1. Consideration as a Basis For Enforcement
1.1. Hamer v Sidway
1.1.1. Forbearance as consideration
1.1.2. "Nephew"
1.2. Gratuitous Promises
1.2.1. gifts not enforceable
1.3. Feinberg v. Pfeiffer
1.4. Moral Obligations
1.4.1. Mills v. Wyman
1.4.2. Webb v McGowin
1.4.2.1. (material benefit conferred); issue where is consideration? subsequent promise is enforceable
1.4.2.2. saved life became disabled/couldn't work
1.4.3. Harrington v Taylor
1.5. CONTRACT MODIFICATION A contract modification occurs when the parties to a contract change or add additional terms to an existing enforceable contract. • Under the common law, a contract modification must be supported by consideration. The preexisting duty rule stipulates that a promise to do something of which the party is already legally obligated to do, by contract or otherwise, is not consideration. • Under the UCC, a contract modification need NOT be supported by consideration. The UCC stipulates that a contract modification will be valid if the parties enter into the modification in good faith.
2. "Love For Dogs Treat Every Rover Terrifically" - *Barbari notes
2.1. Love= Law ; Common Law vs. UCC
2.2. For = Formation; Consideration/Acceptance, Offer,Terms, Communication, Expressed vs. Implied, Bilateral/Unilateral, Enforceability
2.3. Dogs=Defenses: Statute of Frauds, Misrepresentation
2.3.1. Mistakes
2.3.1.1. Mutual Mistake
2.3.1.1.1. Sherwood v Walker (fertile cow)
2.3.1.2. 1 party mistake
2.3.1.3. Misrepresentation
2.3.1.3.1. Fraude
2.3.2. Statue of Frauds: M.Y. L.E.G.S.
2.3.2.1. M=Marriage
2.3.2.1.1. prenup
2.3.2.1.2. (M) Marriage A contract made in consideration of marriage triggers the statute of frauds. However, the marriage contract itself (i.e., the promise between two people to marry each other) does NOT trigger the statute of frauds.
2.3.2.2. Y=Year (1 year contract)
2.3.2.2.1. (O) One-Year Provision
2.3.2.2.2. A contract that by its terms CANNOT be performed within one year from the day after its formation triggers the statute of frauds.
2.3.2.2.3. The one-year provision is interpreted very narrowly. There generally must be no possible way that the contract could be performed within one year from formation.
2.3.2.2.4. E.g., A hires B to give him contract law lessons for the rest of A's life. Since A could die within one year from formation, the statute of frauds is not triggered under the one-year provision.
2.3.2.2.5. E.g., A hires B to build a full-scale replica of the Egyptian pyramids. Here, even though it is unlikely, it is possible that B could build the replica within one year from formation. Therefore, the statute of frauds is not triggered under the one-year provision.
2.3.2.3. L= Land
2.3.2.3.1. (R) Real Estate Contracts Any agreement or promise to transfer, receive, or create an interest in real estate triggers the statute of frauds. Notably, agreements to build structures on land (i.e., construction projects) do not transfer, receive, or create an interest in real estate. Therefore, these types of construction project contracts do not trigger the statute of frauds unless they fall under the one-year provision.
2.3.2.4. E=Executor (must be writing)
2.3.2.4.1. (E) Executor/Administrator of an Estate Creditors of the estate have priority to the assets of the estate over beneficiaries. The executor or administrator of a will is responsible to use the estate’s assets to pay off the estate’s debts to creditors before distributing any assets to beneficiaries. However, if an executor or administrator of an estate promises to personally pay a debt that the estate owes to a creditor, the statute of frauds is triggered. This is very similar to a suretyship contract.
2.3.2.5. G= Goods at $500 or more is covered by UCC Statute of Frauds
2.3.2.5.1. (U) UCC Goods Contracts for $500 or More A contract for the purchase or sale of goods for $500 or more triggers the statute of frauds.
2.3.2.6. S= Surety (promise must be in writing)
2.3.2.6.1. Guarantor to pay for debts is pass away
2.3.2.6.2. (S) Suretyship A suretyship contract generally triggers the statute of frauds. A suretyship contract is a three-party agreement where the surety promises an obligee to pay the principal's debt if the principal fails to pay the obligee (usually a suretyship contract is in the context of one family member wishing to help another family member get approved for some type of loan). Main Purpose Exception: However, If the surety's main purpose in agreeing to pay the principal's debt is for the surety's own economic benefit, then the statute of frauds is NOT triggered.
