Contracts

▼	False Assumptions
	▼	Who wants out?
	•	Can they use one of the below theories?
	▼	Mistake
	▼	Mistaken belief about facts AS THEY EXISTED at the time of the contract. 
	•	Mistake = Beleif, Misrepresentation = assertion. 
	▼	Mutual Mistake
	•	(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154.
(2) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.
	•	Shared by both parties
	▼	A mistake in judgement is not a defense-
	•	If the parties think that the market price will go up and it doesn't- that is a mistake in judgement and is not a defense.
	▼	Unilateral Mistake
	▼	Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and
(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or
(b) the other party had reason to know of the mistake or his fault caused the mistake.
	▼	If the other party knew or had reason to know of the mistake- the contract is voidable by the effected party.
	▼	Actual knowledge is not neccessary.
	•	A large disparity in price would be enough to put the other party on notice that maybe a mistake has occured.
	•	Of couse- it does not apply to errors in judgement. 
	•	Mistake only by one party
	•	Most unilateral mistakes are caused by an error in computation in the contract.
	▼	§154 Exceptions
	•	A party bears the risk of a mistake when
(a) the risk is allocated to him by agreement of the parties, or
(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
(c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.
	•	Is there a mistake? A factual belief not in accord with the facts
	▼	Is it mutual or unilateral? This becomes tricky, and it becomes an issue of advocacy.
	•	It easier to get relief if the mistake is Mutual rather than unilateral.
	▼	Lots the mistake stuff can be avoided by proper drafting!
	•	Reeds Photo mart mistake is not easily solved by drafting. 
	▼	Mistake analysis
	•	Who wants out
	▼	identify mistake
	•	belief thats not in accordance with the facts
	•	mutual/ unilateral
	•	who bears the risk. - If your client bears the risk, you will not succeed. 
	•	Unilaterial - the contract is unconscionable or the other party person knows
	•	Standard relief is resicion
	•	Remidy is usually recission
	▼	If the contract doesn't say who bears the risk then:
	•	Does one party have superior knowledge
	•	relationship of the parties
	•	Usage of trade
	•	ANything really that will help you make a determination.
	•	Where will the risk fairly fall. 
	▼	Impracticability/Impossibility
	▼	Nature of the performance has changed.
	•	The non-occurance of the event was a basic assumption on which the contract was formed. 
	•	Not every occurrence excuses performance
	▼	Impossibility has been around for a while
	▼	If something happens that is beyond your control and it prevents the carrying out of the contract  - you'll get out of the contract.
	•	If the dance hall you rent burns to the ground, though no fault of your own, then there is no liability for breach
	▼	Impracticability grew out of impossibility
	•	Impracticability is something less than impossibility
	•	We assumed that the performance would be of this nature, and after the supervening event, it can no longer be of that nature.
	▼	§261 Duty to render performance is discharged unless the risk has been alocated.
	•	Does the party who wants out bear the risk? If so you arn't getting out of it. 
	▼	Analysis
	•	Something unexpected must have occured
	▼	The risk of the unexpected occurance must have not been allocated by custom or allocation
	•	The liklhood of the occurance can be interpreted when determining the liklyhood that the risk was alocated by the prices of the contract
	•	Usage of Trade
	•	Conduct of one party assumes an assumption of risk
	•	Party who is better situated to bear the risk.-
	•	There is no risk splitting and no risk sharing when a court steps in. 
	▼	The occurance must have made performance unpracticable
	•	No reasonable alternative to allow performance.
	▼	Unpracticble means something like the whole contract would be worthless
	•	Possibility that the buisness would no longer be a going concern if the contract was performed.
	•	No just - were going to loose some money.
	•	Physically impossibility.
	▼	Standard relief is discharge,
	•	Don't use the language of recission- use discahrge
	•	Maybe the time period is changed
	▼	Force Majure
	▼	Impracticapility drafted into the contract.
	•	Acts of war, acts of god, standard
	•	Labor disputes common in construction contracts
	•	Acts of terrorism is also included now.
	•	Acts of piracy.
	•	Though standard in many contract - they're more taylored to certain industries.
