It is a contract from an offer that is open as to how it is accepted.
It is bilateral unless:
Reward.
The offer expressly requires performance.
A unilateral contract:
It is a contract from an offer that requires performance to accept.
Formation:
Offers
General test: manifestation of commitment.
An offer is a manifestation of an intention to contract. The basic test is:
Whether a reasonable person in the position of the offeree would believe that his assent creates a contract.
Any answer that deals with the speaker (the offeror) is wrong.
Special problems
Terms:
The offer is not required to contain all material terms.
The essential lists:
Identity of the offeree, subject matter;
Price to be paid;
Time of payment, delivery and performance,
Quantity involved;
Nature of the works.
Subject matter
Real estate:
The land and the price must be there.
Sale of goods:
The quantity must be there: Art 2.
Requirements and output contracts:
Definition
Requirement contracts are a promise to buy all that I require.
Output contracts are a promise to sell all that I manufacture.
An agreement: the quantity can be specified in terms of the buyer's requirement or the seller's output.
The buyer can increase the requirements but not disproportionately.
Employment contracts:
The duration of the employment must be specified.
Vague or ambiguous terms
For a fair price:
That is NEVER an offer under both Art 2 and C.L.
Advertisement
General rule:
They are NOT an offer.
Exception:
An advertisement can be an offer if it:
Specific as to quantity, and
Indicates who can accept.
Termination of offers
An offer cannot be accepted if it has been terminated.
Method 1: Lapse of time.
Method 2 : revocation of the offer
This is by conduct of the offeror.
How
Statements of the offeror to the offeree indicating unwillingness to contract
Conduct of the offeror that the offeree is aware of:
The offeree MUST be AWARE.
Any means of communication, it does not have to be direct from the offeror to the offeree.
Test:
Correct info;
from a reliable source;
of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer.
If public offer: by same or comparable publication.
MBE:
If it is not by the same publication, the offer has NOT been revoked.
When does revocation of an offer become effective?
Revocation of an offer sent through the mail is not effective until effective.
An offer cannot be revoked after it has been accepted.
Offers that cannot be revoked:
NYD:
promise not to revoke:
If an offer is in writing, signed by the offeror and states that offer is irrevocable, then the offer is not revocable during the time stated or for a reasonable time, even if the offer is not supported by consideration.
It can be for a longer period than 3 months.
Part performance and unilateral contracts:
It can be revoked until performance is completed.
Option contracts:
The offeror has promised to keep the offer open and;
The promise is supported by consideration.
Firm offers under Art 2:
An offer cannot be revoked for three months of
Contract for sale of goods;
Signed, written promise to keep the offer open, and
Party is a merchant.
An offer cannot be revoked if there has been detrimental reliance by the offeree that is reasonably foreseeable.
It will be irrevocable as an option contract for a reasonable length of time.
Part performance: true unilateral contract offers.
Applies on MBE ONLY.
The start of performance pursuant to an offer to enter into a unilateral contract makes the offer irrevocable for a reasonable time to complete performance
Mere preparations alone do not trigger the rule.
Part performance: offer indifferent as to manner of acceptance:
Most bilateral contracts are indifferent as to how offer is accepted:
Beginning of performance, the contract is complete and revocation becomes impossible.
Method 3: termination of an offer: words or conduct of the offeree: Rejection.
General:
Rejection by the offeree terminates any right to accept the offer
Rejection sent through the mail is effective when received.
Rejection can be direct or indirect.
Indirect method 1: counteroffer
Bargaining does not terminate the offer. Counteroffer does.
Indirect method 2: conditional acceptance:
Provided, as long as, if, on the condition: rejects the offer.
Indirect method 3: additional terms to a common law contract: ONLY for C.L.
The mirror image rule
You cannot add terms in the acceptance.
Additional terms still acceptance under Art 2: battle of the forms.
Seasonable expression of acceptance
Additional terms will become a part of the contract if:
Both parties are merchants, and
The offer is not expressly limited to its terms, and
The offeror does not object within a reasonable time, and
The additional term is not a material change.
If one or both of the parties is not a merchant, the additional term is merely a proposal that is to be separately accepted or rejected.
Method 4: termination by operation of law
death of a party prior to acceptance:
Death or incapacity of either party terminates offer
Exceptions:
An option contract
Part performance of offer to enter into unilateral contract.
Termination by destruction of subject matter
Termination by supervening legal prohibition of proposed contract.
