cheat sheet

• Essential Elements of a Contract:

  • Mutual Assent: There must be a clear offer and acceptance. This means one party makes an offer, and the other party unequivocally agrees to the terms. The offer and acceptance must mirror each other (mirror image rule).

  • Consideration: Something of value must be exchanged between the parties. This can be a promise, an act, or forbearance. Consideration distinguishes a contract from a gift.

  • Legality of Object and Performance: The purpose and subject matter of the contract must be legal. A contract to commit an illegal act is void and unenforceable.

  • Capacity: Parties must have the legal capacity to enter into a contract. This generally means they are of sound mind, of legal age, and not under duress or undue influence.

Express vs. Implied Contracts

• Express Contracts: Terms are explicitly stated, either written or oral. These contracts leave no room for doubt, as the terms are clearly defined.

• Implied-in-Fact Contracts: Based on conduct, indicating an intention to create a contract. Requires:

  • Plaintiff furnished a service or product: The plaintiff provided something of value to the defendant.

  • Plaintiff expects compensation: The plaintiff reasonably expected to be paid for the service or product.

  • Defendant had the opportunity to reject the service/product but did not: The defendant knew or should have known that the plaintiff expected compensation and did not object.

Damages and Remedies

• Purpose of Contract Remedies: To compensate the aggrieved party, not to penalize the breaching party (no punitive damages). The goal is to make the non-breaching party whole.

  • To put the aggrieved party in the position they would have been in if the contract had been performed. This is often achieved through monetary damages or equitable remedies.

Damages

• Damages must be:

  • Proximate: The act or omission plays a substantial part in causing the damages. There must be a direct link between the breach and the damages suffered.

  • Foreseeable: A reasonable person would be able to foresee the damages as a result of the breach at the time the contract was formed. This encourages parties to consider potential risks when entering into a contract.

  • Reasonably Certain: Damages must be proved, not merely speculated upon. The non-breaching party must provide sufficient evidence to establish the amount of damages.

Quantum Meruit

• Definition: "As much as he deserves."

• Application: Reasonable value of services provided. Used when there is no enforceable contract but one party has provided a service to another.

• Determination: Determined by the court based on evidence of the value of the services.

Equitable Contract Remedies

• Available when a remedy at law (damages) is insufficient to make the aggrieved party whole.

• Types:

  1. Specific Performance: Forces performance of the contract. It is used when the subject matter of the contract is unique and irreplaceable.

     • Not available for non-unique personal property (damages can be quantified). If the item can be easily replaced with a similar one, damages are adequate.

     • Not available for personal services agreements (13th Amendment). Forcing someone to perform personal services would violate the prohibition against involuntary servitude.

     • Can be used for unique items like specific paintings or land, where monetary compensation would not suffice.

  2. Injunction: A court order that either compels or restrains a party from doing a specific act.

     • Example: Stop a union strike or prevent illegal competition, preventing continued harm.

  3. Restitution: Returns the consideration to the party, placing them in the position they would have been in if no contract existed. It aims to undo any unjust enrichment.

     • Available in cases of:

       • Total breach: One party fails to perform their contractual obligations entirely.

       • Repudiation (I'm not going to perform): One party indicates that they will not fulfill their obligations under the contract.

       • Minor avoids a contract: A minor has the right to disaffirm a contract, and restitution restores them to their original position.

       • Fraud in procuring a contract: If a contract was induced by fraud, restitution can restore the defrauded party.

  4. Reformation: Court rewrites the contract to align with the parties' original intent. This is used when there is clear evidence that the contract does not reflect what the parties initially agreed upon.

Offer and Acceptance

• Definition of an Offer: A manifestation of willingness to enter into a bargain that justifies another person in understanding that their assent will conclude the bargain.

  • Communication: The offer must be communicated to the offeree.

  • Intent: The offeror must intend to be bound by the offer.

  • Definiteness: The terms of the offer must be clear and certain.

Communication of an Offer

• The offer must be communicated to a specific offeree by an authorized person. This ensures that the offeree is aware of the offer and its terms.

Duration of Offers

• If no stated time, an offer remains open for a reasonable time under the circumstances. What is "reasonable" depends on the nature of the contract, market conditions, and industry practices.

Revocation of Offers

• Offers can be revoked at any time before acceptance unless the offer is irrevocable. This is a fundamental principle of contract law.

• Revocation requires notice or knowledge of revocation received by the offeree. The offeree must be aware that the offer has been withdrawn.

• Revocation can be express or implied through conduct, effective upon receipt by the offeree, terminating the power to accept unless it's an irrevocable offer. Actions that clearly indicate the offeror no longer intends to be bound can serve as implied revocation.

UCC 2-104 Definition of a Merchant

• A person who:

  • Deals in the kind of goods involved in the transaction. This indicates a professional level of familiarity with the goods.

  • Holds themselves out as having knowledge or skill about the practices or goods involved. They represent themselves as experts in the particular type of goods.

  • Uses an agent, broker, or intermediary with such knowledge or skill. They rely on others with specialized expertise.

UCC § 2-205 - Firm Offers

• Applies to merchants.

• An offer by a merchant to buy or sell goods in a signed writing, assuring it will be held open, is not revocable for lack of consideration. This promotes certainty and reliability in commercial transactions.

• The period of irrevocability is the time stated or a reasonable time, but no more than three months. This limit ensures that offers do not remain open indefinitely.

• Any such term of assurance on a form supplied by the offeree must be separately signed by the offeror. This provision protects offerors from inadvertently agreeing to firm offer terms.

NY GOL § 5-1109 - Written Irrevocable Offer (Non-Merchants)

• Applies to non-merchants in New York.

• A firm offer made in a writing signed by the offeror or agent, stating it is irrevocable for a set period or time, is binding. This provides non-merchants with a way to make credible, binding offers.

• If the writing states the offer is irrevocable but doesn't specify a period, it's irrevocable for a reasonable time. The duration of "reasonable time" depends on the circumstances.

• Applies to offers for:

  • Real property

  • Services

  • Buying or selling goods if not made by a merchant

• Must be in writing, signed, and contain "firm offer" language to be enforceable.

Firm Offer Language

• All firm offers (merchants and non-merchants) must be in writing, signed, and give affirmative assurance that the offer will be held open.

  • Examples: "This is a 'firm offer,'" "Will remain open," "Will not be withdrawn," "Is irrevocable."

• Non-qualifying Language:

  • "This offer will expire on…"

  • "You must reply by…"

  • "If I do not hear from you by…" These phrases do not create a firm offer; they merely set a deadline.

Inquiries

• Do not indicate an unwillingness to accept the terms of the offer. They seek clarification or explore alternative terms without rejecting the original offer.

• Merely propose new or different terms. These are not counteroffers but rather attempts to negotiate.

• Do not terminate the offer. The original offer remains open for acceptance.

• Often phrased as a question (e.g., "Would you consider…?