Term
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Definition
anything of value promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, abstinence from a future action, and much more.
Must be regarded by both parties
Promisor does not have to benefit; promisee's legal rights could be reduced as consideration (ex. refraining from drinking [conduct])
*under "pre-existing duties", if a legal obligation to pay already exists, it is not consideration
IMPORTANT: past performance is NOT consideration. Consideration must have futurity to it. |
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Term
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Definition
| commitment by someone to do or not do something; the central component of all contract language |
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Term
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Definition
refers to the situation where there is a common understanding in the formation of the contract
Necessary requirement for the formation of a contract |
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Term
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Definition
| a common type of counter-offer which purports to accept original offer with expressed conditions of additional or different terms |
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Term
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Definition
| an agreement to exchange goods at a price; an exchange of promises, or promise for performance |
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Term
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Definition
| an exchange of one promise for another promise with futurity |
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Term
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Definition
| an exchange of promise for performance with an implied immediacy |
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Term
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Definition
| agreement to terms of contract; gauged objectively by conduct from any reasonable person |
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Term
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Definition
"fair practice"; estops offeror from poor practice; enforces promise without consideration
Requirements:
1. actual reliance on K
2. reliance was foreseeable to breaching party
3. clearly detrimental
4. can only be avoided by enforcement of law
Must prove all elements for doctrine of promissory estoppel to act. |
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Term
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Definition
| a conditional contract that is left open for a period of time; consideration must be given to hold contract open |
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Term
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Definition
| Uniform Commercial Code; governs the transfer (purchase and sale) of all goods; protects warranty of the transfer; does not protect services |
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Term
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Definition
| in short, as long as the parties are aware that there is at least one essential term (ET- such as rate, $) not yet agreed upon, there is no contract |
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Term
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Definition
shrinkwrap terms: terms and conditions packed in shipped material
clickwrap terms: "I agree" on screen with order; must scroll through terms and conditions
browsewrap terms: implied, usually inaccessible terms and conditions for use of site (browser not encouraged to read) |
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Term
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Definition
| Once an offer is sent in mail (placed in mailbox, sent in email) it is acceptance. There is no revocation. |
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Term
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Definition
| attached to promissory estoppel; breaching party must reasonably know of reliance by accepting party |
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Term
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Definition
A party can accept an offer throuhg silence by:
-offeree takes benefit of offered services (with opportunity to reject) knowing were offered with expectation of compensation
-offeror has stated offeree can accept by silence and offeree remains silent with intent to accept
-because of prior dealings or other circumstance (e.g. custom) is reasonable to accept by silence |
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Term
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Definition
| reasonable and objective observations of conduct that imply acceptance |
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Term
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Definition
| Actual or Apparent authority to create a binding agreement on all essential terms |
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Term
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Definition
| the conduct of parties that manifest an intent to be bound can make a contract (even unwritten) be enforceable |
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Term
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Definition
| the conduct of parties that manifest an intent to be bound can make a contract (even unwritten) be enforceable |
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Term
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Definition
| rewarded damages from a breached contract or breached negotiations that were in good faith; sometimes called reliance damages |
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Term
| Process of analysis for determing if there is a contract |
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Definition
1. Bargained for K
a. mutual assent
b. consideration
2. Duty to negotiate in good faith (essential terms were established)
3. Reliance K (promissory estoppel) |
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Term
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Definition
| dies with property ($) exceeding debt without will |
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Term
| Non-Promissory Restitution |
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Definition
If a person receives material benefit from another, a subsequent promise to compensate the person for rendering such benefit is enforceable.
Regardless of the existence (or lack thereof) of a bargained-for K or promissory estoppel/reasonable reliance.
[see elements of NPR]
In this case, a moral obligation for material benefit is consideration. |
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Term
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Definition
Attached to restitution:
If a party receives benefits from another and is unjustly enriched from service or benefits, wronged party is entitled to restitution based on quality of fairness and equity. |
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Term
| Elements of Non-Promissory Restitution |
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Definition
1) Party conferred benefit to other person (beneficiary)
2) Party not acting officiously e.g. benefit rendered with reasonable expectation for payment
NOTE: benefit cannot be thrust upon someone unless in dire medical situation
or of unsound mind as a life-saving measure |
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Term
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Definition
not an actual contract, but is a legal substitute for a contract formed to impose equity between two parties.
