Contracts

• Parol Evidence Rule

  States that extrinsic evidence may not be used to modify or supplement a written contract.
• Extrinsic Evidence

  Is any evidence other than the parties' written agreement that is offered by a party to prove contract terms that do not appear in writing.
• Integrated Agreement

  A writing that is a final expression of the deal.
• Completely Integrated Agreement

  The parties adopt this agreement as the compele and exclusive statement of terms
• Partially integrated

  This agreement does not contain all the terms of the parties' agreement. With this type of agreement, evidence of additional terms may be admissible so long as it does not contradict a term of the writing.
• Collateral Agreement Rule

  Applies to PER cases, although an agreement may be completely integrated, the parties are not prohibited from attempting to show that they formed an entirely separate and distinct agreement. Parties may show they entered into a side agreement as long it does not contradict the main agreement.
• Merger Clauses

  Although an agreement may be completely integrated, the parties are not prohibited from attempting to show that they formed an entirely separate and distinct agreement. Parties may show they entered into a side agreement as long it does not contradict the main agreement.
• Parol Evidence (UCC)

  For the parol evidence rule to apply, parties must have a writing “intended by the parties as a final expression of their agreement with respect to such terms as are included therein. If there is a written agreement, evidence of terms not included in the writing are not admissible.
• Rule for Admissibility of Extrinsic Evidence

  Interpretation is used by courts to give meaning to language used by parties to determine legal effect. For admissibility of extrinsic evidence to explain the meaning of a writing is whether the offered evidence is relevant to prove a meaning to which the language is reasonably susceptible. If so, extrinsic evidence is admissible to explain the meaning even if it would otherwise be barred by PER.
• Good Faith (Restatement)

  Under the Restatement, every contract has a duty of good faith and fair dealing in its enforcement. Bad faith under this rule: prevents another from performing to cause breach, evasion, lack of diligence, interference or failure to comply with other party performance, abuse of power to specify terms.
• Good Faith (UCC)

  Under the UCC, every contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement.
• Requirements Contract

  In a requirements contract, the seller agreed to sell and the buyer agrees to buy all the goods of a particular kind that the buyer may require in its business. It assures the buyer of a steady supplier for the goods in need.
• Outputs Contract

  The seller agrees to sell and the buyer agrees to buy all of the goods of a particular kind that the seller may produce in its business. The seller is assured of a market for its goods.
• Warranty

  A warranty is a representation, either express of implied, that certain facts relating to the goods sold are true.
• To prove a breach of warranty:

  the buyer must prove that the seller made a warranty, that warranty was breached, the buyer’s injury was caused proximately and in fact by defective nature of goods, and that there were damages.
• Express Warranty (UCC)

  an express warranty relating to the goods is created when (a) a seller makes and affirmation of fact or promise to the buyer which relates to the goods and becomes part of the basis of the bargain, (b) any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description, (c) warranty may also be formed on the basis of a sample, model, specifications, or blueprints.
• Warranty of Title

  When a buyer has expectations that the seller has title to the goods that they will receive upon purchase
• Implied Warranty of Merchantability

  An implied warranty of merchantability arises when a merchant sells goods to a buyer. There must be a contract for the sale of goods and the seller must be a merchant. A merchant is one who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction
• To bring a breach under implied warranty of merchantability,

  the plaintiff must prove that the sold goods were not merchantable at the time of sale, there was injury and damages to the plaintiff or its property which causes proximately and in fact by the defective nature of the goods.
• Implied Warranty of Fitness for a Particular Purpose

  arises after a buyer tells the seller of his particular needs for the goods and relies on the seller’s skill and judgment to supply them. The following conditions must be present if a plaintiff is to under this section (1) the seller must have reason to know of the buyer’s particular purpose for the goods, (2) the seller must have reason to know that the buyer is relying on the seller’s skill or judgment to furnish appropriate goods; (3) the buyer must, in fact, rely on the skills or judgment in purchasing the goods.
• Disclaimer of Express Warranties

  If the seller has made an express warranty, it is almost impossible to disclaim it. To a limited extent, the seller is protected against false allegations of oral warranties.
• Disclaimer of Implied Warranties

  Sellers attempt to negate the implied warranties for a particular purpose
• Requirements for modifying or excluding implied warranties

  1. Any written disclaimer must be conspicuous

  2. Exclusion or modification of the warranty of fitness for a particular purpose must be in writing and be conspicuous

  3. Exclusion or modification of the implied warranty of merchantability, whether written or oral must mention the word "merchantability"

