Download contract against the

Statute of Frauds-Recap
http://www.youtube.com/watch?v=tNwAFgdpLJM&feature=youtube_gdata_player
2 Exceptions to statute of frauds
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Partial performance
Admissions
Partial performance
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If buyer has paid any portion of purchase price
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Started to improve land or taken possession
Then this partial performance is proof of the K
ADMISSIONS
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If admit in court or under oath that there is an oral K cant claim SOF
PAROL EVIDENCE RULE
ONE CAN NOT VARY OR ALTER THE TERMS OF
A WRITTEN K
WITH EVIDENCE OF TERMS AGREED TO BEFORE OR CONTEMPORANEOUSLY WITH THE
WRITING
Reason for parol evidence rule
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TO PREVENT EVIDENCE THAT CONTRADICTS THE K
MERGER CLAUSE
(in contract)
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Clause that says THIS is the final agreement of the parties
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Also usually says no modifications of K unless in writing
Exceptions (to P.E. Rule)
Lack of consent (fraud, duress, undue influence, mistake)
Ambiguous K
Incomplete (can fill in gaps, but cant change or contradict terms)
Orally agreed on conditions (if existence of entire K depends on condition, but cant alter
the terms of the K)
To determine if parol evidence allowed, ask:
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Is it an integrated K?
(a complete and final agreement)
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If integrated, no parol evidence (unless one of the exceptions applies)
IF a K is only partially integrated
(then it isn’t done yet) and parol evidence may be allowed to show additional, consistent terms
to supplement
(but not to contradict)
CAN USE PAROL EVIDENCE
To interpret an ambiguous contract
Plain meaning rule
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When K is clear and unequivocal, courts will enforce K according to its terms
Interpretation of Ambiguous terms
Interpret to give effect to intent of parties as expressed in whole K
4 corners rule (Interpret as a whole)
Ambiguities resolved against drafter
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Words given common, ordinary meaning
CAN USE PAROL EVIDENCE
To interpret an ambiguous contract BUT CANT CHANGE OR MODIFY
REMEMBER!
Parol evidence can NEVER be used to contradict the terms of the K
Two situations when a 3d party given rights to a K when he is not a party
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3d party beneficiary
Assignment
Third Party Beneficiary K’s
When the performance is intended to benefit someone other than the person who made the
K
Third Party Beneficiary Contracts
Types:
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Donee Beneficiary
Creditor Beneficiary
Incidental beneficiary
INTENTIONAL BENEFICIARIES
ARE DONEE AND CREDITOR BENEFICIARIES
THEY CAN ENFORCE THE CONTRACT
INTENDED BENEFICIARY K
3rd party beneficiary can sue the PROMISOR for enforcement
BUT NOT
the PROMISEE
Who is the PRMISOR in a 3rd party beneficiary K?
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The party that made the promise that benefits the 3rd party
Example
Life Insurance Co makes K w/ Grandpa for life insurance and Fred is the beneficiary
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Life Ins. Co= promisor
Fred= 3rd party benefic.
Grandpa= promisee
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Fred can sue Life ins co to enforce K but not Grandpa
DONEE BENEFICIARY
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Primary purpose of contracting was to make a gift of performance to the beneficiary
DONEE BENEFICIARY
CAN ENFORCE THE
CONTRACT AGAINST THE
ORIGINAL PROMISOR
BUT NOT THE PROMISEE
Donee Beneficiary (Examples)
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If
PURCHASE OF HOUSE BY PARENT FOR CHILD; ROOF FALLS IN.
MAN BUYS ENGAGEMENT RING FOR FIANCEE AND IT TURNS OUT THAT THE STONE IS
GREEN GLASS NOT EMERALD
Life Insurance contracts (designated beneficiary is a donee beneficiary)
Creditor Beneficiary
performance will satisfy a legal duty that owed a third party (can be any legal duty; not
just payment of $)
INCIDENTAL BENEFICIARIES
CAN NOT ENFORCE THE CONTRACT
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Incidental Beneficiary
K is not intended to benefit
--------------------Has NO RIGHTS under the K
(is NOT an intended beneficiary)
Examples Incidental beneficiary
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Someone next door makes a K to have their ugly house painted
Business in strip center makes contract with guy to dress up like gorilla and stand on
corner to bring traffic to center
A contract consists of rights and duties
A transfer of rights is called an assignment
A transfer of duties is called a delegation
Can’t assign
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Rights that are personal
Rights that increase obligors risk or duties
When prohibited by law or contract
ONCE ASSIGNED
Assignor has no rights left under the K
Delegation (Duties)
Cant delegate personal duties requiring specific talent or expertise
Delegation
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If delegatee doesn’t perform, person delegating the duty (delegator) is still liable under
the K
Discharge of a K—How does a party terminate his obligations?