	▼	Hardship Clause
	▼	Not yet typical in domestic K's - popular in int'l K's
	•	A good way to reconcile different contracting styles in Int'l systems.
	▼	Frustration of Purpose
	•	Performance remains possible but the expected value of performance to the party seeking to be excused has been destoryed by an event which supervenes to cause an actual but not literal failure of consideration.
	•	The superviening event has not changed the performance of either party, but the reasoning behind entering into the contract are now gone
	•	Rest §265
	▼	Performance has not changed- but the reason for doing it is no longer there.
	•	Renting the room for the corrination parrade- rent the room, parade is cancelled. The room can still be rented, but the purpose for one party to do what it was that they did.
	•	The value of the contract
	•	forseability of the interviening  action
	•	Remidy depends on where the parties are in the process.
▼	Scope of  the Contract
	▼	Terms
	▼	Parol Evidence Rule - an evidence barring rule
	▼	Parol evidence will not be admitted to vary, add to, or contradict a written contract that constitutes an integration
	▼	Doesn't apply to agreeements entered into AFTER the main written agreement - either oral or written
	•	We are free to modify agreements either orally or written.
	•	Does effect agreements PRIOR to the written agreement either written or oral.
	▼	Purpose - to protect the written agreement.
	•	Writting is generally the best evidence of what the contract is supposed to be.
	•	Doesn't effect contemporanious written agreements but does effect contemporanious ORAL agreements. 
	▼	Rest §213,  UCC 202 - Each has a slightly different interpretation
	•	Course of performance and usage of trade.
	▼	Analysis - not the only/ right way to do the analysis
	▼	Is the document an Integration?
	▼	Traditional rule- Williston
	▼	Does the document look like it is complete on its face?
	•	This test looks to the form of the document
	▼	Modern Rule- Corbin
	•	Did the parties intend this document to be an integration
	•	The court will consider any relevant evidence to determine the parties intent.
	•	Careful - Some courts use the word intigration to imply a complete intigration -complete/ partial is a second step after determining an integration.
	▼	Just because there is no integration clause, doesn't mean that the document is not an integration.
	•	Look at the document to see if it is complete.
	•	Under the traditional rule- a merger/intigration clause is dispositive of the question about the completeness of the document
	•	Under the modern rule- its one piece of evidence to be taken into consideration
	▼	Is it a Partial or Complete integration.
	•	If the document is a partial integration it will be considered controlling on the subjects that are included in the written document.
	•	Complete? Then any parol evidence will be excluded. 
	•	Partial - its not the whole agreement - there are other terms
	▼	How do we know if it is partial or complete?
	•	Complete looks complete-
	▼	A conservative court will look at the "four corners" of the document.
	•	How far outside of the document will the court look.
	▼	Would the suspect extrinsic terms be included in the document
	▼	We have to look at the suspect terms to decide this.
	•	And that is looking outside the"four corners" of the document
	▼	Support or Contradict?
	•	If the parol evidence contradicts the writing, it will NEVER be allowed.
	•	Supporting oral agreements will be allowed if parol evidence is allowed.
	▼	Tests
	•	The document
	▼	the extrinsic term
	•	Even a four corners jurisdiction will look at the extrinsic term
	▼	Naturally be separate
	▼	Rest. stance - If it would be naturally separate - then it would be a partial integration.
	•	a naturally separate term must not conflict with the written integration
	▼	Anything Goes
	•	circumstances included - Corbin
	•	Test is any credible evidence.
	•	The more liberal the court - the more tests they will use to determine the extent of the completeness of the
	•	More liberal jurisdictions have more litigation over the parol evidence rule. 
	•	A Complete integration is the kiss of death for the admission of parol evidence in a conservative district.
	▼	Supliment Contradict?
	•	Does the additional agreeemnt suppliment or contradict the written agreement,
	•	An extrinsic term cannot contradict the written document.
	▼	Exceptions
	▼	Collateral agreement -
	•	A seperate topic that might touch on the main agreement
	•	an agreement supported by separate consideration will be allowed. 
	▼	Lack of consideration
	•	Parol evidence is always allowed to show lack of consideration.
