Contracts Flashcards
(110 cards)
1
Q
Applicable law rule statement
A
Article 2 of the UCC governs contracts involving the sale of goods, and the common law governs all other contracts, including those involving services and real property.
2
Q
UCC goods def
A
movable, tangible property
3
Q
UCC merchant def
A
A merchant includes not only a person who regularly deals in the type of goods involved in the transaction, but also any businessperson when the transaction is of a commercial nature. Special rules apply to merchants under the UCC.
4
Q
Predominate purpose test
A
When a contract includes both goods and services, whichever one predominates will determine the governing law. *look at purpose of K (is purpose to provide services or provide goods?)
5
Q
Starting rule for K formation issue
A
A valid contract requires offer, acceptance, and consideration.
*Then discuss all three and discuss each potential offer until you find actual one
6
Q
Offer common law rule
A
An offer is a manifestation of willingness to enter into a bargain. An offer requires a
(1) promise (of intent to enter into a K, can be shown by language and context),
(2) definite and certain terms (parties, subject matter, price and quantity) and
(3) communication to the offeree.
7
Q
Advertisements rule
A
typically invitations to deal and not offers to sell.
*Exception: ads that are specific, contain words of commitment and limit who may accept the offer/offeree can be identified with specificity can be a valid offer.
8
Q
Solicitation of bids
A
likely preliminary negotiations
9
Q
Catalogs with specified goods and prices
A
typically an invitation to deal, not offer
10
Q
Rewards and auctions
A
Can be offers if it is clear who can accept/win
11
Q
Offer UCC rule
A
Making an offer in any manner and by any reasonable means is permissible (UCC finds offers more easily than CL).
**UCC will use gap fillers for missing terms EXCEPT for subject matter and quantity.
12
Q
Termination of offer, can happen in 5 ways
A
- Rejection
- Counteroffer (contains different terms, rejection AND new offer)
- Revocation
- Lapse of time
- Death or incapacity of either party
13
Q
Revocation general rule
A
An offeror can revoke an offer at any time before acceptance. A revocation can be:
- Direct or indirect,
- Unambiguous words or conduct that’s inconsistent with intent to contract,
- Offeree is made aware
14
Q
Revocation exceptions: Irrevocable offers
A
- UCC firm offers
- Option K
- Detrimental reliance and partial performance
15
Q
Irrevocable offers: UCC firm offer
A
UCC “firm offers” are irrevocable even without consideration. Firm offers require:
(1) Made by a merchant,
(2) Signed writing,
(3) Gives assurance it will be held open for a specified time (during which it’s irrevocable but cannot exceed 90 days, unless there is consideration then it can remain open for longer than 90 days).
**NOTE: even if offer says it remains open for longer than 90 days, that doesn’t affect firm offer, will be irrevocable for 90 days then revocable after that
16
Q
Irrevocable offers: Option K
A
Where offeror grants offeree an option to enter into a K for a specified period of time and promises the offer will be held open during that time. Consideration is required and the offer will be irrevocable for the stated option contract.
17
Q
Irrevocable offers: Detrimental reliance and partial performance
A
An offer will be temporarily irrevocable if the offeree has made preparations to perform in reasonable detrimental reliance on the offer or has performed in part.
(1) Unilateral contract: once performance has begun, the offer is temporarily irrevocable.
(2) Bilateral contract: making preparations to perform may make the offer irrevocable if justice requires (e.g., subcontractor bids)
18
Q
Acceptance general rule
A
An acceptance is the manifestation of assent to the terms of the offer. This can be by words (oral or written) creating an express contract, or by conduct creating an implied-in-fact contract.
19
Q
2 methods of acceptance
A
- Bilateral contract: parties exchange promises. Can be accepted by a promise OR by the beginning of performance.
- Unilateral contract: the offeror makes a promise, and the offeree must perform. Can only be accepted by complete performance.
20
Q
Power of acceptance limitations
A
- Timing: acceptance made within reasonable time
- Only be offeree
- Only in response to offer
- Manner of acceptance: an offer must be accepted in the manner required by the offer. But, if no method is specified, acceptance can be by “any reasonable means.”