Elements:
1. Plaintiff furnished / rendered valuable goods / services to Defendant with a reasonable expectation of being compensated;
2. Defendant knowingly accepted the benefits of the goods / services; and
3. Defendant would be unfairly benefited by the services / receiving the goods if no compensation were paid to the Plaintiff |
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Term
| Promise to Pay for Benefit Received |
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Definition
| promise made in recognition of benefit received is binding to extent necessary to prevent injustice. Promise not enforceable if benefit is a gift (Mills) or value is disproportionate to benefit (a gratuitious promise). |
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Term
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Definition
Part of Statute of Frauds:
any writing signed by or on behalf of charged party which
a) reasonably identifies subject matter
b) is sufficent to indicate K has been made
c) states with reasonable certainty essential terms |
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Term
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Definition
part of Statute of Frauds
any part of a K that cannot be satisfied within a year (excludes uncertain duration) |
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Term
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Definition
Types of Contracts enforced:
1) contracts which cannot be performed in one year
2) sale of interest in land
3) executor of will to pay debt
4) sale of goods
Requires a writing against whom the action is dictated (a signed memorandum) or incidentally document through series of writings (circumstantial) |
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Term
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Definition
1) if term is capable of more than one meaning
2) if term is patently ambiguous on face
3) term is latently ambiguous if not on face but circumstances reveal ambiguity |
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Term
| If Ambiguous, whose meaning controls? |
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Definition
1) if parties agree to meaning, then said meaning
2) when parties disagree, the "innocent party" controls; that is, innocent party is one that didn't know of meaning at time agreement was made and other party did or had reason to know of ambiguity
3. IF both parties are innocent and reasonable, then there is NO ASSENT!!! |
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Term
| Principles of Interpretation |
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Definition
1. Four Corners: Look at all circumstances AND parties' purpose for K in interpreting terms
2. Interpret all writings as a whole
3. Absent contrary intent, look at generally prevailing meaning of term
4. Look at course of performance- where a single transaction involes repeated occasions for performance by a party and the other party knows of and does not object to nature of performance
When possible, interpret words or actions from course of dealings (history)
When possible, interpret words or actions with trade usage
Contrary to Parol Evidence Rule (PER) because of the supplemental nature of interpretation. |
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Term
| Priority of Interpretation |
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Definition
1. Express/Define terms in K
2. Context of language in K
3. Course of performance (definition through acceptance)
4. Course of dealing
5. Trade usage |
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Term
| Parol Evidence Rule (PER) |
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Definition
| Extrinsic Evidence is inadmissable if introduction of evidence (circumstantial, oral agreements, etc) countervene/vary the terms of a final writing (a signed K) |
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Term
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Definition
| Evidence not contained in the written agreement between two parties; an implied (but unstated) warranty, for example; does not supplement the terms of an agreement simply because it's "assumptive"- the old "ass" "u" "me" rule- it could vary the terms of a contract and is, therefore, inadmissable by the PER |
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Term
| Implied Covenant of Good Faith and Fair Dealing (ICGFFD) |
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Definition
| In short, every K contains an implied covenant of good faith and fair dealing. This implied convenant CANNOT override express terms of K but permits finding breach (Locke) |
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Term
| Assessing breach of good faith |
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Definition
1) look at UNFAIR DEALING- whether a party acted arbitrarily, capriciously, or unreasonably such that it was inconsistent with justified expectations of other party
2) assess IMPROPER MOTIVE: determine the need to imply covenant to avoid injustice and respect for bargain that was freely made |
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Term
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Definition
1) to imply terms not expressly stated to give K efficacy
2) to determine whether is breach where a party prevented, hindered, undermined performance, or failed to cooperate
3) to determine whether party exercised discretion expressly granted to it.
