Damages
State the foreseeability rule for expectation damages.
To be recovered, damages must be reasonably foreseeable.
Damages are reasonably foreseeable if they follow from the breach EITHER
(1) in the ordinary course; or
(2) as a result of special circumstances that the breaching party knew about at the time the contract was made.
Under the common law, in determining whether a breach is material, what factors must the court consider?
The court should consider the extent to which:
(1) the injured party was deprived of the benefit of the contract;
(2) the injured party can be adequately compensated for that loss;
(3) the breaching party will suffer forfeiture;
(4) the breaching party will cure; and
(5) the breaching party has behaved in good faith.
Under the common law, is an implied condition (for example, that one party's performance is an implied condition of the other party's obligation to perform) strictly enforced?
No: only a material breach allows the injured party to suspend or terminate performance.
To spot a parol evidence rule, what 4 things should you look for?
A final written agreement
An oral (or prior written) side agreement
Which relates to the same transaction and
Was made for the same consideration
What types of contracts does the SoF cover
The categories are:
(1) contracts not to be performed within one year of their making;
(2) contracts for the sale of land or any interest in land;
(3) contracts to guarantee the debt of another (suretyship provision, which also includes contracts made by an executor to pay a debt of the estate);
(4) contracts in consideration of marriage;
(5) contracts for the sale of goods (UCC)
Under the expectation measure, the plaintiff is entitled to the difference between her "expectation position" and her "actual position." To determine her "actual position" what should you consider?
Consider (1) what the plaintiff actually received; (2) what he actually gave; (3) whether he was able to save any expenses or prevent any losses; and (4) what additional expenses he incurred in dealing with the breach and because of the breach.
Under the common law, what are the injured party's remedies for a material breach?
The injured party may:
(1) sue for damages or withhold an appropriate amount;
(2) suspend or withhold performance; and
(3) treat the breach as total (and cancel) or partial (and continue the contract) if the breach is not cured.
What is the key issue in interpreting a "satisfaction" clause (i.e., an express condition requiring that one party be "satisfied" with the other’s performance).
Whether the parties intended that the standard for satisfaction be objective or subjective, which generally turns on whether the clause involves commercial quality or personal aesthetics.
In applying Prong 2 of the parol evidence rule, what does a court consider when focusing on the written contract itself?
The contract language (including whether there was a merger clause), whether the contract seems complete on its face in light of the detail, the importance of the term omitted.
What is the difference between the UCC and common law sufficient writing requirements
UCC requires that the writing specify a quantity while the common law requires that the writing describe the essential terms with reasonable certainty, including the parties, the subject matter, and the consideration
Under the UCC, what is the difference between "resale" damages and "lost volume" damages, and when do you use each?
Resale damages are the difference between the contract price and the resale price, whereas lost volume damages are based on the seller`s lost profit on the sale. You use resale damages when the resale of the item was a true replacement sale (e.g., your own used car); you use lost volume damages when seller has an unlimited supply, so could have made two profits instead of one (e.g., sale of new car at dealership).
Under the UCC, what is the key difference between the standard for rejecting non-conforming goods and the standard for revoking acceptance of non-conforming goods?
Non-conforming goods may be rejected for "any" reason (even a trivial defect), but after the goods have been accepted, the buyer may revoke only if the non-conformity "substantially impairs" its value.
In determining whether an express contract term is a "condition" or a "promise," what should the court consider?
The court must determine what the parties intended in light of the words used (i.e., contract language) and the context (e.g., the parties’ purpose). If in doubt, the court should construe the term as a promise.
In applying Prong 2 of the parol evidence rule, what additional factors does a court consider when using the Corbin approach and considering the surrounding circumstances?
In addition to the focusing on the written agreement (contract language, merger clause, detail in contract, importance of term omitted), the court considers factors such as how sophisticated the parties were, their relative bargaining power, whether they had legal counsel, and any particular reasons why they might have omitted the side agreement.
