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University of Kansas School of Law
Ware, Stephen J.

Contracts Outline
a.     Sources of Contract Law
                          i.      CASES
                       ii.      RESTATEMENT 2d
·         A comprehensive statement of general common law principles first promulgated by the American Law Institute in 1932 (2d, 1980)
·         “Common law ‘persuasive authority’ with a high degree of persuasion”
                     iii.      UNIFORM COMMERCIAL CODE
·         Statues that govern all cases involving the sale of goods
·         It has been adopted by almost all the states (not Louisiana)
·         Not law, law “as adopted . . .”
·         American Law Institute as well
·         UCC ARTICLE 2
o   Article 2 of the U.C.C. deals with transactions involving the sale of goods. Article two only covers the sale of goods.
o   Goods include all items that can be both identifiable and moveable at the time of the sale. Article 2 does not cover transactions involving service contracts.
o   In addition, the sale of real estate is not covered by Article 2, but rather by Article 9 of the Uniform Commercial Code.
o   For example, the sale of an automobile or a computer would be covered by Article 2.
o   However, the sale of insurance or a membership in a health club or a contract between you and a painter to paint your house would not be covered.
o   The sale of your house would also not be covered. A house certainly is a Good, but the sale of a house involves the sale of land.
                     iv.      VIENNA CONVENTION:
·         They are a body of law governing the international sale of goods between parties domiciled in member countries.
·         Formally known as the United Nations Convention on Contracts for the International Sale of Goods.
·         An international treaty governing international commerce, defining the rights and duties of an exporter/seller and an importer/buyer.
·         For example, it states that the seller must deliver the goods and the buyer must pay for them.
·         Importantly, the treaty sets forth a variety of agreements into which exporters and importers may enter. This list of agreements lays out when the risk associated with delivery of the goods transfers from the seller to the buyer, and who is responsible for what costs. More than 70 nations subscribe to the Vienna Convention.
b.     Enforceable Promises
                          i.      §1. CONTRACT: Promise or 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.”
·         A promise for a promise can be a contract
·         Contracts are “bargained for promises”
o   § 3. A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.
                       ii.      3 BASES FOR ENFORCING PROMISES:
1.      Consideration
2.      Reliance
3.      Restitution
                     iii.      § 2. PROMISE: A promise is a manifestation of intention to act or refrain from
acting in a specified way, so made as to justify a promise in understanding that a commitment has been made.
1.     PROMISE
a.      Express
b.     Implied
                                                                  i.      Conduct
                                                                ii.      Circumstances of Transaction
2.     Manifestation = External Expression of Intent
·         HAWKINS v. McGEE
o   “Hairy Hand” case
o   POLICY CONCERNS: We don’t want doctors governed by ordinary contract, we don’t want them to be scared out

ot be workable, courts might not be good at it
·         Therefore courts don’t normally order specific performance
o   Second Major Principle:
§ In the U.S. the general form of relief for breach of contract is monetary compensation.
2.     Reliance: Putting nonbreaching party in position they would have been if
contract had not been made. Reimbursing them for loss caused by reliance on the contract.
3.     Restitution: Restore to promisee any benefit that he has conferred on the
other party.
                       ii.      HOW DO WE MEASURE CONTRACT DAMAGES?
1.     Since the purpose of damages for breach of contract is to compensate injured party for the loss caused by breach, those damages are generally measured by plaintiff’s actual loss
a.      § 355. PUNITIVE DAMAGES
·         Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.
·         Insurance company harassment exception
·         United States Naval Institute v. Charter Communication
o   Paperback sales of “Hunt for Red October”
o   Finding Naval’s actual loss caused by the breach. That is, the question is NOT how much money did Charter make, but how much money did Naval NOT make, that it would have made had Charter performed.
o   Amount court comes up with is a bit generous, however, in uncertainty lean towards the injured party