Contracts Outline

Contracts Fitzgerald Fall 2013

1) ELEMENTS

a) K – a promise/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.

i) Cohen: reporter’s promise of anonymity is a moral commitment, which alone is not legally enforceable. Law won’t create K where parties intended none.

ii) Pierce: A reporter-source confidentiality arrangement is a moral obligation w/no K liability.

1) REMEDIES

a) Expectation damages:

i) to repair economic harm only NOT emotional/inconvenience;

ii) to compensate for loss of econ. benefit reasonably expected from transaction;

iii) to compensate for substitute performance;

(1) What interests do monetary damages protect?

(a) Expectation interest (the benefit of bargain as if K performed);

(b) Reliance interest (reimbursement for losses as if K was never made);

(c) Restitution interest (return of benefits conferred).

b) Specific performance (equitable remedy):

i) not available unless the no adequate monetary remedy (Kilarjian);

c) No Punitive damages

2) SALES OF GOODS UCC

a) Sale

i) passing of title from S to B for a price;

b) of Goods

i) all things movable at the time of identification to the K for sale;

(1) UCC Art. 2: mandatory for all states (each adopted except LA);

(a) Comm. law: fills/supplements UCC unless displaced (UCC>precedent)

(2) POLICIES:

(a) Uniformity among law in different jurisdictions;

(b) Simplify, clarify, modernize law of commercial trans-s (>flexible, more realist);

(c) Permit expansion of comm. practices thru custom/usage/agreement of parties;

(3) APPLICATION:

(a) First, determine if goods or services (if mixed transaction) (Shelby Aviation):

(i) Gravaman test

1. Looks at the part upon which breach is based to determine goods/services;

(ii) Predominate purpose test

1. Looks at transaction as a whole: is predominant purpose sale of goods or provision of services?

a. Reason parties entered into K;

b. Language;

c. Nature of business;

d. Final product, etc.

(4) SOL: UCC – 4 years (if unspecified, implied warranty attaches); generally for Ks – 6.

c) Merchant – a person who deals in goods/ by occupation holds himself out as having kn./sk. peculiar to the practices or goods (such kn./sk. may be attributed by employment of an agent who holds himself out as having such kn./sk.)

i) D/n matter who parties are and if buying stuff for job or personal;

3) CISG

a) When the parties’ places of business are in different contracting States;

i) Fed. Law (supplemented by state law) – trumps CL + UCC;

ii) As a treaty to US, CISG is the law in each S; statutory effect on transactions w/n scope;

(1) Parties may validly agree to exclude the application of CISG in its entirety or may provide in their agreement for rules different from those in the CISG;

(2) D/n apply to sale of all goods (personal/ household/ stocks/ shares/ vessels/ aircrafts/ electricity)

4) CONTRACTUAL ASSENT & THE OBJECTIVE TEST

a) §1. K – a promise/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) §2. Promise – a manifestation of intention to act/ refrain from acting in a specified way, so made as to justify a promisee in understanding a commitment has been made.

c) §3. Bargain – an agreement to exchange promises/promise for performance/ performances.

i) MUTUAL ASSENT is a foundation of K;

(1) Objective standard

(a) Holds a party accountable for words/ actions by looking at outward manifestations to determine assent; protects reliance.

(i) Manifestations (written/spoken words/conduct) to be interpreted reasonably;

1. Language/words used;

2. Comprehensive/specific terms;

3. Aimed at a specific person;

4. Relationships of parties/ prior dealings;

5. Common practices/ trade usages/ customs;

(ii) From the perspective of the party who observed it. Account for:

1. Attributes (experience, training, commercial sophistication);

2. Background info he possessed;

3. The relationship b/n the parties;

4. The context of the transaction;

(2) Subjective intent d/n matter

(a) (Morales): failure to read or understand d/n relieve from compliance w/ terms of an arbitration agreement. P manifested assent to terms by showing up for work.

(b) Subjective intent can supplement/explain obj. manifestation of assent, as long as it d/n contradict!

(i) (SR Int’l Business Ins. Co): Uncommunicated subjective intent is not wholly inadmissible/irrelevant if not different from objective manifestation of assent;

d) DUTY TO READ

i) Even if K on standard terms, drafting + non-drafting parties. “D/n read” ≠ defense.

(1) (McDonalds): Where a participant has an opportunity to read the arbitration clause of K, but fails to do so, he is bound by such arbitration clause of that K;

(2) “Boxtop” – terms on outside of the packaging, discernible before opening;

(3) “Shrinkwrap” – terms inside the package (a printed insert/user manual) packaged w/product, or in an electronic form or software included in the package.

e) BAD JOKES

i) If one party’s manifestations of assent to K are not serious, but the other party reasonably understands the manifestations as serious, the K is enforceable

(1) (Lucy) If person’s words/ actions, judged under a reasonable standard, demonstrate intent to agree to a K, unexpressed subjective state of mind is irrelevant.

(2) (Leonard) An offer to the public is made if an objective person can reasonably conclude that such an offer is made (humor, mere puffery, absurd, exaggerated fantasy)

5) OFFER

a) UCC 2-204

i) K may be made in any manner sufficient to show agreement, incl. conduct by both parties which recognizes K;

(1) Even if the exact moment of its making is undetermined;

(2) Even if 1+ term left open, K d/n fall for indefiniteness

(a) if parties intended a K and

(b) there is a reasonably certain basis for giving an appropriate remedy;

(i) Ct will supply the missing term.

b) COMMON LAW

i) Offer – manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited/will conclude it (§24)

ii) Power of acceptance – an offer gives to the O