Supplementing the Agreement🫱🏼🫲🏻
If a party acts in a way that obviously undermines the benefits to the other party from the contract or if a party attempts to sabotage another in performing their end of the agreement, what rule has the party breached?
The Implied Covenant of Good Faith and Fair Dealing
Example: Locke v. Warner Bros., Inc.
If an individual below the age of majority enters into contract, is that contract VOID or VOIDABLE by the minor?
The contract is VOIDABLE by the minor unless it is for a necessity or the product's value has been lessened by significant use or damage by the minor.
This misunderstanding with extraordinary circumstances can cause a court to hold that a contract does not exist due to a mistaken belief about an existing fact.
Mistake
What is a breach?
any non-performance of a contractual duty at the time when performance of that duty is due
Give a rule statement for anticipatory repudiation
What is an "At-Will Contract"?
Under the "At-Will" Doctrine either party is free to terminate the contract at any time and for any reason without a requirement of good or just cause
What two factors do courts look for to show fraud in a contract?
(1) Defendant knowingly made a false representation as to a material matter with the intent to deceive the plaintiff; and
(2) Plaintiff was damaged by reasonably relying on that false representation
What are the three types of changed circumstances that occur between the making of the contract and the time of performance that can justify nonperformance?
Impossibility, Impracticability, and Frustration of Purpose
What is an express contract? What are expressed conditions?
Express contract- a contract proved by an actual agreement either written or oral requiring mutual assent/meeting of the minds
Express conditions- Unambiguously expressed binding conditions that can trigger a performance or a contract
What is the UCC's take on "substantial performance"?
The UCC does NOT accept the idea of substantial performance- the Perfect Tender Rule demands the tender to be perfect, meaning both the goods and the delivery of the goods must be exactly as the contract specifies.
Explain an employee contract.
A contract between employer and employee setting the terms and conditions of the employment relationship. Where the contract involves matters of fancy, taste, or judgement, the promisor is the sole judge of his satisfaction.
What are the two components of the sliding scale of unconscionability?
1) Procedural- examines the context of how the deal was made, generally the negotiation and the contract and whether there was unequal bargaining power or lack of meaningful choice
2) Substantive- examines whether the deal itself is so unfair to be unreasonable and whether each side is similarly bound or if one side is significantly limited
When is a contract impossible?
When the contract can not happen AT ALL by any person, not just by the party. For example, a plumber is hired to replace old pipes in a house. The house burns down. The plumber cannot sue to enforce the contract because it is literally impossible because the pipes no longer exist to be replaced.
What are the buyer's options of action to take upon the delivery of nonconforming goods under the Perfect Tender Rule?
1: Reject the Entire Delivery- here seller can cure the nonconformity (conditionally)
2: Accept the Entire Delivery- verbally or by affirmative action
3: Accept One or More Commercial Units and Reject the Rest
What common law doctrine places the burden of inspection on the buyer? It states that the buyer alone is responsible for checking the quality and suitability of goods before purchasing.
Caveat Emptor (latin for "let the buyer beware" 👻)
How does a seller make an express warranty?
They make an explicit promise on which the buyer relies, whether or not they intended to create a warranty.
What are the three components courts look for to determine whether duress was present in the formation of a contract?
1) A wrong or improper threat as inducement
2) anything illegal or that would constitute as a tort or an act or crime that is done in bad faith
3) Leaving no reasonable alternative but to enter the contract
What is the purpose of expectation damages?
The intention is to put the non-breaching party in the position they would be in if the breaching party had fully performed their contractual duties. This is calculated by finding the difference between what was given and what was promised, along with consequential and incidental costs.
What factors do courts consider to determine if a breach is material or minor?
1) the loss of benefit to the injured party; 2) the adequacy of compensation for the injured party's loss; 3) the likelihood of a cure by the breaching party; 4) the extent of forfeiture by the breaching party if denied the bargained-for benefit; and 5) the lack of good faith and fair dealing in the contract
What is the main limiting factor of the modification of a warranty?
The modification must be CONSPICUOUS
The seller is aware of the particular purpose and the buyer relies on the seller's skill or judgement to create suitable goods for the buyer's particular purpose and the seller has reason to know of this reliance.
What are the seven factors considered when evaluation undue influence over a party in a contract?
1. Discussion of the transaction at an unusual/inappropriate time; 2. consummation of the transaction in an unusual place; 3. insistent demand that the business be finished at once; 4. extreme emphasis on untoward consequences of delay; 5. use of multiple persuaders by the dominant side against a single servient party; 6. absence of third party advisors to the servient party; and 7. statements that there is no time to consult financial advisors/attorneys
What is the purpose of restitution?
To rectify unjust enrichment. It measures the extent of the defendant's gain and not the amount of the plaintiff's loss. The guiding maxim goes back to Ancient Rome: "let no one be made richer through another's loss." Upon breach, the innocent party is entitled to damages equal to what was expected under the contract terms.
What are two situations where anticipatory repudiation is final and may not be withdrawn?
1) Where the injured party has materially changed position in reliance on the repudiation (ex. hired an alternative)
2) Where the injured party has indicated to the repudiating party that the repudiation is considered final (ex. "I am cancelling our contract")
What is the formula for finding expectation damages?
Loss in Value + Other Loss
-Cost Avoided - Loss Avoided