Contracts - Equitable Remedies

Question 1

Specific Performance

Answer 1

Equitable remedy where court orders breaching party to perform what it promised to perform under contract. Purpose is to give injured party the benefit of actual performance rather than equivalent in money damages

(i) there must be valid contact with definite and certain terms (passes SOF)
* Mutual assent + consideration (do full analysis)
* It must be clear what parties intended

(ii) plaintiff already performed or is ready and able to perform (or is excused from performing)
* Ex. To show he is ready and able to perform, P can tender purchase price to court

(iii) legal remedy (damages) is inadequate
* Rare or unique goods: Legal remedy inadequate when subject matter of contract is rare or unique because P cannot buy substitute goods
* Land: Money damages are presumed inadequate for sale of real property because every parcel of land is unique
* Damages are too speculative or small (or injury is irreparable)

(iv) it’s feasible for court to enforce decree
* Supervision: Parties might need too much supervision
* Jurisdiction: Court might not have jurisdiction over parties (enforcement feasible when court has personal jurisdiction over D since if D disobeys court order, D can be held in contempt of court)
* Indefinite Contract Terms: Enforcement less feasible if sale of goods contracts have indefinite terms

(v) defendant has no defenses

Question 2

Defenses to Specific Performance (HULF)

Answer 2

Hardship
* Court won’t enforce contract that had inadequate consideration, marked inequality between the parties, or P had an unfair advantage

Unclean Hands: P seeking equitable remedy is guilty of wrongdoing in SAME transaction that’s being sued over (P did inequitable/wrongful conduct)
* Ex. P obtained D’s consent through fraudulent misrepresentation

Laches: P delayed bringing lawsuit and this delay prejudiced defendant

Freedom of Speech: Constitutes a prior restraint under First Amendment

Question 3

Defenses to Contract Formation

Answer 3

Fraudulent Misrepresentation
* Contract is voidable if a party used fraudulent misrepresentation of a material fact to induce the other party to enter contract, and the other party justifiably relied on the misrepresentation
* Nondisclosure of immaterial fact without concealment is not misrepresentation
* Doesn’t matter that exercise of reasonable care would’ve revealed misrepresentation

Statute of Frauds
* Contract for sale of goods over $500 must be in writing, signed by party to be charged, and contain a quantity term.

Mutual Mistake: Contract voidable by adversely affected party if:
* (i) both parties were mistaken on a basic assumption underlying contract
* (ii) mistake concerns essential element of agreement and thus has a material effect; and
* (iiI) party seeking to void contract didn’t assume risk of mistake

Unilateral Mistake: Contract voidable by mistaken party if only one party was mistaken but:
* (i) nonmistaken party knew or had reason to know of mistake;
* (ii) mistake had a material effect; and
* (iii) mistaken party didn’t assume risk of mistake
* Note: relief usually granted for computational errors

UCC: Breach of Duty of Good Faith
* Article 2 requires all parties in sale of goods contract to act in good faith; act honestly and observe reasonable commercial standards of fair dealing