Condensed Contracts Final Exam Cheat Sheet, Study notes of Law

Download Condensed Contracts Final Exam Cheat Sheet and more Study notes Law in PDF only on Docsity! Contracts Spring 2021-- Roadmap e@ Areas of law to cover when answering a question: (remember to show your work! Say WHY and HOW you came to that conclusion) © What law applies? Common law, UCC or CISG? ff Is it mixed? I _CISG = treaty, so its > UCC because of supremacy clause © Was there a meeting of the minds? When was the offer? HE When was acceptance? Were there counteroffers? @ Retracted? e Could it be retracted? (e.g. firm offer) e Was it retracted? © Consideration lf Did this type of contract require consideration? ll If so, was the consideration valid? © How many parties are there? 2 like most of the contracts we’ve covered? Or are there third parties? e@ Intended or incidental? e If intended, is it a creditor or donee beneficiary? e@ Have rights vested? e Does it involve a gov’t contract? e@ Was there assignment of rights and/or delegation of duties? © Where are we? This tells you where to look within the source of law you have already identified! ll Is this a problem solving question in the negotiation phase? Or was a contract already formed? e If it was formed, do both parties still want it to be valid? © Does a party want to include extrinsic evidence? lf Interpretation @ Parol evidence rule lf Battle of the forms e@ Or, is one or more parties trying to say the contract is void or voidable? ° Void? Lack of capacity (e.g. infancy) Duress Public policy Illegality Unconscionability © Voidable? Due diligence Hf Mistakes li Representations Warranties ll If the contract is already formed, is the issue with performance or breach? © Any defenses? If breach was it material, total, partial? If UCC, perfect tender rule HB Some examples= impossibility/impracticability/frustration of purpose or force majeure clause anticipatory repudiation © Any damages? What kind and to whom? I Types of remedies: Equitable remedies ©. Specific performance © Injunctive relief ° Avoidance oO Rescission Damages ©. Liquidated oO Expectancy © Reliance © Special damages like consequential and incidental ° Punitive I Limitations on recovery/ defenses to breach Failure to mitigate Foreseeability Avoidability Anticipatory repudiation e@ Other considerations when answering the question: o Akano further assent / negotiation needed from offeror [unless “to my personal satisfaction” exception to general rule] ¢ Invitation to deal - §26 [price quotes, estimates, etc.] = “estimate” / “price quotation” o person buying has reason to know tht other person making manifestation of willingness to bargain requires a further manifestation to conclude the bargain o see §33 for failing offers [ MERE INVITATIONS TO DEAL]: Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain/definite = Aka must have a reasonable basis for determining the existence of breach and for giving an appropriate remedy =» EVEN IF SAYS ITS AN OFFER 3 if it says “ all offers are subject to approval by us” = cannot be an offer because still requires an additional manifestation of assent by offeror / doesn’t include acceptance to preclude the bargain/deal # “The objective theory of contract views offers in the minds of how a reasonable person would view __.” « “Tf one party objectively communicates a desire to enter a contract, engendering a reasonable understanding that acceptance will create a contract, then he has made an offer.” Here, IF NOTHING APPLIES TO BE AN OFFER, Ask if offer/contract is implied from acts, conduct or words: implied in fact [§4 — does work after asked to, implied will be paid reas price / auction, for ex.] or implied in law [require u to compensate another for a benefit conferred in order to avoid UNJUST ENRICHMENT: i.e. helping dying person on street ucc: True even if parties fail to include terms tht would result in a failure at common law= ¢ don’t fail for indefiniteness if parties intend to make a contract and a “reasonable basis” [look at commercial context. But more missing terms, more likely didn’t intend to make contract] = difference 1 > 2-204(3) ¢ need quantity. Can never gap fill quantity ¢ 2-305: don’t need price term. One party can determine it if in good faith - Article 14: a proposal for concluding a contract addressed to 1 or more parties constitutes an offer if it is sufficiently definite and - indicates the intention of the offeror to be bound in case of acceptance. O A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provisions for determining the quantity and price - Article 15: an offer becomes effective when it reaches the offeree - [An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer ] - Article 55: open price = impliedly made reference to the price generally charged @ the time of the conclusion of the contract for such goods sold under comparable circs in the trade concerned STEP 3: The words “ _” show that _ accepted the offer. // The words “ _” do not show an acceptance/an objective manifestation of assent to conclude the bargain but instead show 2. ACCEPTANCE [VALID OR CONDITIONAL OR INQUIRY]? OR COUNTER-OFFER? Common law: mirror-image / last-shot rule / mail-box rule MANDATES / AMBIGUOUS: Acceptance by promise: 50(3) = offeree must “complete every act essential” to making of that promise [tell them u accept, etc.] and beginning performance, if invites either by promise or performance = implied promise to complete. Binds both parties. Offeree bound. - Effective on dispatch // whenever out of offeree’s possession [§63] vs. option contracts = effective on receipt - THE WORDS “_” show that acceptance was conditioned on X’s assent to _ - The objective theory of contracts is that if one party objectively manifests assent > communicates what a listener or reader would understand to be agreement to contract terms — that party has agreed to a contract even if he didn’t “really mean it.” - Clicking yes = equivalent of signing a contract w/o reading it first. If u odnt read, assumption of the risk. Acceptance by performance: 50(2) = offeree must tender at least part of what offer requests [and full performance of the offer requires that the offeree tell offeror]. Beginning performance = offeror CANNOT REVOKE. Offeree not bound to complete. - Common law [54]: don’t need to notify offeror usually when u begin performing, but do need to do reasonable diligence 2 notify after completed performance [vs. 55 — promise, must notify or offeror must be seasonably notified otherwise] - UCC 2-206: if not notified of acceptance [when beginning of performance is a reasonable mode of acceptance], offeror can treat offer as having lapsedff if not notified of acceptance in a reasonable time O 2-206(1)(b) = if buyer / accepting party adds term thts diff , seller/ other party doesn’t object or stays silent and ships = ACCEPTANCE OF THAT TERM - performed by ... If no method of acceptance is specified, can either accept by promise or by rendering performance. - §62 and §45 = If performance begins, implied promise to complete performance [offeror cannot revoke, but offeree is more bound here [vs. where offer mandates performance as the exclusive way to accept]: - Here, tender or beginning performance does not create an option in favor of offeree, but instead if offeree fails to complete within reasonable / required time, he will have to pay damages for breach When accept by performance, usually NO DUTY TO NOTIFY OFFEROR WHEN BEGIN PERFORMING [2-206(2)]. UNLESS: - Offeree knows or has reason to know the offeror is not likely to learn of acceptance unless the offeree tells the offeror [lives in a distant state, for ex] > must tell offeror within a reasonable time after commence performance Mirror-image: must match offer exactly - But see Last-shot rule: if boilerplate sent before performance, implied acceptance and those terms prevail [similar to 2-207(3) in that conduct creates the contract] Mail-box: ASK: WAS THE DISPATCH[ACCEPTANCE] OR RECEIVAL[REJECTION] RECEIVED FIRST??? not for options: effective on dispatch - always works if sent acceptance first, but if - Adispatched, r sent ,r received (call/priority) , a received > applies unless offeror relied on the rejection that it first received O Morrison: dispatched acceptance by mail. Then called to revoke, but irrelevant bc acceptance effective on dispatch - TRICKY QUESTION: if rejection, acceptance, > whichever is received first may determine. . . 0 ifr,a dispatched, received , a > mailbox rule says acceptance applies!!! 0 and if r,a,a,r > acceptance will def apply !! ONCE ACCEPT > OFFER IS GONE. DONE. FINISHED AT THAT MOMENT. EFFECTIVE ON - If improperly mailed > wont apply, unless post office fixes it / minor effor / offeror receives it - If acceptance by performance: Mandated as exclusive means > option in favor of offeree once begins performing [only offeror bound] O Not mandated as exclusive means but still allowed because didn’t mandate promise as exclusive means > binds both in the sense that offeror cannot revoke once performance begins, but offeree makes an implied promise to complete and if doesn’t, also liable O Performance over time = acceptance not complete until performance complete, but offeror cannot revoke in the mean time - OPTION CONTRACTS ARE SEPARATE CONTRACTS: ACCEPTANCE OF IT MUST BE RECEIVED WITHIN THE TIME SPECIFIED BY THE OPTION PERIOD AND MERE DISPATCH WONT DO [recipient many times doesn’t care or waives application of the rule by conduct indicating deal still on] NO KNOWLEDGE OF OFFER BUT ACCEPT ANYWAYS BECAUSE PERFORMED THE ACTS REQUIRED????0k! - The “no knowledge of offer” made requirement is designed to protect offeree from offers by parties that require affirmative requirements of rejection!!! / offers by superior bargaining power type offerors that are unconscionable , etc.. 3a. only terms on which both parties agree go into the contract. Supplementary terms (§1-303, Article 2, and if not common law) fill gaps. §1-303 is best gap filler: Express terms [what parties said to each other] Course of performance [at least 2 incidents, that show party’s expectations via how they behave in this deal/contract = 1 party behaved repeatedly and other party, knowing this, accepted it without objection = must be >1 behaviors in same deal. Cant be PO, invoice. New PO, new invoice.] Course of dealing [at least 2 incidents, that show party’s expectations via how they behaved in prior deals/contracts with each other = establishes a common basis of understanding for interp their expressions and other conduct // HABITS ARE ESTABLISHED IN PAST DEALS. But if never litigated/arbitrated, arbitration clause wouldn’t help here ] Usage of trade [how people behave in the same market or same industry to the extent that party’s would know this is what is expected, but if merchant very likely to be unclear = such regularity to justify expectation that it will be observed with respect to transaction in question // at common law, litigation prevails over arbitration for example ] Trade usage/usage of trade means the way things are usually done in this industry or this market if the parties have reason to know how things are usually done. b/c as repeat players, they are familiar w/ them O Usage > practice/method/custom (1), having such regularity (2) as to justify an expectation that parties will observe/assume it applies to their transaction (3) unless agreed otherwise, court [and parties] expect them to do things the way its normally done . need to disclaim it if intend not to be bound by it = 1-303c: if trade code, Q of law for judge You would need to explain your reasoning on four issues: whether the forms created a contract (which a proviso would have prevented); whether Zed’s arbitration clause is an additional term or a different term; whether both parties are merchants; and whether Zed’s arbitration clause has become part of the contract. Don’t assume that Article 2 governs or that the parties are both merchants. These are steps in your reasoning, and you must explain them. PRINCESS CRUISE LINES > HOW COMMON LAW COUNTER-OFFERS WORKS AS A PROVISO IN offeree’s FAVOR: - Any term additional in acceptance = counter-offer. If a offeror gives permission to proceed / conduct sufficient to show acceptance > 10 / not in ur favor - [Klocek: offeror sends PO offeree sends goods back + PO [proviso]. Too late. MM before/when PO received and accepted. So when sent T&C in box = mere proposal and since klocek not a merchant, need to expressly agree. ] 2-606: acceptance of goods: reasonable opportunity to inspect and doesn’t reject, does any act inconsistent with seller’s ownership or after reasonable opp to inspect, tells seller conforming or accepting despite non-conforming nature 2a. if doesn’t look like acceptance, ask: silence exception applicable? [where INACTION would be required to not accept? > to make silence applicable, impose a duty on offeree: “offeree must __ /shall/will not/shall not/cannot sue for/agree to”] > (a) prior relationship/COD [pattern of _] that would give offeree reason to believe silence=acceptance (b) offeree retains benefit + knows of offer [see Norcia] + offeree knows offeror will expect compensation + had time to reject [§69] (c) offeree exercises dominion over goods and then does something with them [hangs it up/uses/sells] even if doesn’t intend to accept [many states don’t allow unordered merchandise] (d) offer states can be accepted this way + offeree intends to accept 2b. if looks like acceptance, ask: (a) timely? [according to period: held open or is good until X, then POA ends when X occurs. OR reasonable if none] (b) In proper form [promise or act required in offer?] (c) deviates? [mirror image -CAN ANSWER YES OR NO // or additional statement just a mere implication of offer: Implied gap filla? // or LAST-SHOT: perform as if deal [SHIPPED + ACCEPTED] THEN last form [counter-offer’s] terms apply Vs. UCC 2-207 allows for anything tht doesn’t have a proviso (even if more/dif terms) also more gap fillas so more implications/easier to be an acceptance] CISG: - 18: no silence, but any statement or conduct made indicating assent / EFFECTIVE ON RECEIPT OR AT MOMENT ACT OCCURS (18(3)) 3. REVOCATION OR REJECTION ? COMMON LAW: ON RECEIPT, ALSO OPTIONS ARE IRREVOCABLE Revocation: - Anact of revocation, known to offeree. Includes ambivalence 0 Irrevocable if: = option [w/ consideration, even if offeror rejects during option time] = an Option is a sep contract, a promise to keep the offer open, so thus requires paying sep consideration or promise to pay consideration > irrevocable /even if reject, or death, or incapacitated ¢ mailbox rule DOES NOT APPLY TO OPTION CONTRACTS. Thus, acceptance is only effective on receipt here ! ! = detrimental reliance [reasonable, and offeror shld reasonably expect this: 887], or a1 = performance begins under unilateral contract [§45] O OTHERWISE, only acceptance terminates the power of revocation / rejection O General offers: 846 = can revoke by public announcement if thts the only reasonable way to do it Rejection: - §36/§38 [terminates POA unless contrary intention or “I reject but hold it under further advisement for future”]. - Includes counter-offers: §39 [conditional terms, NOT MERE INQUIRIES], lapse of time, death/incapacity b4 acceptance or non-occurrence of any condition of acceptance under terms of offer UCC: ON RECEIPT, ALSO FIRM OFFERS ARE IRREVOCABLE Revocation: - Firm offer [2-205]: offer by a merchant [2-104], to buy/sell/lease goods, in signed writing, which states held open / irrevocable for a period of time no > 3 mos, and if on offeree’s form, offeror must sign twice - 2-608: can revoke acceptance oof nonconforming goods if substantially impairs value to him if accepts if reasonable assumption wld work earlier or just discovered non- conformity and must occur WITHIN A REASONABLE TIME Rejection: - Counter-offers are not rejections / don’t terminate POA - 2-602: must notify offeror after a reasonable time tht ur rejecting goods if sent - 15: An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer - 16: irrevocable if reaches before acceptance dispatched [MAILBOX] / cant be revoked if offer states irrevocable or reasonable for offeree to rely on revocation and offeree did rely - 17: even if irrevocable, TERMINATED when rejection reaches offeror [NO OPTION EXCEPTION TO REJECTION — HERE, IF REJECT, TERMINATES POA NO MATTER IF IRREVOCABLE] 4. VALID CONTRACT? 