Past Papers PDF - Contract Law

EMP 126-160 - - - - - - - - - - La Salle National Bank v Vega *Appellate Court of Illinois, Second District* *167 Ill.App.3d 154, 117 Ill.Dec. 778, 520 N.E.2d 1129 (1988)* - - - - - Ever-Tite Roofing Corp v Green *Court of Appeal of Louisiana* *83 So.2...

EMP 126-160 - - - - - - - - - - La Salle National Bank v Vega *Appellate Court of Illinois, Second District* *167 Ill.App.3d 154, 117 Ill.Dec. 778, 520 N.E.2d 1129 (1988)* - - - - - Ever-Tite Roofing Corp v Green *Court of Appeal of Louisiana* *83 So.2d 449 (1955)* - - - - - - - - - - - - - - - - Davis v Jacoby *Supreme Court of California* *1 Cal.2d 370, 34 P.2d 1026 (1934)* - - - - - - - - - - - - - - Hendricks v Behee *Court of Appeals of Missouri, Southern District* *786 S.W.2d 610 (1990)* - - - - - - Adams v Lindsell *Court of King's Bench* *106 Eng. Rep. 250 (1818)* - - - - - - - - Ellefson v Megadeth Inc *United States District Court, S.D. New York* *2005 WL 82022 (2005)* - - - - - - - - - 9/11- IN CLASS -------------- *Modes of Acceptance* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - EMP 160-186 *Carlill v Carbolic Smoke Ball Co.* *Court of Appeal* *1 Q.B. 256 (1893)* - - - - - - - - - - - - - - - - - - - *Marchiondo v Scheck* *Supreme Court of New Mexico* *78 N.M 440, 432 P.2d 405 (1967)* - - - - - - - - - - - - - - - - - - - - - - - *Laredo National Bank v Gordon* *United States Court of Appeals, Fifth Circuit* *61 F.2d 906 (1932)* - \#\#\# 1. Does the K fall within the UCC or common law? \*\*Analysis:\*\* This contract pertains to legal services provided by an attorney (Gordon) to a client (Laredo National Bank). Contracts for legal services fall under common law rather than the Uniform Commercial Code (UCC), which governs the sale of goods. Therefore, this is a common law contract. \#\#\# 2. Has a K been formed? \*\*Analysis:\*\* Yes, a contract has been formed. Gordon\'s telegram stating his fee of \$12,500 was a valid offer, and the bank\'s silence and subsequent actions (such as proceeding to settle with the Rosenblums) can be interpreted as acceptance of that offer, leading to the formation of a contract regarding the attorney\'s fee. \#\#\# 3. What are the material terms of the K? \*\*Analysis:\*\* The material terms of the contract include: \- The provision of legal services by Gordon to the bank. \- The agreed-upon fee of \$12,500 for those services, specifically in the context of settling the lawsuit against the Rosenblums. \#\#\# 4. Have those material terms been performed? \*\*Analysis:\*\* Gordon performed his part of the contract by providing legal services (i.e., bringing the suit against the Rosenblums) and following through with the settlement negotiations. The bank also accepted the settlement, which indicates that it engaged in the necessary steps to fulfill its part of the contract. \#\#\# 5. If not, has performance been excused? \*\*Analysis:\*\* Since Gordon has performed his obligations under the contract, the question of excused performance doesn't directly apply here. There is no indication that any performance by Gordon was excused. \#\#\# 6. If not, have the \[material\] terms been breached? \*\*Analysis:\*\* The bank contended that the fee was \"beyond reason,\" which suggests a potential dispute regarding the acceptance of the fee term. However, since the court found that the bank\'s silence constituted acceptance of the \$12,500 fee, the court determined that the bank breached the contract by not paying the agreed-upon fee after accepting Gordon's offer. \#\#\# 7. If there's been a breach, what's the remedy? \*\*Analysis:\*\* The remedy for the breach, as determined by the court, was that Gordon was entitled to the \$12,500 fee. The court directed a verdict in favor of Gordon for that amount, which includes any applicable interest. \#\#\# 8. If there's no contract, is there a quasi-K remedy? \*\*Analysis:\*\* While the court found that a contract was formed, if it had ruled otherwise (i.e., if there was no contract), a quasi-contract (or unjust enrichment) remedy might have been appropriate. This would be based on the principle that the bank received a benefit from Gordon\'s services and would not be unjust to require payment for those services even in the absence of a formal contract. \#\#\# Conclusion Applying this test reveals that a contract was indeed formed under common law, with material terms clearly defined and performed by the attorney. The bank's failure to compensate Gordon constituted a breach, thereby justifying the court\'s ruling in favor of the attorney for the fee he requested. *People v Robinson* *Illinois Appellate Court* *974 N.E.2d 978 (2012)* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - *Gresser v Hotzler* *Court of Appeals of Minnesota* *604 N.W. 2d 379 (2000)* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9/16- IN CLASS -------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Diagram 2-207 ahead of class EMP 239-297 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9/25- IN CLASS -------------- R2d90 2-207 trick "must agree to the terms" is that expressly conditionally? They must absolutely must go from 2-207(1) to (3) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Common law: cares about who's the offeror and the offeree-- a lot, mirror-image rule UCC: care only slightly about whose involve, 2-207 - - What happens when parties both hate courts decision? Parties will settle after the decision, because they settle they will not appeal R2d33: \(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a **manifestation of intention is not intended** to be understood as an offer or as an acceptance. Parties are still negotiating stage and aren\'t ready to be bound → parties have reached agreement on SOME material terms but have agreed to agree later is there a k? No → Parties can say they're bound but they are still trying to figure out if they can agree on some terms.. Evidence on intent to be found, K formed → Parties have drafted at least one material term that is difficult to understand, but they intended to agree... agreed to do it but in the weeds → Parties are clear about what they mean by each material term → K is completed How do we figure out parties' intentions? K language and behavior of the parties Did they accidentally leave a term open? How do they act? What's the normal in the industry? What if your client wants you to leave a term open? Nah girl you really should pin that term down MRPC 1.2(a): subject to paragraphs c and d a lawyer shall abide by a client's decisions concerning the objectives of representation and as required by Rule 1.4 shall consult with the client as to the means by which they are able to be pursued MRCP 2.1: lawyer shall exercise independent professional judgment and render candid advice, do a memo to the firm saying you don't want to do something client wants LOA (letter of agreement) Were they intending with this letter to ALREADY be bound or are they still in the negotiation phase "Non-binding" LOA not bound by letter, but bound by exclusive and good faith negotiations → they just have to really try and negotiate R2d90: didn't have a contract but have reliance \(1) A **promise** which the promisor should **reasonably expect to induce** action or forbearance on the part of the promisee or a third person and which **does induce** such action or forbearance is **binding if injustice can be avoided only by enforcement** of the promise. The **remedy** granted for breach may be **limited as justice requires**.... 2-207(2) merchant 2-207(3) not a merchant 45: only can accept through performance The moment you start performing you have created an option contract to keep the contract open, so they cannot revoke while you are still performing Start performing and walk away, that\'s okay "Can only accept by fully performing" 62: promise or performance Could have exchanged for a promise or performance treat the beginning of performance as the start of the promise Start performing and walk away, breach Cannot gap fill quantity!!! Assignment: SKIM EMP 299-355 9/30- IN CLASS -------------- Main point: Consideration, Part 1 Goals of the lesson: - - - **Key Takeaways from the lesson** - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - *What are the two things we care about in the bargain?* *{YOU NEED BOTH IN A BARGAIN}* +-----------------------------------+-----------------------------------+ | \(1) Is the type of | \(2) Is it "**sufficient**"? | | consideration being traded a | | | "**good"**? | \[*In other words...* is it | | | something that a reasonable | | \[*In other words...* is it on | person would think is within the | | the list of something that *can* | bounds of reality that the | | be traded?\] | parties would trade?\] | | | | | *Good* consideration: relates to | *Sufficient* consideration: | | what types of things can be | relates to whether we believe | | traded as consideration | that a reasonable person would | | | trade what's being traded | | | | | | Think: *Would no reasonable human | | | on the face of the earth make | | | this trade? If not, it is not | | | sufficient :(* | +-----------------------------------+-----------------------------------+ - - - - - - - - - - - Breakdown of consideration... Scott will pay \$15 a week for child support → because of this Scott will not attempt to see the child → and no claim other than the money will be damned of Scott→ in return Forester will release all claims against Scott - - - - - So... \[Scott (A) ←\> Forester (B)\] ---\> Child (c) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - **What do you need to modify a K?