Generalized Contract Law Outline

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Preliminary Orientation:

WHO are the PARTIES to the contract? Two parties: set up two-party model • A = aggrieved party • B = party breaking the promise Three parties: set up three-party model (see III, below)

What KIND OF CONTRACT is involved? (If sale of goods, apply U.C.C.; otherwise, apply modern common law.) 1. FORMATION: Does B have an OBLIGATION to perform? a. Has there been MUTUAL ASSENT? i. Was there an OFFER MADE? 1. Did the offeror appear to have the requisite INTENT? 2. Are there any problems with the CONTENT (terms) of the offer? 3. Was the offer COMMUNICATED? ii. Was the OFFER STILL OPEN? 1. Has the offer been TERMINATED by one of the following: a. Its OWN TERMS? b. LAPSE OF TIME? c. DEATH of the offeror or DESTRUCTION of the subject matter? d. Supervening ILLEGALITY? e. ACTS OF THE PARTIES? 2. Is this a special kind of offer that is NOT FREELY REVOCABLE, such as: a. an OPTION? b. a MERCHANT’S FIRM OFFER (UCC 2-205)? c. an EQUITABLE OPTION? iii. Was the offer ACCEPTED? 1. Does the person making the acceptance have the CAPACITY TO ACCEPT? 2. If this is a common law BILATERAL contract, is the acceptance a RETURN PROMISE? 3. If this is a common law UNILATERAL contract, is acceptance by PERFORMANCE OF THE ACT REQUESTED? 4. If this is a U.C.C. shipment contract, is there any problem with shipment of NONCONFORMING GOODS? 5. Was the acceptance UNEQUIVOCAL? a. If this is a common law contract, is the acceptance a MIRROR IMAGE of the offer? b. If this is a U.C.C. contract, does the acceptance contain NEW OR ADDITIONAL TERMS (UCC 2-207)? i. Is the acceptance EXPRESSLY CONDITIONAL upon agreement to the new or additional terms? ii. Is the contract BETWEEN MERCHANTS? b. Is there CONSIDERATION or some CONSIDERATION SUBSTITUTE? i. Was there a BARGAINED-FOR EXCHANGE? 1. WHEN was B’s promise made? a. Are there any problems with PAST CONSIDERATION? b. If so, can the contract be enforced under the doctrine of MORAL OBLIGATION? 2. WHY was B’s promise made? a. Could it be argued that B’s promise was really a DISGUISED GIFT? b. Are there any problems with a GIFT SUBJECT TO A CONDITION? 3. WHAT did B get in return? a. Are there any problems with PRE-EXISTING DUTY? b. Was A’s FORBEARANCE TO SUE good consideration? c. Was one of the promises ILLUSORY? ii. If consideration was lacking, could the promise be enforced through PROMISSORY ESTOPPEL? 1. Did the aggrieved party FORESEEABLY AND REASONABLY RELY to his/her detriment on B’S PROMISE? 2. Is enforcement of the promise NECESSARY TO AVOID INJUSTICE? iii. Has A conferred a benefit on B so that, as a matter of law, B owes A something to avoid unjust enrichment? c. Is there any DEFENSE TO ENFORCEMENT of B’s promise? i. Is there any problem with the CAPACITY of the parties? ii. Are there any PUBLIC POLICY problems? 1. Is the subject matter of the contract ILLEGAL? 2. Is enforcement of the deal UNCONSCIONABLE? iii. Are there any problems with FRAUD, DURESS or MISTAKE? iv. Does the contract fall within the STATUTE OF FRAUDS? 1. Does the contract involve the SALE OF REAL PROPERTY? 2. Does the contract involve the SALE OF GOODS FOR $500 OR MORE? 3. Is the contract capable of PERFORMANCE WITHIN ONE YEAR? 4. Is this a GUARANTEE CONTRACT? 5. Is there an APPLICABLE EXCEPTION which takes the contract OUT OF THE STATUTE? 6. Is there a WRITING SUFFICIENT TO SATISFY THE STATUTE? 7. Could B be ESTOPPED FROM ASSERTING THE STATUTE as a defense? d. Is any party seeking to introduce any PAROL EVIDENCE to vary or contradict the terms of the writing? e. Have the parties MODIFIED the terms of the original agreement? i. Is the modification VALID? 1. Was the modification the product of MUTUAL ASSENT? 2. Is CONSIDERATION required to enforce the modification? 3. Are there any applicable DEFENSES TO ENFORCEMENT? ii. Has there been a valid ACCORD AND SATISFACTION? 2. PERFORMANCE: Has B’s obligation ripened into an ABSOLUTE DUTY to perform? a. Are there any EXPRESS, IMPLIED, OR CONSTRUCTIVE CONDITIONS to B’s performance? i. If yes, have they been SATISFIED? ii. If no, have they been EXCUSED? 1. Has there been a WAIVER of the condition? 2. Has B engaged in BREACH ACTIVITIES? 3. Could the condition be excused to AVOID FORFEITURE?

