I certify that this Contracts outline represents substantially my own work. Ashley SpencerWhat is a Contract?1. a contract is a promise or set of promises that the law will enforce2. there are two key elements to the existence of a contacta) a promise or promises b) enforcement 6. a promise is a commitment as to the happening or non-happening of some future event 7. enforcement means legal enforcement.. an award of damages or some other order by a court of law8. not all promises are legally enforceable; in some instances the making of a promise creates a moral obligation but not a legal obligation9. any contract inevitably involves a legal relationship between at least 2 parties bound by reciprocal promises to one another (exchange relationships)10. at bottom, contract law exists to satisfy the basic impulse that the reasonable expectations excited by a promise are entitled to recompense in a court of law, if and when disappointed w/o legal excuseTwo types of Contracts1. Unilateral: only one party makes a promise in the form of an offer, which calls for the other to render some type of performance as acceptance 2. Bilateral: both parties makes mutual promises to each other Has your client made a deal? Determining Mutual Assent1. Lucy v. Zehmer: D writes a contract to sell his farm to P on a napkin for $50,000 dollars. When P tries to enforce the contract D claims he and his wife were only joking about the deal. 2. the law judges an agreement between two persons exclusively from expressions of their intentions which are communicated, not unexpressed or secret3. Not what the offeror meant, but the reasonable impression created 4. if his words and acts judged by a reasonable standard manifest an intention to agree it is immaterial what may be the real but unexpressed state of his mind5. Objective theory of contracts 6. Leonard v. Pepsico: D advertised a competition offering a herrier jet for 7 million pepsi points. P tried to obtain the jet by sending in pepsi points and a check for $700,000. D refused, saying the commercial advertised the jet as a joke7. an advertisement which a reasonable person would not take seriously and refers to other material is not an offer Advertisements are not offers 98% of the time negotiation does not equal mutual assent intent not to be bound until agreement is expressed in writing can indicate no mutual assent, rather mere negotiation To form a valid contract each party to the contract must have the intent to promise or be bound There are two types of intent to contract: objective and subjective In general, assent to be bound is analyzed in two steps: offer and acceptance It is a partys objective intent that will be considered as creating either an offer or acceptance The court shall look to an external interpretation of the partys intent as manifested by actionOffer 1. Restatement Second of Contacts 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 2. An offer is the manifestation of assent by the offeror that essentially says to the offeree, I commit to a deal on these terms an invitation for offers does not operate as an offer to create an enforceable contract 3. Restatement Second of Contracts 26: advertisements are understood to be mere requests to consider and examine and negotiate; no one can reasonably regard them as otherwise unless the circumstances are exceptional and the words used are very plain and clear4. Leonard v. Pepsico: an advertisement is not transformed into an enforceable offer merely by a potential offerees expression of willingness to accept the offer.. 5. Well established rule: advertisements and order forms are mere notices and solicitations for offers which create no power of acceptance in the recipient6. The absence of any words of limitation such as first come, first served renders the alleged offer sufficiently indefinite that no contract could be formed Destroying the Offer Offers create the power of acceptance in the offereeFour ways to terminate an offer: Restatement 361. Rejection 2. Revocation3. Lapse4. Death or Incompetence of the offeror Rejection Restatement 38 Rejection: (1) An offeree's power of acceptance is terminated by his rejection of the offer, unless the offeror has manifested a contrary intention. (2) A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement.Direct Revocation: the offerors termination of her offer Restatement 42: An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.Indirect Revocation Dickinson v. Dodds: D sent P a memo in which he offered to sell a piece of land with the offer held open until 9 am on Friday. P accepted the offer but did not inform the D. D sold the land to a third party1. offers may be revoked before acceptance, even impliedly 2. Promises to keep an offer open until a certain time will be only a promise unless made binding by consideration and acceptance necessary to form a binding agreement 3. Offeror is in charge until acceptance has been made4. Offeror can kill first offer by making another offer which is inconsistent with the firstLapse of Time Restatement 41: Lapse of Time: An offeree's power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time. (2) What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made. (3) Unless otherwise indicated by the language or the circumstances, and subject to the rule stated in 49, an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day on which the offer is received. Minn. Linseed Oil Co. v. Collier White Lead Co.: P sent telegram to D saying they would sell oil at 58 cent, on the same day the D accepted P withdrew the offer. D replied saying sale was effected before the request to withdraw was received 1. offers have to be accepted within a reasonable time if no time is givenif not the offer will lapse due to inaction2. Reasonableness depends on the circumstances 3. Deposited/accepted rule: when acceptance is put into the mailbox you have a contract Mailbox Rule!1. When Acceptance Becomes Effective:a) Mailbox Rule: In most courts, acceptance is effective upon proper dispatch.(1) An acceptance made in a manner and by medium invited by an offer is operative and completes the manifestation of mutual assent as soon as its put out of the offeree's possession, without regard to whether it ever reaches the offeror. 63.(2) The mailbox rule does not apply if the offer provides for otherwise.(3) In order for the mailbox rule to apply it must be properly dispatched and addressed correctly.b) If both an acceptance and a rejection are sent, then the one that is sent first will reign. Rejection must be received before the acceptance. However, acceptances are effective on dispatch.c) Option Contracts: the acceptance of an option contract is effective upon receipt by the offeror, not upon dispatch.d) Mistake in Transmission: Mistake is on the sender if the receiver does not know or have reason to know that it was a mistake.2. Indefiniteness: No contract will be found if the terms of the parties agreement are unduly indefinite.a) The court will supply the missing terms. But if the court believes that the parties intended to contract and the court believes that it can supply a reasonable value for the missing term, it will do so. Parol Evidence: The parol evidence rule limits the extent to which a party may establish that the discussions or writings prior to the signed written agreement should be taken as a part of the agreement. In interpreting and enforcing a contract, questions as to the parties intent often arise. Where the parties to a contract express their agreement in writing with the intent that it embody the full and final expression of their bargain, any other expression-written or oral-made prior to the writing, as well as any oral expression contemporaneous with the writing, are inadmissible to vary the terms of the writing. This rule is designed to enforce the apparent intent of the parties. Integration: A document is said to be integrated if it is intended to be a final expression of the agreement. Partial Integration: a partial integration is a document that is intended to be final, but that is not intended to include all details of the agreement. 210 When a writing is a partial integration no document or oral evidence may be admitted if it contradicts a term of the writing. Thompson v. Libby (Objective): Extrinsic evidence is inadmissible to contradict or vary the terms of a valid written instrument. Total Integration: is a document that is not only an final expression of the agreement but also included all the details of the agreement. 210 If a document is totally integrated no term can be altered or even added by temporaneous agreements or negotiations. Taylor v. State Farm (subjective): a writing itself cannot prove its own completeness. Nanakuli Paving v. Shell Oil: Evidence of trade usage is only admissible if the party offering the evidence can prove that such usage exists. However, it that usage conflicts with the express terms of the K it is inadmissible. Roles of Judge and Jury: most courts hold that the judge, not the jury, should decide whether the writing was intended as an integration, and if so, whether its partial or total. Courts disagree about how the judge should make these decisions. Two extreme positions: Four Corners: the judge decides whether there is an integration by looking at the document alone, and nothing else. Corbin View: looks at a available evidence including testimony, to determine the parties actual intent. Merger Clause: states the writing constitutes the sole agreement between the parties. Most of the time if a contract has a merger clause it will be considered totally integrated. Situations Where the Rule doesn't apply: Fraud, Mistake, or other voidability: Even if a writing is a total integration, a party may always introduce evidence of earlier agreements to show illegality, fraud, duress, mistake, lack of consideration, or any other fact that would make the contract voidable.