1A. IS THERE CONSIDERATION? [or a small amount of money or a gift exchanged ?? an exception?] Common law: pre-existing legal duty [§73] - Promise, act, forbearance [IF invalid legal claim: §74 says must be in fact doubtful [objectively uncertain] or good-faith/honest belief], or creation/mod/destruction of legal relation - Nota promise to make a gift on a condition = this wld not be a contract but cld prob get reliance under §90 - Legal detriment and benefit to promisor [BARGAINNED FOR EXCHANGE] 12 If trying to prove no consideration > past consideration / merely gratiutious / not a bargained- for-exchange - For gifts, “if u come over ill give u bike” > COMING TO UR HOUSE WAS NOT THE PRICE OF ACQUIRING THE BIKE, BUT RATHER THE MEANS OF EFFECTUATING THE GIFT TO INCENTIZE PERFORMANCE: * Covenant: if condition isn’t satisfied, party with covenant doesn’t need to perform/ isn’t obligated to perform [ex: if the tenant fails to pay, the tenant shall pay penalty] A. INSTEAD OF PROMISING HIGHER PAY/WAGES/SALARY, SAY “if our company refuses to satisfy you / if you are unsatisfied by the end of this year, we will pay u more” ¢ Discretionary authority: if not satisfied, party w/ discretionary authority isn’t allowed to exercise it [ex: if tenant fails to pay, landlord may...] A. If we fail to meet your salary expectations by X date, you may enforce raise *§219-222 imitates UCC: §220 says usage can be relevant to interpretation / §221 says usage can be relevant to supplement /qualify terms that were omitted if both parties: 1) knew/had reason to know of usage and 2) neither party knew/had reason to know tht meaning attached by other was inconsistent w/ usage MODIFICATIONS: all subject to limit that no duress/ improper threat ] - mod NOT ENFORCEABLE B/C WLD FACTOR RISK INTO PRICE [“consideration” = fair & equitable in view of circumstances not anticipated at time contract made] ... - otherwise, if fully performed on 1 or both sides [so now 1 party is essential a debtor: only way to mod is to make an accord / new agreement w/consid aka if disputed debt- agree to discharge debt for less] or no unanticipated consequences making it f/e to mod [reliance], §73 pre-existing duty rule says mods need consid (vs.) - UCC §2-209(1) = don’t need to analyze risk / knowledge bc mods don’t require consid if good faith. O_ and if btwn merchants: observance of reas commercial stds of fair dealing in trade and may require some objectively demonstrable reason for seeking mod BUT MARKET SHIFTS INVOLVING A LOSS MAY PROVIDE SUCH A REASON EVEN IF NO SUCH UNFORESEEN DIFFICULTY = comment 2], it does not need to be in light of unanticipated circumstances BECAUSE MODS DON’T NEED CONSIDERATION!!!! UCC: no legal duty rule - 2-306: output/requirements ok unless unreasonably disproporiationate to any stated estimate or in the absence, the normal/comparable prior output/requirements demanded or tendered // exclusive dealing is ok if best efforts 15 - 2-309 = DIFFERENCE: “change my mind at any time” is ok if reasonable notification received by other party - Also, 1-308 = if u reserve rights “w/o prejudice” “under protest” or “the likes are sufficient” u cant waive rights to perform in a manner demanded by other party, so modification or promise wld not be enforceable [mod ok if good faith and no reservation of rights: SO UR USING UR RIGHTS TO STOP MOD/AGREE TO Mods // MODIFICATIONS = NOT ASSIGNING / DELEGATING. There can be unilateral assignment and delegation ! - 2-209 = DIFFERENCE: modifications don’t need consideration ONLY GOOD FAITH needed or if other party relied on promise to modify - NOM ok if not waived by trying to orally mod, for ex., but if provided by merchant, must be sep signed by non-merchant - Although express terms > COP > COD > usage to modify, COD can prevail: tam 8 An art gallery owner called one of her best customers to inform him thal she had just acquired a painting by e javerite artist and that she would sell it te him for $1,000. The collector, who had purchased tem 10 ings from ‘at afternoon to see the painting. The collector stated that he itant to purchase it because he wasn't sure the painting, which was 2 departure from the artist's usual style, would fit with the rest of his collection. Although the custom in the art hem 12 sale trade Is to prohibit returns other than for damage, the gallery owner had permitted the collector to eae change his mind and return several pieces over the years, no questions asked. With that ia mind, the tom 13, collector decided to go ahead and sign the contrect for purchase, agrecing to pay $1,000 upon delivery of tem 11 the painting If did not ion the possibility of sencing the painting back Item 14 ‘Two cays late, when the painting was delivered to him, the collector, having decided that the piece did not Nem 18 i fitinto his collection, refused to acceat t. The gallery owner crings an action for breach, item 16 Is the gallery owner likely o prevall? ent a tem 18 < AA Yes, because the language ofthe written, signed contract controls ‘ [ree] B Yee, because the custom ofthe trade controls ¥C _ No. because the the parties! course of dealing wil affect the toms of the contract. D__ No, because the glory owner knew the collector was unsure about the purchase, 1B. EXCEPTIONS TO CONSIDERATION [if UCC, no exception needed for mod] 1. moral obligation expanded into material benefit rule §89= if benefit received implies some moral obligation to repay benefactor/promisee, even if not legal, court may enforce it [charitable donations, debtor promising after debt discharged, many others may not be economic: saving someones life, for ex.] - or any other otherwise unenforceable promise bc minority/incapacitated promise made > still enforceable against party not young/dumb if minority/incapacitated party made a real promise [not illusory] to them 16 2. promissory estoppel [§90] = “GAG IN MOUTH” = only get reliance interest damages = GOOD ALTERNATIVE WHEN CANT PROVE RELIANCE WAS JUSTIFIABLE [AOR] OR WHEN NO CONSIDERATION... . - (1) PROMISE MADE (2)promisor reasonably expects/foresees promise will induce action or forbearance (3) action/forbearance induced/DETRIMENTAL RELIANCE (4) therefore justice requires enforcement of promise ** only awarded for reliance expenses incurred after contract made [so expenses made before breaching party knew/had reason to know other party wld incur losses if breach are unenforceable] ******* - Usually awarded only when party asserting the rights deliberately engaged in misleading behavior with knowledge/reason to know misleading and wld or cld induce reliance - Reliance on a promise tht falls short of contract be of some defect/omission in agreement formation [vagueness — id certum est quod certum redid potest, SOF clause, escape clause but some commitment to justify] where fairness demands accountability despite failure to comply w/ legal formalities 0. If charitable pledge / other gifts > no reliance needed [§90(2)] O Also gratuitous promises to convey land if reliance by moving onto land and making improvements, gratuitous intra-fam promises , gratuitous promises to procure insurance... O Will make lender insurer when making a promise to pay premium [East_ Providence O Sometimes for irrevocability to create an enforceable option even tho no consideration giving to the extent necessary to avoid injustice, usually in SUBCONTRACTOR BIDS [§87(2) = usually when part performance doesn’t establish the reliance, but instead when must undergo subs expense, or undertake subs commitments, or forego alternatives to accept, for ex. ] = Unless agreed otherwise, subcontractors offer [bid] is irrevocable until general contractor has had a reasonable opportunity to notify subcontractor of the award and accept the subcontractor’s offer CISG: nothin - NO CONSID REQUIRED// article 29 says can modify as long as agreed to /NOM ok to prevent oral mods unless reliance on conduct // article 12 says u can waive this via 96 declaration 2. IS THERE A SOF [STATUTE OF FRAUDS] ISSUE? [sof= makes a lot of sense, but not realistic] Common law - Agree to answer debts of another, marriage, sale of land [or any transfer/alienation of an interest in land — see Waddle], sale of goods 500$ or more, leases 1000$ or more, sale of personal property beyond 5000$, or agreements that cannot possibly be performed within 1 year [even if performance is 1 day!! AND IF DOESN’T STATE TIME, SOF DOESN’T APPLY] 17 (1) present duty to perform: 20 A) CONDITIONS PRECEDENT / condition on promise: all conditions met / all CPS performed or excused? A1) constructive condition of tender (showing willingness to perform) not satisfied? [enforceable contract but duties not enforceable until each party tenders: UCC 2-511(1) says buyer must pay first and seller then delivers, but if neither happen, both get out (seller cant sue if buyer doesn’t pay if seller himself doesn’t deliver) like 2-507(1) // common law sale of land says same time/concurrent and §238 = bilateral/executory, neither party’s duties enforceable until other tenders performance] - Ifseller tenders delivery and buyer refuses to tender payment [or paid and refuses to accept goods] ~ sellers duty to perform is discharged O. If buyer paid already [i.e. just rejected goods] > buyer can recover in restitution even though sellers duty is discharged oO ****when a party’s duties of performance are discharged, the other party is entitled to restitution of any benefits conferred onto the discharged party in an attempt to perform on his side ae If common law > substantial performance of an implied / constructive condition is enough to trigger obligation to pay O But subs performance = simple breach and entitled to damages O Jacobs and Young: yes the breach was immaterial and yes it was inadvertent, but wlda still be entitled to any damages = difference btwn value received under subs performance and value bargained for. In j&y, it was nominal so 1$ At UCC > only perfect tender of the condition to deliver triggers the obligation to pay If explicit condition > strict compliance, at either common law or UCC, triggers the obligation to pay ... but: A2) did the party seeking enforcement waive the right, even if expressed as a condition, to that strict performance: orally mod after NOM clause: through behavior [acquiescence], conduct acted as either a i) mod of terms previously stated or ii) waiver of right to enforce that term(s) — §89 and 2-209(4) says can be waived ... but u can un-waive the waiver under 2-209(5) by asking for re-instatement of the term for the future if waiver not relied upon and reasonable notice is given B) CHANGED CIRCS: imposs or highly impracticable? [see impracticability / impossibility / force majeure = prob not gonna work if buyer claiming cuz thatd just be a “losing contract” frustration of purpose type situation: all buyer has to do is pay] C) FRUSTRATION: some supervening event frustrated purpose or value of contract? D) common law > should the non-occurrence of an express condition still nonetheless be excused i.e. because the non-occurrence of conditional event was caused by a party’s wrongful prevention, HINDRANCE or non-cooperation // breach of duty of e) exception in loan / installment payment breach under 243(3)? > i.e. breach by one [failure to pay $ installment] that is less than whole, even if followed by repudiation [I will not pay ever again] does not give rise to a claim for damages for total breach [[only gives rise to a claim for breach as to the payment due at the time]] - Unilateral contract [no longer executory] where if ur promise to perform ur side is consideration and the other side fully performed or tendered performance > u must perform or u breached (2) discharge of contract by full performance on both sides or recission [one party seeking it = i.e. mistake, misrep, no consideration, duress???] or a release/accord and sat or a full check payment ?????.. see question 4 [page 30]. - remember: even if a condition is not satisfied [or material or total breach, for ex.], if other party already performed all duties > only remedy is damages [recission does u no good] 2. Argument about what agreement covered [written or more?: PER): circular: PER impacts interp by restricting extrinsic evidence to writing but interpretation, often in light OF THAT VERY EXTRINSIC EVIDENCE, must be used to decide whether and to what extent the writing shld have the effect of excluding the extrinsic evidence PER [EVIDENCE = NOT AN ARGUMENT/ EXTRANEOUS FACTS BUT PROOF OF FACTS VIA DOCS OR TESTIMONY ]= generally inadmissible: - written [OR oral on the record] agreements and u want to MODIFY /CHANGE or SUPPLEMENT [ADD TO OR SUBTRACT] agreement with O PRIOR OR CONTEMPORANEOUS evidence , usually oral but can be written O [[Vs. interpretive: interp of contracts to give effect to parties’ reasonable meaning. 0. If no evidence of context meaning of language in contract [not usually pure dictionary meaning, but also meaning via entire context of transaction: prior contracts of same kind [COD], trade usage, post-formation course of performing the contract [COP]] O PER= WHEN AGREEMENT ALREADY RECORDED, places CONTROLS ON EXTRINSIC EVIDENCE USED IN INTERPRETATION *be careful — extrinsic = parol and interpretive // verbal = contract created by words [parol means words], spoken or written [non-verbal = conduct][ - 214 if EXTRINSIC EVIDENCE [prior or contemporaneous oral agreements] IS BEING USED / ENTERED TO SHOW: A) integration / the writing is or is not integrated (a, b) = after judge finds its partially integrated or rather after judge finds that it might not be completely integrated 21 B) what agreement in writing means / the meaning of the writing, whether or not integrated (c = interp), but explaining or clarifying a term cld be subject to PER .... See **or C) grounds for avoidance/remedies = IS IT BEING USED AS A DEFENSE TO PER is also not applicable to: [EVEN IF ITS COMPLETELY INTEGRATED]! Oral/written agreements regarding a conditions precedent to the happening of some event/term in the written agreement [oral agreement is a conditions precedent to the enforceability of the duties under the contract: §271 ] Modifications after formation of contract When the proffered evidence is to show tht the other party never paid the recited consideration [§218(1): contract says 5k paid and received but evidence is tht never paid] Evidence ab voidability of contract [duress, undue influence, misrep, mistake, etc.] or evidence that there was no contract at all !!! Interp evidence = parties agreed orally that days means business days, for ex. Usage of trade, course of dealing or COP to explain the contract under 2-202 UCC **Examples of what is covered by PER: provisions beyond the words of the written agreement, to modify/change, add or subtract to the written agreement with evidence of prior written and prior/contemporaneous oral agreements [type of logs agreed to/express warranties — Thompson, price agreed to — Lopez, ice house with sale house — Mitchell, express warranties on jet range — Betaco, ab whether bound to boilerplate certified mail deadline — MCC Marble] 209 [judge decides integration], O 210 for integration level , O 211[3] = consumer protection aspect for contracts [W/ UNFAIR BARGAINNING POWER btwn merchants boilerplate and consumer like adhesion contracts where consumer can accept to entire form or walk away from deal, not 2 consumers] tht have merger clauses may still not be completely integrated Judge Ruling Judge Ruling Parol Evidence on Contract on Term Admissibility Contrary Parol Evidence is not Totally Integrated Additional Term admissible Consistent Additional Parol Evidence is not Totally Integrated Term admissible Contrary Parol Evidence is not Partially Integrated Additional Term admissible Consistent Additional Parol Evidence is Partially Integrated Term admissible Common law = traditionally 4 corners, now move more towards UCC but specifically if theres an ambiguity, allow extrinsic evidence to explain it 22 * PRIOR OR (4) Collateral Acreements: The parol evidence rule does nol apply (o collateral agreements: CONTEMP THT ARE prior or contemporancons agree! that are distinet from a DISTINCT FROM A subsequeut written contract (even if the wrillen coutraet is Lully SUBSEQUENT integrated) WRITTEN ( But See Mitchill: Parol evidence rule precluded plaintiff trom CONTRACT J> ifso, giving evidence of an oral agreement berween plaintiff and admissible to defeudant that defendant would remove an ice house across the SUPPLEMENT street trom his house in consideration for a written agreement to sell his house to plaintiff because (1) the written sales contract unlessssss completely purported to show the full agreement between the parties; (2) the integrated: agrocments were too closely related: and (3) the agreement to - 216(2) to see if COMPLETELY remove the ice Louse should have been expressed in the original contract. integrated: [if either satisfied, its collateral / consistent additional term 1. General Rule: Where one agreement is entered into wholly or AND NOT COMPLETELY partly in consideration of the sinullaneous agreement (o euler into RA AN another, the transactions are necessarily bound together. INTEGRATED SO C BE USED TO SUPPLEMENT // ***if distinct 2. Test for Determining Whether The Oral Agreement Can Be enough and not compl integ, can Adautted: add it**]: Because the subject (J) Agreement must be collateral: A * . (2) Must not contradict the expressiimplied provisions of matter is so diff that the parties the written contract: would not necessarily address them (3) Parties would ordinarily expect the agreement to be in in the writing writing. The writing must not contain the engagement of the purties, define the object, aud measure the extent of engagement. The agreement should not he sa closely Oo 2b= couneeted with the principal transaction as to be a part and parcel of it §214 - Evidence of Prior or Contemporancous TERM [DENCE USED wld naturally be omitted from the writing = AKA WOULDN’T BE IN THIS WRITING BECAUSE ITS SO DIFFERENT AND THUS THIS WRITING IS PROBABLY COMPLETELY INTEGRATED -if term might naturally be omitted [tht reasonable parties wld not necessarily agree to, had they, to make this deal ] = ADMISSIBLE // if they would not naturally include if agreed to it vs. if at least 1 party wld insist on it being in if agreed to, wld NOT NATURALLY BE OMITTED = INADMISSIBLE = not collateral. Not admissible. ]: - if the ICE house were on the same land bought / not across the street > WOULD DEF FLUNK THIS TEST [be wldnt naturally omit]/ O BUT weird since it was across the street, 0 BUT SAID wld ordinarily expect this to be in the writing and its not so complicated tht sep consid wld be needed 25 - So wld NOT be naturally omitted and reas parties wld agree to this, had they, to make this deal = aka 2b shows its completely integrated and one party wld insist on it being in the AND WOULD “PASS” [flunk admissibility] THIS TEST, SHOWING IT WAS COMPLETELY INTEGRATED = The oral evidence not allowed in Mitchell be ® 1. Written contract purported to show full agreement = 2. Agreems were TOO CLOSELY RELATED. = And 3. Agreement to remove ice house shlda been expressed in orig contract [????] = Fentress: merger clause so cnt . ALSO NOT DISTINCT ENOUGH 0 2a=WLD BE AGREED TO FOR SEPARATE CONSIDERATION = aka so complex that needed its own agreement !! '/writing and 2 agreements were distinct in substance is the collateral agreement to the contract? O If distinct enough, OK / ADMISSIBLE TO SUPPLEMENT IF PART OF SAME CONSIDERATION —1.E. AGREEMENT ENTERED INTO WHOLLY OR PARTLY IN CONSID OF THE OTHER: NOT DISTINCT ENOUGH. // IF SEP CONSID, DISTINCT ENOUGH AND ADMISSIBLE 0 [airplanes: manuf and goods, cars, etc. anytime theres a closing/ PO and delivery agreement/ or contemporaneous performances for services and goods] = shows that its prob not completely integrated: look at experience-level of parties, nature of contract, ask: WAS IT SIMULTANEOUSLY AGREED [at same time], OR CONTEMPORANEOUSLY AGREED [even a few mins after the signing is ok!]