Contracts - Kordana (Good)

Contract-
“A promise or a 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.”- Oliver Wendell Holmes
Introduction to Contracts.................................................................................................................5
Objective theory of contracts ..............................................................................................5
Defined...................................................................................................................................5
Applied...................................................................................................................................5
Why the objective theory.......................................................................................................5
Cases.......................................................................................................................................5
Incomplete contracts............................................................................................................5
Requirements for completeness..............................................................................................5
Why does it have to be complete............................................................................................5
Fault and Contractual Performance ....................................................................................5
Substantial Performance.........................................................................................................5
Fault .......................................................................................................................................6
Damages...............................................................................................................................6
market damages or expectancy damages ...............................................................................6
344 of restatement judicial remedies to protect interest.........................................................6
Quote......................................................................................................................................7
350 of rstmnt Mitigating losses..............................................................................................7
Reason for Breach doesn’t matter..........................................................................................7
Kose Theorem........................................................................................................................7
Cases.......................................................................................................................................7
Inequality and defenses .......................................................................................................7
Unconscionability...................................................................................................................7
Cases.......................................................................................................................................7
Field result goes here.....................................................................The Bargain Theory of Contract
..............................................................................................................................................7
Promises...............................................................................................................................8
Why promises are enforced....................................................................................................8
Promises are the building blocks of contracts........................................................................8
A promise v. Contract............................................................................................................8
Two views of promissory enforcement..................................................................................8
Self-Sanctions precluding enforcement..................................................................................8
Consideration.......................................................................................................................8
Requirements..........................................................................................................................8
Modern View..........................................................................................................................8
Promises to Make Gifts..........................................................................................................8
Bargained for test (The more common modern view)...........................................................9
Exceptions to the bargained for test.......................................................................................9
Benefit Detriment Test ..........................................................................................................9
Forbearance as consideration.................................................................................................9
Reliance................................................................................................................................9
Beneficial Reliance.................................................................................................................9
Detrimental Reliance..............................................................................................................9
−1−
Results of Reliance...............................................................................................................10
Continued Reliance..............................................................................................................10
Promissory Estoppel ............................................................................................................10
Options.................................................................................................................................10
Guarantors ...........................................................................................................................11
Cases.....................................................................................................................................11
Restitution..........................................................................................................................11
.............................................................................................................................................11
What is restitution................................................................................................................11
Why Resitution.....................................................................................................................11
When restitution is enforced ................................................................................................11
Kinds of things we get a benefit from for which we aren’t obligated to pay......................11
Quasi Contracts are created when........................................................................................11
Agency Law.......................................................................................................................12
Two principles of agency law..............................................................................................12
Third parties have to interpret the agent reasonably............................................................12
Cases 12
Field result goes here..........................................................Negotiation and Formation of Contract
............................................................................................................................................12
Offer 12
Rstmnt 17 ............................................................................................................................12
Defined.................................................................................................................................12
Counter Offer Defined..........................................................................................................12
Offer expiration or revocation..............................................................................................12
Advertisements as offers......................................................................................................13
Meeting of the Minds ..........................................................................................................13
Cases.....................................................................................................................................13
Acceptance.........................................................................................................................14
Types of acceptance.............................................................................................................14
Mail box rule Restatement 63..............................................................................................17
Cases.....................................................................................................................................18
Construction Contracts.......................................................................................................18
Uniqueness of Construction.................................................................................................18
Bids by subcontractors are enforceable offers.....................................................................18
Problems with sub contractor bid enforcement....................................................................19
Solutions...............................................................................................................................20
Case......................................................................................................................................20
Negotiation and Closure....................................................................................................21
Almost Contracts (letters of intent etc..................................................................................21
Cases.....................................................................................................................................22
Battle of the Forms............................................................................................................23
BoF Software problems.....................................................................................................25
Standard Form Contracts...................................................................................................26
211 Restatement Form Contracts.........................................................................................26
C & J Fertilizer v Allied Mutual Insurance..........................................................................26
Field result goes here........................................................................... Risk Allocation in contracts
−2−
............................................................................................................................................28
General Principles of Risk Allocation...............................................................................28
Mistake and Impossibility....................................................................................................28
Risk materializes..................................................................................................................29
How to tell who is bearing the risk?.....................................................................................30
Two approaches to Contracting for Risk Allocation.........................................................31
Standards based approach.....................................................................................................31
Rules based approach...........................................................................................................31
Mistake...............................................................................................................................32
Rstmnt. 154 A party bears the risk of mistake when...........................................................32
Bilateral mistake 152 restatement .......................................................................................32
How knowledge is attained..................................................................................................32
Cases ....................................................................................................................................33
Impossibility (56-57 notes)................................................................................................33
Reasons for impossibility with exceptions...........................................................................33
Reasons for impossibility without exceptions......................................................................34
Cases.....................................................................................................................................34
Necessity and Effect of a Writing..................................................................................................34
Statute of Frauds................................................................................................................34
Restatement 110 Classes of contracts that have to be in writing.........................................34
Why the 1 year provision?....................................................................................................34
SOF and indefinite duration.................................................................................................35
Defense of Statute of Frauds................................................................................................35
Cases.....................................................................................................................................35
UCC 2-201 Statute of Frauds...............................................................................................35
UCC Cases............................................................................................................................35
Parole Evidence Rule.........................................................................................................36
Fully integrated.....................................................................................................................36
Partially integratedMostly enforceable i.e. different terms can’t be argued about, but
additional ones can be..........................................................................................................36
Non-integratedAll evidence of terms wehther written or unwritten are admissible and no
conclusive writing exists .....................................................................................................36
Remedies........................................................................................................................................36
Contract Damage Measures...............................................................................................36
Purpose of contract damages................................................................................................37
Expectation Damages.........................................................................................................37
Cost of Completion v. Diminuition in Value.......................................................................37
Lost Volume Seller...............................................................................................................37
Foreseeability.....................................................................................................................38
Rstmnt. 351..........................................................................................................................38
Cases.....................................................................................................................................39
Mitigation...........................................................................................................................39
Mitigation is required...........................................................................................................39
Rstmnt. 350..........................................................................................................................40
UCC 2-709............................................................................................................................40
Cases.....................................................................................................................................41
−3−
Reliance Damage and Restitiution.....................................................................................41
Reliance Damages................................................................................................................41
Restitution Damages.............................................................................................................42
Liquidated damages v. Penalties........................................................................................42
Field result goes here..................................................................................Other things to consider
............................................................................................................................................42
−4−
. Introduction to Contracts
A. Objective theory of contracts (1)
1. Defined
a. The objective theory of contracts essentially takes a step back to
see what the reasonable third person would see when they saw the
exchange.
