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Contracts II
Stetson University School of Law
Morrissey, Joseph F.

Contracts II Outline – Fall 08, Morrissey
Contents
Overview :2
Statute of Frauds. 6
Flow Chart:6
Rules of Interpretation. 8
Restatements on how to interpret:9
Parol Evidence. 12
Exceptions:13
Flow Chart to evaluate:14
E-Contracting. 14
Implied Contracts. 15
Warranties. 18
Warranty Flow Chart:20
Excuses / Justification for Non Performance. 21
Mistake. 21
Impracticable & Frustration Doctrines. 22
Doctrine of Impossibility. 23
Modification. 24
Material Breach. 26
Anticipatory Repudiation. 30
Remedy. 32
TYPES OF DAMAGES. 36
Agreed Remedies. 42

Reference Chart:

Restatement

UCC

SoF

§ 110, 131, §139

2-201

Parol Evidence

§209-§217

2-202

Mistake

§152 – §154

Impossibility

261-264

2-613

Impracticability

261-264

2-613 – 2-615

Frustration of Purpose

265

2-613 – 2-615

Modification

89

2-209

Damages

371, 374

2-718, 2-704, 2-716, 2-715

Interpretation

201 – 204

Implied K’s

205-208

Performance

235(1)

2-601

Repudiation

Overview :
A. Was a contract formed?
a. O+A+K = K
B. Is the contract within the statute of frauds?
a. If so, is there sufficient writing?
b. If not, is there another basis for complying with the statute (past performance, etc..)
c. If not, is the party seeking to rely upon the statute of frauds stopped from doing so?
C. Contract Modification
a. Did the parties mutually agree to modify their contract?
b. Was consideration present or was the requirement of consideration excused by statute or by another established exception? If neither, can promissory estoppels be used to enforce the promise to modify?
c. Was the contract as modified within the statute of frauds and if so, was it satisfied?
d. Did the contract contain a writing requirement? Was it waived or satisfied?
e. If the agreement is not enforceable as a modification of the contract, can it still be effective as a waiver of a condition to the contract?
D. Interpretation
a. What are the express terms of the contract?
i. Is one party attempting to add to or modify terms of a writing by use of extrinsic evidence of a prior agreement thereby creating a parol evidence rule issue?
ii. Is one party attempting to influence the meaning of terms in a writing by offering evidence as to the parties stated intentions as to the meaning of the term?
iii. Apply general rules of interpretation to determine meaning of language in writing
b. What are the implied terms of the contract?
i. Implied from the parties’ course of performance of this contract or course of prior dealings in similar contract or from general usages of the trade.
ii. Implied by parties conduct or implied from other circumstances in the case.
c. What terms will the ct construe to be a part of the contract without regard to the parties intentions?
i. Constructive conditions (all those latin phases)
ii. An obligation of good faith or good faith and fair dealing.
E. Defenses
a. Lack of capacity, duress, undue influence, Mistake, misrepresentation, Unconscionability, bad faith,
F. Anticipatory Repudiation and Demands for Assurance
a. Has one of the parties manifested an intention not to perform? What response did the innocent party make? When is it too late for guilty party to retract
b. If words or circumstances create reasonable doubt about other party’s willingness or ability to perform, do the circumstances justify a demand for assurances? What reasonable demand should the innocent party be permitted to make? (Sackett v. Spindler)
G. Performance
a. 1st identify who is suing whom for what?
b. Are you dealing with an independent or unconditional promise or whether the duty of performance was dependent upon the occurrence of some condition?
i. What where the conditions precedent?
c. Have the conditions precedent to the promise been fulfilled or excused? If the promise is subject to a condition, the promisor will never have a duty of immediate performance (and thus will never breach the promise) unless the conditions precedent are fulfilled or excused.
i. What will excuse a condition? Things like impossibility, or failure of the promisor to cooperate, acts of bad faith.
1. If it is a condition of satisfaction, it will be excused if the party who was to be satisfied wrongfully withheld approval.
ii. What will fulfill a condition? If it is a constructive or promissory condition, it is fulfilled by substantial performance (Rest. §241). Or has there been a material breach?
d. If conditions to promise have been fulfilled or excused and time for performance has arrived, evaluate whether the promise has been performed or whether performance has been excused (see J ) if the promise has been breached in whole or in part, when the aggrieved party has a right of action for such remedy as the law may allow.
e. In many performance problems, both parties are claiming that the other has breached. Each promise may have been a condition to the other party’s promise so that analysis is interrelated.
i. Circumstances significant in determining whether a performance failure is material is in Rest §241.
ii. Circumstances significant for determining when an uncured material breach discharges the other party’s remaining duties are in Rest §242.
f. WARRANTIES If transaction involves goods, and problem related to tender and acceptance of seller’s performance:
i. Whether this is a single lot or an installment contract (UCC §2-307) & 2-612!
ii. If single – has there been a defect in tender justifying rejection (2-601)
1. Has buyer in fact accepted (2-606), or rejected (2-602)
a. If buyer rejected, may seller cure (2-508) and re-tender?
b. If buyer accepted, are facts present that would permit revocation of acceptance (2-608 and 2-607)
2. If it is an installment contract, has there been a breach that constitutes a substantial impairment of the value of the installment tendered and cannot be cured (2-612(2)) (if so – buyer may reject that installment)
a. Has there been such a breach that it substantially impairs the value of the entire contract? (if so, buyer may terminate the entire contract, 2-612(3).
b. If buyer has failed to pay for installments when due or is otherwise in breach, the 2-612(3) analysis is also applied to that breach to determine whether seller can suspend or cancel performances. (if the legal picture is not clear, this is a possible circumstance justifying a demand for assurances – see Part H)
H. Excuse of Performance
a. Mistake
b. Impracticability- after the contract is formed, the occurrence of an event that makes performance impossible or legally impracticable may excuse performance.
i. One must prove that the non-occurrence of this event was the basic assumption on which the contract was made.
ii. One must also establish that the risk of this event is not

