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Contracts
St. Johns University School of Law
Weiskopf, Nicholas R.

I. Types of Contracts
A. Contract- A legally enforceable set of promises
B. Unilateral Contracts
1. A promise made in return for a performance
2.
3.
4.
I will pay you $10 to walk across that bridgeOnce the performance has begun, the offer cannot be rescinded until the performance is complete
Only the promising party can breach the contract (Promisee not obligated to perform, promisor’s duty arises only on completion
C.
Bilateral Contracts
1. A promise made in return for a promise
2. If you promise to walk across the bridge, I will promise pay you $10
D. Three Parts of ContractsOffer- The maker of the offer should show a reasonable intent to be bound by his promise to the offeree
1.
2.
3.
a.
b.
If one party gives up something and gets nothing in return, this is gratuitous and no contract forms Meeting of the minds- both parties are giving up something the other wants to get what they want
Consideration- Reciprocity of inducements between the parties Acceptance- Offeree agrees to the terms of the offer
II. Enforcement
A. Principles
1. The purpose of enforcement is to compensate the injured party
a.
There are no punitive damages in contracts, might see it if a bad faith breach occurred, and therefore a tort, but otherwise no
2.
a.
Sometimes it is economically desirable to breach- the law wants an overall net gain, so it compensates the injured and lets the breaching party make its profit
Contract law prefers to give monetary compensation and shies away from injunctive relief
B.
1.
a. Mandatory injunctions- Enforces and action
b.
2.
a.
b.
c.
d.
e.
Public interest Buyer does not have the money to compensate Damages are too difficult to assess Sale of real property (Land is considered unique) When goods are unique (A painting you can’t get elsewhere) Specific Performance is only given when money damages will not be adequate. This includes: Prohibitory injunctions- Prohibits and action
C. Lost Expectancy
1.
2.
3.
a.
b.
c.
d.
e.
If these requirements aren’t met, recovery is made under Market formula The goods must be of the same quality as those originally bargained for There cannot be unreasonable delay in getting cover There must be a good faith effort to obtain the goods at a low price (can’t go hunting for high prices and then recover) If the seller of goods suddenly refuses to sell, the buyer can buy the goods elsewhere and then recover the difference in price from the seller (plus any additional expenses in finding and minus any money saved from the breach)
Cover damages (UCC 2-712) The preferable remedy for breach of contract
4.
a.
b.
i. Extra costs in getting the goods
ii.
Profits that would be realized if there was not breach, assuming the seller knew of the need
Incidental or consequential damages: The difference between the market value of the goods at the time the buyer learned of the breach and the price in the contract together with any incidental or consequential damages
D.
1.
2.
Used if the promisee acted to his detriment in reliance of the promise
a. Includes losses in performing his side or preparing to perform
3.
4.
Reliance must be reasonablePromisor should have reason to know promisee would rely on the promise
E.
1.
2.
Focus on the gain of the breaching party- What did they take from promisee? Negate this gain.
F.
-A, a contractor, promises to build a house for B, a buyer. The
purchase price in the contract is $100,000, but the work will ultimately be
worth $120,000. B pays A a deposit of $50,000. B also goes out and
buys some expensive lighting fixtures that are compatible with the plans
as drawn up by A, but are incompatible with the plans normally prepared
by most contractors. The fixtures cost $1,000. A then refuses to build the
house. B sues.
1. Specific performance- A must build the house
2. Expectancy
3
4
. Restitution- B gets the $50,000 he paid A- A was unjustly enriched by this amount. Reliance- B gets what he spent in reliance on the contract. This is the $50,000 deposit plus the $1,000 on fixtures.- The award would be $70,000. B is getting a $120,000 item for $100,000, so his gain had the contract not been breached would be $20,000. Then add the $50,000 A will have to return.
III. Consideration
A. GenerallyConsideration is something done or promised in return for either a promise or a performance.
1.
2.
3.
a.
i.
b.
i.
Hamer v Sidway- Uncle bargains for nephew to refrain from vice
c.
Creation, modification, or destruction of a legal relation (Give up the right to sue for money)
The promisee must be induced by the promise Forbearance (Giving up something you have a legal right to do) Performance (an act) Consideration must be bargained for- it means giving up something the other

and past dealings Output- A party promises to sell all of its output to a buyer
G.
1.
2.
a.
b.
Under UCC, a termination provision does not need to include notice because it is implied (so you have to give reasonable notice)
Usually giving notice is restriction enough If there is some restriction on this right, then it is probably good consideration
c.
Restrictions can also include some event beyond the parties control, like a recession Termination ClausesA promise that includes a provision that either side can terminate at any time is illusory Requirements/Output ContractsRequirement- A party promises to purchase all of its requirements from a buyer The remedy for quasi contract is restitution Quasi ContractsWhen one party had rendered a benefit on another party without consent of that party, the law may infer a promise by the receiving party and form a contract Implied Promises in Agency ContractsIf a party is given exclusive agency to sell items or conduct business, the law will infer that a promise had been made to do this with due diligence and in good faith Conditional PromisesA promise that an action will be performed if a specified event or action takes placeA promise made in good faith based on a fact that is untrue but the promisor believes to be true that is used to induce a return promise can be good consideration Scenario (stolen) RestitutionUnjust enrichment- Attempts to put the promisee back in the position as if the contract was never made, and takes away from promisor any gains he made from the breach at the expense of the promisee RelianceAttempts to put the promisee in the same position as if the contract had never been made Market Price Formula (UCC 2-713)Attempts to put the promisee in as good a position as if the contract had been honored Specific PerformanceWhen the court orders the breaching side to perform on the contract, rather than granting money damages