	▼	Fraud  Mistake and Duress -Leaving the term out
	•	We agreed to the term and it was left out
	▼	Condition precedent to the formation of the K.
	▼	Evidence will be allowed in to show a condition precedent to the legal effectiveness of the written agreement.
	•	The evidence cannot ADD a condition precident, it can only show that one was agreed upon. 
	•	A condition precident is an event that will impact someone's duty to perform.
	▼	Parties will merge companies, and the merger is conditioned on getting financing
	•	Condition wasn't written
	•	But because its a condition precedent, parol evidnece rule doesn't apply and you can bring it in. 
	▼	Interpretation
	•	Evidence of interpretation of terms may be brought in as parol evidence
	•	The evidence will explain the contract- not add terms too it.
	•	Remember- interpretation cannot be used to contradict the agreement.
	▼	UCC position- sale of goods- very liberal interpretation.
	•	Parol Evidence will be admitted unless the evidence certainly would have been included.
	•	Includes course of dealing, course of performance and usage of trade.
	▼	Course of performance
	•	The course of perforomaning THIS contract. 
	▼	Course of dealing
	•	Their previous contracts
	▼	Usage of trade
	•	Moves beyond these particular parties, to the trade in general.
	▼	What's the scope of the ussage
	•	Are they new to the organization?
	•	Small geographic area,
	•	Distinct area of the trade
	▼	Note- these will be used even in conservitive jurisdictions in contracts for the sale of goods
	•	because its the UCC.
	▼	No oral modification clause - not enforcable outside of the UCC
	•	Parol evidence doesn't apply to oral modification after the contract is formed
	•	ANy oral modifications must be supported by consideration though
	•	People add this to prevent oral modification, and allow only written modifications.
	▼	Courts will generally allow oral modifactions even if the clause is present
	•	WHY? Because parties can orally agree to disregard parts of the contract.
	▼	UCC by statute makes them enforcable,
	•	But there are lots of exceptions that makes them essentially unenforcable.
	▼	Interpretation UCC 2-202
	▼	UCC case in a conservitive jurisdiction will still allow usage of trade course of dealing and course of performance.
	▼	Heirarchy
	•	Course of Performance
	▼	Course of Dealing
	•	the relationship of the parties in previous contracts
	•	And Then Usage of Trade
	▼	Negotiations are not part of the scope of things.
	•	They are part of the circumstances sourounding the contract.
	•	Circumstances can overlap the other categories.
	▼	By allowing for another person (the court) to interpret your contract, you are handing control over to them.
	•	We want to maintain control of our contracts.
	•	Before we get caught up in what the parties mean, look at the term
	•	What does each party think that the terms mean.
	•	Finding ambiguity will be a threshold test in some jurisdictions.
	▼	Tools
	▼	Usage of trade, course of performance, and usage of trade
	•	UCC interpretation - ALWAYS used, even
	▼	Course of performance will trump course of dealing, and then usage of trade
	•	It goes to how THESE parties had behaved in their contract, which comes next in preference, and then the usage of trade.  
	•	grammar rules
	•	drafting party
	•	valid meaning
	▼	circumstances under which the K was made
	•	Not exactly a cannon of construction.
	•	plain meaning
	•	context
	•	plausibility
	•	market conditions
	•	course of dealings
	•	course of performance.
	▼	Gaps
	•	Gap fillers
	▼	No waiver clause
	•	"Any waiver now is not a waiver in the future."
	▼	Implied Warranties under the UCC
	▼	Merchantability
	•	Goods will do what they are supposed to do.
	▼	Fitness for a particular purpose
	•	If I';m buying them for a purpose and the seller KNOWS that I'm using them for a purpose, then they will generally work
	•	Both can be disclaimed
▼	Breach
	▼	Prom/Covenant
	•	A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promise in understanding that a commitment has been made. 
	▼	Duty/ Obligation - Are breached and then results in a remedy.
	•	Absolute
	▼	Conditional
	▼	Pure Condition
	•	Getting financing for a loan. 
	•	Something that is not an obligation- I get it or I don't and me paying you is condition on me getting it
	▼	The law abhors a forfiture
	•	They will try to interpret around it
	▼	Breach
	•	Every breach has a remidy- and absolute rule of law.
