#9102 - Contracts - Contracts
CONTRACTS MIDTERM: CONDENSED OUTLINE
General Strategy:
Identify legal issue (typically if K exists)
Go through fact pattern chronologically using categories of analysis below
Speak hypothetically, always argue both possibilities unless you can argue 100% for one side
State general principles
Support conclusions w/cases- analogize and distinguish
| CATEGORY OF ANALYSIS | PRINCIPLES AND CASES |
|---|---|
| Answer after completed analysis of components of K. If Answer is yes, move on to # 2. |
| -An invitation to offeree to accept -Contains all essential terms (3 Ps- parties, product, price) -Ascertained by theorizing its policy consequences (Boots) -Distinguished from an invitation to treat (Johnston- price quote not binding; > Dickinson- promise not binding) -If offer is rejected, it is terminated -Option K- offer can be left open for a “reasonable” period of time -Firm offers- offer open for stipulated amount of time, often written |
| -Not essential to K, but useful to distinguish in terms of discerning offer + acceptance -If counter offer is made, it terminates original offer (Butler) |
| -If acceptance does not occur w/in a reasonable time, offer = null (Manchester Diocesan) -Revocation is valid any time before acceptance -Must be communicated to other party (Larkin) and is not binding until received (Byrne) -If no consideration, then can revoke at any time bc no K (Dickinson) |
| -When both parties agree to be bound to perform or pay DMs -Party making offer controls mode of acceptance (Eliason; Manchester Diocesan) -Must be communicated to other party, cannot be given to agent (Larkin); must be done in manner in which offeror is aware of liabilities -In retail, acceptance = when seller accepts customers’ $ (Boots) -Bilateral Ks- exchange of promises to complete their end of K -Unilateral Ks- offers made to entire world, acceptance = performance (Denton, Lefkowitz) -Cannot add a term after K is made (Lefkowitz; Eliason) -Accepting goods > silence is not acceptance (statutes for consumer protection) but it can be in CL -Battle of the forms > last K w/terms is binding- if you accept goods on terms different than desired, you may be held accountable to those terms (Butler- attempted to change this approach thru looking at all the documents to determine where there is an agreement but has not been adopted) -Written communication w/in a reasonable amount of time =acceptance even if on different terms unless acceptance is conditional on diff terms not being present, if it alters the K or if objection is already expressed (Universal Commercial Code US) -If acceptance beats attempt to revoke, then K is accepted, and vice versa -Postbox rule: offer considered accepted when it is posted (Henthorn) -Exceptions: does not apply to Option K (Howell Securities) and instantaneous technology> acceptance = when it is received (Eastern Power; Electronic Commerce Act) |
| -Something of value given by both parties that induces them to enter into a K -Cts will only enforce a promise supported by full consideration (must be reciprocal – Tobias) -Required for a K bc it is evidentiary basis of K and mechanism of accountability -An issue if parties assert there is no K, if K is vague, if nothing is exchanged, if a party tries to change terms or when party doesn’t perform K -Can be a benefit or a detriment (loss/responsibility- Hamer), but it must be something of social utility (White v. Bluett) -Good consideration: rescission and replacement of K w/new K (Gilbert Steel) (consideration = promise not to sue), performance in an open agency K -Bad consideration: burden that comes w/accepting a gift (Thomas), performance of original K (Stilk, Gilbert Steel; exception- Williams, but not yet adopted); promise made under duress (Harris; Williams), something that creates negative policy implications (Harris), lacks evidentiary basis (White v. Bluett) -A change in a term of the K must be supported by consideration (Gilbert Steel) -Cts can imply consideration based on evidence of parties conduct, operation of K and if it prevents unjust enrichment (Wood) -estoppel can be a remedy when a party attempts to revoke consideration |
| -2 forms of uncertainty: vagueness and “agreeing to agree” -“agreeing to agree” > cts typically wary of enforcing (May) but will if there is a long term relationship or mechanisms for determining a “reasonable” price (Foley) -Ks can imply terms based on parties conduct, nature of industry and external evidence (Hilias) or to support business ease (Empress Towers) but are reluctant to enforce K if parties do not agree -Cts concerned w/ unjust enrichment and degree of unfairness/surprise |
