Spring Chart

7/30/2019 Spring Chart

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HOW TO APPROACH A QUESTION:

OK, so you have a contract but someone is trying to get out of it.A. First they are going to try to avoid the contract.

1.

So your first step is to see if they have the capacity to contract- Are they under guardianship?- Are they a minor?- Are they mentally incapacitated?- Are they intoxicated?

2. If none of those apply, Was there a problem in the formation of the contract- Was there a mistake of some sort?- Was there fraud?- Was there duress or undue influence?- Was the contract or parts of the contract unconscionable?- Was there illegality in the contract?

Ok, they have the capacity to contract and there were no problems in the formation, so now y ou have to see if there was a problem with the performance of the contract1. First we need to interpret the contract.

- If one of the parties is trying to bring in outside evidence to supplement the meanings of what is written on the page look to see if it is allowed under the parolevidence rule.

- In addition make sure to follow the rules of interpretation to determine that the contract means.2. Identify the conditions to the contract express and constructive3. Now you need to check and see if there was a breach of the contract

- Was a breach of the duty of good faith?- Was there a breach of a warranty (UCC sale of goods)?- Was the a breach of an express condition?- Was there a breach of a constructive condition?- Was there an anticipatory repudation?

3. Do they have a defense for their breach- Are they excused from the express condition?- Was there impracticability or frustration of purpose in performing the contract?- Did they substantially perform?

There is a breach so what are the possible remedies1. Can they get compensatory damages and how much?2. Can they get damages for mental anguish or punitive damages?3. Can they equitable remedies?4. Were there liquidated damages and are they enforceable?


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WAYS TO GET OUT OF THE CONTRACT

VOID:

13: Persons under Guardianship 163: Fraud in the execution 174: Duress by physical compulsion

Illegality (agreement to commit a crime)

VOIDABLE:

15: Mental Incapacity 16: Intoxication 152: Mutual Mistake 152: Unilateral Mistake 164: Fraud in the inducement 175: Duress by threat 177: Undue influence 208 / 2-302: Unconscionability

AVOIDANCE OF CONTRACTSRest. Restatement Capacity to Contract

12 Capacity to Contract Capacity to Contract: Ability to understand the nature, purpose, and the consequence of the contract.Voidable Contract: A contract where at lease 1 party has the ability to declare it void

12(2): (a) under guardianship = VOID(b) infant (minor) = VOIDABLE(c) mentally ill or defective = VOIDABLE(d) Intoxicated = VOIDABLE

13 Persons Affected by Guardianship If you enter into a contract while under guardianship the contract is VOID.

14 Infants General Rule: The contract is voidable. When the infant reaches majority they can ratify the contract or void it. If an infantvoids a contract they give back what they have in whatever condition is it in, and get back what they gave.

Exceptions: (Contract is valid and enforceable)

1. Student loan2. Military enlistment3. Marriage4. Sports and Entertainment contracts approved by the court5. Some odd insurance contracts

2 Ways to Ratify:- Express: saying that they ratify it


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- Implied: continuing to perform the contractVoiding / Disaffirming: Can get out of it at any time before reaching minority and for a reasonable time after reachingmajority.

Restitution (only if they are voiding a contract and it is for a necessity) General Rule: Minors do not pay restitution. Exception: If the subject of the contract that they are avoiding is necessary then the minor has a quasi

contract responsibility. (The contract is still voidable, but we are going to enforce a restitution amountbased on a quasi contract responsibility).

Necessaries 12 comment f: determined on a case to case basis. Normally include.1. food2. clothing3. medical care4. shelter

Misrepresentation of Age: Does not take away the minors right to use the minority defense.

Analysis:1. Is the contract voidable?2. If the minor decides to void the contract look for restitution.

15 Mental Illness or Defect No Bright Line RuleThe presumption in the law is capacity therefore the person claiming mental incapacity has the burden of proving theincapacity, and the other party has to reasonable in their assessment the competence. (Do not have to know about theincomepetence to be VOIDABLE)

To determine mental incompetence:

1. Physical condition2. Adequacy of consideration (79 fairness and reasonableness of the transaction.)3. Relation of trust of confidence, fiduciary relationship4. Weakness of the mind

15(2): If the contract is fair and the other party does not know of the mental illness, the ability to ability to void thecontract die to mental illness terminates if the contract has been performed to the point that voiding it would be unjust.

16 Intoxicated Persons 1. The other person has reason to know the incapacitated person is intoxication.2. Intoxicated person cannot understand the nature and consequences of the contract.


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3. Unable to act in a reasonable mannerDEFECTS IN THE BARGAINING PROCESS

Rest. Restatement UCC UCC Mistake

151 Mistake Defined A belief that is not in accord with the facts 152 Mutual Mistake Mutual Mistake = VOIDABLE by the party adversely affected unless hebears the risk under 154.

Factors:1. Both parties make the same mistake2. Basic assumption3. Material effect

- take into account if there is relief by reformation orrestitution

- When the resulting imbalance in the agreed exchange is sosevere that he cannot fairly be required to carry it out.

4. Whether the adversely affected party bore the risk un 154

153 Unilateral Mistake Unilateral Mistake = VOIDABLE by the person adversely affected unlesshe bears the risk under 154

Factors:1. One party makes a mistake2. Basic assumption3. Material effect4. Enforcement of the contract would be unconscionable5. Other party has reason to know of the mistake.5. Whether the adversely affected party bore the risk un 154

Example: Boise subcontractor submits a bid but accidentally leaves outprice of glass with is 30% of the bid. The price was so low the generalcontractor had reason to know there was a mistake. Court found it wouldbe unconscionable to enforce the contract.

154 When A Party Bears the Risk of a A party bears the risk if:


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Mistake (a) agreed to bear the risk(b) treats his limited knowledge as sufficient(c) risk allocated by the court.

Example: Beachcomber(fake dime case) The lower court said itwas customary for parties purchasing the coin to bear the risk.

157 Effect of Fault Of Party SeekingMistake

If you dont know about this mistake this section will protect you unlessyour lack of knowledge does not rise to a failure to act in good faith.

158 Relief Including Restitution (1) May have restitution(2) The court may grant relief on such terms that justice requires

including protection of the parties reliance interests.

1-303 Course of Performance, Courseof Dealing, and Usage of Trade

Course of Performance: A sequence of conduct between parties in thistransaction.

Course of Dealing: A sequence of conduct between parties in previoustransactions.

Usage of Trade: Any practice or method of dealing so regularly observedin the trade to justify and expectation that it be observed.

Hierarchy:1. Express terms2. Course of performance3. Course of dealings4. Usage of trade

Rest. Restatement UCC UCC Fraud

159 Misrepresentation Defined A misrepresentation is an assertion that is not in accord with the facts.

160 When Action is Equivalent To AnAssertion (Concealement)

Active concealment:Actions intended or known to be likely to prevent another from learning afact.

161 When Non-Disclosure is EquivalentTo And Assertion

Non-Discloser = assertion when:(a) When you know a past assertion has changed and you do not inform

the person of the change.(b) When you know someone is mistaken you may have the duty to tell

them they are mistaken(c) Certain relationships can trigger a higher duty to disclose.


