contracts i - maggs - fall 2003_4

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Contracts I - Maggs - Fall 2003_4

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    I. CLAIMSA. Breach of Contract

    1. You made a promise and didnt keep it! (E.g. Mills, Feinberg)2. Because of implied term of good faith or reasonable efforts? (Channel, 205)

    a. Was there an implied or express contract to negotiate to completion?B. Claim for compensation

    1. Could be either contract or tort.2. Remember and compare with Galligan, Klar, OCallaghan, Henningsen

    C. Rescission (detailed below under defenses)1. Unilateral mistake if near unconscionable; 153

    a. D may say bare non-disclosure and UM isnt accepted in this jd2. Age3. Non-disclosure in confidential relations (not at arms length), 161(d)4. Declaratory judgment5. Fraudulent or Material Misrepresentation6. Duress7. Active concealment8. Induced by half-truth9. Mutual mistake with material effect

    D. Restitution / Unjust Enrichment1. Ask for any payment back

    II. DEFENSESA. No Breach

    1. Construe terms like strict construction - maybe there was no breach.2. Didnt breach an implied term of

    a. Reasonable efforts(1) Consider if there was flat fee compensation (license?)

    b. Good faith3. No warranty4. No breach of implied warranty

    B. No Contract1. Cancelled

    a. Subsequent settlement contract?b. Termination clause

    2. Preliminary Negotiations3. Failed Negotiations4. Signature wasnt required - indication there was no K.5. Exculpation Clause6. No Refund Clause7. You signed a waiver

    C. No Promise or Implied PromiseD. Promise was Illusory

    1. Didnt impose an express or implied commitment. (Strong) 2. Termination clause

    a. If terminable at-will, then promise wont be illusory3. Reasonable efforts? (Lady Duff Gordon)4. Good faith? Satisfactory was objective phrase. (Mattei)5. Of a group of alternatives, one was invalid, thus making promise illusory

    E. You promised to waive claims (Fiege)1. Or, my promise to do so is unenforceable because you didnt have good faith reasonable

    belief in possible validity of the claim. (Fiege)

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    F. No Assent to be bound1. Either P or reasonable person would have to know. (Zehmer, 16)2. Did they indicate they wanted to be subject to contractual liability?

    a. What was the context?b. Was it a contest?c. Was it a simple promise between parent and child / in family?d. A promise only to help out?e. Mutual favors?

    G. Indefinite, 331. Are there implied limitations?2. Would a court be able to determine if breach? Adequate remedy? (Varney & 33)3. Ambiguous terms construed against drafter (Toys, 206)4. May require less definiteness if promissory estoppel. (Hoffman)

    H. No Basis for Enforcement (see specs below)1. No consideration2. No reliance3. Moral Obligation

    I. No Consideration1. No Promise2. Illusory Promise (Sheffield)3. Unconscionably inadequate (evidence of sham)

    a. Simple difference in value is not enough and wont be questioned, 794. Conditional promise to make a gift (Kirksey)5. No consideration for modification (see below) (Alaska)6. Performance was previously given (Feinberg)7. Performance after was not in exchange (Feinberg, but Central Adj.)8. Sham

    J. Moral Obligation1. Promise wasnt binding (defense to material benefit) (Mills)2. Not one of the special kinds the court will enforce, 82,

    a. Statute of Limitationsb. Bankruptcy, 83c. Infancy, 14

    3. Material benefit conferred (Webb, 86(1)), but not accepted in this jd (Dementas).K. Promissory Estoppel / Reliance, 90

    1. Unreasonable act2. Unforeseeable act3. No Promise4. No Action5. Not induced by (Feinberg)6. No injustice (Feinberg, Rickets, Cohen)7. Reliance and Land under S.o.F.

    L. No Bargain / Not bargained-for1. Past services (Feinberg)2. Not actually in exchange (past or future) (Feinberg, Strong, Central Adj.)3. Conditional Promise to Make a Gift (Kirksey)4. Sham / excuse (not really bargained for)5. Reward (awareness?)6. Charitable Gift (Allegheny)

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    7. Benefit / Detriment (clue about whether there is a bargain) (Hamer)8. Gratuitous? An offer to help?9. Incidental exchange only

    M. No Offer1. There was no offer

    a. Not less than, etc. (Owen & 26)b. Preliminary Neg. not binding, unlesss specific language (Harvey, Fairmt & 24)

