Blaw Exam 5 Content PDF

November 14 Role of Unions Changes Over Time - Exception to at-will (explicit contract) - Union employees are contract employees (not at-will) - Protection for collective organization - Employees have more power together - Pro-union - Collective bargaining...

November 14 Role of Unions Changes Over Time - Exception to at-will (explicit contract) - Union employees are contract employees (not at-will) - Protection for collective organization - Employees have more power together - Pro-union - Collective bargaining - Better together than you are as an individual - But too much power can negatively impact industry - Union limits in mid-1900s - Can be an impediment to economic progress - Are unions as necessary today? - **Only 10% of US employees are in unions right now** - **Only 6% of private employees are unionized (this is pretty low compared to previous years)** - **35% currently, Govt employees are unionized (still pretty strong)** Rules for Working with Unions - Strikes - Influence on shareholders - Economic strikes - Replacement workers - Higher ups can replace you. - Plant closings - Higher ups can close the plant - Lockouts - One a strike, you don't get paid. Striking over Wages, hours, vacation compensation (economic reasons) - Unfair Labor Practice Strikes - we are being treated illegally - you have to get rehired automatically - "Cooling-off period" - Taft-Hartley - 80 day pause that the president can order for a strike -- a strike that affects the entire nation. - After 80 days, the strike can continue. - Labor hates the cooling off period (restricting their power) - Contract Negotiations - **Good faith bargaining** refers to the legal obligation of employers and unions to meet and negotiate in a sincere effort to reach a mutual agreement - Mandatory vs. permissive - **Mandatory** - Companies have to have good faith bargaining on things that are mandatory - Hours, vacation, benefits, etc. - **Permissive** - Break room, more unnecessary things - No employer unfair labor practices - Discrimination against union employees - Interference w/ protected activities - Taft-Hartley established six unfair union practices - 1\. Coercing an employee to join a union - 2\. Forcing employer to discriminate against non-union - 3\. Refusing to bargain - 4\. Striking for illegal purposes - 5\. Excessive union fees - 6\. Demanding employer pay for work not performed HISPANICS UNITED OF BUFFALO - Hispanics United (HU) is a non-profit that provides services\ to disadvantaged persons - Cole-River and Cruz-Moore were employees - Cruze-Moore criticized HU advisors treatment of clients - Cole-Rivera and other posted complaints on Facebook - When HU found out, Cole-Rivera and four others were fired - NLRB (national labor relations board) found that: - Illegal to interfere with employee's concerted activity related to\ working conditions or organization - Facebook posts were **protected activity** - **1. Working together** to complain about workplace conditions - **2. Protection exists even if you don't have a union** (these employees in particular were not in a union. You have protection even if you don't have a union) - Firing was not legal National Labor Relations Board (NLRB) - Independent government agency - Executive agency. But not under the direct control of the president. - Not government employees - Not independent contractors, ag laborers and domestic workers - Not employee of spouse or parents - Quasi-Judicial authority - Investigations - Cease and desist order - Elections Incoming President's ability to Impact Agencies - Most agencies part of executive branch under President's\ control - Leadership changes with administrations - Some agencies are "independent" - Leadership staggered - May require representatives of more than one party - Usually senate-confirmed - But control may change with new Presidential appointments - Chair and counsel appointed by President - National Labor Relations Board (1935) - Five members (only four currently) with staggered five year terms - Democratic majority --- will change - Equal Employment Opportunity Commission (1964) - Five members (only four currently) with staggered five year terms - Democratic majority --- will change in 2026 - Congress can always rewrite laws Union Organizing & Elections - A union has to have majority support - Voluntary recognition by company - Evidenced by authorization (usually) - More than 50% employees must be in favor - Can be challenged within six months with request for election - Election by employees - File petition with authorization cards evidencing 30% approval for election - Appropriate bargaining unit (mutuality of interest) - Successful in forming a union if more than 50% employees vote for it - Formal election with campaigning on both sides - NLRB will determine the bargaining unit. - Elections suspended by unfair practices - Inappropriate campaigning - Intimidation - Removing recognition - Employees by 50% vote or to get rid of an existing union. - National Labor Relations Board Administration and Certification Union Busting - Employers are allowed to oppose unions - But not with unfair