Contracts Fall Outline

Contracts Outline

Introduction: Contract Law

Quasi-Contract vs. Implied in Fact Contract

No intent to promise 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. §2-105.

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

1. Meaningful choice usually negated by gross inequality of bargaining power.

2. 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).

1. 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.

2. Standards of Performance

Perfect Tender-

Applicable 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 Performance-

Typically 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.

3. 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 Circumstances-

Generally, contract law treats the claim of changed circumstances the same as claims for...

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