Contracts Outline
Professor Movsesian
Fall 2014
Final:
3 Issue spotter essays, each 1 hour
Look at practice exercises
closed book, only responsible for class material.
Form
IRAC
R: UCC, case law
Application: argue both sides. ADDRESS BOTH SIDES. Explaining your conclusion. Why you are about to conclude, what reasons
C: Conclude on one side
KEY IS TO SHOW REASONING
Introduction to Contract Law
I. Contract Defined:
a. “A Contract is 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 (2d) of Contracts § 1
i. Subjecting a promise to a set of rules
ii. Legally enforceable: If a person does not perform as promised, the party to whom the promise was made can bring lawsuit for a remedy
iii. Remedy:
1. Money damages
2. Rarely, injunction to promisor
II. Sources of Rules:
a. Case law: Decisions of courts that resolved contract disputes – Common Law
b. The Restatement
i. American Law Institute writes common law, the law as it is
ii. Not codified: Not enacted binding law but persuasive authority
iii. The Court can adopt the Restatement in a judicial decision
c. UCC: An officially enacted texted, adopted by legislature (49/50 states)
i. UCC 2-105(1): Goods
1. All things (including specially manufactured) which are moveable at the time of identification to the contract for sale other than the money in which the price is to be paid, investments securities…and things in action (lawsuits)
a. Physical, tangible, moveable object
ii. UCC 1-103: Where the UCC governs a case (sale of goods) but is silent with respect to the issue of the case, common law principles apply as default
1. “Unless otherwise displaced by particular provisions of this act, the principles of law and equity (common law)…shall support its provision”
2. Refers to the historical distinction of the 2 separate court systems
a. Law: money damages
b. Equity: discretionary, injunctive relief
c. Now merged
3. Ex. UCC does not define an offer; go to the common law for the definition
III. Contracts as the Law of Promises:
a. Restatement Section 1: “A Contract is 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”
b. Restatement Section 2: “A Promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made”
IV. 3 Different Types of Contracts:
a. The Express Contract
i. Made verbally: an agreement or intention manifested by words
ii. Need not be written
iii. E.g.: I promise to pay you $5,000 if you take care of my horse”
b. The Implied-in-Fact Promise
i. Intention manifested by conduct, not words
ii. Even though the parties have not expressly stated it, the circumstances and actions imply an agreement has been made
iii. What meaning does the party’s conduct imply in the circumstances?
iv. Would a reasonable person understand there is a deal
v. Ex: The Auction: In itself, raising one’s hand is ambiguous – doesn’t manifest any intention clearly.
vi. In context of an auction, raising one’s hand manifests an intention to bid on the item
c. The Implied-in-Law or Quasi Promise
i. A legal fiction
ii. The law imposes the promise in order to avoid injustice
iii. Person puts himself out/confers a benefit. Reimburse in the interest of justice
iv. No manifestation of intent, neither express nor implied in fact
v. Law infers the promise
vi. The party did not manifest an intention to make a promise but should have
vii. Quasi Contract = Constructive Contract = Restitution
viii. Elements: Does justice require the defendant to pay the plaintiff?
1. Plaintiff confers benefit on defendant
2. Defendant appreciates the benefit
a. Knew about the benefit and did not decline it
b. The unconscious defendant? A reasonable person would think there is an obligation to pay
3. Circumstances are such that it would be unjust for defendant to retain the benefit without reimbursing the plaintiff (societal understanding)
ix. The Limiting principle is: reasonableness under an objective standard
1. Would a reasonable person think that justice requires the party to pay?
d. Bailey v. West: (1969) There is no quasi-contract AND no implied-in-fact contract.
i. A benefit was conferred (Bailey cared for the horse)
ii. Did West appreciate the benefit? No: As soon as he learned the horse was lame, he declined to accept it.
iii. Unjust? No: Bailey was a volunteer. No one asked him to care for the horse. Circumstances suggested not to.
iv. Cannot confer a benefit to obligate others to pay. Not unjust for West not to pay.
v. There was no conduct to suggest that Bailey was contracted to take care of the horse
vi. A reasonable person in the position of Bailey would not have expected payment from West.
vii. West made no manifestation of intent.
e. As a general ma
. Expectation
3. Decrease in economic value of nose:
a. Plaintiff has waived because it would be difficult to prove
b. Expectation: She’s an entertainer
c. Reliance
4. Physical pain and suffering
a. First two operations:
i. NO expectation: Had the contract been performed as expected, she would have experienced this
ii. Reliance: Without contract would not have suffered at all
b. Third operation:
i. Expectation: Was not included in the original contract
ii. Reliance
5. Doctor’s fee and hospital expenses:
a. NO expectation: Would have been paid. Only if there are fees from the third operation
b. Restitution: Value of the benefit injured party conferred. The doctor’s fee should be returned
c. Reliance
iii. Plaintiff gets to elect which measure of damages.
Expectation greater than reliance.
a. Jurisprudential Ideas: Why there are remedies for breach
iv. Moral: do what you promise to do
v. Economics: Mass credit economy and need for assurance
vi. Most people perform their contracts
VII. Themes: Modes and Legal Reasonings
a. Formalism:
i. First part of 20th century
ii. Today, new formalism comeback
iii. Logical application of axiomatic principles (rules) to resolve legal problem
iv. Court should not consider policy aside from that which contained in the rule
v. Benefit: predictability – know the outcome of contract/litigation
vi. Downside: fairness – assumes you knew the rules. Does not conform to social change
b. Realism:
i. Middle 20th century
ii. “The life of the law has not been logic; it has been experience”
iii. Court should consider which result makes most sense as a matter of social policy
iv. Benefit: justice in individual case, conforming law to actual practice
v. Downside: worries over judicial activism and less consistency
c. American law tensions between two principles
d. Contract law oscillates between formalism and realism
e. Contract contains both formalist and realist doctrines – balance between rule and chaos