labor practices - Threats or intimidation that suggest punishment for unionizing - Even closing a facility if intent is to deter workers elsewhere - In 2022 and 2023, NLRB brings cases against Starbucks and Amazon for anti-union intimidation Right to Work - NLRB permits unions and employers to agree to limit certain jobs to union employees - Union security agreement - If you don't join, you still pay - Every employee has to pay whether they join or not. - Gives the union security/power - "**agency shop**" requires employees at least pay fees - Taft-Hartley permits states to outlaw agency shops - "Right to Work" laws - You don't have to join a union. And if you don't join, you don't have to pay. Employees cannot be forced to pay fees. - Unions have a lot less power in these states. - 27 states JANUS V. AFSCME (2018) - Mark Janus is a child support specialist with Illinois Dept. of Healthcare and Family Services - All employees must pay basic (non-political) dues (\$500/yr) - Janus argues that requirement violates his speech rights (first amendment right) because he disagreed with the union's political positions - Court - Old 1977 case said requiring fees ok - Now overruled - Forcing public employees to endorse objectionable ideas violates First Amendment -- as it compels them to financially support union activities they may oppose - Covers a matter of public concern (budgets, taxes, etc) - This decision made the entire public sector in the United States operate under a "right-to-work" framework - Public employee can no longer be required to pay union fees as a condition of employment, even if they benefit from the union's negotiations - However, this weakens public-sector unions November 19 Nature of Contracts - What is a contract? - A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty - Promise - Future or forward thinking (predictability) - Enforceable by society - Consequences - Sources of Contract law - 1\. Common law - Derived from court decisions and developed through precedents - Mostly state law: each state has its own set of legal principles governing contracts - 2\. Statutory Tweaking (generally state law) - Contract law can vary from state to state - ex. - Broad Example: Uniform Commercial Code (UCC) - Sale of goods. Most states have adopted some version of the UCC - Narrow Example: Implied Warranty of Habitability - A legal rule that landlords must ensure rental properties are livable (ex. Functioning heat, no structural issues) - 3\. Administrative Regulation - Regulations from govt agencies may also influence contract law, such as rules on consumer protections or employment practices - Should all contracts be enforced? - Limited government restriction - Unforceability - Some contracts cannot be enforced if they violate legal principles - Unconscionability - A contract that is grossly unfair or oppressive may unenforceable - Illegal activity - Unequal bargaining position - If one party has significantly more power (ex. A major corporation vs. an individual), courts may scrutinize the contract to prevent exploitation - Public policy - Contracts that violate public policy cannot be enforced - Ex. Employer cannot enforce a right to not vote for an employee - Impossibility, impracticability - If a contract becomes impossible to perform - Examples of contract limits: - arbitration (agreements to resolve disputes outside of court) - generally enforceable - Example: NDA cluses related to sexual abuse or harassment - Basic Requirements for a contract (if you have all 4: you have a contract) (if you are missing on requirement: you do NOT have a contract) - **1. Offer & acceptance** - Someone makes an offer, and the other person accepts it - Must show serious intent to form a contract - Ask: would a reasonable person think this is a serious offer? - Factors to consider: - Circumstances (where and when it was said) - Relationship of the people involved (friends vs. business partners) - Language used (clear, specific wording) - Industry norms (what's standard in that type of business) - Things that are usually NOT offers: - Things said in anger, joking, or excited moments - Opinions - Statements of intention (I plan to sell this next week) - Preliminary talks (early negotiations without specific details) - Ads, catalogues, or circulars (usually an invitation to make an offer, not offers themselves) - Definiteness - The offer must be clear enough about its terms (what's being agreed to) - If some terms are missing: - They can be added later in the acceptance or by a court - Under the UCC (for the sale of goods): - You must always include the quantity of goods being sold - Communication - The offer must be communicated to the person it's intended for - Ex. In a "unilateral contract" (a promise for an action), the offeree must know about the offer before promising the action - **2. Consideration** - both parties must exchange something of value (money, services, promises, etc.) - **3. Contractual capacity** - both parties must have the legal ability to enter into a contract - ex. Minors, mentally incompetent individuals, or intoxicated people may lack capacity - **4. Legality** - the