2.3.2.7. Exceptions
2.3.2.7.1. Specialized Goods: "Bubba boots"
2.3.2.7.2. Performance: Full performance subst. writing
2.3.2.7.3. Written Merchant Confirmatory Memorandum, both parties are Merchants;"answer the damn letter"
2.3.2.7.4. Admit to having a contract
2.3.2.7.5. Promissory Estoppel
2.3.3. Statute of Fraud: The statute of frauds is a common law concept that requires written contracts for certain agreements to be binding.
2.3.4. Duress:Duress describes the act of using force, false imprisonment, coercion, threats, or psychological pressure to compel someone to act contrary to their wishes or interests (can be economic as well)
2.3.5. Conscionability
2.4. Treat= Terms
2.5. Every=Excuse
2.6. Rover = Remedies
2.7. Terrifically = Third Party Rights
3. Formation Acronym: My Cats Do Sneak
3.1. My= Mutual Assent
3.1.1. Mutual Assent between the parties;
3.2. A traditional, enforceable contract is formed when there is
3.2.1. CONTRACT FORMATION
3.3. Cats= Consideration
3.3.1. Valid Consideration vs. Invalid Consideration
3.3.1.1. The promisee incurs a legal detriment OR the promisor receives a legal benefit; AND The promise induces the detriment AND the detriment induces the promise.
3.3.1.1.1. courts only focus on whether the promisee incurred a legal detriment, irrespective of a benefit to the promisor.
3.3.1.2. The promise induces the detriment AND the detriment induces the promise.
3.3.1.3. Promising not to sue (settlement of a legal claim) will act as a legal detriment so long as the party promising not to sue has an honest and good faith belief in the validity of the claim.
3.3.1.4. A bargained-for exchange requires reciprocal inducement – that the promise induces the promisee to incur his legal detriment and that the legal detriment induces the promisor to make his promise.
3.3.1.5. EXAMPLES OF INVALID CONSIDERATION
3.3.1.5.1. Gift Promises are NOT consideration.
3.3.1.5.2. E.g., A promises to give B his truck for free. Here, B incurs no legal detriment and A's promise to give B his truck is not induced by any action or forbearance from B. This is a gift promise, not bargained-for consideration.
3.3.1.5.3. Conditional gifts are NOT consideration.
3.3.1.5.4. E.g., A promises to give B his truck if B will drive 30 minutes away to pick the truck up from A's house. Here, A's promise to give B his truck is not induced by B coming to pick the truck up. Thus, A is not bargaining for B to come. This is a conditional gift, not bargained-for consideration.
3.3.1.5.5. A preexisting legal duty is NOT consideration.
3.3.1.5.6. E.g., A promises to pay B $100 if B refrains from smoking crack-cocaine for 6 months. Here, B already has a preexisting legal duty imposed by law to refrain from smoking crack-cocaine. Thus, B incurs no legal detriment, which means consideration is not present.
3.3.1.5.7. Notably, if A promised to pay B $100 if B refrained from smoking tobacco for 6 months, then consideration would be present (assuming B is 18 years of age or older and can legally smoke tobacco). Refraining from or promising to refrain from exercising a legal right which the party is otherwise entitled to exercise constitutes a legal detriment.
3.3.1.5.8. Past consideration is NOT consideration.
3.3.1.5.9. E.g., A's truck catches fire as A is demonstrating the truck’s safety features to B. After the fire erupts, B rushes over and extinguishes the flames saving A's life. Grateful, A promises to pay B $100 for the rescue. Here, A's promise to pay B is induced by an action that B already completed. This is past consideration, not bargained-for consideration.
3.3.1.5.10. A pretense of consideration or sham consideration is NOT consideration.
3.3.1.5.11. E.g., A and B are cousins. A wishes to give B his truck that is valued at $10,000 as a gift for B's birthday. Attempting to form an enforceable contract, A "sells" B his truck for $1 solely to meet the consideration requirement. Here, A is not induced to give B his truck for the $1. This is merely a pretense of consideration, not bargained-for consideration.
3.3.1.5.12. An illusory promise is NOT consideration.
3.3.1.5.13. An illusory promise occurs when the promisor fails to clearly commit to the deal.
3.3.1.5.14. E.g., A promises to buy B's truck if “he feels like it.” Here, A is not committing to the deal. This is an illusory promise, not bargained-for consideration.