  4. Implied warranties may be disclaimed or excluded by expressions like "as is" or "with all faults" or other language which in common understanding calls the buyers attention to the exclusion of warranties and makes plain there is no implied warranty

  5. Implied warranty of fitness for a particular purpose may be excluded by general language, but it must be in writing and conspicuous

  6. Disclaimer of implied warranties must be conspicuous
• Waiver

  A waiver is an intentional relinquishment of a known right. It may be express or implied from words or conduct. A waiver is a unilateral act. By characterizing a waiver, the 3 requirements for an enforceable modification are avoided: mutual assent, a writing if the agreement falls within the statute of frauds, and consideration or detrimental reliance. An effective waiver can be retracted before the time for occurrence of the condition has expired. Under the UCC, an attempted modification can operate as a waiver.
• Impracticality

  Relief is only granted if the change in circumstances creates a severe and unexpected burden on the party seeking discharge and that party has neither assumed the risk nor is it appropriate to allocate the risk of the change on that party
• Claiming that a supervening event has prevented and thus excused a promised performancemust demonstrate

  1. an event has made the performance as agreed impracticable
  2. the nonoccurrence or contingency of the event was a basic assumption on which the contract was made
  3. impracticality resulted without fault of the party seeking to be excused
  4. the party has not assumed a greater obligation than the law imposes
• Existing Impracticality

  A party claiming existing impracticality must prove:

  1. Event has made agreed performance impracticable.

  2. Non-occurrence was a basic assumption upon which the contract was a basic assumption upon which the contract was made

  3. Impracticality was not fault of the party seeking seeking.

  4. Party did not assume greater obligation than law imposes AND

  5. Party seeking excuse must show they did not know or have reason to know at time of contract that the facts made performance impracticable
• Temporary Impracticability

  Under common law, temporary impracticability suspends obligors duty to perform while the impracticability exits, but it does not discharge or prevent duty arising after the impracticability ends; unless the performance has become materially more burdensome had there never been any impracticability.
• Elements of Frustration of Purpose

  1. The event must have been substantially frustrated that party’s principal purpose in entering contract.

  2. It must have been a basic assumption on which the contract was made that the event would not occur

  3. The frustration must not have occurred through the fault of the party seeking to be excused.

  4. That party must not be assumed a greater obligation than the law imposes.
• Contract remedies

  Contract remedies are to make the injured party whole through compensation for the loss caused by the breach. Under the restatement, the purpose of judicial remedies is to protect one or more of the promisee’s three interests: the expectation, reliance and restitution interests.
• Expectation Interest

  The greatest measure of recovery, compensating the injured party for the benefit they would have received had the contract been fully performed, including lost profits
• Limits on recovering expectation damages

  • A party must show causation
  • A party's loss must be foreseeable and proved with reasonable certainty
  • A party has a duty after the defendant's breach to make all reasonable efforts to avoid unnecessary damages
  • A party may not recover more than contract terms would have provided
• Reliance theory

  An alternative to expectation damages if a party cannot meet the requirements for expectation damages
• Reliance Interest

  The reliance theory would seek any expenses incurred in reliance on the contract by preparing to perform or in performance. This type of recovery puts the party back in the position it would have been in had the contract not been made.
• Restitution Interest

  A party may seek to recover damages based on its restitution interest. The goal is not the enforcement of the promise but the prevention of unjust enrichment. If a party has changed position in reliance on the contract and has also conferred a benefit on the other party, the court may require the other party to disgorge the benefit received by returning it to the party who conferred it. The restitution is smaller than the expectation and reliance.
• Measure of Restitution Interest

  Restitution will be awarded, as justice requires as one of the following:

  1. reasonable value to the other party of what he received OR
  2. extent other party's property has been increased in value/other interests advanced.
• Measure of Damages (CL)

  injured party has a right to damages based on the expectation interest measured by the loss of value to him of the other party's performance caused by its failure, plus any other loss, including incidental loss, caused by breach, or any cost or other loss avoided by not having to perform
• avoidability

  damages are not recoverable for loss that injured party could have avoided without undue risk, burden or humiliation
• unforeseeability and related limitations

  damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made. loss maybe foreseeable as a probable result of a breach because it follows from the breach in the ordinary course of events or special cirumstances.
• quantum meruit (cl)


  damages awarded in an amount considered reasonable to compensate a person who provided services in a quasi contractual relationship

  calculated based on market value of services