contract must be for a legal purpose - ex. Contracts for illegal activities (ex. Selling drugs) are not enforceable - Defenses - **Improper form of contract** - Some contracts must be in writing. If they're not, they're unenforceable - **Genuineness of assent** - Both parties must truly agree to the contract. If there's fraud, mistake, duress, or undue influence, the contract isn't valid Contracts As Private Law - Why are contracts considered private law? - A contract is like a personal law created between two parties - Applies only to the people who made the agreement - What is private law? - A way for people to resolve disputes or decide how to share resources without involving formal government laws or institutions - Contracts act as a substitute for government rules or policies because the people involved decide the terms - Why is freedom to contract important? - Gives individuals the freedom to make their own agreements without government's interference - The government's role is to enforce the contract but not interfere in what's agreed upon - Important limitation: **Privity** - **Privity** means that a contract only applies to the people directly involved (the parties in the contract) - If you're not part of the agreement (not "in privity"), you cannot enforce the contract or sue based on it - If you are not in privity, you cannot sue Contracts & the U.S. Constitution - Government interference in Contracts: - The Contract Clause in the Constitution says that the government cannot interfere with private contracts - Reality: this is not absolute. Courts allow the government to interfere with contracts if there's a rational reason (like protecting public welfare or ensuring fairness) Types of Contracts - Bilateral vs. Unilateral - Who is bound to do something? - **Bilateral**: promise for promise - I promise to pay you \$100 if you promise to help me move on Sunday - Both parties have responsibilities, both are stuck - **Unilateral**: promise for performance - If you help me move on Sunday, I'll pay you \$100 - Express vs. Implied - **Express**: actually spelled out, orally or in writing - **Implied**: by the actions of the parties, not written or spoken - Key question: Did the parties act like they had a contract? - Example signs: - Services or property were provided - Both sides expected payment - The services or property could have been rejected by weren't - A reasonable person would conclude there was a contract - Combination of Express & Implied - Many contracts are a mix of express and implied terms - Ex. Some terms might be written, while others are understood based on behavior - **Unsolicited offers** - companies often reject unsolicited ideas to avoid legal issues - ex. If someone submits an idea that's similar to what the company is already developing, it could lead to disputes. - Some companies accept ideas but set strict conditions - Ex. LEGO allows submissions but under clear rules - **Quasi Contracts** - Not a real contract. Instead, it's something the court creates to prevent unfairness. - When is it used? - If there's no real contract, but someone has provided a benefit to another person, and it would be unfair for that person not to pay - Ex. You perform work for someone, and they accept the benefit. The court may "invent" a contract to ensure you get paid. - How is payment decided? - The court uses quantum meruit, which means "as much as they deserve" (a fair value for the work done) - Important limitations - You can't force a benefit on someone and expect payment - Ex. Painting someone's house without their consent and sending them a bill - If there's already a real contract, the court won't create a quasi contract - Courts only use quasi contracts when no other legal remedy exists Unilateral Contracts in Business - Life insurance - Policy holder performs - The insurance company is obligated to pay the benefit if needed - This is sometimes called a "reverse unilateral" -- because the performance happens before the company's promise - Bonuses - The employee works hard or achieves a goal (performs) - The company pays the bonus - Contests and rewards - People participate in a content or complete a task - The company pays the reward or prize LEYDEN V. AMERICAN ACCREDITATION - About implied contract and retaliation when Leyden, an employee at the American Accreditation Healthcare Commission, claimed that her termination was unfair after raising concerns at work - At-will employee (meaning she could be fired at any time for any legal reason) - Leyden was promised that the company would follow certain policies - They encouraged employees to report misconduct or issues - The promised no retaliation for doing so - Shortly, after, she was fired - Court - Leyden claimed the company violated an implied contract - Court ruled that at-will employees can still have implied contracts based on company polices or behavior - The company's promise to prevent retaliation was an implied contract - By firing Leyden after she reported issues, the company may have breached that promise NORTHEAST FENCE V. MURPHY QUIGLEY - Northeast Fence was hired as a subcontractor to install fences