** +-----------------------------------+-----------------------------------+ | **Common Law: NEED | **UCC: DON'T NEED CONSIDERATION, | | CONSIDERATION** | NEED GOOD FAITH** | | | | | - - - - - | - - - | | | | | | - - | | | | | | - - | | | | | | - - | | | | | | - - | +-----------------------------------+-----------------------------------+ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - When does modified contract stay same or become new contract?????? Can't have two enforceable contracts at once, so if both parties agree to new modifications, we toss the old contract, and need a new offer, acceptance, and consideration for the modification contract Assignment: SKIM 355-407 10/2- IN CLASS -------------- Main point: Consideration, Part 2 (what to do when you can't find consideration) Goals of the lesson: - **Key Takeaways from the lesson** - - - - - - - - - - - - - - - - - - - For and against enforcing the grandfather's promise in *Ricketts v Scothorn* (page 357) Has to do with a promise so should be promissory estoppel → since has something to do in the future +-----------------------------------+-----------------------------------+ | For: | Against: | | | | | 1. 2. 3. 4. 5. 6. 7. | 1. a. | | | | | | 2. 3. 4. 5. 6. | +-----------------------------------+-----------------------------------+ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10/7- IN CLASS -------------- EMP 409-432 Goal: Figure out when a contract must be in writing and signed by the party being sued ("the party to be charged") // Statute of Frauds - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Signing party sues non-signing party for breach of K → non-signing party answers with the affirmative defense that the K is not enforceable due to statute of frauds → signing party looks for exceptions to statute of frauds - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Baby bar questions - - - - - - - - - - - - - - - - - - - - - - - - - - 10/9- IN CLASS -------------- Assignment: EMP 432-459 Goal: fraud, misrepresentation, nondisclosure, lack of capacity, undue influence, and duress - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - "Is there anything else we should/need to cover?" - - - - Lack of capacity - - - - - - - - - Inordinate pressure: duress and undue influence Duress Duress big in contract negotiations someone wants to get out of Doing something affirmatively wrong Bad guy puts this in place to exploit me - - - - - - - - - Undue Influence Capitalize on someone\'s bad state of mind when they are in distress (bad time, manner, place) How they did it not whether they have a right or not Capitalize on something legal, not fair to hold me to it - - - - - - - - - - 10/11- IN CLASS --------------- Assignment: Skim 459-512 - - - - - - - - Illegality and public policy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Unconscionability - - - - - - - - - - - - - - - - - - - - - - - - - - - Mutual Mistake - - - - - - - - - - - - - - - - - - - - - - - - - - - 10/14- IN CLASS --------------- Party-supplied terms; context-supplied terms; good faith (material terms) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10/16- IN CLASS --------------- Assignment: Skim EMP 544-592 Parol evidence rule Practice Questions 544-545 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - *P and E are negotiating for the purchase of a cow, w/the purchase price to be \$600 and lots of negotiations about delivery date, vet inspections, etc. The K says:* 2\. What if E shows up w/a personal check, not a cashier's check? May E introduce evidence that, prior to signing the document, P had indicated to E that a personal check would be ok? -K said cashier's check -not integrated at all can introduce it -integrated then cannot introduce it because contract clearly and specifically said "cashier's check" 3\. What if P had agreed to accept a personal check AFTER he and E signed the agreement? -no PER stops at time you agree to enter into the agreement -you are allowed to orally modify agreement not subject to PER 4\. Same facts as in \#1, but now the K also says: -did they really really mean it? It seems they meant it said "tough short" 5\. NOW assume that, after signing, E asked P to hold the document "in escrow" while he tried to get a cashier's check. When he found out that a cashier's check cost \$25, E asked P to reduce the price of the cow to \$575. P refused. Later on, P sues E for nonpayment. E wants to prove that P agreed to hold the agreement "in escrow," but can E introduce that evidence? -conditional precedent question -contract has not started yet, exception to parol evidence rule 6\. Same facts as in problem \#4, but now E demands a vet certificate, even though the K expressly says that none is required. E argues that T/U in the industry demands a vet certificate. -K said no vet certificate -if it is a fully integrated agreement, they already agreed to no certificate, so can't want it now How to approach a PER question? 