	▼	Conditions - Are not breached- they are satisfied or they fail- and impact the duty (or right)
	▼	Precedent/Subsequent
	•	A condition precedent is a condition that must occur before a party has a duty to render performance under the contract.
	▼	Conditiion Precedent
	•	A duty to preform does not attach until the condition is satisfied.
	•	Substantial performance cannot be used to analyse a Conditition precident because it is only applicable to duties, and with a condition precident is no duty.
	•	A condition precident is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises. 
	▼	Conditions are not favored in contract law
	•	Rest §227(was 261) - Where it is doubtful whether words create a promise or an express condition, they are interpreted as creating a promise.
	•	They will be defeated if there is ambiguity about the construction of the clause.
	•	If they are not conditions, then they are promises
	•	There is a general legal policy against forfeitures
	•	Condition precedent must happen before the duty
	▼	A condition subsequent is a condition that terminates the duty to perform after it occurs.
	▼	I agree to work for you as long as I am in law school
	•	When I graduate- the duty to remain at the place of employment ceases.
	▼	True conditions subsequent are rare.
	▼	Condition supsequent that is actually a condition precident: you agree to submit proof of loss under your insurance policy within 30 days of the loss
	•	Looks like a CS- after the fire you have to do soemthing
	•	But in reality its a CP- the insurers duty to pay- the reason you have the policy- is premised on you turning in the proof of loss.
	▼	Express Conditions
	•	explicit contractual provision 
	•	Express conditions must be satisfied exactly as specified.
	▼	Implied Conditions
	•	ONLY 3- there are no more.
	▼	Simmultanious exchange
	•	I'll sell you my car, and you pay me. One person handing the money, the other is obligated to give the car. Who ever starts first will trigger the other
	▼	One longer than the other
	▼	The longer to perform duty goes first.
	•	You paint my house, I pay you.
	•	You paint first, I pay when you're done, because one takes longer than the other. 
	▼	Ongoing
	•	Each parties duty to continue to perform is conditioned on the other parties continued performance. 
	•	Pure/ Promisory
	▼	Conditions are satisfied or they fail
	•	If they are satisfied, then the duty that is dependant on it attaches
	•	If the condition fails- then the duty does not attach. 
	▼	Substantial Performance
	•	While a material breach is a condition on the promise to pay, substantial performance is an immaterial breach that operates as a promise.
	▼	How do we know what substantial performance is?
	▼	The answer is found by weighing
	•	 the the purpose to be served,
	•	the desire to be gratified,
	•	the excuse for deviating,
	•	the cruelty of enforcing strict adherence,
	•	 or of compelling the promisee to receive something less then they bargained. 
	▼	Another analysis
	•	what were the promises in the contract
	▼	did the party fail to do what they promised to do
	•	Yes? then that party is in breach
	•	Calculate the expectancy damages
	▼	Is the breach material?
	•	Yes- other parties performance is discharged
	•	No-other party must perform, but may deduct damages for the immaterial breach
	•	Is there any relief under substantial performance?
	•	does the performance meet the essential purpose of the contract?
	▼	Substantial performance is something less than complete performance
	•	the parties can of course say that payment is conditioned on complete performance with an express condition
	•	But when there is no express condition- we use this to determine payment
	▼	Anything less than full performance is still a breach of the contract
	•	And entitle the non-breaching party to a remedy
	•	The breaching party will sue for expectation damages, which will be offset by the damages resulting from the non-perfect performance.
	•	A is building a house for B. A doesn't install a light switch- performance is not complete so B withholds payment- A sues for payment, and any judgement A receives will be offset by the damage B incurred by not having the job finished as specified.
	▼	SO the contractors performance is a promissory condition
	•	ALL constructive conditions are promissory conditions- they link the parties duties together
	•	If the breach is a promise- the the remedy is damages
	•	If the breach is a condition- then the duty to pay has not yet attached- so you can withhold payment.
	▼	UCC adopts a perfect tender rule- substantially conforming goods will not count.
	•	But there are lots of exceptions.