for a product. Murphy Quigley was the general contractor overseeing the project - There was no formal written contract between the two parties, but Northeast Fence completed the work - Murphy Quigley refused to pay, arguing there was no official agreement - Court - Court ruled in favor of Northeast Fence using the principle of Quasi-Contract - If would be unfair for Murphy Quigley to benefit from the work without paying for it KOLODZIEJ V. MASON - Mason, a defense attorney, made a statement during a TV interview struggling it was impossible to travel a certain distance within a specific timeframe - Mason said that he would pay a million dollars to anyone who can do it - Kolodziej took the challenge, completed it, and demanded 1M - Mason refused to pay saying it wasn't a serious offer - Court - Court ruled in favor of Mason - Mason's statement was not a serious offer - A reasonable person would not interpret the statement as a genuine offer to pay \$1 million - Mason **did not have a serious intent to contract** - No contact between parties; No mutual assent --- no contract November 21 About offer and acceptance \-- basic requirements for a contract Quantity is the most important thing Termination of an Offer - An offer remains open until it's accepted unless it is terminated - 1\. Termination by parties: - Revocation (offeror takes back the offer): - Must be communicated to the offeree - Effective when received - Some offers can't be revoked - Irrevocable offers - Option contract -- separate contract to keep the offer open for a set time - Rejection (offeree says no): - Action taken by offeree - Effective when received - Asking about the offer (inquiries) doesn't count as rejection - Counteroffer - Action taken by offeree - Mirror image rule (the acceptance of an offer must exactly match the terms of the original offer) - Terminates prior offer and creates new one - 2\. Termination by Law: (external events) - Lapse of time - Offer expires after a reasonable time or stated deadline - Death or incompetence - Ends the offer unless it's irrevocable - Illegality - If the subject of the offer becomes illegal before acceptance - Destruction of subject manner - If the item in the offer is destroyed Acceptance - Essentially two categories: - 1\. Acceptance BY PROMISE: - Creates a bilateral contract (a promise for a promise) - 2\. Acceptance BY PERFORMANCE - Creates a unilateral contract (a promise for an action) - Key rules for Acceptance - Mirror Image Rule: Acceptance must exactly match the offer - UCC exception (for sales of goods) - Under the UCC, merchants can add extra terms unless: - The new terms are rejected, - The offer is limited, or - The terms materially change the agreement - Silence is usually not acceptance except: - If there were prior dealings where silence implied agreement - If the offeree accepts benefits of the offer - Communication of Acceptance: - Bilateral contracts: requires communication of the promise - Unilateral contracts: acceptance happens when performance is completed - Mode and Timing of Acceptance: - Acceptance is effective when sent unless: - The offer specifies otherwise - The offeree makes an error or uses an unreasonable method of communication What is the UCC? (Uniform Commercial Code) - 1\. State law - Governs sales of goods (movable items) - 2\. Enacted in every state (in some form) - 3\. Replaces Common law of Contracts (involving goods) - 4\. For Sales of Goods - 5\. For any goods transaction (business and personal) - Applies to both business and personal goods transactions Mailbox Rule Summary - Acceptance if effective when sent, except: - 1\. If an unreasonable method is used (ex. Slow mail) - 2\. If the offer specifies a different method or timing - 3\. If rejection is sent first -- then the first response received counts - Revocation and rejection are effective when received Online "Terms of Service" & Policies - 1\. Terms of Service - Users accept terms in different ways: - Clicking "agree" before using the service - Using the service after reviewing the terms - Hidden terms generally don't count as accepted (may be procedurally unfair) - Updated terms may require acceptance through continued use of the service - "agree" button before access -- agreement - Use of service after reviewing -- agreement - Use of service with hidden terms -- no agreement - Procedural unconscious ability - 2\. Policies (like privacy polices): - Sometimes just statements of intent, not enforceable promises - In some cases, policies may be treated as contractual promises What is Consideration? - Consideration is the value given in exchange for a promise - Does not matter how much the value is, just that something of value is exchanged - Each promise must have consideration in return to form a valid contract Valid Consideration - For consideration to be legally valid: - Not just economic loss -- it must be a legal detriment (something the person gives up or agrees to do) - Three types of legal detriment: - Promise to do something you were not previously obligated to do - Performing an action you weren't required to do - Refraining from something you have a legal right