Performance
--complete
---substantial
Material breach
Mutual agreement
Performance Excused (By operation of law prevention by other party or impossibility)
Material Breach
If performance is not at least substantial
(failure to perform)
When material breach
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The other party no longer has to perform
And can sue for breach of K
Anticipatory breach
Also called anticipatory repudiation
Occurs before a contract has been fully performed
------------------------------------------If other party indicates intent not to perform other party can treat the K as breached (and sue)
EXCUSES FOR NONPERFORMANCE
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Prevention (other side prevents)
By operation of law
a. Bankruptcy
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Impossibility
a. death or illness
b. intervening illegality
c. destruction of the subject matter
Remedies for breach
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Damages (remedies at law)
OR
Equitable remedy
Damages
Compensatory (actual)
Consequential
(special)
Nominal
Consequential Damages-Special circumstances
FLOW from the breach
Consequential Damages
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Includes incidental damages-
Inspection, storage, transportation, buying replacement goods
Consequential Damages
Have to be foreseeable from the breach
Parties can draft
Clause in contract to WAIVE
Consequential damages
Nominal Damages= to show wrong even though no compensable harm
NO PUNATIVE DAMAGES !
For breach of contract
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Unlike Tort actions, where attorney’s fees are not recoverable
The prevailing party in a breach of contract suit can usually recover his reasonable attorney’s
fees (plus interest and costs of court)
Liquidated Damages
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Provide in advance that a specific sum recovered if breach
When Liquidated Damages provided for in the K, it is the exclusive remedy (cant get more)
Duty to Mitigate
Parties injured by a breach of contract have a duty to minimize damages
(Cant recover for injuries that could have been avoided)
MITIGATE=
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To make less
EXAMPLE
Rosco alleging wrongful termination from employer. Rosco can’t just sit around for 4 years
waiting for case to go to trial. Has to MITIGATE his damages by looking for other work.
Distinguish between
LEGAL REMEDIES AND
EQUITABLE REMEDIES
LEGAL REMEDIES =
DAMAGES
$$$$$$$$$$$
Equitable Remedies=Court Ordered Action
Equitable Remedies
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Specific performance (if unique subject matter) … i.e. real estate K’s
Restitution- (return property given)
Rescission—undo K and return parties
to status quo
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CLEAN HANDS
REQUIRED FOR EQUITY
NOTE:
DAMAGES ARE DIFFERENT THAN EQUITABLE REMEDIES
Is a winning bid at an auction
A contract?
Ways to Enforce a Promise when there is no contract
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quasi-contract
Promissory estoppel
Quasi-Contract a/k/a/ quantum meruit
No contract
Contract is implied to prevent unjust enrichment
Quantum Meruit
“as much as he deserves”
Quantum Meruit
An equitable remedy that prevents others from receiving unjust enrichment
Quantum Meruit
Allows recovery for reasonable value of services provided
Quantum Meruit (quasi-Contract) Elements
Someone furnishes goods or services and expects compensation
Other person accepts goods or services and obtains a direct benefit
NOTE: Quantum Meruit
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Based on the parties conduct
EXAMPLE: Quasi-Contract
UPS delivers TV to you by mistake and you keep it
REMEMBER!!!!!!!!!!!!!!!
Quantum Meruit (quasi-contract) is for when there is NO CONTRACT
PROMISSORY ESTOPPEL
Person made promise, knew you would rely on it and
You justifiably relied on it to your detriment
REMEMBER!!!!!!!!
PROMISSORY ESTOPPEL is for when there is NO CONTRACT
FINIS!
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