Unenforceable by Operation
What do courts consider in determining if covenants not to compete are reasonable?
In general, courts will invalidate or rewrite such clauses unless they are reasonably required to protect a significant interest, are reasonably narrow in geographical scope, and are for a reasonable time. The work restrictions must be clearly defined and relevant to the business's interests.
Can a 17 year old revoke a contract they made? When can a 17 year old not revoke a contract?
Yes they can because they are an infant. However if it is a day before there 18th birthday, they can not revoke a contract or if the contract is for a necessity they cannot revoke it.
A city offers a $5,000 to stop murders. Police Officer Marissa prevents a murder in the course of her normal duties and claims the reward. Can Marissa enforce the reward promise?
No, she has a preexisting duty because of her job to prevent murder.
Explain the difference between an intended beneficiary and an incidental beneficiary.
Intended beneficiaries are those persons necessary to reflect the intention of the parties to the contract, and either (i.) performance will satisfy an obligation of the promisee to pay money to the beneficiary; or (ii.) circumstances indicate the promisee intends to give the beneficiary the benefit of the promise. A incidental beneficiary benefits from a contract but the benefits are not intentional.
Painter Paige contracts to paint Owner Olivia’s house for $5,000. Paige paints half the house, then breaches. Olivia pays another painter $4,000 to finish. What expectation damages can Olivia recover.
$1,500
Total Breach Expectancy Interest= Loss in Value + Other Losses – Costs Avoided – Losses Avoided
Partial Breach Expectancy Interest= Loss in Value + Other Losses
Expectation damages = cost of completion ($4,000) – unpaid balance ($2,500)=$1,500
What are the five types of contracts under the Statute of Frauds?
Bonus: What is the sixth category added by the UCC?
1. Marriage Contracts, 2. Contracts that require more than a year to complete, 3. Land contracts, 4. Executor -Administrator contracts, 5. Suretyships
UCC Categeory: Contracts for goods more than $500
Louise has a sever mental illness she entered into a contract to buy a zoo. At the time she was unable to understand the nature and consequences of buying a zoo. The zoo owner had no clue Lousie had a sever mental illness or that she did not understand the nature and consequences of buying the zoo. Can Louise void the contract?
Yes, when a party is unable to reasonable understand the nature and consequences of a transaction they can void the contract even if the other party does not know they are in this condition/
Tyler agrees to build a bridge for Iowa for $30 million, completion by September 1. Midway through, unexpected flooding destroys part of the foundation, and Tyler had to start over. Tyler tells Iowa: “I can finish the bridge, but I’ll need an additional $5 million because of the flooding.” Iowa agrees in writing. Is the modification enforceable?
Yes, because it was supported by consideration. Courts often allow modifications when unexpected events make performance substantially more burdensome. The flooding was not contemplated at the time of contracting and materially altered the job.
A company contracts with a health provider to give free massages to employees’ spouses. The contract names “spouses of employees” as eligible. If the provider refuses to treat an employee's spouse, can the spouse sue?
Yes, spouses are expressly stated to be intended beneficiaries
Jeff contracts to deliver flour to Annie's Bakery. Jeff breaches, and Annie cannot bake bread for two weeks, losing $15,000 in profits. Can Annie recover her lost profits?
It depends. Consequential damages are recoverable if foreseeable at the time of contracting. If Jeff knew Annie was a bakery relying on flour, she might be able to recover. It also might matter if Annie tried to mitigate her damages by getting flour from someone else
The TARDIS Company makes and sells scarves. Each scarf is handmade with only the highest quality of silk. TARDIS were selling the scarves at a trade show, the DALEK company came up and asked to by 20 scarves for there employees of the year. DALEK got the scarfs but didn't want to pay for them. Is there an unenforceable contract under the statue of frauds?
Yes although a contract for the sale of goods $500+ falls under the statue of frauds, there are exceptions. One exception is that if the goods have already been received. It's too late to say we didn't have a contract. However if the court still decides that there is nit a contract the TARDIS could still sue for unjust enrichment.
Gene is really drunk and I mean really drunk. He signs a contract to sell plasma to a blood bank while drunk. Is the contract voidable?
It depends, if the contract is in person the other party should have known that Gene could not reasonably understand what he was signing. However if the contract is online, such as one that you have to sign when making an appointment, than the bank would have no reason to know that Gene was even intoxicated
Seller contracts with Buyer for delivery of steel. Contract says: “No oral modifications.” Later, they orally agree to extend the delivery date. Seller delivers late under the oral agreement, but Buyer sues for breach. Can the Seller enforce the oral modification?
Yes, under UCC § 2‑209(4), even if the oral modification is invalid, it may operate as a waiver. If Buyer accepted late delivery, the oral agreement may be enforced as a waiver.
