exam3

Mistake of Fact

Contract entered with different understandings of a material fact; makes contract voidable

Unilateral Mistake

One party mistaken; no relief UNLESS (a) other party knew/should have known OR (b) substantial math error not due to gross negligence

Mutual Mistake

Both parties mistaken about same material fact; either party may rescind; includes different reasonable interpretations

Mistake of Value

Generally does NOT allow rescission

Fraudulent Misrepresentation

(a) material misrepresentation (b) intent to deceive (c) justifiable reliance (d) damages required

Misrepresentation of Law

Not valid UNLESS speaker has superior legal knowledge (professional)

Misrepresentation by Silence

(a) no duty to disclose (b) duty may arise by statute/common law (c) fiduciary relationship → nondisclosure = fraud

Innocent Misrepresentation

Statement believed true but false; allows rescission but usually no damages

Negligent Misrepresentation

Failure to use reasonable care/skill in obtaining or communicating facts

Out of Pocket Damages

Difference between price paid and actual value at time of sale

Benefit of Bargain Damages

Difference between value as represented and actual value

Consequential Damages (Misrep)

Must be (a) foreseeable (b) directly traceable (c) result of misrepresentation

Undue Influence

Unfair persuasion in fiduciary relationship; presumption when dominant party benefits

Duress

Contract entered under wrongful/illegal threat that removes free will; voidable

Economic Duress

Economic pressure alone not enough UNLESS party creates situation and exploits it

Adhesion Contract

Take-it-or-leave-it contract; unenforceable if unconscionable (unfair + one-sided)

Statute of Frauds

Certain contracts must be in writing → MYLEGS

MYLEGS

Marriage, Year (>1 year impossible to complete), Land, Executor, Goods ≥ $500, Surety

Primary Obligation

Promise to pay NOT conditioned on default → no writing required

Secondary Obligation

Promise to pay IF another defaults → must be in writing

Main Purpose Rule

No writing required if guarantor's main purpose is personal benefit

Partial Performance

May allow specific performance (especially land contracts)

Admission

Contract enforceable if admitted under oath

Promissory Estoppel (SOF)

Reliance → court may enforce oral contract to avoid injustice

Assignment

Transfer of contractual rights

Delegation

Transfer of contractual duties

Assignor

Transfers rights

Assignee

Receives rights

Obligor

Party who must perform

Obligee

Party owed performance

Assignment Effect

(a) assignor rights extinguished (b) assignee can demand performance (c) assignee "stands in shoes" (takes subject to defenses)

Delegation Effect

(a) obligee must accept delegatee (b) delegator still liable (c) both can be sued

Third Party Beneficiary

Intended beneficiary can sue; incidental cannot

Condition Precedent

Must occur BEFORE performance required

Condition Subsequent

Occurrence TERMINATES obligation

Concurrent Condition

Performances occur simultaneously; must tender to sue

Discharge

Release from obligation by performance or other means

Tender

Unconditional offer to perform

Complete Performance

Full performance → discharge

Substantial Performance

(a) good faith (b) no major deviation (c) same benefit received → damages still possible

Satisfaction Contracts

(a) personal → good faith standard (b) non-personal → reasonable person standard

Material Breach

Major breach; non-breaching party excused from performance

Minor Breach

Small breach; duties suspended until cured; damages still available

Anticipatory Repudiation

Refusal before performance due; treated as material breach; allows immediate suit + mitigation

Time

(a) reasonable time if not stated (b) "time is of the essence" → strict requirement (court may still allow recovery)

Mutual Rescission

New agreement to cancel contract; each promise not to perform = consideration

Novation

(a) prior valid contract (b) agreement of all parties (c) extinguish old obligation (d) valid new contract

Settlement Agreement

New contract resolving dispute

Accord and Satisfaction

(a) dispute exists (b) accord = agreement (c) satisfaction = payment

Discharge by Law

Includes (a) material alteration (b) statute of limitations (c) bankruptcy (d) impossibility

Impossibility

(a) unforeseen (b) objectively impossible → examples: death, destruction, illegality

Temporary Impossibility

Performance delayed; may discharge if becomes too burdensome

Commercial Impracticability

Performance extremely difficult/expensive beyond expectations

Compensatory Damages

Actual loss of bargain; standard = difference between promised vs actual performance

Incidental Damages

Costs directly caused by breach

Consequential Damages

Foreseeable losses known to breaching party

Punitive Damages

Punish; generally NOT available unless tort (e.g., fraud)

Nominal Damages

Small amount when no actual loss but valid claim

Mitigation of Damages

Non-breaching party must reduce damages; failure reduces recovery

Liquidated Damages

Valid if (a) damages hard to estimate (b) reasonable amount

Penalty

Unenforceable if excessive

Rescission

Cancel contract and restore parties to pre-contract position

Restitution

Return benefits conferred (or monetary equivalent)

Specific Performance

Court orders performance; common in land; NOT for personal services

Reformation

Court rewrites contract (fraud, mutual mistake, mismatch with intent)

Quasi Contract

No contract but (a) benefit conferred (b) expectation of payment (c) not voluntary (d) unjust enrichment

Waiver

Voluntary relinquishment of right; cannot later enforce waived breach (unless pattern suggests otherwise)

Limitation of Remedies

Contract may limit remedies → (a) exclude consequential damages (b) limit to repair/refund (c) cap damages