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(d) Where the other person is entitled to know the fact because of arelation of trust and confidence between them.

162 When a Misrepresentation IsFraudulent Or Material Misrepresentation is Fraudulent when:(a) you know what youre saying is not in accord with the facts(b) Dont have confidence in what youre saying (c) Dont have a basis to back the assertionMisrepresentation is Material if:It would be likely to induce a reasonable person to agree, or you havereason to believe it is likely to induce assent

163 When a Misrepresentation PreventsFormation Of A Contract

Fraud in the Execution = VOIDSign something thinking that it is something else

164 When A Misrepresentation PreventsFormation Of a Contract.

Fraud in the Inducement = VOIDABLEIf assent is induced by either a fraudulent and/or a material

misrepresentation by the other party upon which they reasonably relied. 167 When A Misrepresentation is An

InducingA misrepresentation induces a partys assent if i t substantially contributesto his decision to assent.

168 Reliance on Assertions of Opinion Opinion: an assertion that only expresses a belief

Reasonable to Rely on Opinion as Assertion if:(a) that the facts known to that person are not incompatible with his

opinion or(b) that he knows facts sufficient to justify him informing it.

169 When Reliance on an Assertion of

Opinion is not Justified

Not justified in relying on an opinion UNLESS:

(a) relationship of trust such that would make reliance reasonable(b) reasonably believed the person has a special skill in the subject matterExample: Vokes (old lady who believed she would be a famous dancer)

(c) particularly susceptible to a misrepresentation for some specialreason.

2-313 Express Warranties byAffirmation, Promise,Description, Sample

The seller makes a promise about the goods, and that promise is notgood or untrue you can sue on the express warranty.


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Express Warranties created by:(a) an affirmation of fact or promise made by the seller to the buyer and

the becomes the basis of the bargain.(b) A description of goods that is the basis of the bargain(c) A sample or model

164 FRAUD ANALYSIS:- Is there a misrepresentation under 159 - Was there inducement under 167 - Was the misrepresentation fraudulent under 162(1)

or or- Is there active concealment under 160 - Was the misrepresentation material under 162(2)

or- Is there non-disclosure under 161

Fraud Mistake

Someone is doing something bad Misrepresentation: as assertion that is not in accord with the facts has the wrong idea does not have the wrong idea ANALYSIS

163 / 164: Fraud requires1. got the wrong idea from either

159 active misrepresentation 160 active concealment

OR 161 silence with a duty to speak

ANDWAS REASONABLE ON RELYING ON THE MISREPRESENTATION

2. Induced in to the contract ( 167)3. Fraudulent or Material ( 162)

Mostly innocent Beliefthat is not in accord with the facts has the wrong idea gets the wrong idea from somewhere: 151 Bilateral (Mutual) Mistake 152

1. has the some wrong idea2. Wrong idea goes to a basic assumption3. Effects their performances4. The sis not depend on their own knowledge as sufficient 1 54

Unilateral Mistake 1531. Basic assumption2. Effects performance3. Mistake is so bad that enforcement would be unconscionable

ORThe other party knows the mistake is due to their fault

4. The did not depend on their own knowledge as sufficient 154


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Rest. Restatement Duress & Undue Influence

174 Duress by Physical Compulsion Duress by physical compulsion = VOID

175 Duress by Threat Duress by Threat = VOIDABLE(1) If the partys manifestation of assent is induced by improper threat by the other party that leaves the victim no

reasonable alternative(2) If the partys manifestation of assent is induced by one who is NOT a party to the tranaction, the contract is

voidable by the victim UNLESS the other party to the transaction in good faith and without reason to know of theduress either gives value or relies materially on the transaction.

176 When a Threat is Improper A threat is improper if:(a) the threat is a crime or tort or would result in a crime or tort(b) threat of criminal prosecution(c) threat of civil action in bad faith(d) threat of a breach of the duty of good faith under a contract

Example: Austin v. Loral Loral threatened to breach existing contract if Austin did not comply with terms of newproposed contract (economic duress)

177 Undue Influence Undue Influence = VOIDABLE(1) Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persaution

of who because of relation between them is justified in assuming that that person will not acting a mannerinconsistent with his welfare.

- Unfair persuasion by a person with a special relation ship(2) If a partys manifestation of assent is induces by undue influence by the other party the contract is voidabe (3) If a partys manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by


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the victim UNLESS the other party to the transaction in food faith and without reason to know of the undue influencewither gives value or relied materially on the transaction.

Rest. Restatement UCC UCC Unconscionability

208 Unconscionable Contract Term 2-302 Unconscionable Contract orClause

If a contract is deemed unconscionable the court may

Refuse to enforce the whole contract Pull out the terms they think is unconscionable and enforce the

remainder of the contract

Reformation: rewriting the contract (usually better for the )UCC ADDS: Basic Test whether in the light of general commercialbackground and commercial needs of particular trade or case, the clausesare so one-sided as to be unconscionable

UNCONSCIONABILITY ANALYSIS: JUDGED FROM THE TIME THE CONTRACT WAS MADE1. No duress, no undue influence, no fraud.2. Still have a question about concent3. Look for Procedural Unconscionability:

Procedural Unconscionability: Unconscionable in the process of getting into the contract. When one party lacks meaningful choice.4. Look for Substantive Unconscionability:

Substantive Unconscionability: Unconscionability in the actual terms of the contract

*** NEED BOTH PRECEDURAL AND SUBSTANTIVE UNCONSCIONABILITY ****** SUBSTANTIVE WAYS HEAVIER THAN PROCEDURAL ***

PROCEDURAL UNCONSCIONABILITY:- Includes unfair surprise, oppression, inequality of bargaining power.- Looks to the negotiation process- Think about how the contract was formed and how it got signed- Rule of Thumb: Procedural if one of the parties lacked a meaningful choice in

entering into the contract

SUBSTANTIVE UNCONSCIONABILITY:- Involves the harshness or one-sided provisions- Looks to actual terms- Excessive prices- Rule of Thumb: terms are oppressively one-sieded

Rest. Restatement Illegality

178 When a Term Is Unenforceable forPublic Policy

Have to weigh the interest of enforcement against public policy

Factors for weighing the interest in enforcement:(a) the parties justified expectations(b) any forfeiture that would result if enforcement were denied


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(c) any special public interest in the enforcement of the particular termFactors for weighing public policy against enforcement of terms:

(a) the strength of that policy as manifested by legislation or judicial decisions (more data makes it easier to make adecision)

(b) the likelihood that a refusal to enforce will further that policy? / Does it matter if we dont enforce the provision? (c) The seriousness of any misconduct involved and the extent to which it was deliberate (the more deliberate and

serious the less likely the conduct will be enforced)(d) The directness of the connection between the misconduct and the term. (look for bad behavior and how closely it

related to the term in question)

Contracts that violate Public Policy:

Agreements for immoral acts Agreements in restraint of trade

- covenant not to compete- EXCEPTIONS: Sale of a business, and employment agreements (trade secrets)

Agreements evading or eroding statutory protection / Not allowed to give up your own rights Agreements involving conflict of interest Agreements with exculpatory clauses

- excuses you from liability for your own tortuous conduct; depends on how much it excuses the writer.