Death or incapacity of the offeror Restatement Second of Contracts 48: an offerees power of acceptance terminates when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract The death of a party who had the right of revocation or withdrawal of an offer to contract renders the completion impossible and terminates the negotiations at the very point where they were when he died Acceptance Restatement Second of Contracts 50(1): acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer An effective acceptance requires 3 things:1. A manifestation of assent by the offeree to the terms of the offer 2. The acceptance must be made in the manner invited or required by the offer; and 3. The acceptance must occur while the offer is still open if the offer has already been revoked, the acceptance is not effective 4. a binding contract is not formed until acceptance has been communicated to the offeror. An uncommunicated intention to accept an offer is not an acceptance5. Communication of acceptance of an offer to ones agent is not sufficient and does not bind the offeror6. Unless the offer is supported by consideration, an offeror may withdraw his offer at any time before acceptance and communication of that fact to him7. Offer minus withdrawal plus acceptance equals NO CONTRACT8. An agent is a fiduciary steps into the shoes of the principal Adams v. Lindsell: D sent a letter to P offering to sell them 800 tods of wether fleece upon receipt of their acceptance in the course of post. The letter was misdirected by the D, in consequence of which it was received late. P wrote back agreeing to accept, however D sold to someone else 1. an offer is accepted upon mailing of the acceptance MAILBOX RULE2. The mailbox rule applies because once the acceptance is mailed it is out of the hands of the offeree3. Everything possible has been done to accept the offer4. Mailbox rule doesnt apply to withdrawals because they have to be actually communicated Carlill v. Carbolic Smoke Ball Co.: D placed various ads in various newspapers offering a reward of 100 pounds to any person who used the smoke ball 3 times per day and contracted influenza. P used the ball as directed and caught influenza. P made a claim for the reward and D refused to pay 1. an offer for a reward becomes binding upon the performance of the conditions requested in the offer2. In cases where the offer can be accepted by performance only, notification of acceptance does not need to precede performance Marchiondo v. Scheck: P brought suit against D to recover his broker fees based on the fact that he communicated Ds offer to sell his real estate to his client and had received an acceptance before D revoked his offer1. part performance of an offer of a unilateral contract results in a contract with a conditionwhich is full performance by the offeree2. An offer may not be revocable after performance has begunAcceptance by Silence or Inaction Restatement Second of Contracts 69 1 (c): Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.Imperfect Acceptances: any change to an offer makes it a counteroffer.Restatement 39 Counter-Offer: A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer.1. A counteroffer is simultaneously an implied rejection of the original offer and a new offer which the offeror now has the power to accept 2. An imperfect acceptance can also take the form of an acceptance with a condition 3. Acceptance cannot add anything to the offer. Acceptance must correspond with the offer, with only minor discrepancies tolerated today (Mirror Image Rule) Restatement Second of Contracts 32: a contract is valid if it is so definite in its terms that the performances to be rendered by each party are reasonably certain Restatement Second of Contracts 34 (a): Under Restatement Second of Contracts 21 express manifestations of the parties that their legal relations are not to be affected are generally accorded deference by courts Consideration ONE purpose of the law of consideration is to distinguish between gratuitous and non-gratuitous promises Restatement 71: to constitute consideration, a performance or a return promise must be bargained for... a performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise the performance may consist of: 1. an act other than a promise2. a forbearance 3. the creation, modification, or destruction of a legal relation The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person mere gratuitous promises arent enforceable Gift promises may have conditions that do not represent consideration Past consideration is not consideration at all A gift is enforceable when it is given Consideration itself shows that the party is serious about the contract Consideration: both benefits and determents incurred by both parties in the same exchange in general a waiver of any legal right at the request of another party is a sufficient consideration for a promise Forbearance of legal rights can serve as consideration A valuable consideration in the sense of the law may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other Doesnt matter if consideration benefits the other party Schnell v. Nell: Ds wife, who owned no property of her won, died after inserting in her will to leave $200 dollars to P and two other people. The agreement stipulated that the 3 parties would pay one cent in return for the $200 dollars payments. P brought suit against for nonpayment While inadequacy of consideration will not vitiate an agreement, it does not apply to a mere unequal exchange of money The exchange would have been valid if the cent had been particular or was of indefinite value A moral consideration only will not support a promise Restatement 75: one promise can be consideration for another promise. The promise is enforced by fact of bargain Gratitude or moral obligations arising from past acts are not sufficient consideration to create a valid contract, thus the promise to compensate P for her injuries is unenforceable Past consideration is not valid consideration Exceptions to moral obligation being consideration Moral obligation is consideration if there is a revival of the promise that the law otherwise quashed Moral obligation is sufficient consideration in only some cases: debts barred by SOL; debts incurred by infants; and debts of bankrupts These may be enforced b/c they merely remove an impediment created by law to enforce debts that are due, but which public policy protects debtors from having to pay In this case, Ds expenses were not bestowed at his own request The court held that moral obligation is a sufficient consideration for an express promise is to be limited in its application to cases where at some time or other a good or valuable consideration has existed (an exception) Webb v. McGowin: P worked at a mill and fell with a 75 pound block so that the block would be diverted and would not fall on McGowin. P was badly crippled for life as a result, and McGowin agreed to pay P $15 dollars every two weeks for the rest of Ps life. The payments were made until McGowin died, P sued his estate for payments where the promisee cares for, improves, and preserves the property of the promisor, though done w/o his request, it is sufficient consideration for the promisors subsequent agreement to pay for the service b/c of the material benefit received 3. Non Promises:a) Illusory Promises: A statement which appears to be promising something, but which in fact does not commit the promisor to anything at all. Promisor cannot reserve a choice. 77.(1) One main type is when the promisor reserves the right to change his mind.b) Alternative Promises: A promise which reserves to the promisor several alternatives performances is generally consideration IF each would have been consideration if they had been bargained for by themselves. 77(a).c) Right to Terminate: if the contract allows for one or both parties to terminate the agreement then the promise may be illusoryd) Implied Promises: Courts try to avoid striking down agreements for lack of consideration. One way to do this is to find implied promises. Wood v. Lucy, Lady Duff Gordon. Restatement 86: Promise for Benefit Received (1) a promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice (2) a promise is not binding under subsection (1): (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not unjustly enriched; or(b) to the extent that its value is disproportionate to the benefit Promissory EstoppelRestatement 90: a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires Offers a mechanism whereby a purely gratuitous promise might be enforced Ricketts v. Scothorn: Ps grandfather gave her a promissory note for $2,000 dollars and stated that none of his grandchildren worked and neither should the P. P left her employment on the reliance of the promise. The grandfather died and his estate refused to pay claiming the promise lacked consideration Promissory estoppel prevents a promisee from using lack of consideration as a defense to breach of contract A promise can be enforced even though it was given w/o consideration if the promisee has foreseeably and reasonably relied on the promise to her detriment Claims of promissory estoppel only succeed where all other elements of a contract exist, but consideration is lacking There is no gap for promissory estoppel to fill when consideration existStatute of Frauds Because of the statute of frauds, some agreements are not enforceable unless there is special proof that the agreement was made What is the Statute of Frauds? an act for prevention of frauds and perjuries. It required that certain kinds of agreements must be in writing to be legally enforceable The primary purpose of the statute of frauds is to provide reliable evidence of the existence and terms of the contract, and the classes of contracts covered seem for the most part to have been selected b/c of importance or complexity Restatement 110: Classes of Contracts Covered (1) the following classes of contracts are subject to a statute, commonly called the statute of frauds, forbidding enforcement unless there is a written memorandum or an applicable exception;(a) a contract of an executor or administrator to answer for a duty of his decedent (b) a contract to answer for the duty of another (c) a contract made upon consideration of marriage(d) a contract for the sale of an interest in land (e) a contract that is not to be performed within one year from the making thereof