    2. Advertisement (Lefkowitz)3. Lapse - either in the time specified or after reasonable time. 414. Revocation, 36(1)(c)

    a. Direct or indirect (Dickinson) (42, 43)b. Option Contract? (Dickinson) (45)c. Reliance? Is that a valid basis in this jd? (Drennan - implied option K)d. If condition of acceptance not met, offerees power of acceptance ends, 36(2)

    5. Rejection and Counteroffer (M&StL Ry; 38, 39); Mirror Image Rule, 59a. Different or additional terms? (M&StL Ry)

    6. Death - there was no option contract to keep it open. (Earle, 48)N. No Acceptance, 30 (form invited); 32

    1. No complete performance as invited (Carlill)2. Offeree didnt make explicit or implicit promise to completely perform, as invited

    a. Perhaps they didnt start peforming (White, Ever-Tite, Allied)3. Offeree accepted with promise in uninvited manner

    a. Consider Mailbox Rule: accept. on dispatch unless K says no, or option K, 63b. Was the different manner allowable? (Allied, Intl Filter, 56)

    4. Offeror could not insist silence would be acceptance, 69a. Prior course of dealing? (Hobbs)b. Silence is not OK if at-will relationshipc. Only OK when offeree takes servs, silence specif. allowed and offeree intends

    acceptance, course of dealing, offeree uses goods, 695. Offer required return promise; but notice of acceptance was not provided and I didnt

    waive it (White, Ever-Tite, Intl Filter, 56)6. Offer required performance, but I specifically requested notice (Carlill, 54(1))7. Lack of adequate notice (as warning)

    a. Consider whether this thing (shipping form/instructions) usually has contractualterms

    O. Modification, 891. And the Pre-Existing Duty Rule (Alaska)2. And lack of consideration for it.

    a. Or, there didnt need to be consideration b/c fair & reasonable in light of changedcircumstances. Was the change enough? (Watkins)

    3. Previous contract was cancelled. (Schwartzreich)4. Was there an oral contract first that was modified?

    P. Inducement (as a defense or basis for rescission)1. Duress, 175(1)

    a. Threatened to breach in bad faith?b. Threatened to bring a claim (in which they had bad faith?)c. Threats of crime or tort? 176

    2. Pre-Existing Duty Rule (Alaska, 73)a. Modification to Contract

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    b. Was not fair and reasonable and is unenforceablec. Was no/inadequate additional considerationd. Not applicable if previous contract is voided (Schwartzreich)

    3. Fraudulent or Material Misrepresentation, 164(1), 162a. D responds it was only a belief or opinion!

    4. Active Concealment5. Induced by half-truth and misleading (Kannavos)6. Induced by non-disclosure in confidential or arms length relationship, 161(d)7. Non-Disclosure: I wasnt required to disclose the facts I concealed. (Swinton)8. Mutual Mistake (Sherwood, Boynton, Stees; 152)

    a. It wasnt mutual mistake but was just poor prediction (Stees, Boynton)b. You, the promisor, bore the risk of mistake (154(c))c. It wasnt mutual, I knew I was ripping you off.d. The assumption was fundamental to the transactione. There was material effect (couldnt be easily fixed)f. Wouldnt benefit society since mistake was mutual

    9. Unilateral Mistake of Promisor (Swinton)a. Was it unconscionable? 153. Did promisor know of mistake or cause it?b. Is that recognized in this jd?c. Knowledge is property

    10. Unconscionability, 20811. Exculpation Clause (Galligan, 206)

    Q. Defenses to Restitution / Unjust Enrichment1. There has been no unjust enrichment, Restit. 12. No expectation of compensation (probably a volunteer)

    a. Did they do it for personal benefit, perhaps because they enjoyed it?3. Officious intermeddler4. Volunteer, 575. Alternative Remedy (Callano, Restit. 110)6. Reimbursed by infant if subject matter available, or if necessaries (Kiefer)

    R. Statutes of Frauds1. Falls within because of MYLEGS reasons

    a. Marriage, 124b. Meets definition of suretyship (Langman)c. Could NOT be complete performed within a year (Coen, 130)

    (1) Versus simply being terminable within a year.2. There was no writing3. Writing lacks essential terms (price, quantity, etc.)4. D did not sign the writing, or manifest intent to assent to writing5. Ps reliance (&land) not recognized in jd (action beside purchase price?) (Johnson, 129)6. Ps reliance and injustice not recognized in this jd. (Monarco, 139)

    S. Status (as defense or basis for rescission), 15(1)(a)1. Infants can only make voidable contracts (Kiefer, 14)2. No Capacity

    a. Traditional: they could understand and appreciate nature (Cundick)b. Modern: acted unreasonably but had no notice (Ortelere, 15)c. Is there any testimony or evidence? Was behavior reasonable? Counsel?