Agreements that are unconscionable 189 Promise in Restraint of Marriage A promise is UNENFORCEABLE on grounds of public policy if it is unreasonably in restraint of marriage.

190 Promise Detrimental to MaritalRelationship

A contract that would prove detrimental to the marital re lationship is UNENFORCEABLE under public policy.Ex. A prenup that encouraged divorce

197 Restitution Generally Unavailable - Restitution is not available on a contract that is unenforceable on grounds of public policy UNLESS denial of restitutionmay would cause a disproportionate forfeiture.

198 Restitution in Favor of Party Who isExcusably Ignorant or in not Equally

Wrong

Can get restitution if:(a) he was excusably ignorant of the facts of legislation of a minor character, in the absence of which the promise would

be enforceable or(b) he was not equally in the wrong with the promisor

IN GENERAL:3 Categories for Illegality.

1. Contract whose formation or performance is a tort or a crime- agreement to commit a crime = VOID


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- agreement to commit a tort = VOIDABLE / UNENFORCEABLE by the party that would benefit from the contracts illegal provision2. Contracts that violate statutes3. Contracts that violate public policy ( 178)

- public policy usually includes such things as public welfare, health, and safetyPossibilities for Illegal contracts:- Some agreements [like to commit a crime] are void.- Some agreements [like those that violate regulatory licensing statutes] are

voidable, and thus unenforceable by the party who would benefit from thecontracts illegal provisions

- Some agreements can be reformed by the court to remove the illegal provision; a court may be able to sever the illegal portion from a contract and enforce the rest.- Some agreements can still generate a recovery for the injured party; a court can award damages in restitution for the value of any benefit conferred in partial or full

performance of an illegal contract, even though the contract itself is unenforceable.

If the contract is found to be illegal the court can

- remove the illegal portion and enforce the rest- award damages in restitution for the value of any benefit conferred in partial or full performance of an illegal contract, even thought the contract is unenforceable. (

198)

PERFORMANCERest. Restatement UCC UCC Parol Evidence Rule

209 Integrated Agreements Integrated Agreements: in writing and the writing constitutes a finalexpression of the terms.

- if it reasonably appears to be a complete agreement, it is takenas integrated unless it is established by other evidence that thewriting is not a final expression.

210 Completely and Partially IntegratedAgreements

Fully integrated: Intended to serve as a final expression of all the terms.- No parol evidencePartially integrated: Some of the terms are integrated- Can have parol evidence as long as it is not contradicted (CONSISTANT

ADDITIONAL TERMS)

213 Parol Evidence Rule 2-202 Final Written Expression: Parol Restatement:


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or Extrinsic Evidence Fully Integrated: prior agreements not coming inPartially integrated: prior agreements coming in if:

- they are not inconsistent with integrated agreements are notcoming in, AND

- must be something that we would not expect to be in thecontract

UCCFully integrated: prior agreements barred UNLESS they are a usage oftrade, course of performance, or course of dealing.Partially integrated: prior agreements coming in if:

- they are not inconsistent with integrated terms- must be something we would have expected to be in the

contract

214 Exceptions to the parole evidencerule

Prior agreements are admissible in evidence to establish:(a) that the writing is or is not an integrated agreement(b) that the integrated agreement, if any, is completely or partially

integrated(c) the meaning of the writing of the writing (interpretations)(d) illegality, fraud, duress, mistake, lack of consideration, or other

invalidating cause(e) ground for granting or denying rescession, reformation, specific

performance, or other remedy.

215 Contradiction of Integrated Terms Except as stated in the preceding section, where there is a bindingagreement, either completely or partially integrated, evidence or prior or

contemporaneous agreements or negotiation is not admissible inevidence to contradict a tern of the writing.

216 Consistent Addition Terms With a partially integrated contract, consistent terms come in withextrinsic evidence.An agreement is not completely integrated if the writing omits aconsistent additional agreed term which is

(a) agreed to for separate consideration; or(b) such a term as in the circumstances might naturally be omitted

form the writing


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PAROL EVIDENCE ANALYSIS:If the contract does not pass 33 (definiteness and certainty) then parol evidence rule does not apply1. Is the contract fully integrated or partially integrated?

- fully integrated: Rest = parol evidence barredUCC = barred UNLESS usage of trade, course of performance, course of dealing (then go to next step)

- partially integrated: moved to the next step2. Is the parol evidence is contradictory to the terms of the contract or consistent?

- if contrary no parol evidence allowed3. If consistent look to see if it is something that would normally be excluded

4 Corners Rule: hold the parties to what is written in the contract. Period.Collateral Agreement: An agreement that is related to bur separate from the integrated written typically has separate consideration

EXCEPTIONS: ISSUES OF REALITY OF CONSENT

- Choice of Law provision: parties agree in advance which substantive law will govern disputes- Arbitration Clause: parties agree in advance that any dispute arising from the agreement will be settled via arbitration- Merger Clause: parties agree that the written contract contains their entire agreement and that no other evidence can come in to vary the agreements terms . (Merger

clauses tips toward integrated)- CISG: 8(1)

- Eliminates the parole evidence rule in international dealings and focuses on the intention of the partiesEXCEPT- With an indemnification clause

Rest. Restatement UCC UCC Interpretation

When the court has to step in to determine the meaning of the terms of the contract:Interpretation:

-

pay attention to usage of trade, course of performance, and course of dealing- Contra proferentum interpretation against the drafter ( 206)- Expressio unius est exclusion alterius expression of one thing excludes the other (stay in the same category if a list goes from specific to general)

Construction:- construe terms as consistent, if possible

200 Interpretation of Promise ofAgreement

Interpretation of a promise or agreement or a term thereof is anascertainment of its meaning.

201 Whose meaning prevails (1) When both parties have attached the same meaning go with whatthey attached.


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(2) When the parties have attached different meaning interpret in favor

of(a) the party who did not the about the other meaning and the first

party knows they have attached another meaning.(b) Or the party who have no reason to know of a different meaning

and the first party had reason to know tey had attached adifferent meaning.

202 Rules In Aid of Interpretation Plain meaning approach: the words mean what they meanContextual approach: determine the meaning in light of thecircumstances

Restatement says:(1) Words and conduct are interpreted taking all the circumstances into

account, and if the parties intentions are know they are given the

most weight.(2) Interpret the writings as a whole including all the writings that are

part of the transaction.(3) Unless a different intention is manifested

(a) interpret language in accordance with its general meaning(b) interpret terms of art in accordance with their technical meaning

when used in a transaction within their technical field.(4) Where an agreement involves repeated occasions for performance by

either party with knowledge of the nature of the performance andopportunity for objection to it by the other, any course ofperformance accepted or acquiesced in without objection is given

great weight in the interpretation of the agreement(5) When reasonable any manifestation of intention are interpreted asconsistent with each other and with any relevant course ofperformance, course of dealing, or usage of trade.