NOTE: If there are no conditions, or if all conditions have been satisfied or excused, B has an ABSOLUTE DUTY to perform.

b. Has B’s absolute duty been DISCHARGED by some unforeseeable changed circumstance? i. Has performance become IMPOSSIBLE? 1. Has performance become ILLEGAL? 2. Has there been a DEATH OR DISABILITY of a person NECESSARY TO THE PERFORMANCE? 3. Has there been a DESTRUCTION of a thing NECESSARY FOR PERFORMANCE? ii. Has performance become SEVERELY IMPRACTICABLE? iii. Has the principal purpose of the contract been TOTALLY FRUSTRATED?

NOTE: If B has an absolute duty to perform which has not been discharged, B has no excuse for not performing his/her promise.

c. Has B refused or failed to perform as A expected? i. Is the breach PRIOR TO THE TIME B’s performance is due (PROSPECTIVE)? 1. Are B’s words or conduct merely expressions of DOUBT OR AN UNEQUIVOCAL REPUDIATION? 2. What OPTIONS are available to A? ii. If B is in PRESENT BREACH, is that breach MINOR or MATERIAL? 1. Is B’s breach WILLFUL? 2. Is B entitled to a reasonable TIME TO CURE? iii. Are there any theories under which B (the breaching party) can recover? 1. Has B already SUBSTANTIALLY PERFORMED? 2. Is the contract DIVISIBLE? 3. Can B recover in RESTITUTION? 3. REMEDIES: How should A be compensated for B’s breach? a. Does the contract contain a valid LIQUIDATED DAMAGES CLAUSE? b. Can A receive EXPECTATION DAMAGES? i. What is the STANDARD MEASURE OF DAMAGES for this type of contract? ii. Are there any CONSEQUENTIAL DAMAGES which can be recovered? iii. Can the amount of the damages be determined with sufficient CERTAINTY? iv. Is A under a DUTY TO MITIGATE his/her damages? c. Can A recover RELIANCE DAMAGES? d. Can A recover in RESTITUTION? 4. THIRD PARTY PROBLEMS: Are there more than two parties involved in the transaction? If so, what kind of a third party contract is involved? a. Is it a THIRD PARTY PROMISOR, and if so, is the third party promise ENFORCEABLE?? b. Is it a GUARANTEE CONTRACT which triggers a STATUTE OF FRAUDS analysis? c. Is it a THIRD PARTY BENEFICIARY CONTRACT? i. What TYPE OF BENEFICIARY is involved? 1. What are the classifications under the FIRST RESTATEMENT? 2. What are the classifications under the SECOND RESTATEMENT? d. Have the original parties attempted to MODIFY OR RESCIND the original terms of the contract? If so, had the third party beneficiary’s rights VESTED before the attempted modification/rescission? e. What are the RIGHTS AND LIABILITIES of the parties? i. If the beneficiary does not receive performance, WHO CAN THE BENEFICIARY SUE? ii. Can the PROMISEE SUE the PROMISOR, and if so, for what? iii. Who can the PROMISOR sue? What DEFENSES can the promisor assert? f. Is it an ASSIGNMENT OF A CONTRACTUAL RIGHT? i. Did the assignor have a present INTENT TO TRANSFER the right assigned? ii. Is the assignment VALID? 1. Are there any problems with CONTRACTUAL LANGUAGE PROHIBITING ASSIGNMENTS? 2. Does the potential assignment INCREASE THE PROMISOR'S DUTY OR RISK? 3. Is the right assigned as EXISTING RIGHT? iii. Has the assignor attempted to REVOKE THE ASSIGNMENT? 1. If so, was the assignment REVOCABLE or IRREVOCABLE? a. Was the assignment WRITTEN? b. Was CONSIDERATION GIVEN for the assignment? c. Was there any TOKEN CHOSE (symbolic writing) exchanged? 2. Who wins in the case of MULTIPLE ASSIGNMENTS? iv. What are the RIGHTS AND LIABILITIES of the parties? 1. Can the ASSIGNOR SUE THE OBLIGOR? 2. If the assignee does not receive performance, who can the ASSIGNEE SUE? a. If the assignee sues the obligor, what DEFENSES can the obligor raise? b. If the assignee sues the obligor, has there been a BREACH OF AN IMPLIED WARRANTY? g. Is it a DELEGATION OF A CONTRACTUAL DUTY? i. Did the delegator have a present INTENT TO TRANSFER the duty delegated? ii. Is the delegation VALID? 1. Are there any problems with CONTRACTUAL LANGUAGE PROHIBITING DELEGATIONS? 2. Is the DUTY DELEGABLE? iii. Has the delegatee ASSUMED THE OBLIGATION OF PERFORMANCE? iv. What are the RIGHTS AND LIABILITIES of the parties? 1. Who can the OBLIGEE SUE? 2. Can the DELEGATOR SUE THE DELEGATEE? v. Has the delegation produced a NOVATION