In all, these are samples of going against the spirit of the law but not the letter of the law |
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Term
| When is good faith breached? |
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Definition
1) Evasion of spirit of bargain
2) lack of diligence
3) willful rendering of imperfect performance
4) abuse of power
5) interfere or failure to cooperate
6) creating dispute unnecessarily
7) asserting contra-interpretation
8) taking advantage of circumstances to extort modification
9) harassing demands for assurances
10) rejecting performance without stated reason |
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Term
| Promissory Estoppel v SoF |
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Definition
| Promissory estoppel and the Statute of Frauds serve as counterweights to one another on the scales of justice, with the benefits of each intended to hold in check the potential evils of the other. |
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Term
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Definition
a term in the language of the contract that declares it to be the complete and final agreement between the parties. It is often placed at or towards the end of the contract.
could preclude PER; inclusion usually prompts an examination of bad faith dealing |
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Term
| Duty of Good Faith analysis |
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Definition
1. Look at timeline when agreement was written.
2. Look at terms of K.
3. Look at performance to determine whether terms were purposefully underperformed or never intended to perform (observable conduct from reasonable person)
see Locke- could enforce business decisions based on gender discrimination, for instance |
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Term
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Definition
a promise of fact
Example: a promise of not being contracted by any other party at that time |
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Term
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Definition
| non-expressed promise in goods that product is fit for its ordinary purpose |
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Term
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Definition
a form of defense to enforceable K: refers to a party who, when the K was made, was either not of age (minority) or mental capacity to understand or agree to terms of K
would indicate undue influence of bargaining party towards minority |
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Term
| Duress or Undue Influence |
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Definition
| a defense to an enforceable K: if party is under severe duress (typically financial) when K is made, then K can be rescinded, esp. when one party has substantially more negotiating power or position than the other |
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Term
| Infant Rule v Benefit Rule |
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Definition
Infant rule says a minority is not bound by judgement, so K is rescinded.
Benefit rule says that if K is made in good faith with minority, and minority enjoys benefits of service or good rendered, minority is entitled to refund less benefit taken |
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Term
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Definition
| "buyer beware"- Under the doctrine of caveat emptor, the buyer could not recover from the seller for defects on the property that rendered the property unfit for ordinary purposes. The only exception was if the seller actively concealed latent defects or otherwise made material misrepresentations amounting to fraud. |
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Term
| Economic Duress (Totem Marine) |
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Definition
Elements:
1. Wrongful threat (crime, conduct) to accept terms
2. in circumstances that permitted no reasonable alternative (e.g. no way to obtain goods)
3. caused other party to involuntarily accept
*Some courts require financial hardship to be caused |
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Term
| Undue Influence (Odorizzi) |
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Definition
Elements:
1. Excessive pressure by dominant party (no representation, parties in relationship of trust)
-discussion at unusual place/time
-overly insistent
-use of multiple parties
Characteristics of weak party:
-lacking full capacity
-lack of vigor due to age, emotional anguish (Papa or Nana)
-in position of necessity |
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Term
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Definition
| a statement (innocent or purposely) not in accordance with the facts |
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Term
| Misrepresentation (defined) |
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Definition
1. Fraudulent- statement made intentionally, carelessly, or negligently; must induce action or reliance (causation factor)
2. Material- usually innocent; important enough to induce assent |
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Term
| Types of Misrepresentation |
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Definition
1. Statement
2. Concealment - Affirmative act intended to keep another from learning of a fact that he otherwise would have learned- amounts to a representation that the concealed fact does not exist
3. Ommission- in relationship of trust and confidence AND a duty to disclose info, party leaves out facts or does not correct mistake; this forms the basis for entry into the K
*wronged party is relying on these facts |
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Term
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Definition
Usually must be evidence of procedural AND substantive unconscionability
Test is at time K was made
Court may either refuse to enforce (Ahern) or strike uncon. terms (Higgins)
Procedural- an absence of meaningful choice of one party
Substantive- terms unreasonably favor one party |
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Term
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Definition
K unenforceable if:
-legislation provides term is unenfor.
