Damages
3 Damage Interests and their definitions
Expectation, put promisee in position they would be in if the contract had been performed
Reliance, put promisee in position if contract hadn’t been performed
Restiution, put promisor in position if contract hadn’t been performed
What is the default rule for sale of Land?
Specific peformance
What is the objective theory of mutual assent? (BONUS: what case describes this best?)
-External Manifestations; AND
- Reaction of a Reasonable Person
Case: Lucy v. Zehmer
Two requirements for consideration:
Baragained for Legal-Detriment
What is your favorite case from the semester and why?
:-)
Difference between elements of mutual and unilateral mistake
Unilateral ahs same requirements but adds additional element: enforcement also would be “unconscionable”
What damage interest was used to recover in Mistletoe Express
What is a liquidated damages clause?
A provision within a contract that specifies a predetermined amount of compensation a party must pay to the other if they breach the contract
What is an offer?
Restatement § 24:
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it
When is oral modification sufficient under the UCC?
NEVER
Under UCC 2-207, between merchants, the additional terms are included unless:
The materially alter the original terms
The offer expressly limits acceptance
The offeror has already objected to the particular terms or objects within a reasonable time
Two kinds of unconscionability
Procedural and Substantive
What are the two forms of damages considered in Hawkins v. McGee (Hairy Hand) and what was awarded
Expectation v. Reliance, expectation was awarded
What form of relief is enforceable for personal services
Injunctive relief
What is the firm offer rule?
UCC 2-205: An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.
When is Moral Consideration sufficient?
In order for sufficient consideration due to moral obligation, promisor needs a material benefit towards him to occur:
- Loans for money with no legal obligation
- Promisee injured saving promisor’s life (webb v. mcgowin)
- Bankruptcy
- Statute of limitations
- Promises that would result in injustice if they were not enforced
What are the elements of Promissory Estoppel?
- Promise
- Promisor had reason to expect reliance
- Promise induced reliance (must be reasonable)
- Injustice avoided only by enforcement
How do impracticability and Mistake differ?
In mistake the issue is about the present fats when the contract is made, Impracticability is about something that happens after the contract is made
General measure for calculating damages
loss in value + other loss - cost avoided - loss avoided
What are the three categories for Equitable Remedies?
Land, Goods, Personal Services
*DOUBLE JEOPARDY*
What are the 3 of the 5 possible effects of a reply to an offer?
Acceptance, Acceptance + request to modify, Rejection, Counter offer, Inquiry about a different bargain
When is Past Consideration Sufficient
NEVER
What is the part performance exception to the SOF
To invoke this exception, one must show that
- the goods are to be specially manufactured for the buyer;
- they are not suitable for sale to others in the ordinary course of the seller’s business;
- before receiving notice of the buyer’s repudiation, the seller made a substantial beginning on their manufacture or commitments for their procurement; and
- the circumstances reasonably indicate that the goods are for the buyer.
A party bears the risk of mistake when:
The risk is allocated to him by agreement;
He is aware of his limited knowledge but treats it as sufficient; OR
The risk is allocated to him by the court
Outside of Monetary damages, what are the other damage interests? what is this form of relief called?
Equitable relief through injunctions and specific performance
What is the test for determining is a liquidated damages clause is enforceable? (Hint: Wassenar)
It is a reasonableness test, with two prongs and tow approaches:
Ascertainability prong: Is the injury caused by the breach one that is difficult or incapable of accurate estimation at the time of contract? (the difficulty of ascertainment test) And
Proportionality prong: Are the stipulated damages a reasonable forecast of the harm caused by the breach?
BONUS: Both prospective and prospective-retrospective approaches must be used to analyze the test. Courts will enforce stipulated damages clauses that are reasonable estimates of harm, but not clauses that are penalties
Three questions to ask to determine if there was an offer?
Was there an expression of a promise, undertaking, or commitment to enter into a contract?
Were there certainty and definiteness in the essential terms?
Was there communication of both those elements to the offeree?
When is Pre-Exisiting Duty sufficient under the Common Law?