The acceptance of an offer
Who may accept:
Generally, an offer can be accepted only by
A person who knows about the offer,
Who is the person to whom it was made.
Method 1:
If the offeree starts to perform, there is acceptance of an offer to enter into a bilateral contract, NOT an offer to enter in a unilateral contract.
Bilateral:
offer is open as method of acceptance so start performance is acceptance.
Unilateral: offers require performance for acceptance so that’s tart of performance is not acceptance, completion of performance is required.
Method 2: if the offeree promises to perform
Most offers can be accepted by a promise to perform.
Very few offers can be accepted only by performance.
The mailbox rule:
General rule:
Acceptance is effective when posted.
Exception 1:
Contract otherwise provides
Exception 2
Rejection, then acceptance
The mailbox rule does not apply.
Rejection is effective on reception.
Acceptance must arrive first, then it controls.
Exception 3
Acceptance, then rejection:
The mailbox rule applies;
However, if the offeror receives the rejection first and relies upon it, there is no contract.
Option deadlines:
Under both C.L. and Art 2: it is irrevocable.
Have to meet the deadline. If a date is set, the acceptance must be received by that date.
If the seller of goods send the wrong goods
General rule: acceptance and breach
The seller accepted it, creating an implied contract by sending the wrong goods, then breached it.
Accommodation exception: counteroffer and no breach:
In accommodation cases, there is no breach:
MBE:
Any answers with the breach part are a WRONG answer.
If the offeree is silent:
General rule
Silence is NOT acceptance.
Exception
If offeree agrees, silence is acceptance.
Consideration:
What is consideration:
Bargained for- legal detriment
NYD:
Bargained for- benefit to the promisor.
Forms of consideration
Performance
Forbearance:
Not doing something legally entitled to.
Promise to perform
Promise to forbear.
Possible issues:
Bargained for/ conditional gift:
The fact pattern will tell you if gift or not.
Past consideration
NYD: is binding if:
The promise is in writing;
The past consideration is expressly stated;
The consideration can be proven; and
The writing is signed by the promisor.
General rule
Past consideration is NOT consideration
Exception: MBE
Expressly requested and expectation of payment.
"pre-existing contractual or statutory duty rule :
C.L
Performance of pre-existing contractual or legal duty not consideration
Exception:
Unforeseen difficulty so severe as to excuse performance
NYD exception:
Written modification does not require modification
Art 2:
There is no pre-existing duty rule.
Good faith is the test.
Part payment as consideration for promise to forgive balance of debt
The key is whether the debt is due and undisputed.
If it due and undisputed, then part payment is no consideration.
If the debt is not due, yet, part payment is new consideration for the release.
Illusory promise
MBE:
Usually the wrong answer
An illusory promise is a promise in which the promisor has not committed himself in any manner. There is no detriment.
Most of the time, you see an illusory promise is identified with control upon only one party.
Exceptions
Restrictions on right to cancel
This is not illusory
Conditional promises
They are enforceable, no matter how remote the contingency, unless the condition is entirely within the promisor's control.
Written promise to pay debt barred by technical defense such as statute of limitations as Consideration substitute.
Promise is in writing, the former is barred but the new promise is enforceable if the debtor promises to pay.
Seal is NOT a consideration substitute.
Promissory estoppel is the most important consideration substitute.
Look for a consideration answer, 1st.
NOT the promissory estoppel answer.
Elements
Promise
Reliance that is reasonable, detrimental and foreseeable
Enforcement necessary to avoid injustice.
Defenses: Capacity to contract
Who lacks capacity?
Infant: under 18.
Mental incompetents
Intoxicated persons if other party has reason to know.
Consequences of incapacity: right to disaffirm:
Infant:
Only the infant can disaffirm.
Implied affirmation
If the infant retains the benefit, she is barred from disaffirming.
Liability for necessaries:
Food, clothing, shelter, medical expenses.
Everyone is legally obligated to pay for necessaries even incapacitated people.
It will be a quasi-contract.
Defenses: statute of frauds
NYD:
Contracts within the statute of frauds:
Contracts to enter into lease.
Promise to pay discharged debts;
Assignment of insurance policy or promise to name beneficiary of such policy, and
Contracts to pay commission or finder's fee, unless attorney, auctioneer or licensed real estate broker is involved.
Equal dignities rule:
In agent/principal relationship, if dealing with interest in land, agent must be authorized in writing or principal must ratify.