2. Applied
. Although it is an objective standard you have to subjectively
believe it to the be the case to prevent opportunism.
3. Why the objective theory?
. Efficiency- you don’t have to get into people’s heads if the
manifest an intent to be bound you can just trust that
4. Cases
. Lucy v. Zehmer
(1) A guy fakes his friend out about selling land, but the friend
is serious and he relies on that and it is enforced because
the buyer couldn’t tell the subjective intent of the seller.
Specifically enforced.
B. Incomplete contracts (2-3)
. Requirements for completeness
. Rstmnt. Sec. 33- a contract has to be reasonably certain in all its
material terms
. Sec. 34 it doesn’t have to be completely certain in all cases
. UCC even if material terms are uncertain they will be set as
reasonable and if one side is at fault mroe than the other side then
the less faulted side can set a reasonable price or term.
. Why does it have to be complete? (2)
. Court regulation or comparative advantage
() You basically have to agree on the basics to even justify
the court hearing your case.
() This view says court is not at an advantage in settling the
basics, but only in complex issues
. Actual intent approach
() Small gaps are reasonable and expected and in exceptional
circumstances should be settled by the court
() Large gaps make the court wonder whether the parties
really intended to be bound.
. Sun Printing
() the price and the term weren’t set in stone. Cardozo ruled
that it shouldn’t be enforced because of that, but it wasn’t
that unclear you know....
C. Fault and Contractual Performance (3-4)
. Substantial Performance
−5−
. S. P. Is good enough in some cases
() In construction s.p. is good enough
() in art or manufactured goods s.p. is not good enough
. The opposite of substantial performance is perfect tender
. The reason why s.p. is good enough sometimes
() it stops buyer opportunism
() it keeps prices lower for everyone
. Reasons for wanting perfect tender
() you get what you contract for
() stops opportunism the other way
() respects idiosyncracies
. Cases
() Jacobs & Young
(a) A guy wants a certain brand of pipe in his house
and they install a different kind of pipe. He doesn’t
want to pay like 6k in 1924. Cardozo decision
substantial performance is enough.....
. Fault (4)
. Responsibility for loss
() you are only responsible if you could have foreseen the
loss at the time of contracting
() notification of the cost of breaching is not enough it has to
be contracted into the contract.
() The breacher is not responsible for third party contracts
which are breached by the other party as a result of the
orignal breach.
() This is because it is implied into the contract
(Kordana’s lottery ticket)
. Cases
() Globe Refining- the oil company was going to buy oil
from another company and they breached and they sued for
all sorts of random damages not forseeable at the time of
contracting. They got shot down on most of them.
() Delchi Carrier Spa- some people bought a bunch of parts
for A/C units that didn’t conform with the model that was
given to them as a sample. They won all sorts of damages
that were forseeable.
D. Damages (4-5)
. market damages or expectancy damages

. Most common type of damages in breach of contract
() This is calculated by basically giving you what you have
spent and what your profit would have been had the other
party not breached.
. 344 of restatement judicial remedies to protect interest
. Expectation interest- this is the interest of the parties in the bargain
−6−
and compenstaion to be in as good of a position if the parties
breach as if they don’t breach
. Reliance interest- is a person’s interest in being reimbursed for
loss caused by a reliance on the contract- again they just want to be
in as good of shape as they otherwise would have been
. Restitution interest- you want to be compensated for benefits given
to the other party
. Quote
. Oliver Wendell Holmes said “A contract means nothing mroe than
‘I will perform or I will pay damages’
() There are exceptions, but that is interesting
. 350 of rstmnt Mitigating losses
. Damages are not recoverable if you don’t try to mitigate the loss
. Reason for Breach doesn’t matter
. This is because there is such thing as an efficient breach
. People can contract around this if they want (Kordana’s lottery
ticket)
. Kose Theorem
. The distributuion of goods doesn’t matter if there are no
transaction costs it will all end up the same
. Cases
. Same as above under fault
E. Inequality and defenses (5-7)
. Unconscionability
. Absent of meaningful choice along with unfair terms in the
contract
. A court can choose to void a whole contract or only enforce the
parts that are not unconscionable
. If the court thinks something is unconscionable then the sides have
a chance to present evidence on the issue
. The historic test says it is unconscionable if “no man in his senses
and not under delusion would make on the one hand and as no
honest or fair man would accept on the other”
. Some say substantive (unfairness) unconscionability in contracts is
evidence of procedural unconscionability (coercion, lack of choice,
lack of understanding etc.)
