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Contracts
University of Mississippi School of Law
Barnes, Richard L.

 
I.      Introduction
a.      Sources of Contract Law:
1.       Common Law
·         primary source of general contract law in most jurisdictions
·         governs all contracts EXCEPT sale of goods
2.       Restatement 2d of Contracts
·         has no legal force but provides highly persuasive authority on common law
·         does not have to be followed
3.       Uniform Commercial Code (UCC)
·         governs all transactions for sale of goods
o        EXCEPT Leases and Securities
·         covers all parties – not just merchants (although some provisions are limited to merchants)
·         has been adopted by every state except Louisiana

b.       Common Law or UCC?
i.      Whether the common law (Rest.2d) or the UCC controls, depends upon the primary purpose of the contract:
·         primary purpose is sale of goods – UCC controls
·         primary purpose is sale of services or non-goods – common law (Rest.2d) controls
·         Contracts that involve both goods AND services must be evaluated to see which constitutes the primary purpose of the contract.

c.      Rest.2d § 1:            A contract is 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. 1973 Cotton Cases – “forward” contracts at 30¢, price shot up to 80¢, farmers tried to break contracts.

d.      Generally, a contract exists and a promise is legally enforceable when it:
i.      was made as part of a bargain for valid consideration;
ii.      reasonably induced the promisee to rely on the promise to his detriment; or
iii.      is deemed enforceable by a statute despite the lack of consideration.

e.      Contract law is not about making moral judgments, it is about economic judgments. Contracts of moral consequence are left to other parts of the law.

f.       Two approaches to interpretation of contracts:
i.      Purposive Interpretation: contract is interpreted with the intention of the parties in mind.
ii.      Strict Interpretation:  Contract is interpreted by the strict meaning of the words used in the contract.


II.      Interests protected by remedies: for breach of contract focus upon the EXPECTATIONS of the non-breaching party. The law looks at three interests of a party when determining appropriate remedies for breach of contract:
a.      Reliance § 349 (to be in the place you would have occupied in regard to the world had there been no contract at all) “anti contract”
i.      Includes any prep expenses
ii.      Any detriment suffered
b.      Expectation § 347 element-puts you in the same position you would have been had the K been performed

a cash award.
e.      Punitive Damages §355-not recoverable for BOC unless the conduct constituting the breach is also a tort for which PD are recoverable.
i.      Spite at the spiget: willful breach not the same as tort or punitive damages.

III.      Overview of the UCC
a.      Covers all contracts for the sale of goods.
i.      UCC § 2-105(1) – “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities and things in action.”

The UCC definition of goods includes:
·         crops and timber that are growing, unborn young of animals, and other identified things attached to land, if they can be removed without harm to land
·         minerals and structures to be removed by the seller
·         currency exchanged as a commodity

The UCC definition of goods DOES NOT INCLUDE:
·         minerals and structures that are to be removed by the buyer
·         intangible rights such as intellectual property
·         investment securities
money which is the medium for payment of goods