1. a writing for the sale of land must contain an express statement of consideration, a description of the land, signature of the party to be bound, and the parties to the contract. Also the general terms and conditions upon which the sale will be made 2. identification, description, mechanism, and terms and conditions 3. if a party has relied on an oral promise and rendered part performance the other party should be estopped from asserting the statute of frauds Expect damages: benefit of the bargain damagesOffers are more formal than promises Statements of future intent do not constitute a promise All offers contain promises Promissory estoppel cannot be based on preliminary negotiations Reliance must be reasonable and foreseeable Fraud & Misrepresentation 6 Elements for the seller: 1. Seller made a representation 2. Of present fact 3. One or more was false 4. It was material 5. Seller knew it was false 6. Made to induce the buyer 3 Elements for the buyer:1. Reliance upon misrepresentation 2. Reliance was justified 3. Buyer was injured 3 types: innocent, negligent, fraudulent ***based upon common law and common sense the action is generally a suit for rescission to make an agreement unenforceable in determining whether an agreement should not be enforced or should be rescinded courts generally look to (1) how important the misrepresentation was, (2) whether the other party relied on that misrepresentation, and (3) if that reliance was reasonable Absent a false statement, the concealment of a known defect is not actionableLack of Capacity Kiefer v. Fred Howe Motors, Inc.: The contract of a minor, other than for necessaries, is either void or voidable at his option. DEFENSESDuress and Undue Influence Restatement 175: there is duress when assent is induced by an improper threat that leaves the victim no reasonable alternative. Outside of threats to ones person or property, claims for duress usually involve threats to a persons economic interests. a contract is voidable on the ground of duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding the exercise of his free will Immediate possession of needful goods is threatened, or more particularly, by proof that one party to a contract has threatened to breach the agreement by withholding goods unless the other party agrees to some further demand It may also appear that the threatened party could not obtain the goods from another source of supply and that the ordinary remedy of an action for breach of contract would not be adequate In economic duress there is no way out Restatement 177: Undue Influence WHEN UNDUE INFLUENCE MAKES A CONTRACT VOIDABLE 1. Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare.2. If a party's manifestation of assent is induced by undue influence by the other party, the contract is voidable by the victim.3. If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the undue influence either gives value or relies materially on the transaction a. A party may rescind an agreement by showing such agreement was the result of undue influence b. Undue influence is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature, persuasion which overcomes the will w/o convincing the judgment c. By statutory definition, undue influence includes taking an unfair advantage of anothers weakness of mind, or necessities or distress d. to make a good contract a man must be a free agente. In essence undue influence involves the use of excessive pressure to persuade one vulnerable to such pressure pressure applied by a dominant subject to a servient object f. First aspect: Undue susceptibility may consist of total weakness of mind or spirit which leaves a person entirely w/o understanding g. Second aspect: involves an application of excessive strength by a dominant subject against a servient object h. There are limits to persuasion with adults (Hammond)i. 7 factors of over-persuasion: 1. Discussion of the transaction at an unusual or inappropriate time 2. Consummation of the transaction at an unusual place3. Insistent demand that the business be finished at once 4. Extreme emphasis on untoward consequences of delay 5. The use of multiple persuaders by the dominant side against a single servient party6. Absence of third party advisers to the servient party 7. Statements that there is no time to consult financial advisers or attorneys Illegality and Public PolicyRestatement 181: Effect of Failure to Comply with Licensing or Similar Requirement If a party is prohibited from doing an act b/c of his failure to comply with a licensing, registration or similar requirement, a promise in consideration of his doing that act or of his promise to do it is unenforceable on grounds of public policy if(a) The requirement has a regulatory purpose, AND(b) The interest in the enforcement of the promise is clearly outweighed by the public policy behind the requirement Restatement 178: a promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms R.R v. M.H.: P and his wife entered into a surrogacy agreement with D. D changed her mind prior to giving birth and expressed a desire to keep the child1. Surrogacy agreements that compensate the birth mother directly, provide compensation in excess of expenses, and obtain the birth mothers consent to a custody agreement prior to birth violate public policy The Blue Pencil Rule: eliminating grammatically severable, unreasonable provisions 1. Where the severability of the agreement is not evident from the contract itself, the court cannot create a new agreement for the parties to uphold the contract Unconscionability: contract law reasons for NOT enforcing contacts prevents one party to a contract from taking undue advantage of the other and enforcing a too one sided deal Two types of unconscionability:1. Procedural: absence of meaningful choice by one of the parties Oppression: unequal bargaining power between the parties Surprise: the unconscionability is hidden in legal jargon 2. Substantive: unreasonably favorable contract terms to one of the parties ***both must be shown however, in some situations one is okay if an extreme amount is present where the element of unconscionability is present at the time a contract is made, the contract should not enforced Mistake: Contract law reasons for not enforcing contracts a contact