???? UCC = more flexible and realistic [cant contradict w/ prior [written/oral] or contemp [oral], but can ALWAYS supplement with COD/C OP/usage — so never 4-corners, but instead using commercial context [unless clearly and unequivocally indicate a contrary intent or usage cannot be reconciled w/ writing] ..... and can sometimes supplement consistent additional terms unless completely integrated] 2-202: (a) = can explain, interp or supplement with COP/COD/usage (B) = can supplement with consistent additional terms unless completely integrated STEP 1: start with terms, then use implied warranties/1-303/gap-fillas to determine if parties intended to be fully integrated [price: 2-305, time/place delivery: 2-308/9/10, duration: 2-309, quantity: 2-306] Step 2: is prior [oral/written] or contemporaneous oral [ALWAYS ALLOW CONTEMP - Yes, cant use. - No, move on Step 3: is evidence being used to supplement? - IfCOD, COP. usage > always allowed to supplement or explain [also vice versa: evidence of contemp oral allowed to establish a COD.COP.trade usage] - Ifit’s a consistent additional term > allowed if not completely integrated: 26 Contracts Spring 2021-- Roadmap e@ Areas of law to cover when answering a question: (remember to show your work! Say WHY and HOW you came to that conclusion) © What law applies? Common law, UCC or CISG? ff Is it mixed? I _CISG = treaty, so its > UCC because of supremacy clause © Was there a meeting of the minds? When was the offer? HE When was acceptance? Were there counteroffers? @ Retracted? e Could it be retracted? (e.g. firm offer) e Was it retracted? © Consideration lf Did this type of contract require consideration? ll If so, was the consideration valid? © How many parties are there? 2 like most of the contracts we’ve covered? Or are there third parties? e@ Intended or incidental? e If intended, is it a creditor or donee beneficiary? e@ Have rights vested? e Does it involve a gov’t contract? e@ Was there assignment of rights and/or delegation of duties? © Where are we? This tells you where to look within the source of law you have already identified! ll Is this a problem solving question in the negotiation phase? Or was a contract already formed? e If it was formed, do both parties still want it to be valid? © Does a party want to include extrinsic evidence? lf Interpretation @ Parol evidence rule lf Battle of the forms e@ Or, is one or more parties trying to say the contract is void or voidable? ° Void? Lack of capacity (e.g. infancy) Duress Public policy Illegality Unconscionability © Voidable? Due diligence Hf Mistakes li Representations Warranties ll If the contract is already formed, is the issue with performance or breach? © Any defenses? If breach was it material, total, partial? If UCC, perfect tender rule HB Some examples= impossibility/impracticability/frustration of purpose or force majeure clause anticipatory repudiation © Any damages? What kind and to whom? I Types of remedies: Equitable remedies ©. Specific performance © Injunctive relief ° Avoidance oO Rescission Damages ©. Liquidated oO Expectancy © Reliance © Special damages like consequential and incidental ° Punitive I Limitations on recovery/ defenses to breach Failure to mitigate Foreseeability Avoidability Anticipatory repudiation e@ Other considerations when answering the question: o Akano further assent / negotiation needed from offeror [unless “to my personal satisfaction” exception to general rule] ¢ Invitation to deal - §26 [price quotes, estimates, etc.] = “estimate” / “price quotation” o person buying has reason to know tht other person making manifestation of willingness to bargain requires a further manifestation to conclude the bargain o see §33 for failing offers [ MERE INVITATIONS TO DEAL]: Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain/definite = Aka must have a reasonable basis for determining the existence of breach and for giving an appropriate remedy =» EVEN IF SAYS ITS AN OFFER 3 if it says “ all offers are subject to approval by us” = cannot be an offer because still requires an additional manifestation of assent by offeror / doesn’t include acceptance to preclude the bargain/deal # “The objective theory of contract views offers in the minds of how a reasonable person would view __.” « “Tf one party objectively communicates a desire to enter a contract, engendering a reasonable understanding that acceptance will create a contract, then he has made an offer.” Here, IF NOTHING APPLIES TO BE AN OFFER, Ask if offer/contract is implied from acts, conduct or words: implied in fact [§4 — does work after asked to, implied will be paid reas price / auction, for ex.] or implied in law [require u to compensate another for a benefit conferred in order to avoid UNJUST ENRICHMENT: i.e. helping dying person on street ucc: True even if parties fail to include terms tht would result in a failure at common law= ¢ don’t fail for indefiniteness if parties intend to make a contract and a “reasonable basis” [look at commercial context. But more missing terms, more likely didn’t intend to make contract] = difference 1 > 2-204(3) ¢ need quantity. Can never gap fill quantity ¢ 2-305: don’t need price term. One party can determine it if in good faith - Article 14: a proposal for concluding a contract addressed to 1 or more parties constitutes an offer if it is sufficiently definite and - indicates the intention of the offeror to be bound in case of acceptance. O A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provisions for determining the quantity and price - Article 15: an offer becomes effective when it reaches the offeree - [An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer ] - Article 55: open price = impliedly made reference to the price generally charged @ the time of the conclusion of the contract for such goods sold under comparable circs in the trade concerned STEP 3: The words “ _” show that _ accepted the offer. // The words “ _” do not show an acceptance/an objective manifestation of assent to conclude the bargain but instead show 2. ACCEPTANCE [VALID OR CONDITIONAL OR INQUIRY]? OR COUNTER-OFFER? Common law: mirror-image / last-shot rule / mail-box rule MANDATES / AMBIGUOUS: Acceptance by promise: 50(3) = offeree must “complete every act essential” to making of that promise [tell them u accept, etc.] and beginning performance, if invites either by promise or performance = implied promise to complete. Binds both parties. Offeree bound. - Effective on dispatch // whenever out of offeree’s possession [§63] vs. option contracts = effective on receipt - THE WORDS “_” show that acceptance was conditioned on X’s assent to _ - The objective theory of contracts is that if one party objectively manifests assent > communicates what a listener or reader would understand to be agreement to contract terms — that party has agreed to a contract even if he didn’t “really mean it.” - Clicking yes = equivalent of signing a contract w/o reading it first. If u odnt read, assumption of the risk. Acceptance by performance: 50(2) = offeree must tender at least part of what offer requests [and full performance of the offer requires that the offeree tell offeror]. Beginning performance = offeror CANNOT REVOKE. Offeree not bound to complete. - Common law [54]: don’t need to notify offeror usually when u begin performing, but do need to do reasonable diligence 2 notify after completed performance [vs. 55 — promise, must notify or offeror must be seasonably notified otherwise] - UCC 2-206: if not notified of acceptance [when beginning of performance is a reasonable mode of acceptance], offeror can treat offer as having lapsedff if not notified of acceptance in a reasonable time O 2-206(1)(b) = if buyer / accepting party adds term thts diff , seller/ other party doesn’t object or stays silent and ships = ACCEPTANCE OF THAT TERM - performed by ... If no method of acceptance is specified, can either accept by promise or by rendering performance. - §62 and §45 = If performance begins, implied promise to complete performance [offeror cannot revoke, but offeree is more bound here [vs. where offer mandates performance as the exclusive way to accept]: - Here, tender or beginning performance does not create an option in favor of offeree, but instead if offeree fails to complete within reasonable / required time, he will have to pay damages for breach When accept by performance, usually NO DUTY TO NOTIFY OFFEROR WHEN BEGIN PERFORMING [2-206(2)]. UNLESS: - Offeree knows or has reason to know the offeror is not likely to learn of acceptance unless the offeree tells the offeror [lives in a distant state, for ex] > must tell offeror within a reasonable time after commence performance Mirror-image: must match offer exactly - But see Last-shot rule: if boilerplate sent before performance, implied acceptance and those terms prevail [similar to 2-207(3) in that conduct creates the contract] Mail-box: ASK: WAS THE DISPATCH[ACCEPTANCE] OR RECEIVAL[REJECTION] RECEIVED FIRST??? not for options: effective on dispatch - always works if sent acceptance first, but if - Adispatched, r sent ,r received (call/priority) , a received > applies unless offeror relied on the rejection that it first received O Morrison: dispatched acceptance by mail. Then called to revoke, but irrelevant bc acceptance effective on dispatch - TRICKY QUESTION: if rejection, acceptance, > whichever is received first may determine. . . 0 ifr,a dispatched, received , a > mailbox rule says acceptance applies!!! 0 and if r,a,a,r > acceptance will def apply !! ONCE ACCEPT > OFFER IS GONE. DONE. FINISHED AT THAT MOMENT. EFFECTIVE ON - If improperly mailed > wont apply, unless post office fixes it / minor effor / offeror receives it - If acceptance by performance: Mandated as exclusive means > option in favor of offeree once begins performing [only offeror bound] O Not mandated as exclusive means but still allowed because didn’t mandate promise as exclusive means > binds both in the sense that offeror cannot revoke once performance begins, but offeree makes an implied promise to complete and if doesn’t, also liable O Performance over time = acceptance not complete until performance complete, but offeror cannot revoke in the mean time - OPTION CONTRACTS ARE SEPARATE CONTRACTS: ACCEPTANCE OF IT MUST BE RECEIVED WITHIN THE TIME SPECIFIED BY THE OPTION PERIOD AND MERE DISPATCH WONT DO [recipient many times doesn’t care or waives application of the rule by conduct indicating deal still on] NO KNOWLEDGE OF OFFER BUT ACCEPT ANYWAYS BECAUSE PERFORMED THE ACTS REQUIRED????0k! - The “no knowledge of offer” made requirement is designed to protect offeree from offers by parties that require affirmative requirements of rejection!!! / offers by superior bargaining power type offerors that are unconscionable , etc.. 3a. only terms on which both parties agree go into the contract. Supplementary terms (§1-303, Article 2, and if not common law) fill gaps. §1-303 is best gap filler: Express terms [what parties said to each other] Course of performance [at least 2 incidents, that show party’s expectations via how they behave in this deal/contract = 1 party behaved repeatedly and other party, knowing this, accepted it without objection = must be >1 behaviors in same deal. Cant be PO, invoice. New PO, new invoice.] Course of dealing [at least 2 incidents, that show party’s expectations via how they behaved in prior deals/contracts with each other = establishes a common basis of understanding for interp their expressions and other conduct // HABITS ARE ESTABLISHED IN PAST DEALS. But if never litigated/arbitrated, arbitration clause wouldn’t help here ] Usage of trade [how people behave in the same market or same industry to the extent that party’s would know this is what is expected, but if merchant very likely to be unclear = such regularity to justify expectation that it will be observed with respect to transaction in question // at common law, litigation prevails over arbitration for example ] Trade usage/usage of trade means the way things are usually done in this industry or this market if the parties have reason to know how things are usually done. b/c as repeat players, they are familiar w/ them O Usage > practice/method/custom (1), having such regularity (2) as to justify an expectation that parties will observe/assume it applies to their transaction (3) unless agreed otherwise, court [and parties] expect them to do things the way its normally done . need to disclaim it if intend not to be bound by it = 1-303c: if trade code, Q of law for judge You would need to explain your reasoning on four issues: whether the forms created a contract (which a proviso would have prevented); whether Zed’s arbitration clause is an additional term or a different term; whether both parties are merchants; and whether Zed’s arbitration clause has become part of the contract. Don’t assume that Article 2 governs or that the parties are both merchants. These are steps in your reasoning, and you must explain them. PRINCESS CRUISE LINES > HOW COMMON LAW COUNTER-OFFERS WORKS AS A PROVISO IN offeree’s FAVOR: - Any term additional in acceptance = counter-offer. If a offeror gives permission to proceed / conduct sufficient to show acceptance > 10 / not in ur favor - [Klocek: offeror sends PO offeree sends goods back + PO [proviso]. Too late. MM before/when PO received and accepted. So when sent T&C in box = mere proposal and since klocek not a merchant, need to expressly agree. ] 2-606: acceptance of goods: reasonable opportunity to inspect and doesn’t reject, does any act inconsistent with seller’s ownership or after reasonable opp to inspect, tells seller conforming or accepting despite non-conforming nature 2a. if doesn’t look like acceptance, ask: silence exception applicable? [where INACTION would be required to not accept? > to make silence applicable, impose a duty on offeree: “offeree must __ /shall/will not/shall not/cannot sue for/agree to”] > (a) prior relationship/COD [pattern of _] that would give offeree reason to believe silence=acceptance (b) offeree retains benefit + knows of offer [see Norcia] + offeree knows offeror will expect compensation + had time to reject [§69] (c) offeree exercises dominion over goods and then does something with them [hangs it up/uses/sells] even if doesn’t intend to accept [many states don’t allow unordered merchandise] (d) offer states can be accepted this way + offeree intends to accept 2b. if looks like acceptance, ask: (a) timely? [according to period: held open or is good until X, then POA ends when X occurs. OR reasonable if none] (b) In proper form [promise or act required in offer?] (c) deviates? [mirror image -CAN ANSWER YES OR NO // or additional statement just a mere implication of offer: Implied gap filla? // or LAST-SHOT: perform as if deal [SHIPPED + ACCEPTED] THEN last form [counter-offer’s] terms apply Vs. UCC 2-207 allows for anything tht doesn’t have a proviso (even if more/dif terms) also more gap fillas so more implications/easier to be an acceptance] CISG: - 18: no silence, but any statement or conduct made indicating assent / EFFECTIVE ON RECEIPT OR AT MOMENT ACT OCCURS (18(3)) 3. REVOCATION OR REJECTION ? COMMON LAW: ON RECEIPT, ALSO OPTIONS ARE IRREVOCABLE Revocation: - Anact of revocation, known to offeree. Includes ambivalence 0 Irrevocable if: = option [w/ consideration, even if offeror rejects during option time] = an Option is a sep contract, a promise to keep the offer open, so thus requires paying sep consideration or promise to pay consideration > irrevocable /even if reject, or death, or incapacitated ¢ mailbox rule DOES NOT APPLY TO OPTION CONTRACTS. Thus, acceptance is only effective on receipt here ! ! = detrimental reliance [reasonable, and offeror shld reasonably expect this: 887], or a1 = performance begins under unilateral contract [§45] O OTHERWISE, only acceptance terminates the power of revocation / rejection O General offers: 846 = can revoke by public announcement if thts the only reasonable way to do it Rejection: - §36/§38 [terminates POA unless contrary intention or “I reject but hold it under further advisement for future”]. - Includes counter-offers: §39 [conditional terms, NOT MERE INQUIRIES], lapse of time, death/incapacity b4 acceptance or non-occurrence of any condition of acceptance under terms of offer UCC: ON RECEIPT, ALSO FIRM OFFERS ARE IRREVOCABLE Revocation: - Firm offer [2-205]: offer by a merchant [2-104], to buy/sell/lease goods, in signed writing, which states held open / irrevocable for a period of time no > 3 mos, and if on offeree’s form, offeror must sign twice - 2-608: can revoke acceptance oof nonconforming goods if substantially impairs value to him if accepts if reasonable assumption wld work earlier or just discovered non- conformity and must occur WITHIN A REASONABLE TIME Rejection: - Counter-offers are not rejections / don’t terminate POA - 2-602: must notify offeror after a reasonable time tht ur rejecting goods if sent - 15: An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer - 16: irrevocable if reaches before acceptance dispatched [MAILBOX] / cant be revoked if offer states irrevocable or reasonable for offeree to rely on revocation and offeree did rely - 17: even if irrevocable, TERMINATED when rejection reaches offeror [NO OPTION EXCEPTION TO REJECTION — HERE, IF REJECT, TERMINATES POA NO MATTER IF IRREVOCABLE] 4. VALID CONTRACT? 