. A contract is unconscionable if it has procedural (meaningfulness
of the choice can be negated by gross inequality of bargaining
power) and substantive (it is just unfair) unconscionability
. Cases
. Walker-Thomas furniture co. A lady signs a contract to buy on
credit with a cross collateral cause. The company reposse’s her
stereo that was the recent purchase and everything else and the
court rules the cross collateral clause unconscionable
The Bargain Theory of Contract
−7−
. Promises (7-8)
. Why promises are enforced
. Autonomy- it lets people be free to make themselves bound to
certain terms
. Economic theory- it lets people rely on contracts and promotes
mutually beneficial exchanges
. Reliance theory- it maximizes beneficial reliance and minimizes
detrimental reliance.
. Promises are the building blocks of contracts
. A promise v. Contract
. A promise does not become a contract until it is recognized by law
and provides a remedy for breach.
. Two views of promissory enforcement
. A promise should be enforced unless there is a reason to not
enforce it.
. A promise should not be enforced unless there is a reason to
enforce it.
. The common law takes the latter approach
. Self-Sanctions precluding enforcement
. Self-sanctions are sometimes strong enough like in legitimate
promises to family members that legal sanctions shouldn’t be
imposed because it appears that there would be a legitimate reason
for not enforcing the promise
. Consideration (8-11)
. Requirements
. Must be bargained for
. A performance or return promise is bargained for if it is sought by
the promissory and is given by the promissee in exchange for the
promise (You have to view x as the unfortunate price you have to
pay for Y)
. The performance may consist of an act other than a promise or a
forbearance
. Modern View
. A promise is only serious if it is worthy of legal enforcement and
it is consciously given in exchange for something else.
. Promises to Make Gifts
. These are generally unenforceable unless there is a compelling
reason to enforce them or they are to charities.
. They also lack consideration
. Conditional gifts are also not enforceable
() Like if you are masking a gift in the form of a promise.
Like if you walk across the road I will give you 1000
dollars that is a conditional gift not a contract.
. Illusory promises are not enforceable
() A promise so unclear that its performance is optional
because it isn’t even a promise, but more of a gesture
−8−
. Bargained for test (The more common modern view)
. In bargained for test beach side has to suffer a detriment and each
has to view their promise as the unfortunate price they have to pay
to get the gain from the contract.
. The things that are bargained for don’t have to be of equal worth
. The result doesn’t have to actually benefit or create a detriment to
anyone
. There doesn’t neccesarily have to be a mutuality of obligation
. Exceptions to the bargained for test
. Moral consideration- if the prommissor has a strong sense of duty
towards the promissee
. Past consideration- if the promise is to pay someone for a benefit
previously received -like if someone is hurt saving your life you
might promise to give them a lot of money
() this may or may not be enforceable because of self-
sanctions
() Only enforced to prevent injustice Sec 86
. Benefit Detriment Test (The older way still used in some jurisdictions)
. If one side either gets a benefit from the deal or suffers a detriment
then the contract or promise is enforceable.
. The benefit or detriment counts as consideration
. Forbearance as consideration
. Forbearance to do something is not an uncommon form of
consideration.
. Fiege v. Boehme
() Some lady was going to try to get child support through
bastardy proceedings, but she didn’t if he would just pay.
So the guy quit paying after a while. They did tests and
found out he wasn’t the father, but he still had to pay the
child support even though he wasn’t the father because he
made a valid contract
() If as part of a contract it is agreed that one side will not
institute proceedings against another side about which
there is a true question of fact or which the parties both
feel is a substantive claim that will count as consideration
and make a contract valid. If on the other hand it is based
on a claim that one party knows isn’t true then it is not
valid consideration and could void the contract.
. Reliance (9)
. Beneficial Reliance
. The benefit derived from being able to rely on others promises
such as the benefit you get from buying supplies for a vacation
before you get on the plane and show up at your hotel.
. This should be maximized
. Detrimental Reliance
. The loss you would suffer as a result of your reliance on the
−9−
promise if you buy something in reliance that the promise will be
kept then the promise is not kept htat is detrimental reliance
. This should be minimized
. Results of Reliance
. The promissee is going to adjust his behavior based on the
likelihood of the promise being enforced
. The promissor is less likely to make a lot of promises if htey know
they are going to be enforced
. When someone regrets making a contract there will be losses the
courts just need to determine on whom the losses fall.
() They usually do this by deciding who was the least cost
avoider
. Continued Reliance
. People who have received some performance of a promise are
more likely to rely on that performance to continue than those who
have not seen any performance of the promise.
. Promissory Estoppel
. Promises without consideration can be enforced if
() The promise must be clear and definite
() The promissor should have at the time the promise was
made reasonably expected that it would invoke actions or
forbearance on behalf of the promissee.
() The promise did indeed produce action or forbearance
() And Justice can only be found by enforcing the doctrine
() Unless the promise is to a charity then it is enforceable just
because
() They really need to be able to rely on promises to
function
() This can cause problems with people not wanting to
make promises they are going to be bound by.
. Courts are reluctant to apply these rules unless
() The reliance is significant and resulted in significant harm
() One side pretty much screwed the other side.
. Courts are reluctant to enforce Promissory estoppel because
() Formality- if you really want your promises enforce you
can be more formal about it.
() If people are confident in their ability to bargain it
promotes more mutually beneficial exchanges
() they only enforce important promises see (15)
. Options (13)
. Options to purchase stuff are enforceable if
() Valid consideration is given
() The terms of the option are reasonably certain
. Options are not offers, but extended period offers
. Eastern Michigan case-
() Some lady was going to sell the land they were supposed to
−10−
give her one dollar in consideration. She signed saying she
had received the one dollar even though she hadn’t and she
won the lawsuit when she didn’t want to sell because it
wasn’t VALID consideration
. Guarantors (14)
. Third party’s who promise to guaranty a contract are making an
enforcable promise §71 (4)
. Cases
. Cohens v. Cowles Media- a guy leaks political info and the
reporters promise anonymity and then they print his name and he
loses his job etc. He wins
. Midwest Foods- Some franchising company screws a potential
franchisor and they win money based on thier reasonable reliance
. Restitution (16-17)
. What is restitution
. Returning to someone the benefit they have conferred on another if
it is fair that they be compensated and they can reasonably expect
to be compensated
. Why Resitution?
