Contracts PDF

Contracts Contracts * Contracts versus “Enforceable Agreements” Contract = “K” Types: Bilateral Contracts Unilateral Contracts Difference between the two  law...

Contracts Contracts * Contracts versus “Enforceable Agreements” Contract = “K” Types: Bilateral Contracts Unilateral Contracts Difference between the two  law common Contracts Analysis Approach * Step1: Is there a Valid Contract? Contract Formation Loading… Step 2: Are there any issues related to the performance of a valid contract? Contract Performance & Breach Step 3: What Remedies are Available if a Contract is Breached? Contract Remedies Contract Formation Offer I Termination Revocation Rejection Acceptance Consideration Defenses Was there a Valid Offer? Requires intent to be bound Must be definite in terms * Loading… Must be communicated to offeree  Counteroffer & Common law required mirror image of offer Implied rejection of offer Effect of counteroffer is the creation of a new offer requiring a new acceptance Counteroffer made during option period does not terminate power of acceptance Acceptance & Capacity: eligible offeree - Option K may be assigned to 3rd party Communicated Unequivocal Unlike revocations, rejections, and options, which are effective upon receipt, acceptance is the only thing effective upon dispatch (The Mailbox Rule Consideration “Bargained for Exchange” - & Past consideration: NO consideration Moral consideration: NO consideration Gift promises: NO consideration Forbearance to sue on a claim: If valid claim YES consideration New promise to pay past debt: OK, can prolong debt Illusory promise: NO consideration Pre-Existing Duty Rule: Depends Promissory Estoppel Substitute for consideration alternative Detrimental reliance D Allowed if: One party promised The other party reasonably relied on that promise to his/her/their detriment Avoids injustice Defenses to Formation Writings Statute of Frauds Parole Evidence Rule Public policy Unconscionability Illegality Incapacity Fraud/Duress Mistake Statute of Frauds Applies to: Sales of real property & Goods of $500 or more Contracts not capable of being performed within one year Guarantee / Surety Content: Requires all essential terms (parties, subject matter) Signed by the party to be charged (raising the SOF defense) Parole Evidence Rule * Bars evidence of any prior or contemporaneous agreements that vary/contract the essential terms of an integrated writing. Integrated writing: Parties intend a contract to be a final and complete expression of their terms. If integrated writing, “four corners rule” If no writing, no PER  ] Third Party Beneficiary (3PB) For a third party to prevail under an A-B K: Need valid K between parties Parties’ intent must be shown at time K formed Must be intended 3PB (creditor, donee), not incidental Assignment & A transfer of rights Assignee has the same rights as assignor under K Rights must be sufficiently described Assignor must indicate a present intention to transfer rights exclusively to assignee Delegation A transfer of duties * Duty must be delegable Non-delegable duties: too personal, prohibited by K Delegee must assume duties Delegor remains secondarily liable for delegee’s nonperformance unless novation Contract Performance Conditions Discharge Loading… Breach of Contract Conditions ] A condition is an event not certain to occur which must occur unless its non-occurrence is excused before performance on a K becomes due Types: Express Implied Satisfied? recognize Excused? Anticipatory Repudiation Express words repudiating intention to perform a K Must be unequivocal Other party may: Reject repudiation Treat as breach (suspend performance) If neither party has performed, can sue immediately If one party has fully performed, must wait until time of performance to sue Prevention One party in bad faith interferes with satisfaction of the condition Attempted prevention will excuse condition Discharge of K Duties * Changed circumstances after the K has been formed that releases or excuses one or both parties from performing. Can be partial, temporary, or full Impossibility Severe Impracticability Commercial Frustration  Impossibility Must be objective impossibility the thing can’t be done by anyone. If temporary, only suspends performance Illegality After K is formed, subject matter becomes illegal Death Commercial: Death does not discharge, estate must hire someone else to perform (painting house) Personal: Decedent himself essential to bargain (artist) Destruction of subject mater of K Depends on who bears the risk of loss Impracticability Not technically impossible but extremely burdensome Courts are very reluctant to discharge duty under this theory Requires: Severely burdensome / risky Claimant did not assume risk Market fluctuation not sufficient Commercial Frustration Total frustration of the principle purpose of the K Does it make what the party would get worthless? Example: Renting out suites to watch a parade and it is cancelled  Breach of K * A breach is an unjustified failure to perform an absolute duty Major v. Minor Major: (essence of the bargain) Excuses injured party’s counter performance and allows for right to damages Minor: Requires continued performance by injured party and a suit for damages for defective performance Plaintiff gets substantial benefit of his/her/their bargain If very minor deviation, possible substantial performance Prospective Breach – Anticipatory Repudiation remedies Anticipatory Repudiation Express words repudiating intention to perform a K Must be unequivocal Other party may: Reject repudiation Treat as breach (suspend performance) If neither party has performed, can sue immediately If one party has fully performed, must wait until time of performance to sue Contract Remedies Damages Expectation Reliance Liquidated Restitution Specific Performance Damages NO punitive damages in K Nominal damages where liability proven but can’t prove actual damages Compensatory in one of three forms: Expectation Reliance Liquidated Expectation * Goal: To give the injured party the benefit of their bargain $$ in the amount as if the K had been fully performed Must be natural and consequential Standard measure of damages that arise naturally in event of breach Foreseeable at the time the K was made Certain, not speculative Unavoidable - Duty to Mitigate Damages Specific Performance & Equitable remedy Court orders the other party to perform the K as intended (no money damages as substitution) Usually disfavored Must show $$ damages are inadequate Rare circumstances where the subject of the K is unique and irreplaceable Not allowed in service Ks