21
Q
Mailbox rule (when acceptance is effective)
A
the mailbox rule provides an acceptance is effective when placed in the mail.
22
Q
Mailbox rule exceptions
A
- Where offer itself provides otherwise, terms of offer control.
- Option contract is effective upon receipt, not when sent.
- If both an acceptance and rejection is sent…
(1) Rejection sent first = acceptance effective only if it is received first.
(2) Acceptance sent first = effective when sent.
23
Q
Acceptance varying from offer: CL mirror image rule
A
An acceptance must be a precise mirror image of the offer. If the response conflicts at all with the offer, it is a rejection and a counteroffer.
24
Q
Acceptance varying from offer UCC part 1: additional/new terms
A
If terms in acceptance are additional/new –> “battle of the forms determines outcome:
- If any party NOT a merchant, acceptance is valid but will not include additional terms unless offeror agrees.
- If BOTH parties merchants, acceptance is valid and additional term becomes part of K unless:
(1) Offer expressly limits acceptance to its terms,
(2) Material alteration with added term (disclaimer of warranties),
(3) Objection: If offeror objects to additional term within reasonable time.
25
Acceptance varying from offer UCC part 2: different/conflicting terms
If terms in acceptance are different --> different terms are treated different depending on jx:
- Knock out rule (majority): conflicting terms cancel each other out, neither enters K. K consists of agreed on terms, court supplies missing terms if needed
- Treat as additional terms (minority rule): apply above test
- Fall out rule (another minority rule): offeror's terms control.
26
Acceptance by shipping goods
Unless offer specifies otherwise, an offer to buy goods may be accepted by shipping the goods (e.g., a purchase order sent to the seller and the seller fills the order). The offer is accepted by promptly shipping conforming or nonconforming goods.
- Shipping conforming goods = acceptance
- Shipping nonconforming goods depends on whether seller acknowledges conformity. If yes, not an acceptance, seller making counteroffer that buyer is free to accept or reject. If not, offer has been accepted AND breached simultaneously.
27
Consideration rule
bargained for exchange of legal detriment
28
Illusory promise
NOT supported by consideration and is thus not enforceable.
*E.g., one party includes right to cancel order provision in K; A promises to buy as many X as he wants
29
Requirement Ks (good faith implied)
Valid because parties agree that the seller will be the exclusive source of all of the buyer’s requirements for a particular item for a specified period of time.
30
Output Ks (good faith implied)
Valid because buyer agrees to buy all of the seller’s output of a particular item for a specified period of time.
31
Past consideration
a promise to pay for a benefit received in the past will not provide current consideration on a new bargain subject to two exceptions:
- New promise to pay past debt that is now barred
- New promise to pay for benefits previously received at promisor's request or in an emergency
32
Preexisting duty rule
Provides that a promise to do something that one is already legally obligated to do will not provide consideration for a new bargain unless the duty is owed to a third person.
33
Promissory estoppel rule (ALWAYS assess if there's no or invalid consideration)
If a promise is made by a party, but there is not consideration provided by both sides, the promise will still be enforceable if:
- promisor should reasonably expect the promise to induce action,
- promise actually induces action, and
- injustice can only be avoided by enforcement of promise.
*Damages limited to reliance damages
34
Defenses to K formation (can be spotted at time of contracting) SMUFM
- SOF
- Misrepresentation
- Unconscionability
- Fraud
- Mistake (unilateral or mutual)
35
SOF rule
Certain Ks must be in writing and signed by the party to be charged to be enforceable (MR. DOG)
- Marriage
- Real property
- Suretyship (debt)
- One year (Ks that cant be fully performed within one year of their making)
- Sale of goods $500 or more
36
SOF exceptions
if the SOF is not met, a court will still enforce the oral K in limited situations:
- Part performance for land sale Ks (Purchase, Improvements, Possession--2 out of 3)
- Full performance has occurred by party seeking to enforce K
- Goods (enforceable for full performance like goods paid for or delivered, and enforceable to the extent money has been paid for part performance)
- Main purpose doctrine: pay debt of another where main purpose of K is promisor's own interest or indemnity K
37
SOF writing requirement rule
There must be one or more writings that, combined, include (1) the essential terms of the contract and that (2) is signed by the party to be charged (person against whom enforcement is sought).