	▼	Courts rule that omissions from contracts that are both trivial and innocnet will sometimes be atoned for by allowance of the resulting damage and will not always be the breach of a condition to be followed by a forteiture.
	•	What is trivial and innocnet.
	▼	Court says that the margin of departure within the range of normal expectation upon a sale of common chatels will vary from the margin to be expected from upon a K for the construction of a mansion or a skyscraper
	•	But if this reasoning is followed, doesn't it make the small details of a K inconsequesntial? How do people have control over their contracts  with this rule .
	•	Duty is to pay for the K
	▼	The condition is express to use reading pipe or get a waiver.
	•	the condition is satisfied only by the use of reading pipe
	•	Because the condition is plain in the K
	▼	Severable conditions
	•	Another way to avoid total forfeiture.
	•	If there is substantial performance, then there is no need to talk about divisability. 
	▼	How do we know if a contract is divisable
	▼	Is there divided consideration?
	•	Is part of the money allocated for certain parts of the K
	•	Can the contracts purpose be acheived w/o some parts of it?
	•	If a K is divisible- then the party who has performed one or more parts is entitled to collect the contract price for those parts, even it he breaches other parts.
	▼	How is the UCC different
	▼	Perfect tender rule 2-601
	•	K that sets out quality, quantity, ect
	•	If anything isn't right, then substantial performance does not apply.
	•	It's got to be perfect.
	•	Rejection has to be reasonable 2-602
	▼	Cure by the seller 2-508
	•	If seller delivers early and the goods are nonconforming, they can still redeliver curing the defects with the original time frame. 
	▼	Revocation of acceptance 2-608
	•	I've accepted and now I discover that something is wrong, and I revoke my acceptance.
	•	Theres substntial impairment, and it wasn't readily apparant. 
	▼	Excuse of Conditions
	•	If the condition is excused, is has the same effect as if the condition were satisfied.
	▼	Waiver
	•	An intentional release from an obligation
	•	waivers are normally enforceable in exchange for separate consideration.
	▼	it is enforceable w/o separate consideration if:
	•	it is not material to the agreed upon exchange
	•	uncertainty of the occurrence of the condition was not an element of the risk assumed by the party who gave the waiver
	▼	retraction of waiver
	•	not given for separate consideration
	•	the other party has not changed performance in reliance on the waiver
	•	the waiver relates to a condition to be fulfilled by the other party- as a opposed to a third party.
	•	the retraction occurs before the time that the waived condition was supposed to occur,
	•	and either sufficient notice is given while there is still a reasonable time to perform, or an extension is granted.
	•	If you waive some conditions through course of performance, and then later intend on enforcing them, you need to put the other party on notice of the "change" back to the original terms
	▼	What about a no waiver clause?
	•	Reliance may get around a no waiver clause
	▼	Prevention
	▼	If One party prevents a condition precident from occuring, then the condition is excused
	•	Generally you arn't bound if the condition doesn't occur
	•	The promisor must WRONGFULLY prevent the condition from occuring.
	•	Election: ????
	▼	Retraction:
	•	I say- its ok that you're late with the next payment.
	▼	Then I say- "Sorry I changed my mind, you have to pay on time"
	▼	Thats a retraction- but it must happen before the due date. You can't retract after the due date.
	•	UNLESS there is reliance on the waiver of the due date.
	▼	Impossibility
	•	the condition must not be a material part of the exchange if impossibility is to work
	▼	Rest §229 Excuse of an impossible condition
	•	Court can excuse the condition unless it is material to the lease.
	▼	Material Breach
	▼	Both parties have ongoing duties to perform
	•	If on party is in material breach, the other party doesn't have to perform their remaining duties
	▼	Who Materially Breached first is the one liable
	•	If you breach because the other guy breached, and it turns that the other guys did not materially breach, then you are the one in breach and are liable for damages.
	▼	What makes it material? §241 Rest. Esentially the same factors as the substantial performance factors.
	•	The exent  to which the breaching party has performed
	•	whether the breach is willful, negligent, or the result of purely innocnet behavior.
