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Contracts
St. Johns University School of Law
Kniffen, Margaret N.

Contracts I
Fall 2004                                                                                  Professor Kniffin
St. John’s University School of Law


Contract – a promise or a set of promises for the breach of which, the law gives a remedy, or the performance of which, the law in some way recognizes as a duty (Restatement Second of Torts)
I.                  The Basis for Enforcing Promises
A.     The Meaning of “Enforce”
1.                  Purpose of Relief
a)                  Contract law aims to compensate, not to punish
b)                  Although we don’t want to encourage breaches, the free market system and the legal system work better when people are allowed to breach.
(1)               example: Doctor creates a medical device and contracts with a company who becomes sole manufacturer, but that company does not have the resources to market the product, so the Doctor breaches in order to make the product more widely available to the public
c)                  Rules are designed to do the most good for the most people – some will always be negatively affected
(1)               Our system of damages does not give lawyers fees, does not compensate for stress, etc. so it isn’t perfect. [not everyone is fully compensated for breach] 2.                  Law and Economics
a)                  Prescriptive Relief
(1)               Looking at economic efficiency rather than justice
(a)                Judge Posner is an advocate of this (not the norm)
(2)               This approach is a source of controversy
(a)                There are many factors on which we cannot place economic value – we would be neglecting important elements of the law
b)                  Descriptive Relief
(1)               Use economics to describe what is best for justice
(2)               Justice is the most important principle
3.                  Alternative Dispute Resolution
a)                  Arbitration
(1)               The decision to arbitrate is very important – many contracts contain provisions that require disputes to be settled by arbitration
(2)               Arbitrators make binding decisions
(a)                Advantages
(i)                 Arbitrator may have more technical expertise
(ii)               Decisions are faster and cheaper
(b)               Disadvantages
(i)                 Decision is usually not appealable – should not give up the right to appeal lightly
(ii)               Arbitrator generally does not state reasons for decisions (people decide more carefully when they are asked to state the reasons and people generally like to hear the reasons)
(iii)             A

e had not been a breach
3.                  Specific relief is not common (applies when article is unique like Rembrandt painting)
a)                  If this was common Defendant could always deliver sub-standard goods – this would result in another suit
4.                  Legal fees are not compensated for in breach           
5.                  Punitive damages are not awarded in contracts – if you see punitive damages there must be a tort issue
a)                  We do not want to make the penalty so great for breach that people are deterred from making contracts – our economy would not function well
6.                  There is one uniform statute for the sale of good across the country à the UCC
D.    Types of Money Damages
1.                  Restitution Damages
a)                  Puts you back in time as if you had never made the contract
b)                  Gives you back the benefit that was conferred by D
c)                  Requirements
(1)               D received a benefit
The benefit was at P’s expense (P paid for it)