. If expectation and reliance don’t serve justice there is always
restitution.
. When restitution is enforced (Kordana)
. Plaintiff has created a material benefit for the defendant
. Plaintiff expects repayment (because they are a professional in
whatever service they are providing i.e. doctor etc.)
. Plaintiff either gave defendant an opportunity to decline or
plaintiff has an excuse for not giving the defendant an opportunity
to decline (they were unconscious etc.)
. Kinds of things we get a benefit from for which we aren’t obligated to pay
. ‘Officious intermeddler’ like the squegee man at the intersection
who cleans your window....
. ‘Mistaken conferror’ when you are benefitted by mistake like
someone accidently paints your house while you are at work and
they meant to paint your neighbor’s house.
. ‘Mere Volunteer’ someone who is mowing their lawn and sees that
your lawn needs it and just mows it.
. Quasi Contracts are created when
. If someone confers a benefit upon you
. You have knowledge that the benefit is being conferred
. You accept the benefit and you could have easily denied it
. You keeping the benefit would be inequitable
() If someone paints your house by mistake and you don’t say
anything and you just watch them then you would have to
pay = quasi contract
() IF you aren’t there and they do it then you don’t have to
pay =/= quasi contract
−11−
. Agency Law
. Two principles of agency law
lllllll. If the boss is responsible for the actions of the agent or if the agent
is acting under his authority then any contracts made by the agent
on behalf of the boss are enforceable.
mmmmmmm. The parent authority principle which basically says if the
boss tells a third party that so and so agent represents him then any
promises made by the agent are enforceable.
. Third parties have to interpret the agent reasonably
rrrrrrrrrrrrrrrrrrrr. You can’t take advantage of a rogue agent if it
would be unreasonable to do so.
. Cases
808. Bailey V. West - some guy buys a horse it turns up lame. The guy sends
it back to where he bought it from. The seller won’t take it back. The
agent takes the horse and drops it at the stable of Bailey. He boards it for
like 4 years sending bills every once in while. No one pays. He finally
sells the horse and sues. The trial court gave him 5 months of boarding
which was fair, the appeals court gave him crap because he was a ‘mere
volunteer’
Negotiation and Formation of Contract
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL. Offer
1488. Rstmnt 17
zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
zzzz. A contract requires a bagain with consideration and
aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa
aaaaa. A manifestation of mutual assent.
1489. Rstmnt. Sec 22
ffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff.
A manifestation of mutual assent normally takes a form of an offer and an
acceptance
1490. Defined
lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll.
Rstmnt. Sec 24
(2944) An offer is the willingness to enter into a bargain so as to
show that the other person to whom the offer is made may
ascent to the offer and that would conclude the bargaining.
1491. Counter Offer Defined
ppppppppppppppppppppppppppppppppppppppppppppppppppppp
ppppppppppppppppppp. Section 39
(3624) A counter offer is an offer made by the offeree to the
offerror relating to the same matter as the original offer,
but having a different set of terms.
(3625) This voids the offeree’s power to accept the original offer.
1492. Offer expiration or revocation
ttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt
−12−
The offer will be held open until it expires or
(4304) it is withdrawn by the offerror before acceptance
(4305) it is rejected
(4306) it is rejected by way of a counter offer
(4307) a reasonable time has past (no more than three months)
(4308) Either party dies or become incappacitated
(4309) the terms of the contract include a condition for acceptance
and the condition fails to occur.
1493. Advertisements as offers
ffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff
ff. Generally Advertisements are
(4992) invitations to bargain
(4993) so are price quotes, but not bids
ggggggggggggggggggggggggggggggggggggggggggggggggggggggggggg
g. Advertisements to the general public
(5328) are enforceable if they are clear, definite, explicit and leave
nothing open to negotiation.
(5329) you can’t advertise something without an intent to sell it
without as advertised.
1494. Meeting of the Minds
ppppp. Section 20
(6016) There is no manifestation of mutual assent if the parties
attach materially different meanings to their manifestations
(6017) neither party knows or has reason to know that the other
side attaches a different meaning to the terms
(6018) If both parties know the other sides is interpreting it
differently there is no contract
(6019) If one party knows then the other party doesn’t know then
they will go with what the ignorant party thought it meant.
1495. Cases
tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt
tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt
ttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt. Ford Motor
Credit v. Russell
(6696) Some lady buys a car she saw advertised, but she didn’t
qualify for the advertised apr. she loses the car, but then
sues Ford because they didn’t live up to their offer. It was
just an invitation to bargain according to the court.
uuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuu
−13−
Oswald v. Allen
(7040) A swiss guy tries to buy a bunch of coins from a New
Yorker through an interpreter and they confuse which coins
they are talking about. The Nyer wants to get out of the
contract for other reasons, but claims they make a mistake.
Based on Section 20 of the restatement. No meeting of the
minds.
vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv
vvvvvvv. Raffles v. Whihelhaus
(7376) Two guys contract about the goods on a cargo ship called
peerless sailing from Bombay. There are apparently two
ships called Peerless. There is no contract because there is
no meeting of the minds.
wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww
wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww.
Ardente v. Horan
(7720) Some guy takes a leave of abscence and the college he
works for has a policy of reinstatement if you take a leave.