1. 2. 3. Two Possible PER questions? 1. 2. -NO!!!!!...if we decide it is completely integrated she cant introduce evidence...not integrated she can as it becomes a he said she said Problem 1) quantity already stated in the contract, goes against an express term in the contract (100 chickens) Problem 2) what B wants is illusory, we don't know how many she wants! We don\'t know if this is the full deal or not P/I 2\. S & B enter into a written K providing that each week in 2018, S will deliver 100 chickens to B, and B will pay S \$3/chicken. The K is silent on how the chickens are to be wrapped, and B alleges that S told her, before they signed the K, that S would deliver the chickens wrapped for freezing. S moves to dismiss. What result? -completely integrated but silent cannot introduce evidence -did partial integration include wrapping or not P/I, wrapped for freezing may simply be a t/u concept or it could be rebutted by t/u 3\. S & B enter into a written K providing that each week in 2018, S will deliver 100 chickens to B, and B will pay S \$3/chicken. The K provides: "This is the complete and final agreement between the parties and supersedes any previous understandings and agreements between the parties, written or oral." B wants to introduce evidence of how the chickens are to be wrapped. S moves to dismiss. What result? -c/i agreement, silent on the term, cannot integrate it was the complete and final expression of the terms -chicken is inherently ambiguous unless talking about the delivery method Just stuck with interpretation 10/21- IN CLASS --------------- Assignment: Skim EMP 592-614 Contract Interpretation / Rules of Construction - - - - - - - - - - - - - - - - - - - - - - - - - - - Question of James and credit card slip security interest on page 602... - - - - - - - - - Fred is a book collector who advertises: - - - - - - - - - - - - - - - - - - Example: You represent Verizone, a seller of cellular telephone service. Your business contact wants you to draft a form contract that will bind consumers to a \$350 "early termination fee" if they attempt to cancel any service contract within two years after signing up. He's heard about *Broemmer*.... But he wants to sell in Arizona---there are lots of old people there who want cell service; the problem is, however, that they will switch in a minute to another carrier if they think it is cheaper unless there is some significant disincentive to do so. "\$350 ought to keep them," he says. What types of provisions would you suggest to include in the form contract? What type of instructions should you draft for Verizon\'s sales force when selling their service? - - - - 10/28- IN CLASS --------------- Assignment: EMP 615-682 Warranties - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Express Warranties: - - - - - - - - - - - - - - - - - - - - - Implied Warranty of **Merchant**ability: - - - - - - - - - - - - - - - - - - - - - - - - Implied Warrant of Fitness (for particular purpose: - - - - - Excluding and Modifying Warranties: - - - - - - - - - - - - - - - - 10/30- IN CLASS --------------- EMP 683-717 Conditions; Modifications; Waivers; Estoppel 5\. If not, was the performance excused? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11/1- IN CLASS -------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11/4- IN CLASS -------------- Material and Non-material breaches - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ### 11/6- IN CLASS -------------- Money Damages - - - - - **E** = \[(**PromVal** -- **DelVal**) + **C** + **I**\] -- \[**CA**\] **E** = **expectation damages (value of the K to the parties)** **PromVal (the promised value)** = **value of what was promised, what the breaching party should have done** **DelVal (the delivered value)** = **value of what was delivered** **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, flow from missed promise but not part of the K itself** **I** = **incidental damages = Damages that involve the non-breaching party trying to figure out how bad the breach was (e.g., calling around for replacement performance)** **CA** = **costs avoided = What the non-breaching party SAVES by not having to perform his remaining promises** If there would have been NO breach **E** = **PromVal** **E** = **expectation damages \[value of the K to the parties\]** **PromVal** = **value of what was promised AND delivered \[the value of the K to the parties--see? Same thing!)