Contracts II - Schooner - Spring 2006_4

5/17/2018 Contracts II - Schooner - Spring 2006_4

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Contracts II Schooner (Spring 2006)

Avoiding Enforcement (Ch 7) Lack of Capacity, Duress, Undue Influence, Misrepresentation, Fraud, UnconscionabilityJustification for onperformance (Ch !) Mistake, Impossibility, Impracticability, Frustration of Purpose, Modifications"ights # $uties of %rd&art' (Ch ) Beneficiaries, Assignment, DelegationConseuences of on*&erformance (Ch +0) Breac, Anticipatory !epudiation, Promises "s# Conditions, $%press Conditions$amages (Ch ++) $%pectation, !eliance, !estitution, &pecific Performance, Limitation of Damages,ther Issues 'oods or &er"ices

I- Avoiding Enforcement. Incapacit'/ argaining 1isconduct/ nconsiona3i4it'/ # &u34ic &o4ic' (Ch 7)

5ac of Capacit'( to be enforceable eac party must a"e te legal capacity to assent to ) at te time te ) is made

A# Age*minority incapacity + infancy doctrine( under -. in most states people do not a"e capacity to ) *ob/ecti"e 0-1-# Minor Can Disaffirm( a person 2o lacks capacity as a rigt to get out of te agreement *disaffirm or a"oidance3# 4oidable By Minor, Binding on Adult( Potter can sue &cooner *) is "oidable but &cooner can5t sue Potter *) is not "oid6# Can Be Used As &ield But 7ot A &2ord( minors can5t use minority incapacity in a predatory fasion1# Clear Age Cutoff( relati"ely easy to determine if someone is under -. prior to contracting 2it tem8# Protecting Minors "s# $%pectations( tose 2o can5t make good decisions ore%pectations of repayment to tose tey ) 2+9# !escind : Deduct Use or Benefit( minors a"e some obligation if benefited from bargain *e#g# return ; minus benefit+use

a# $%ample( e"en if minor5s ) for ;1,ual to decrease in "alue of ireturned *bad condition rater tan refund full purcase price *e#g# depreciated ;1#1) Dodson v. Shrader-


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II- Justification for onperformance. 1istae/ Changed Circumstances/ and Contractua4 1odifications (Ch !)

A# Basic Idea( discrete reasons for getting out of ) cu? parties e%pectations a"e been disappointed+unfulfilled *regret not enougB# Competing Policies( pro"iding e>uitable relief "s# predictability of and freedom to ) autonomyC# A44ocation of "is( ) process is about anticipating contingencies : deciding 2o 2ins+loses if someting goes 2rong *e#g# Jas isKD# 1istae*at time of )

-# Mistake Definition( a belief not in accord 2it te facts3# 1utua4 1istae 0-83( mistake of bot parties at time of ) as to basic assumption 2ic as a material effect on te agreede%cange of performance, ) is "oidable by ad"erse party unless tat party bears risk of mistake as allocated by ) or is a2are oflimited kno2ledge and treats tat as sufficient, or te risk allocated is reasonable under te circumstances#

a# Basic Assumption( aggrie"ed party5s moti"ation for deal as sared 2+ oter party *consider foreseeabilityb# Materiality( substantiality of impact on aggrie"ed party of e%pected bargain *e#g# undermines basis of bargain

i# $ssence *material( 2at someting is *e#g# barren+fertile co2, diamond+cubic ?irconiaii# 4alue *immaterial( 2at its 2ort *e#g# 8 Ce"y 2ort ;1) or ;8)

c# $rrors of Business udgment Are 7ot Mistakesd# 3 Innocents( 2ere neiter party kne2 of septic problem : )5s as is buyer assumed risk%ena(ee v. Messerly-uired *but not for sale of goods

a# Pre$%isting Duty !ule 06( performance of duty o2ed is not consideration, but similar performance is if it differs fr2at 2as re>uired in a 2ay reflecting more tan a pretense of bargain

b# Part Performance Binding if Fair 0.uitableconsidering circumstances unanticipated by parties, pro"ided by statute, or to e%tent /ustice re>uires cu? of reliance#c# 7o 7e2 Consideration 7eeded For 'oods UCC 033=


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III- "ights and $uties of ;hird &arties (Ch- )

