CONTRACTS OUTLINE—BAGCHI, FALL 2006
I. Introduction
A. Generally:
Contract as a Binding Promise: “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 was recognizes as a duty.”
UCC: “contract” means the total legal obligation which results from the parties’ agreement as affected by this Act and any other applicable rules of law
Why enforce contracts?
· “sanctity of contract”à common law says keep your promise
· contracts should be enforced for the economy, and facilitates trade and economic exchange
· Helps diffuse power in society (private lawmakers
Development of system Legal Contract Rules
· Contracts have evolved from early common law to more codified
· NCCUSL made Uniform Sales Act. ALI, Restatement. Then NCCUSL and ALI., UCC. (49 states have adopted UCC). UCC has influenced Restatement. Internationally, U.N. CISG (Contracts for the International Sale of Goods)
Default v. Immutable Rules:
· Default rules govern when the parties have remained silent on a particular issue
· Immutable rules cannot be contracted around and established by both courts and leg to protect parties within the contract (paternalism) and outside the contract (externalities). Immutable rules displace freedom from contract.
B. Theories of Promissory Liability
Barnett’s Assessment of Current Theories of Contractual Obligation:
· Five theories explain which commitments merit enforcement and which do not: Will, Reliance, Efficiency, Fairness, and Bargain.
· Will and Relaince = “party-based”; Efficiency and Fairness = “standards-based.” Bargain theory = “Processed-based”
Party-based
· Focus on protecting one particular party to a transaction
· “Will” theories protect Promisor: goes to the promisor’s state of mind if he genuinely meant the promise (objective v. subjective test of intent)
· “Reliance” theories protect Promissee: if the promissee has reaosonably relied on the promise
· problem is that cases must be solved ad hoc using vague concepts (e.g.reasonableness)
Standards-Based
· Focus on the substance of a contract to see if it conforms to a standard of evaluation, either is it efficiency or fairness
· Efficiency: “s
has incurred in anticipation of performance (encourages entering contracts)
· Damages generally not punitive like in torts
2. Measuring and Compensating Loss Resulting from Breach
A. Reliance and Restitution Damages
1. Grant Rel. ad Rest. When expectation hard to assess: Sullivan v. Occonor, Mass1971
P undergoes 3 nose job operations. First two contracted for. Third was to fix the botched
job…what type of damages?…reliance and restitution. Rest: Out of pocket costs of 1st and 2nd surgery.. Reliance was pain and suffering for the third and out of pocket costs for the third. No expectation damamges because for policy reasons it would become too difficult to assess and too expensive for doctors who would practice defensive medicine
B. Specific Performance
1. Grant Specific Performance when breacher cant pay $, performance unavailable elsewhere, and performance whole point of the agreement: Curtice Brothers Co. v. Catts, NJ
