Unit 1: The Stakes in Contract Law: Expectation and Reliance Interest
A Contract is an agreement b/t 2 or more ppl as to something that is to be done in the future by one or both of them.
Sources of K law include judicial opinions, statues like the UCC, Rest, legal commentary, and int’l commercial law.
Different Types of Contracts
o Types as to Formation
§ Express-K – can be written or oral, expression of the parties, not left to assumptions
§ Implied-in-fact K – creation of the parties assent, reasonable value of the service and providers gives reasonable care, just b/c you didn’t say you would pay X doesn’t mean you don’t have to pay
§ Implied-in-law K/quasi-K – doesn’t care about consent or assent at all, obligations not born out of contract but out of an impulse in common law to make good on benefits bestowed on another. It’s a legal fiction.
o Types as to Acceptance
§ Bilateral K- promise for a promise, “I promise to pay you $5000, if you promise not to smoke, drink, etc.” Most contracts fall into this category, it’s an exchange of promises to do something
§ Unilateral K- promise for a performance, “I promise to pay you $5000, if you don’t smoke, drink, etc.” Most common in award cases, real estate brokerage cases they get paid if they do sell your house. “Promise if you do this thing” On one side you’re promising something on the other side is just performance. Promisor is only going to pay upon completion of the act. Once the act was completed the contract was formed.
o Default v immutable rules
Default rules – very big concept today, settings that are there through no action on your part but you can change, rules that govern contracts but the parties are free to set aside, unless the parties “opt out” or “contract out”
“The maker is master of the offer, sound kinky, and it is!”
Immutable rules – can’t be set aside by the parties no matter how much they want to, stuff that’s hardwired, ie minimum wage, does not mean utterly unchangeable just means the parties can’t set them aside (like duress)
Contract default rules v baseline/ “rule-exception” – This rule applies unless otherwise stated in certain situations, ie the speed limit is 25 unless it says something else, ie UCC 1103
Remedies for Breach
The 3 Interests in American Contract Law
o Restitutionary- the value of the benefit conferred on the other party, Ben Folds’ “give me my money back.” In many cases you opt for this instead, such as in Algernon Blair.
o Reliance – going back to where you would have been before the contract, going back in time, status quo ante, “I wish I never meet you.” More rare, used in cases where expectation is difficult to ascertain. Remedy in promissory estoppel cases.
§ Sullivan v O’Connor
· Facts: the patient underwent plastic surgery on her nose, and the operation made it look worse rather than better. She had to undergo three rather than two operations, and even this did not improve her nose.
· Holding: relian
d that the common law rule in Cal was that SP was not available when it would require a continuing series of acts and cooperation b/t the parties. This is because of the difficulty of enforcing a ruling for SP in these circumstances.
Copylease Facts: Memorex and Copylease agreed that Copylease would buy Memorex toner and distribute it. It was to run for an initial term and then could be renewed each year. Memorex had somehow breeched this contract and Copylease wants to make them fulfill it.
UCC §2-716 suggests that specific performance may be required if the product is unique or there is “other proper circumstances”
Efficient breach – if you want to breach and you have the money you should be able to do, and agr party should take the money and do business elsewhere.
Unit 2: The Stakes Cont’d: Agreed Remedies and Restitution
Generally default common law rules are used as remedies, which means that you would get expectation damages. However, sometimes the contracting parties might come up with a stipulated damages clause. This would set aside the common law in favor of some agreement between the parties to use in the event of a breach.