n
· Definite and substantial character of the action or forbearance in relation to the remedy sought
· Extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence
· Reasonableness of the action or forbearance
· The extent to which the action or forbearance was foreseeable by the promisor.

Crabtree v. Elizabeth Arden Sales Corp.
Multiple Writings & Parol Evidence
Facts:
· Arden wanted to hire Crabtree. On Sept. 26 Arden’s secretary made a memo with an employment agreement b/w arden and crabtree about pay scale and duration. Not signed by Arden or Crabtree. Crabtree ‘phoned Mr. Johns and telegraphed Miss Arden; he accepted the ‘invitation to join the Arden organization’, and Miss Arden wired back her ‘welcome’ . Arden paid the first salary increase, but not the second There were 2 payroll calls signed by the general manager and the comptroller ok’ing increase
RULE:
· Memo does not have to be in 1 document, can be pieced together out of several documents, IF the Signed and unsigned documents refer to the same subject matter or transaction.
· Enough to meet statue’s requirements if the memos are signed to authenticate the information. But no intent to make a contract.
· a. Memorandum req’t: Ifa writing is signed with the intention to authenticate the information contained therein and the information contained therein does evidence a contract, then the writing satisfies the SOF.
· b. If [P] the writings signed by the party to be charged and writings unsigned by the party to be charged clearly refer to the same subject matter or transaction, then [Q] the writings signed by the party to be charged and the writings unsigned by the party to be charged may be read together to satisfy the SOF.
· c. If {(S) no term of the contract is supplied by parol evidence and (T) the unsigned writing refers on its face to the same transaction as that set forth in the one that was signed and (U) the signed writing that establishes a contractual relationship between the parties is signed by the party to be charged, then [R] parol evidence is admissible to show the connection between the writings signed by the party to be charged and the writings unsigned by the party to be charged.

Alaska Democratic Party v. Rice
§139 Equitable Estoppel (Defeating a defeater doctrine)
Facts: Rice was contacted my wakefield to discuss possibiliy of rice working for party in Alaska. In Summer 1992 Wakefield confirmed decision to hire Rice for specific terms: $36000 / yr for at least 2 years, etc… In Sept/Oct Rice accepted position to work for party in Alaska. In Nov Rice moves to alaska – but no contract entered into. In Feb 1993: Wakefield told he could not hire Rice. , Rice filed suit
HOLDING: PE may be invoked to enforce an oral contract that falls within the Statute of Frauds
RULE:
· Promisory estopple can be used to enforce a contract notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise
o Determination that injustice can be avoided is a balance between certainty and fairness.

(§139 of Restatement (Second) of Contracts) If (P and Q and R) then EP-NSOF
* If (P) there is a promise that the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and (Q) the promise does induce the action or forbearance and