1A. IS THERE CONSIDERATION? [or a small amount of money or a gift exchanged ?? an exception?] Common law: pre-existing legal duty [§73] - Promise, act, forbearance [IF invalid legal claim: §74 says must be in fact doubtful [objectively uncertain] or good-faith/honest belief], or creation/mod/destruction of legal relation - Nota promise to make a gift on a condition = this wld not be a contract but cld prob get reliance under §90 - Legal detriment and benefit to promisor [BARGAINNED FOR EXCHANGE] 12 If trying to prove no consideration > past consideration / merely gratiutious / not a bargained- for-exchange - For gifts, “if u come over ill give u bike” > COMING TO UR HOUSE WAS NOT THE PRICE OF ACQUIRING THE BIKE, BUT RATHER THE MEANS OF EFFECTUATING THE GIFT TO INCENTIZE PERFORMANCE: * Covenant: if condition isn’t satisfied, party with covenant doesn’t need to perform/ isn’t obligated to perform [ex: if the tenant fails to pay, the tenant shall pay penalty] A. INSTEAD OF PROMISING HIGHER PAY/WAGES/SALARY, SAY “if our company refuses to satisfy you / if you are unsatisfied by the end of this year, we will pay u more” ¢ Discretionary authority: if not satisfied, party w/ discretionary authority isn’t allowed to exercise it [ex: if tenant fails to pay, landlord may...] A. If we fail to meet your salary expectations by X date, you may enforce raise *§219-222 imitates UCC: §220 says usage can be relevant to interpretation / §221 says usage can be relevant to supplement /qualify terms that were omitted if both parties: 1) knew/had reason to know of usage and 2) neither party knew/had reason to know tht meaning attached by other was inconsistent w/ usage MODIFICATIONS: all subject to limit that no duress/ improper threat ] - mod NOT ENFORCEABLE B/C WLD FACTOR RISK INTO PRICE [“consideration” = fair & equitable in view of circumstances not anticipated at time contract made] ... - otherwise, if fully performed on 1 or both sides [so now 1 party is essential a debtor: only way to mod is to make an accord / new agreement w/consid aka if disputed debt- agree to discharge debt for less] or no unanticipated consequences making it f/e to mod [reliance], §73 pre-existing duty rule says mods need consid (vs.) - UCC §2-209(1) = don’t need to analyze risk / knowledge bc mods don’t require consid if good faith. O_ and if btwn merchants: observance of reas commercial stds of fair dealing in trade and may require some objectively demonstrable reason for seeking mod BUT MARKET SHIFTS INVOLVING A LOSS MAY PROVIDE SUCH A REASON EVEN IF NO SUCH UNFORESEEN DIFFICULTY = comment 2], it does not need to be in light of unanticipated circumstances BECAUSE MODS DON’T NEED CONSIDERATION!!!! UCC: no legal duty rule - 2-306: output/requirements ok unless unreasonably disproporiationate to any stated estimate or in the absence, the normal/comparable prior output/requirements demanded or tendered // exclusive dealing is ok if best efforts 15 - 2-309 = DIFFERENCE: “change my mind at any time” is ok if reasonable notification received by other party - Also, 1-308 = if u reserve rights “w/o prejudice” “under protest” or “the likes are sufficient” u cant waive rights to perform in a manner demanded by other party, so modification or promise wld not be enforceable [mod ok if good faith and no reservation of rights: SO UR USING UR RIGHTS TO STOP MOD/AGREE TO Mods // MODIFICATIONS = NOT ASSIGNING / DELEGATING. There can be unilateral assignment and delegation ! - 2-209 = DIFFERENCE: modifications don’t need consideration ONLY GOOD FAITH needed or if other party relied on promise to modify - NOM ok if not waived by trying to orally mod, for ex., but if provided by merchant, must be sep signed by non-merchant - Although express terms > COP > COD > usage to modify, COD can prevail: tam 8 An art gallery owner called one of her best customers to inform him thal she had just acquired a painting by e javerite artist and that she would sell it te him for $1,000. The collector, who had purchased tem 10 ings from ‘at afternoon to see the painting. The collector stated that he itant to purchase it because he wasn't sure the painting, which was 2 departure from the artist's usual style, would fit with the rest of his collection. Although the custom in the art hem 12 sale trade Is to prohibit returns other than for damage, the gallery owner had permitted the collector to eae change his mind and return several pieces over the years, no questions asked. With that ia mind, the tom 13, collector decided to go ahead and sign the contrect for purchase, agrecing to pay $1,000 upon delivery of tem 11 the painting If did not ion the possibility of sencing the painting back Item 14 ‘Two cays late, when the painting was delivered to him, the collector, having decided that the piece did not Nem 18 i fitinto his collection, refused to acceat t. The gallery owner crings an action for breach, item 16 Is the gallery owner likely o prevall? ent a tem 18 < AA Yes, because the language ofthe written, signed contract controls ‘ [ree] B Yee, because the custom ofthe trade controls ¥C _ No. because the the parties! course of dealing wil affect the toms of the contract. D__ No, because the glory owner knew the collector was unsure about the purchase, 1B. EXCEPTIONS TO CONSIDERATION [if UCC, no exception needed for mod] 1. moral obligation expanded into material benefit rule §89= if benefit received implies some moral obligation to repay benefactor/promisee, even if not legal, court may enforce it [charitable donations, debtor promising after debt discharged, many others may not be economic: saving someones life, for ex.] - or any other otherwise unenforceable promise bc minority/incapacitated promise made > still enforceable against party not young/dumb if minority/incapacitated party made a real promise [not illusory] to them 16 2. promissory estoppel [§90] = “GAG IN MOUTH” = only get reliance interest damages = GOOD ALTERNATIVE WHEN CANT PROVE RELIANCE WAS JUSTIFIABLE [AOR] OR WHEN NO CONSIDERATION... . - (1) PROMISE MADE (2)promisor reasonably expects/foresees promise will induce action or forbearance (3) action/forbearance induced/DETRIMENTAL RELIANCE (4) therefore justice requires enforcement of promise ** only awarded for reliance expenses incurred after contract made [so expenses made before breaching party knew/had reason to know other party wld incur losses if breach are unenforceable] ******* - Usually awarded only when party asserting the rights deliberately engaged in misleading behavior with knowledge/reason to know misleading and wld or cld induce reliance - Reliance on a promise tht falls short of contract be of some defect/omission in agreement formation [vagueness — id certum est quod certum redid potest, SOF clause, escape clause but some commitment to justify] where fairness demands accountability despite failure to comply w/ legal formalities 0. If charitable pledge / other gifts > no reliance needed [§90(2)] O Also gratuitous promises to convey land if reliance by moving onto land and making improvements, gratuitous intra-fam promises , gratuitous promises to procure insurance... O Will make lender insurer when making a promise to pay premium [East_ Providence O Sometimes for irrevocability to create an enforceable option even tho no consideration giving to the extent necessary to avoid injustice, usually in SUBCONTRACTOR BIDS [§87(2) = usually when part performance doesn’t establish the reliance, but instead when must undergo subs expense, or undertake subs commitments, or forego alternatives to accept, for ex. ] = Unless agreed otherwise, subcontractors offer [bid] is irrevocable until general contractor has had a reasonable opportunity to notify subcontractor of the award and accept the subcontractor’s offer CISG: nothin - NO CONSID REQUIRED// article 29 says can modify as long as agreed to /NOM ok to prevent oral mods unless reliance on conduct // article 12 says u can waive this via 96 declaration 2. IS THERE A SOF [STATUTE OF FRAUDS] ISSUE? [sof= makes a lot of sense, but not realistic] Common law - Agree to answer debts of another, marriage, sale of land [or any transfer/alienation of an interest in land — see Waddle], sale of goods 500$ or more, leases 1000$ or more, sale of personal property beyond 5000$, or agreements that cannot possibly be performed within 1 year [even if performance is 1 day!! AND IF DOESN’T STATE TIME, SOF DOESN’T APPLY] 17 (1) present duty to perform: 20 A) CONDITIONS PRECEDENT / condition on promise: all conditions met / all CPS performed or excused? A1) constructive condition of tender (showing willingness to perform) not satisfied? [enforceable contract but duties not enforceable until each party tenders: UCC 2-511(1) says buyer must pay first and seller then delivers, but if neither happen, both get out (seller cant sue if buyer doesn’t pay if seller himself doesn’t deliver) like 2-507(1) // common law sale of land says same time/concurrent and §238 = bilateral/executory, neither party’s duties enforceable until other tenders performance] - Ifseller tenders delivery and buyer refuses to tender payment [or paid and refuses to accept goods] ~ sellers duty to perform is discharged O. If buyer paid already [i.e. just rejected goods] > buyer can recover in restitution even though sellers duty is discharged oO ****when a party’s duties of performance are discharged, the other party is entitled to restitution of any benefits conferred onto the discharged party in an attempt to perform on his side ae If common law > substantial performance of an implied / constructive condition is enough to trigger obligation to pay O But subs performance = simple breach and entitled to damages O Jacobs and Young: yes the breach was immaterial and yes it was inadvertent, but wlda still be entitled to any damages = difference btwn value received under subs performance and value bargained for. In j&y, it was nominal so 1$ At UCC > only perfect tender of the condition to deliver triggers the obligation to pay If explicit condition > strict compliance, at either common law or UCC, triggers the obligation to pay ... but: A2) did the party seeking enforcement waive the right, even if expressed as a condition, to that strict performance: orally mod after NOM clause: through behavior [acquiescence], conduct acted as either a i) mod of terms previously stated or ii) waiver of right to enforce that term(s) — §89 and 2-209(4) says can be waived ... but u can un-waive the waiver under 2-209(5) by asking for re-instatement of the term for the future if waiver not relied upon and reasonable notice is given B) CHANGED CIRCS: imposs or highly impracticable? [see impracticability / impossibility / force majeure = prob not gonna work if buyer claiming cuz thatd just be a “losing contract” frustration of purpose type situation: all buyer has to do is pay] C) FRUSTRATION: some supervening event frustrated purpose or value of contract? D) common law > should the non-occurrence of an express condition still nonetheless be excused i.e. because the non-occurrence of conditional event was caused by a party’s wrongful prevention, HINDRANCE or non-cooperation // breach of duty of e) exception in loan / installment payment breach under 243(3)? > i.e. breach by one [failure to pay $ installment] that is less than whole, even if followed by repudiation [I will not pay ever again] does not give rise to a claim for damages for total breach [[only gives rise to a claim for breach as to the payment due at the time]] - Unilateral contract [no longer executory] where if ur promise to perform ur side is consideration and the other side fully performed or tendered performance > u must perform or u breached (2) discharge of contract by full performance on both sides or recission [one party seeking it = i.e. mistake, misrep, no consideration, duress???] or a release/accord and sat or a full check payment ?????.. see question 4 [page 30]. - remember: even if a condition is not satisfied [or material or total breach, for ex.], if other party already performed all duties > only remedy is damages [recission does u no good] 2. Argument about what agreement covered [written or more?: PER): circular: PER impacts interp by restricting extrinsic evidence to writing but interpretation, often in light OF THAT VERY EXTRINSIC EVIDENCE, must be used to decide whether and to what extent the writing shld have the effect of excluding the extrinsic evidence PER [EVIDENCE = NOT AN ARGUMENT/ EXTRANEOUS FACTS BUT PROOF OF FACTS VIA DOCS OR TESTIMONY ]= generally inadmissible: - written [OR oral on the record] agreements and u want to MODIFY /CHANGE or SUPPLEMENT [ADD TO OR SUBTRACT] agreement with O PRIOR OR CONTEMPORANEOUS evidence , usually oral but can be written O [[Vs. interpretive: interp of contracts to give effect to parties’ reasonable meaning. 