Art 2A lease of personal property
If lease payments total at least $1000
Within the statute of frauds
Main purpose rule:
Requires that promisor to come under an independent duty of payment irrespective if the liability of the principal.
Right to terminate within a year
If the party seeking the enforcement was the only one who had the right t terminate:
It is within the statute.
Lifetime contracts:
It is within the statute.
Ex:
Employ someone for life
When statute not applicable:
Not applicable if part performance of a lease agreement.
What does it mean:
Certain contracts must be in writing, if not they failed under the statute of frauds.
Issues
Is the contract within the statute of frauds?
Is so, is the statute of frauds satisfied?
If not, what result?
Contract within the statute of frauds:
Promise in consideration of marriage
Likely to be the wrong answer.
It must be in writing.
Promise by executor or administrator to pay obligation of estate from his own funds
Likely to be wrong answers
If from his own funds, must be in writing.
Other promises for the debts of another
Likely to be wrong answer on MBE.
It is very narrow too.
The paradigm:
C promises to pay b is A does not.
This is a guarantee, must be in writing.
Exception:
Main purpose rule:
If the main purpose of the promise is that it benefits the guarantor, it is not within the statute of frauds.
Services not capable of being performed within one year from the time of the contract:
Tasks can always be performed within a year.
Employ some for life:
It can be performed within a year since the person can die before the end of the year.
If promise to employ someone for three years:
It is within the statute of frauds.
The statute of frauds start when the contract is signed:
If the performance is a year after the contract is signed
It is within the statute of frauds.
Transfers of interest in real estate of a duration of more than a year
Leases of one year are NOT within the statute of frauds.
Sale of land is within the statute of frauds.
Easements of more than one year is within the statute of frauds.
Fixtures are within the statute of frauds.
Mortgages and other securities liens are within the statute of frauds
Sales of goods for $5oo or more
It is within the statute of frauds.
How is the statute of frauds satisfied?
The statute of frauds can be satisfied by performance.
Services contracts
Full performance by either party satisfies the statute of frauds
Part performance of a service contract does NOT satisfy the statute of frauds
If it is inequitable:
The court will find a quasi-contract.
Sale of goods contracts:
General rule
Part performance of a contract for a sale of good satisfies the statute of frauds but only to the extent of the part performance.
Specially manufactured goods exception:
Substantially beginning or commitments for the procurement of the goods:
Then the statute is satisfied.
Real estate transfer contract:
Performance by seller of real estate does satisfy the statute
I.e.: conveyance of the title
Full payment by buyer or real estate does NOT satisfy the statute:
Part performance by buyer of real estate CAN satisfy the statute:
Any 2 of the following 3:
Part payment; and or
Possession, and or
Improvement on the land.
writing
C.L.:
Look at the contents of writing or writings
All material terms must be there
Look at who signed:
Must be signed by the person to be charged.
Sales of goods:
First situation:
The writing must contain the quantity term
The writing must be signed by the person to be charged; or
Second situation:
Both parties must be merchants and the person who receives a signed writing with quantity term that claims there is a contract fails to respond within ten days of receipt.
Art 2A leases:
The writing must:
Indicate that it is a lease
Describe what is being leased, and
State the duration of the lease.
Judicial admission of sale of goods agreement
In pleadings, discovery, testimony
Related issues:
Authorization to enter into contract for transfer of interest in real estate
Because of the equal dignities rule:
If the underlying contract has to be in writing, then the authorization must be in writing.
Contract modification:
If the contract with the modification is within the statute of frauds, the modification agreement must be in writing.
C.L.
If there is provision saying all modification is in writing:
The court will look at what is modified.
They usually ignored that provision.
Art 2:
You have to focus on the new agreement.
If get into statute:
writing is necessary
if get it outside the statute
no writing is necessary.
If they provide that no oral modification is possible:
It will be enforceable.
Illegality, duress or fraud
Illegality:
If either the consideration or the subject matter is illegal:
The contract is void.
If the purpose was illegal
The contract is voidable by:
The party who did not know of the illegality; or
Knew but did not facilitate the purpose and the purpose does not involve "serious moral turpitude"
If the illegality arise after the contract was formed:
The contract is discharge.
Limitations
If the plaintiff was unaware of the illegality,
He can recover on the contract.
Fraud in execution/ fraud in inducement:
If fraud results in a person not knowing she is signing the contract:
The contract is void
If fraud results in person being deceived about material terms of the contract:
The contract is voidable.
