contracts rulesets for final

predominant thrust/predominant factor test

all are to be analyzed;

• language of the contract

• nature of the business of the supplier

• intrinsic worth of the materials

  
  

if the main purpose is goods/tangible property, UCC Article 2 governs

if the main purpose is service/realty/employment/intangible property, common law of contract governs

objective theory of contract

assent evaluated from the perspective of a hypothetical reasonable person based on outward manifestations

duty to read

• signing party with capacity to understand is generally bound by written terms, regardless of failure to read

  • rebuttable presumption of knowing assent

exceptions to duty to read

• bargaining misconduct, i.e.;

  • fraud

  • misrepresentation

    • oppressive/unexpected boilerplate terms

  • duress

  • undue influence

• mutual mistake (both parties share the same erroneous belief)

rules to contract formation

all required;

• mutual assent

• consideration

rules to mutual assent

all required;

• offer

• acceptance

rules to offer

all required;

• expression of promise

• definite & certain terms

• communication to promisee

• invites acceptance

rules to counteroffer

all required;

• same subject matter with terms changed

offeree becomes offeror

rules to acceptance

all required;

• manifestation of assent to exact terms (mirror-image rule)

• communication in manner prescribed

  • if no manner prescribed, must be communicated reasonably

rules to consideration

required;

• bargained-for exchange of legal value

  • legal value induces benefit

  • promise induces detriment

rules to promissory estoppel

all required;

• clear & unambiguous promise

• promisor should reasonably expect to induce action or forbearance

• actual, reasonable, foreseeable detrimental reliance by promisee

  • injustice avoided only by enforcement of promise

rules to option contracts (common law)

all required;

• promise to keep offer open for specified period

  • either separate consideration or nominal consideration in signed writing

offeree reliance on unaccepted offer

• requires an offer

• offeree reasonably/foreseeably relies on offer before formal acceptance

offer becomes binding as option contract to however long needed to prevent injustice

rules to restitution/quasi-contract

all required;

• no promise is made

• plaintiff confers benefit to defendant

• defendant appreciates/knows of benefit

• retention of benefit without payment is unfair

• plaintiff doesn’t act officiously intermeddling/gratuitously/outside an emergency medical exception

rules to promissory restitution/material benefit rule

all required;

• defendant makes a subsequent promise in recognition of a material benefit

• value of the promise is proportionate to the material benefit

• plaintiff didn’t act gratuitously

enforceable lasts for however long needed to prevent injustice

rules triggering common law statute of frauds

contract must be written if within any category;

• marriage is being used as consideration

• year-long+ contract

  • contract can’t be performed in over a year

    • excludes ‘lifelong’ contracts (a person can die within a year)

• land contract

• executor-administration contract (answering for the debt of a deceased)

• goods over $500

• suretyship (answering for the debt of someone alive)

rules satisfying common law statute of frauds

all required;

• written memorandum/note

• signed by party pressured to uphold contract

• states the bargain’s terms with reasonable certainty

other writings can be joined if both of the following are met;

• the writings talk about the same thing

• at least one of them is signed

rules for land contracts when one party relies on an oral promise & substantially performs, even if in part (part-performance exception)

all required;

• oral contract for sale/transfer of land interest

• valuable consideration paid or possession taken

• substantial improvements made or detrimental reliance unequivocally referable to contract

rules to promissory estopped exception to SoF

all required;

• promise inducing reasonable & foreseeable detrimental reliance

• would only be just if enforced

evaluated by availability of;

• other remedies

• character of reliance

  • proof of terms

rules to UCC § 2-201 sale of goods under SoF

all required;

• contract for sale of goods, for price of $500+

• writing sufficient to indicate contract of sale

• signed by party against whom enforcement is sought

  • contains a quantity term (enforceable only up to quantity stated)

rules to contract interpretation (ambiguity determination)

all required;

• textualism (plain meaning)

  • judge determines ambiguity strictly from the four corners with no extrinsic evidence

• contextualism (modern approach)

  • judge considers writing + extrinsic context to determine ambiguity

ambiguity = term reasonably susceptible to more than one plausible meaning

rules to ambiguity resolution

• if party A & B attach same meaning, that meaning governs

• if party A knows/has reason to know B’s meaning, but B doesn’t know/have reason to know A’s, B’s meaning wins

  • if neither party knows/has reason to know the other’s meaning, court supplies reasonable term or the contract is ordered to forego it

rules to reasonable expectations doctrine (adhesion contracts)

• boilerplate contract of adhesion

• protects objectivity of buyer’s reasonable expectations

  • bizarre or oppressive terms cutting under dickered terms are unenforceable despite a formal agreement

rules to parol evidence rule (PER)

all required;

• final written expression of an agreement (integrated writing)

• complete integration

  • extrinsic evidence of prior/contemporaneous agreements that contradict/supplement is barred

• partial integration

  • contradictory evidence is barred, but consistent/additional terms are allowed

rules to PER exceptions

outside evidence allowed if there’s proof of;

• invalid contract (fraud, duress, mistake, representation)

• entitlement to equitable reformation

• collateral oral agreements supported by separate consideration

• meaning/interpretation of ambiguous terms

rules to implied terms (exclusive dealing)