Mike buys a cooking course taught once a week by Gordon Ramsay. Before the course begins, Gordon assigns the duty of teaching the course to his personal assistant. The assistant can only teach once a month and has no cooking experience. Is the assignment enforceable?
No, the course has less value to Mike since it is no longer taught by a famous chef and the frequency of lessons decreased. Restatement (Second) of Contracts § 317(2) provides that a contractual right can be assigned unless the substitution of a right of the assignee for the right of the assignor would... reduce its value to him
Owner Olivia contracts with Builder Bob to construct a guesthouse for $100,000. Olivia pays Bob $20,000 upfront. He spends $15,000 on materials and labor before breaching and walking away. Olivia hires another builder who charges $120,000 to finish.The completed guesthouse is worth the originally expected $100,000. What type of damages should Olivia seek?
Expectation:$40,000 (120,000+20,000-100,000)
Reliance damages: $20,000
Restitution damages = $20,000
Pine Tree’s LLC sells as you can guess pine tree’s for the winter holidays. Each tree ranges from $200-300. Pine Tree’s LLC knows that some people would rather not pay the price all at once so they have a monthly payment option. You can pay $20 per 10 months or $30 per 10 months. Dolly really wants a $300 pine tree, and chooses the installment plan. She pays the $30 for the first 9 months, but month 10 she forgot to pay. Because she couldn’t pay Pine Tree’s LLC reposes items that value up to $500 or just $500. Make an argument on why the court would not enforce the repossession clause? Any arguments for Pine Tree’s LLC? What will the court most likely do?
The courts could hold this clause to be unconscionable because if you fail to make one payment you have to give times that value up to $500 or just $500. When under normal damages they would just owe $30 and maybe some interest.
However the company could argue that it's not unconscionable because they cannot repossess the tree as it will die. Instead this clause is to ensure that the installment plan will be paid.
In this case the court might hold that the clause is not unconscionable under § 178 and § 179, but not allow Pine Tree's LLC to recover the $500 in liquidated damages because it does not represent the actual loss caused by the breach and is not necessarily reasonable in light of the anticipated breach when the contract was made.
Mr. Fish-oder is selling his amusement park. Mr. Tina is interested in buying it, He asks several questions about the park. How old are the rides? for example. But he also says these machines are making a lot of money. If the machines are not making a lot of money, and it turns out they are not. Is the contract voidable? Under what rule?
Yes, under the doctrine of misrepresentation, a non disclosure can be misrepresenting if the other parties know it is necessary to fix a mistake. This would also fall under unilateral mistake, unless Mr. Tina bore the risk of the mistake.
Max owns a bookstore and contracted with Steve, a merchant, to purchase 5,000 books. The written contract includes a clause: “No modifications shall be valid unless in a signed writing by both parties.” Later, Max and Steve orally agree to increase the quantity to 8,00 books. Max refuses to pay for the extra books when delivered. Is the oral modification valid?
No, under the UCC § 2‑209 between merchants, a clause requiring signed written modifications is enforceable. The oral modification is invalid because it was not signed. However, if Max accepted the extra books, that conduct may operate as a waiver of the clause.
Pilot Pete contracts with Delta to fly a VIP charter. On the day of the flight, Pilot Pete is injured. Pilot Paul agrees to accept Co-Pilot Parker instead. Is this waiver valid?
Yes, waivers in emergency situations are enforceable if the obligee knowingly accepts the substitute. Delta cannot later claim breach.
Lucas contracts with Dustin to purchase a rare, one-of-a-kind painting for $950,000. Lucas pays the full purchase price upfront. Dustin breaches and refuses to give Lucas the painting. What is Lucas' remedy?
Specific performance as the painting is a unique good. For items like land or unique art/antiques where money can't buy a replacement, courts often grant specific performance (forcing the sale) or allow you to recover the item.
Creditor Cathy assigns Debtor Debbie’s $20,000 debt to Assignee Arthur. Later, Cathy fraudulently reassigns the same debt to Assignee Beth. Debbie, unaware of Arthur, pays Beth in good faith. Does Arthur still have a claim against Debbie?
No. Payment in good faith to an assignee discharges the debt. Arthur’s remedy is against Cathy, not Debbie.
Troy contracts with Pierce to sell a rare, one‑of‑a‑kind sculpture for $500,000, with payment due in full by June 1. Troy does not pay until June 15, materially breaching the contract. Abed has declared the contract terminated and sold the sculpture to Shirley on June 2. What is Troy's remedy.
Restitution damages. He materially breached the condition of paying on June 1 and the condition was not not waived. Only the non-breaching party can sue for specific restitution so he can not recover the sculpture.