Personal duress/ economic duress
Personal or physical duress is a basis for avoiding the agreement. NOT economic duress.
Unconscionability
This doctrine empowers a court to refuse to enforce all or part of an agreement.
The two basic test:
Unfair surprise; and
Oppressive terms,
Are tested as of the time the agreement was made by the court.
Ambiguity
There will be no contract if:
Parties use a term that is open to at least two reasonable interpretations, and
Each party attaches a different meaning to the term, and
Neither party knows or has reason to know meaning attached by other.
If one party knows of the ambiguity
There is a contract.
Mistake of fact
Mutual mistake of material fact
There will be no contract if
Both parties mistaken
Basic assumption of fact
Materially affects the agreed exchange.
Mistake as to subject matter:
It is fatal
Mistake as to price:
Never fatal.
Unilateral mistake of material fact
General rule:
Courts are reluctant to void the contract
Exceptions:
Palpable mistakes
If the other party to the contract knows or should have known of the mistake, courts grant relief to the mistaken party
Avoidance before significant reliance by the other party
Bidder gets relief unless the other party relied on it.
Terms of the contract
Parol evidence rule
Nature of the rule
It is substantive law, NOT a rule of evidence
It affects the terms of contract, NOT formation.
Rule:
When parties have agreed to a written contract as the final expression of their agreement, a PRIOR or CONTEMPORANEOUS agreement cannot be used to vary the terms of that written contract
Triggering facts:
Written contract, and
Intended as final agreement: an integrated agreement, and
Earlier or contemporaneous agreement that adds to or changes that written agreement.
Issues:
The judge can add terms if she finds that the writing was not intended as the complete agreement
Even if the judge decides that it is a complete writing, she can consider parol evidence of an additional term from an earlier agreement if the relates to a matter that would normally and naturally not be included in the contract
Exception:
When there was an error in reducing the contract into writing:
The parol evidence rule does not apply.
Parol evidence can be introduced to show any defect in contract formation.
UCC terms:
Delivery obligations of seller of goods:
Possible obligations:
Non carrier cases:
Tender or delivery
It must be perfect tender
Carrier cases
Shipment contract: where seller has not agreed to tender at particular destination
Put the goods into the hands of a reasonable carrier and make reasonable contract for their transportation to the buyer
Obtain and promptly tender any documents required by the contract or usage of trade or otherwise necessary to enable the buyer to take possession; and
Promptly notify the buyer of the shipment
Destination contracts:
The seller is not done until the goods arrive where the buyer is.
Sources of delivery terms:
F.O.B. contracts:
They are shipment contract unless the city of destination is different
If the seller is a merchant, risk of loss passes to the buyer only upon her taking physical possession of the goods.
If the seller is not a merchant, risk of loss passes to the buyer upon tender or delivery.
Carrier cases:
Contracts not requiring delivery at particular destination
Risk of loss passes when the goods are delivered to the carrier
Destination contracts
The risk of loss passes only after the goods been tendered to the buyer at the destination
Goods held by bailee to be delivered without being moved
Risk passes to the buyer upon the occurrence of one of the following events:
The buyer's receipt of a negotiable document of tile covering the goods;
An acknowledgement by the bailee of the buyer's rights to the goods; or
The lapse of reasonable time for the buyer to notify the bailee of the buyer's rights in the goods after the buyer's receipt of a nonnegotiable document of title or other written direction to the bailee to deliver.
Effect of breach on risk of loss:
Defective goods:
If defective to the point the buyer has a right to reject them:
The risk did not pass to buyer.
Revocation of acceptance
Where the buyer rightfully revokes acceptance:
The risk of loss is treated as having rested on the seller from the beginning, to the extent of any deficiency in the buyer's insurance coverage.
Breach by buyer
Any loss occurring within a commercially reasonable time after the seller learns of the breach falls upon the buyer to the extent of any deficiency of seller's insurance coverage.
Risk in sale or return and sale on approval contracts
Sale or return:
The risk remains on the buyer.
Sale on approval:
The risk is on the seller.
Warranties of quality:
Express:
Promise, description, affirmation of fact.
Puffing is always okay and it is NOT a warranty.
Conduct: use of sample or model
Basis of the bargain
The buyer relied on it when he bought the goods.