** Let's add one more component that might make the formula more useful to you: **OL (other loss)** = what you have to add to DelVal to get the equivalent of the breached promise (the replacement of the performance). **E** = \[(**PromVal** -- **DelVal**) + **OL** + **C + I**\] -- \[**CA**\] Where **(PromVal** -- **DelVal**) + **OL** are general damages relating directly to the non-performance of the promise (AUTOMATICALLY FORSEEABLE) **C + I** are special damages that flow from the non-performance of the promise (NEED TO BE FORSEEABLE) It is the difference between what was promised (a machine that would produce 100 widgets) and what was delivered (a machine that only produces 60 widgets) \[(+ OL + C + I) - CA\] Start off with expectation damages (what was promised - what was delivered) Hawkins v McGee What did the doc do that was so wrong (besides do a rotten job at grafting)? - - Why doesn't Hawkins get pain & suffering damages? - - - - **GET EQUATION** Could he have gotten punitive damages for the botched graft? So what's the calculation of damages? So expectation damages take the person all the way to where he'd been if the other party hadn't breached. What would tort damages do?  Problems on price differential 1\. Red lists his farm, Redacre, for sale for \$1.3M. Ace is the winning bidder w/a bid of \$1.8M. Red and Ace execute a K, but later Ace refuses to close the deal. Red offers Redacre to another bidder for \$1.9M. What are Red's damages against Ace? None; he lucked out from the breach and made more. 4\. Now, instead of selling the farm, Red just wants to build a new barn. He picks Ace, who's the lowest bidder (\$250K). After the K is executed, Ace realizes that he has underbid, and he tells Red that the cost is now \$300K. Red contracts with the second-lowest bidder to do the work for \$275K. What are Red's damages? Looking at other loss 25k Value of promise 250k - valued delivered by ace is 0 + OL of 25k ADD REST 5\. What if Ace is halfway through building and has been paid \$125K and then demands that the final price be increased to \$300K before he'll finish the job? If Red scoffs and finds someone else to finish the work for \$175K, what are Red's damages? 50K in damages, no C or I Use duress as an excuse to get out of any modification Lewin v Levine Lewin's lawyer should have introduced evidence of (i) what the contract price was for all the renovations; (ii) what they actually paid Harmon as progress payments; and (iii) what they paid third parties to complete and fix what Harmon agreed to do. Groves v John Wunder Co Do I care that the breach was "deliberate"? I DONT CARE What's the difference between *Jacob & Youngs* and this case? Diminution in value or cost to fix? Close enough in value they had to do what they promised K included a promise to re-grade the property at the end of the lease. Cost to re-grade the property: \$60K. Value of property after it's been fixed: \$12,160. Court awards: VS Peevyhouse K required the land to be returned to the not-strip-mined condition. Cost to return the land to that condition: somewhere between \$25K and \$29K. Value of property after it's been fixed: \$300. Court awards: Do people have to use their damage awards for their intended purpose? When you take a look at the UCC and its approach to "cover" or market value, it's using that approach because people don't always have to "cover" (replace the missing performance). That's true under common law, too: we can award people damages w/o checking afterwards to see if they used the damages for the original purpose (e.g., fixing something, getting a service elsewhere, etc.). Special Damages side of the house- consequentials *Penncro Associates, Inc. v. Sprint Spectrum, L.P.* (p. 880): Lost-profits are special damages Confusion between revenue and profit Attorney fees in breach of K cases: American Rule: each party pays its own attorney fees. A lot of the rest of the world: loser pays. Consequential damages are BUT FOR z **E** = \[(**PromVal** -- **DelVal**) + **OL** + **C + I**\] -- \[**CA**\] 2500k an hour 4 hour session - 10k paid prior 2hr 5k an hour - 2 hours 1k costumes 10k - 5k + 10K + 1K 10 year lease 10k a month 120k a year fulfilled 5 years before it burned down, building cost 500k Was it foreseeable a disgruntled employee caused the fire? Intervening cause there may not be liability...so excuse \$25 → \$45 → (\$35) Non performance → non performance → performance Two separate lawsuits 11/13- IN CLASS --------------- Class 22: more on money damages; starting to think about limitations on money damages - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11/18- IN CLASS --------------- The rest of the limitations on money damages, plus agreed-upon remedies and non-monetary relief - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Expectation (taken from the non-breaching party's POV) Reliance (taken from the non-breaching party's POV)  Restitution (taken from the "unjust