Contract Essay Rules

Offer

an expression of promise, undertaking, or commitment to enter into a contract and contains terms that are definite and certain which must be communicated to the offeree

When Does Death Not Terminate Offer

unilateral or option contract

Promissory Estoppel

if necessary to avoid injustice, a court will enforce a promise without consideration if

• the promisor should have expected the promisee to change his position in reliance on the promise

• the promisee did change his position and

• the change in position was to the promisee’s detriment

Implied Revocation

offeree receives correct info from a reliable source of acts of the offeror that would indicate to a rxbl person that the offeror no longer wishes to make the offer

Merchant’s Firm Offer

if a merchant offers to sell goods in a SIGNED writing, and the writing gives assurances it will be held open, the offer is not revocable for lack of consideration during the time stated, or if no time is stated, for a rxbl time not to exceed 3 months

Merchant

one who regularly deals in goods of the kind sold or who otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved

Battle of the Forms

• inclusion of additional terms does not constitute rejection and counteroffer, but is effective as an acceptance unless the acceptance is expressly made conditional on assent to the additional or different terms

  • contracts involving nonmerchant: terms of offer govern

  • contract btw merchants: additional terms included unless

    • materially alter original terms

    • offer expressly limits acceptance to terms of offer

    • offeror has already objected to terms or objects within rxbl time after notice of them is received

Fair and Equitable Modification

some courts will allow a court to be modified without additional consideration if the modification is fair and equitable in view of circumstances not anticipated when contract was made (usually difficulties in performing bordering on impracticability)

Modifications under Article 2

• contract modifications sought in good faith are binding without consideration

• good faith means honesty in fact and observance of rxbl commercial standards of fair dealing, there must be legitimate commercial reason for modification

Duress

contract can be voided based on duress when party’s assent to a contract is induced by an improper threat by the other party that leaves the victim no rxbl alternative

Economic Duress

• party threatens to commit a wrongful act that would seriously threaten other contracting party’s property or finances and

• there are no adequate means available to prevent the threatened loss

Ambiguous Contract Language

• neither or both party aware: no contract unless intended same meaning

• one party aware: binding contract based on what ignorant party rxbly believed to be meaning of ambiguous words

Mutual Mistake

• contract may be voidable by adversely affected party if

  • mistake concerns basic assumption on which contract was made

  • mistake had material effect on agreed-upon exchange

  • party seeking avoidance did not assume risk of mistake

• not defense if party bore risk - was in better position to know

Unilateral Mistake

• will not prevent formation of contract

• if non-mistake party knew or had reason to know of mistake made by other party, contract is voidable by mistaken party

  • mistake must have material effect on agreed-upon exchange and mistaken party must not have born risk of mistake

Fraud in the Inducement

• party induces another to enter into contract by asserting info they know is untrue

• contract is voidable by innocent party if they justifiably relied on fraudulent misrepresentation

Material Misrepresentation

• whether or not misrepresentation is fraudulent, contract is voidable by innocent party if they justifiably relied on misrepresentation and misrepresentation was material

  • would induce rxbl person to agree OR

  • maker knows that for some special reason it is likely to induce the particular person to agree, even if rxbl person would not

SoF Writing Requirement

• rxbly indicate subject matter of contract

• indicate contract made btw parties

• state with rxbl certainty essential terms

Taking Contracts Out of SoF

• full performance of oral contract unable to be performed within a year

• full performance by seller of oral land sale contract (conveyance)

• part performance of buyer may remove (payment, possession, valuable improvements)

• part performance of goods contract if paid or accepted, or goods were specially manufactured

Merchant’s Confirmatory Memo

• in contracts btw merchants if one party

  • within a rxbl time after an oral agreement is made, sends to the other party a written confirmation of the agreement

  • this is sufficient under SoF to bind sender, it will also bind recipient if

    • he had reason to know of confirmation’s contents and did not object in writing within 10 days of receipt

Express Warranty

any affirmation of fact or promise made by the seller to the buyer creates an express warranty if it is part of the basis of the bargain

Implied Warranty of Merchantability

in every contract for sale by a merchant who deals in goods of the kind sold, there is implied warranty that the goods are merchantable (at least fit for ordinary purpose for which goods or used)

Anticipatory Repudiation Remedies

• treating it as total breach and suing immediately

• suspending performance and waiting to sue until performance date

• treating repudiation as offer to rescind and treating contract as discharged

• ignoring repudiation and urging promisee to perform

Demand for Assurances

• if party rxbly believes the other party will be unable or unwilling to perform he may suspend further performance and make a written demand for adequate assurances that performance will be forthcoming at proper time

• if party fails to provide adequate assurances within rxbl time, innocent party may be excused from their own performance and treat failure as repudiation

Excuse of Condition by Substantial Performance

• in contracts not involving sale of goods, condition of complete performance may be excused if party rendered substantial performance

  • if breach is minor, performance is substantial; if breach is material, performance is not substantial

Determining Materiality of Breach

court looks at amount of benefit received, adequacy of damages, extent of performance, hardship to breaching party, and whether breach was negligent or willful

Divisible Contract

• if contract is divisible, a party who has performed one or more parts is entitled to collect the contract price for those parts even if it breaches the other parts; nonbreaching party has cause of action for underperformed units and may withhold counter performance for those units

• for contract to be divisible

  • performance of each party must be divided into 2 or more parts under the contract

  • number of parts due from each party must be same

  • performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party

Impracticability

• extreme and unrxbl difficulty and/or expense and

• its non-occurence was basic assumption of the parties

Frustration

• some supervening act or event leading to the frustration

• at the time of entering into the contract, parties did not rxbly foresee the act or event occurring

• purpose of contract has been completely or almost completely destroyed by this act or event

• purpose of contract was realized by both parties at time of making contract

Restitution

remedy based on avoiding unjust enrichment; available even when no contract exists

• P conferred benefit on D

• P conferred benefit with rxbl expectation of compensation

• D knew or had reason to know P expected compensation

• D would be unjustly enriched if allowed to retain benefit without paying P

  • if P is party who breached, may still recover in quasi-contract the value of services performed minus any damages incurred as result of breach