Contracts 130.

01 - Fall 2015 “Attack” Outline

Professor Katherine T. Bartlett Fall 2015

Themes
 Good faith
 Intentions of the parties
o What deal did the parties want to make/think they made?
 Public policy
o Encourage exchange and efficiency
o Discourage opportunism
 Classic v. modern contract law
o Formalistic v. intent-based
 UCC v. Restatement

Formation
 What’s the consideration?
o Reliance on a donative promise (§90)
o Past benefit conferred (§86)
 Promises to pay a past debt (§82, §83)
o Legal duty ≠ consideration
o Nominal consideration (illusory promise)
o Promise for a promise (bilateral)
o Promise for performance (unilateral)
 Any problems with the bargaining process?
o Unconscionability (procedural and substantive) (§208, §2-302)
 UCC says substantive unconscionability
o Duress

Offer and Acceptance

 What’s the offer?
o Is the offer sufficiently definite?
o Preliminary negotiations
o Option contract
 In writing?
 Consideration?
 What terminates the power of acceptance?
o Revocation, lapse, rejection, and counter-offer terminate an offer
 Three ways to view a counter-offer: rejection (mirror image rule), acceptance with
additional terms to be negotiated, putting the offer on hold to discuss other terms
 What keeps an offer open?
o Delay in receipt of an offer (§49)
o Part performance creates an option contract (§45)
 What’s the acceptance?
o Promise (bilateral)
o Performance (unilateral/option)
 Notify the offeror
o Silence (in specific scenarios) (§69)
 Does the contract need to be in writing? Statute of Frauds
Contracts 130.01 - Fall 2015 “Attack” Outline
Professor Katherine T. Bartlett Fall 2015

Assent
 Are the terms definite/certain enough?
o Can we tell what constitutes a breach and what damages would be?
o If so, we can probably figure out everything else.

Interpretation
 Implied in law (equitable principle) v. implied in fact (based on conduct/purpose)
 Misunderstanding
o Is there a contract? (assent) (§20)
o If so, whose meaning prevails? (§201)
 Implying terms
o What would the parties have agreed to?
o Course of dealing, course of performance, trade usage
o Gap-fillers
o Are there any implied conditions?
 Interpreting condition as promises (§203)
 Plain meaning rule: when can you bring in outside evidence to interpret a contract.
o Depends on the court (formal v. modern)
 Parol evidence rule: when can you bring in evidence of other agreements.
o See chart!
o Oral modifications
 UCC §2-209 (no way, but maybe a waiver) v. Restatement (OK)
 Warranties
 Form Contracts
o How to interpret additional v. different in §2-207(2)

Performance
 Modifications (§89, §2-209)/Waiver (§84, §2-209)
 Mistakes
o Unilateral/bilateral mistake in fact
o Mistake in transcription
o Nondisclosure
o Who bears the risk?
o Enforcement unconscionable?
 Unexpected Circumstances
o Who bears the risk?
o Impracticability/frustration of purpose
 Good faith
 Conditions
o We don’t like forfeiture
o Satisfaction: objective v. literal/subjective

Breach
 Substantial performance
Contracts 130.01 - Fall 2015 “Attack” Outline
Professor Katherine T. Bartlett Fall 2015

o Partial breach
 Perfect, complete performance  No breach
 Partial breach  Both parties still must perform, damages only
o Innocent party can treat a material breach as partial breach
 Material breach  Innocent party can withhold performance temporarily
o §241 tells us what a material breach is
 Total breach  Terminates the contract
o §242 tells us what a total breach is
 Anticipatory repudiation  Total breach in advance; terminates the contract before
performance/breach actually occurs
 Right to demand assurance
o Assurance ≠ modification

Damages
 Expectation
o Direct damages
o Consequential damages must be foreseeable and certain (if not foreseeable, then “special
circumstances” have been communicated)
 Measures of expectation damages when the party performing services breaches:
o Cost of completion (§348(2)(b))
o Diminution in value (§348(2)(a))
 Measures of expectation damages when the party having services performed breaches:
o Costs incurred plus expected profits minus payments made.
o Contract price minus costs saved minus payments made.
 Cost of repair is the measure of damages when a warranty is breached (§2-714(2))
 Buyer’s options when seller breaches:
o Cancel and receive a refund (§2-711)
o Buy substitute goods and recover any costs above the contract price (§2-712)
o Receive difference between contract price and market value of goods at the time of the
breach (§2-713)
o Accept goods that are damaged and receive difference in the value of what the goods
should be (§2-714)
o Identify goods and demand specific performance (§2-714)
 Seller’s options when buyer breaches:
o Withhold goods
o Resell goods and recover damages (§2-706)
o Recover difference between contract price and market value of goods at the time of the
breach (§2-708)
o Recover lost profits – specifically in lost volume cases (§2-708(2))
 Reliance
o Compensation for costs incurred
o §90, §87(2), §139
 Restitution (§370, §373)
o Return of a benefit incurred
 Liquidated Damages
Contracts 130.01 - Fall 2015 “Attack” Outline
Professor Katherine T. Bartlett Fall 2015

o Must reflect actual loss; damages must be difficult to quantify

 Specific Performance
o When damages are inadequate