Condensed Contracts Outline For Law School
A contract is a legal promise
Course of performance
What would the reasonable person believe?
Joking + not reading = no bueno
UCC = Movable & tangible goods
Predominant Purpose = 1 reason for contract
Gravamen = break into 2 parts
Quantity = only required term, unless past dealings would fix it.
########## PHASE 1: FORMATION – PLAN A ##########
Offer = specific manifestation to be bound
Ads are solicitations to bid
Offeror is master, can revoke
Acceptance = clear + unaltered + communicated agreement (except MailBox rule)
Method, reasonable, consistent unless specified
Medium, specified, consistent, reasonable, industry custom
Manner, unilateral (performance) or bilateral (promise)
Timely, reasonable, specific or lapse
Moment, must have a moment – UCC doesn’t require
Mailbox Rule acceptance effective on dispatch if proper medium + stamped
Counteroffer not mirror image in material way or too late (except options)
Rejection by words or conduct
Lapse by reasonable time, moment conversation ends, longer with written
Revocation upon receipt before acceptance tendered, indirect, reason to believe
Incompetence immediately kills offer but not a K and not if performing
Option contracts = separate agreements w/ new C or tender performance.
Writing & signature required (not for performance)
Notify if performance not specified (offeree now bound)
Firm offer UCC, merchant signed writing
No C needed, Max 3 months
Preliminary negotiation can become K OR agree to agree; bargain in good faith
Express intent not to be bound till future doc?
Material terms already determined? How definite/vague?
Part performance already accepted?
Usually in writing?
Consideration = bargained for benefit or detriment (usually economic)
Peppercorn, adequacy of consideration is not determinable.
Evidentiary and channeling policies.
Not consideration = illusory promises, past performance, pre-existing duties, additional terms, gifts, warm fuzzies, unlawful claims
Illusory promise, discretionary
Statute of Frauds = requires writing (or record) w/ a signature (or authentication)
Property, Longer than a year (explicit), $500 goods
Standard terms acceptable b/c economic and practical benefits
Sufficient notice? Returnable item? Availability of terms?
Exceptions = specially manufactured + tender beginning, merchants
Battle of the forms = acceptance even if additional terms (unless conditional)
Additional immaterial terms are proposals for contract addition
Merchants = additional terms are part of the contract unless:
Explicitly limits, materially alters, timely objection
******* PLAN B *******
Promissory Estoppel = cures C and SOF
Should know there would be reliance
Justice requires remedy
Damages = reliance or rarely expectation
******* PLAN C *******
Unjust Enrichment / Quasi Contract = something valuable requires payment
Gift or marketing scheme?
Excuse for no valid contract?
******* PLAN D *******
Moral Obligation = sympathetic realist judge, slim chance
Enormous benefit to promisor with history of payments
########## PHASE 2: DEFENSES TO FORMATION ##########
Fraud & Misrepresentation = (1) Intentional or reckless (2) material (3) false representation of (4) fact
Victim’s reliance must be reasonable
Restitution + possibly punitive damages
Non-disclosure that’s material or relied on is fraud when it’s reasonable to rely and:
Required for good faith (other side can’t find out)
(Arms length means parties are on equal ground of power)
Mistake in integration
Undue Influence = position of power used improperly
Duress = Improper threat to coerce contrary action b/c no reasonable alternative
Threat of physical harm
Economic harm: knowledge, causation
Civil process in bad faith
Breach good faith contract
Supervening Difficulties: substantial and burdensome difficulty AFTER contract
Not an error in judgment
Modification terms must be reasonable
Unconscionable: Shocks the conscience
Procedural in the bargaining process
Substantive terms that are draconian
Adhesion: Take-it or leave-it terms. Superior bargaining power. No choice.
Monopoly? One sided? Waives torts? Who’s likely to insure?
Illegal contracts can’t be enforced – harm public policy.
Public Policy: overreaching (absolving torts)
Law making infringes on Legislature
Infancy Doctrine: minor can void a contract
Depreciation? Fake-ID (reasonable investigation). Return C.
