Damages
When are damages awarded? What are the two types of breaches where damages are awarded?
Damages are awarded as a contract remedy to make parties whole in the event of a breach of contract.
Breach by non-performance: occurs when one party does not perform any contract obligation.
Breach by defective performance: Occurs when a party does not correctly perform the contract obligations.
what is parol evidence rule
governs a parties ability to admit extrinsic evidence in clarifying a contract. The PER only applies to prior and contemporaneous oral agreements and prior written agreements, for which there was no separate consideration. If the PER does not apply, the evidence is admissible.
Duress/ Undue influence
physical or economic wrongful act that precludes the free will choice to enter into a meaningful contract
undue: when one party with a greater power imbalance uses excessive persuasion to induce the vulnerable party to enter into the contract
To form a valid contract you must have?
Mutual assent and consideration
mutual assent is offer and acceptance
consideration is a bargain for exchange (quid pro quo)
an event not certain to occur, which must occur before performance under a contract becomes due.
What is COR? What is DIV? When are they appropriate?
Cost of repair: awarded for breach by defective performance by determining the cost of repair unless COR is grossly disproportionate to the Diminution of value (DIV)
If PER applies courts look to?
what are two degrees of integration?
Whether the agreement was integrated and the degree of integration
Partial: some terms left unfinalized
Completely: when all terms are therein are finalized
contracts governed by the SOF
Marriage, Suretyships, One year, UCC- sale of goods $500 or more, Real property
Special offers are?
Generally not offers unless includes essential and material terms
Ads, LOI, Request for bids, Price quotes
Firm offers: between merchants, signed writing, irrevocable for time stated if no time stated reasonable time (3 months).
what are the two types of conditions?
Express conditions: conditions actually stated as terms of the parties contract that communicates an intent to make further performance dependant on the occurrence of the event.
Constructive conditions: conditions imposed by the courts in connection with bilateral contracts to achieve justice between the parties.
What are reliance damages?
What are the two types of reliance damages?
Reliance damages include the cost incurred when preparing to perform or performing a contract
Essential damages: include the cost of preparing to perform or performing a contract
Incidental damages: include all other costs suffered in reliance on a contract or in reliance on a breach
What is the Williston test?
Courts look at the four corners of the agreement to determine whether the parties intended a complete integration and if it was natural to omit the term- how the contract is on its face (merger clause)
False statement of fact, intention, or opinion is material to the contract.
Made with a requisite state of mind.
False statement of F,O,I was justifiable and actually relied upon.
Caused damage
What are the manners of acceptance?
Unilateral: accept by starting performance. mere prep is not enough but once performance has begun can not be revoked for a reasonable time for completion.
Bilateral: Accept by promising to perform. If not states courts will assume Bilateral
three types of express conditions?
pay when paid clauses
what are consequential damages?
include the direct losses resulting from a breach of contract
what is the Corbin test?
Courts look at all evidence of the agreement, the terms, and the surrounding circumstances (including the Hatley factors) to determine if the parties intended a complete integration
When do you have a duty to disclose?
1. fact was fundamental
2. party learns past representation is now untrue
3. parties in a confidential or fiduciary relationship
4. knows that the other party was mistaken as to the context of the writing
5. if the party makes a partial disclosure that is misleading by omission
What is pre-existing duty?
no new consideration to do something one is already legally obligated to do.
UNLESS; genuine new duties, tear up contract and make a new one, honest dispute, contract not fully performed, unforeseen circumstances.
Three limitations on damages?
Avoidability: avoided the loss without undue risk, burden, or humiliation if the injured party unsuccessfully attempted to avoid loss they can still recover
Foreseeability: courts will limit the recovery of damages if (1) injured parties loss was foreseeable, in the natural flow or (2) if the breaching party did not have reason to foresee that loss
Certainty: courts will limit the recovery of damages if the loss cannot be proved with reasonable certainty
If the agreement is completely integrated courts...?
If the agreement is partially integrated courts...?
courts determine whether the term is inconsistent and contradictory by using the four corners and PG&E tests.
courts determine whether the term is inconsistent with or contradictory to the writing by seeing if the term is in harmony with the writing and if the term completely negates any other term of the writing. If the term is in harmony with the writing or does not negate any terms of the writing, then the evidence is admissible.
Mutual: both parties mistaken about a basic assumption, that has a material effect on the parties contractual exchange.
Unilateral: A mistake by both parties concerning a basic assumption, which has a material affect on the parties, and either the non-mistaken party knew, or should have know, or caused the mistake; or the mistake makes the contract a unconscionable bargain. Assumed the risk applies to unilateral mistake.
What is the Mailbox rule?
Acceptance effective upon dispatch if properly addressed if not properly addressed will still be constructed as accepted if received in the same reasonable time a properly addressed on would be received.
Option contract: exception to the mailbox rule affected upon receipt