203 Standards of Preference inInterpretation


General standards of preference:(a) interpretation which gives reasonable, lawful, and effective meaning

to all the terms is preferred to an interpretation which leaves a partunreasonable, unlawful, or no effect

(b) Hierarchy of Interpretation


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1. express terms- express terms and exact terms over- general language- separately negotiated or added terms are given greater

weight than standardized terms or other terms notseparately negotiated.

2. course of performance3. course of dealing4. usage of trade

204 Supplying An Omitted Essential Term The court can fill in essential terms that are missing from the contract.

The comments say:The court should provide a term that comports with community standardsof fairness and policy .

206 Interpretation against the draftsman If there is an unclear term interpret against the person who wrote it.

219 Usage Usage is a habitual or customary practice 220 Usage Relevant to Interpretation Agreement interpreted in accordance with relevant usage

221 Usage Supplementing andAgreement

An agreement is supplemented or qualified by a reasonable usage withrespect to agreements of the same type if each party knows or has reasonto know of the usage and neither party knows or has reason to know thatthe other party has an intention inconsistent with the usage.

222 Usage of Trade 1-303 Course of Performance, Courseof Dealing, and Usage of Trade

Usage of Trade: A usage that is so regularly observed in a trade that itjustifies imposing the knowledge of it on all parties.

- Question for the jury- Matter of law = what the usage of trade intale or if its in

writing.

- Can be binding on a party who doesnt know it. - Unless otherwise agreed, usage of trade that the parties know, or havereason to know, gives meaning to, supplements, or qualifies theagreement,(can opt out of usage of trade by expressly putting it in the contract)

223 Course of Dealing 1-303 Course of Performance, Courseof Dealing, and Usage of Trade

Course of Dealing: Conduct of the parties in contracts which canreasonably be a basis of understanding for interpreting this contract.


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- Unless otherwise agreed, course of dealing gives meaning to,supplements, or qualifies the agreement,

224 Condition Defined A condition is an event, not certain to occur, which must occur, unless itsnon-occurance is excused, before performance under a contract


Course of Performance: A sequence of conduct between parties in thistransaction.

Course of Dealing: A sequence of conduct between parties in previoustransactions.

Usage of Trade: Any practice or method of dealing so regularly observedin the trade to justify and expectation that it be observed.

Hierarchy:5. Express terms6. Course of performance7. Course of dealings8. Usage of trade

1-301 Territorial Applicability;Parties Power to Choose

Applicable Law

Parties can choose which states law they would like to apply to theircontract.- if parties do not put in a choice of law provision, the UCC applies to

transactions bearing an appropriate relation to this state.- If one of the following (not listed) UCC provisions specifes applicable

law that provision governs and a contrary agreement is effective onlyto the extent permitted by the law.

2-208 Course of Performance or

Practical Construction

(1) Where the contract for sale involves repeated occasions for

performance by either party with knowledge of the nature of theperformance and opportunity for objection to it by the other, any courseof performance accepted or acquiesced in without objection shall berelevant to determine the meaning of the agreement.

(2) The express terms of the agreement and any such course ofperformance, as well as any course of dealing and usage of trade, shall beconstrued whenever reasonable as consistent with each other; b ut whensuch construction is unreasonable, express terms shall control course of


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performance and course of performance shall control both course ofdealing and usage of trade (Section 1-205).

(3) Subject to the provisions of the next section on modification andwaiver, such course of performance shall be relevant to show a waiver ormodification of any term inconsistent with such course of performance.

1-101 UCC must be liberally contrued

1-201 Agreement distinguished from a contracts

Rest. Restatement UCC UCC Duty of Good Faith

202 Comment a: The phrase good faith is used in a variety of contexts, and its meaningvaries somewhat with the context. Good faith performance or enforcementof a contract emphasizes faithfulness to an agreed common purpose andconsistency with the justified expectations of the other party;

it excludes a variety of types of conduct characterized as involving

bad faith because they violate community standards of decency, fairnessor reasonableness. The appropriate remedy for a breach of the duty of goodfaith also varies with the circumstances.

205 Duty of Good Faith and Fair Dealing 1-304 Obligation of Good Faith Every contract imposes upon each party a duty of good faith and fairdealing in its performance and its enforcement

*** Cannot contract around the duty of good faith but can put in aprovision to specify what constitutes good faith as long as it is notmanifestly unreasonably ***

1-201 General Definitions Good faith: except otherwise provided in Article 5, means honesty in factand the observance of reasonable commercial standards of fair dealing.

2-103 Definitions and Index ofDefinitions

Good faith: in the case of a merchant means honesty in fact and theobservance of reasonable commercial standards of fair dealing

Implied Good Faith:- Issues of contract formation tradition duties of care to refrain from misrepresentation and correct subsequently discovered errors- Termination of at will employees firing someone out of malice or retaliation- Cases governing discretion in contractual performance

To show bad faith show that:
http://web2.westlaw.com/find/default.wl?pbc=5A04A3F9&rs=WLW12.01&tc=-1&rp=%2ffind%2fdefault.wl&ordoc=4526193&fn=_top&tf=-1&findtype=L&vr=2.0&docname=ULUCCS1-205&db=1002112http://web2.westlaw.com/find/default.wl?pbc=5A04A3F9&rs=WLW12.01&tc=-1&rp=%2ffind%2fdefault.wl&ordoc=4526193&fn=_top&tf=-1&findtype=L&vr=2.0&docname=ULUCCS1-205&db=1002112http://web2.westlaw.com/find/default.wl?pbc=5A04A3F9&rs=WLW12.01&tc=-1&rp=%2ffind%2fdefault.wl&ordoc=4526193&fn=_top&tf=-1&findtype=L&vr=2.0&docname=ULUCCS1-205&db=1002112http://web2.westlaw.com/find/default.wl?pbc=5A04A3F9&rs=WLW12.01&tc=-1&rp=%2ffind%2fdefault.wl&ordoc=4526193&fn=_top&tf=-1&findtype=L&vr=2.0&docname=ULUCCS1-205&db=1002112


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- one of the parties has so much discretion that they deprive the other party of substantial portion of the contract valueOne partys failure to perform in good faith can supply the other party w/ a defense for nonperformance

UCC UCC Warranties 2-313 Effects of a Breach by Non-

Performance as Excusing the Non-Occurrence of a Condition

How to create an express warranty:(a) an affirmative promise from seller to buyer, relating to the goods, that is a basis for the bargain.(b) Any description of the goods that is a basis for the bargain(c) A sample or model that is a basis for the bargain.

- You dont need magic words to create an express warranty

2-314 Implied Warranty: Merchantability;Usage of Trade

Implied warranty of merchantability: If the seller is a merchant in the goods, there is an implied warranty that the goodsare merchantable

Merchantable Goods:(a) pass without objection in the tract under the contract description (usage of trade)(b) for fungible goods: of fair average quality within the description(c) are fit for the ordinary purpose for which such goods are most used(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and

among all unites involved(e) are adequately contained, packaged, and labeled as the agreement may require(f) conform to the promises or affirmations of fact made o the container label if any.

