Contracts II Outline

CONTRACTS II HAMMOND SPRING 2015

Analysis for Questions

I. What rule of law applies

R2d

UCC

CISG

2. Has the duty to perform become absolute?

•If there are conditions precedent, to a party’s performance, have those conditions occurred or been excused

•What was the event that may excuse performance?

•Was non-occurrence of the event a shared assumption between the parties?

•Was either party at fault?

•Does the contract indicate who bears the risk?

•Is the non-performance excused

•Who is it that breached?

Plaintiff? Defendant?

•What damages are available?

3. Is there something that discharged the duty to perform?

4. If the duty to perform has become absolute and it hasn’t been discharged, is there a breach of duty

SOURCES OF CONTRACT LAW

CISG

UCC

What is the CISG? Convention on Contracts for the Sale of International Goods. It is an international treaty.

Article 1(1): applies to Ks for the sale of goods btw parties whose places of business are different foreign states

Article 2a

· excludes consumer transactions (family, personal, household use)

· applies only to COMMERCIAL transactions

Article 3

· doesn’t apply to Ks for services

Article 6: OPT OUT Clause

· The contracting parties can agree to opt out of CISG

What kind of language does the party of the K need to effectively “opt out” of CISG?

Simply choosing the law of jurisdiction was not enough to opt out of CISG

Express exclusion of the CISG is necessary

The clauses must “evince a clear intent to opt out of the CISG

“CISG does not apply to this contract”

Ordinary choice of law clause means the CISG is part of what the court should apply

Article 7:

· Must pay attention to the reason why it was created

· To promote uniformity in its application and the observance of good faith in international trade

·

Can the parties opt out of applying the UCC? NO

UCC § 1-103: If the UCC doesn’t address the issue, then the court must look to the common law

UCC § 2-102: Applies to the transactions in goods

UCC § 2-105:

a) Goods means all things that are movable at the time of the K for sale, other than money;

b) Goods must be existing and identified before an interest in them can pass.

CISG continued ß

Article 10: Parties w/more than 1 place of business:

A) If a party has more than one place of business, the place of business is that which has the closest relationship to the K and its performance

B) if a party does not have a place of business, the habitual residence is used

Asante: CISG applies as it is part of California’s laws – they must adopt treaties that the U.S. is part of. CISG is a federal law that trumps state law that is inconsistent with it. Court applies CISG (6) & (10) in this case. The court found they didn’t opt out, and place of business to be used is that w/the closest relationship – which in this case is British Columbia.

MCC-Marble:

WHAT TO DO WHEN THERE IS A MIXED K – GOODS AND SERVICES?

Use the predominant factor test (Princess case)

Look at:

1. Language of the contract 2. nature of the business of the supplier 3. the intrinsic worth of the materials

Facts: P is a Delaware Corporation with primary place if business in Cali. Plaintiff purchased equipment from D. D says his place of office and work space is in Canada but sells everything in Cali. P says forms opt out of CISG and that bc one company that distributes D’s products is in Cali, the UCC should apply. Held: CISG applies, place of business is in Canada bc postage was sent from Canada, goods manufactured there, and P had knowledge that this was happening all in Canada

Opt out didn’t work in this contract bc it just said they wanted California law to apply and under California Law the CISG would apply

D wanted this in federal court and the CISG always goes to federal court

Doctrines such as unconscionability, duress, etc are not governed by the CISG

Hypo on Slide:

HYPO: A has a computer store and has a contract with Lenovo (foreign company) computers to purchase 100 computers. Delivery is scheduled for September 1.

A agrees to make a payment for the computers. September 1 comes and the computers don’t arrive. A wants to bring a breach of contract against Lenovo. Clause said that Illinois law would govern the contract. What would the court look to to determine if there is a contract and

if there is a breach and so on?

ANSWER: The court would look to the CISG because as a treaty, it pre-empts Illinois law

Remedies: Measuring Damages

Three kinds of damages contract damages: (can only claim 1)(Fuller and Purdue)

1. Restitution Interest (Exception): defendant must pay for the benefit received

2. Reli