He comes back and doesn’t get a job because there were no
openings. He sued, but they didn’t have to give him a job
if there were no openings. It wasn’t an offer.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxx. Davis v. Satrom
(8064) Some people are negotiating over the purchase of a trailer
park. The buyers keep sending stuff for the sellers to sign,
but they send it back signed, but modified. There is a
clause in the contract that says it is based on the approval
by the seller’s lawyer. They go through wiht the deal, but
the lawyer says they shouldn’t so they don’t. The court
says Clauses requiring third party approval of an attorney
or someone else are valid if that approval is either granted
or denied in good faith.
MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMM
MMM.Acceptance
16512. Types of acceptance
−14−
Manifestation of acceptance through corespondance
wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww. Accept
ance by performance
(17280) UCC 2-206 and rstmnt sec 30
(jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj
j) If you have a contract to sell something and it
doesn’t say how you can accept it you can accept it
by corespondance or by beginning performance
(17281) Unilateral Contracts
(hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh
hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh
hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh) if you start on
−15−
a unilateral contract you create an option contract,
but you can’t enforce the original offer until the
performance is completed.
(17282) Completion
(nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn
nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn
n) if you accept an offer by promptly shipping goods
then you are promising complete performance.
x. Acceptance by Silence Restatement 69
(18640) You can’t accept a contract by silence unless
(rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr) you accept goods or services
with a reasonable opportunity to reject the contract
−16−
(ssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss
sssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss
ssssssssssssssssssssssssssssssssssssssss) if the offerror
makes it clear that acceptance can be made by
silence and the offerree intends to be bound and is
silent
(tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt
ttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt
ttttttttttttttttttttttttttttttttttttttttttttttttttttt) previous
dealings dictate that the offerree would say
something if he didn’t agree
16513. Mail box rule Restatement 63
nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn
nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn. If you mail an acceptance it
is valid as soon as it leaves your hand in the mailbox even if it
doesn’t reach the offerror in time.
ooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo
−17−
Exceptions
(19664) option contracts and their acceptance is only upon
receipt
(19665) international sales under cisg
16514. Cases
zzzzzzzzzzzzzzzzzzzz. Midsouth Packers v. Shoneys
(20352) Shoneys orders meat and before they order the meat
they agree on a specific price and terms and stuff, but it is
just in a letter of agreement kind of like an offer neither
side signs they can’t raise the price without 45 days notice.
They raise the price. The sides fight. Shoney’s pays the
increased price for a while, but then on their last order they
refuse to pay. They were being opportunistic and the court
smacks them down. .
(20353) They lost because the court didn’t want to create an
incentive for opportunism
NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN. Constr
uction Contracts
20608. Uniqueness of Construction
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj. General contractors have to
rely on sub contractors bids in order to make their bids for jobs.
Otherwise the whole system collapses.
20609. Bids by subcontractors are enforceable offers
hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh
−18−
Even if mistakes are made
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii. This is because of
reliance primarily under section 87
(21712) if a promise is meant to induce reliance
(21713) does produce reliance
(21714) it will enforced as an option contract to the extent
necessary to avoid injustice
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj. It could be because of
an option contract under section 45
20610. Problems with sub contractor bid enforcement
tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt.
Assymetry generals can still bid shop
uuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuu
−19−
Some disparity of bargaining power exists as a result
20611. Solutions
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr. Bid shopping
is not allowed. See Pavel Enterprise v. AS Johnson
ssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss
ss. In some areas they just live with it.
20612. Cases
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Arango
Construction v. Success Roofing
(23080) Some company gives a bad bid to a general
contractor of about half what it would normally be. They
accept it because it is just a little lower than the bid they
would have accepted otherwise.
−20−
OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO. Negoti
ation and Closure
23336. Almost Contracts (letters of intent etc.)
hhhhhhhhhhhhhhhhhhhhhhhhhhhh. Defined
(24104) contracts that aren’t really contracts, but a final step
of the negotiation process.
(24105) A document that says you intend to be bound in the
future
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii. Intent Based Approach
(24448) Judges look at the intent of the parties and see if
they meant to be enforced.
(24449) In doing this they steamroll specific language
(24450) This spits in the face of the objective theory of
contracts
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj. Straight up according to the
−21−
words
(24784) Judges look at what it says and if it says it is not a
contract or it is subject to agreement on something then the
people don’t agree well then sorry charlie no contract
(24785) This is the objective theory of contracts
23337. Cases
xxxxxxxxxxxxxxxxxxxxx. Arnold Palmer v. Fuqua
(25472) Arnold Palmer and some other company are buying
a manufacturing plant together. They have a letter of
intent. They are right at the point of closure, but then
Fuqua backs out. They are sued by Palmer and it is
dismissed in Summary Judgement. On appeal the appeals
court says to look at their intent.
yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy
yyyyyyyyyyyyyyyyyyyyy. Empro Manuf. V. Ball Co
−22−
(25808) Ball is selling its assetts. They have a letter of
intent and all the crap with Empro. Empro puts a bunch of
outs for themselves in the contract. Ball wants a security
holding in the propery. Empro won’t agree. Ball starts
selling to someone else. Empro sues. No contract
(25809) intent in contract law is objective rather than
subjective if people want to be bound they have to
objectively show that by having firm contracts
PPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPP. Battle of the Forms
26064. UCC 2-207
ffffffffffffffffffffffffffffffffffffffffffffffffff. An acceptance doesn’t have
to be a mirror image to be an acceptance, unless it says so in the
offer.
ggggggggggggggg. Additional terms are proposals for additions to the
contract.
−23−
Between merchants the terms become part of the contract unless
(26832) the offer expressly requires mirror image
acceptance
(26833) they materially alter the contract or
(26834) the other party gives you notification that they
object within a reasonable time
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii. Actions sufficient to indicate
there is a contract count as a contract even if their other writings
don’t make a contract.