| If yes, then move on to # 3. |
| -Entitled to rescind K if breach was substantial (Bollenback) -Point of DMs is compensatory, not to punish D (except in rare cases of punitive DMs) -DMs should not impede free market -Neither P nor D should be unjustly enriched -Typically remedies are mutually exclusive (Bollenback; Anglia) -Repudiation = violation of K |
| -Starting point for DMs (Wertheim) -Restores parties to position as if K not breached -Forward looking- can include expected profit or psych benefit (can include intangible DMs) -May go further than reliance DMs -Often calculated by difference in what P would have made – what P ended up w/ (applies to warranty, e.g. Hawkins) -Don’t have to prove harm/out-of-pocket expenses -Market value> measure on day of purchase – day of breach -If market value dropped, then look to reliance or restitution |
| -Prevents unjust enrichment by K breaker -Backward looking- transfers benefit back to P -Appropriate remedy for when benefits occurred to D by mistake, under duress or coercion, to preserve life of another or to discharge a duty owed -An appropriate remedy for good faith policies but can only compensate for losses incurred after breach (Bollenback) -Typically the remedy for a rescission (cancelling of K), but may be limited in that the benefit may be gone and cannot be restored (Bollenback) -Can be awarded in cases where there is no financial loss if P has legitimate interest in preventing enrichment of D and if breach is serious and if injunction or SP not appropriate (AG v. Blake) |
| -Backwards looking -undoing harm/loss experienced by P bc of breach -Used as a remedy when expectation DMs are too speculative (Anglia) -Compensates for pre K expenditures that are reasonably foreseeable by both parties (Anglia) -DMs= what P started w/- ended up w/ (can include intangible losses) -Includes restitution but may go further |
| -Forward looking- restore parties to position as if K had been fulfilled -Only awarded if DMs are difficult to quantify or item of K is unique (e.g. land, unique good); if P is not guilty of dishonest conduct; if undue delay in seeking remedy will lead to a refusal, if it is necessary for 3rd party K (Tanenbaum) -In cases of SP for work, particulars of job must be specified, if P has sufficient interest in SP and if D has land (Tanenbaum) -Cts wary of having a role in enforcement (Finelli) -Negative covenant (injunction) can be enforced if positive covenant is not an available remedy (Warner Bros.) but will not be used if it is punitive, makes D idle or causes undue hardship -Cts will rarely enforce K for personal services and “restraint of trade” Ks (if D is forced to choose SP or starve) –exception- Warner Bros. - requirements met -SP not an appropriate remedy if it creates unjust enrichment or forces D to continue noneconomic or hostile business (Argyll Stores) -SP not awarded if it interferes w/ 3rd party rights (Wroth) -Mutually exclusive w/mitigation- DMs caused by failure to mitigate can be charged to D and will be assessed at date of possibility of beginning mitigation |
| Aggravated DMs Punitive DMs | Aggravated DMs- compensating for non-financial harm/loss experienced by P (Fidler) Punitive DMs- not about P loss but about deterrence for D’s irreprehensible behavior, must be rational and proportional (rarely awarded) (Whiten) -Both types of DMs require an independent actionable wrong (Vorvis) but in insurance and employment Ks the breach meets this requirement if the DMs flow from the breach bc implied duty of good faith (Fidler, Whiten, Wallace); if not then, a tort is required -Keays- Wallace ltd in that only when employer acts in extreme bad faith will DMs be awarded in employment Ks |
| |
| -Difficulty in ascertaining DMs does not mean they will not be awarded (Carson; Anglia) -In ascertaining DMs for failure to perform construction jobs, standard is cost to have work completed (Groves) -Breaches of K of sale: if supply is greater than demand then DMs will be awarded (Thompson), if vice versa, then DMs = price of goods – market price when they were supposed to have been accepted (Sales of Goods Act; Charter v. Sullivan) (measured in specific market of good not general market) |
| -Not just to make D liable for all DMs from breach (Fuller and Purdue) and to prevent economic waste -Factors: 1) degree of foreseeability (is it w/in reasonable contemplation of the parties? (Fuller and Purdue; Hadley) (Heron II- only need to be “not unlikely to be foreseeable”) 2) communication of... |
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