Implied warranty of merchantability:
When a party buys any good from any MERCHANT, a term is automatically added to the contract by operation of law:
They are fit for ordinary purpose
Merchant is a seller of goods of that kind.
Implied warranty of fitness:
Buyer has a particular purpose:
He is relying on seller to select suitable goods; seller has reason to know of purpose and reliance.
2A warranties on lease:
general rule:
lessor of personal property makes the same warranties as a seller:
Express, merchantability, fitness.
Finance lease:
In a finance lease, warranties made by the supplier to the lessor are enforceable by lessee.
Contractual limitations on warranty liability:
Disclaimer
It eliminates warranties
Express warranties
You CANNOT disclaim express warranties.
Implied warranties of merchantability and fitness:
"As is" or "with all faults" or
conspicuous language of disclaimer, mentioning merchantability
limitations of remedies:
it does not eliminate warranty, simply limits or sets recovery for any breach of warranty
It is possible to limit remedies even for express warranties.
The general test is unconscionability
Prima facie unconscionable if breach of warranty on consumer goods causes personal injury.
Performance:
Conditions of performance
What a performance condition is:
It is an event beyond the control of the parties to a contract that affects a party's duty to perform under the contract.
What terms are used to describe conditions:
A true condition
Is an even that affects the party's duty to perform under the contract that is beyond the control of the parties.
A condition coupled with a covenant:
Is an event that affects the duty to perform that is to some extent within the control of one of that parties and creates a legal obligation on that party to use reasonable good faith efforts to cause the event to occur.
Precedent/ subsequent:
Precedent must occur before
Subsequent must occur after.
Express/ constructive
Express: words
Constructive:
Service contract: no time for payment
After the service usually.
Contract has order for performance:
The first performance is a condition precedent for the second performance to be performed.
How can a condition be excused?
Look at the person who benefits from the condition, and see if she has done anything to take that benefit away:
Failure to cooperate:
The other party can sue.
Estoppel or waiver
Estoppel is based on a statement by the person protected by the condition BEFORE the conditioning event was to occur and requires a change of position
Waiver is a similar statement after the conditioning event was to occur and does not require a change of position.
How can a condition be satisfied?
Strict or complete satisfaction of express condition
Condition of satisfaction:
It is the reasonable person standard that is applied.
If, in good faith, the other party is unsatisfied, then the condition is not satisfied.
Substantial performance of constructive condition:
You don't need strict compliance.
Most service contract are constructive condition:
You pay after the job is done.
Sale of goods performance concepts:
Perfect tender
It is the general standard of Art 2.
Subject to limited exceptions, seller is obligated to deliver perfect goods.
Cure
A seller who fails to make perfect tender will be given a second chance.
Not every seller can cure.
The buyer cannot compel the seller to cure.
Time for performance has not expired yet
If delivery before dead line:
The buyer rejects
The seller can cure.
Time of performance has expired
Whether the seller has reasonable grounds for believing that the improper tender would be acceptable.
Rejection of the goods: general rules:
How?
It has to be timely.
Reject only if not perfect tender
The buyer cannot reject if perfect tender.
When?
Rejection must occur before acceptance
If the goods are less than perfect, the buyer has the option to reject unless it is an installment sales contract.
Installment sales contract
An installment contract requires or authorizes
Delivery in separate lots
To be separately accepted.
Why is it important to spot it:
The buyer has a right to reject only if
There is substantial impairment in that installment that can't be cured.
Acceptance of the goods:
When:
Express acceptance.
Implied acceptance
Retention after inspection without objection
Payment without inspection is NOT acceptance
Effect of acceptance
If the buyer accepts the goods, he cannot later reject the goods.
Revocation of acceptance of the goods:
In limited situations, a buyer can effect a cancellation of the contract by revoking its acceptance of the goods
Requirements:
Non conformity substantially impairs the value of the goods, and
Excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction, and
Revocation within a reasonable time after discovery of nonconformity.
Buyer's payment obligation
Unless there is an agreement for credit,
The buyer must pay cash
Checks are okay
Excuse of non performance [discharge]
Excuse by reason of failure of condition
If a party's duty to perform is conditional, failure of the condition excuses the duty to perform.
Excuse by reason of other party's breach:
Sales of goods: perfect tender
If the tender is less than perfect, the buyer can reject the goods and withhold payment:
The buyer is excused from paying.
Other contracts: material breach:
C.L. generally requires only substantial performance.
If one of the parties substantially performs, the other party is required to perform.