b/c it violates protection of public welfare
-public policy clearly outweighs interest in promise enforc. |
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Term
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Definition
Generally looked unfavorable as restrain fair trade
Can only be enforced if:
1) are ancillary to some other valid transaction
2) do not restrict fair trade; depends on profession of restricted person and ancillary to business interest |
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Term
| Enforcement of Non-Competes (Farber) |
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Definition
Restriction is unreasonable if:
a. Restraint's scope is greater than is necessary to protect promisee's legit interest
b. Promisee's legit interest is outweighed by hardship to promisor and likely injury to public |
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Term
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Definition
a belief not in accordance with the FACTS- not different interps or material misrepresentation
- held at the time K was entered into, the truth of which is discovered after K entered into |
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Term
| Test for mistake (Basic Assumption Defense") |
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Definition
1. Both parties are mistaken to basic assumption on which K is made (ex. contract a quarterback who can only kick field goals)
2. has material effect on agreed-upon exchange of performances (ex. hired to clean a pool that has become toxic- must first decontaminate pool and therefore cannot fulfill K)
3. party does not bear risk of such mistake (ex. evidence that one party reasonably believed in outcome that defied intended terms of K- which becomes a possibility for misrepresentation/fraud) |
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Term
| Examples of Party bearing risk |
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Definition
1. "As is" clause generally allocates risk; some courts require specific allocation
2. Party has limited knowledge as to a factual matter but decides to treat that as sufficient
3. Court may also allocate risk to party where is "reasonable" to do |
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Term
| Unilateral Mistake (Wil-fred) |
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Definition
If party makes a mistake, there are grounds for rescission of K
-if mistake is material to K
AND
-is palpable (lots of $ difference) i.e. unconconscionable to enforce
OR
-if other party had reason to know of mistake or fault caused it
**If party was reckless in making bid, court would likely enforce K. If mistake was honest, court will not enforce. |
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Term
| Impossibility, Impracticability, Frustration ELEMENTS (Basic Assumptions) |
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Definition
1) person will be alive and have capacity to perform
2) UnForeseeability within reason- 3rd party conditions such as war, famine, 9/11, disease, acts of God- but these items must be extreme and present immediate risk to party if continued performance
NOT continuation of existing market conditions or financial conditions |
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Term
| Impossible, Impracticable, Frustration (definition) |
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Definition
Impossible: performance is impossible
Impracticable: performance is unusually difficult or overly expensive
Frustration: purpose of original K is frustrated (value of performing is worthless)
*An obligation is not excused if party bears the risk of such event
**but if even part performance is possible, then court will say so- (Mel Frank..warehouse stores rags, just not chem rags) |
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Term
| Modification- (Exception to Pre-Existing Duty Rule) |
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Definition
1.) If A promises to do more than obligated under K and received nothing in exchange but promise from B to perform obligation, B's promise is not consideration for A's promise of additional performance
2.) Courts are reluctant to apply PED where B encounters unforeseen circumstances and A, not coerced, voluntarily promises more
3.) Some courts enforce A's modification in reliance on B's promise to perform original obligation where A's modification induced B's performance |
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Term
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Definition
| Any failure to perform an obligation as/when due. |
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Term
| Determining Breach or Excuse |
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Definition
1) Was performance due?
2) If due, was performance excused? (b/c of other party's material failure or anticipatory repudiation, or imposs/imprac/frust., or mistake)
3) If due and excused, did it fail to comply with terms? |
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Term
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Definition
Express condition must be satisfied in full
Implied condition may be deemed satisfied upon substantial performance/compliance
Where obligee has control over satisfaction, courts imply duty to attempt in good faith to satisfy condition, and imply duty to cooperate |
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Term
| Excuse of Condition (Express or Implied) |
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Definition
1. Non-occurence may be waived if benefiting party does not insist on fulfillment of condition...but only if supported by consideration
3. to avoid disproportionate forfeiture (weigh forfeiture vs. condition- which would be worse?)
***If duty is excused, obligor now has unconditional duty to perform- otherwise breach, then remedy
2. May be excused where party whose benefit was created wrongfully hinders or prevents condition from occurring |
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Term
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Definition
| In short, a one-shot chance to perform within a given bargain. Ex. buy a house in exchange for bill of sale and title. There is no such thing as substantial performance in constructive conditions. |
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Term
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Definition
if breach is material and
causes party to lose opportunity or
time is of the essence (no time to wait for cure
**Remember: cannot stop performance if there is breach; if material breach, may temporarily cease performance until party performs- must weigh facts (time, value, proximity to deadline, good faithv nonperformance) to determine material/partial and total breach- crucial in determining damages |
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Term
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Definition
either statement or act (definite and unequivocal) by obligor intending not to perform obligations under K
Can retract repudiation by notifying other party of retraction provided notice is delivered
1) before other party materially changes position in reliance on repudiation and
2) before other party indicates that it considers repudiation to be final
AR discharges non-repudiating party's remaining obligations |
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Term
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Definition
| If condition cannot be met, duty to perform becomes impossible and, therefore, no obligation to complete K |
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Term
| Right to Seek Assurance (Hornell) |
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Definition
Where party to K has reasonable grounds to believe other party will not perform, may demand adequate assurance from other party that it will perform.