State the exceptions to the land provision of the Statute of Frauds
Part performance is an exception, but only if it is unequivocally referable to the contract. For the buyer, there usually must be either:
(1) some combination of taking possession, paying all or part of the purchase price, or making permanent improvements; OR
(2) rendering services over a long period of time
Under the UCC, if the aggrieved party does not cover or resell, the party is entitled to "market" damages. How is the market price determined?
It is the price prevailing at the time the aggrieved party learned of the breach and at the place where the goods were to be tendered. If there wasn't one, the court may use a commercially reasonable substitute.
Under the UCC, if the buyer rejects non-conforming goods, in what circumstances does the seller have a right to cure?
The seller has a right to cure if
(1) the time for performance has not yet expired; OR
(2) the seller reasonably believed the nonconforming goods would be acceptable, with or without a money allowance (i.e., a discount).
Describe how a court fills a gap in the parties’ agreement through implication
The court considers the language and purpose of the agreement to determine if the parties had in mind a particular term, or if not, what term they would have included if they had thought about the issue. The court may also choose a term based on fairness or policy.
What factors make it more likely that a court will disregard a merger clause?
it was preprinted,
it was buried in the contract,
the affected party lacked sophistication and/or a lawyer,
the other party had greater bargaining power.
To satisfy the common law Statute of Frauds, how must the writing describe the subject matter of a land-sale contract?
The writing must describe the specific property.
NOTE: a reference to “my” land or “your” land will suffice if the seller owns only one tract meeting the description
What factors do courts consider in determining whether to award "cost of completion" damages or "diminution in value" damages?
(1) the extent of the disproportion between the two measures;
(2) the subjective value to the plaintiff (whether the breach involved merely an incidental aspect; whether the plaintiff would actually spend the money to complete the work);
(3) whether the breach was unintentional and in good faith; and
(4) the amount of economic waste involved.
Under the UCC, normally a buyer must pay the contract price if it accepts non-conforming goods (but still can sue for damages). When may the buyer revoke its acceptance?
The buyer may revoke its acceptance of non-conforming goods only if the non-conformity substantially impairs their value to the buyer AND the buyer accepted the goods EITHER:
(1) on the reasonable assumption that the seller would cure the non-conformity and it does not; OR
(2) the buyer's acceptance was induced by the difficulty of discovering the defect or the seller’s assurances.
Describe the “context” approach to determining whether an express term is ambiguous
The judge examines all credible evidence of the parties’ intent–the contract itself AND the surrounding circumstances, including negotiations, business context, trade usage, course of performance or dealing, and the contract’s purpose. If the contract language is reasonably susceptible to either party’s interpretation, then it is ambiguous
What approach does Corbin recommend for applying Prong 2 of the parol evidence rule, and what additional factors do courts consider when following his approach?
Corbin advocates a party-focused approach, under which the judge considers what reasonable people having all the characteristics of the parties in their particular circumstances would naturally do. Under this approach, the judge focuses on the written contract itself AND the circumstances surrounding the making of the agreement.
State the requirements for each UCC sale of goods exception
For the confirmation exception to apply, the party seeking to enforce the contract must show:
(1) both parties were merchants
(2) he sent the other a written confirmation of the contract which
(3) satisfies the Statute as to him (the sender) and was sent within a reasonable time
(4) the receiving merchant had reason to know its contents; and
(5) failed to object in writing within 10 days of receipt
For the special order exception to apply, Seller must show:
(1) the goods were to be specially manufactured for the buyer
(2) goods are not suitable for sale to others in the ordinary course of Seller’s business
(3) Seller made a substantial beginning on their manufacture or commitments for their procurement, and
(4) Seller’s actions were taken before it received notice of Buyer’s repudiation and in circumstances reasonably indicating the goods were for Buyer
The admission exception applies when the party against whom enforcement is sought admits that the contract was made in his pleadings, testimony, or otherwise in court
NOTE: the contract is enforceable only up to the quantity admitted
Under the part performance exception, the contract is enforceable to the extent that:
(1) payment has been made and accepted; OR
(2) the goods have been received and accepted