to do - The consideration must be bargained for, meaning the parties agree on it as part of the contract HAMER V. SIDWAY - William Story stopped drinking, smoking, and gambling because his uncle promised him \$5000 if he did so until he turned 21 - William followed the promise and asked for the money. - Uncle agreed, but later his assignee (Hamer) was denied the money - Court - Abstaining from a legal right (ex. Gambling) is a valid consideration - Hamer wins because William gave up his right to gamble, which is enough for consideration, even though there was no money involved Lack of Consideration - Examples: - Suzy offers not to shoot you if you pay her \$99.95 (no valid consideration; threat) - Your general contractor tells you that he won't finish the work on the house unless you pay another \$1000 - Your landlord says to you, "you must pay \$1000/month rent and then you can live here for as long as I have the apartment available" (this lacks consideration because there's no real exchange) - Instances where consideration is lacking (parties may not be aware) - 1\. Pre-existing legal duty - Promising to do something you were already required to do - 2\. Past consideration - Something that was done before the promise, not in exchange for it - 3\. Illusory promises - Vague or unenforceable promises that don't actually bind the parties VASSILKOVSA V. WOODFIELD NISSAN - Nadejda Vassilkovska buys a car with a contract that includes a two-sided arbitration agreement - Later, she sues the dealership for misrepresenting the car price, but they want to enforce the arbitration agreement - Court - While agreements to arbitrate are typically fine, Woodfield's promise to arbitrate was illusory because it excluded the dealership from arbitration - Cort said this wasn't a valid agreement due to the lack of real consideration Consideration Unnecessary - 1\. Written promise - If you sign a written document saying you intend to be legally bound, it might be enforceable in certain cases (like in the Uniform Written Obligations Act in Pennsylvania) - Contains the statement that you "intend to be legally bound" - 2\. Detrimental reliance - Promissory Estoppel - A promise can be enforceable even without consideration: - There's a clear promise - The person reasonably relied on it (justified reliance) - Their reliance caused them to change their position (substantial/definite reliance) - Ex. A job offer might be enforceable if you moved mor made significant changes based on it, but not if it's an "at-will" job - 3\. Gift promises - Generally a promise to make a gift is not enforceable unless it includes delivery and a clear intent to give - Donative intent - Delivery December 5 Nature of Capacity - General def: mental ability to understand the nature and effects of one's acts - Specific definition: entering into a contract Void vs. Voidable - Void - A void contract is completely unenforceable - This happens when it's missing an essential element (e.g., legality, consideration) - Voidable - A voidable contract can be canceled (disaffirmed) by at least one party - Often happens to protect one party (e.g., minors, mentally incapacitated) Minors - A minor is someone under the age of majority (usually 18 in most states) - Also known as "infancy" - Minors can form contracts - These contracts are not void, but they are voidable by the minor - Minors can disaffirm (cancel) the contract - Parents? - Generally not liable - Co-signing - To dissafirm a contract, the minor must: - Do so before turning 18 or within a reasonable time after reaching adulthood - Be clear and explicit about canceling - Minors can also ratify (approve) the contract after turning 18: - Ratification can be express (spoke/written) or implied (actions (ex. Continuing to make payments)) LOPEZ V. KMART - Adrian Lopez, 16 year old, was hired by Kmart - Before starting work, Lopez agreed to arbitrate employment disputes, with the option to opt-out within 30 days - Two years later, Lopez filed a lawsuit over wage statements - Kmart wanted arbitration, but Lopez disaffirmed the agreement - Court - Minors can disaffirm until they turn 18 or a reasonable time afterward - Rule can apply to employment contracts - Lopez's disaffirmation was valid, so he was not bound to arbitration Minors & Necessaries - Minors can disaffirm contracts for necessaries (essential items like food, shelter, medical care, transportation) - However, minors must pay the reasonable value for what they received - This is treated like a quasi-contract (created by the court to ensure fairness) - What counts as "necessary"? - Depends on the specific situation - Food, shelter, transportation, medical care - Ex. If parents are providing adequate food and housing, a minor may not need to contract for those items Minors and the Internet - About 1/3 of internet users worldwide are minors - Rules for minors online: - In the U.S., minors under 13 need parental consent to sign up for online services - In FL, no online access under 14 - In the EU, data protection laws (GDPR) let countries set the minimum age between 13-16 - Minors can disaffirm online agreements/contracts just like