    T. Substance (as defense or basis for rescission)1. Enforcement would violate public policy; or that public policy you mention isnt

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    recognized in this state. (OCallaghan, Henningsen, Black, 178(1))a. Promise to commit crime or tort?

    2. Enforcement would be unconscionablea. Did parties understand the nature?

    U. Form Contracts (Adhesion)1. Didnt breach the promise2. Not liable because of exculpation clause3. You had adequate notice (lawyer involved?) (Klar, 211(1))

    a. Assenting to agmt knowing of exculpation clause precludes recovery based oninadequate notice, 211

    4. Strict construction favors me (Galligan, 206)a. Even after looking at it in light favorable to you

    5. Public policy (Henningsen, OCallaghan, 178)a. This is not one of the traditional public policy argumentsb. Consider if there is a monopolyc. Should not be able to contract away all liability

    6. Limits dont shock the conscience, isnt unconscionable, 208V. Specific Performance Defenses, 359

    1. Not possible because property has already been conveyed.2. Damages would be adequate3. P could have found substitute4. Bargain / terms unfair or inequitable at time it was made (McKinnon, Tuckwiller; 364)

    a. Hardship?b. Grossly inadequate?c. Induced by mistake?

    5. Consideration was inadequate6. No harm proven (Collatz)7. Unfairness of exchange8. Defense to request for injunction

    a. Difficulty in proving damages (360 - certainty)b. Damages would be adequate, 359

    W. Expectation Damages Defenses1. Avoidability (Rockingham, 350)

    a. Overstated other loss or loss in value (b/c no notice in Hadley)b. Understated costs avoided or other loss avoided (zero in Sullivan since paid all)c. Substitute comparable and not unreasonable or humiliating (Parker)

    2. Cost to remedy (loss in value) dispropor. to value to P (Jacob & Youngs, Peevyhouse)a. 348(2): If breach results in unfinished constr. and loss in value cant be proven

    w/reasonable certainty, diminution of mkt price or cost to remedy is awarded 3. Unforeseeable (in reasonable course of events? No notice of unusual.) (Hadley, 351)4. Uncertain (Collatz, Fera, 352)

    a. Was any harm proven?b. What about expert testimony or evidence of past profits?c. 348(3): If breach conditioned on fortuitous event which is uncertain to have

    occurred, recovery of damages is based on value of right.X. Liquidation Damages Defenses, 356

    1. Unreasonably large in relation to actual and anticipated damages (Gustafson)a. Penalty in light of actual or anticipated circumstancesb. Appears to deter violations rather than compensatec. Vastly disproportionate to market rate

    2. Not unconscionably small (Henningson)

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    a. D argues it should be small (limiting liability) to keep price down.b. Did P have opportunity to declare more and fail to do so?

    3. No refund clause specified4. No consideration

    a. Liquidated damages specification was given after initial contract; a provision madeafter breach, but for which no consideration was given (2000Exam, #5)

    Y. Nominal Damages, 346(2)1. Sure, take em.

    III. RESPONSES (most common)A. Public policyB. Pre-Existing Duty RuleC. No terminationD. Silence was AcceptanceE. Option contractF. Mailbox RuleG. Lack of adequate noticeH. These liquidated damages would be penaltyI. Mutual mistakeJ. DuressK. Strict ConstructionL. Dominant purpose of the contractM. No AcceptanceN. There was new considerationO. Modern modification ruleP. UnconscionabilityQ. No considerationR. Equitably estopped from denying existence of sufficient signed writing, b/c D asserted there was

    IV. REMEDIESA. Name First and Second Choices!B. DamagesC. Specific performanceD. InjunctionE. Cost to remedyF. Reliance DamagesG. Alternative DamagesH. Refund (consider RESTITUTION)I. Liquidated DamagesJ. RestitutionK. Expectation DamagesL. Nominal Damages

    V. REMEDY LIMITATIONS (besides those above)A. Unfairness of exchangeB. Unavailability of cost to remedyC. Valuation of propertyD. JusticeE. Penalty

    VI. ADDITIONALA. Claims of weird parties?B. Retainers?C. Reservation of rightsD. Indefinite period of agency

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