Chapter 9

A contract is a question of

Law

Courts will decide what

a contract means

If a word in a contract has a particular trader usage

Courts will give it that meaning

Ex- Rose for a contract with a wine comapny talks about a type of wine

Typically businesses use

Standard Preprinted form contracts

The court is going to interpret handwritten terms to

control typed terms

The court is going to interpret typed terms to

control pre-printed terms

Hierarchy

Handwritten

Typed

Pre-printed Terms/Forms

Parol Evidence Rule

Parties to a complete and final written contract cannot introduce evidence of oral agreements made at the time of or prior to the written contract that would change the terms of the contract

When evidence of oral agreements is allowed

Evidence of oral modifixations occuring after the written contract

Evidence to explain the meaning of the terms may be admitted

Neccessary to prevent fraud

Duty of Performance

Performance required by the other party as promised in the contract

Discharge

Occurs when the party is relieved from all further responsibilites of performance

Condition Precednet

Something (a condition) that must take place before a party has a duty to perfrom

Condition subsequent

excuses contractual performance if some future event takes place

Express ocdtions

Explicity mentioned in the contract governme=ing peformance

Implied COnditions

Not eexplicitly mentioned but can be read into the parties obligations to perform

Concurrent Conditions

Parties have simutanous duty of performance

Ex- transfer of title to land

Complete Performance

Everything required under the contract has been done

Performance level of complete performance

A party that performs completely i entitiled to complete performance from the other party and they may sue to enforce

SUbstantial performacen

Less than full performace but greater than significant performance

breach of contract

Performanbce level of substantial performance

Other party is required to perform and they may sue for any damages resulting from the breach

Material Breach

The performance is materially deficient or non-existent

Performance level of material breach

The other party is relieved from performing and can sue for damages

Force Majeure

Must be negotiated into contract

Excuses a parties obligation to perform if certain extreme event occur

Event must be outside of any parties control and unforseeable

hurricane, flood

Impossibility

Performance is illegal or physically impossible

subject matter of your contract was destroyed

Frustration of Purpose

occurs when an unfoorseen event that undermines a partys principle purpose for entering into contract

Person with coach no longer going to olympics

Commercial Impractibilty

circumstances greatly increase the difficulty and violate the parties reasonable expectation

Mere increased diffculty or reduced profibilabity

doesnt count for impossibility or frustration of purpose

Breach of contract

When party does not accomplish obliugation of contractual perfromace

Remedies

Damages - Money award

Equitable remedies

Compensatory Damages

Damages put the plaintiff in the same position as if the contract had been performed

Liquidated Damages

When the amount of damages is stipulated in the contract

Must be reasonable

Consequential Damages

Damages that arise from unusual forseeable losses

Lost sales

Buyers Breach

Seller can sue for lost profits

If buyer fails to pay, seller makes a replacement sale for a lower price

seller can sue for contract price when

If buyer fails to pay for g/s and seller cannot resale

Seller breaches

Buyer can sue for difference between market price vs contract price

occurs when seller fails to deliver g/s and it is procurred at a higher price

textbook difference 100 dolla

Duty to mitigate

Victim of a breach of contract must take reasonable steps to mitigate a contrate

Mitigation

Reducing or minimizing damage

Equuitable remedies are only allowed

if money damages are not adequate

Specific performance

Requires defendant to do what they are contractuablly obligated to do

Used for unique subject matter

IInjunction

Court order directing a party to do or refrain from doing something

Recission

When court cancels agreement and returns consideration exchanged to each respective party

Land is considered

Unique subject matter