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Contracts II
Villanova University School of Law
Gordon, Ruth

 
CONTRACTS II
 
 
Statute of Frauds
-Always inquire to this if there is a non-written contract, anytime it is in words not in paper
-Just because this is satisfied does not mean the case is over
A. These things are within the statute
          1. Things that cannot be completed in a year – if its possible dont worry about it
                   -Courts are hostile to the rule
                   -If it is in any way possible to be completed in under a year its not within the            statute
                             -Written k must explicitly say this, not merely imply(construction) Klewin
          2. Surety
                   -Answering for the obligations of another must be in writing Strong v Sheffield
                   -Puts original debtor and suror on the hook to creditor
                             -A novation does not need writing, this is when would be suror makes a                             deal with creditor an with creditor’s consent lets debtor off the hook
                             -An original promise does not need writing, this is when the would be                       suror promises to give the debtor money to pay back creditor (mom)
                                      -Needs its own consideration but is the Mom factor
          3. Interests in real property
          4. Anything good more than $500 under the UCC
                   -They are changing this to be more than $5,000
B. Is there sufficient memorandum to satisfy the statute
          -Must look up the specific statute in your state
          -Does not have to be entirely in one document
          -It must be signed by the party we are trying to enforce against
          -Not if there are scribbles on a ledger Richard
          -If its under the UCC (2-201) there is a much looser writing requirement
                   -Can omit or erroneously state terms of the k
                             -Cannot enforce beyond the price listed in the k even if its erroneous
                   -Between merchants
                             -If a confirmation is sent in a reasonable time its enforceable
                                      -Unless party objects to receipt in 10 days – must object to k not                                    merely its terms
                             -Usually the more volatile the market the smaller the window of                                        “reasonable time”
                                      -Usual course of dealings can make us look at it differently Ansgar
C. Does an Exception Apply
          a. Part performance – only an exception if the performance unequivocally indicates the        alleged oral k Richards
          b. Custom made goods – why else would you make it? – UCC 2-201(3)
          c. Leading object rule – If a party is self motivated to assume debt as in Central Ceiling
          d. Reliance
                   -Restatement 139
                   -Must be reliance + because there is some reliance in all these cases
                   -”Unconscionable and unjust enrichment” – staying at home until 21 – Monarco
 