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj. If terms are different or they
are additional and both parties aren’t merchants then it is the
knockout rule
26065. Mirror Image Rule
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr. An
acceptance only counts if it is exactly like the offer.
−24−
Common law default rule
26066. Last Shot doctrine
ppppppppppppppppppppppppppppppppppppppppppppppppppppppppppp
pppppppppppppppppppppppppppppppppppppppppppppppppppppp.
If performance begins and there wasn’t a mirror image acceptance then
the last terms will be the ones that are applied
26067. Application of 2-207
QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ. BoF
Software problems
27776. See PAGE 50 ALL NOTES
27777. Cases
bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb
−25−
Step Saver
(28544) Box top agreements fall under 2-207 and are not
included because they are made after the original contracts.
They are proposals.
cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc
cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc.
Hill v. Gateway
(28880) box top agreements rule because they are implied
into the contract that they will rule and most people would
want to be governed by them to save time and money in the
long run.
(28881) You can’t have a battle of the forms with only one
form.
RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR. Standard
Form Contracts
29136. 211 Restatement Form Contracts
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj. Form contracts are
enforceable unless
(29904) The side that wrote the form contract has reason to
believe that the other party wouldn’t want this contract if
he knew that particular terms were included in the contract.
29137. C & J Fertilizer v Allied Mutual Insurance
−26−
vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv. Some company
bought an insurance policy that had a burglary exception meant to
deter inside jobs that said there had to be visible markings on the
building. The court ruled that this was an unexpected term under
211 and that it shouldn’t count.
−27−
The case book author rips on this decision
Risk Allocation in contracts
RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR
RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR. General Principles of
Risk Allocation
30848. Mistake and Impossibility
ffffffffffffffffffffffffffffffffffffffffffffffffffffffffff. People ask to be
excused from performance
−28−
They are really asking for the risk to be shifted to the other party
30849. Risk materializes
ddddddddddddddddddddddddddddddddddddddddddddddddddddddddddd
ddddddddddddddddddddddddddddddddddd. Was it anticipated?
(31952) if yes enforce contract
eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee
eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee. If no
then three options
(32296) split the cost of the risk
(xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
−29−
courts don’t actually do this, but its not clear why.
(yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy
yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy
yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy) It could be
argued taht someone should have assumed the risk
(32297) Assign the risks to the lowest cost avoider
() cost of risk = impact x probability
i) sometimes one side has more control over
one facet and the other has more control
over the other facet
ii) difficult to calculate in most cases
(32298) Assign risks to the party who would have agreed to
bear them in the first place
() Puts ALL the risks on one side
() Not always accurate
() If unanticipated risks they weren’t anticipated this
is kind of circular and takes a lot of guesswork
30850. How to tell who is bearing the risk?
. Who took pre contractual precautions to avoid the risk?
. Who by the terms of the contract is holding the lottery ticket?
() fixed price contracts arguably put the lottery ticket in the
seller’s hand Northern Indiana v. Carbon County Coal
−30−
Posner takes this view
() cost plus contracts put the lottery ticket in the buyer’s hand
() both allocate the risk
SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS
SSSSSSSSSSSSSSSSSSSS. Two approaches to Contracting for Risk Allocation
. Standards based approach
. Cost plus type contracts
. Benefits
() cheaper at time of contracting
() takes into account actual circumstances not predicted
circumstances
() The court will have the benefit of hindsight
. Draw backs
() risk of court misinterpretation of the issues
() costly litigation if you end up litigating
() threat of seller taking advantage of “costs”
. Kevin Kordana’s take
() This is an invitation for the courts to meddle
. Rules based approach
. Fixed Price type contracts
. Problems with
() More expensive in initial contracting
() Doesn’t take account of actual future circumstances just
predicts
. Disadvantages
() not much risk of misinterpretation
() cheaper litigation if it comes to that point.
. Kevin Kordana’s Take
() courts should BUTT OUT
−31−
TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT
TTTTTTTTTTTT. Mistake
. Rstmnt. 154 A party bears the risk of mistake when
. The risk is allocated to him by the agreement
. He knows his knowledge is limited about the thing the mistake
was made, at the time of the contracting, but he didn’t do anything
about it.
. The risk is allocated to him by the court since it is a reasonable
thing to do .
. Bilateral mistake 152 restatement
. When both parties make a mistake about a “basic assumption on
which the contract was made” the contract can be voided by the
party adversely affected unless he bears the risk under 154.
. Unilateral mistake 153 restatement
. If a party doesn’t bear the risk under 154 and they make a mistake
of basic assumption etc. the contract can be voided If
() the effect of the mistake is such that enforcement of the
contract would be unconscionable or
() the other party had reason to know of the misake or his
fault caused the mistake
. If it is beneficial try to get it in the 152 box
. How knowledge is attained
. Casually
() Requires disclosure in contracting
. Deliberate investment
() If we required disclosure it would take the incentive out of
being an expert and making investments to find
−32−
information out because the cost would outweigh the
benefits
. Cases
. Lenawee County Board of Health v. Messerly
() Some people buy a property after inspecting it. They find
6 days after closing that it is worthless because it is
condemned for sewage leaking out. They sue and want to
get out of performance for mistake.
() Recision only goes to those who really deserve it and this is
not one of those cases. Someone has to bear it you might
as well.
UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU
UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU. Imposs
ibility (56-57 notes)
. Reasons for impossibility with exceptions
. Supervening impracticability 262 restatement
() If something happens that is no fault of one side that makes
a basic assumption on which the contract was made not
work then he can be excused from performance
. Supervening Frustration 265 restatement
() If your principal purpose for contracting was frustrated
() frustration must
) be about the principle purpose of contract
) be substantial
−33−
) be a basic assumption on which the contract
was made
. Existing impracticability or Frustration 266 restatement
() If there was already impracticability or frustration at the
time of contracting and you had no reason to know and
didn’t know
. Exceptions
() Risk is allocated by the contract
() Circumstances indicate the outcome should be different
. Reasons for impossibility without exceptions
. Death or incapacitation 262 rstmnt.
. Government regulations stop performance 264 restatement
. Something necessary for performance doesn’t exist or is destroyed
prior to performance 263 restatement
. Cases
. Karl Wendt v. International Harvester
() IH was losing tons of money so they sold their farm
equipment company to Case. KW was a dealer. Case said
no way you arne’t a dealer anymore so KW sues IH. IH
wins in DC because of impracticability. The appeals court
says no impracticability is when it is basically impossible
to perform if it is just economically unattractive then you
can’t claim impracticability
. Alcoa v. Essex
() Alcoa has a fixed price contract with Essex. The cost of
energy spikes. Alcoa breaches because they are going to
lose 75 million bucks in a year. The District court says yes
that is impracticability and sets a price that gives alcoa a
small profit. They settle before the appeal is heard.
. Alabama Football v. Wright
() A player is sued for his bonuses and stuff back because the
team folded. He counter claims saying he should be paid
for the remaining time on his contract. He wins on the
original claim because there was consideration. The court
separates each year of the contract into a different contract
and excuses the team for the remaining years.
. Necessity and Effect of a Writing
. Statute of Frauds
. Restatement 110 Classes of contracts that have to be in writing
. Sale of land
. Contracts not to be performed within one year
. A contract of an executor of an estate
. A contract made on consideration of marriage
. A contract made to answer for the duty of another
. Why the 1 year provision?
. Drafters may have thought serious contracts took longer than a
−34−
year to occur
. After a year evidence and memory could be fuzzed
() Arguments against this
() serious contracts can be performed in less than a
year and non-serious ones can take longer
() evidence could be presented earlier even if contract
is more than a year.
. SOF and indefinite duration
. If a contract doesn’t specifically say when something is to be
performed it is not under the statute of frauds
() why?
() Courts think its dumb so they like to limit it.
. Defense of Statute of Frauds
. Without it people might be really wary of negotiating and be afraid
people would run off claiming they had a contract
. Easier to delegate negotiations if you know you won’t be bound
until you sign
. Game Theory Analysis??? To get to win, win situation (3,3) as
apposed to never engaging in K situation, we want to wipe out
opportunists where we get (5, -5)
. Nixes outcomes in the middle of negotiations and forces Contracts
to the end.
. Cases
. CR Klewin v Flagship Properties
() Two companies agree over dinner to do a construction
project. They reduce to writing the first phase then one
party backs out. They claim SOF defense. It fails and
doesn’t qualify for SOF because the duration is not
specified even though 1 year is unlikely that is okay.
. UCC 2-201 Statute of Frauds
. Any sale of goods for $500 or more has to be in writing. Or if you
can find some document clearly indicating that there has been a
sale.
. Between merchants if notice is received and you knwo what its all
about then it is enfoceable
. If not valid under the first part of this it is enforceable if
() If they are specially manufactured for you
() the person against whom enforcement is sought admits in
his pleading or wherever that a contract was made
() if the goods have been paid for or recieved and accepted.
. UCC Cases
. Migerobe v. Certina
() A watch company breaks off a deal with a dealer to sell
tons of watches at a really good price. They get sued.
They claim statute of frauds doesn’t allow this contract
under UCC because it is worth more than 500. The
−35−
plaintiff got a hold of several documents talking about a
sale. They were enforced the contract was breached Sorry
Charlie.
. Conagra v. Nierenberg
() A wheat farmer was a merchant (didn’t contest) and he was
held liable for the breach of an oral contract because he
received notice of it within ten days and didn’t respond.
. Parole Evidence Rule
. UCC 2-202
. The contract reflecting a final agreement is not to be contradicted,
but can be supplemented by
() course of performance, course of dealing, or trade usage
and
() by evidence of additional terms unless it is fully integrated
. Fully integrated
. Fully enforceable according to the terms
. Merger clauses
() excludes anything other outside terms
. Partially integrated
. Mostly enforceable i.e. different terms can’t be argued about, but
additional ones can be
. Non-integrated
. All evidence of terms wehther written or unwritten are admissible
and no conclusive writing exists
. Two approaches by courts
. Cite the merger clause and say it is intergrated
. term specific
() they look at each individual term and say whether it is
integrated or not
. Tests
. Natural Ommissions test (common law)
() Is this the type of thing that parties would normally include
in a contract?
() If they let additional terms in they are saying it is partially
integrated
() if they don’t let the additional term in they are only saying
it is fully integrated as to that term.
. Certain Inclusion test UCC
() The unsplein elephant in the room is that the contracts are
not unintegrated since the party is only arguing for xxx
specific term.
. Merger Clause
a. Basically a contractual clause that says this is the final agreement
and nothing else matters. This is to fight the parole evidence rule.
. Remedies
. Contract Damage Measures
−36−
. Purpose of contract damages
. Compensation
() we want people to be in as good of a position as they
would have otherwise been if the contract had been
completed
. Deterrence
() we want to deter breaches of contract, but how much?
