GEORGIA CONTRACTS DISTINCTIONS PROFESSOR WILLIAM BIRDTHISTLE CHICAGO-KENT SCHOOL OF LAW

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1 GEORGIA CONTRACTS DISTINCTIONS PROFESSOR WILLIAM BIRDTHISTLE CHICAGO-KENT SCHOOL OF LAW Nte 1: This lecture cvers nly the principal differences between the law and Gergia and the law in yur MBE Cntracts & Sales materials. CHAPTER 1: CONTRACT LAW A. Revking Offers 1. Optin An ptin is an independent prmise t keep an ffer pen fr a specified perid f time. Gergia Distinctin: Time Perid MORE SPECIFIC If the time perid during which the ptin is t be held pen is nt stated, a is implied. Hwever, irrevcability cannt exceed. 2. U.C.C. Merchants Under the UCC, an ffer t buy r sell gds is irrevcable if the fferr is a merchant. Gergia Distinctin: Merchant Defined NARROWER A merchant means a persn wh deals in gds f the kind r wh hlds himself ut as having knwledge r skill peculiar t the practices r gds invlved in the transactin. (As ppsed t the U.C.C., where it is any business persn.) 3. Cunterffers and mirrr-image rule In general, acceptance must mirrr the terms f the ffer r it is a cunterffer. Gergia Distinctin: Cunterffers and Mirrr-Image Rule ELECTION If an ffer cntains alternative prpsitins, the fferee may between the alternative prpsitins. B. Cnsideratin Gergia Distinctin: Cnsideratin Gergia distinguishes between gd and valuable cnsideratin. cnsideratin is funded n a natural duty and affectin, r n a strng mral bligatin. cnsideratin is funded n mney r smething that can be cnverted int mney.

2 Marriage, even thugh it cannt be cnverted int mney, is cnsidered cnsideratin. 1. Cntracts under Seal Gergia Distinctin: Cntracts Under Seal In Gergia, cntracts under seal raise a rebuttable presumptin f cnsideratin. Hwever, cnsideratin will suffice t defeat a defense f failure f cnsideratin. 2. Bargain and Exchange AS CONSIDERATION Gergia Distinctin: Bargain and Exchange Minrity Rule Gergia fllws the minrity rule, which nly requires that there be a benefit r a detriment, but nt bth. 3. Prmissry Estppel Gergia Distinctin: Charitable Institutins A charitable institutin des nt have t prve n the prmise t recver under prmissry estppel. C. DEFENSES 1. Mistake a. Unilateral mistake Gergia Distinctin: Defendant's Negligence A unilateral mistake that results frm the defendant s wn negligence des nt justify the defendant s. b. Mutual mistake Gergia Distinctin: A cntract cannt be enfrced if it was executed n the basis f a mutual mistake f law r fact. 2. Misrepresentatin, Nndisclsure, and FRAUD Gergia Distinctin: FRAUD Fraud renders a cntract at the electin f the injured party. A cntract is vidable n the basis f actual fraud, cnstructive fraud, r cncealment. Actual Fraud T recver n a claim f fraud, the party must, upn discvery f the fraud, prmptly restre r ffer t restre t the ther whatever he received frm the cntract Themis Bar Review, LLC GA Cntracts Distinctins

3 Actual fraud exists if misrepresentatin f a material fact is (i) made willfully t deceive r recklessly withut knwledge (ii) acted n by the ppsite party. Cnstructive Fraud: Cnstructive fraud ccurs when the misrepresentatin is (i) made by mistake r inncently and (ii) acted upn by the ppsite party. Cncealment: Cncealment f a material fact amunts t fraud when a is made and the truth is evaded. 3. Duress a. Deprivatin f meaningful chice Gergia Distinctin: A party t a cntract wh is a victim f duress, whether by imprisnment, threats, r ther acts, can the cntract. The duress must be such that it vercmes the mind and will f a persn f. 4. Capacity t Cntract a. Infancy Gergia Distinctin: Individuals under the age f d nt have the capacity t cntract. Hwever, if the infant receives prperty r ther valuable cnsideratin and retains it after reaching the age f 18, she is deemed t have the cntract. 1) Liability fr necessities Gergia Distinctin: A cntract fr necessaries is binding n a minr. Hwever, the persn supplying the necessaries must shw that the parent r guardian failed r refused t supply sufficient necessaries r that the minr was. 2) Statutry exceptins Gergia Distinctin: Statutry Exceptins X THREE: 1. If a minr is engaged in any trade r business, the minr is bund fr all cntracts in cnnectin with that trade r business. 2. cntracts and settlements made by minrs wh are f lawful age t marry are binding. 3. Any indebtedness fr a lan frm a trust fund fr purpses t any educatinal institutin is binding n a minr. GA Cntracts Distinctins 2017 Themis Bar Review, LLC 3