0. If no evidence of context meaning of language in contract [not usually pure dictionary meaning, but also meaning via entire context of transaction: prior contracts of same kind [COD], trade usage, post-formation course of performing the contract [COP]] O PER= WHEN AGREEMENT ALREADY RECORDED, places CONTROLS ON EXTRINSIC EVIDENCE USED IN INTERPRETATION *be careful — extrinsic = parol and interpretive // verbal = contract created by words [parol means words], spoken or written [non-verbal = conduct][ - 214 if EXTRINSIC EVIDENCE [prior or contemporaneous oral agreements] IS BEING USED / ENTERED TO SHOW: A) integration / the writing is or is not integrated (a, b) = after judge finds its partially integrated or rather after judge finds that it might not be completely integrated 21 B) what agreement in writing means / the meaning of the writing, whether or not integrated (c = interp), but explaining or clarifying a term cld be subject to PER .... See **or C) grounds for avoidance/remedies = IS IT BEING USED AS A DEFENSE TO PER is also not applicable to: [EVEN IF ITS COMPLETELY INTEGRATED]! Oral/written agreements regarding a conditions precedent to the happening of some event/term in the written agreement [oral agreement is a conditions precedent to the enforceability of the duties under the contract: §271 ] Modifications after formation of contract When the proffered evidence is to show tht the other party never paid the recited consideration [§218(1): contract says 5k paid and received but evidence is tht never paid] Evidence ab voidability of contract [duress, undue influence, misrep, mistake, etc.] or evidence that there was no contract at all !!! Interp evidence = parties agreed orally that days means business days, for ex. Usage of trade, course of dealing or COP to explain the contract under 2-202 UCC **Examples of what is covered by PER: provisions beyond the words of the written agreement, to modify/change, add or subtract to the written agreement with evidence of prior written and prior/contemporaneous oral agreements [type of logs agreed to/express warranties — Thompson, price agreed to — Lopez, ice house with sale house — Mitchell, express warranties on jet range — Betaco, ab whether bound to boilerplate certified mail deadline — MCC Marble] 209 [judge decides integration], O 210 for integration level , O 211[3] = consumer protection aspect for contracts [W/ UNFAIR BARGAINNING POWER btwn merchants boilerplate and consumer like adhesion contracts where consumer can accept to entire form or walk away from deal, not 2 consumers] tht have merger clauses may still not be completely integrated Judge Ruling Judge Ruling Parol Evidence on Contract on Term Admissibility Contrary Parol Evidence is not Totally Integrated Additional Term admissible Consistent Additional Parol Evidence is not Totally Integrated Term admissible Contrary Parol Evidence is not Partially Integrated Additional Term admissible Consistent Additional Parol Evidence is Partially Integrated Term admissible Common law = traditionally 4 corners, now move more towards UCC but specifically if theres an ambiguity, allow extrinsic evidence to explain it 22 * PRIOR OR (4) Collateral Acreements: The parol evidence rule does nol apply (o collateral agreements: CONTEMP THT ARE prior or contemporancons agree! that are distinet from a DISTINCT FROM A subsequeut written contract (even if the wrillen coutraet is Lully SUBSEQUENT integrated) WRITTEN ( But See Mitchill: Parol evidence rule precluded plaintiff trom CONTRACT J> ifso, giving evidence of an oral agreement berween plaintiff and admissible to defeudant that defendant would remove an ice house across the SUPPLEMENT street trom his house in consideration for a written agreement to sell his house to plaintiff because (1) the written sales contract unlessssss completely purported to show the full agreement between the parties; (2) the integrated: agrocments were too closely related: and (3) the agreement to - 216(2) to see if COMPLETELY remove the ice Louse should have been expressed in the original contract. integrated: [if either satisfied, its collateral / consistent additional term 1. General Rule: Where one agreement is entered into wholly or AND NOT COMPLETELY partly in consideration of the sinullaneous agreement (o euler into RA AN another, the transactions are necessarily bound together. INTEGRATED SO C BE USED TO SUPPLEMENT // ***if distinct 2. Test for Determining Whether The Oral Agreement Can Be enough and not compl integ, can Adautted: add it**]: Because the subject (J) Agreement must be collateral: A * . (2) Must not contradict the expressiimplied provisions of matter is so diff that the parties the written contract: would not necessarily address them (3) Parties would ordinarily expect the agreement to be in in the writing writing. The writing must not contain the engagement of the purties, define the object, aud measure the extent of engagement. The agreement should not he sa closely Oo 2b= couneeted with the principal transaction as to be a part and parcel of it §214 - Evidence of Prior or Contemporancous TERM [DENCE USED wld naturally be omitted from the writing = AKA WOULDN’T BE IN THIS WRITING BECAUSE ITS SO DIFFERENT AND THUS THIS WRITING IS PROBABLY COMPLETELY INTEGRATED -if term might naturally be omitted [tht reasonable parties wld not necessarily agree to, had they, to make this deal ] = ADMISSIBLE // if they would not naturally include if agreed to it vs. if at least 1 party wld insist on it being in if agreed to, wld NOT NATURALLY BE OMITTED = INADMISSIBLE = not collateral. Not admissible. ]: - if the ICE house were on the same land bought / not across the street > WOULD DEF FLUNK THIS TEST [be wldnt naturally omit]/ O BUT weird since it was across the street, 0 BUT SAID wld ordinarily expect this to be in the writing and its not so complicated tht sep consid wld be needed 25 - So wld NOT be naturally omitted and reas parties wld agree to this, had they, to make this deal = aka 2b shows its completely integrated and one party wld insist on it being in the AND WOULD “PASS” [flunk admissibility] THIS TEST, SHOWING IT WAS COMPLETELY INTEGRATED = The oral evidence not allowed in Mitchell be ® 1. Written contract purported to show full agreement = 2. Agreems were TOO CLOSELY RELATED. = And 3. Agreement to remove ice house shlda been expressed in orig contract [????] = Fentress: merger clause so cnt . ALSO NOT DISTINCT ENOUGH 0 2a=WLD BE AGREED TO FOR SEPARATE CONSIDERATION = aka so complex that needed its own agreement !! '/writing and 2 agreements were distinct in substance is the collateral agreement to the contract? O If distinct enough, OK / ADMISSIBLE TO SUPPLEMENT IF PART OF SAME CONSIDERATION —1.E. AGREEMENT ENTERED INTO WHOLLY OR PARTLY IN CONSID OF THE OTHER: NOT DISTINCT ENOUGH. // IF SEP CONSID, DISTINCT ENOUGH AND ADMISSIBLE 0 [airplanes: manuf and goods, cars, etc. anytime theres a closing/ PO and delivery agreement/ or contemporaneous performances for services and goods] = shows that its prob not completely integrated: look at experience-level of parties, nature of contract, ask: WAS IT SIMULTANEOUSLY AGREED [at same time], OR CONTEMPORANEOUSLY AGREED [even a few mins after the signing is ok!]???? UCC = more flexible and realistic [cant contradict w/ prior [written/oral] or contemp [oral], but can ALWAYS supplement with COD/C OP/usage — so never 4-corners, but instead using commercial context [unless clearly and unequivocally indicate a contrary intent or usage cannot be reconciled w/ writing] ..... and can sometimes supplement consistent additional terms unless completely integrated] 2-202: (a) = can explain, interp or supplement with COP/COD/usage (B) = can supplement with consistent additional terms unless completely integrated STEP 1: start with terms, then use implied warranties/1-303/gap-fillas to determine if parties intended to be fully integrated [price: 2-305, time/place delivery: 2-308/9/10, duration: 2-309, quantity: 2-306] Step 2: is prior [oral/written] or contemporaneous oral [ALWAYS ALLOW CONTEMP - Yes, cant use. - No, move on Step 3: is evidence being used to supplement? - IfCOD, COP. usage > always allowed to supplement or explain [also vice versa: evidence of contemp oral allowed to establish a COD.COP.trade usage] - Ifit’s a consistent additional term > allowed if not completely integrated: 26 O Contemp oral cant contradict if fully integrated [written always ok] = 1) oral is truly collateral [distinct and independent: rlly a consistent additional term], 2) oral doesn’t contradict express/implied provisions, 3) oral is one tht parties WOULD NOT ordinarily be expected to embody ina writing — // not a term that wld certainly be included if agreed to — if so, KINDA EVIDENCE THT NOT COMPLETELY INTEGRATED TOO = 3): based on circs surrounding drafting of it: if oral and written are very closely intertwined its not truly collateral, especially if writing is detailed] Oral mods generally allowed even if no oral mod clause. UCC more favorable to NOM clauses, however 2-209(4) says an attempt at orally modifying can result in a waiver and (5) shows waivers are generally effective CISG — ARTICLE 8 [AND 9]: no PER. Court can consider when interpreting INTENT - Requires definiteness, but several articles [31, 32] tht provide gap fillers in the absence of specific terms [55 = reasonable price], for ex. - Unlike common law and UCC, whereas duty to read business terms/assume risk of not reading boilerplate, and cant testify boilerplate was not apart of it if contemp oral - BUT, ucan under CISG > words said by one party, where other party knew or cldnt have been unaware what the intent was, interp according to how they were intended SUBJECTIVELY, not how court wld automatically interp them - Intent = based on evidence and surrounding context [8(3) = in determining intent, interp according to the reasonable understanding that RP wld have in all the circs, in context of negotiations, any practices the parties have established btwn selves [COD], usages and any subsequent conduct of parties [COP] - ARTICLE 9 says parties are BOUND by any usage / COP/ COD established btwn themselves and impliedly applied usage/COD/COP to their contract if knew or ought to have known // 8(1) ALSO REQUIRES U TO LOOK AT INTENT IN INTERPRETING THE PARTIES CONDUCT - 8(3) isa clear instruction to admit parol evidence regarding negotiations [contemp oral] to the extent that they reveal parties’ subjective intent - WHAT PARTIES BELIEVED, NOT WHAT TERM MEANS OBJECTIVELY - 9 =usages : bound if agreed or established btwn themselves / unless otherwise agreed, considered to have impliedly made applicable all usages known/shda known 3. Argument about what agreement meant [words/conduct: interp or facts?: misrep] INTERPRETATION = generally admissible: AMBIGUITY [more than 1 inconsistent meaning] /VAGUENESS [context of deal/gap fillas/usage]: want to EXPLAIN what the words mean in the written agreement “The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible...” = modern approach. 27 - Requires definiteness, but several articles [31, 32] tht provide gap fillers in the absence of specific terms [55 = reasonable price], for ex. - Unlike common law and UCC, whereas duty to read business terms/assume risk of not reading boilerplate, and cant testify boilerplate was not apart of it if contemp oral - BUT, ucan under CISG > words said by one party, where other party knew or cldnt have been unaware what the intent was, interp according to how they were intended SUBJECTIVELY, not how court wld automatically interp them - Intent = based on evidence and surrounding context [8(3) = in determining intent, interp according to the reasonable understanding that RP wld have in all the circs, in context of negotiations, any practices the parties have established btwn selves [COD], usages and any subsequent conduct of parties [COP] - ARTICLE 9 says parties are BOUND by any usage / COP/ COD established btwn themselves and impliedly applied usage/COD/COP to their contract if knew or ought to have known // 8(1) ALSO REQUIRES U TO LOOK AT INTENT IN INTERPRETING THE PARTIES CONDUCT - 8(3) isa clear instruction to admit parol evidence regarding negotiations [contemp oral] to the extent that they reveal parties’ subjective intent - WHAT PARTIES BELIEVED, NOT WHAT TERM MEANS OBJECTIVELY - 9 =usages : bound if agreed or established btwn themselves / unless otherwise agreed, considered to have impliedly made applicable all usages known/shda known 4. Argument about performance/promises AFTER THE FACT: - ASK: is (S) Warranty: there a (a) Promise of fact. One party states a Lact and promises (o the other party (hat the slatement is true, A warranty is breached if the statement is nol true. Distinguish warranties [rom covenants: Il'a party is promising future action, this is a covenant, But if'a party is promising some future fact that’s out af his control, this is a warranty. Example: A clause providing that “The television will work for a year” on the paper slip inside the television’s box when you first open it. (b) Consequences for Breach of Warranty: Damages are the default remedy. Lf the warranty provides, the party who sold the produet will fix it. (6) Representation: (A) Statement of fact made by one party to induce the other to a deal. Example: ar dealer tells the buyer: “This ear has only one prior owner.” If the statement is not true, the statement is a misrepresentation. (B) A party may only represent a past or present fact, but not a fisture fact. A party can warrant the future, but not represent it, (C) A misrepresentation is a tort in a contract context. There are tort remedies for representations of both past and present facts. (D) Consequences for Misrepresentation: A court can rescind the contract or award damages. breach warranty, misrep? - Isthere a mistake [if mistake > FIRST Q: WAS THERE A DEFECT TO MM????]? 30 - Last Q: AOR???? [mistakes, reps and AOR = only common law // 2-403 for delivery: even if some w/ voidable title transfers goods, if deliver them can entrust good title to the extent tht it’s a good faith purchaser — but still NEED TO AUTHENTICATE IT [still might not have good title even if gift giver, for ex, bought it in good faith]. THOUGH U HAVE RIGHTS TO TITLE, RISK U NEED TO DEFEND SUIT TO ENFORCE UR RIGHTs [transaction/deal].... For a gift, no consid. So u need to show that u have rights to the gift too ] - After u authenticate it / investigate independently if gift giver didn’t authenticate it herself, need to get it appraised so u know how much it will sell for in the market O Get gift givers signature on something that wld satisfy 2-201 after u get consid somehow [price to pay for gift = way of honoring her] oO After u do this, maybe get a rep/warranty ab authenticity and title BUT BE CAREFUL MISTAKE: a belief about an objective fact from the outside world [remedy = recission [can get reformation/restitution too], or affirmative defense]: §151 belief ab a fact [external fact w/ objective existence] + belief is wrong = defect as to meeting of the minds [objective manifestation of parties intent [through conduct or words] shows __ was not contemplated, courts cannot provide intent] ... NOT A MISUNDERSTANDING [NOT CHICKEN!!!!]. 31 - Ok if unconscious awareness ignorance, ok if no awareness of ignorance vs. AOR/ not ok if conscious awareness ignorance [know entering contract w/ limited knowledge] - Mutual: §154 [no awareness of limited knowledge — if know of ignorance, AOR unless protected by warranty or rep] and (1) mistake by both parties [DIFF MEANINGS/ NO KNOWLEDGE OF EITHER AT THE TIME CONTRACT WAS FORMED] (2) aba basic assumption (3) tht has a material effect on exchange of performances (4) and did not bear risk of mistake O (3) -> DIFFERENT USES OK = DIFF IDENTITIES [Sherwood] /vs./ DIFFERENT QUALITIES NOT OK = SAME IDENTITIES [Woods O (1) -> “both parties didn’t know didn’t know”: no awareness of ignorance / “didn’t contemplate personal injuries, not that didn’t contemplate extent, just not at all”: unconscious awareness of ignorance, given smoking gun evidence = OK [Sherwood] + [Williams] /vs./ “both parties knew didn’t know”/later learns bad deal/conscious awareness of ingorance = NOT OK [Woods v Boynton]: NEITHER PARTY HAD A BELIEF ABOUT A FACT. JUST DIDN’T HAVE A BELIEF/DIFFERING DEGREES OF IGNORANCE. SO CANT BE A MISTAKE] - unilateral: §153 [no awareness of limited knowledge] and (1) mistake by 1 (2) ab a basic assumption (3) tht was material to the deal (4) and did not bear risk of mistake oO AND 1 OF THE 3: 1) unconscionable 2) other party had reason to know of mistake or 3) other party caused mistake O usually works in snapping up, SERIOUS clerical errors [ZIPPYSACK: didn’t work because carelessness is not a mistake of fact but assumption of risk [ontel wont win on unconscionability because they were the ones who agreed to wrong # > so ZS wins] O construction bids or unfair bargaining power [extremely complex boilerplate to a non-merchant, little opp to read it, no barg power and WHAT WAS BARGAINNED FOR WAS URGENTLY NEEDED] = (1) unconscionable WARRANTY [remedy = damages = default, can maybe get specific performance] Common law UCC WARRANTIES CAN BE ADDED AFTER MM / AFTER CONTRACT FORMED (1) promise [OF present, past or future FACT vs. covenant = promise of action/non- action] (2) that statement of fact is true (3) statement isn’t true no implied warranties at common law express: ask if puffery [not measurable: cant falsisfy it or reasonable ppl wouldn’t believe this to be true or rlly a warranty [a statement of fact/promise/ DESCRIPTION OF GOODS / SAMPLE OR MODEL OR PICTURE?? CAN GIVE LIMITED WARRANTIES [supp pages 90-91]: i.e. limit scope of breach = apple, for example, if warranty is breached ur only remedy is repair, replacement or refund not dmaages [if don’t replace / refund, u can get damages, tho] implied warranties [tht are implied if seller is a merchant w/ respect to goods of that kind, including sale or food or drink] to exclude under 2-316, can exclude all w/ “as is” “w/ all faults” or similar language tht makes plain there is no implied warranty > 2-314 merchantability [only if seller is merchant: INCLUDES RESTAURANTS]: doesn’t need to be in writing but if it is, must be conspicuous AND MUST say merchantability .... If not excluded, (2) merchantable if (a) pass without objection in the trade under the contract description and (b) in the case of fungible goods, are of fair avg quality within the description and (c) are fit for ordinary purposes for which such goods are used and (d) run within the variations permitted by the agreement of even kind, quality and quantity within each unit and among all units involved and (e) are adequately contained, packaged and labeled as agreement may require and (f) conform to promises or affirmations of fact made on container/label 2-315 for partic purpose: must be in writing AND CONSPICUOUS [can be excluded by: “there are no warranties which extend beyond the face hereof”] 0 if given opp to inspect and doesn’t / inspected fully and satisfied > implied warranties as to //can also exclude by COD/COP/usage CANT EXCLUDE EXPRESS WARRANTIES: CISG 32 Oo Oo §2-312: express title [guarantees seller will convey good title to buyer at time sale] Warranty must be explicitly conveyed that the title shall be clean and total §2-313: express quality [seller makes an affirmation of fact “this is a new car”, describing the item “when it arrives, it will be painted yellow” making a promise relating to the goods “if it doesn’t work, ill fix it” OR displaying a sample/model “this is what it will look like”] Article 