Unless excluded or modified, other implied warrenties may arise from course of dealing or usage of trade.

2-315 Implied Warranty: Fitness forParticular Purpose

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are requiredand that the buyer is relying on the sellers skill or judgment to select or furnish suitable goods, there is unless excluded ormodified under the next section and implied warranty that the goods shall be fit for such purchase

Do not need to be a merchant(1) Implied warranty if: good fit for its ordinary purpose but not fit for the buyers specific purpose and the sellerknows that the goods dont fit the buyers specific use.

Breach of express warranty:- incidental damages: extra stuff having to be done as a result of the breach

- reasonably incurred by the in attempting to deal with the breachconsequential damages: flow from the breach

2-316 Exclusion or Modification of (2) Can contract around implied warranties by using clear and conspicuous language that there is not implied warranty.


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Warranties(3) Other ways to get around or modify implied warranties

1. expressions like "as is" or "without fault"2. the buyer fully inspects the goods, or refuses to inspect and the defect would have been clear had they inspected.

- 3. course of dealing, course of performance, or usage of trade indicate that the warranty is excluded or modified.3 TYPES OF WARRENTIES

EXPRESS

Affirmation of Fact Not opinions Description of goods Models and samples

CREATES WARRANTY THAT THE GOODS ARE HOWYOU ARE REPRESENTING THEM

IMPLIED WARRANTY OF MERCHANTIBILTY(fit for ordinary purpose)

Only exists when the seller is a merchant in thosegoods

WARRENTY IMPLIED BY LAW THAT THE GOODS AREMERCHANABLE

IMPLIED WARRANY FOR A PARTICULAR PURPOSE

Dont have to be a merchant You educate the seller of the particular purpose

you have with respect to the goods AND you relyon the sellers skill and judgment in selecting the

goods.IMPLIED WARRANTY THAT THE GOODS WILL BE GOOD

FOR THAT PARTICULAR PURPOSE

Rest. Restatement UCC UCC Express Conditions 224 Condition Defined A condition is an event, not certain to occur, which must occur, unless its

non-occurrence is excused, before performance under a contract

Condition Precedent A condition that must be satisfied before a contractual duty comes intoexistence.

Condition Subsequent Not really a conditionObligations of parties are binding but something happens that dischargesthe parties.

Rest. Restatement UCC UCC Excuse of Express Conditions

225 Effects of the Non-Occurrence of aCondition

When someone is trying to get out of a contract because of the failure ofthe condition

(1) Performance of a duty subject to a condition cannot become dueunless the condition occurs or it non-occurrence is excused.(2) Unless it has been excused, the non-occurrence of a condition

discharges the duty when the condition can no longer occur.(3) Non-occurrence of a condition is not a breach by a party unless he is

under a duty that the condition occur

229 Excuse of A Condition to AvoidForfeiture

Courts may excuse a condition that was not a material part of the agreedexchange to avoid disproportionate forteiture.


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271 Impracticability As Excuse For Non-Occurrence of a Condition

Impracticable to excuse if it is not central to the contract and would beunfair not to excuse.

245 Effects of a Breach by Non-Performance as Excusing the Non-

Occurrence oh a Condition

Interference with the occurrence of the condition- the breaching party cannot benefit from his own misconduct- the court excuses the condition and the breaching party is no

in the contract.- Can be imposed by active efforts or passive efforts

249 When Payment Other Than by LegalTender is Sufficient

Where the payment or offer of payment of money is made a condition ofan obligor's duty, payment or offer of payment in any manner current inthe ordinary course of business satisfies the requirement unless theobligee demands payment in legal tender and gives any extension of timereasonably necessary to procure it.

Waiver 2-209 Modification, Rescission andWaiver

Excuse of Conditions by Waiver: A condition can be excused by theconduct by one party which falls short of an agreed modification

Election Waiver Election to perform even after condition is failed Estoppel Waiver - says dont worry about the condition AND

materially changes his position based on s representation

Waiver w/o election or estoppel - states it will not insist upon anonmaterial condition

Modification: mutual and required consideration / not unilaterallyretractable.Waiver: Unilateral and requires no consideration / retractable absentreliance

UCC

(1) modification does not require consideration (2-209)(5) A waiver can be retracted at by reasonable notice UNLESS theretraction would be unjust because the other party reasonably relied.

- dont need reliance to make a waiver valid, but if there isreliance then you cant retract the waiver.

Rest. Restatement UCC UCC Constructive Conditions

Independent Covenants Each party has a duty to perform regardless of whether the otherperforms (old default rule)


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Either party may recover damages from the other for the injury he mayreceive by a breach of covenants in his favor and where no excuse for toallege that breached covenants.

Dependent Covenants Performance of one depends on prior performance of the other (moderndefault rule)- Until the prior condition if performed the other is not liable for hisperformance but he can sure the first for breach

Mutual Covenants Conditions are to be performed at the same time

233 Performance at One Time or inInstallments

(1) If you can complete your performance at one time you shouldcomplete performance at one time, UNLESS the language of thecontract or circumstances indicate the contrary.

(2) If only a part of performance is due at one time, that part is due atthat time UNLESS the language of the contract or circumstancesindicate the contrary.

234 Order of Performance (1) If both parties can render performance simultaneously then theyshould perform simultaneously.

(2) If one parties performance takes time he must start before the otherparty has to perform, UNLESS there is language to the contrary (suchas a payment schedule, etc).

235 Effect of Performance as Dischargeand Non Performance as Breach

Full Performance: discharges the dutyNon-performance: breach

236 Claims for Damages for Total and forPartial Breach

(1) A claim for damages for total breach is one for damages based on all ofthe injured party's remaining rights to performance.

(2) A claim for damages for partial breach is one for damages based ononly part of the injured party's remaining rights to performance.

237 Effect on Other Partys Duties of aFailure to Render Performance

Except as stated in 240, it is a condition of each party's remaining dutiesto render performances to be exchanged under an exchange of promisesthat there be no uncured material failure by the other party to render anysuch performance due at an earlier time.

240 Part Performance as AgreedEquivalents

When a contract is divisible:If the performances to be exchanged under an exchange of promises canbe apportioned into corresponding pairs of part performances so that theparts of each pair are properly regarded as agreed equivalents, a party's
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performance of his part of such a pair has the same effect on the other'sduties to render performance of the agreed equivalent as it would have ifonly that pair of performances had been promised.

The Doctrine of Substantial

Performance

What Is Substantial Performance?

Sometimes a party to a contract may still be paid under (or retain thebenefit of) the contract even though they have not fully complied withthe specific terms of the contract.

If a court finds that one party has performed enough of thecontract, theother party will not be able to get out of the contract.

When Has a Party Substantially Performed? Failure to fully perform under the contract must not be intentional or a

result of carelessness or negligence. The party must not have frustrated the purpose of the contract. For

example, if you have contracted to have your house paintedpurple and the painter instead paints it black, since the purposeof the contract is a purple house, even though the house hasbeen fully painted, the purpose of the contract has beenfrustrated.

Exceptions to the Doctrine of Substantial Performance If the contract explicitly states that specific and complete performance

is required as a condition of the contract, then a party mustcompletely fulfill their obligations.