in-person agreements - Ex. Cancelling payments or persmissions to use content Quick Note: Other Important Capacity Categories A table with text on it Description automatically generated Nature of Legality - Contracts can be illegal if: - They involve an illegal act or object (ex. Selling drugs) - The relationship or transaction itself is illegal - Important: an illegal act doesn't have to be a crime -- it could simply violate public policy or laws Key Legality Issues - 1\. Contracts that restrain trade - Contracts that limit competition or trade may be illegal under: - **Federal Sherman Act** (federal law) and **state antitrust laws** - "Per se" illegal categories (always illegal) - **Price fixing**: competitors agree to set prices - **Bid rigging**: companies collude to control bids - **Dividing territory**: companies agree to not compete in specific areas - **Group boycotts**: competitors refuse to do business with someone - Covenants not to compete (agreements to restrict someone from working for competitors) - Not always illegal, but restrictions must be reasonable - Some states do not enforce these agreements at all - Reasonable restrictions - Time (for a limited period) - Geography (limited to a specific area) - Scope of employment (related to the job/business interest) - 2\. Unconscionable Contracts - If it's extremely unfair or "shocks the conscience" of the court - 2 types: - **Substantive Unconscionability** (unfair contract terms): - **Exculpatory clauses:** terms that release one party from liability - **Allowed if:** - The risk is clearly stated and voluntarily accepted - It doesn't involve intentional or criminal conduct - **Procedural Unconscionability** - **Adhesion contracts:** "take it or leave it" contracts where one party has no choice - Not automatically illegal but may be unconscionable if terms are unfair - Ex. Hidden arbitration clauses U.S. V. REALPAGE - Issue: price-fixing through algorithms - What happened: - RealPage sold a program called YieldStar to landlords - The program used private data to suggest higher rent prices, helping landlords keep rents high - Govt claim: - This is price fixing since landlords are working together to inflate prices - Competitors working together to keep prices high - First case to be based on coordination by algorithm - Still ongoing; may end in a settlement FINCH V. INSPECTECH - Issue: exculpatory clause in a home inspection contract - Finches hired InspecTech to inspect a home before purchase - The contract included an exculpatory clause, stating InspecTech wasn't responsible for any unreported issues - "client hereby releases and exempt the company from all liability and responsibility for repairing any unreported defect" - InspecTech finds no serious problems - Finches closed on house - One week later discover \$39,000 in water damage - Finches sue InspecTech - Court - The exculpatory clause was invalid because it violated public policy - Inspectors cannot escape liability for failing to meet professional standards - The Finches were allowed to continue their lawsuit December 10 Legality Consequences - If a contract is **illegal**, the consequences are: - **usually void** (treated as if it never existed) - **In Pari Delicto** - If both parties are equally at fault, neither gets help from the court - **Restitution/withdrawal** - If one party withdraws from the contract before performance, they may recover their losses - **Reformation** - Courts may rewrite part of the contract to fix the illegality - **Voidable** if: - One party is **Justifiably ignorant** (didn't know it was illegal) - One party is part of a **protected class** (e.g., employees protected by labor laws) - Some illegal contracts may also result in **civil or criminal penalties** Nature of Contracts - To form a valid contract, you need: - **Offer & acceptance** (clear intent to agree shown through words, actions, or circumstances) - **Consideration (**something of value exchanged) - **Contractual capacity** (both parties must be able to enter the contract) - **Legality** (the contract must be for a legal purpose) - Defenses Against a Contract: - **Improper form of contract** - If the contract doesn't meet legal formalities (ex. Written or oral) - **Genuineness of assent** (if agreement wasn't genuine due to fraud, duress, or mistake) - Statute of fraud - Purpose: prevent fraud by requiring certain contracts to be in **writing** to be enforceable - It's not about fraud itself, but about proving whether a contract exists - A "Statute" is a law passed by legislation When the Statute of Frauds Applies 1. **Contracts Involving Land** a. Sale of land, permanent interests in land b. Oral leases are legal but only if they are temporary. Long-term leases must be written. 