35: must deliver of quality, quantity and description as provided in the contract //// only implied warranties of being fit for ordinary use / packaged correctly / 35 ® Contract has been discharged by some other ground [recission - MISREP, payment in full check, etc.] ® SELLER delivers goods to buyer [AFTER buyer paid in this hypo] or makes them available for possession, buyer rejects and seller re- sells > ok bc seller’s duty to tender delivery discharged, however buyer can recover in restitution A) Figure out what the problems could be before they happen : A. for example, if ur buying a Mac laptop, ur O (1)assuming its rlly a Mac and not a fake by an unknown manufacturer O (2) assuming that the parts u cant see [processor and hard drive] do have characteristics advertised 0 (3) that the seller actually owns or will own the laptop and can transfer title to u O (4) and that the laptop will work for a reasonable time after u purchase it - if seller, DD = contacting credit card company and getting authorization b4 letting them have laptop > CAN NEVER “INVESTIGATE” do DD with market risk / market fluctuations / below-or-above market price: thus a long-term contract with fixed prices wld be risky B. lawyer for buyer wld negotiate for provisions permitting buyer’s experts to inspect assets thoroughly, together w/ conditions on the buyer’s obligation to purchase based on results of that [examine business records, 2 see if ranch as profitable as said / etc.] Lawyer for seller wid negotiate 4 provisions to ensure tht the inspection will be accurate [livestock be inspected by a large-animal vet w/ cattle experience] IN DRAFTING: O Common law > MORE WARRANTIES, WARRANTIES, WARRANTIES vs. 0 UCC > already have many implied warranties, so focus on other stuff 0 Client has limited knowledge, but other party WILL NOT rep/warrant: = Last resort: “not a topaz”. Instead of “idk cld be a topaz” so its an actual mistake, not a profession of a degree of ignorance & BEST OPTION: due diligence. If can’t do it, narrow scope of settlement as much as possible ..... O Make sure everything client is promised is in contract. IF NOT, REPS/WARRANTIES ® Same w/ assumptio deal can change !! substantiation, etc. O When ur the smart one, say: maybe part of 161b [disclosure wld correct mistake of other party as to basic assumption], BUT DIDN’T AMOUNT TO A FAILURE TO ACT IN GOOD FAITH O LAWYER FOR SELLER WHEN MISTAKE: = ***IF WANT RECISSION / WANT COW BACK IF FERTILE: “we rep and warrant that buyer has limited knowledge as to the fertility of the cow” if assumption turns out not to be true, value of !!! so get rep/warranties, due diligence, ¢ Want jewel back if not a topaz AND BUYER IS MORE KNOWLEDGABLE: “buyer reps and warrants that this stone is NOT MORE VALUABLE THAN A TOAZ” = IF DON’T WANT COW / WANT BUYER TO KEEP REGARDLESS IF TERM IS FALSE / CONDITION NOT MET: “we rep and warrant that we have limited knowledge as to the fertility of cow” [OK]... *** *BUT IF CAN, MAKE TERMS MERELY CONDITIONS [BETTER]: “buyer will purchase on condition that X” or covenants so its too late to claim condition not there DEED E EDEL De 2 2 a a a O LAWYER FOR BUYER WHEN MISTAKE: = IE WANT THING, REGARDLESS OF QUALITY: “seller reps and warrants that he has limited knowledge” = AOR ¢ Get a disclaimer as to ability to sue after sell = ***IF DON’T WANT COW IF BARREN: “seller reps and warrants that this cow cannot breed” **** ... DO NOT MAKE TERMS MERELY CONDITIONS because once sign, already purchased it [condition already passed] / too = Instead, MAKE TERMS [that ur not positive about] REPS OR WARRANTIES ¢ Warranty [if want what equals $$$ value if thing not true] > if. think didn’t rely / didi stifiably rely / AOR © Reps [if want thing no matta what]> if know relied detrimentally DURING NEGOTIATIONS: [see page 10 midterm outline and model rules of profess conduct] - Other party discloses profession / superior knowledge > STOP STOP STOP. GET A FREAKING WARRANTY IN WRITING [“other party reps and warrants that __facts which im relying on__are true”] 0 Also, ask for substantiation [especially if want their knowledge to be actually true / not just tryna get them to make a bad deal] 0 Ask/negotiate for opportunities to do DD O Court may view any opinions [of the knowledgable party] as fraudulent if wrong - Useeamerger clause > stop stop stop!!!!/ IT 0. get ur client to WRITE A LIST OF EVERYTHING HE THINKS IS TRUE: ask what he is POSITIVE ABOUT , leave it alone, and find stuff that he IS ASSUMING IS TRUE: = ifbuyer: With those, get a rep/warranty ... MAKE SURE EVERYTHING u think is being promised will be in contract ¢ “letter dated X, exhibit B, is part of the contract and all of the promises in it are in the contract” = ifseller: With those, get conditions/covenants if seller [and don’t want it] or reps/warranty [if want it back if condition/thing/”fact”/belief not true] OIF keep merger clause in [WHICH U USUALLY ALWAYS SHOULD - bc don’t want other party using it against u, aka saying u rlly promised this or agreed to this, so it cld end up hurting u if no merger] 36 = EXPAND DEAL INSOFAR AS EVERYTHING YOU BELIEVE U ARE PROMISED IS INSIDE THE FACE OF THE DEAL e Everything else: O Don’t use separately negotiated terms // Let stronger party draft it all O AKAboilerplate, but not that detailed [OTHER DOCS, i.e. purchase order or cover letter [context] were more detailed and explicit and precise] and didn’t say “warranty” so widnt have clued some into necessity of reading it = Don’t use a lawyer + Show very unfair bargaining power / boilerplate - BURIED IN BOILERPLATE, NOT CONSPICUOUS, COULDN’T BE NEGOTIATED / one party cld not possibly have known what agreed to // Use 211[3] restatements: if unreasonable standardized term tht party wid not have agreed to if known, cld work > LOPEZ: merger clause is factually false bc doesn’t reflet agreement [stories about __ directly contradict merger clause] + Show not enough ample time to read it before signing it = IF REPRESENTED, show not sophisticated / not a merchant / not experienced = SHOW AN ABSENCE OF A TERM THAT WLDA BEEN CERTAINLY INCLUDED IF COMPLETELY INTEGRATED / NO WAY CLDA AGREED ON CHICKEN OR LOGS IF DIDN’T AGREE ON QUALITY [usage] - Be careful about what u say in conversations: don’t make any unqualified statements, make sure they know that u were guessing O_ If lawyer: make sure not to violate model rules of professional conduct O KEEPIN MIND STATEMENTS MADE DURING NEGOTIATIONS COULD OR COULD NOT BE ENTERED INTO EVIDENCE depending on PER / integration level = If merger clause, not as much [no PER prob] = If ambiguous wording anywhere, be very careful [yes EE for integration] = If standardized form tht just filled in blanks // friends // very complicated deal with multiple docs // omitted term or so complex that sep consideration, BE SUPER FUCKING CAREFUL WHAT U SAY PRIOR OR DURING NEGOTIATIONS - Keep in mind usage / COD / COP > CAN ALWAYS BE USED TO INTERPRET / supplement TERMS - ifthe numbers matter, make sure u inspect for urself O make sure ANY leftover reliance is reasonable, if cant get rep/warranty: “no rogue shld enjoy his ill-gotten plunder for the simple reason that his victim is by chance a fool” - think about what's supposed to happen > what might go wrong > what needs to be done to protect client [documented or action] > what are legal consequences During performances / contract: - See if have a duty to perform After / at litigation stage: 37 0. if seller, get buyer to rep/warrant “that the buyer has limited knowledge with respect to__ but nonetheless assumes risk” - Get thing ur buying appraised to learn true market value, or rep/warrant that “seller represents and warrants that it is no more valuable than a topaz” INSURANCE COMPANY / UNFAIR BARGAINNING POWER: - Remember reasonable expectations doctrine : take into acct unrepresented claimant, any expertise, resources, lack of knowledge, etc. - Emphasize boilerplate // inability to negotiate // take it or leave it // needed services or products - Ins co. best bet: “the undersigned has limited knowledge but nevertheless assumes the risk” - PAGES 90-91; RULES OF CONTRACT LAW: STANDARDIZED AGREEMENTS [§211] POLICY ARGUMENTS: [for ins companies or other unequal bargaining powers] - Reasonable expectations doctrine = to interpret words, regardless if ambiguity oO Factor 1 = ambiguity oO Factor 2 = whether was told it was important but obscure [ins. Co. burden to (1) communicate coverage exclusions accurately and clearly and (2) tht expectations of coverage be reasonable under circs] oO Factor 3 = conditions/exclusions/limitations on liability: were these sorts of provisions known to the public generally? = If not > hidden in definitions section? ® If yes > DEFINITELY WILL NOT BE UPHELD [insured held only to the reasonable knowledge of literal terms and conditions] ® Ifnot > did they communicate it to u directly [clearly and comprehensively explained]? Even if they did > can still use reasonable expectations O ESPECIALLY FOR EXCLUSIONS - READ NARROWLY AGAINST INSURER O Why? Because 1) few insured see policy until premium is paid and 2) even if they try to read it, prob cant comprehend it 0 Isit reasonable for this insurer to exclude this??? If not > “unconscionability” ARGUMENTS for seller/ins co : ARGUE COMPLETELY INTEGRATED : language is simple and straightforward, a reasonable buyer widnt find it hard to comprehend. Though a preprinted clause not subject to negotiation is a factor that it GOES IN FAVOR OF ADMITTING EXTRINSIC EVIDENCE, that fact ALONE CANNOT RENDER THE PROVISION UNENFORCEABLE. It was not buried in fine print, nor was it written as to be opaque. It was relegated to front/back but even if back, the front bage admonished the signatories in bold/capitalized lettering .. the provisions weren’t so many nor so complicated that buyer wid have given up before he/she reached __[merger]_ clause. 40 Opportunity to read it, get a lawyer, and review in as much detail as psos b4 signing. Not ins co fault he didn’t get a lawyer IS THE PARTY SUING FOR MISREPRESENTATION? [past and present facts used to induce deal, did induce and detrimentally relied, justifiably and to her detriment] - LAYWER FOR BUYER: O Must do due diligence. If don’t, will not be justifiable reliance 0 Don’t allow client to fall in love w/ deal: make them aware of all fallacies acting on 0. Ask: deliberate lie? Hiding truth? Keeping silent and: duty to speak up cuz previous assertion; or knows disclosure wld correct a mistake of basic assumption; or amounts to bad faith in accordance w/ reasonable stds dealing [contents writing, fam/friends/trust] ? Asked Q that calls for disclosure? - LAYWER FOR SELLER: O Show that buyer did not justifiably rely > (a) a RP would not consider this important in deciding whether to purchase property (b) not a material misrep bc no reason to know the special characteristics that made reliance happen IS THE PARTY SUING FOR BREACH OF WARRANTY? [past, present or future PROMISES as part of consideration] - LAYWER FOR BUYER: O Show didn’t get what was promised, EVEN IF NOT EXPLICITLY PROMISED: see 2- 314, 2-315 [best if buyer AOR] O Make sure promises as detailed as possible so a RP wid think that the promise, viewed objectively, meant ___ O BUTALSO make sure that the contract is as broad as possible - LAWYER FOR SELLER: O Make sure u disclaim any implied warranties O AREASONABLE PERSON would not think that promise meant ___ O Make promises as vague as possible O BUTALSO make sure that contract is as narrow as possible IS THE PARTY SUING FOR UNILATERAL MISTAKE? [§153] - Was it a belief/traste/preference [puffery], future prediction , promise of future action or error in judgment? Goof/bad decision? [goof = scriveners error, an error in transmission/recording [not the beliefs]: STILL A MEETING OF MINDS] Oo Yes > done. = Meaning of aterm? > INTERP / AMBIGUITY ISSUE 0 No~ Wasit a belief about a fact? = Yes. Continue: O Was there NO awareness of ignorance? > PROB ok, unless no due diligence O Unconscious assumption? > DEF OK. O Conscious awareness of ignorance? / know have limited knowledge? > NEVER OK - Can they prove all of the following?: 41 O Basic assumption as to a material fact [of the deal], = MATERIAL IF different uses/different identities [substance of what’s delivered or received is different from what was bargained for] = NO MISTAKE IF difference in quality or accident > unless parties in same market / both merchants 0 tht the party was mistaken about, O who did not assume the risk of mistake [§154], O AND EITHER: (a) unconscionable (b) other party had reason to know of mistake or (c) other party caused the mistake - Was there snapping up [taking advantage: serious/obvi error, not mistaken belief ab being able to be efficient but ERROR in calculation] or a clerical error [scrivener’s error or unconscionable bc clerical error on something craxy Ik on price]? © Yes > ok!!! Ask if want REFORMATION or RECISSION © No-~ prob wont work. 0 Check if it’s a construction bid [clerical errors common in price or in omission of IS THE PARTY SUING FOR MUTUAL MISTAKE? [§152] - Isit a misunderstanding as to the meaning of a term? 0 Yes > interp issue / PER [not mistake: its in accord w/ the facts] 0 No~- continue, cld be mututal mistake - Did one/ both parties know that they didn’t know? > yes. Done. [AOR] 0 Works only if SMOKING GUN EVIDENCE THAT HAD A MISTAKEN BELIEF oO Works also if protected by a rep or warranty - Did one/both parties make a bad deal [error in judgment]? > yes, done. Not a mistake Because NOT A BELIEF. INSTEAD, A LACK OF A BELIEF THT SHLDA HAD - Was the mistake as to the use/identity of what was delivered/received? Yes, continue: = Did both parties have diff meanings/same WRONG meaning and no knowledge of eithers meaning? > GOOD [NO MUTUAL ASSENT] ° Find the smoking gun evidence : “probably barren” - WHOEVER MADE THAT STATEMENT, PROB SELLER // beef price vs. cow price - BUYER AND SELLER // what was asked of cattle b4 delivered [shrinkage requirement] - BUYER ¢ Is there a representation or warranty that seller made? > cld be done and breach / misrep ¢ DID ONE PARTY DO DUE DILIGENCE AND OTHER DIDN’T? > cld be AOR on one party and other wins, if DD possible/practicable ® Did neither party have knowledge of either’s meaning? > OK [NO MUTUTAL ASSENT] e Find the smoking gun evidence = Did one party have knowledge of others meaning? > NOT OK [SOME ASSENT]. EITHER UNILATERAL MISTAKE OR FRAUDULENT MISREP @ Find smoking gun evidence - Was the mistake to the extent of injuries in an insurance claim? 42 shows same exact business terms as other party’s boilerplate [money and what money buys] but different legal terms: the boilerplate is yours [protects YOU] Also include: same warranty in PO, a statement tht there are no limitations on liability or damages, and a statement that other party accepts by beginning to do the work BUT NO PROVISO , in general, BECAUSE IT WILL PREVENT A CONTRACT ~> don’t do PROVISO + MAKE SURE OTHER PARTY PERFORMS SO CONTRACT (because only terms on which parties agree will be entered, ur fucked / knocked out and gap filled) Yes proviso + make sure other party performs > if say “party accepts by beginning work” and HAVE AN AMAZING CLAUSE LIKE THIS: = this is likely, that they will perform or at least partially, because they wanna make $$$$. and if they don’t perform, only risk is that u don’t deal w/ them [not that ur bound by some boilerplate terms u don’t want] “by signing this document, you agree to all of its terms. Your signature certifies that there is no term in this document to which u object or consider urself not bound. Ur signature also certifies that u have not communicated to any of our agents or employees any reservation about whether you are bound by all this document’s terms. And by signing this doc, you promise that you will not later claim that u do not consider urself bound by one or more of its terms” Or, include other legal provision u want: arbitration [USUALLY RULE IN FAVOR OF COMPANIES EBCAUSE COMPANIES GIVE THEM BUSINESS AND CAN TAKE IT AWAY], forum selection, etc. in own boilerplate and wait for other party to perform 0 If no term on dispute resolution > free to litigate [every1 has aright to sue unless they have agreed not to] Offeror’s version of proviso: Object in advance to additional terms - 2-207(3): “any proposal by you for additional or different terms or any attempt by you to vary any of this POS terms is hereby objected in advance by us” O OR DON’T ACT CONSISTENTLY W/ OFFER: DON’T SEND GOODS [DON’T SHIP] so their proviso doesn’t apply Oo “Nonwithstanding anything u say __” = in commerce and industry 45 If Bayer didn’t have own proviso, wida been a contract Proviso: refers to anything in the last-form sent CANT BE A PROVISO IN THE NEXT TO THE LAST FORM. THERE CAN ONLY BE A STATEMENT THAT SAYS WE DISAGREE IN ADVANCE [2-207(3)©] IF ORAL AGREEMENT , THEN WRITTEN IS DIFFERENT > - WRITTEN CONTRACT = tangible evidence VS. CONVERSATION = doesn’t clearly establish what parties agreed to > don’t try to analogize the two 0 i.e. agreed to “all of our policies” on phone, and although didn’t ask what all policies were > NOT analogous to signing a contract w/o agreeing because it wld require policyholder to prove that the so-called __policy