entered into by mistake is voidable Restatement 151: A mistake is a belief that is not in accord with the facts at the time the contract was entered into Sherwood v. Walker: case of the not so barren cow!1. A mutual mistake regarding the substance of the subject matter of a contract may render that contract unenforceable.2. There is no contract if there is a difference or misapprehension as to the substance of the thing bargained for, or if the thing actually delivered or received is different in substance from the thing bargained for and intended to be sold.3. When parties to a contract agree upon an object, taking for granted that it will not change, a change in the nature of the object could void the contract. It is easier for the party adversely affected by the mistake if the mistake is mutual Restatement 152 Mutual Mistake: Mutual mistake occurs when both parties to a contract are under substantially the same erroneous belief as to the true facts at the time of the exchange Elements of mutual mistake: 1. The mistake of both parties must be as to a basic assumption as to which the contract was made***the shared mistake must change the essential nature of the contract2. The mistake must have a material effect on the agreed exchange of promises 3. ***it must be demonstrated that it would be too unfair to enforce the bargain called for in the agreement 4. The party seeking to avoid the contract must not bear the risk of that mistake Conditions: an excuse for not doing what one agreed to do The non-occurrence of an express condition can provide an excuse to any legal obligation to perform that contract Restatement 224 Condition Defined: a condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance is due Non-occurrence of condition excuses performance Restatement 225 Effect of the Non-Occurrence of a Condition: performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused the non-occurrence of a condition is not a breach 1. a contract is not binding where a condition precedent to performance of the agreement was not met 2. a condition precedent is a factor event which that parties intend must exist or take place before there is a right to performance 3. if the condition precedent is not fulfilled the contract is not enforceable conditions are intimately tied to promises the condition must occur before the contract is activated conditions are giant exercises in logic (Hammond) conditions can always be viewed from each parties perspectives Two types of conditions: express and implied Express conditions are actually spelled out in the text of the contract Implied conditions: condition agreed upon by the parties as evidenced conduct of the parties The three consequences of an express condition language in a contract are straightforward and easy:1) Excuse of performance: non-occurrence of a condition excuses any duty to perform 2) Strict compliance: occurrence of a condition requires strict compliance with the contract language of condition 3) No breach: the non-occurrence of a condition is not a breach of contract The party to the contract who is the seller would have to be the party to excuse the non-occurrence of the condition Peacock Const. Co. v. Modern Air Cond.: P subcontracted with D and written subcontracts provided that D would pay P in full w/in 30 days after completion of the work. However, D would not pay b/c the owner had not paid in full1. Unless expressly agreed, a subcontractors payment is not conditioned upon payment to the contractor by the owner2. Provisions calling for payment after written acceptance do not set condition precedents, they constitute absolute promises to pay, fixing payment by the owner as a reasonable time for making payment to the subcontractor Excusing Conditions! (Avoidance of forfeiture or Prevention) Avoidance of forfeiture or prevention excuses/extinguishes the excuse for going what you agreed to do so that you are obligated to do what you agreed to do Restatement 229 excuse of a condition to avoid forfeiture: to the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange Prevention: a condition will be excused if the party favored by the condition wrongfully prevents or hinders the fulfillment of the condition Modification Modification requires good faith by the party seeking the modification and new consideration to support the modification Modification requires consideration a modification is a promise and can thus be modified with mutual consent Parties can show mutual consent by their behavior Cannot accept something while calling it a breach Cannot waive something and attempt to take the waiver back later May Centers v. Paris Croissant: if an obligee accepts a performance by the obligor that differs from what is due, the duty is discharged ***by their own actions the parties modified the contract*** (Restatement 278)Impossibility: occurrence of something not provided for in the K as an excuse to not perform Restatement 263: If the existence of a specific thing is necessary for the performance of a duty, its failure to come into existence, destruction, or such deterioration as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made. Impossibility applies when an unexpected event occurs which makes performance by a party objectively impossible 1. Provides a defense to a breach of contract whereby the Ds duties have been validly discharged Taylor v. Caldwells to allow P to use its musical hall for concerts, however the hall was destroyed by fire. It was no ones fault, but the P sued 2. If contract performance depends on the continued existence of a person or thing, and that person or thing ceases to exist, performance may be excused for impossibility of performance Impracticability Restatement 261: Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary. Impracticability excuses performance when it would be unreasonably costly for a party to carry out its obligations Performance may be impracticable because extreme and unreasonable difficulty, expense, injury or loss to one of the parties will be involved Frustration of Purpose Nearly identical to the doctrine of impossibility Performance remains possible but the expected value of the performance to the party seeking to be excused has been destroyed by the supervening event Restatement 265 Discharge by supervening frustration: Where a partys principal purpose is substantially frustrated w/o his fault by the occurrence of an event of which the nonoccurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary Krell v. Henry: D contracted to use Ps flat to view the coronation procession of King Edward. The coronation was postponed and D refused to honor the agreement although the purpose was not expressly stated in the contract 3. Performance will be excused when the purpose of a contract is frustrated by an unforeseeable event and the purpose was w/in the contemplation of both parties when the contract was executed4. A contracts purpose may be inferred from surrounding circumstances Mel Frank Tool & Supply v. Di-Chem Co.