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Contracts
University of Kansas School of Law
Peck, John C.

KU Law
John Peck
Contracts
Spring 2011
 
Contracts
I.                    Defns:
a.       K: a 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.
                                                               i.      Not all promises are enforceable i.e. political promises, promises by a minor, by an insane person, by an intoxicated person.
                                                             ii.      K always has an element of the future in it.
                                                            iii.      The promise itself is not the paper document.  Technically the paper is not the K. 
                                                           iv.      Why do we enforce promises at all: encourage economic stability, interpersonal interaction, reliance on promises to the detriment of the relier.   
b.      Agreement: a manifestation of mutual assent on the part of two or more persons.
c.       Art 2 of the UCC–primary law for transactions involving the sale of goods.
                                                               i.      Rules for merchants (more sophisticated than consumers)
                                                             ii.      Defn: merchant is a person who deals in goods of the kind and who by his occupation holds himself out as having knowledge or skill peculiar to the goods involved in the transaction.
                                                            iii.      Goods: Things which are moveable. 
d.      Hybrid K: involves sale of both goods and stuff other than goods (i.e. real estate)
e.      Things in action, choses in action: a term used in common law tradition in different senses. Chose local is a thing annexed to a place, such as a mill. A chose transitory is something movable, that can be carried from place to place. However, “chose” in these senses is practically obsolete, and it is now used only in the phrases chose in action and chose in possession.
f.        Assign–transfer, convey
g.       Disgorgement: forced giving up of profits obtained by illegal or unethical acts
h.      Specific performance: an order of a court which requires a party to perform a specific act, usually what is stated in a K. It is an alternative to awarding damages, and is classed as an equitable remedy commonly used in the form of injunctive relief.  Usually used in sale of land.
i.         Objective theory of contracts: an obligation attached by the force of law to certain acts of the parties. 
                                                               i.      Restatement adheres to objective theory in wider generalizations.   What is spoken or in a written document.
j.        Subjective theory of contracts: “actual intent” theory what you think
k.       Executory: term used to mean that nothing has been done yet on either side. 
l.         Dower interests: joint contracts bwn husbands and wives.
m.    Letters of Intent/Memorandums of Understanding (MOUs): LoI: Doc signed by both parties as they are moving through the negotiation of a big deal.  It's a preliminary doc.  Parties not bound by it until they sign the final document.  Can be useful–i.e. can assist with getting financial backing. 
n.      Performance specification: requires a contractor to produce a specific result without specifying the means for achieving that result.
o.      Design specification: specifies the design, materials, and methods, and impliedly warrants their adequacy. 
p.      Parol: oral
q.      Knockout rule–opposing terms knock each other out and the gap-filler provision steps in. 
r.        F.O.B.: 'free on board' — seller will place sold item on means of transportation.
s.       Executory K: the K is still being performed. 
t.        Executed K: one that has been performed. 
u.      Wholly executed K: one where both parties have performed. 
v.       Partially executed K: one where one (or less than all) parties have performed.
w.     Shrinkwrap license agreements: typically involve notice of the agreement on the product packaging, inclusion of the full terms of the agreement inside the packaging, and prohibit access to the product absent an express indication of acceptance. Under such cases the K does not form at the time of purchase; generally it forms when the purchaser makes the express indication of acceptance, for example by declining to return the product within a specified period of time.
x.       Rolling K formation: there is no agreement or K upon placement of the order or receipt of the goods.  It is only after the consumer has affirmatively retained the merchandise for more than 30 days–within which the consumer has presumably examined and even used the product(s) and read the agreement–that the K has been effectuated. 
y.       Anticipatory repudiation: breach of the K before it starts. 
z.       Letter of Intent: the opposite of a K.  It's prelim negotiations.  Not a K, no binding promise.  Might be a binding preliminary agreement. 
aa.   Binding preliminary agreement: where the parties exchange promises of value to each other, they can be found to have provided consideration sufficient to support a binding agreement to negotiate in good faith.
bb.  Gratuitous Promise: one by which a person promises to do, or refrain from doing, something without requiring any consideration in return.
cc.    Bilateral Ks: rights and duties on both sides, e.g. services in exchange for $
dd.  Unilateral Ks: rights on one side and duties on the other side.  E.g. reward Ks, no acceptance needed.
ee.  Option K: unilateral, cannot revoke offer.
ff.     Nudum pactum: a promise not supported by consideration.
gg.   Requirements K: a sale of goods K.  “will buy all I need.”
hh.  Outputs K: will sell all can produce
ii.       Quasi K: claim is not based on a true K, but instead seeks redress for unjust enrichment.  i.e. emergency surgery
                                                               i.      Also called an Implied in law K or a constructive K: law says there was a K created.
                                                             ii.      The duty defines the K (as opposed to actual Ks, where the agreement defines the duty)
jj.      Quantum meruit: as much as he deserved–action used to enforce duties of payment for services.  i.e. getting payment for work put in rather than % of K.
kk.   Quantum valebant: as much as they were worth
ll.       Implied in fact K: facts imply that there was a K created. 
mm.                      Negotiorum gestio: management of the affairs of another.  A person who, without invitation, but in compelling circumstances, takes charge of the affairs of another, is entitled to compensation for services rendered in the other's interest. 
nn.  mechanic's liens: mechanic refers to contractors who work on buildings. 
                                                               i.     

contracts may invoke labor laws–it's important to classify. 
                                                            iii.      Water is a moveable good.  Water supply is a hybrid bwn goods & svcs maybe. 
                                                           iv.      Construction Ks–common to have claims of improper performance. 
III.                Types of remedies (§ 345):
a.       Orders (i.e. for specific performance) are extraordinary remedies.
                                                               i.      Specific performance
                                                             ii.      Restoration to prevent unjust enrichment (quantum meruit–“what one has earned” i.e. reasonable value of services)
                                                            iii.      Judgment: To pay amount due
b.      Arbitration: method of resolving a dispute outside the courts.  Agreed to in a K.  Both sides agree to be bound by the decision.
c.       Mediation: involves a third party trying to resolve a dispute. 
d.      Reformation: to reform a K.  When parties say that a K does not reflect the parties' intention and they ask a judge to reform the K to be more accurate.
e.      Rescission: to rescind a K. 
IV.                Remedies
a.       Equity–in personam
                                                               i.      Equitable remedies were extraordinary.
                                                             ii.      No equity remedy if legal remedy was adequate.
                                                            iii.      Land issues–usually an equity remedy b/c land is unique.
                                                           iv.      Modern trend favors specific relief.
                                                             v.      Usually equitable remedies do not have juries. 
                                                           vi.      Order says you must do something.  (Specific performance)
                                                          vii.      Maxims:
1.       One who seeks equity must do equity.
2.       One who comes into equity must come with clean hands
3.       Equity aids the vigilant 
                                                        viii.      With equity we think about the P as a person.  The ct might consider what type of a person is seeking relief.  (clean hands doctrine)
                                                           ix.      Divorce is an equitable cause of action.  So the clean hands doctrine applies. 
                                                             x.      Equity does not enforce unconscionable bargains.
                                                           xi.      Specific Performance