in written agreement__was an office policy on the day they had the oral convo / phone call so it was included in the “all of our [policies” - if vague / broad term like “all of our policies” > Ouse hypos = all doesn’t really mean all Ouse usage: “all of our policies” = limited to what a reasonable person would have understood through usage and policies only tht one WOULD EXPECT TO FIND IN THAT MARKET/TRADE/INDUSTRY = yes reasonable person wid read written contract = no reasonable person widnt ask for recitation of all policies in this mkt/industry [or rlly in general] if LITTLE TO NO CONTEXTUAL EVIDENCE OF CONTRACT’S MEANING > “COURT is necessarily confined to finding meaning within the 4 corners of the document” IF INSTRINSIC AMBIGUITY [AMBIGUOUS ON ITS FACE] - 4-CORNERS FIRST, THEN CONTEXT - hear extrinsic evidence [express terms>COP>COD>usage> logic of deal is last step] O context: discussions during negotiations, and after [COP - if tendered and accepted, strong indicator of what was intended vs. waiver of rights or modification agreement], conduct in prior comparable transactions [COD] and customs and usage in the market which they are dealing with eachother [if both in market/trade, if not > if known/reasonably shida known: so notorious, universal and ancient] O BEST USAGE [1-303c] if usage is embodied in a trade code or similar record, interp is a Q of law - general meanings preferred to specialized, unless used in a specialized/technical field - specific provisions preferred to general provisions - negotiated terms resolved in favor of standardized terms if in conflict when drafting: make sure §214 [MAYBE NOT INTEGRATED - a or b] will not be needed to construe what agreement means: - give own definition in written agreement [BECAUSE OF AVAILABILITY BIAS = WE ASSUME THAT OUR DEFINITIONS ARE UNIVERSALLY HELD. BUT MOST OF THE TIME, NOT HUM] - don’t use legalise / overly complicated language, but clear/laymens terms [straightforward definitions and explanations of coverage and limitations] - try to draft contract in correct tense: present, past or future 46 even if nothing drafted is ambiguous, extrinsic evidence could still be entered [i.e. 214© - to show what agreement means or 214d/e - to show grounds for avoidance/remedies so]: O make sure context complies with ur interpretation [COP, COD, usage] 0 make sure logic of deal complies with ur interpretation 0 use hypos to reinforce ur point 0. ifall else fails, try a policy argument [reasonable expectations for unfair bargaining power, for ex.] // common expectations of parties reinforce this IF EXTRINSIC AMBIGUITY [not ambiguous on its face but using extrinsic evidence to establish ambiguity] - CONTEXTUAL APPROACH - 1S there evidence offered relevant to prove a meaning to which the language of the 0 indemnification agreements > pacific gas [even tho plain language of provision showed compensation, if there is another meaning tht language was reasonably susceptible to, can be admissible] 0 default clause / NOM > Columbia nitro [even if quantity term is inconsistent w/ express terms on its face, COD/usage, if reasonably construed as consistent w/ agreement, can be admissible ] © IF EXCLUSION / LIMIT ON LIABILITY w/ insurance co. > Altawater [even if express definition, and due diligence [told client], can use reasonable expectations to see if ambiguous... because exclusions are narrowly read against the insurer] IF EMPLOYEE TRYING TO GET MORE $ FOR SAME WORK: [pre-existing legal duty rule, but not if circs changed or employee detrimentally relied] EMPLOYER HAS 2 CHOICES: 1. refuse to pay > suffer catastrophic losses - but can avoid potential of finding reinforced promise to pay: a.precedent described in Wainwright Brewery // Goebel v Linn [Judge Cooley]: “when employee declined to go further w/ contract, employer had right to sue for damages and not having done so but instead acceded to his demand = cannot now argue that his promise was w/o consideration” or b. Bishop case: since price of brick increased considerably, and plan of building changed > enforceable to ask for more $$ for same work [such a modification to price and plans was a modification tht necessitated a new contract] 2. promises to pay > court might reinforce promise - IF CLIENT WANTS THIS, RESHAPE IT SO COURT FINDS PROMISE UNENFORCEABLE: a. employee supplied no consideration - do not ask employee to do anything extra - promise to give away $ for free ina formal contract mod signed by both purposes [employees signature = objective manifestation of assent to get something for nothing]: “wishing merely to insure timely completion of the buildings covered by this contract, parties agree tht employer will pay extra in addition to fee already agreed to. Employee is not obligated to do any additional work for extra $” 47 - BUT IF UDON’T INCLUDE THIS STUFF, U RUN A BIGGER RISK OF LITIGATION [MORE COSTS, EVEN LESS PROFITS] OR RECISSION [NO DEAL AT ALL] Exercise on Drafting Contracts [pg 159 supp but use 64-65 supp] - Draft this provision: ralph owns all rights in cartoon ralph. Ralph LP [who owns rights of ralph cartoon] agreed to indemnify its licensee, merchandisers, if a 3" party claims tht merchandisers is violating that party’s trademark in ralph. RLP insists only liable if it receives notice from merchandisers no later than 10 business days afrer it receives notice of claim. - “RLP may indemnify M if XX claims that M is violating XX’s trademark in ralph. RLP shall only be liable if it receives notice from M no later than 10 business days after it receives notice of claim. If RLP receives notice 11 days or later or not at all, RLP shall not be liable.” Making Contracts relevant.... Express conditions are the real tools of the working lawyer - Express conditions = what lawyer uses to control way deal progresses to make sure client protected - SO RELIABLE CONDITION OR PROMISE?? = ANY TIME THERES A BREACH THAT MIGHT NOT TERMINATE THE ENTIRE AGREEMENT, SAY = “THIS WAS NOT AN EXPRESS CONDITION” - Condition: event not certain to occur but which must occur for performance to become due [sale of land w/ closing: even if not expressed, implied in law bc seller wont transfer title unless buyer pays] - Promise: commitment to act or refrain from acting IF U WANT consequence for _no_ to be don’t have to pay/perform [_ not activated] > make it a condition // if u want to allocate risk of PERFORMANCE, MAKE IT A CONDITION !!! [attached to duty: party w/ duty doesn’t neeed to perform duty vs. attached to DA: party w/ DA isn’t allowed to exercise it vs. attached to declaration: if not satisfied, declaration isn’t considered true] o “if” / “unless” / “provided that” / “so that” / “while” are ok / “in the event that” 0 “on condition” or “it shall be a conditions precedent that” is BETTER 0. If benefits one party only > that party can waive condition if doesn’t occur [can still chose to go through w/ it] or if acts inconsistently & goes thru w/ performance despite condition not met > other party can treat as waived 3 types: [to see how affects burden of proof/ when ambiguous > look to see who wants condition turned on / off: Gray case: buyer to pay more “unless” greater quantity arrives > BUYER WANTS TO KEEP CONDITION [CS] DORMANT. SINCE BOTH HAD EQUAL LIKELIHOOD OF PROVING BURDEN/CONDITION > COURT GAVE BURDEN TO BUYER[WHO HAD INCENTIVE TO KEEP LIGHT TURNED OFF] ***The person who wants to tak advantage of the condition [to turn it/duty on if CP vs. to turn duty/it off if CS] is the party w/ the burden of proof*** 50 1) CP = preqreq = “if” light switch flipped on, _ light turns on/DUTY ACTIVATED [event must occur before performance is due/activates dormant duty]: party wanting it turned on/showing condition [usually P, but see buick motor: better able to prove condition] satisfied must prove CP [event thingy] satisfied [yes event] O ELEMENT OF P’S CASE [FULFILLMENT OF CP] AND MUST BE PROVED BY PARRTY SEEKING TO ENFORCE IT 0. Asset sales can hv this to = conditions tht must have happened b4 closing O When trying to activate a condition > need to prove this is satisfied O EVEN IF ITS AN INSURANCE CLAIM >> must strictly adhere to the conditions in order to get the coverage if its expressly conditioned. 2) CS = “unless” light switch turned off, _ duty/DA/dec activated [event must occur before performance/duty is deactivated]: party wanting thing conditioned turned off /continue to be dormant / must prove condition satisfied [no event] O DEFENSE TO NONPERFORMANCE AND MUST BE PROVED NONFULFILLMENT CS] BY PARTY WHOSE PERFORMANCE OBLIGATION HAS ALLEGEDLY BEEN DISCHARGED O When utr trying to deactivate a condition > need to prove this was satisfied 3) concurrent: TENDER OF PERFORM at closing: “If closing, then _”: AKA NO CONTRACT/ VOID CONTRACT IF CONDITION DOESNT HAPPEN FOR BOTH PARTIES, [merit hill: 157-158 supp: if conditions > don’t have to close [perform]/can get deposit back[bc sellers fault didn’t satisfy condition, but if buyers fault didn’t close then seller keeps deposit and no closing] // but if promises > damages] 0 Seller puts deed on table = concurrent condition to buyers putting $ on table and vice versa oO Each tenders performance at the same time when do this 0. If X tenders [shows money] and Y doesn’t tender [show card] but will only perform and show card if X actually gives money, Y is liable for failing to satisfy a now-enforceable duty. X’s duty to pay is not enforced because it was conditioned on Y’s obligation to tender that did not occur O Once one party tenders performance of a concurrent condition, the other duty automatically becomes enforceable 3 ways to word: 1) express condition [in words] > STRICT COMPLIANCE [Dove: not ok to do subs perf]. 2) implied in fact [from situation/COP/surrounding circs] > SUBST PERFORMANCE OK TO SATISFY CONDITION BUT SIMPLE BREACH. 3) constructive/anytime theres not an express condition but it’s a term/part of the deal that was breached [implied by words/sense contract] > SUBS PERFORMANCE SATISFIES CONDITION BUT SIMPLE BREACH SO CAN STILL GET DAMAGES, LIKE [Jacob and Young: subs performance ok for condition] 51 Not in UCC: no subs performance rule // 2-601: perfection required [perfect tender = but if tendered b4 due, ability to cure under 2-508], even for implied/constructive conditions: 1) duty to deliver and 2) duty to deliver goods that u agreed to buy > if not perfect, buyer can reject whole and if rejects, not obligated to pay// - but if accept, or reas opp to reject/inspect and don’t reject [2-607]: burden of showing non-conformity shifts to seller , also if revoke: ur burden of showing non- conformity thts substantially impairs value to u or to a reasonable person [2-608] ***Even if barred from recovering on contract bc non-occurrence of express condition, can still sue for restitution [quantum meruit] conferred on other party There are different consequences depending on whether a clause is a promise, a condition, or both. - For example, suppose a contract calls for a package to arrive at 3:00 p.m. on Wednesday. - If the 3:00 p.m. delivery clause is an express condition precedent, the buyer does not have to accept it if the package arrives at 3:05 p.m. under the strict construction rule for express conditions. But the buyer would have no recourse against the seller for failing to delivery timely. All that happens is the condition precedent to accepting the good has not been fulfilled, but the seller has breached no enforceable promise. - If, however, the 3:00 p.m. delivery clause was a promise/duty under the contract, the buyer would likely be obligated to accept the package, but could sue the seller for breach for failing to deliver on time. - If itis both a condition and a duty, then the buyer could both reject the package and sue for breach if the package was not timely delivered. ¢ An interpretation that a promise is an unconditional duty is favored when the event necessary to fulfill the condition is within the obligee’s control, Restatement 2d § 227(2); (VS.) IF U WANT consequence for _no_ to be damages > make it a promise oO “shall” / “must” > [for buyer]: shall X > best efforts X > best efforts X of at least $Y > commercially reasonable efforts X > shall request X O Simple breach: can only get damages [subs performance: less promised but not good enough // 50$ short in 20k deal]: Jones/Young, modern version: Dove Acre Farms case = Forfeiture is a consequence of not following a type of condition. The idea is that if the party does not meet the condition, s/he forfeits the benefits. If breach should/justifies allow _ to forfeit the benefits already performed, then material or total. Otherwise, simple. O Material breach: can suspend performance until cured AFTER send notice threatening / asking to cure breach& they don’t + can later sue for damages [500$ short in 20k deal] * Don’t get what u bargained for / so bad that frustrates purpose of contract ®= once a material breach has occurred, there are generally only three possible future scenarios: (1) the material breach can be cured; (2) the material breach can be waived; or (3) the material breach can be transformed into a total breach. Although there are other ways to do it, generally a material breach will ripen 52 RIGHT SLOPE: promisee [top] AND promisor[bottom right] = CONTRACT. Containing the promise at issue that will benefit 3PB BOTTOM SLOPE: some performance going left from promisor to 3PB O Doesn’t happen, promisee disappears [or doesn’t sue to enforce] > 3PB sues promisor going right on bottom slope TO SUE: O 1) 3PB [promise made by promisor to promisee and tht promise benefits 3PB] MUST BE INTENDED [§302] = = 3PB = party intended to benefit from performance of contract/wld inevitably BENEFIT =not just incidentally benefit as an incidental benefit to primary purpose of contract // must be intended to benefit OR KNOW will benefit when agreement made (A) ¢ For ex, owner is generally not an intended beneficiary of a general - sub contractor relationship ¢ But doesn’t need to be identifiable/in existence at time of contract creation, but in order to vest must be = &either commercial or personal relationship btwn 3PB and promisee (B) ® If commercial/creditor > can always sue 4 prom //but if done > can only sue if performance happened and no promise of payment © Types of intended beneficiaries: "Creditor © Promisor agrees to pay creditor beneficiary for the promisee’s debt © Example= Jane hires Ben who makes balloon animals for her child’s birthday party. He charges $300 for the day. Jane is with her friend Kate the day before when Kate's tire suddenly blows out. Kate doesn’t have enough cash in her account at the moment but promises to pay Jane back. Jane pays for the new tire and tells Kate to just pay Ben when she comes to the party. © If Kate refuses to pay Ben, Ben can seek to enforce his right against Kate. © Jane= promisee © Bens third party to this 2 contract between Kate and Jane © Kate= promisor = Donee © Promisee intends donee beneficiary to benefit from promisor’s performance * Think of a “donor”—they do not get anything; the done gets a kind of “gift” even though they have not given anything in exchange * Example: Dave babysits for the Watsons on the weekend for extra money; he tells the family to just Venmo the money to his niece Amy so she has some spending money. Amy would be the done beneficiary of the contract between Dave and the Watsons. © Dave [donor] doesn’t really “get” anything out of this except the joy of seeing his niece happy. © Watsons don't care because they get a babysitter and it’s the same money anyway © Amy [donee] has a claim IF (1) Dave babysits; and (2) the Watsons do not pay or do not pay correctly, therefore breaching the contract 309] = right slope contract is not void/illegal or unenforceable/voidable [but see EPCU v Geremia: doesn’t work if ins co [promisor] defense against debtor [promisee] settled and now creditor [3PB] is left and needs $ so goes after ins co even tho ins co not paid by debtor, thts diff issue in O 2) [none of thes 55 diff lawsuit] or voidable/unenforceable at time of formation bc of impracticability, public policy, or non-occurrence of condition of performance O Aka > if 3PB is sitting in shoes of promisee, and promisor has a valid defense against promisee = PROMISOR cannot assert promisee’s defenses against 3PB IF: promisor has made an absolute promise to pay 3PB [and not simply a promise to pay whatever the promisee owed him]. Otherwise, when a 3PB sues promisor, promisor may raise defenses it has against promisee O AND 3) rights are vested [§311/3PB is identifiable in some way: DOESNT AFFECT INTENDED, CAN BE INTENDED AND NOT VESTED. JUST AFFECTS VESTING]: 1) contract says or 2) detrim rely b4 learn of mod/KNOWS 3PB and materially changes position or 3) sues before learns of mod or 4) either party asks 4 consent and 3PB agrees/manifests assent 3pi may exist even if not named/identifiable/not yet in existence so long as can be identifiable or in existence at time of performance [when tht arrives] but no vested rights until identified [can be mod/rescinded until 3pds are identified] Assignment/DELEGATION: Assignment: u owe $ to creditor/creditor sends notice saying “send us the $ now” [or creditor sends notice / no response so sues on PN as holder: promissory note] ; someone buys other company’s contract who doesn’t normally perform services u are contracted w/ Delegation: new person is gonna be performing duties / u report to them to get ur performance // “we wont perform service for u anymore but X will” Both: as above , “under new assignment”: changed ownership and now this person will be honoring existing contracts; old owner sells business as entity to new owner and new owner succeeds to all new contracts; one owner buying players from another: assigning rights to get jeter’s performance and delegating duty to pay jeter [or obligee in delegation / obligor in assignment] - Novation: simpler way to simultaneously assign/delegate [LIKE A MOD = BOTH PARTIES NEED TO AGREE, THIS Is HOW U CHANGE CONTRACT]: swapping out contract, but requires BOTH PARTIES AGREEING [not grunt]: - obligee must accept THE SUBSTITUTE CONTRACT/SATISFACTION OF OBLIGOR’S EXISTING DUTY, why? Bc now obligee has only one D / obligors duty discharged]: - §279/280: Its different because its not a triangle, its just one party swapping out another Assignment: - X[obligor/debtor or gift giver = bottom right] owes Y [obligee/assignor = top] = orig contract [[Performance supposed to go from obligor > assignor/obligee originally = NO PERFORMANCE HAPPENS ON RIGHT SLOPE UP]]... so... Obligee assigns right to assignee [bottom left] because ASSIGNEE PURCHASES RIGHT TO PERFORMANCE or is GIFTED it or is OWED something from obligee. 