If performance can be completed by a minor alteration, or if the onlyobstacle to complete performance is a small defect, then the party may

not use the doctrine of substantial performance and must correct theirmistake.

What Can You Recover if a Party Has only Substantially Performed theirObligations under the Contract?If the other party has substantially performed you must pay them for thereal value of their service minus what it would cost you to fix theirmistakes. Or, if this remedy isnt appropriate, you must pay them the
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value of their service or benefit.

Although substantial performance usually applies to building andconstruction contracts, it can also apply to other types of contracts. For

example, in an employment contract, an employee may substantiallyperform as a prerequisite to becoming entitled to a benefit.

241 Circumstances Significant inDetermining A Failure is Material

To determine if there has been a material breach (which will dischargethe other parties duties) weigh the following factors:

(a) the extent to which the injured party will be deprived of thebenefit which he reasonably expected.

(b) The extent to which the injured party can adequately compensatefor the part of that benefit of which he will be deprived

(c) The extent to which the party failing to perform or to offer toperform will suffer forfeiture

(d) The likelihood that the party failing to perform or offer toperform will cure his failure, taking account of all thecircumstances including any reasonable assurances

(e) The extent to which the behavior of the party failing to performor to offer to perform comports with standard of good faith andfair dealing.

If the factors weigh in favor of a material breach, then the doctrine ofsubstantial performance will not apply and the injured party will beexcused from performing.

183 When Agreement is Enforceable asto Agreed Equivalents

What to do with the parts if the contract is divisibleIf performance can be apportioned into corresponding pairs of partperformance, that portion of the agreement is enforceable by a party who

did not engage in serious misconduct. 2-601 Perfect Tender Rule If the seller delivers goods that do not c onform with the contract thebuyer may: (does not apply to installment contracts)

(a) reject the whole(b) accept the whole(c) accept any commercial unit or units and reject the rest

2-711 Buyers Remedies When a seller fails to deliver or repudiates or the buyer rightfully rejectsthe goods the buyer may cancel.

(a) the buyer is required to cover before he can recover under the


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next section.(b) The buyer that recover damages for non-delivery as provided in 2-

713Buyer may:

(a) recover for the goods that have been identified to the contract(b) in proper circumstances obtain specific performance

2-703 Sellers Remedies When buyer breaches seller may:(a) withhold delivery of such goods(b) stop delivery(c) under the next section respecting goods still unidentified to the

contract(d) resell and recover damages

recover damages for non-acceptance or in a proper case the price

2-717 Deduction of Damages fromthe Price

The buyer on notifying the seller of his intention to do so may deduct all orany part of the damages resulting from any breach of the contract from

any part of the price still due under the same contract.Rest. Restatement UCC UCC Impracticability & Frustration of Purpose

261 Discharge by SuperveningImpracticability

Partys performance is discharged when made impracticable without hisfault due to occurrence of event, the non-occurrence of which was a basicassumptionFactors:

1. the event made performance impracticable2. the non occurrence of the event was a basic assumption on which

the contract was made3. the impracticability resulted without the fault of the party

seeking to be excused

4.

the party had has not assumed a greater obligation then the lawimposes.Example: the Hall that burned down by no fault of the Hall owner.

262 Death or Incapacity or PersonNecessary for Performance

If the existence of a particular person is necessary for the performance ofa duty his death of incapacity makes performance impracticable

263 Destruction, Deterioration or Failureto Come Into Existence of Thing

Necessary for Performance

If the property which the performing party expected to use is destroyed,that party is discharged only in the party that was specifically referred toor at least understood by both partied to be the property that would beuse.


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264 Prevention By GovernmentalRegulation of Order

The law changed, and you had no reason to believe that the law wouldchange so it falls under 261)

265 Discharge by SuperveningFrustration

The promisor has the capacity to perform and performance would notproduce severe financial hardship HOWEVER the promisor has no

incentive to perform because the purpose for which the other partysperformance was purchased changed dramatically. In light of thatchange, the promisor would not now enter into the same contract

If a parties principle purpose is substantially frustrated without his fault,his remaining duties are discharged,Example: Krell - The guy who rented the apartment for the purpose ofseeing the coronation but the coronation didnt happen. The contractwas to rent the space, but the reason he rented it was to see thecoronation which was not going to happen.

Test from Krell:1. What was the foundation of the contract?2. Was the performance of the contract prevented?3. Was the event which prevented the performance of the contract

of such a character that it cannot reasonably be said to have beenin the contemplation of the parties at the date of the contract.

*** if yes to all then both parties are discharged.

266 Existing Impracticability (1) Where, at the time a contract is made, a party's performance under it isimpracticable without his fault because of a fact of which he has noreason to know and the non-existence of which is a basic assumption onwhich the contract is made, no duty to render that performance arises,unless the language or circumstances indicate the contrary.

(2) Where, at the time a contract is made, a party's principal purpose issubstantially frustrated without his fault by a fact of which he has noreason to know and the non-existence of which is a basic assumption onwhich the contract is made, no duty of that party to render performancearises, unless the language or circumstances indicate the contrary.

Difference between Existing Impracticability and Mutual Mistake:


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Existing Impracticability: unknowable facts that are not known- contract exists and the court is dismissing it- no duty to perform if conditions are met- can loose the value of the defense through your own

conduct- tie into a basic assumption- FOCUS: hardship to promior

Mutual Mistake: knowable facts that are not known- the contract becomes voidable- have the duty to perform but the duty is voidable- can loose the value of the defense through your own

conduct- tie into a basic assumption- FOCUS: imbalance in the contract

2-613 Casualty to Identified Goods IF:

1. Goods are identified to the contract when the contract was made (2-501)2. Good suffer a casualty3. Without the fault of eigher party4. Before the risk shifts to the buyer (2-509)THEN:1. if the loss is total the contract is avoided2. if the good no longer conform, the buyer can treat the contract as

avoided or accept the goods minus the depreciation price.

2-501 Insurable Interest in Goods;Manner of Identification of

Goods

Goods are identified to the contract if:(a) the contract is made for sale of goods already existing and identified(b) the contract is for the sale of future goods ad the foods are shipped,

marked or otherwise designates by the seller as goods to which thecontract refers

(c) when crops are planted or otherwise become growing crops, babyanimals when they are conceived

2-615 Excuse by Failure ofPresupposed Conditions

1. Non delivery in whole or in part2. Performance is impracticable3. Occurrence of a contingency the non occurrence of which was a basic


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assumption on which the contract was made

Rest. Restatement UCC UCC Anticipatory Repudiation

250 When a Statement or an Act is aRepudiation

Repudiation: Statement by obligor indicating that be will not perform(express repudiation); or an affirmative act which renders obligor unable

to perform without a breach. (acts = implied repudiation) 251 When a Failure to Give Assurance

May be Treated as a Repudiation 2-609 Right to Adequate Assurance If reasonable to believe that obligor will not perform, obligee can demand

adequate assurance and may suspend peformance for which he has notreceived a benefit.

If obligor does not provide adequate assurance within a reasonable time,obligee can treat that as repudiation.