4 b. Mental illness Gergia Distinctin: Adjudicated Mentally Incmpetent If an individual has nt been adjudicated mentally incmpetent, the cntract is, unless it was made during a interval. Exam Tip 1: Once a persn is adjudicated mentally incmpetent and a guardian has been appinted, all cntracts entered int by the ward are vid, even if they are entered int after the ward is restred t sanity. c. Intxicatin Gergia Distinctin: Intxicatin A cntract entered int while intxicated is vidable, but may be either expressly r thrugh cnduct incnsistent with rescissin. 5. Impracticability D. Rescissin Gergia Distinctin: Impracticability Generally, a party cannt excuse himself frm a cntract by pleading that perfrmance is impracticable, in the absence f a statutry prvisin r a fr such a cntingency. Gergia Distinctin: Fraud r Nn-Perfrmance T rescind n the basis f, the defrauded must prmptly, upn discvery f the fraud, restre r ffer t restre whatever he received under the cntract. A party may nly rescind n the basis f the ther party s when bth parties can be restred t their pre-cntract cnditin. E. Intended and Incidental Beneficiaries Gergia Distinctin: Must be Express Fr a third-party beneficiary t have standing t enfrce a cntract, it must that bth parties intended that the third persn shuld be the beneficiary f the cntract. F. Assignment f Rights Gergia Distinctin: Nn-assignment Clause Unless the cntract is fr r requires particular skills r qualificatins, nce a party perfrms its bligatins under the cntract, that party s right t enfrce the cntract may be assigned withut the ther party s cnsent, even if the cntract cntains a nn-assignment clause Themis Bar Review, LLC GA Cntracts Distinctins

5 G. Types f Cntracts within the Statute f FRAUDS Gergia Distinctin: In additin t the five standard cntract types ("Mr. SOUR") Gergia requires the fllwing additinal types f cntracts t be in writing: 1) A prmise by an executr, administratr, guardian, r trustee t pay damages ut f his wn ; 2) Any prmise t a debt barred by a statute f limitatin; and 3) Any cmmitment t. H. DAMAGES 1. Cnsequential Damages Gergia Distinctin: Cnsequential Damages Disfavred In Gergia, cnsequential damages are nt recverable unless they can be traced slely t the breach, r are capable f. 2. Actual Damages Gergia Distinctin: Liquidated Damages Bth parties are bund by the agreement t accept liquidated damages, and therefre the nnbreaching party cannt elect t take if he already agreed t liquidated damages. 3. Mitigating Damages Gergia Distinctin: Landlrd Need Nt Mitigate In Gergia, the general rule is that the injured party must mitigate damages as far as is practicable by the use f rdinary care and diligence. This rule des nt apply t a landlrd, hwever, when a breaches a lease. Thus, when a tenant breaches, the landlrd may leave the premises vacant and hld the tenant liable fr rent accrued, unless the landlrd accepts the tenant s surrender, r the tenant successfully terminates the lease. In such a situatin, the landlrd must then make reasnable effrts t re-lease the premises and mitigate damages. Nte 2: Surrender differs frm. T shw a surrender, there must be a mutual agreement between the landlrd and tenant; the mere taking f the keys t the leased premises by a landlrd des nt amunt t an acceptance f a surrender f a lease. GA Cntracts Distinctins 2017 Themis Bar Review, LLC 5

6 4. Litigatin Expenses and Interest Gergia Distinctin: Generally, litigatin expenses are nt allwed as damages. Hwever, an exceptin exists when the defendant has acted In bad faith, Has been stubbrnly litigius, r Has caused the plaintiff unnecessary truble and expense. 5. Reliance Damages Gergia Distinctin: Unenfrceable Prmise In Gergia, there can be n justifiable reliance n a prmise that is at the time it is made. I. SPECIFIC PERFORMANCE 1. Real Prperty Gergia Distinctin: T recver in a suit fr specific perfrmance n a cntract fr the sale f land, the purchaser must shw that he paid r tendered the price accrding t the cntract. J. REMEDIES UNDER U.C.C. 1. Replevin Gergia Distinctin: Right t Replevin In Gergia, a buyer has a right t replevin fr the gds identified in the cntract if after reasnable effrt, the buyer cannt cver r the circumstances shw the effrt will be unavailing, r the gds have been shipped under reservatin and satisfactin f the security interest has been made r tendered. [END OF HANDOUT] Themis Bar Review, LLC GA Cntracts Distinctins