2. **One-Year Rule** c. Contracts that cannot possibly be performed within a year must be in writing d. Focuses on what's objectively possible, not what's likely 3. **Sale of Goods** e. Under the UCC (Uniform Commercial Code) i. Applies to the sale of movable, tangible goods ii. If the price if \$500 or more, the contract must be in writing iii. The writing must include a signature and essential terms (ex. **Quantity)** - Exceptions to the Statute of Frauds - A contract may still be enforced even if it isn't written if: - 1\. **Partial Performance** - One party has already started performing (ex. Made a payment or delivered goods) - 2\. **Admissions** - A party admits in court or testimony that a contract exists - 3\. **Detrimental reliance** - The other party relied on the promise and suffered harm (promissory estoppel) UCC Exceptions to Statute of Frauds - **Specially manufactured good**s: - if a seller starts making customer goods for a buyer, the contract is enforceable even without a writing - **Partial performance:** - Payment has been made or goods have been delivered and accepted - Merchant's Written Confirmation: - If merchants exchange a written confirmation (ex. An order confirmation), it's enforceable even if there's no signed contract  Modern Contracts - E-SIGN (Electronic Signatures in Global and National Commerce Act) - **Federal law** that allows electronic contracts, signatures, and records to be legal - **Commerce clause Preemption**: Applies unless the **UETA** (state law) is enacted - electronic signatures can take various forms (ex. Typed name, checkbox) - No one can be forced to use electronic contracts - Contracts are **enforced when accepted** and **acceptance is sent** (ex. Via email/fax) IACONO V. LYONS - Iacono and Lyons agreed to split Las Vegas winning 50/50. - Lyons won almost 2M but claimed no written contract, so it wasn't enforceable - Paid out in 20 years - Court - The winnings could be paid within a year, so the one-year rule didn't apply - There was valid consideration. Iacono won the case. Fraudulent Misrepresentation - Fraud occurs when there is a misrepresentation: - Misrepresentation **of fact** - Or opinion of an expert - Misrepresentation can be: - **Explicit** (direct statement) - **Conduct** (ex. Hiding something) - **Silence** (usually not fraud unless it creates a dangerous situation) - **Intent to deceive:** - **Scienter** (knowing intent to deceive) - Recklessness or negligence can also count - **Justifiable reliance:** - The victim must **reasonably rely** on the false information - No knowledge of the truth - **Injury & Remedies:** - Contract can be voided - Can enforce the contract and sue for damages (including **punitive damages** in fraud cases) SARVIS V. VERMONT ST. COLLEGES - Sarvis applied for a job without disclosing his bank fraud conviction and prison sentence - He suggested he worked during those years but was "retired" - Fraud discovered when his probation officer called - Court - Fraud occurred due to partial disclosure - The omission was **material** to the contract MISTAKE - Not all mistakes matter -- only specific types of mistakes can void contracts - **Types of Mistakes:** - **1. Mistake of Fact** - A misunderstanding about something **true or false** related to the deal - **2. Mistake of Judgement or Value:** - Courts do not intervene if the mistake involves value or judgement (ex. You thought a painting was worth more) - **Unilateral Mistake** (One Party's Mistake) - General rule: too bad. We don't help in this case. The contract is still enforceable. - Exceptions: - The other party **knew** about the mistake and did nothing to correct it. - Mathematical mistakes that the other party should have noticed. - **Mutual (Bilateral) Mistake (**both parties' mistake): - Both parties misunderstood a fact -- the contract can be voided - Must be a mistake of fact, not value SHERWOOD V. WALKER - Sherwood bought a cow described as "barren" for \$80 (about \$3000 today) - At delivery, the cow turned out to be pregnant and worth \$750-1,000 (about \$38,000 today) - Court - Both parties misunderstood the cow's condition - The contract could be rescinded (canceled) Lack of Assent - **Duress** - Happens when there is too much pressure to agree to a contract - Pressure must involve: - A wrongful act (ex. Tort) - Something illegal - What is NOT duress: - Economic pressure alone isn't enough - It must be combined with a wrongful act December 12, 2024 - Judges interpret contracts and decide what they mean - **Question of Law** judges have the final say Contract Performance - **Discharge of obligations** Do what you promised - **Complete Performance** - Both parties fully meet their obligations - No breach. Ideal in business contracts. - **Substantial Performance:** - Performance isn't perfect but close. - Triggers a response from the other party; considered a breach - **Satisfactory Performance** - Would a reasonable person be satisfied? If yes, then it's complete. - More than substantial - **Conditioned performance** - **Condition Precedent:** - A condition must happen before performance begins - Ex. Delivery only happens if a special nozzle is acquired - Contracts can be set in steps or milestones conditions - Conditions that must be complete before moving to the next one - If I don't get something before, I'm not required to perform - **Condition Concurrent:** - Has to happen during the performance - Ex. Weekly deliveries occur only if oil remains \$2.50-\$2.90/gallon - **Condition Subsequent:** - Cuts off performance. A condition