() Market damages create an efficient
breach/deterrence balance
. Point is compensation and NOT PUNISHMENT
. Expectation Damages
128. Cost of Completion v. Diminuition in Value
rrrrrrrrrrrrrrrrrrrr. Rstmnt 348
(896) If you can’t use your property for a while becasue of
breach you can get the rental value or the cost of interest on
the value of the land
(897) If there is unfinished construction in the breach and you
can’t prove how much you lost with certainty
(ffffffffffffffffffffffffffffffffffffffffffffffffff) the diminution
in the market price of the property caused by the
breach or
(ggggggggggggggggggggggggggggggggggggggggggggggg
ggg) reasonable costs of completion or remedying the
defects if the cost is not clearly disproportionate to
the probably loss in value
ssssssssssssssssssss. Peevyhouse v. Garland Coal Mining
(1576) A coal company is contracted that they would fix a strip
mine when they were done. It would cost 29k the value of
the property is only decreased by 300. They don’t fix it.
They get sued. The court says damages are only 300 and
not 29k.
129. Lost Volume Seller
zzzz. UCC 2-708
(2256) Damages are measured to put you in as good of a position
as you otherwise would have been if the contract had been
completed
(2257) If that is inadequate you can get more
aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa
aaaaaaaaaaaaaa. UCC 2-706
(2600) If a buyer backs out then you can only recover extra costs
of the re-sale and the difference between the re-sale and the
original now breached sale
bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb
bbbbbbbbbbbbbb. Define
(2944) If you have unlimited stock and you lose a sale by breach
−37−
of contract then you have sold only 9 and not 10
(2945) As a result you can recover your lost profits on the tenth
sale that was breached
130. Under the UCC: Cover
. Foreseeability
3200. Rstmnt. 351
vvvvvvvvvvvvvvvvvvvv. You can only recover damages that were
foreseeable at the time of contracting.
(3968) Reasoning
(llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll
lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll
lllllllllllllllllllllllllllllllllllllllllllllllllllllllllll) Contract is
strict liability i.e. you are responsible for breach no
matter why you brach
(mmmmmmmmmmmmmmmmmmmmmmmmmmmmmm
mmmmmmmmmmmmmmmmmmmmmmmmmmmmmm
mmm) If you know your chances of being held liable are
higher you will charge a higher price or will
contract around the issue.
(nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn
−38−
It motivates people to reveal their idiosyncracies and
lowers the market price for those without
idiosyncracies while those with idiosyncracies pay
the fair market price to have those idiosyncracies
satisfied.
3201. Cases
hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh
hhhhhhhhhhhhhhhh. Hadley v. Baxendale
(13184) Some milling company needs a shaft shipped
quickly, but it doesn’t get there in time so they sue for
major damages. They lose because if it was that important
they should have revealed their idiosyncracies and
foreseeable damages are the only ones recoverable.
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii. Simeone
(13520) Some guy tries to buy repossessed classic cars from
the bank. They are sold to someone else. He sues. He
wins 2.4 million even though the market price for the cars
would have been only 1.4 million when he got them. He
got the market increase of the cars two years later. This is
an anomaly
(a) Damages by the courts put the possibility of
increase or decrease on the seller
(b) specific performance puts that possibility of an
increase or decrease in value on the buyer.
i) this case specific performance was likely
very difficult because the cars had been
resold probably several times. So maybe
the court did it this way instead.
. Mitigation
14464. Mitigation is required
−39−
Economically more efficient
cccccccccccccccccccccccccccc. Breacher is implicitly saying to other
side that they feel that the breached party is in a better position to
mitigate.
14465. Rstmnt. 350
zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz. You can’t recover damages
that you could have mitigated without undue risk, burden or
humiliation
aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa. If you reasonably try
to mitigate and fail you can still recover.
14466. UCC 2-709
ffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff. The
seller can collect the full price of goods sold if
(15912) the buyer accepted the conforming goods or
(15913) if the seller can’t after a reasonable time resell the
goods
−40−
14467. Cases
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj
jjjjjjjj.Madsen v. Murrey
(16592) Some guy contracts for 100 pool tables at 55k.
They are really special and stuff. The guy breaches and the
company making them just junks them except for a few
parts. He had payed 42.5 k, but the company had saved
21k by not finishing the tables.
(16593) He wasn’t required to mitigate because they were so
specialized that his expert said they weren’t worth much.
(16594) Damages were calculated 42.5k+21k-55k= 8750 so
the company had to pay the guy who breached 8750k
because that is how much they came out ahead of where
they were going to be.
kkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkk
kkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkk. Manouchehri
v. Heim
(1) Some guy buys an xray machine that is a certain strength.
He gets a crappier one from the seller. The seller keeps
promising to fix it. The buyer sues for lost profit. The
seller says he should have mitigated and gotten a new one
somewhere else. The court said he didn’t have to mitigate
because he was still expecting that the machine would be
fixed and so they gave him a month of lost profits.
. Reliance Damage and Restitiution
17192. Reliance Damages
−41−
The damages for what you spent relying on the contract. You use this to
recover your expenses.
aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa.
This puts you in as good as a situation as you would otherwise be if the
contract had not been made.
17193. Restitution Damages
a. You want to get back the benefit you conferred on someone
b. Construed more strictly against the breaching party
. Liquidated damages v. Penalties
. Specific Performance
1. SEE PAGE 81 ALL notes
Other things to consider
. Rules and their progress towards standards see page 59 of notes
. Statute of Frauds use discovery to find documents
. Majoritarian v. Penalty default rules p. 6 all notes
. Court regulation v. Actual intent
. Autonomy/will theory v. Instrumentalist theory
. Consideration doesn’t always benefit
. Substantial performance
. Unilateral v. Bilateral contracts (p. 22 all notes)
−42−

Contracts - Kordana (Good)

Încărcat de

Informații document

Descriere originală:

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Contracts - Kordana (Good)

Încărcat de

Drepturi de autor:

Formate disponibile

Contract-

. market damages or expectancy damages

The Bargain Theory of Contract

S-ar putea să vă placă și