	•	the extent of the uncertanty that the breaching party will perform the remainder of the contract
	•	the extent to which the nonbreaching party will obtain the benifit they have bargained for despite the breach
	•	the extent to which the nonbreaching party can be adequatly be compensated
	•	the degree of hardship imposed on the breaching party if they were found to have materially breached.
	•	If there is material Breach, then the nonbreaching parties duty is suspending
	▼	With material breach, then condition fails
	▼	Then what? §242
	▼	Partial Breach  
	▼	If it's partial, then the breaching party can fix it (cure) and then the contract continues
	•	There is still a remidy for the breach, but the contract doesn't end.
	•	There is a chance for redemption.
	•	Partial breach gives rise to a cause of action for damages relating ot the breach, but it does not discharge the duties under the contract. 
	▼	Total Breach
	•	Material breach gives rise to an immediate cause of action, and it excuses further performance by the innocent party.
	•	Then the nonbreaching parties duty is discharged and the contract is over
	•	Can be an immediate total breach, and the duty is immediatly discharged.
	▼	Or its a partial breach and the breaching party doesn't cure in time- resulting in a total breach
	•	How much time do you have to fix it? Depends on the K.
	▼	§241 factors plus
	•	 what the nonbreaching party can do to get substitute performance.
	▼	What does the nonbreaching party need? How urgent is performance needed
	▼	"Time is of the essence"- as a stock phrase, it may not actually mean time is of the essence.
	•	The contract says it, so it should be considered, but the court will really look at additional factors
	•	Kind of like a merger clause.
	▼	What is a breach
	•	In order to give rise to a breach, there must be an absolute and unequivical refusal to perform or a distinct and positive statement of an inability to perform
	▼	Unequivical
	▼	Can be a statement or actions
	•	"I'm not going to complete the contract" - Or "You must show up tomorrow" and then they fail to show up.
	•	§250 Rest
	▼	§256 - Repudiating party can take it back
	•	Can do that unless there is reliance.
	•	§254 Acceleration clause- protects the creditor in case of breach- allows them to sue easily.
	▼	Anticipatory repudiation/breach
	▼	If one party breaches before performance is due- thats anticipatory breach
	•	Acts or words are sufficient to establish Anticipatory breach
	•	The acts must constitute an unconditional refusal to perform the contract.
	•	The nonbreaching party has an immediate cause of action- just as if the breach had been material
	•	Aniticpatory breach functions the same as regular breach except that the time for performance has not yet passed
	▼	Retraction
	•	The breaching party may retract their notice of breach and agree to the continuation of the K, UNLESS the innocent party has changed their position in detrimental reliance, or has accepted the repudiation.
	•	The innocent party has a duty to mitigate.
	▼	Request for assurances by a nervous party. UCC 2-609 What reasonable grounds look like.
	▼	When can you demand assurances?
	•	When reasonable grounds for insecurity arise with respect to the performance of either party the other may in wrtiting demand adequate assurance due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.
	•	Just because you havn't received the loan for the job doesn't make it reasonable to demand assurances
	▼	What can you ask for?
	•	Only reasonable things.
	▼	You can't use the demand for assurances to add items to the contract.
	•	Like a personal guarantee or liquidated damages clause.
	•	How do you evaluate the assurances that you do get?
	•	An unjustified failure to provide adequate assurances within 30 days after the demand constitutes a repudation of the contract as a mater of law. 
▼	Remidies
	•	Every Breach has a remidy!
	▼	Protecting the expectation interest is the starting point for remidies
	▼	The value of the goods at the time they lose possession
	•	The value of the painting at the time it is returned is the correct remidy- not the value paid at the time of the painting is origonally purchased
	▼	how to measure damages
	▼	Expectation interest 
	•	The purchase price plus interest
	•	"Value"
	•	value at time of dispensation
	•	value at time of sale
	▼	Can also measure by a restitution interest
	•	Tiger Woods' yacht.
	▼	Do you get to choose between expectation interests and restitution interterests? What if one is so much larger than the other
	•	Some allow it- some don't
	•	Reliance expendentures is another thing that can be measured
	▼	Redress Breach
	•	what the non-breaching party needs to make then whole.