UCC adds: A 30 day time limit to give adequate assurance or else it is arepudiation

252 Effect on Insolvency When the obligors insolvency gives the obligee reasonable grounds to

believe the obligor is going to breach under 251 the obligee may suspendperformance until be receives adequate assurance.

Insolvent: A person who either has ceased to pay his debts in the ordinarycourse of business or cannot pay his debts as they become due 0r isinsolvent within the meaning of the federal bankruptcy law.

253 Effect of a Repudiation as a Breachand on Other Partys Duties

(1) When and obligor repudiates a duty before he has committed abreach, the repudiation alone gives rise to damages.

(2) One parties repudiation discharges the other parties duty to perform. 254 Effect of Subsequent Events on Duty

to Pay Damages(1) A party's duty to pay damages for total breach by repudiation isdischarged if it appears after the breach that there would have been a

total failure by the injured party to perform his return promise.

(2) A party's duty to pay damages for total breach by repudiation isdischarged if it appears after the breach that the duty that he repudiatedwould have been discharged by impracticability or frustration before anybreach by non-performance.

255 Effect of Repudiation as Excusingthe Non-Occurrence of a Condition

Where a party's repudiation contributes materially to the non-occurrenceof a condition of one of his duties, the non-occurrence is excused.


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256 Nullification of Repudiation or Basisfor Repudiation

(1) A repudiation can be retracted by notification as long as the otherparty has not materially changed their position based on therepudiation or indicates that he considers the repudiation to be final.

(2) Repudiation is nullified if the injured party finds out that theconditions causing the inability to perform no longer exist.

2-610 Anticipatory Repudiation When either party repudiate a contract and performance is not yet due,the aggrieved party may:

Wait for performance for a commercially reasonable time Resort to breach remedy even it hes notified repudiating

party that he would wait.

Suspend his own performance- then can cancel the orders and sue for damages

2-611 Retraction of AnticipatoryRepudiation

(1) A party can retract a repudiation at anytime before the nextperformance is due, UNLESS the other party has materially changedtheir position.

(2) Retraction can come in any form but MUST INCLUDE and adequateassurance under 2-609

(3) Retraction reinstates the repudiating party's rights under thecontract with due excuse and allowance to the aggrieved party forany delay occasioned by the repudiation.


(c) the buyer is required to cover before he can recover under thenext section.

(d) The buyer that recover damages for non-delivery as provided in 2-713

Buyer may:(c) recover for the goods that have been identified to the contractin proper circumstances obtain specific performance

2-703 Sellers Remedies When buyer breaches seller may:(e) withhold delivery of such goods(f) stop delivery(g) under the next section respecting goods still unidentified to the

contract(h) resell and recover damages


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(i) recover damages for non-acceptance or in a proper case the priceANTICIPATORY REPUDIATION ANALYSIS (UCC):1. 2-609(1): Reasonable grounds for insecurity in writing

2-609(2): if there are merchants (reasonable grounds for insecurity look at commercial standards)

2. 2-609(4): waited 30 days3. 2-610(b): possible remedies4. 2-711: Sellers remedies

REMEDIESRest. Restatement UCC UCC Basics / Compensatory Damages

344 Purposed of Remedies Expectation Interest: put the in the position he would have been hadthere been no breach.

Reliance Interest: Put the in the position he would have been had therebeen no contract. Reimburse the for loss caused by reliance on thecontract.

Restitution Interest: Give the back any benefit he conferred on theother party.

347 Measure of Damages in General Calculating Expectation Damages:(a) loss in the value to him of the other partys performance cause by its

failurePLUS (+)

(b) any other loss, including incidental and or consequential loss, causedby the breachMINUS (-)

(c) any cost or other loess that he has avoided by not having to perform.(savings)

Formula:Actual Loss + incidental & consequential loss savings = exp. damages

349 Damages Based on Reliance Interest Calculating Reliance Damages:- any expenditures made in preperation for performance

MINUS (-)- any loess that the party in breach can reasonably prove the injured


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party would have contract been performed.

Formula:Amount spent in reliance amount you would have lost anyway = reliance

371 Measure of Restitution Interest Calculating Restitution Damages:(a) the reasonable value of the other party of what he received in terms

of what it would have cost him to obtain it from a person in theclaimants position.OR

(b) The extent to which the other partys property has been increased invalue or his other interests advance.

351 Unforseeability and RelatedLimitations on Damages

Foreseeability (Hadley)(1) Damages are not recoverable for loss that the party in breach did not

have reason to foresee as a probable result of the breach when thecontract was made.

(2) Loss may b foreseeable as a probably result of a breach because itfollows from the breach(a) in the ordinary course of events or(b) as a result of special circumstances, beyond the ordinary course

of events, that the party in breach had reason to know.(3) A court may limit damages for foreseeable loss by excluding recovery

for loss of profits, by allowing recovery only for loss incurred inreliance or otherwise if i t concludes that in the circumstances justiceso requires in order to avoid disproportionate compensation

2-703 Sellers Remedies When buyer breaches seller may:(j) withhold delivery of such goods(k) stop delivery(l) under the next section respecting goods still unidentified to the

contract(m)resell and recover damages(n) recover damages for non-acceptance or in a proper case the price



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(e) the buyer is required to cover before he can recover under thenext section.

(f) The buyer that recover damages for non-delivery as provided in 2-713

Buyer may:(d) recover for the goods that have been identified to the contract

in proper circumstances obtain specific performance

2-708 Sellers Damages for Non-acceptance or Repudiation

(1) the seller can recover the difference between the market price atthe time and place of tender and the unpaid contract price,together with any incidental damages BUT MINUS the expensessaved in consequence of the buyers breach

(2) seller can claim damages under 2-708(1) are inadequate to put itin as good a position as performance would have done entitledto damages measured by the profit which the seller would havemade from full performance by the buyer PLUS incidental

damages due allowance for costs reasonably incurred and duecredit for payments or proceeds of resale.

2-709 Action for Price (1)(b): Seller cannot recover unless are reasonable resale is not available

2-715 Buyers Incidental andConsequential Damages

(1) Incidental damages resulting from the seller's breach includeexpenses reasonably incurred in inspection, receipt, transportationand care and custody of goods rightfully rejected, any commerciallyreasonable charges, expenses or commissions in connection witheffecting cover and any other reasonable expense incident to thedelay or other breach.

(2) Consequential damages resulting from the seller's breach include(a) any loss resulting from general or particular requirements and

needs of which the seller at the time of contracting had reason toknow and which could not reasonably be prevented by cover orotherwise; and

(b) injury to person or property proximately resulting from anybreach of warranty.

2-716 Buyers Right to SpecificPerformance

Specific performance may be granted where the goods are unique or inother proper circumstances.