- D leased premises from P but vacated after the city informed that it could no longer store chemicals on the premises. 1. A contract can only be avoided under frustration of purpose when the entire purpose for entering into the contact is frustrated 2. So long as there is a serviceable use for the property, a partys performance is expected even though the remaining uses are less lucrative Anticipatory Repudiation: unwillingness or inability to perform as an excuse for nonperformance Restatement 250: Repudiation is: (a) a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach under 243, or(b) a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach. Consists of words or conduct by a party to a contract that a reasonable person would interpret as an expression of refusal to render any further performance Hochster v. De La Tour: P entered into a contract with D to accompany D on a trip. D changed his mind before the trip and refused to pay P any compensation 1. If two parties enter into a contract to be performed at a designated time in the future, a party may sue before the contract was to be performed 2. A party need not wait until the time for performance has passed Material Breach One is excused from performing because of the other guys breach only when the other guys breach is a material breach Restatement 237: it is a condition of each partys remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time In order for there to be a breach there must be substantial non-performance of a constructive condition and the issue must be material to the contract Nichols v. Raynbred: P promised to deliver a cow to D in exchange for 50 shillings. D did not pay, nor did P deliver the cow. In a promise for a promise a party need not perform before recovery on the contract is allowed. In an exchange of a promise for a promise, each promise is treated as independent of the other. Each party is therefore entitled to sue the other for nonperformance, even if the party bringing suit had not performedWhat constitutes a material breach? the measure of damages for a trivial and innocent omission is not the cost of replacement but the difference in value 3. Substantial performance mitigates material breach 4. A promisor who has substantially performed is entitled to recover, although he has failed in some particular to comply with his agreement 5. However, one who tenders a performance so deficient that it can be remedied only by completely redoing the work for which the contract called has not established, as a matter of law, that he has substantially performed his contractual obligation 6. Substantial does not excuse failure to perform an express condition 5. Where the breach is not material and the contract does not explicitly state that an immaterial breach will excuse further performance, termination of the contract is improper, and the injured party is limited to damages for the breach Election of Remedies: when a party breaches a K the non-breaching party must choose between two remedies it can elect to terminate the contract and recover liquidated damages or it can continue the contract and recover damages solely for the breach Once a party elects to continue the contact, it can never thereafter elect to terminate the contract based on that breach, although it retains the option of terminating the contract based on other subsequent breaches Waiver v. Election of Remedies: 1. Waiver a party may by words or conduct, waive a provision in a contract or eliminate a condition in a contract which was inserted for its benefit 2. Election of Remedies: an election is not a waiver of any rights under the contract but rather a choice between two inconsistent remedies for breach of the contract In essence, the election of remedies doctrine is implicated only in .the absence of waiver The remedy of termination is available only where one party has materially breached the contract Restatement 243 Total Breach: with respect to performances to be exchanged under an exchange of promises, a breach by non-performance gives rise to a claim for damages for total breach only if it discharges the injured partys remaining duties to render such performance Total Breach: if the breach is material, then the non-breaching party is justified in suspending its performance and if it is sufficiently serious, cancelling the contract; it may also then sue for damages measured by the breaching partys failure to perform now and in the future Partial Breach: if the breach is not material or there is an argument that the other side accepted the material breach and continued performance there is still a breach and there is still a remedy in damages but only for the present breach, not for future obligations Specific Performance 1. Specific performance is an order by the court requiring a party to perform exactly what was promised under the contract 2. Van Wagner Advertising v. S & M: A court should award specific performance in breaches of real estate contracts and in other breaches where the uniqueness of the property in question raises uncertainty in valuing it. The imposition of an equitable remedy must not itself work an inequity, and specific performance should not be an undue hardship 3. Walgreen Co. v. Sara Creek Property Co.: P operated a store in Ds mall. The lease contained a clause in which D promised not to lease any space in the mall to anyone wanting to operate a pharmacy Injunctive relief is appropriate when money damages are difficult and costly to calculate and would not cure the ill the P wantsDamages

