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Contracts Fall Outline

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This is an extract of our Contracts Fall document, which we sell as part of our Contract Law Outlines collection written by the top tier of Oklahoma City University School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Contract Law Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Contracts Outline

Introduction: Contract Law Quasi-Contract


No intent to promise

Implied in Fact Contract Intent to Promise

Quasi-Contract- (1) unjust enrichment, appreciation of the benefit, received a benefit. Instant Retraction- if a promise otherwise meets the criteria for enforceability, the courts will generally pay no attention to how soon a change of heart is announced.

The UCC (is binding since adopted by all 50 states) Goods- mean all things which are movable at the time of identification to the contract for sale. SS2-105.

The Restatements (non-binding unless adopted) Contract- a promise of set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Promise- a manifestation of intention to act or refrain from acting in a specified way; can be made in words, oral, or written, or may be inferred wholly or partly from conduct. Promisor- person making the promise Promisee- person who the promise is made to. Beneficiary- person who will benefit from the promise other than the promise Manifestation of Intention- the external expression of intentions as distinguished from the undisclosed intention. THIS IS THE ONLY ONE THAT COUNTS.

Limitations on Enforcement: Unconscionability (Williams v. Walker Thomas Furniture Co.) Ideally, a legally binding commitment should always be the product of a voluntary, rational, and informed choice by the promisor. Unconscionability- generally recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. (court question of fact not jury question)

1. Absence of Meaningful Choice Related to reality of consent or quality of consent=Procedural Unconscionability Requires a contextual analysis, circumstance analysis a) Meaningful choice usually negated by gross inequality of bargaining power. b) Manner in which contract entered into: (1) Obvious education or lack of (2) Reasonable opportunity to understand terms of contract (3) Hidden terms in maze of fine print (4) Minimized by deceptive sales practices

2. Terms Unreasonably Favorable to Other Party Relates to notion of fairness= Substantive Unconscionability Unconscionability under the UCC(1) Court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (2) When is ti claimed or appears that a contract or any clause is unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid court in making determination. The section is intended to make possible for courts to police explicitly against contracts or clauses found to be unconscionable.

Performance of The Obligation

1. Introduction to the Idiosyncratic ("unreasonable") Bargainer Idiosyncratic Bargainer must make intention clear, where it is not, it will be presumed to hold in contemplation the reasonable and probable.

Example- for material specifications must be clear as to why specifying. (want for certain pipe to be used, and only that pipe, not substitutions, so need address why want that pipe).

Jacobs & Young v. Kent (Reading pipe)(pipe problems in building house, didn't use certain type pipe)(was not a material breach and the specification not clear in contract, so only entitled to damage of breach which would be difference in pipe value (or zero). a) Conditions and Dependent Promises Some promises are dependent- my fulfilling my promise to you is dependent upon you fulfilling your promise to me.

Some are so independent they can never be construed as conditions of one another.

When a departure from a condition is significant, it may be viewed as independent &
collateral to a contract.

b) Standards of Performance Perfect TenderApplicable to sales of goods where buyer of goods can 'reject' the goods and avoid having to pay for them, for any defect, however minor. Gives the buyer a clear and definitive yardstick by which to measure the seller's performance.

Substantial PerformanceTypically applies to construction + service contracts, and permits party to withhold his own performance only when the defect materially impairs the essence of what was contracted for.

c) Default Rules In case of construction contracts, the parties will be presumed to have agreed to measure the contractor's performance by the standard of "substantial performance" unless otherwise EXPRESSLY noted differently.

When a defect is trivial and innocent, the law doesn't nullify the contract, but restricts the remedy to damages, or the value of the difference.

2. Allocating Risks (dealing with unanticipated difficultly of performance) When contract for the future, you try to negotiate for foreseeable risks, but also must anticipate unforeseen. Try to contract around the risks.

Stees v. Leonard (house kept collapsing from soft ground) Absent any provision excusing the contractor from completing the project for any specified reason, he is in breach if he does not complete the project. He could have provided differently. Was not an act of god. He was prof. and should have checked site and plans. No impossible to finish.

The courts will gap fill any term that was lacking in the parties' express promise. (Allocated Risks by Default)

Spearin Doctrine (government contracting specifications)

If contractor is bound to build according to plans and specifications prepared by the owner, the contractor is not responsible for the consequences of defects in the plans and specifications. But the contractor is still required to check the site, check the plans, and assume responsibility for work until completion and acceptance.

3. Excuses for non-performance Changed CircumstancesGenerally, contract law treats the claim of changed circumstances the same as claims for unanticipated costs: the foreseeable risks associated w/ performance are assigned by default to the promisor and thus non-performance will not be excuses.

Some exceptions: Taylor v. Caldwell (hall burned down so could not perform concert; contract was dependent on that particular hall so both parties excused from performance of contract).

Default Rule- In contracts in which performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance, as long as perishing not caused by fault of contractor.

Remedies for Nonperformance

1. The Compensation Puzzle

Expectation Interest: Interest in having the benefit of his bargain by being put in as good a position as he would have been had the contract been performed. (may be measure by market value)

Reliance Interest: Interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as would have been had the contract not been made.

Restitution Interest: Interest in having restored to him any benefit that he has conferred on other party. (payment, furnished services)

Usually when court concluded that there has been a breach of contract, it enforces the broken promise by protecting the expectation that the injured party had when he made the contract.

Promisee may have changed his position in reliance on the contract, (incurred expenses preparing to perform, performing, or in foregoing opportunities to make other contracts) so court may recognize claim on reliance instead of expectation.

Court may grant relief to prevent unjust enrichment. If party has changed position in reliance and conferred a benefit to other party, court may require other party also give back the benefit received.

2. Specific Performance Specific Performance vs. Damages is usually only relevant when the market alternatives don't provide good substitutes for performance.

Under UCC-(jet plane not being sold per contract, could have been covered so no specific performance)

1) Specific performance may be decreed where the goods are unique or in other proper circumstances (cannot cover) 2) Decree for specific performance may include such terms and conditions as to payment of the price, damages, or relief deemed just. 3) Buyer has a right of replevin for goods indentified to the contract if after reasonable effort he is unable to effect cover for such goods or if circumstances reasonably indicate that such an effort will be unavailing.

Enforcing Promises

1. Consideration Doctrine (bargain theory) a) Bargain v. Gift For a bargain-for exchange, the promisor gets something in exchange for (as the price of) his or her promise.

Party seeking enforcement must show that the parties agreed to the exchange.

The promisor requires something from the promise in return for the promise.

As simple gift promise (I'll give you this) is not supported by consideration and is therefore unenforceable (unless gift delivered).

To make the promise enforceable, the promisor must "bargain for" or request the consideration supplied by the promise in exchange for the promise.

Ex. A promises B new clothes if B walks to the corner store a few blocks away. This is only enforceable if A bargained for the walk as the consideration. The walk was the price of the promise for the new clothes. The promise must actually induce the promise to deliver that consideration which was bargained for.

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