56 - NOW, PERFORMANCE SUPPOSED TO GO from RIGHT TO LEFT ON BOTTOM SLOPE from obligor [bottom right] to assignee [bottom left] , doesn’t : O Now, assignee Obligee/Assignor sues obligor on bottom [going right]: person Assignment — who bought right to obligee’s Assignee Obligor performance NYM Kershaw O ASSIGNEE HAS Delegation — No more rights Lap Obligor/Delegator than Delegate ‘Obligee NYM Kershaw assignor/obligee = person originally owed performance, by obligor, who SELLS right to performance to assignee 0 Akaassignee is subject to all claims and defenses by the obligor [one obligated to pay] 0 Implied warranties: §333 in assignments of an assignor [but don’t skip so be careful if sub-assignee, i.e. holder in secondary market] Delegation: - Obligor/delegator [top] owes obligee [bottom right] PERFORMANCE !!! [but PERFORMANCE GOING DOWN ON RIGHT SLOPE DOESN’T HAPPEN when/bc delegate]: Obligor delegates duty to delegate [bottom left] by PAYING DELEGATE TO DO IT FOR HIM !!!! = left slope is an employment contract, basically - Obligee has to look to delegate for performance from delegate > obligee [NOW, PERFORMANCE SUPPOSED TO GO FROM LEFT TO RIGHT ON BOTTOM SLOPE] BUT DOESNT: O OBLIGEE SUES DELEGATE on bottom [going left] O Obligee can sue either obligor OR delegate [can sue both, recover from one] BECAUSE OBLIGOR CAN NEVER ESCAPE DUTY TO PERFORM!!! So long as obligor exists & Failed delegation = anticipatory breach of contract... can also demand assurances from delegate is reas grounds for insecurity LAW LOVES ASSIGNMENTS. HARD TO PROHIBIT: must say “a party shall not assign a right or delegate a duty” .... 57 60 O BREACH OF WARRANTY? = no due diligence needed / can AOR !!!! [don’t need to rely, nor do u need to justifiably rely] = IN ADDITION TO DAMAGES [= harm], CAN GET SPECIFIC PERFORMANCE [espec for land contracts - unless sold in good faith, not usually for employment contracts] = Injured party feels harmed for lack of performance: Specific performance [$ - if tht legal remedy inadequate] O Prob need extrinsic evidence to prove Breach warranty [want $ = value of deal if performed properly] Damages = expectation is normal for breach [whats required to put injured party back to position if promise wida been performed] // reliance [promissory estoppel - no contract/unenforceable contract but want to give u relief] // liquidated [agreed measure of damages or limitation bc past/moral consid ] O FRADULENT MISREP?: instead of avoidance/restitution, seek to AFFIRM THE © Or, negligent/innocent misrep? [this wld be if don’t want contract] > remedy is avoidance/recission = (4) statement fact (2) intended to induce reliance (3) P relied (4) justifiably (5) detrimentally (6) statement was material to deal [must be material to support a remedy if not fraudulent = objectively important?] (7) statement was not true when made (8) D made statement w/ NO SCIENTER and ONLY REMEDY IS avoidance/restitution if no scienter (2) Intend to induce reliance = regardless if actually increased odds, was it made to increase the odds that the other party wld agree w/ intent to induce other party to deal??? [if statement made, most likely] (4) met If other party repped/warranted, bc u know that they were taking responsibility for any risk of unknown 0 Still needs to be met for fraudulent, but less so / just needs to be at least credible O (4) =if sale of land, and innocent/neg or non-disclosure misrep, very little DD required = “wholly irrational” O REMEDIES: ***** reformation. HOW TO SHOW:******* = Clear and convincing evidence that written contract is not what parties actually agreed to [COURTS NEED TO IMPOSE INTERPS OF INTENTS!] IF SUCCESSFUL > REWRITES AND PARTY WHO DIDN’T PAY/PERFORM LIABLE FOR BREACH IF UNSUCCESSFUL => TRY affirm defense of fraudulent misrep or warranty [affirm contract, get damages] or warranty breach + specific performance = Scrivener’s error or unilateral mistake???? = 1) other party admits true agreement or 2) concedes this party wrote false agreement 3) nothing in facts suggest any reason why this party wld have made false agreement/term on purpose IF DON’T WANT TO HAVE TO PERFORM _avoidance/recission [+ restitution if harmed from reliance/slight performance] 0 Evidence needed: = Mistake/misrep = Or minority [other affirmative defense] O Remedies: RECISSION / AVOIDANCE O SELLER WANTS TO REVEST TITLE / RESCIND SALE: = Show vendee [buyer] was guilty of fraud or intentional misrepresentation OR Mistake by vendor [seller] as to the identity of the thing sold [Or don’t deliver and use avoidance as an affirmative defense ] !!!! 0 Injured party just annoyed / doesn’t feel like contract is worth time: = INNOCENT/NEGLIGENT MISREP for recission/avoidance/restitution ° and O Restitution to restore oneself back to previous position O AVOIDANCE so no need to perform / no obligations = MISTAKE for avoidance = BREACH WARRANTY or FRADULENT MISREP for damages - IEDON’T WANT CONTRACT BUT ALREADY PERFORMED: damages O WARRANTY for damages [can get other side to specifically perform too] O FRADULENT MISREP for damages - IE WANT TO AVOID EXISTING LIABLITIES / OBLIGATIONS FROM PERFORMANCE: assumption, materially altering value w/ no AOR], impracticability, duress, etc] O Avoiding future liabilities > termination clause - If it depends whether want contract or not: Injured party [USUALLY BUYER] got a bad deal: 0. Seller/buyer > if valuable thing, sue for misrep [recission] = If not valuable just made a bad deal > sue for breach of warranty [damages] or intentional misrep [damages] 0. This is tough. So u need to show that there was a mistake [belief ab a fact not true] that materially affected SUBSTANCE OF deal/identity/usage and no AOR Remedies = Order - liquidated, expectation, reliance, incidental/nominal, punitive = Remember the purpose of damages in contracts claims is not to punish the breaching party. Punitive damages are only available in extreme circumstances. Common law 61 - Breach: simple [subs performance = get diminution in value like construction contracts or cost remedying], material [damages and can suspend performance unless cured within reas time/give notice to breacher], total [damages and can walk away from deal] - Breach (express) warranty = damages = harm to other party ... - ANY TIME THERES A BREACH THAT MIGHT NOT TERMINATE THE ENTIRE AGREEMENT, SAY = “THIS WAS NOT AN EXPRESS CONDITION, but a constructive condition [so subs performance allowed]” - Reupidation [250]: by words that will commit breach tht wld give u total damages or by action tht cant perform w/o breach TYPES OF DAMAGES: breach warranty/promise. . . - Expectation [pgs 145-149 on BIG OUTLINE]: valid, enforceable contract / breach and uccan prove ur damages: A [loss in value: value of received - value warranted/expected] + B [incidental: transaction costs in dealing w/ it] + B [consequential: other losses in profits, pain and suffering FROM BREACH, cost subs performance] +all other costs spent in performing/reliance costs spent in performing - C [costs saved in no longer having to perform / stuff breacher already paid] Cover > what u contracted to pay and what u did pay (difference) + conseq/incidentals Limits: foreseeability [B] , preponderance of evidence, not recoverable if clda avoided loss Back to top expected Law supplies part of promised future that didn’t happen. In his example, variations 1 and 2 = both of these, part of promised future tht didn’t happen was 100$ [A getting asset worth 100$]. In variation 2 [A pays 90$]: law only has half as much of a job Say = loss in value [A] is 100 [or 24k in problem 63 or just whatever the price / total value is. Don’t SUBTRACT/SAY the loss in value is the net profit / net loss in value on exam]. - There are no incidentals, consequential(s), and - [C], the loss avoided is 0 because paid 90 [or 90 if didn’t pay yet] or in problem 63, cost avoided is 5k because spent 15k instead of 20k Ex: price = 100k. expected cost = 90k. spends 60k, other dude breaches w/o paying. Value to him = 40k. My formula = 100k-90k = 10k [lost profit] + 60k spent = 70k His formula = 100k [loss in value] - [90k - 60k = 30k (COST AVOIDED FROM BREACH)] = 70k - Reliance [pg 150 on BIG OUTLINE]: relied a lot and changed position [things got a lot worse] / other party wid be unjustly enriched but unenforceable for some reason : Expenditures made in performing [> expectancy bc includes fee paid to doc, for example] - loss wida suffered if D had performed Limits: no anticipated costs bc cldnt be in reliance of contract [unless u told other party], only costs relying on contract after formed/before breach, 62 deducting damages from contract price] = if wholesaler, lost profits on goods delivered , aka what u couldn't sell or what u couldn’t sell for price as warranted O LIMIT = like subs performance, IF REVOKING UNDER 2-608, must show non- conformity substantially impaired value to him and loss must result in ordinary course of events as determined by seller and reasonable loss = Also 2-715(1)(a) all ab rejected goods [inspection/transportation costs in rejecting], (1)(b) all ab cover [transaction costs of going back into market], 4(C) = incidental, i.e. reasonable expenses incident to delay/breach ] FOR ALL OF THE ABOVE = 2-715(2)(a) = foreseeable / seller had to know special circs tht resulted in loss at time of contract, 2(b) = no foreseeability, but injury to person/property tht proximately [IN ORDINARY COURSE OF EVENTS] resulted from breach CISG - damages = art 74-77 - sellers rights = 53-59 / buyers rights = 45-46 - likes specific performance Liquidated damages [160 - 162 on BIG OUTLINE]: 1a) anticipated loss or 1b) actual loss at time = reasonable [if too large = penalty] + 2) difficult to prove loss... 1a =runa bunch of scenarios of when breacher breaches, wid the loss to nonbreacher be similar to the formula in the liquidated damages clause many times??? “all of remaining months rent due” / “all min quantity promised” = usually penalty be can imagine x/12 scenarios where breach is earlier and seller doesn’t suffer much loss 0 Also =limiting damages clauses = invalid if unconscionable [if consumer and limiting consequential damages], and when consumer and warranty fails of its essential purpose, will be unconscionable Punitive/attorney’s fees [159 on BIG OUTLINE] : usually never besides bad faith ins. refusing to indemnify, even if willful, bc breach = SL // sue in tort or fraudulent misrep OTHER RELIEF: - Specific performance [153-157 on BIG OUTLINE]: rare only when damages inadequate = difficult to get substitute [360b] or cant prove damages w/ reas cert [360a] or other party cant pay [360c]. What was promised was unique = land [buyer only] or personal service injunction [NOT SPECIFIC PERFORMANCE] - Reformation: fix it, scriveners error or mutual mistake Recission/avoidance / RESCIND: Biggest ones: O mutual mistake[false statement made by one tht made other induced to deal / other reasonably relied on that false statement] or unilateral mistake, 65 implied] smaller ones: clause???? O (A) Force majeure clauses [list of excuses: ct reads in 5 elements/”reasonable control” = good faith not to make event happen], to get around default rules: [2-615 UCC and §261 = 5 elements must be true for it to work // for u to be excused] = GROUNDS FOR AVOIDANCE / DEFENSE AGAINST BREACH because impracticable/impossible or ur suing under restitution if meet all 5 elements: If not in FM clause, and FORESEEABLE event, sucks / AOM 1) event not anticipated, assumed widnt occur 2) event occurred 3) makes performance impracticable [acts god/war, huge source of supply bc of embargo or large crop failure] 4) party seeking avoidance didn’t cause/contribute [must make reas efforts to remedy] and 5) party seeking avoidance didn’t assume risk Most courts > If have FM not on the list, prob not an excuse [deliberately left out embargos resulting from war, didn’t want it to be an excuse] Some courts wid say > FM clause isn’t good enough © (B) unconscionable [176] at MM [so defect of MM] / judge decides / circs made it oppressive, or such that wid cause an unfair surprise bc unconscionable at time of signing[extremely weak and gullible party being taken advantage of stronger party set out to deceive weaker] © frustration of purpose[179] // rare // queen Victoria parade (D) duress: 174-77 [179] € illegality: 178, 181, 187-88, 198 [179] (F) incapacity: 14-16 [179] oooo°o Anticipatory breach = repudiation Common law: §251 -> similar to 2-609, however need not be in writing and no 30-day limit on time to provide adequate assurances of due performances - §253 ->effect repudiation ALONE gives rise to damages for total breach [unequivocally and affirmatively states will totally breach - not tht will materially or simply breach aka not that gonna pay one day late if time not of essence] / creates COA alternative to breach O Moment of breach = damages vs. Moment of repudiation = damages based on the predicted breach - So when reasonable belief of repudiation [aka anticipatory repudiation]: O 1) cansuspend performance and any preparation 66 O 2) right to require adequate assurance that other party’s performance will be duly forthcoming [if UCC: only accept this response from a 2-609 notice: “we have solved our internal difficulties and will produce scooter as agreed. Pls send ur personnel to our offices and well make our plans and schedules avail to them 4 inspection” - this invoke rights under 2-609... O 3) means why which aggrieved party may treat contract as broken if reasonable grounds for insecurity not cleared up within a reasonable time If don’t get adequate assurances, can do nothing, cancel contract, act in reliance on contract & perform or act in reliance on repudiation [substitute and sue for difference later] or otherwise immediately sue First party who crosses the line/in breach cannot go asking for assurances Party may retract repudiation under common law/UCC if it does so before aggrieved party acts in reliance on repudiation and materially changes position // repudiation may be any means sufficient to show repudiating party intends to perform. Retraction restores repudiating party’s rights UCC: §2-609: right to adequate assurance of performance: (1): procedure for making other party adequately assure or repudiate bc adequate assurance is proof tht they will perform ... AKA When reasonable grounds for insecurity arise w/ respect to the performance of either party, the other party may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. Failure to provide adequate assurances within a reasonable time not exceeding 30 days > can treat it as repudiated *must be able to point to a specific fact/situation that brings ur client doubt in other party’s ability or willingness to perform* = draft it in concrete, precise terms what u want to reassure ur client. Until receiving this, can suspend any performance *CALM DOWN UR CLIENTS WHEN THREATS BEGIN: talk lawyer to lawyer until calms / anxieties are driven down. Law much prefers u handle it thru 2-609 procedure: u will protect ur clients rights and reduce odds of a fight !!!! * > if u don’t follow 2-609 procedure [in writing, etc.], don’t get 2-609(4) and don’t get anticipatory repudiation under 2-610 §2-611: retraction of anticipatory repudiation [if performance not yet due, and IF aggrieved party has not yet cancelled or materially changed his position or otherwise indicated he is treating repudiation as final] Assumption of the risk of not knowing - if u don’t ask for/have any of the above and don’t engage in any due diligence §154: (a) rarely occurs - risk allocated to him by agreement of parties. (c) is very narrow - risk is allocated by court on ground tht its reasonable. (b) is what matters in litigation > was the adversely affected party aware, when the contract was made, that his knowledge was 67