Bargaining Process
When would a misrepresentation be considered material?
A misrepresentation is material if it would be likely to induce a reasonable person to manifest his/her assent or if the maker knows that it would be likely to induce the recipient to do so (innocent but material)
162 Misrepresentation is Fraudulent or Material
When should a collateral agreement be introduced as evidence?
If the collateral agreement is likely to not mislead the fact finder and the writing is at most partially integrated. If it was an agreement that would naturally be made separately.
If they're additional terms that would have certainly been included in the original document then parol evidence is not admissible and the collateral agreement should NOT be introduced.
What is an aleatory contract?
An agreement where the potential gains and losses, whether to all the parties or to some of them, depend on an uncertain event not under the control of either party.
What is the basic rule why the Court would issue specific relief?
When money damages are inadequate. The Court will take into account practical difficulties in shaping and enforcing a decree for specific relief in deciding whether to grant such relief.
T/F. A contract is not binding where a condition precedent to performance of the agreement was not met.
True. See Rest. 225
What is the difference between duress and undue influence?
Duress is the pressure exerted by one party over another during pre-contract bargaining and is typically seen as threat that have no reasonable alternative.
Undue influence is excessive pressure exerted by the dominant party that overcomes the will of the subservient party. Destroys free agency and constrains a person who is susceptible.
UCC 2-202 should be applied in which circumstance?
For Contracts of Sale of Goods when to determine if the Parol evidence or extrinsic evidence can be included.
(When they are to explain or supplement either by course of performance, course of dealing or usage of trade and consistent additional terms unless the court determines it to be complete and exclusive terms)
T/F. Adhesion contracts can not be enforceable.
False. They can be enforced as long as the contract does fall within the reasonable expectations of the weaker or adhering party or it is not unduly oppressive or not unconscionable.
When will the court apply the market value rule in measuring damages?
When the breach is incidental to the main purpose of the contract and completion would be disproportionately costly or the breach is unintentional and the contract has been substantially performed in good faith such the cost of completion would involve economic waste.
What has to occur for payment to be demanded if there is no agreement to the time of payment?
The work must be substantially performed prior to demanding payment
Alex persuaded his grandmother, Clara, to sell him her car for $1,000. They both knew the car was worth much more than that. However, Clara did not need the car anymore and loved her grandson, so she agreed to sell him the car. The next day Clara found out that Alex was planning to sell the car to a friend for $6,000. Clara can avoid the contract because of:
a. duress b. fraud c. undue influence d. mistake
c. undue influence
When will the court consider extrinsic evidence of the parties' intent?
When the contract is ambiguous
( Greenfield v. Phillies Record, Inc.)
T/F. Need both procedural and substantive element of unconscionability of a claim.
True. The courts will apply a sliding scale to determine this but it does not have an equal degree for both. If the contract has a high degree of procedural unconscionability only a modest degree of substantive unconscionability is required.
How does the court determine incidental/consequential damages?
Can a party take back an anticipatory repudiation before the change of position?
Yes it can be retracted at any time prior to a change of position by the non breaching party.
T/F. A minor has the right to avoid a contract.
True.
When should evidence of usage of trade and course of dealing be excluded from being admitted?
Under 2-202, when the evidence can not be reasonably construed as consistent with the terms of the contract
Briefly describe the three general situations where good faith and fair dealing would be applied
- when a term not expressly set forth is necessary to protect the parties' expectations.
-when termination of other action by one party is in bad faith
- when the exercise of a party's discretions expressly granted by the contract's terms must be limited by principles of good faith and fair dealing.
Mary had a small shop where she sold her own jewelry creations. She was commissioned by a lovestruck young man, Willie Darcy, to design and create a set of rings (engagement and wedding) for Willie's beloved, Elizabeth. Mary designed and created the rings in 18k gold, leaving room in the engagement ring for a large marquise-shaped diamond. She then entered into an oral agreement with Hanson, a well-known gemologist, to provide the diamond, for which Mary would pay Hanson $20,000. Mary's agreement with Hanson was that she would pay him when Willie paid her. Hanson took much care in finding a suitable gemstone, cutting the diamond to show off its brilliance, and otherwise preparing it per Mary's specifications. Hanson delivered the diamond to Mary, who accepted it with praise. Hanson waited to be paid, and when he was not, he contacted Mary, but she refused to pay him, arguing that their agreement was unenforceable and, anyway, Willie has not paid her. If Hanson sues Mary, how much can he recover?
A. The fair market value of his work, under a quasi-contract theory.
B. The cost of materials and labor, under a quasi-contract theory.
C. $20,000, the contract price.
D. Nothing, because Willie has not paid Mary.
C. $20,000, the contract price.
Hanson will be able to recover the full $20,000 contract price. Under the U.C.C., the contract is enforceable, despite the absence of a writing, to the extent of the goods accepted, which here is the entire amount contracted for. The proper remedy is the agreed-upon price of $20,000, which Hanson will be able to prove by parol evidence. See U.C.C. 2-201 (2)
Does a failure of an express condition occurring constitute a breach of contract?
No, non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur. 225 (3)
Tariq is interested in buying a block of luxury apartments. He intends to retire and live off the income from the rents. The vendor informed him that all of the apartments were let. He did not however tell him that the tenants had given notice to quit. Tariq feels that he has been misled by the vendor who only told him half the truth.
a. The vendor should have provided Tariq with the full information in respect of the current tenants, and his non-disclosure will amount to a misrepresentation.
b. Silence can never amount to a misrepresentation, so Tariq will have no redress against the vendor.
c. Silence will always amount to a misrepresentation. It is the responsibility of the vendor to disclose all known facts when entering into a contract of sale.
d. The statement made by the vendor was correct at the date that it was made – the apartments were all occupied by tenants when the statement was made.
a. The vendor should have provided Tariq with the full information in respect of the current tenants, and his non-disclosure will amount to a misrepresentation.
Failure to make a statement or non-disclosure of facts will not generally qualify as misrepresentation. However, telling only half the story can amount to misrepresentation.
T/F. When applying UCC 2-315, the seller does not have to have knowledge of the buyer's purpose of buying and the buyer does not have to rely on this knowledge.
FALSE. For implying a warranty for fitness for particular purpose to apply, the seller must know or have reason to know of both the buyer's particular purpose and the buyer's reliance on the seller's skill or judgment.
Damages agreed upon by the parties when they first enter into a contract are called
a. actual damages
b. incidental damages
c. anticipatory damages
d. liquidated damages
d. liquidated damages
Can a party retract a waiver?
a person who has waived a condition is bound by the waiver, but a party who waives the condition before the time for its occurrence can retract the waiver unless the other party has materially changed its position in reliance on the waiver. Restatement (Second) of Contracts
§ 84.