NEVER but:
To avoid this rule, you can:
- Cancel old contract and create a new one
- Add an additional consideration to the modifications (option contract)
Name the three writings considered in the Parol Evidence Rule and what kinds of extrinsic evidence are permissible
Not an Integration: May add or Vary terms
Partial Integration: May add consistent terms only
Complete integration: Cannot add or vary terms
Elements of misrepresentation (also, what is a material misrepresentation):
If party’s manifestation of assent is induced by a fraudulent or material misrepresentation where they are justified in relying, the contract is voidable
- A misrepresentation is material if a reasonable person and the specific person would reasonably rely on it (both objective and subjective standard)
*DOUBLE JEOPARDY*
5 limitations on Damages
Foreseeability, If a reasonable person can assume what consequential damages there may be if they dont hold up their end of the contract, they are liable for those damages
Certainty, Only damages proved with reasonable certainty are recoverable
Avoidability, Damages are not recoverable for harms that could have been avoided by the injured party with reasonable efforts
Mitigation, Promisees have an obligation to make an effort to mitigate damages, but if they are different or inferior they arent obligated to accept
Lost Volume Rule, A volume seller (where there are an inexhaustible amount of the good to sell) is entitled to recover the profit he or she would have made on a lost sale
Cumbest v. Harris, what are some facts and the rule from this case?
Facts: Transaction was a loan in which hi fi equipment worth 10,000 was used as collateral, the items were composed of very specific parts that took 15 years to assemble, it was essentially a recording studio
Rule: Specific performance can be administered for 1/1 unique goods
What are the 5 ways an offeree's power of acceptance can be terminated?
Rejection
Counter-offer
Lapse of time
Revocation
Death or Incapacity of either offeror or offeree
Define the requirements for both Bargained-For and Legal Detriment
Bargained-For:
Party’s bargain when each party’s apparent motivation is to induce reciprocal action from the other party
Each party has to induct action from the other, requires mutual inducement
The apparent motivation must be a requirement not just a hope (if this then that)
Legal Detriment:
Did a party give up a legal right in order to get something in return
Agreeing to do something one is not obligated to do OR agreeing to refrain from doing something one has a right to do
What are the requirements of a memorandum to satisfy the SOF in both the CL and UCC?
Price term (only CL)
Parties
Subject matter
Quantity
Elements of Impracticability
Performance must be rendered impracticable
Without fault of party asserting defense
By event that constitutes failure of a basic assumption
Bonus: Saying “I can’t do it” is no defense, it must be that it cannot be done
If I agree to sell you a copy of the Restatement for 10 dollars, the market value for the book is 15 dollars. You come to pay me and I refuse to deliver the book. What are you entitled to under Reliance? Expectation?
Reliance = 5
Expectation = 15
Sedmak v. Charlies Chevrolet inc. What are some facts and the rule from this case?
Facts: A special corvette was made, P bought it, it was reserved for him, when he went to take delivery of the car and they said he had to bid on it
Rule: Goods need to be specifically unique to qualify for specific performance
- Here the same mileage, condition, ownership and appearance, made it unique
- This case was a proper circumstance for ordering specific performance
Mirror Image Rule: An offer of a bargain by one person to another imposes no obligation upon the former, unless it is accepted by the latter according to the terms on which the offer was made.
Mailbox Rule: Acceptance by mail or similar means is effective at the moment of dispatch, provided that the mail is properly addressed and stamped, unless:
- The offer says acceptance is not effective until received
- An option contract is involved (acceptance under option contracts if effective upon receipt)
Mutual Assent in E-Commerce and the Internet:
User affirmatively expresses assent, User has actual notice of terms (Constructive notice: Website puts a reasonable prudent used on notice of terms)
Explain the Schnell v. Nell case (Hint: it was not considered consideration)
The alleged contract set forth three distinct forms of consideration upon which the contract was to be formed: the promise to pay one cent, the love and affection of his deceased wife, and the desire to leave a bequest to the three beneficiaries.
The court held that the consideration of one cent was not sufficient to render Schnell’s promise enforceable. The exchange would have been valid if the cent had been an item of indeterminate value because it was unique or different or sentimental.
They also held that D had no legal obligation to honor his wife’s bequests and his promise to pay them was not legally binding moral consideration
Under UCC 2-207, how do you determine if something acts as acceptance or as a counter-offer?
Is there a definite and conditional acceptance of the offer or written confirmation within a reasonable amount of time? This operates as acceptance unless acceptance is expressly made conditional on assent to the additional or different terms, if this happens the new form acts as a counter-offer
Explain Halpert v. Rosenthal and its rule:
Termite House, Rule: A misrepresentation is material is a reasonable or if not a reasonable person, the specific person would reasonably rely on it (both objective and subjective standard)