Policing the Bargain
I. Looking at the status of the parties
A. Minors
-Contracts are voidable at option of the minor Keifer
          -Does not work the other way
-Even if they have a wife and kids but are still under the age of majority Keifer
          -Minors can contract for necessities and since this is fact specific, being emancipated may change how it is viewed
-Courts are split as to whether you can protect yourself by putting in statements affirming that you are 18
          -It will help if it is prominent and not boiler plate
B. Mental Incapacity
-Reasonable minds can differ on this, there are a lot of dissents
-Courts can ignore medical testimony Cundick
-There are odd cases of incapacity such as being drunk (selling the farm) and industries such as adoption right after birth and funeral planning are heavily regulated to avoid problems
          -It’s a hint that if there are a lot of regulations there are a lot of problems
-There are two tests to determine mental incapacity
          1. Cognative Test
                   -Applied in Cundick and outlined in Restatement 15(1)a
                   -Means you are too insane to understand what you are doing
                   -Retaining 40% of fair bargain may mean you understood enough Cundick
          2. Volitional Test
                   -Applied Ortelere and outlined in Restatement 15(1)b
                   -Means you cannot control yourself
                   -Other party must have some reason to know and Must be at a level recognized                 by doctors
II. Overreaching
A. Pressure in Bargaining
-In general, k’s are altered all the time for reasonable unforeseen problems with no problem
-We mainly care about gross unfairness used to modify an existing k
          1. Mistake – even an honest one
          2. Fraud
          3. Non-Disclosure
          4. Duress (either physical or economical)
                   -Limits on this require that P have resisted at some point
                   -Ironically, consulting a lawyer maybe evidence of duress if you ignored good           advice – why would you ignore advice you paid for?
                   A. Pre-Existing Duty Rule
                             -More $ for same work – no consideration=non-enforceable
                             -Restatement 89 and UCC 2-209
                             -Alaska Packers – employer could not get new workers in time for season                          so conceding to demands was under duress
                             -Watkins – Finding rocks in basement is a fair modification because its                     not the same work for same $
                             -Rescission is a good way around the rule
                                      -Valid if you rip off signatures of k Schwartzreich
                                      -Can be implied if you renegotiate fairly
                                      -Restatement 73 – new consideration for new k
                             -Five factors to see if its ok to renegotiate
                                      1. Possibility of future transactions – maintaining repor
                                      2. Reputation in market – will it be affected
                                      3. Ease of substitution
                                       4. Liquidation damages
                                      5. Specific Relief (get a new one and sue later)
                   B. Yielding to threats
                             -Courts are subjective to see if your will was overborne Austin
                                      -Stopping fulfillment of military k demanding higher rate
                             -Rule from Austin to see if you were forced
                                      1. Is there a needful good being threatened
                                      2. Is it impossible to get from another source
                                                -If you can, do it and sue for the difference
                             -Renegotiation for one man is duress for another, in Austin trial court,                      appeal, and dissent went the other way
                   C. Undue Influence
                             -A form of duress based upon relationship of parties
                             -Would be if employer tells you to quit or they’ll publicize the arrest                         implicating your gay Odorozzi v School District
                                      -However, the school has a legal right to do it so not duress
                             -There are factors to help see if undue influence is going on
                                       1.       Discussing at an unusual time
                                      2.       Unusual place
                                      3.       Insistence to finish deal immediat

etimes you can figure out what the k means based on price of goods R-203(1)
-There is a hierarchy in the UCC 1-303 to determine what terms in k mean
                   1. Express terms of k
                   2. Course of performance
                             -Showing that a previous k was executed in this particular way
                             -Cannot be used if there is only 1 prior k but can be if there are 2 and                      they went 2 for 2 Nanakuli
                   3. Course of dealings
                             -Showing that prior conduct between parties would indicate they both                      had a common understanding of the term
                   4. Trade Usage
                             -Can tell you what a term means e.g. 50% protein Hurst
                             -Other side will argue you are using the wrong trade
                                      -You must prove your not or they are not bound by it
                                      -If two trade usages exist, its good to show other party knew                                 about the one you want enforced Slaw Cabbage
                                      -It can be sown you knew about trade practices even if you are                                       not in the trade Nanakuli
D. Good Faith in Contracts
          -Good faith according to the UCC
                             a. Honesty in fact for regulars
                             b. Honesty in fact + commercial standards for merchants
                             c. Current revision requires honesty in fact + commercial standards for                     regulars
          -Using good faith to define terms
                   1. Start with R-202(3) – unless there is a different intent give words their                  ordinary meaning
                   2. Then go to 201(1) and if parties attach the same meaning go with that                meaning
                   3. End with 201(2) – if the parties have different interpretations use A’s if:
                             A did not know B’s meaning but B knew A’s b OR A had no reason to                       know B’s meaning but B had reason to know A’s
E. Objective Interpretation and Its Limits
-No meeting of the minds if you are purely talking about a different thing Peerless
          -Or of there is fair misunderstainding (language barrier) Oswald
-If parties agree to a patently ambiguous term they are bound by the k and the courts interpretation of the term Colfax
          -Especially if there is good reason for the party to know the other sides anticipated    meaning Colfax
F. Supplementing the Agreement with Terms Supplied by Law
          1. Gap fillers
                   -UCC 1-302 says you can do anything you want and these are merely gap fillers
                   -Many things get left out a lot and UCC has off the shelf solutions
                             e.g. UCC 2-308 says place of delivery is the sellers place of business if a                            place for delivery was not specified
                             e.g. UCC 2-305 lets you fill in price with a reasonable market price
          2. Warranties