enrichment" POV) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Balloon payment works like this: - - - - - - - - - - - - - - - Problems on liquidated damages 1\. E/M/P form a law partnership and set liquidated damages for the breach of the non-compete clause as \$50K. Non competes look at 1) length of time 2) geographic location 3) interest being protected Reasonable in light of actual damages - possible to prove, no one knows what the damages are right away Can they get an injunction? Probably not, put a price tag on the non-compete Gonna lose income stream from the case he brought in, maybe he brings in a lot of big cases - mention test 1) hard to calculate damages 2) reasonable in light of actual or anticipated damages Maybe? What if the court denies the injunction? Can M & P ignore the liquidated damages clause and try to prove actual damages of \$200K? These are K lawyers who should know better, so maybe limit to 50k as they went into the contract knowingly 2.Many retail stores have signs saying "\$40 charge on returned checks." Is such a term enforceable? - - - - - - - - - - - - - - - - - - - MC Questions \#1 think liquidation damages test She had numbers she could use → so reasonable forecast Difficult at time anticipated to prove...no Difficult at time of actual...no Amount is going to be unreasonable large compared to actual damages Answer: C \#2 When they contracted they set reasonable standards 1. 2. 3. Answer: D REAL \#3 Answer: B REAL \#4 Answer: B Sweeney Short Answer 2-207(1): a definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those agreed upon, UNLESS acceptance is expressly made conditional on assent to the additional or different terms\* → sweeney accepts through letter within a reasonable time that states additional terms Acceptance was not made expressly conditional on assent to the additional terms Additional terms: terms not originally included Go to 2-207(2): if both parties are merchants Barker used to be a merchant but says it has been a long time Assume Sweeney is a merchant as he seems to be knowledgeable about his type of business But new terms materially alter the contract... adding in another cost (duress), changing place of hand off, elimination of warranty, limitation of remedies (don't like then you can return them to Toby) So additional terms knock out and we are with the originally agreed upon contract (original place, no extra fees) Did he really accept them or was it duress? If both parties are NOT merchants (which is more reasonable based on the long period gap in career) then the new terms are construed as proposals that must be accepted by the other party → foreseeability and consequential damages Warranty of merchantability : were the blades merchantable or not? → because the new terms are knocked out we are back to the original contract where there previously was a warranty → breach of warranty can lead to consequential damages 11/20- IN CLASS --------------- Continuing to discuss everything that is not expectation damages - - - - - - - - - - - - - - - - - - - - - - - - Example problem: Think of the following case: E wants to fly to Michigan to see P. E chooses BAM Airlines and pays \$500 for his ticket. Before the trip commences, BAM Airlines fails, and E, lucky duck that he is, manages to get another ticket for \$450. Does he have any damages for BAM Airlines' failure to fly him to Arizona? No expectancy damages; he is in some sense better off since he got a better deal. No reliance damages; he just paid the price asked \[for the other airline's ticket\]. But he does need to get his \$500 back \[from BAM Airlines, which will be complicated if BAM Airlines files for bankruptcy protection\]. And a court will do that. It will "restore" E to the position he was in before the contract was entered into. So restitution is easy when there is full payment by one side and total breach by the other, and none of the other damage measures compensate. - - - - - - - - - - - - -  Example Problem You buy a hard copy of the Rapoport Mythical Outline from a Boyd 2L at the low, low price of \$650. Trusting in its efficacy, you don't even crack it open until the week before final exams start. When you start reading it, you realize that it's wildly inaccurate. Panicked, you buy every commercial Contracts outline on eBay, for a total expenditure of \$12,750. The last-minute stress costs you hours and hours of sleep, and you do poorly on the exam. Draft a complaint suing the Boyd 2L for breach of warranty. ::: {.section.footnotes} ------------------------------------------------------------------------ 1. ::: {#fn1} Notified the other side of the issue and the other side did not fix it. The breaching party tried to fix it and couldn't or didn't try to fix it at all. So performance is suspended.[↩](#fnref1){.footnote-back} ::: :::