• exclusive dealing contract

• implies obligation by seller to use best efforts to supply goods & buyer to use best efforts to promote sale

• reasonable notification for contracts of indefinite duration

rules to implied obligaiton of goods faith & fair dealing

• implied in every contract

• subjective honesty in fact with the conduct/transaction

• objective observance of reasonable commercial standards of fairr dealing

• prohibition injuring right of other party to receive fruits of other contract

• discretionary terms must be exercised in good faith under objective reasonableness or subjective honesty

rules to UCC express warranties

all required;

• affirmation of fact, promise, description, or sample/model made by seller

• relation to a material fact of the good

  • becomes a part of the basis of the bargain

rules to UCC implied warranty of merchantability

all required;

• sale of goods by a merchant with respect to goods of that kind

• implication that goods are fit for ORDINARY purposes for which such goods are used

rules to UCC implied warranty of fitness for particular purpose

all required;

• seller has reason to know specific/particular purpose for which the goods are required

• buyer relies on seller’s skill/judgment to select suitable goods

rules to incapacity (minors)

• minor has the right to void a contract before retaining majority or within reasonable time after

  • minor is liable for reasonable value of necessaries

• can recover full price

  • depreciation or willful/negligent damage to the goods by the minor can reduce the restitution received

  • if the minor hasn’t been overreached/unduly influenced, the minor can recover the purchase price minus compensation to the vendor

rules to incapacity (mental incompetency)

one required;

• party is so incapacitated to understand nature/consequences of transaction

• unable to act reasonably & other party knows/has reason to know

  • requires medical testimony

cognitive test:

• not understanding the trade nor controlling your actions

volitional test:

• understanding the trade but not controlling your actions

  • other party must know you can’t control your actions

rules to duress

all required;

• wrongful/improper threat by one party

  • becomes physical duress if it involves a physical threat

  • the threat itself need not be illegal to generally constitute duress

• leaves victim no reasonable alternative

  • becomes economic duress if the options are either compliance or bankruptcy

    • gives rise to a voidable (but not automatically void) contract

    • change in the market does not count

• actually induces assent of victim

rules to undue influence

• mental impairment = lack of capacity

  • (not necessarily medical; can be a mental state)

• excessive pressure/overpersuasion:

  • people representing dominant party outnumbers weak party

  • time/location of discussion is unusual/inappropriate

  • dominant party claims;

    • immediacy in face of severe consequences

    • no time to consult with legal counsel/advisors

  • weaker party in fact fails to seek legal counsel/advisors`

rules to actual fraud

all required;

• knowledge of false statements on material matters (misrepresentation)

• intent to induce reliance that ends up manifesting

• resulting damage upon relying party

rules to unconscionability

all required;

• procedural unconscionability

  • unfairness in the bargaining process

    • absence of meaningful choice or hidden terms

• substantive unconscionability

  • one-sided or oppressive terms in a contract

rules to public policy defense

all required;

• contract term or performance violates statute, judicial, or established public interest

  • court balances interest in enforcing promise against public policy harm

rules to mutual mistake

all required;

• mistake by both parties during formation as to a basic, material assumption on which the contract was made

• voidable by adversely affectd party

  • unless that party bore the risk fo the mistake

rules to unilateral mistake

all required;

• mistake by one party as to a basic material assumption

• either;

  • that party caused the risk

  • enforcement would be unconscionable

• adversely affected party did not bear the risk

rules to impracticability & frustration of purpose

impracticability: occurrence of an event that makes performance objectively impracticable

frustration of purpose: principal purpose of the contract is substantially frustrated

• non-occurrence of event is a basic assumption on which the contract is formed

contractual modification under common law

new consideration is required, under the pre-existing duty rule

contractual modification under UCC

no consideration required if the contract is made in good faith

rules to express condtions

all required:

• strict compliance

• event not certain to occur which must occur before performance becomes due

non-occurrence excuses performance duty unless excused by either;

• waiver

• forfeiture

• bad faith

material breach

• party is deprived of essential benefit

non-breaching party’s performance is excused

allows immediate claim for total breach

substantial performance

• minor breach

obligee must perform but can deduct damages

constructive condition of exchange

performance by one party is conditioned on performance by the other

rules to anticipatory repudiation

all required;

• unequivocal statement or voluntary act

• indicates party will commit material breach

non-repudiating party may:

• suspend performance

• treat contract as breached

• seek immediate remedies

repudiating party may retract repudiation prior to either:

• change of position

• acceptance of repudiation

rules to reliance damages

• reimburses out-of-pocket expenses incurred in reliance on contract

• places plaintiff in same position as before contract was made

  • reduced by a loss defendant proves plaintiff would have suffered had the contract been performed

rules to restitutionary damages

• restores calue of benefit conferred on defendant by plaintiff

• prevents unjust enrichment of breaching party

rules to specific performance

• equitable remedy ordering breaching party to perform promised act

• a legal remedy is inadequate

rules to agreed/liquidates damages

all required;

• contractual term stipulated upon breach

• enforceable if reasonable in light of both;

  • anticipated/actual harm

  • difficulty of proving loss

• unenforceable as a penalty if unreasonable/punitive