	▼	Punitives are not allowed in contract cases
	•	Purpose is to put the non-breaching party in the place that they would be had there been no breach
	•	If you can find a tort in there somewhere- then you can get punies, but not otherwise.
	▼	Efficient Breach
	•	Sometimes its more economically efficient to breach and pay the damages, and then enter into a new contract.
	•	is it efficient from the non-breaching parties perspective?
	▼	Specific performance is only available if the object contracted for is so unique as to be unavailable otherwise
	•	Real estate is always unique!
▼	Damages
	▼	General/ Direct Damages
	•	Damages naturally arising from the breach
	▼	Expectancy Damages
	•	The amount of $ it will cost to put you in the place that you would have been had the contract been completed
	▼	Restitution Damages
	▼	Receiving the value of the benefit conferred
	▼	The classic example - the return of money that was incorrectly/ erroneously paid.\
	•	Either under no contract-
	•	or an unenforceable contract.
	•	Prevents unjust enrichment.
	▼	When is something not unjust?
	•	When it is a gift
	•	when it is conferred officiously.
	▼	when a benefit is conferred because you made a bad decision about the value of something
	•	I sell you a painting I think is worth $10,000. It turns out that its worth $15,000- a benefit has been conferred- but because the benefit is conferred 
	▼	When there is no contract- the court will imply one at law to prevent unjust enrichment
	•	You are unconscious and drowning- I rent a boat to save you- court will imply a contract to compensate me for the cost of the contract.
	•	When there is a contract- restitution will not always be available
	•	The amount of restitution is the reasonable value of the benefit conferred.
	▼	Reliance
	•	puts the person back in the same place they were before the contract.
	▼	The amount paid by the non preacher that doesn't benefit the breacher
	•	The cost of a title search done in contemplation of buying a house.
	•	The was a promise
	•	The promisor could reasonably expect the promise to induce action
	•	The promise does induce the action.
	▼	The remedy will generally be limited to the extent of the reliance.
	▼	you only get reliance damages for costs incurred after the contract was entered into-
	•	Duh- but make sure you don't fuck this up.
	▼	But sometimes the costs incurred before entering the K will be allowed-
	•	Like I buy a ticket to a trade show and ship something there with your company- you don't deliver on time- and now I have no reason to go- would I have enter into the K? Did you know that your breach made my trip worthless to me?
	•	The amount of loss that you would have incurred in completing the contract will act to offset any reliance damage award- Rest §349.
	▼	Consequential Damages
	•	Damages that flow from a damaged party's particular circumstances
	•	 Eg: Lost profits
	▼	Consequential Damages can be recovered only if, at the time the contract was made, the defendant had reason to foresee the damages as a probable result of the breach. Hadley Rule- cranks shaft being shipped
	▼	Foreseeability
	▼	The extent to which damages for lost profits may be recovered is limited by the amount of liability that the breaching party was aware of at the time the contract was entered into.
	▼	I ship the crankshaft, but don't tell the shipper that we are loosing money by not having it- they take longer than they say the will to ship the crankshaft-
	•	 The shipper will not be liable for damages that they did not know were possible.
	•	Because the shipper had no reason to suspect that they would be liable for huge losses at the time to contract was entered into, they will not be liable for the unknown damages that result from breaching.
	▼	Foreseeability AT THE TIME THE CONTRACT WAS ENTERED INTO.\
	•	ALL RISK IS ALLOCATED AT THE TIME THE CONTRACT IS ENTERED INTO.
	•	It's a negotiated risk- we can adjust for the risk by charging more at the time of the K.
	▼	Foreseeability of consequential damages because of the breach
	•	Is it forseeable that because you cancel, you will harm the persons ability to get other work.
	•	In a lot of K's you'll see a disclaimer of consequential damages, or a cap on them. 
	•	"probable result" = more likely than not.
	▼	Certainty- consequential damages must be of an amount that is reasonably certain of computation
	•	If its really tough to get the damages numbers right-too speculative-  then only nominal damages will be awarded.