I. Expectation, Restitution, Reliance

a. Generally, damages must be determined with certainty, courts dont commonly make parties adhere to contracts, usually makes one party pay other party for damages caused.

i. Punitive damages are not usually given in breach of contracts disputes.

II. RELIANCE: Damages that put promise in position had he never entered the contact at all.

a. Typically used when:

i. Profits are too uncertain to determine but can show expenses

ii. No enforceable contract, but entitled to something under promissory estoppel

iii. Failure to perform on land contract and jurisdiction doesnt allow expectation damages.

1. Reliance = expenditures made in preparation of performance expenses saved in breach

b. CASES:

i. Sullivan v. OConnor (Messed up nose job on entertainer)I: Should the damages be based on reliance?

F: had two operations done to her nose by . claimed that had promised to enhance her beauty and improve her appearance, and sued for breaking his promise.

R: Contracts usually issue expectation damages except here, where the court makes an exception for medical breaches of contracts.

H: can bring breach of contract action against because he made pro-mises of a specific conclusion, and that pain and suffering beyond that contemplated were compensable.

III. EXPECTATION: (compensatory): damages that put promisee in condition that he would have been if transaction occurred, the normal damages offered in contract law.

a. Expectation measures are preferred because it causes people to breach only when it makes at least one party better off and no one worse off, i.e. encourages only efficient breaches

b. Expectation = loss in value to him of the other partys performance caused by its failure or deficiency + any loss, incidental or consequential, caused by breach any cost or other loss that he has avoided by not having to perform.

c. CASES:

i. Hawkins v. McGee (Infamous hairy hand case/ promise of 100% perfect hand)

I: Can oral guarantee of 100% success in operation hold a doctor liable when operation fails? (i.e.: when a special contract is made?)