Incompetent: void when incompetent
Adjudicated by a court, following contract voidable
Cognitively: Evidence of not understanding realities
Irresistible Urge: Some what irrational. Doesn’t understand consequences.
Contract fair? Other person know crazy? Performance? Unjust to avoid?
########## PHASE 3: INTERPRETATION & CONSTRUCTION ##########
Interpretation: reasonable meaning intended (Can invalidate K)
Express terms > Current performance > Past dealings > Customs
Negotiated? Subjective agreement? Know other’s interpretation? Extrinsic evidence? Language issues? Economic issues?
Construction: Adding legal terms (party’s probably intent)
Gap fillers: if not very material and reasonable
Good faith required in all Ks (reasonable ebb and flow in requirement Ks)
Parol Evidence Rule: limits extrinsic items from impacting written Ks
No Parol rule in oral Ks
Helps with ambiguous language, blank items, trade usage
Fully Integrated: complete and final (even if gaps)
Explicit? Sophisticated? Merger clause?
Integrated: final, but can add just not contradict
########## PHASE 4: DEFENSES TO ENFORCEMENT ##########
Mistake: Assumption that certain state of affairs exists
Material? Unfair? Compelling? Negligent? Misestimation?
Grab bag rule: seller passes risk on to buyer.
Mutual mistake (FSBMBU)
Shared by both
Basic assumption of K
Material effect on exchange
Impacted party did NOT bear the risk
Unfair to reallocate risk?
Unilateral mistake (FOBMBU) harder to get out of – bad idea?
One party mistaken
Basic assumption of K
Material effect on exchange to mistaken party
Mistaken party did NOT bear the risk
Unconscionable b/c of mistake
Impractical: K becomes impossible to fulfill
Impossible / impractical / illegal
Unforeseeable implies were reasonably careful
Frustration of purpose: can still perform but purpose is gone
Purpose is primary & known by other party
Basic assumption that purpose wouldn’t be frustrated
########## PHASE 5: BREACH ##########
Anticipatory Repudiation: Undeniable statement or act indicating breach
Other party does NOT have to perform
Repudiator may retract if:
(1) Not due. (2) Other didn’t cancel. (3) Other didn’t materially change. (4)Other didn’t accept the repudiation.
Assurance can be asked for.
Material Breach: Central, total, non-curable promise equivalent to a condition.
Can stop performance & sue for damages now
How harmful? Honest mistake? Economic waste/forfeiture? Unfair? Good faith?
Opportunity to cure: pretty much before due date
Clean hands? Partial performance? How much inconvenience?
UCC not very lenient; deviation of goods or delivery
Substantial Performance usually found to be non-material
Damages are the cost to cure
Breacher gets some money under unjust enrichment (quantum meruit)
Severance is possible where contract can be split up
Perfect tender rule: UCC
If goods or delivery(no time left) don’t conform
Can (1) reject all, (2) accept all, (3) partial
########## PHASE 6: REMEDIES ##########
You can only have one
Expectation: benefits of the K
Direct: Difference in value (Fair market value, substitute K)
Consequential not in the contract but arises b/c of breach
Lost business/profit, injury
Incidental cost to fix the breach, attorney fees
Subtract avoided costs
Reliance: costs from reasonably relying on the K
K needs to have been a winning/profitable contract
Restitution: give back consideration (down payment)
Quasi contract / unjust enrichment
Speculative? On notice for potential damages? Mitigate damages?
Equitable Relief: specific performance, injunction, recission, modification (damages possible too)
(1) Extraordinary, damages are inadequate, (2) Discretionary, judge not required, (3) Clear K, no ambiguity / uncertainty, (4) Resist supervision, clean & quick relief
Liquidated Damages: pre stipulated damages (can’t be a penalty)
Reasonable to anticipation of loss? OR
Reasonable to actual damages? AND
Difficulty in determining damages?
Trivial breach? Sliding scale?
Economic Efficient Breach: makes $ense to breach