	▼	Lost profits are calculated differently for new or existing businesses
	•	Existing businesses lost profits are estimated from past profits and are not too speculative
	▼	New businesses- Old rule was that lost profits were too speculative
	•	New Rule- if they can be estimated from similar businesses or some other measure - they will be allowed if calculated with reasonable certanty
	•	Most of the time now -lost profits will only be disallowed if they are REALLY speculative.- UCC calls for the liberal administration of the remedy. 
	•	Restitution is not available to the non-breaching party who has fully performed their end of the contract.
	▼	Perfect tender rule has been modified-
	•	now there is a duty on the non-breacher to allow the breacher the ability to cure.
	▼	UCC formula
	▼	Can be used with just about any contract, but its diffcult to plug the numbers into the correct spots.
	•	Loss in value suffered- what ever you thought you would get minus what you got
	•	plus other losses - consequential damages
	•	minus expected expenses that were never outlaid
	•	minus salvage
	•	Under the UCC the seller cannot get consequential dmages- only buyers
	▼	Peevyhouse Rule
	•	If breach pertains to a matter only incidental to the main purpose of the contract, and performance would be disproportionately costly, the proper measure of damages is the diminution in value measure.
	▼	Construction contract
	▼	Where the buyer/owner breaches- also works for manufacturing.
	•	K amount.
	•	plus amount actually spent
	•	plus consequential damages
	•	minus progress payments and procceds - things you could salvage
	▼	General Rule will be the cost of repair
	•	Because we want to put people in the place where they would have been
	•	Diminution of Value will only really be looked at when the cost of repair is so huge .
	▼	Avoidability/ Duty to Mitigate Rest § 350
	•	Duty to Mitigate is an affirmative defense. NOT REALLY A DUTY
	▼	It's a limitation on the non-breaching parties ability to collect damages.
	•	The nonbreaching party has to avoid damages by accepting new work that is of the same type as the contracted for.
	•	The general rule is that the measure of recovery  is the amount of sallery, less the amount which the employer affirmativly proves the employee has earned or with reasonable effort might have earned from other employment
	▼	If there is a difference in kind between the two employments- then the nonbreaching party can refuse the new offer and not be liable for failure to mitigate.
	•	What constitutes a differnece in kind? seems to be a question for a jury.
	▼	Construction contract- once repudated by the home owner, the contractor must cease work on the home-
	•	They cannot continue to work in order to rack up more damages. 
	•	Expenses incurred in mitigating damages are added to the recoverable cost.
	▼	Liquidated Damages
	▼	Liquidated Damages fix the amount that is recoverable under the contract.
	▼	The court will determine whether the Liquidated damages clause constitues legitimate damages, or acts as a penalty. 
	•	Penalty damages will not be allowed.
	▼	To be valid a liquidated damages clause must meet 2 requirements
	•	Damages must be difficult to estimate at the time the contract was entered into
	•	the damages agreed upon must be a reasonable estimate at the time the contract was entered into. 
	•	NOTE: Courts may not enforce a liquidated damages clause if the damages are in fact acertainable after the fact, and the liquidated damages are so out of proportion with the reality- courts would hold the liquidated damages as unconscionable.
▼	Third Party Issues
	•	Are there any people out there in the universe who have a legal interest in the contract?
	•	Anybody who is not a party to the contract, but has rights or obligations from it the contract
	▼	3rd party benificiary - TPB
	•	Happens because of the nature of the contract
	▼	Intended TPB
	•	You are intended if the parties intended you to be one.
	▼	Does the performance go straight to the TPB?
	•	Then they look more like a TPB
	▼	Can they enforce the promise?
	•	Reliance
	▼	Are there any defences against the TPB enforcing the promise. Rest 309
	•	impracticability, void of public policy, non-occurance of condition, present of prospective failure of condition,
	•	Any defence that could be raised against the origonal contract party could be raised against asignees
	•	you can't get more than you have.
	▼	Assignment or delegation
	•	Obligor delegates, obligee assignes.
	•	the rights and obligations of the origonal contract are assigned after the contract is entered into- and done
	•	If a person delegate their duty to perform, and the delegee fails, the delegor is still on the hook for performance.
	•	The promisor can sue EVERYONE that has the contract delegated to them and fails to perform.
	•	A de