that ends performance - Ex. When the temperature rises above 40 degrees at night, you stop delivering Performance example - Contract for heating oil delivery in exchange for \$100 on Friday at noon. - Deliver the oil at noon complete - Deliver the oil at 12:01 substantial - Technically a breach. But will hold you on the hook. - Deliver jet fuel at noon insubstantial ST. LOUIS PROD. MARKET V. HUGHES - Hughes worked for 19 years and owed severance pay. - Condition precedent: return all company property before payment - Hughes did not return company laptop, so company refused to pay severance - Court - A condition must be met fully, not matter how small - Hughes' failure to return the laptop was a breach, so the company did not have to pay severance What is a Force Majeure Provision? - Excuses performance due to uncontrollable events - Ex. Pandemic, govt actions, natural disasters, etc. - **Narrow Interpretation** - Must specifically list events in the contract (e.g., pandemic, war) - If an event isn't listed, courts won't add it - Notice required to trigger the provision Other Methods of Discharge - **By Agreement** (both parties agree to end the contract) - **Novation** Let's create a new contract that will replace old one - **Recession** cancel the contract - **By Operation of Law** - **Statute of Limitations** - You can't sue for breach of contract after 6-10 years - Longer than tort - If you get sued after that time, you can't be sued for breach of contract. - **Impossibility** - Performance becomes objectively impossible due to uncontrollable events - **Impracticability** - Performance is possible but would cause extreme hardship - Ex. bankruptcy - **Frustration of purpose** - The contract's purpose is destroyed due to unforeseen events - Quasi Contract as remedy EAST CAPITOL V. ROBINSON - East Capitol (non-profit) hired Robinson one a one-year contract (not at-will) - Before the contract ended, Robinson was terminated - Robinsons sued for breach of contract - East Capitol's Defense: Impossibility - They didn't secure grant funding to pay her - Court - Impossibility requires an external event beyond control - Lack of funding was East Capitol's responsibility, not an outside force - Decision: - East Capitol breached the contract and must pay Robinson Breach of Contract - Failing to do what you promised to do, no matter how small **Breach** - **Types of Breach:** - **1. Material Breach** (Major) - No substantial performance - Options for the non-breaching party: - Cancel the contract and sue for damages - Perform and still sue for damages - 2\. **Non-Material Breach** (minor): - Substantial performance exists - The non-breaching party must perform but can still sue for damages - 3\. **Anticipatory Breach** (repudiation) - Other party clearly signals they won't perform - The non-breaching party can: - Cancel and sue for damages immediately (if material) Material Vs. Immaterial Example - Contract for heating oil delivery in exchange for \$100 on Friday at noon - You deliver oil at noon complete. No breach. - You deliver oil at 12:01 minor breach. Still owe \$100 but can sue for small damages - You deliver jet fuel at noon major breach -- contract incomplete. **Fraud** - Lying to induce someone into a contract - It is a wrong an may involve punitive damages **Breach of contract** - One party fails to deliver on a promise - Not a wrong, just a deal not delivered - Ex. Fyre Festival Controversy Damages - Purpose: to put the non-breaching party in the same position they would have been if the contract was performed. - **Types of Damages:** - **1. Compensatory Damages:** - Repair harm caused by breach - Compensated enough so you don't care. - **2. Punitive Damages** - Very rare. Only when fraud is involved. - Usually restricted to fraudulent misrepresentation - In general, breach of contract is not "wrong" or tortious - 3\. **Consequential Damages** - Losses that are foreseeable due to the breach - 4\. **Liquidated Damages** - Pre-set damages in a contract - Must reflect real costs and not penalties - Ex. Tv show \$50,000 penalty for talking to press. This is not acceptable. Must be reasonable related to what the real damages would be. Measurement: same position - It's intuitive - What would make you okay? Put you in the same place? - Contract price - Market price vs. contract price - Lost profits or other income - Consequential damages - Foreseeability Equitable Remedies - **When money isn't enough:** rare cases where courts provide non-monetary relief - **1. Recession and Restitution** (unilateral) - Cancels the contract and restores both parties to their original state - Available for fraud, mistake, duress - 2\. **Specific performance** - Court orders a party to fulfill their promise - Rare; except for real estate contract - Not allowed for personal services (13^th^ amendment) - Service contracts can never have specific performance - Money is the only remedy in this case - **3. Reformation** - Court rewrites the contract to reflect the true agreement - **4. Quasi-contract** - imposed to prevent unfair enrichment when no real contract exists - Only then is when judges get involved