3.4. Defenses
3.4.1. No defenses to formation or enforcement that would invalidate the otherwise valid contract.
3.4.2. DEFENSES TO CONTRACT FORMATION AND ENFORCEMENT Even if mutual assent and consideration are present, the otherwise valid contract can be invalidated if any of the following defenses are successfully asserted: Incapacity Mistake Misunderstanding Misrepresentation Duress Undue Influence Illegality Unconconscionability If a defense is successful, the contract will generally be void or voidable. A void contract is treated as though it never existed (i.e., neither party can enforce the contract). A voidable contract is enforceable until a party takes action to rescind the contract (i.e., the adversely affected party may be able to enforce the contract).
3.5. Statute of Fraud
3.5.1. Alternative Theories: Pouncing Quells Mice
3.5.1.1. Pouncing= Promissory Estoppel
3.5.1.2. Quell= Quasi Contract
3.5.1.3. Mice = Moral Obligations
4. Performance Acronym: Sarah Plays with Cat Every Afternoon
4.1. Sarah = Substantial Perf.
4.1.1. PERFORMANCE
4.1.2. If a traditional, enforceable contract is formed, and either party fails to perform their contractual duties without a valid excuse for nonperformance, then the breaching party may be held liable for breach of contract.
4.1.3. Performance Under the Common Law
4.1.4. Under the common law, substantial performance is required, which means that performance will be satisfied so long as there is NOT a material breach of the contract. If there is a material breach, the non-breaching party's performance is discharged. If the breach is NOT material, the non-breaching party's performance is NOT discharged.
4.1.5. Performance Under Article 2 of the Uniform Commercial Code
4.1.6. Under the UCC, perfect tender is required, which means that a seller must deliver conforming goods in accordance with the terms of the contract (i.e., “perfect goods” + “perfect delivery”).
4.1.7. The smallest nonconformity is considered a breach that allows the buyer to reject all or a portion of the goods.
4.1.8. However, there are three main exceptions:
4.1.9. The parties can contractually change the default rules to include discussion of substantial performance instead of perfect tender;
4.1.10. Installment contracts (agreement for delivery in separate lots) do NOT have to satisfy perfect tender – the buyer can reject a specific installment delivery when there is a substantial impairment in the installment that cannot be cured;
4.1.11. If the seller fails to tender perfect goods, the buyer MUST give the seller a chance to cure the nonconformity if:
4.1.12. The time for performance under the contract has NOT yet expired; OR
4.1.13. The seller has reasonable grounds to believe that the buyer would accept a replacement for the nonconformity.
4.1.14. Revocation of Acceptance. If a buyer fails to reject nonconforming goods after having had a reasonable opportunity to inspect the goods, the buyer is deemed to have accepted the goods. The buyer may revoke his acceptance if:
4.1.15. The nonconformity substantially impairs the value of the goods;
4.1.16. The revocation occurs within a reasonable time after the buyer discovers or should have discovered the ground for nonconformity and before any substantial change in condition of the goods which was not caused by their own defects; AND
4.1.17. The buyer accepted the goods:
4.1.18. On the reasonable assumption that the nonconformity would be cured and it has not been seasonably cured; OR
4.1.19. Without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
4.2. Plays= Parol Evidence
4.2.1. When the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain, the writing is an integration.
4.2.2. If the writing is not an integration (e.g., non-final expressions such as tentative drafts), the parol evidence rule does NOT apply.
4.2.3. Otherwise, an integration may be complete or partial.
4.2.4. Complete Integration. If the writing completely expresses all of the terms of the parties’ agreement, then it is a complete integration. Absent an exception, all other expressions or statements, written or oral, made prior to the writing, as well as any oral expressions made contemporaneously with the writing, are inadmissible.
4.2.5. A merger clause recites that the agreement is the complete agreement between the parties. This is usually strong evidence that the writing is a complete integration.
4.2.6. Partial Integration. If the writing sets forth the parties’ agreement about some terms, but not all the terms, then it is a partial integration. Other expressions or statements, written or oral, made prior to the writing, as well as any oral expressions made contemporaneously with the writing, are admissible to SUPPLEMENT the writing so long as the evidence does NOT contradict the terms of the writing.
4.2.7. The parol evidence rule does NOT apply if any of the following exceptions exist:
4.2.8. Formation Defects. Extrinsic evidence may be offered to establish a defense to the formation or enforcement of a contract (e.g., incapacity, mistake, duress, lack of consideration, etc.).
4.2.9. Condition Precedents. Extrinsic evidence may be offered if a party asserts that there was an oral agreement that the written contract would not become effective until a condition occurred.
4.2.10. Ambiguity and Interpretation. Extrinsic evidence may be offered for the purpose of interpreting or clarifying an ambiguity in the agreement.
