Business Law - Exam 4

complete performance

performance made with no errors and in accordance with the contract terms

- discharges obligation of performing party

- requires performance by the other party to the contract

requirements of statute of fraud

- certain contracts must be proven by a writing before the contract will be enforceable in court

- must be signed by the opposing party against whom the contract is being enforced

UCC 2-201 (2)

doesn’t require any signatures if both parties were merchants and a written confirmation was sent and no objection was made within 10 days

contracts subject to statute of fraud

- marriage

- year

- land

- executor promises

- guarantee

- goods

year

contracts which cannot be performed within 1 year of contract formation

executor promises

promises made by the executor of an estate to pay for liabilities of the estate

guarantees

promises made to pay for the debt of another when no economic benefit is derived

goods

prices $500 or more

exceptions to statute of fraud

- common law

- UCC

common law

- partial performance

- promissory estoppel

UCC

- admission in court

- acceptance (or partial acceptance) of goods costing $500 or more

- specially manufactured goods

Parole Evidence Rule

if parties intended a writing to contain their final, fully integrated agreement, then the court will exclude all other evidence if that evidence is offered to contradict the terms of the contract

expectation to parol evidence rule

- subsequent modification

- ambiguous terms (courts may look at course of dealing cause of performance and usage of trade)

prior negotiations

+0

fully integrated agreement signed

+1

subsequent modification

+2

UCC 2-202

prohibits evidence of oral contemporaneous agreements if the agreements are being entered as evidence to contradict the terms of the signed agreement

contemporaneous agreements

agreements which occur at the same time

ambiguous terms

- course of performance

- course of dealings

- usage of trade

course of performance

court looks how the parties have been interpreting the contract terms to date as they have performed under the contract (this contract)

course of dealings

court looks at how parties in question have transacted int eh past & interpreted similar terms (past contract)

usage of trade

how do others involved in the trade in question interpret terms such as those in dispute (other businesses)

agreement

parties cannot enter into a legally binding contractual agreement if they have not consented to the terms of the agreement because they were mistaken, tricked, or threatened

mistake of law

not an excuse

mistake of value

courts generally don’t care about this type of mistake

mistake of fact

- bilateral mistakes

- unilateral mistake

bilateral mistake

- both parties mistaken

- cannot have a meeting of the minds

unilateral mistake

- only one party makes a mistake

- courts not interested

expectations of unilateral mistake

- one party knows or should have known the other party is mistaken

- math or bookkeeping errors

fraudulent misrepresentation

no mutual assent when fraudulent misrepresentation has occurred

test for intentional misrepresentation

- misrepresentation occurred

- the innocent party must justifiably rely on misrepresentation

- must be an intent to deceive

scienter

intent by the defendant to tell deceiving lie

innocent misrepresentation

party did not intentionally lie but misstated material fact on which the other party justifiably relied

negligent misrepresentation

same test as innocent

misrepresentation by silence

just as good a defense as verbal misrepresentation in some situationsm

misrepresentation by conduct

similar to misrepresentation by silence

misrepresentation of law

generally, not a defense as parties should be informed of the law

exception of misrepresentation of law

when one party is considered an expert in that area of law

undue influence

- one party has an undue amount of influence on another

- may work as a defense against contract enforcement

- need

• close relationship & relationship caused undue influence on formation of contract

- adequate disclosure and consent may be enough to enforce the contract even if a close relationship has existed

physical duress

thread of violence, false imprisonment, or threat to property

economic duress

more courts are allowing claims

test for physical duress

one party entered into the contract under a threat of immediate harm from the other party

3 requirements of economic duress

the party attempting to prove economic duress must show the other party engaged in

1. wrongful behavior

2. that caused financial hardship

3. the damaged party has no other alternatives

substantial performance

- performance was made in good faith but not to the exact letter of the contract deviation from terms of contract must be immaterial

- doesn’t relieve party from liability for breach of contract because their performance is not complete