F: McGee is a doctor and Hawkins was his patient. Hawkins paid McGee to perform surgery on his hand. Hawkins testified that McGee guaranteed the hand would turn out 100% perfect or 100% good. It did not turn out that good, and Hawkins sued.

R: The Damages that should be awarded are the difference between the value of what P would have received if the contract had been carried out and the value P currently possesses (plus incidental losses resulting from the contract being breached).

H: Yes, utterance of words are done with the intention that they would be taken at face value by patient inducing them to consent to operation. D went beyond offering a medical opinion when offering a perfect hand

IV. RESTITUTION: Damages that relinquish benefits provided to promisor derived from promise covers any benefits conferred by P on D in the performance (NOT available when P has fully performed).

a. Restatement 371 Measure of Restitution Interest If sum of money is awarded to protect a parties restitution interest, it may as justice requires to be measured by either i. The reasonable value to the other party of what he has received in terms of what it would have cost him to obtain it from a person in the claimants position, or ii. The extent to which the other partys property has been increased in value or his other interests advanced. V. LIMITATIONS ON DAMAGES (THREE)a. Remoteness or Foreseeability of Harm, Certainty of Harm, and Avoidability of Harm. i. REMOTENESS OR FORSEEABILITY OF HARM1. Restatement 351 Unforseeability and related limitations on damages. a. Not foreseeable NO DAMAGES b. Foreseeable if: i. Loss follows in ordinary cause of events (consider separation in time and space between breach and consequences, customs of the trade, etc.) ii. Party in breach knows of special circumstancesc. Exceptions to foreseeability damages i. Excluding loss of profits, paying only reliance damages ii. If giving damages exults in overcompensationd. Damages can be curtailed by excluding recovery for lost profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation. e. Test of foreseeability: Determine whether D would have agreed to the contract price had he known the extent of his liability.

2. CASES

a. Hadley v. Baxendale (Failure to deliver on time shaft that runs mill)I: Is D liable for loss of profits?R: Must be foreseeable. For special situations, damages can be awarded only if P informs D of the special situation or if the damages were reasonably foreseeable. Note: this encourages information sharing when deviating from a default rule.H: NO! Damages limited to what was contemplated at the time of contract.

b. Hector Martinez v. South Pac. Trans. (Delay and damage of dragline trans)

I: Due to delay and damage of Ps machinery, should D be held liable for Ps loss profits without and conveyance of special circumstances notice? R/H: Yes, as long as its foreseeable and not remote to a reasonable person.

ii. UNCERTAINTY OF HARM

1. Restatement 352 Uncertainty as a Limitation on Damages: Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.

2. CASESa. Chicago Coliseum Club v. Dempsey (Boxing match breach by boxer)I: What damages to provide when expected profits cannot be determined?R/H: Only RELIANCE and RESTITUTION expenses that flow from and are the result of the breach.

b. Anglia Television v. Reed (Actor breaches contract to appear on television film)I: Since D cannot determine lost profits due to breach can they claim wasted expenditures (reliance damages) BEFORE contract signed?R/H: Yes, P can collect damages even prior to contract provided that it was foreseeable loss due to breach. iii. AVOIDABILITY OF HARM1. Restatement 350 Avoidability as a Limitation of Damages: Damages not rewarded for loss that injured party could have avoided without undue risk, burden or humiliation except when injured party has made reasonable but unsuccessful efforts to avoid loss. a. Mitigation forces people to behave in non-wasteful waysb. Under the mitigation of damages doctrine, a person who has suffered an injury or loss should take reasonable action, where possible, to avoid additional injury or loss. i. Failure of a plaintiff to take protective steps after suffering an injury or loss can reduce the amount of Ps recovery.c. Buyers duty to mitigate is embodied in the duty to cover, (i.e: he must attempt to purchase substitute goods from another supplier) no attempt to recover limits damages to recover only the difference between the market price at the time when the buyer learned of the breach and the contract price.d. Sellers duty to mitigate is much less than the buyers. If a buyer repudiates before delivery or rejects delivery seller has a choice of remedies: i. Resell and recover difference between resale price and contract price ii. Not resell and recover the difference between market price at the time and place for tender and unpaid contract price iii. Recover lost profits that do not require mitigation.

e. CASES i. Rockingham County v. Luten Bridge (breach of buyer on construction of bridge)I: Should D be liable for damages sustained by P post notification of breach???R/H: No, it Ps duty to do nothing to increase the damages flowing from breach. Damages = expenses incurred prior to breach + expectancy interest (profit expected)

f. Buyers Breach/Sellers Remedies i. Sellers Resale (2-706) ii. Damages = resale price contract price + incidental damages expenses saved in breach

1. All aspects of resale should be reasonable. (Boat case)g. Sellers Breach/Buyers Remedies i. Substitute goods in good faith without unreasonable delay (2-712)

