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St. Louis University School of Law
Kniffen, Christine

Contracts Outline
By Maria Boboris
Professor Kniffin
Merchantà Person in the business of buying or selling goods
UCC 2-207 is applicable when the terms of the acceptance do not match the terms of the offer
I. Three Principles of Contract Law
The law is concerned with relief of promises to redress breach and NOT with punishment of promisors to compel performance. Compensate the victim of a breach rather then punishing the breaching party
I. Economics of Breach→ it may sometimes be in society’s best interest that the contract is broken and the resources allocated.► preventing the breach might impair the efficient allocation of resources.
The relief granted to the aggrieved promisee should generally protect the promisee’s expectation by attempting to put the promisee in the position in which it would have been had the contract not been breached
The appropriate for of relief is substitutional; awarding money damages rather that ordering the promisor to perform its promise
II. Damages
Contract Remedies
Liquidated Damages
→ Contract itself states what the damages will be in the case of a breach
Court Costs
ィ filing fees but not lawyer’s fees
Nominal Damages
ィ happens when a particular party breached but no damages have been proven. They are symbolic damages, with very little monetary value
Punitive Damages
→ the court does not award punitive damages for breach of contract only gives compensatory
Money Damages
a. Expectation Damages
→ is usually the most often sought damage
ィ Puts the plaintiff in the position he would have been had the contract been preformed. Puts plaintiff forward in time
Sale Goods – Repudiation by Seller – UCC 2-711
Where the seller fails to make delivery OR repudiates, OR the buyer rightfully rejects or justifiably revokes, the BUYER may
recover so much of the price of K as has been paid, AND
“cover” and have damages under 2-712 as to all goods affected (whether or not they have been identified), OR
recover damages under 2-713
i. Covering
ィ UCC § 2-712
“Good Faith”—must be honest in your intentions
Without unreasonable delayィ if you wait to long market price may go up
Reasonable Purchaseィ purchase or contract to purchase like good in substitution for those due from seller. If you contracted to buy low quality goods and cover with high quality goods that IS NOT reasonable
Covering Formula damages are [(Cost of Cover) – (Contract price)] + incidental and consequential damages – expenses saved as a consequence of the sellers breach
Cover awards are not discretionary (?)
If the aggrieved party does not cover or fails to meet the requirements for cover, the way to commute the expectations is with the Market Price Formulaィ the different between the market price at the time the plaintiff learned of the breach and the contract price + incidental damages
Injured buyer is not required to cover
Sale Goods – Market Price Formula in No Cover situations – UCC 2-713
In no-cover situations, buyer may recover from seller the difference btw market price at time when buyer learned of the breach and the K price, (plus incidental and consequential, minus savings as a result of sellers breach)
ii. Incidental Damages
Resulting from actions required after the seller’s breach
Plaintiff will get any reasonable cost associated with getting cover such as inspection, receipt, transportation, care and custody of rejected goods, and any commercially reasonable charges, expenses and commissions in connection with covering
These include transportation costs, phone calls, and all the extra stuff done to cover for a breached K
iii. Consequential Damages
Chain reaction damages
Compensation for business you might have had if the contract had not been breached
Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know (Forseeability) and which could not reasonably be prevented by cover and injury to person or property proximately resulting from any breach of warranty.”
►Forseeability – damages have to be foreseeable
►Attorney’s fees usually not covered as expectation damages, but court fees are
► Sullivan case: Scale from 0 to 10 regarding the appearance of her nose. Assume that her nose was a 4 when she made the contract. Assume that the doctor had promised to move her up to 8, but brought her down to a 2. She would need six to be where she should be (expectation).
b. Reliance Damages
ィ puts the plaintiff back in time before the contract was made, as if the promise was never made

cially if decree is not clear and it is only clear if it states what the performance is
It must not be a situation forcing antagonistic individuals to work together
n Usually in employment situation—comes from the constitution which prohibits slavery, and this is akin to personal servitude
n Usually limited to individuals and not corporations
III. Arbitration
Dispute between two parties decided not by the court but by arbitrators. Parties (sometimes) decide who the arbitrators will be. Both must agree to arbitration
an arbitration clause can be put in the contract of parties can agree to it after the breach
once you agree to arbitration you are bound by the decision
Advantages: Speed; Can choose arbitrations skilled in the subject matter involved
Disadvantages: arbitrators not required to give reasons for their holdings and usually do not; arbitrators decision cannot be appealed
IV. Valid Contracts
a. Requirements
Mutual Assent: agreement by both parties
i. Offer
ii. acceptance
Consideration: bargained-for-exchange
No Way Out: no defenses to the formation of the contract
iii. Statute of Frauds
iv. Incapacity
v. Unconscionability
b. Types of Contract
Unilateral: The offeror making a conditional promise for the offeree’s performance. Performance becomes the consideration, not the promise to perform and acceptance occurs when the performance is complete
· (Hamer v. Sidway) uncle asks nephew to refrain from smoking until he is 21. Once he turns 21 he accepts and performance is complete. Uncle can revoke anytime before he turns 21
· offeror can revoke offer up until the moment of acceptance (except in some states
Bilateral: Promises on two sides, the offeror seeks a promise. These contracts are much more common today
In unclear cases, court treats contract like a bilateral
Contract formed right away; too late to revoke