Lost Volume Seller: Seller has sufficient supply to meet demands of all customers so failure to make a sale results in lost profit of that sale


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- Seller has the burden of proving lost volume- Requires forseeability

Rest. Restatement Mental Anguish & Punitive Damages

353 Loss Due to Emotional Disturbance Cannot recover for emotional disturbance UNLESS The breach cause actual bodily harm of The contract or breach is such that that serious emotional disturbance was particularly likely to result (like

foreseeability)

EXCEPTIONS:Damages for mental suffering will be awarded in the following contract as long as there is willfull and wanton conduct:

Contracts for carriers and innkeepers with passengers and guests Contract for the carriage or proper disposition of dead bodies Contracts for the delivery of messages concerning death

355 Punitive Damages No punitive damages UNLESS

The conduct constituting the breach is also a tort for which punitive damages are recoverableRest. Restatement UCC UCC Equitable Remedies

345 Judicial Remedies Available The remedies available in 344 (expectation, reliance, restitution)include a judgment or order:

(a) awarding a sum of money die under the contract or as damages(b) requiring specific performance of a contract of enjoining its non-

performnance(c) requiring restoration of a specific thing to prevent unjust

enrichment(d) awarding a sum of money to prevent unjust enrichment(e) declaring the rights of the parties(f) enforcing an arbitration award 357 Availability of Specific Performance

and Injunction(1) Subject to the rules stated in 359-69, specific performance of acontract duty will be granted in the discretion of the court against a partywho has committed or is threatening to commit a breach of the duty.

(2) Subject to the rules stated in 359-69, an injunction against breach ofa contract duty will be granted in the discretion of the court against aparty who has committed or is threatening to commit a breach of the duty
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if(a) the duty is one of forbearance, or(b) the duty is one to act and specific performance would bedenied only for reasons that are inapplicable to an injunction

359 Effect of Adequacy of Damages No specific performance if damages would be adequate

- if damages would be adequate for one part of the contract it doesnot bar specific performance for the contract as a whole

- Specific performance will not be barred just because there may beanother remedy under 357

362 Effect of Uncertainty of Terms Specific performance or an injunction will not be granted unless the termsof the contract are sufficiently certain to provide a basis for anappropriate order.

366 Effect of Difficulty in Enforcement ofSupervivion

A promise will not be specifically enforced if the character and magnitudeof the performance would impose on the court burdens in enforcement

or supervision that are disproportionate to the advantages to be gainedfrom enforcement and to the harm to be suffered from its denial.

2-716 Buyers Right to SpecificPerformance

Specific performance may be granted where the goods are unique or inother proper circumstances.

Rest. Restatement UCC UCC Liquidated Damages

356 Liquidated Damages and Penalties 2-718 Liquidation or Limitation ofDamages, Deposits

Liquidated damage clauses will be enforced if:1. not a penalty2. hard to ascertain at the time of contracting3. proportional to the actual harm

Rest. Restatement UCC UCC Assignment and Delegation

317 Assignments Forms of Assignment:

-

operation of law: happens automatically / does not requireaffirmative conduct by the parties- death and everything goes to the estate- bankruptcy

- act of the partiesAssignor cannot take more then what the assignee had


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Notice- Notice is not required to make an assignment valid, but it makes a

really weird situation.- If A has no notice and pays B then C cannot sue A but can sue B- If A has notice and pays B then C can sue A

318 Delegations DelegationDelegator: the person delegatingDelegatee: the person delegated toObligee: the person getting the benefit

Delegator always has the responsibility. UNLESS there is a novationNovation: substitution of parties (substituting B for A in the contract, butall three parties have to agree that A is out and B is in).

2-210 Delegation of Performance;

Assignment of Rights

(2) Unless Except as otherwise provided inSection 9-406, unless

otherwise agreed, all rights of either seller or buyer can be assignedexcept where the assignment would materially change the duty of theother party, or increase materially the burden or risk imposed on him byhis contract, or impair materially his chance of obtaining returnperformance. A right to damages for breach of the whole contract or aright arising out of the assignor's due performance of his entire obligationcan be assigned despite agreement otherwise.

Rest. Restatement UCC UCC Third Party Beneficiaries

302 Indented and IncidentalBeneficiaries

Third Party beneficiariesIntended: 302 Intended to benefit an identified 3rd party(get to sue)

does not have to be named just have to intend to benefit aperson or a class of persons

1.Creditor beneficiaries: When the contract is intended to settle adebt to a third party. Third party = creditor beneficiary

2.Donee Beneficiary: Contract is intended confer a benefit on a thirdparty by making a gift or donation. Third party = doneebeneficiary(need to intend that the 3rd party has the right to enforce thecontract in court)

Allowed to revoke the status of the Donee UNLESS you have
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make it unrevocable or they have reasonably relied.

3rd party can get locked in if they act in justifiable reliance onthe promise

Incidental: incidentally benefit, but not intended to benefit(don't get to

sue)

310 Remedies Of The Beneficiary Of APromise To Pay The Promisee's Debt;

Reimbursement Of Promisee

(1) Where an intended beneficiary has an enforceable claim against thepromisee, he can obtain a judgment or judgments against either thepromisee or the promisor or both based on their respective duties to him.Satisfaction in whole or in part of either of these duties, or of a judgmentthereon, satisfies to that extent the other duty or judgment, subject tothe promisee's right of subrogation.

(2) To the extent that the claim of an intended beneficiary is satisfied fromassets of the promisee, the promisee has a right of reimbursement from

the promisor, which may be enforced directly and also, if the beneficiary'sclaim is fully satisfied, by subrogation to the claim of the beneficiaryagainst the promisor, and to any judgment thereon and to any securitytherefor.

311 Variation of a Duty to a Beneficiary (1) Discharge or modification of a duty to an intended beneficiary byconduct of the promisee or by a subsequent agreement betweenpromisor and promisee is ineffective if a term of the promise creating theduty so provides.

(2) In the absence of such a term, the promisor and promisee retainpower to discharge or modify the duty by subsequent agreement.

(3) Such a power terminates when the beneficiary, before he receivesnotification of the discharge or modification, materially changes hisposition in justifiable reliance on the promise or brings suit on it ormanifests assent to it at the request of the promisor or promisee.

UCC UCC Negotiable Instrument

3-104 Negotiable Instrument Commercial Papers:Checks, drafts, notes, certificates of deposits


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Negotiable: Can turn it over to someone who can then turn it over to another person for value

To be negotiable the instrument must:1. be in writing2. be signed by the maker/drawer who created the instrument3. contain an unconditional promise4. specifically identifiable amount in money5. contain no other promise or obligation6. be payable on demand or at a definite time7. be payable to order or bearer

- Payable to order: must state that is payable to an ascertainable person, company, or group of people- Payable to bearer: must be payable to no specifically identifiably person, but can be paid to anyone who has

the instrument lawfully in his/her possessionHolder in Due Course: Takes a negotiable instrument for value, in good faith, and with no notice that there are anyproblems with the instrument

-

if it turns out that the instrument was bad a holder in due course would not be required to return theinstrument- If not a buyer in due course they may be required to return the instrument..

Example: A pays B, and B pays C with As instrument. C puts it in the bank. B does not perform the contract and A sues toget her money back. If C is a buyer in due course he does not have to give the instrument back. If C has notice that B maynot perform or there is a problem with the instrument, he may be required to give the instrument back.

Documents

Spring Chart