1. Damages = cost of substitute cover contract price + incidental/conseq damages expenses saved in breach. ii. Damages for non-delivery or repudiation1. Damages = market price @ breach contract price + incidental/conseq damages expenses saved in breach.a. Incidental damages: inspection, receipt, transportation, care, custody of goods rejectedb. Consequential damages: any loss resulting from general or particular requirements and needs of which the seller @ time of contracting had reason to know and which could not be prevented by cover or otherwise, any injury to person or property proximately resulting from any breach of warranty, collectible if parties foresee the possibility of such harm and agree on an estimated amount. ADDITIONAL REMEDIESSPECIFIC PERFORMANCE (SP): Awarded when money damages are not adequate, i.e. sentimental value, priceless items, land, special, unique items, items with subjective value, hard to value items, agreements not to compete, transfer controlling block of shares. I. SP is not allowed if:a. adequate damage compensation is availableb. indefinite contract terms, i.e. indefinite timec. difficulty in enforcement and supervisionCases: I. Land: For cases brought in equity, will be used primarily in real estate deals or other personal property that is tough or impossible to value or otherwise replace. Loveless v. Diehl (SP on option to purchase land improved upon)I: Whether or not SP can be awarded when the breached contract at issue involves real property? Should SP be upheld in sale of land promised to one party and sold to 3rd? R/H: Yes, land is special, damages are clear and Ds would be unjustly enriched otherwise, P had invested improvements in land.SN: If no SP, people would not want to enter purchasing deals. II. Personal Service: SP for personal service are usually DISFAVORED!Cases: The Case of Mary Clark, a woman of ColorI: Whether Ps service, although involuntary in fact, shall not be considered voluntary by operation of law, being performed under an indenture voluntarily executed? SP?R/H: State of servitude produced by direct or permissive coercion will not be considered voluntary either in fact or in law, therefore, no SP.Lumley v. Wagner (Contracted singer breaches in attempt to sing at competitors theater) I: May a court impose a negative injunction on an individual, preventing her from doing something she indirectly contracted not to do?R/H: Since the court cannot order SP, will attempt to bind parties to contract by preventing her from doing something she bound herself not to do injunction allowed due to negative stipulation specifically written into contract. Ford v. Jerman (Contracted singer breaches in attempt to sing at competitors Theater)I: Can specific performance be awarded for the breach of a contract requiring the personal service of an actor?R: Specific performance cannot be awarded for breach of a personal service contract, especially when the specific performance is requested of an actor.RESTITUTION (breach of contract)Restitution generally pertains to situations where one person has without intending to make a gift conferred a benefit on another. Quantum meruit: Restitution can also provide an independent cause of action when there is no contract at all.Case(s): Bush v. Canfield (agreement of delivery of flour priced per barrel) I: Should the damages suffered by an innocent party under a delivery contract under which an advance has been paid be calculated by referring to the price of the goods at the time of delivery?R/H: When a party pays an advance under a contract for the delivery of goods, the proper measure of damages in the event of breach is to refund the advance. 371 MEASURE OF RESTITUTION INTERESTIf a sum of money is awarded to protect a party's restitution interest, it may as justice requires be measured by either (a) the reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant's position, or (b) the extent to which the other party's property has been increased in value or his other interests advanced. 373 RESTITUTION WHEN OTHER PARTY IS IN BREACH Injured party has no right to restitution if he has performed all his duties under the contract and no performance by the other party remains due other than payment of a definite sum of money for that performance. Cotnam v. Wisdom (Surgeons attempt to be compensated for accident victim on street) I: Is there an implied contract when surgeons fetched to the scene of an accident seek to help the accident victim who later dies from injuries? Can Ps take into account victims financial condition?R1: implied contract : an insane person, idiot, or a person completely devoid of senses at the time and reason by sudden stroke of an accident or disease may be held liable for necessaries furnished to him in good faith while in that unfortunate and helpless condition. R2: Because surgical operation is conceived to be performed with due skill and care, the price to be paid does not depend on the resultR3: financial condition of patient cannot be considered where there is no contract and recovery is sustained on an implied contract unless trade custom proves otherwiseexcept in situations of emergencies when implied contracts require only reasonable compensation.A. Statute of Frauds:1. Suretyship: a promise to pay a debt for another is subject to the SOF, and is therefore unenforceable unless put into writing.a) Main Purpose Rule: if a promisor's chief purpose in making his promise of suretyship is to further his own interest, his promise does not fall within the SOF. 116.2. Marriage Provision: a promise for which the consideration is marriage or a promise of marriage is within the statute.3. Land Contract Provision: a promise to transfer or buy any interest in land is within the SOF.4. One Year Provision: If a promise contained in a contract is incapable of being fully performed within one year after the making of the contract, the document must be in writing.a) Time runs from the making. This means that the one year period is measured form the time of exicution of the contract, not the time it will take the partied to perfomr.b) The one year provision applies only if complete performance is impossible within one year after the making of the contract. It is only the possibility of performance, not the possibility of discharge, that takes the contract out of the one year provision. Thus, the fact that the contract may be dischargedby impoissibility or frustration does not take it out of the SOF.5. Sale of Goods: if the oral agreement is for the sale of goods over $500 it is subject to the SOF, unless there is some writing sufficient to indicate that a contract has been made. However, there are some exceptions.a) Exceptions: Specially Manufactured Goods, Estoppel, Goods Accepted or Paid for