Must have:
-"Reasonable grounds"- considers other party's words or actions, courtse of dealings or performance (like Spry)
-"Adequate Assurance"- tested by reasonableness
*Until demanding party receives adequate assurances, it may- if reasonable- suspend its performance |
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Term
| Alternate Interest Protected by Damages |
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Definition
1. Expectation interest: the benefit expected had party performed- default measure of damages (generally $)
2. Reliance interest: reimbursed for losses due to relying on breaching party's performance (ex. surveyor's costs for future land acquisition)
- typically when party was not going to make profit or can't prove expectation damages
3. Restitutionary interest: seeking fair value of benefit conferred (to preclude unjust enrichment)
-same limits as reliance interest |
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Term
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Definition
Loss in value + any other loss- cost avoided- cost mitigated= damages
Loss in value= Amt expected - amt received
Any other loss= incidental or consequential damages
Cost avoided= from not having to perform
Cost mitigated= improved quality of existing possession that would have been traded, lost, etc (ex. selling a car, buyer defaulted, in meantime got car tuned up and ready, better than usual condition) |
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Term
| General Limitation on Damages |
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Definition
1. Party may only recover reasonably foreseeable as a probable result of breach
-effectively limits indirect/consequential damages since direct damages are foreseeable (Hadley)
*Test: did breaching party have reason to know loss would result from breach?
2. Party can only recover damages that are reasonably certain
-must be a natural consequence of breach
-requires evidence from expert, market to prove lost profits (Florafax)
-court might use cost-to-complete measure of damages
3. Party may NOT recover if it failed to mitigate damage |
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Term
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Definition
1. Pre-judgement:
-may be imposed by terms of K (default)
-may be imposed by state law where is liquidated
-may be imposed by judge where justice requires
2. Post judgement:
-generally, provides interest accrues on damages owed until paid at specific time |
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Term
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Definition
1. Punitive (for punishment)
2. Attorney's fees
3. Emotional distress (unless serious emotional distress was result of breach) |
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Term
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Definition
Formation of K:
Bargained-for K (Lonergan)
Advertisement as Offer (Izadi)
Mutual Assent (Normile)
Postponed Bargaining (Walker)
Intent to be Bound (Quake)
Bilateral K/Acceptance (Petterson)
Unilateral/Performance K (Cook v Coldwell)
Consideration (Hamer, Pennsy)
Gift (Dougherty)
Authority (Plowman v Indian Refining)
Option K (Baird)
Promissory Estoppel (Katz v Danny Dare, Drennan)
Charitable Subscription (King)
Non-Promissory Restitution(Pelo)
Quasi K (Commerce)
Promissory Restitution (Mills v Wyman)
Unjust Enrichment (Webb v. McGowin)
Statute of Frauds (Crabtree v Eliz. Arden)
Principles of Interpretation (Frigaliment)
Parol Evidence Rule (Thompson)
Implied Terms (Wood v Lady Duff)
Defenses
Economic Duress (Totem)
Undue Influence (Odorizzi)
Misrepresentation/Fraud (Syester)
Material Misrepresentation/Omission (Hill)
Unconscionable (Williams)
Public Policy (Valley Medical)
Excuses:
Unilateral Mistake (Wil-fred)
Frustration (DiChem)
Modification (Alaska Packers)
Material Breach (Jacob & Young)
Anticipatory Repudiation (Sackett)
Assurances (Hornell)
Remedies:
Direct Damages (Hadley v. Baxindale)
Consequential Damages (Florafax)
Duty to Mitigate (Luten Bridge)
Performance as Relief (Cost Cutters) |
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