4.2.11. Separate Deals. Extrinsic evidence may be offered if it represents a distinct and separate contract.
4.2.12. NOTE. The parol evidence rule does NOT apply to agreements made between the parties AFTER the the execution of the writing. Agreements made after the execution of the writing would be analyzed as contract modifications, and do NOT trigger the parol evidence rule.
4.3. Cat= Conditions
4.3.1. Conditions, Excuses, and Anticipatory Repudiation
4.3.2. A promise is an expression of an intention to act or refrain from acting in a specified way such that it justifies another person in understanding that a commitment has been made (e.g., "I promise to pay you $200,000 for your house.").
4.3.3. Effect: A promise creates a legal duty. The nonperformance of a promise results in breach of contract.
4.3.4. A condition is an event, which is uncertain to occur, upon which a duty of one of the parties depends. In other words, a condition is a term that limits or qualifies a promise (e.g., "I promise to pay you $200,000 for your house on the condition that I get approved for a loan.").
4.3.5. Effect: A condition limits or qualifies a legal duty. The nonoccurence of a condition results in performance discharge.
4.3.6. An express condition is one that is stated in the terms of the agreement. Look for conditional language to indicate an express condition:
4.3.7. "X only if Y . . ."
4.3.8. "X provided that Y . . ."
4.3.9. "X on the condition that Y . . ."
4.3.10. "X in the event that Y . . ."
4.3.11. "X subject to Y . . ."
4.3.12. A constructive condition is not expressly stated in the terms of the agreement, but is implied by the nature of the agreement. The most common constructive condition is the constructive condition of exchange.
4.3.13. For example, suppose I agree to sell my niece an ice cream bar for $5. Here, I am promising to deliver my niece the ice cream bar and she is promising to pay me $5. Although our contract does not contain any language that expressly makes our respective duties conditional on the performance of the other, the law construes our promises as dependent on one another. Thus, my delivery of the ice cream bar is a constructive condition of my niece's duty to pay $5, and my niece's payment of $5 is a constructive condition of my duty to deliver the ice cream bar.
4.3.14. If the law construes reciprocal promises under a contract as dependent on one another, which party is required to perform first?
4.3.15. Where all or part of the performances to be exchanged under an exchange of promises can be rendered simultaneously, they are to that extent due simultaneously, unless the language or the circumstances indicate the contrary. Restatement (Second) Contracts § 234(1).
4.3.16. Where the performance of only one party under such an exchange requires a period of time, his performance is due at an earlier time than that of the other party, unless the language or the circumstances indicate the contrary. Restatement (Second) Contracts § 234(2).
4.3.17. To avoid performance discharge, a condition must be satisfied unless the condition is excused.
4.3.18. Contracts may make a duty conditional on one party's personal satisfaction or approval of the other party's performance.
4.3.19. Under the traditional approach, the satisfaction of a condition based on personal satisfaction is determined purely by the party's subjective satisfaction with the performance rendered by the other party, limited only by the obligation of good faith.
4.3.20. Under the modern approach, the satisfaction of a condition based on personal satisfaction depends on whether a reasonable person in the position of the party would have been satisfied with the performance rendered by the other party.
4.3.21. Excuses
4.3.22. Doctrine of Impracticability/Impossibility
4.3.23. A party's duty to perform under a contract is discharged if:
4.3.24. An unforeseeable event occurs that makes performance extremely and unreasonably difficult or impossible;
4.3.25. The nonoccurence of the event was a basic assumption of the contract; AND
4.3.26. The party seeking discharge was NOT at fault.
4.3.27. Restatement (Second) Contracts § 261.
4.3.28. Doctrine of Frustration of Purpose
4.3.29. A party's duty to perform under a contract is discharged if:
4.3.30. An unforeseeable event occurs that destroys one party's principal purpose for entering into the contract (even if performance is not rendered impossible);
4.3.31. The nonoccurence of the event was a basic assumption of the contract; AND
4.3.32. The party seeking discharge was NOT at fault.
4.3.33. Restatement (Second) Contracts § 265.
4.3.34. Anticipatory Repudiation
4.3.35. Under the common law, anticipatory repudiation occurs when a promisor unequivocally repudiates a promise before the time for performance is due (by words or conduct).
4.3.36. Under the UCC, anticipatory repudiation occurs when:
4.3.37. When a buyer or seller unequivocally repudiates a promise before the time for performance is due (by words or conduct); OR
4.3.38. Reasonable grounds for insecurity arise regarding either party's ability or willingness to perform, and the repudiating party fails to provide adequate assurances within a reasonable amount of time (not to exceed 30 days) upon the non-repudiating party's demand for adequate assurances.
