CONTRACTS_FINAL PREP

MASTER CONTRACTS FINAL STUDY OUTLINE

I. Governing Law

• Always identify this first.

  • Common Law

  • Applies to services, real estate, employment, and most non-goods contracts.

  • UCC Article 2 (Uniform Commercial Code)

  • Applies to transactions in goods.

  • Mixed Contracts

  • Use the predominant purpose test to determine which set of rules applies.

• Why This Matters

  • Governing law controls formation rules, performance standards, and remedies.

II. Contract Formation

A. Mutual Assent

• Always ask: Did the parties objectively manifest agreement?

  • Offer

  • A definite promise that invites acceptance; look for specificity regarding:

    • Subject matter

    • Price

    • Quantity

    • Parties

  • Termination of an Offer

  • Revocation: Offeror can withdraw the offer prior to acceptance.

  • Rejection: Offeree can decline the offer.

  • Counteroffer: Responding with different terms constitutes a rejection of the original offer.

  • Lapse of Time: Offer expires after a specified time or a reasonable period.

  • Death or Incapacity: Termination occurs upon the death or incapacity of the offeror.

  • Acceptance

  • Must mirror the offer under common law. Under the UCC, additional or different terms may still create a contract.

  • Mailbox Rule

  • Acceptance is effective when dispatched, unless the offer specifies otherwise.

B. Consideration

• Defined as a bargained-for exchange of legal value.

  • What Counts

  • Promises, acts, or forbearance (a promise not to act).

  • What Does Not Count

  • Past consideration.

  • Moral obligation alone.

• Modification

  • Common law requires new consideration for modifications.

  • UCC allows good faith modifications without new consideration.

C. Defenses to Formation

• Fraud and Misrepresentation

  • Differentiate between opinion and fact.

  • Material Misstatement: A false statement that induces another to enter the contract.

  • Justifiable Reliance: The injured party must have relied on the misstatement.

• Mistake

  • Mutual Mistake of Material Fact: May void the contract if both parties were mistaken.

  • Unilateral Mistake: Rarely voids a contract.

• Ambiguity

  • If terms are reasonably susceptible to more than one meaning, this can impact the contract's enforceability.

• Parol Evidence Rule

  • Applies to integrated agreements, barring prior or contemporaneous evidence that contradicts the written agreement.

  • Exceptions: Include ambiguity, fraud, mistake, or conditions precedent.

• Key Cases

  • Raffles v Wichelhaus

  • Pacific Gas v Thomas Drayage

  • Mitchill v Lath

III. Conditions of Performance

• Conditions determine when a duty becomes enforceable.

A. Types by Timing

• Condition Precedent

  • Must occur before the duty arises.

• Condition Concurrent

  • Duties occur simultaneously.

• Condition Subsequent

  • Terminates an existing duty.

B. How Conditions Are Created

• Express Conditions

  • Explicitly stated and require strict compliance.

• Implied-in-Fact Conditions

  • Inferred from the language and circumstances of the contract; also require strict compliance.

• Constructive Conditions

  • Implied by law from the sequence of performance; require substantial performance.

• Three Constructive Condition Scenarios

  • One performance precedes another.

  • One performance is longer than the other.

  • Performances occur simultaneously.

• Key Cases

  • Stewart v Newbury

  • Jacob & Youngs v Kent

IV. Performance and Breach

• Substantial Performance

  • Minor defects do not excuse payment; it is measured by the purpose of the contract and fairness.

• Material Breach

  • Defeats the essential purpose of the contract and excuses the other party’s performance.

• Perfect Tender Rule (UCC)

  • Single delivery of goods must conform exactly to the contract. The buyer may reject any nonconformity, regardless of its significance.

• Divisibility

  • A contract may be broken into units of performance, allowing for partial recovery even if full performance fails.

V. Excuse of Conditions

• This is a critical area for exam points.

A. Voluntary Excuse

• Waiver

  • Intentional relinquishment of a known right; often a question of fact.

• Election

  • Waiver that occurs after a condition has already failed and generally cannot be withdrawn. Reliance is not required.

• Estoppel

  • Waiver plus reliance by the other party; condition cannot be reinstated.

• Key Case

  • Clark v West

B. Involuntary Excuse

• Failure to Cooperate

  • Passive interference; a party fails to take reasonable steps required for a condition.

• Wrongful Prevention

  • Active interference; a party causes the condition to fail.

• Anticipatory Repudiation

  • Clear indication of intent not to perform before performance is due; this excuses conditions and accelerates breach.

• Adequate Assurances

  • Allows a party to demand assurance when performance seems doubtful; failure to respond equals repudiation.

• Key Cases

  • Market Street Associates v Frey

  • Cantrell-Waind v Guillaume Motorsports

VI. Quasi-Contract and Restitution

• Used when contract recovery is unavailable.

• Traditional Rule

  • Breaching party could not recover.

• Modern Rule

  • Breaching party may recover the benefit conferred minus damages caused.

• Key Case

  • Lancellotti v Thomas

VII. Remedies Overview

• You likely will not go into depth here, but understand the framework.

• Expectation Damages

  • Aim to put the party where they would have been if the contract had been performed.

• Reliance Damages

  • Aim to return the party to the position they were in before the contract was made.

• Restitution

  • Prevents unjust enrichment by recovering benefits conferred.

VIII. Exam Attack Strategy

1. Identify governing law immediately.

2. Spot formation issues first, even if performance issues dominate.

3. For performance questions, ask:

   • Is there a condition?

   • How was it created?

   • Was it fulfilled or excused?

4. When facts appear unfair, look for:

   • Wrongful prevention

   • Waiver

   • Estoppel

   • Good faith

5. Never discuss an issue without a factual trigger.

6. Write in a clean IRAC (Issue, Rule, Application, Conclusion) format, but focus most space on Analysis.