Condensed Document - Contract Law Fundamentals PDF

- - - - - - - ### RP\#1: Agreements ================= - - - - - - - - - - - - - - - - - - - - - - - - - - - - How to write examples 1. a. b. c. 2....

- - - - - - - ### RP\#1: Agreements ================= - - - - - - - - - - - - - - - - - - - - - - - - - - - - How to write examples 1. a. b. c. 2. d. e. 3. - - - - - - - - - - - - - - - - - - - - - - - - Quimbee: Formation: ------------------- ### Basics - ### Contracts: agreements that are legally enforceable - ### Second restatement of contracts: outlines the rules and principles found in the common law of contracts - - ### Article 2 of the Uniform Commercial Code (UCC): a set of uniform statutes governing the sale of goods - - - - - - - - - - - - - - - - - - ### Offer - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ### Acceptance - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#2: Manifestation of Mutual Assent ===================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#4: Making an offer ineffective ================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#5: Modes of Acceptance, part 1 ================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#6: Modes of acceptance, part 2 ================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#7: 2-207 Battle of the Forms ================================ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - More 2-207 ---------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#8: Misunderstood, Incomplete, and Indefinite Terms ====================================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#9: Consideration, part 1 ============================ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#10: Consideration, part 2 (when we can't find consideration) ================================================================ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#11: Statute of Frauds ========================= - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#12: Fraud, Misrepresentation, Nondisclosure, Lack of Capacity, Undue Influence, Duress ========================================================================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#13: Illegality, Unconscionability, and Mistake ================================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#14: party-supplied terms; context-supplied terms; good faith ================================================================ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#15: Parol Evidence Rule PER =============================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#16: Contract Interpretation; Rules of Construction ====================================================== - - - - - - - - - - - - - - - RP\#17: Warranties ================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#18: Conditions; Modifications; Waivers; Estoppel ==================================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#19: Excuses for Non-performance =================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#20: Material and Non-material breaches ========================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#21: Money Damages ===================== - - - - - +-----------------------------------------------------------------------+ | **E = \[(PromVal-DelVal) + OL + C + I\] - \[CA\]** | +=======================================================================+ | E = expectation damages; the value of the K to the parties | | | | PromVal = value of what was promise; what the breaching party as | | supposed to have done | | | | DelVal = value of what was delivered; what the breaching party did | | do; sometimes 0 | | | | OL = other losses; what you have to add to DelVal to get the | | equivalent of the breached promises (the replacement of the | | performance) | | | | C = consequential damages; losses that fall naturally from the | | breaching party's failure to perform- or those that the breaching | | party had reason to know about before the breach (foreseeability, | | foreseeable losses) | | | | I = incidental damages; damages that involve the non-breaching party | | trying to figure out how bad the breach was (cost of stopping | | performance, cost to inspect/transport goods, cost of disposal of | | goods) | | | | CA = cost avoided; what the non-breaching party SAVES by not having | | to perform his remaining promises (prepaying = 0) | | | | PromVal, DelVal, OL = general damages; those relating to the | | non-performance of the promise | | | | C, I = special damages; those that flow from the non-performance of | | the promise | +-----------------------------------------------------------------------+ 1. **E = \[(10k - 0)\] + 2k + 0 + 0\] - 10k** **E = 2k** **PromVal = 10k = original cost of painting house** **DelVal = 0 = nothing was delivered** **OL = 2k = make up for having to find the new painter for 2k more** **C = 0 = none** **I = 0 = none** **CA = 10k = the cost of P saved from D not painting the house** 2. **E = \[(400k - 0) + 30k + 0 + 0\] - 0** **E = 430k** **PromVal = 400k = original cost of the machine** **DelVal = 0 = nothing was delivered** **OL = 30k = make up for the new machine** **C = 0 = none** **I = 0 = none** **CA = 0 = because B already prepaid- B never avoided any costs** **Get the cost of the new machine difference + money back** 3. **Difference between PromVal (a machine that would produce 100 widgets an hour) and what is delivered (a machine that makes 60 an hour) \[+ OL + C + I \] - CA** - - 4. **E = \[(250k - 0) + 25K + 0 + 0\] - 250k** **E = 25k** **PromVal = 250k = original cost of building barn** **DelVal = 0 = nothing was delivered** **OL = 25K = difference from O.G. bid to bid he had to take** **C = 0 = none** **I = 0 = none** **CA = 250k = original bid** 5. **E = \[(250k - 125k) + 50K + 0 + 0\] - 125k** **E = 50k (plus incidentals whatever they are)** **PromVal = 250k = for the original winning big** **DelVal = 125k = 125k worth of work was done** **OL = 50k = difference between O.G. bid and the 175k bid he had to take** **C = 0 = none** **I = 0 = none** **CA = 125k = cost avoided by not paying the entire 250k of the original bid (think 250k (OG BID) - 125K (work already done) = 125k left unpaid)** - - - - - - - - - RP\#22: More on money damages; starting to think about limitations on money damages =================================================================================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#23: rest of limitations on money damages, plus agreed-upon remedies and non-monetary relief =============================================================================================== - - - - - - - - - - - - - - - - - -  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Example: Sarah owns a small but popular wedding venue in wine country. She enters into a contract with James, who wants to rent the venue for his daughter\'s wedding on June 15, 2024. The contract price is \$15,000 for the venue rental. Based on her experience and financial records from previous years, Sarah knows that June is peak wedding season; that she typically books the venue 12 months in advance; that last-minute cancellations in June usually result in a 60% chance of rebooking, but at a 40% discount; that her profit margin is typically 45% of the rental fee; and that she incurs \$2,000 in pre-event preparation costs. The contract includes a liquidated damages clause requiring James to pay 80% of the contract price (\$12,000) if he cancels within 60 days of the event. James cancels 45 days before the wedding. Can Sarah claim liquidated damages? +-----------------------------------------------------------------------+ | Lost revenue if unable to rebook: \$15,000. | | | | Lost revenue if rebooked at discount: 60% chance of rebooking × | | (\$15,000 × 60%) = \$5,400. | | | | Expected lost revenue = (40% × \$15,000) + (60% × \$5,400) = \$9,240. | | | | Lost profit calculation: Maximum lost profit (no rebooking) = | | \$15,000 × 45% = \$6,750. Expected lost profit = \$9,240 × 45% = | | \$4,158. | | | | **Additional costs:** Preparation costs already incurred = \$2,000. | | | | Total expected damages = \$4,158 (lost profit) + \$2,000 (costs) = | | \$6,158. | | | | The liquidated damages amount of \$12,000 is nearly *double* the | | expected damages of \$6,158. | | | | The liquidated damages clause is likely unenforceable because the | | amount is unreasonably large compared to the probable loss. Although | | the circumstances satisfy the first requirement for enforceability | | (damages were difficult to determine at the time of contracting), the | | amount specified (\$12,000) is significantly higher than Sarah\'s | | reasonably expected damages (\$6,158). Courts will not enforce | | liquidated damages clauses that appear to be penalties rather than | | genuine pre-estimates of probable losses. | +-----------------------------------------------------------------------+ Example: Marcus verbally agrees to sell his antique car to Elena for \$15,000. The agreement stipulates that Elena will pay in 12 monthly installments, with the final payment and transfer of ownership to occur in 14 months. Elena immediately takes possession of the car and begins making payments. After 6 months and \$7,500 in payments, Marcus attempts to rescind the agreement, claiming it\'s unenforceable under the Statute of Frauds. Is the agreement enforceable? +-----------------------------------------------------------------------+ | The correct answer is B. Although the agreement for the sale of the | | car falls under the statute of frauds due to its value being \$500 or | | more and its duration exceeding one year, the partial performance | | exception likely applies here. Elena has taken possession of the car | | and made substantial payments (\$7,500 out of \$15,000), which | | constitutes significant partial performance. | | | | In many jurisdictions, this level of partial performance would be | | sufficient to take the contract out of the statute of frauds and make | | it enforceable. The courts often recognize partial performance as an | | equitable exception to prevent the statute of frauds from being used | | as an instrument of fraud itself. Moreover, under UCC § 2-201(3)(c), | | there is a specific exception for goods that have been received and | | accepted. Since Elena has possession of the car, this further | | supports the enforceability of the agreement. | | | | A is correct but is not the best answer. Under UCC § 2-201(1), | | contracts for the sale of goods for \$500 or more generally need to | | be in writing to be enforceable. But this option doesn\'t account for | | potential exceptions to the Statute of Frauds. | | | | C is incorrect because it is conflating the Parol Evidence Rule and | | the Statute of Frauds. | | | | D is incorrect. The Statute of Frauds does apply to certain sales of | | personal property, including goods valued at \$500 or more under the | | UCC. | +-----------------------------------------------------------------------+ RP\#24: everything that is not expectation damages ================================================== - - - - - - - - - - - - - - - - - - - - - - Priya runs a successful wedding photography business. She contracts with Jordan and Sam to photograph their upcoming wedding for \$3,000, with \$500 paid upfront as a deposit. The contract specifies she\'ll provide 8 hours of photography coverage and deliver 300 edited digital photos within 30 days. A week before the wedding, Priya breaks her arm skiing and notifies the couple that she can't perform. She refunds their deposit, but says that she can't do anything else for them. The couple quickly finds a replacement photographer who charges \$4,200 for the same services. What is the appropriate measure of expectation damages? +-----------------------------------------------------------------------+ | The answer is B. | | | | Goal of expectation damages: Put the non-breaching party (Jordan and | | Sam) in the position they would have been in had the contract been | | performed | | | | ·Original contract price: \$3,000 | | | | ·Deposit paid: \$500 | | | | ·Replacement photographer cost: \$4,200 | | | | To calculate damages: | | | | ·First, what loss did Jordan and Sam suffer? They had to pay \$4,200 | | instead of \$3,000 = \$1,200 more. | | | | ·But they have their deposit back, so they don't have to ask for an | | additional \$500. | | | | ·We want to put them in the same position as if Priya had performed. | | | | Therefore: | | | | ·Cost difference: they\'re out of pocket: \$1,200. | | | | ·This puts them in the position they would have been in had Priya | | performed. | +-----------------------------------------------------------------------+ ABC Tech contracts to provide 24/7 IT support services to Memorial Hospital for \$10,000/month. The contract specifies that ABC must respond to system outages within 1 hour. When the hospital\'s electronic health records system crashes at 2am, ABC\'s on-call technician is unavailable and doesn\'t respond for 8 hours. During this time, the hospital has to divert emergency patients to other facilities and cancel scheduled surgeries. The hospital terminates the contract and hires Emergency IT Solutions at \$12,000/month for the remaining 10 months. The hospital also incurs \$50,000 in overtime costs to manually input patient data, loses \$100,000 in surgery revenue, and pays \$30,000 in ambulance costs to transfer critical patients. What damages can Memorial Hospital recover? +-----------------------------------------------------------------------+ | Direct Expectation Damages: | | | | Potential Consequential Damages: | | | | Total potential consequentials: \$180,000. | | | | Total (direct and consequentials): \$200,000. | | | | Direct Expectation Damages: | | | | Potential Consequential Damages: | | | | Total potential consequentials: \$180,000. | | | | Total (direct and consequentials): \$200,000. | +-----------------------------------------------------------------------+ RP\#25: Quasi-K =============== +-----------------------------------+-----------------------------------+ | contract | quasi-k | +===================================+===================================+ | Actual (express or | Implied-in-law (courts imply | | implied-in-fact). | them). | | | | | Voluntary. | Beware the "mere" or "officious" | | | descriptors (and beware the "mere | | Remedy for breach: start with | officious intermeddler"). | | the mantra of expectation | | | damages. | Remedy: restitution. | +-----------------------------------+-----------------------------------+ - - - - - - - If, w/o being asked, M rushes out and washes E's filthy car, does M have a claim against E for payment? No. What if M did it b/c the rear window was so dirty that it was becoming a safety hazard? (What questions must you ask first to decide if E was unjustly enriched?) - - - -  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RP\#26: Exam Review =================== - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Quimbee: Enforceability ----------------------- 1. ### Consideration a. i. ii. 1. a. iii. iv. 2. b. i. ii. v. 3. vi. vii. viii. 4. 5. c. b. ix. 6. x. 7. xi. 8. 9. 10. 2. ### Promissory Estoppel c. d. xii. xiii. 11. d. e. xiv. 12. e. xv. 13. 3. ### Statute of Frauds f. g. xvi. 14. 15. xvii. 16. 17. f. xviii. 18. 19. 20. g. h. iii. xix. 21. i. xx. 22. 23. j. iv. v. k. l. xxi. 24. m. 25. n. h. xxii. 26. 4. ### Defenses i. xxiii. 27. 28. o. vi. p. vii. q. viii. xxiv. 29. r. xxv. 30. s. ix. xxvi. 31. 32. t. x. 1. 2. u. v. xi. xxvii. 33. 34. 35. w. x. 36. y. z. 37. a. xii. 3. 4. 5. 38. Quimbee: Terms -------------- 1. ### Interpretation a. b. c. i. ii. iii. iv. d. v. 1. 2. 3. vi. 4. 5. 6. vii. 7. a. 2. ### Parol evidence rule (PER) e. viii. f. ix. 8. g. h. i. x. 9. j. k. xi. l. m. xii. xiii. xiv. xv. 3. ### Conditions n. xvi. xvii. 10. xviii. xix. 11. xx. 12. 13. 14. b. i. ii. iii. 15. c. iv. v. d. 16. e. vi. vii. viii. 4. ### Warranties o. xxi. 17. f. g. 18. h. 19. xxii. i. 20. j. ix. 1. 21. k. x. p. xxiii. 22. 23. 24. l. xxiv. 25. m. xi. 2. xii. Quimbee: Performance -------------------- 1. ### Breach and repudiation a. b. i. 2. ### Mistake 3. ### Changed circumstances 4. ### Delivery of goods 5. ### Third parties Quimbee: Remedies ----------------- 1. ### Damages 2. ### Restitution 3. ### Specific performance CALI: UCC Remedies Introduction ------------------------------- - - - - CALI: UCC Remedies: Seller's Remedies When Buyer is in Breach ------------------------------------------------------------- CALI: Buyer's Remedies when Seller is in Breach ----------------------------------------------- CALI: UCC Damage Rules \[breach by seller\] ------------------------------------------- - - - - - - - - - - - - CALI: UCC Damage \[breach by seller\] ------------------------------------- - CALI: Liquidated Damages - - - - - - - - - - - - - - - - CALI: Remedies- Liquidated Damages ---------------------------------- - - - - - - - - - - - - - - -