Contracts Rule Statements PDF

**[Contracts Rule Statements]** A. **Contract Formation** - To have a valid contract, there must be an offer, acceptance, and consideration. - An offer creates the power of acceptance - An acceptance is a manifestation of assent to the terms of an offer - Consideration is a bargain...

**[Contracts Rule Statements]** A. **Contract Formation** - To have a valid contract, there must be an offer, acceptance, and consideration. - An offer creates the power of acceptance - An acceptance is a manifestation of assent to the terms of an offer - Consideration is a bargained for exchange B. **Modification** - A contract modification generally is unenforceable unless it is supported by new consideration. For there to be consideration, (1) there must be a bargained for exchange between the parties and (2) that which is bargained for must be of legal value C. **Battle of the Forms** - \(1) **[if any party is a non-merchant]**: the additional or different terms are considered to be **mere proposals to modify the contract** that do not become party of the contract unless the offeror expressly agrees - \(2) **[if both parties are merchants]**: the additional terms will be included in the contract unless: - They **materially alter** the original terms of the offer - **Expressly limits acceptance** - **Offeror** has already **objected** or objects within a reasonable time D. **Requirement that No Defenses Exist** - **[Statute of Frauds]**---requires that certain agreements, by statute, must be evidenced by a writing signed by the party sought to be bound (M.Y.L.E.G.S) - **Marriage**---a promise in consideration of marriage - **Year**---a promise that by its terms cannot be performed within one year - The date runs from the date of the agreement - **Land**---a promise creating an interest in land must be evidenced by a writing - **Executor**---a promise by an executor to pay the estate's debts out of their own funds must be evidenced by a writing - **Goods**---a contract for the sale of goods for a price of \$500 or more - **Suretyship**---a promise to pay debt or default of another must be evidenced by a writing - In Florida, other contracts required to be in writing include: (1) health care guarantees; (2) debt barred by the statute of limitations; (3) newspaper subscriptions; (4) home solicitation sales; (5) home improvement contracts and (6) credit agreements - Non-compliance with the statute of frauds renders the contract unenforceable at the option of the party to be charged. - If the Statute of Frauds isn't raised as a defense it is **WAIVED!** - A written contract can be modified orally, but the modification must be in writing if the contract **as modified** falls within the Statute of Frauds - Mutual mistake - Elements - The mistake concerns a **[basic assumption]** on which the contract is made - The mistake has a **[material effect]** on the agreed upon exchange - The party seeking avoidance **did not assume the risk (this commonly occurs when one party is in a position to better know the risks than the other party)** E. **Performance and Excuse of Nonperformance** - Impracticability---the test for a finding of impracticability is that the party to perform has encountered extreme and unreasonable difficulty and/or expense and its nonoccurrence was a basic assumption of the parties. A mere change in the degree of difficulty or expense, unless well beyond the normal range, does not amount to impracticability. - **Accord and satisfaction**--- - Accord---an in which one party to an existing contract agrees to accept, in leu of the performance that they are supposed to receive from the other party, some other, different future performance. - Satisfaction---is effect is to discharge not only the original contract but also the accord contract as well F. **Parol Evidence** - When the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain the writing is an integration. Any other expressions, written or oral, made prior to the writing, as well as any oral expressions contemporaneous with the writing are inadmissible to vary the terms of the writing. However, there are several exceptions to this rule. - **Validity issues**---This includes formation defects such as fraud, duress, or mistake may be shown by extrinsic evidence. - **Interpretation**---if there is uncertainty or ambiguity in the written agreement's terms or a dispute as to the meaning of those terms. - Showing of **true consideration paid** - **Subsequent modifications** of a written contract - Article 2 generally follows the rules discussed above, providing that a party can't contradict a written contract but may add consistent additional terms unless (1) merger clause; (2) the courts find from all the circumstances that the writing was intended as complete G. **Anticipatory Repudiation** - \(1) **[Reasonable Doubt is created:]** If one party creates **reasonable** grounds for insecurity with regard to their performance, then the other party can demand adequate assurances in writing that the party will perform when the time of performance is due. If those adequate assurances are not given within a reasonable time (within 30 days under the UCC), then the other party can treat the K as repudiated.  - \(2) **[Clear Indication that a party will not perform]**: If one party clearly indicates that they will not perform when their performance is due, then the non-repudiating party has several options: (1) treat the K as discharged, (2) wait and see if the other party will perform when performance is due, (3) rely on the repudiation, or (4) treat the anticipatory repudiation as total repudiation and sue immediately.  - The repudiating party can retract their repudiation at any time until the other party has relied on the repudiation or indicated that they consider the repudiation final. - H. **Remedies** - **Specific Performance**---if the legal remedy is inadequate, the nonbreaching party may seek specific performance - Always available for land sale contracts, because all land is unique - NO SPECIFIC PERFORMANCE FOR SERVICES! - **Compensatory Damages**---put the nonbreaching party in the position they would have been in had the promise been performed - **Incidental damages**---are always recoverable and typically include expenses reasonably incurred by a buyer - **Consequential damages**---these damages may be recovered only if, at the time the contract was made, a reasonable person would have foreseen the damages as a probable result of a breach - The plaintiff must prove that the losses suffered were certain in their nature and **not speculative** +-----------------------+-----------------------+-----------------------+ | Subject | Common Law | UCC | +=======================+=======================+=======================+ | | A party's basic duty | Perfect Tender | | | at common law is to | Rule---the delivery | | | **substantially | and condition of the | | | perform** all that is | goods must be exactly | | | called for in the | s promised in the | | | contract | contract | +-----------------------+-----------------------+-----------------------+ | Breach | Material and Minor | May reject all, | | | Breach | accept all, or accept | | | | any commercial units | | | Minor: when the | and reject the rest | | | oblige receives a | | | | substantial amount of | | | | benefit | | | | | | | | Material: when the | | | | oblige does not | | | | recive a substantial | | | | amount of benefit | | +-----------------------+-----------------------+-----------------------+ | Modification | Modification can be | Modification can be | | | made as long as there | made in good faith | | | is additional | | | | consideration | | +-----------------------+-----------------------+-----------------------+ | Acceptance | Mirror Image Rule | Battle of the Forms | +-----------------------+-----------------------+-----------------------+ | Essential terms | Clear and definitive | Quantity | +-----------------------+-----------------------+-----------------------+ **UCC\ [Buyer's Remedies = when seller breaches\ ](1) Cover = \[Cost of replacement goods - K price\] + incidental damages + (maybe consequential damages) - costs saved bc of the breach ** **(2) Market Price = \[Market price - K price\] + incidental damages + (maybe consequential damages) - costs saved bc of the breach\ \ ** **UNDER THE UCC SELLER CAN NEVER RECOVER CONSEQUENTIAL DAMAGES** **Seller's Remedies = when the buyer breaches\ (1) Resale = \[K price - Resale price\] + incidental damages - costs saved bc of the breach\ (2) Market Price = \[K price - Market price\] + incidental damages - costs saved bc of the breach\ (3) \*Lost Volume Seller = entitled to lost profit (K price - cost to the seller)\ - this seller has an *[unlimited]* supply ** **[Punitive Damages]** - **Generally, punitive damages are not awarded in contract or tort cases, However, they are awarded if the conduct is willful and wanton, malicious, or reckless.** - **In Florida, punitive damages can be awarded if based on clear and convincing evidence, the defendant intentionally engaged in misconduct or gross negligence. Punitive damages cannot exceed the great of (1) three times the amount of compensatory damages or (2) 500,000** **\ **