Material breach is the converse of substantial performance.
Material breach results from a performance that is not substantial.
Excuse of performance by reason of the other party's anticipatory repudiation on inability to perform
Anticipatory repudiation is a statement
That the repudiating party will not perform,
Made prior to the time performance was due.
It gives rise to immediate claim for damages for breach.
Excuse by reason of a later contract:
Rescission ( cancellation)
MBE:
Whether performance is still remaining from each of the contract parties
If fully performed by one party, then there cannot be rescission.
NYD:
Release in writing is also key.
If fully performed, but agreed in writing to cancel, then it is an effective rescission.
Accord and satisfaction ( substitution of obligation)
Meaning:
Accord is an agreement by the parties to an already existing contract that the same parties will do something different that will extinguish or satisfy the existing contractual obligation.
Satisfaction is the performance of the accord.
Effect of accord alone:
The accord suspends legal enforcement of the prior obligation
No satisfaction
If the accord is not performed, the other party can sue on either the existing obligation or the accord.
Novation
Definition:
A novation is an agreement between both parties to an existing contract to the substitution of a new party
Who is liable?
Novation excused the contracted for performance of the party who is substituted for or replaced.
Novation and delegation:
Delegation does not require the agreement of both parties and does not excuse.
Excuse of performance by reason of a later, unforeseen event:
Performance of contractual duties can be excused under impossibility, impracticability or frustration of purpose by:
Something that after contract formation but before the completion of contract performance;
That was unforeseen;
That affects either part's ability to perform or the value of performance.
Difference between impossibility and impracticability:
Impossibility
Is objective
It cannot be done
Impracticability
Is subjective;
It can be done with extreme difficulty
C.L.: destruction of subject matter
It is impossibility
Contract to build:
If the building is destroyed
The builder can still rebuild, not impossibility.
But if it was not caused by the builder, then
Most courts will excuse the builder from the deadline.
Art 2: casualty to identified goods before the risk of loss has passed:
You have to risk of loss first.
If the risk of loss is on buyer, then
You can NEVER get to excuse of performance;
Be certain that the goods that were destroyed were the subject matter of the contract.
Other grounds:
Can be based on:
Unavailability of raw materials or other problems with suppliers;
Death or incapacity of a person necessary to perform;
Labor strikes
Govt. regulations promulgated or legislation enacted after the contract
Breach remedies for unexcused performance
Liquidated damages:
If in doubt go to liquidated damages.
Contract can stipulate damages or method to fix them.
A contract cannot provide for a penalty.
Two tests to determine if valid liquidated clause or invalid penalty provision:
At time of contract, damages difficult to predict, and
At time of contract, provision reasonable forecast of possible damages.
Punitive damages:
Not recoverable under contract law.
Damages rules for ordinary contracts:
Basic concept:
Protect contract expectations:
ALWAYS say it on essay answer.
General measure of damages for breach of ordinary contract:
Generally, the injured party is entitled to recover the amount that would put her in as good a position as if the contract had been performed
Contract expectation:
Recover the difference.
If the guy started performing:
Cost + profit to the performer
Additions and limitations
Plus foreseeable consequential damages
Plus incidental damages
Costs of dealing with the breach.
Minus avoidable damages:
No recovery for loss that could have been avoided by appropriate steps.
Burden of proof on avoidability is on the defendant.
Damages rules for Sales of goods:
Seller breaches, buyer keeps the goods:
Fair market value if perfect ( fair market value as delivered)
Seller breaches, seller keeps the goods
Market price at the time of discovery of the breach - contract price or
Replacement price - contract price
Buyer breaches, buyer has the goods
Contract price.
Buyer breaches, seller has the goods
Contract price - market price at time and place of delivery or
Contract price - resale price.
Quasi-contract:
Unjust enrichment.
Non-monetary remedies
Specific performance/ injunction
Only available when P has clean hands.
Contract for sale of real estate
Possible
Contract for sales of goods
Unique goods
Specific performance ONLY for those
Unique:
Art
Custom-made
Antiques
Contract for services
Never specific performance.
Possible injunction relief.
You can prevent the person to work for someone else.
Covenant not to compete:
Reasonable business need for the protection
Reasonable geographic limitations
Reasonable time limitation.
Reformation
Correction of error in reducing agreement to writing.
Adequate assurance of future performance ( Art 2 and C.L.)