A#Basic Idea( 2eter nonparties to te ) a"e rigts or duties in connection 2+ te )B# Parties( Promisor( party 2ose promise 2e5re trying to enforce Promisee( party to 2om te promise 2as made 6rd PartyB# Credit Beneficiary( La2rence loans ; to olly, olly loans ; to Fo%# Fo% *promisor promises olly tat Fo% 2ill repay La2renceC# Donee Beneficiary( 7iece sues man5s estate after e left er out of is 2ill after promising is 2ife e 2ould Seaver v. ,ansomD# Intended eneficiar'( "ery purpose of te ) creates a result tat benefits tem

-# @est( promised performance 2ill be of benefit to 6P : ) e%pressly puts promisor on notice tat suc benefit is contemplated bpromisee as one of te moti"ating causes of making te )#3# )ey Indicators( 6P designation in ), performance directly to 6P, 6P as rigts under ), 6P relationsip 2+ promisee6# Beneficiary @est 06=3(seems to suggest bot parties must intend for 6P to be beneficiary, but been interpreted in 6 2ays

a# Promisee Intent( promisee intended to benefit 6P *lo2est standard

b# Promisor )no2ledge( promisor kne2 or ad reason to kno2 of promisee5s intent to benefit 6P *middle standardc# Dual Intent( bot parties *promisorpromisee intended to benefit 6P *igest standard

1# $%amplesa# BankAppraiser( in Bankayes ), not clear ayes in monitoring construction intended to benefit 4ogans *dual, butmay5"e intended to benefit 4s *promisee intent : ayes may5"e kno2n it *promisor kno2ledge -oan

b# @arget Class of 'o"t )( in go"tlandlord affordable ousing ) tenants ad rigt to sue 2en landlord e%ceeded allo2rents cu? tenants are go"t5s intended class of beneficiaries : landlord ad reason to kno2 it/ias-uiredi# Intent to Make Present @ransfer( o2ner of rigt must manifest an intention to make a present transferii# @o Asignee or 6P( intention of assignment must be manifested 2+ regard to assignee or some oter 6P

b# Interpretation of Assignment ords 063.i# Broad Language( references to JassignmentK refers to assignment anddelegationii# &pecific Language( refers to one and not te oter *e#g# delegation or assignment

c# Assignor5s !igt $%tinguised At @ime of Assignment 06- *e#g# rigt to ; assignedd# Future !igts Can Be Assigned 063-( "alid to assign future rigt e"en if it ends up being 2ortlesse# Litigation Proceeds Assignable( assignee *Dr# can old obligors *la2yers responsible 2en assignor5s *ones intenrelin>uis rigt to Dr# 2as clear : obligors *la2yers need not5"e accepted assignmentHerzo v. 'rae-


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Iualify as total breac or a "oluntary act rendering obligor unable or apparently unable to perform 2+o suc breac6# Conse>uences of !epudiation

a# Can &ue : Duty Discarged 0386( aggrie"ed party can sue and no longer as a duty to render performanceb# A2ait or &uspend Performance UCC 039-=( aggrie"ed party can eiter a2ait performance for reasonable period of resort to any remedy for breac, or suspend is o2n performance *but can5t terminate )

1# !etraction of !epudiation UCC 039--( can be retracted 2+ actual notice if oter party5s not acted in reliance, materially can

position, or indicated to retractor tat e considers repudiation final *e#g# iring broker to resell probably not enouga# @imely !etracted Proposed Modification( letters proposing modification after re?oning denied not definite orune>ui"ocal repudiation, but timely retracted any2ay before oter party relied on repudiationTruman #latt-uiring timely response *6= days unUCC : can suspend performance until pro"ided

a# Can &uspend Performance For Failure to !espond( failure by distributor 2o bounced cecks + lacked financing to gne2 credit, personal guaranty, or irre"ocable credit letter grounds to suspend performanceHornell v. Spry-ui"ocal language of te condition in te ), andno undue ardsip or forfeiture to P

a# &ubstantial Performance Insufficient( oral notice for tenant construction insufficient to meet e%press condition re>uir2ritten landlord consent 2ere parties took time to e%plicitly put condition into ) Oppenheimer-


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uately staff call center : 9=termination clause in main ) 2asn5t for benefit of subcontractor : tus no bar on damages #lorafa1 v +T4-


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C4aim &art' =+>s C4aims : $efenses &art' =2>s C4aims : $efenses ?e' 8acts : otes

A

Documents

Contracts II - Schooner - Spring 2006_4