Contracts Outline

Contracts Outline
Prof. Jim Krier – Winter 2007
Frier, White: Modern Law of Contracts

I. INTRODUCTION/ROADMAP
A. Standard: K law is more like negligence than trespass = reasonableness standard not rule
B. Asymmetry: K can be enforceable against one party and not other
C. UCC: Sale of goods
D. Parol evidence rule: if K is in writing, can you introduce oral evidence to show that it shouldn’t be enforced or it should be different?
E. Default rules: general terms read into K even though not written into it
1. Mandatory rules: implied warranty of inhabitability can’t be waived
F. Unconscionability
G. Statute of Frauds: If K is really impt needs to be in writing
H. Damages: liability rule (default remedy in US)
1. In Ks, injuries are usually economic, so ct can give FMV
2. Arise ex post, but have ex ante deterrent effect
I. Specific Performance: Injunctive relief = property rule
1. Most often in real estate = unique good
2. Changing b/c condos are not unique (often won’t even sue for spec perf)
J. Strict liability: By in large, you can’t breach for any reason
K. Efficient Breach: Advance social welfare in utilitarian sense by breaching a K and selling or buying from another.
1. Not a moral jmnt
L. Output K: B buys all of S’s goods.
M. Requirements K: S supplies all of the goods that B requires.
N. Lucy v. Zehmer:
1. Objective approach: A party’s personal belief does not matter (Lucy)
a. Restatement § 20 – “reason to know the meaning attached by the other”: Can’t win based on ignorance
b. Z should have known L was serious based on L’s actions
c. If L knew it was a joke beforehand, might have different result
2. “Know” trumps “reason to know”
a. Reasonable person is someone who would draw an inference when he also has reason to believe otherwise
b. If you know something, you have reason to know it
3. Intoxication – If drunk so as to be incompetent, it matters. If you know or should have known other party is drunk, it matters
4. Why not subjective? Hard to get concrete ev…rely on testimony = lying
O. Prob 1-1: Pepsico sells Harrier jet for points. Is there an offer?
1. It was a joke on objective standard.
P. Expectation Interest: $ or object bargained for
Q.