One party to contract learning something after the contract that makes him concerned about the other party's performance; and
Written demand for adequate assurance
Reclamation
Right of an unpaid seller to get his goods back
The buyer must have been insolvent at the time he received the goods, and
The seller demands return goods within 10 days of receipt.
This ten day rule becomes
a reasonable time rule if before delivery there had been an express representation of solvency by the buyer; and
buyer still has the goods at the time of receipt of demand.
Rights of good faith purchaser:
The good faith purchaser from dealer cuts off the rights of the entruster.
Third party problems
Third party beneficiaries:
Identifying third-party beneficiary problems:
Look for two party contracting with the intent to benefit a third party
Vocabulary
Third-party beneficiary
Not a party to the contract.
Able to enforce a contract made by others to her benefit.
Promisor
Look at the person who is making the promise that benefits the third party.
Promisee:
It's the other party to the contract who is not making the direct promise to the beneficiary.
Intended/ incidental
Incidental beneficiaries have NO rights.
Creditor/donee:
General rule
You have a donee
Unless:
The beneficiary was the creditor of the promisee.
Dealing with efforts to cancel or modify
The test is whether the third party knows of and assents to the contract.
If the third party has assented to the contract,
Her rights have vested.
The contract CANNOT be cancelled or modified without her consent unless:
The contract otherwise provides.
Who can sue whom?
Third party can sue promisor.
Promisee can sue promisor.
Because they are in privity of contract.
Creditor beneficiary can sue promisee on the underlying.
Defenses
If the third party sues the promisor, the promisor can assert any defense that he would have had if sued by the promisee.
Assignment of rights
NYD:
A gratuitous assignment is irrevocable if it is in writing and signed by the assignor.
Successive assignments:
NY follows the majority rule
Additional exception:
The assignment of a construction contract or money due thereunder is not valid until filed.
Thus, a subsequent assignee in good faith, who filed first, prevails over the party who failed to file.
An assignment is:
The transfer of the rights under a contract from one party to someone else.
Vocabulary
Assignor
The party to the contract who later transfer rights under the contract to another.
Assignee
Not a party to the contract.
He is able to enforce the contract because of the assignment.
Obligor
The other party to the contract.
Limitations on assignment:
Contract provisions
Determine if contract prohibits or invalidates assignments:
prohibition
Breach by the one who assigns.
The assignee has all the rights if he did not know about the prohibition
Invalidation:
Breach by the assignor
The assignee has no rights.
C.L.:
Even if a contract does not in any way limit the right to assign, C.L. bars assignment that substantially changes the duties of the obligor.
Assignment of right to payment:
It is always okay.
Assignment of other performance rights
If it does change substantially the duties,
It is NOT okay.
Requirements for assignment:
Language of present assignment.
Writing is the underlying contract required writing.
Consideration is NOT required.
Rights of assignee
Assignee can sue the obligor
Obligor has the same defenses against assignee as it would have against assignor.
Payment by obligor to assignor is effective until obligor knows of the assignment.
Modification agreement between obligor and assignor is effective if the obligor did not know of the assignment
Multiple assignments:
Gratuitous assignments:
General rule
Such a gift can be freely revoked.
Revocation can be accomplished directly or indirectly by bankruptcy, death, the assignor taking performance from the obligor, or the making of another assignment
Since an later gift revokes an earlier gift assignment,
The general rule for resolving claims among assignees who did not provide consideration is a last in time rule.
Exceptions
It is not revocable if it is the subject matter of a writing delivered to the assignee,
The assignee has received some sort of indicia of ownership, or
The assignee has relied on the assignment in a way that is reasonable, foreseeable, and detrimental.
If it not revocable:
The later gift does not fail the earlier gift
Assignments for consideration
First assignee for consideration wins.
Limited exception
A subsequent assignee takes priority over an earlier assignee for value only if he both
Does not know of the earlier assignment, and
Is the first to obtain payment, a judgment, a novation, or indicia of ownership.
Multiple assignments for consideration as breach of warranty
In theses cases, the assignor warranties that the rights are assignable and enforceable
You sue him for breach of the warranty.
Delegation of duties
Party to contract transfer work under that contract to third party.
All contractual duties are delegable
Contract prohibits delegation or assignments,
Contract calls for special skills, or
Person to perform contract has a special reputation.
Essentially no requirements required.
Consideration not required.
Consent of other party not required
Consequences
Delegating party is still liable
Delegate liable to obligee only if he receives consideration from delegating party.