- party receiving substantial performance is entitled to damages

material breach

party fails to perform a significant duty under their contract

- party who materially breaches contract is not entitled to performance

- party who recieves the material breach has their duty to perform suspended

conditions precedent

must occur before performance is requiredco

condition subsequent

must perform until condition is no longer met

concurrent conditions

both parties subject to conditions

express conditions

stated in the contract itself

implied condition

not expressly stated but inferred

objective conditions

satisfied based upon a reasonable person standard

subjective conditions

satisfied based upon the subjective opinion of one of the parties

compensatory damages

compensate injured party for what they have lost

types of damages

- compensatory

- expectation

- reliance

- restitution

expectation damages

difference between where the plaintiff expected to be after performance & where they were after the breach

reliance damages

compensate the plaintiff for the value of benefit provided the defendant

types of compensatory damages

- general damages

- special damages (consequential)

general damages

are awarded to compensate the plaintiff for the direct and foreseeable loss caused by the breach of contract

special damages (consequential)

arise when the damages to be compensated are not normally foreseeable & thus require the defendant have received notice of the possibility for such damages

rescission

to “undo” a contract

- often have to make restitution

injuction

is a court order to stop doing something

specifiic performance

court order to do that which is required under hte contract

reformation

court reforms “changes” the contract

- often used when fraud or mutual mistake is present

- scrivener’s error is a typo or drafting error

UCC 2-712

provided nonbreaching party can buy conforming goods in which case they can recover difference in market price and contract price

UCC 2-607

provides the buyer must notify seller of any defect within a reasonable amount of time

rescession

parties are returned to their pre-contract position

multual rescission

requires a new contract to be made

novation

- substitute a 3rd party or a new contract

- accord and satisfaction

discharge by law

- objective impossibility

- statute of limitation

- bankruptcy

objective impossibility

- death or incapacity of a party who owes a personal service

- death or incapacity of key 3rd party

- destruction of subject matter of contract

when performance is possible

- commercial impracticability

- frustration of purpose

commercial impracticability

performance is possible but commercially impracticable

- available only in extreme circumstances

frustration of purpose

purpose of the contract is not achievable

3rd party beneficiary

normally have 2 parties to a contract but sometimes there will be a 3rd party beneficiary

intended beneficiaries

- can sue for breach of contract

- a beneficiary the parties intended to benefit with their contract

- creditor beneficiary

- done beneficiary

creditor beneficiary

beneficiary is a creditor of one of the parties involved

done beneficiary

- beneficiary is not a creditor but is merely receiving a gift “donation”

- life insurance contracts

Incidental beneficiaries

- cannot sue for a breach of contract

- a beneficiary the parties did not intend to benefit by contracting

assignor assigning rights

- can only assign rights he was

- assignee takes subject to defenses held by obligor

assignor of morgages

banks

when contract rights cannot be assigned

- statute or public policy prohibits assignment

- assignment will increase or alter duties of the obligor

- contract prohibits assignmentc

contract prohobits assignment

assignment of the right to collect money under a contract is generally not allowed to be prohibited by contractual terms

assignor

party who assigns their rights under a contract

assignee

party to whom the assignment was made

obligor

party with a contractual duty

obligee

party to whom performance is made

delegation

transferring duties to another partyd

delegator

person making the delegation

delegatee

person who received delegation

rules of delegation

- some duties cannot be delegated

- public policy or state law prohibits delegation

- 3rd party cannot perform to the level of delegator

- contract prohibits delegation

nonconforming goods

items delivered by a seller that fail to satisfy the exact terms, specifications, quality, quantity, or description outlined in the sales contract

conforming goods

items that strictly accord with all contract terms, including specifications, quality, quantity, description, and delivery requirements

curable goods

refers to nonconforming goods whose defects, shortages, or delivery errors can be legally corrected, repaired, or replaced by the seller before or shortly after the contract deadline

specific goods

items explicitly designated, selected, and agreed upon by both buyer and seller at the exact time the sales contract is made

anticipatory repudation

occurs when one party unequivocally indicates before their required performance date that they will not fulfill their contractual obligations

admission

a statement, act, or formal document by a party to a lawsuit acknowledging the truth of a relevant fact, the existence of a contract, or potential legal liability