4.3.39. When an anticipatory repudiation occurs, the non-repudiating party may:
4.3.40. Treat the repudiation as a breach of contract and sue immediately for damages;
4.3.41. Suspend their own performance and wait to sue until the repudiating party's performance is due under the contract;
4.3.42. Treat the repudiation as an offer to rescind the contract and treat performance as discharged; OR
4.3.43. Ignore the repudiation and urge the repudiating party to perform.
4.3.44. However, if the repudiation is ignored, then continued performance by the non-repudiating party must be suspended if the performance would increase the amount of damages.
4.3.45. A repudiating party may retract their repudiation at any time before the non-repudiating party cancels the contract or materially changes his position.
4.4. Every= Excuses
4.5. With= Warranties
4.5.1. Warranties: Creation and Disclaimer
4.5.2. EXPRESS WARRANTIES
4.5.3. Creation
4.5.4. Under UCC § 2-313(1), express warranties by the seller are created as follows:
4.5.5. Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
4.5.6. Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
4.5.7. Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
4.5.8. "It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty." UCC § 2-313(2).
4.5.9. Disclaimer
4.5.10. "Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but . . . negation or limitation is inoperative to the extent that such construction is unreasonable." UCC § 2-316(1). I.e., it is very difficult to disclaim an express warranty.
4.5.11. IMPLIED WARRANTIES
4.5.12. Implied Warranty of Merchantability
4.5.13. Creation
4.5.14. Under UCC § 2-314(1), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. A good is generally considered merchantable if the good is fit for its ordinary commercial purposes.
4.5.15. Disclaimer
4.5.16. A merchant can disclaim the implied warranty of merchantability in writing or orally:
4.5.17. If the disclaimer is in writing, the language used to disclaim must be conspicuous. Language of “as is” or “with all faults” or language that puts the buyer on notice will be sufficient for disclaiming the implied warranty of merchantability in writing.
4.5.18. "Conspicuous, with reference to a term, means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is 'conspicuous' or not is a decision for the court. Conspicuous terms include the following:
4.5.19. a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and
4.5.20. language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language." UCC § 1-201(10).
4.5.21. If the disclaimer is made orally, the merchant must use the term “merchantability” to disclaim the implied warranty of merchantability.
4.5.22. Implied Warranty of Fitness for a Particular Purpose
4.5.23. Under UCC § 2-315, where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is an implied warranty that the goods shall be fit for such purpose.
4.5.24. The seller need NOT be a merchant for this implied warranty to apply.
4.5.25. Disclaimer
4.5.26. An implied warranty of fitness for a particular purpose can be disclaimed by general language (e.g., “as is”), but the disclaimer MUST be in writing AND conspicuous.
4.5.27. DISCLAIMER OF IMPLIED WARRANTIES BY INSPECTION
4.5.28. If the buyer, before entering into the contract, has examined the goods or a sample as fully as the buyer desires, or has refused to examine the goods, then there is NO implied warranties with respect to defects that an examination ought to have revealed to the buyer. UCC § 2-316(3)(b).
4.6. Afternoon= Anticipatory Reputation
4.7. If a traditional, enforceable contract is formed, and either party fails to perform their contractual duties without a valid excuse for nonperformance, then the breaching party may be held liable for breach of contract.
4.8. If we conclude that a traditional, enforceable contract was formed, we must next determine whether either party failed to perform their contractual duties without a valid excuse for nonperformance.
5. There is mutual assent between the parties;
6. The offer and acceptance (i.e., agreement) is supported by consideration; AND
7. There are no defenses to formation or enforcement that would invalidate the otherwise valid contract.
8. Incapacity
9. Misunderstanding
10. Duress
11. Illegality
12. Unconscionability
13. Restitution as an Alternative Basis for Recovery
14. Reliance as a Basis of Enforcement
15. Remedying Breach
15.1. Sullivan O'Conner (nose/surgery)
15.1.1. Compensatory Measures
15.1.1.1. Expectations
15.1.1.1.1. Puts plaintiff where she would be if Contract fully performed
15.1.1.2. Reliance
15.1.1.2.1. Puts plaintiff back before the contract was formed "want my $ back".
15.1.1.3. Restitution
15.1.1.4. Disgorgement
15.1.1.4.1. US Naval v. Charter Comm.
15.1.1.4.2. Specific Perfromance
15.1.1.5. White v. Benkowski