- The writing does not have to be a formal contract (it can be in the form of letters or receipts), and
- multiple writings can be put together to meet the requirements, as long as they reference each other. - The writing does not have to exist at the time of the promise. It can be created after the promises are made and still meet the SOF
38
SOF writing requirement exceptions: Confirmatory memo
- Both parties are merchants,
- one party sends a confirmatory memo to the other party who knowingly receives the memo and does not respond within 10 days;
- the contract is enforceable against the receiving party, even if it did not sign the memo.
39
SOF writing requirement exceptions: Judicial admission
in pleadings or testimony that there was an agreement will allow the agreement to be enforced without a writing.
40
SOF writing exceptions: Promissory estoppel
If a party reasonably and detrimentally relies on a promise made by the party to be charged, a court may enforce the contract despite the failure to meet the SOF requirement.
*Almost always an exception
41
SOF approach
(1) Determine whether the SOF applies to the contract.
(2) If the SOF applies, determine whether the requirements (written, signed by party to be charged) are met.
(3) If requirements are not met, discuss exceptions (part/full performance, estoppel).
42
Defense to K formation: Misrepresentation
State of mind need not be intentional (if it is, that's fraud below), it can be done negligently or innocently. Elements for latter:
- False statement of material fact
- Justifiable and actual reliance by injured party
- Damages: P must suffer a pecuniary loss
43
Defense to K formation: Fraud
Prima facie case:
(1) False statement of material fact,
(2) Knowledge of the statement’s falsity (scienter),
(3) Intent to induce reliance so other party will enter into k
(4) Justifiable and actual reliance, and
(5) Damages: P must suffer a pecuniary loss (if #’s are given, state the actual economic damages), can also sue for punitive damages.
44
Defenses to K formation: Unconscionability
A court will not enforce a contract that is so unfair, no reasonable person would agree to it. If a court finds unconscionability, it can refuse to enforce the entire contract, or strike the unconscionable portion of the contract, or limit the unconscionable terms.
- Procedural: bargaining process unfair (e.g., party in superior position, like boss)
- Substantive: terms are unfair
45
Defenses to K formation: mistake general rule
Mistake is a belief not in accord with the facts and can be mutual or unilateral.
46
Defenses to K formation: mutual mistake rule
Made by both parties to the contract. A contract can be voidable for mutual mistake if:
(1) both parties are mistaken as to an essential element of the contract and
(2) it has a material effect on the deal.
47
Defenses to K formation: unilateral mistake rule
Made by only one party to the contract. A K can be voidable for unilateral mistake by mistaken party if:
(1) one party was mistaken as to an essential element of the deal,
(2) it has a material effect on the deal, AND
(3) the mistake would make enforcement of the contract unconscionable, OR non-mistaken party failed to disclose the mistake or caused the mistake or knew or should have known that the other party was mistaken.
48
Conditions
A condition is an event that must occur before performance of the other party is due. If it does not occur, performance of the second party is excused (really harsh). Conditions can be express or constructive (implied).
49
Compliance with conditions/std of performance
- Express: strict compliance, must be performed fully
- Implied require substantial performance
*If condition not met to necessary std, other party's performance is excused completely
50
Excuse of conditions
- Waiver: A party can waive a condition by words or conduct, as long as the condition is not material to the contract. The waiving party would then have a duty to perform because it waived the condition.
*Also, a party who benefits from the condition can waive it any time.
- Wrongful interference: If a party hinders the other party’s performance and interferes with the occurrence of the condition, the condition will be excused, and the wrongful party will have a duty to perform.
- Estoppel: If a party indicates that it will not enforce a condition, and the other party reasonably relies on this, the party will be estopped from later enforcing the condition
51
PER rule
Under the Parol Evidence Rule (PER), extrinsic evidence of oral or written communications prior or contemporaneous to the written contract are generally inadmissible for contradicting the terms of the contract.
52
PER approach
(1) State rule
(2) Was writing in question was intended to be the final agreement by looking at the words in the K?
- Total integration: agreement contains all terms, NO PE admissible (note merger clause strong evidence of TI)
- Partial integration: contains some terms, PE admissible as long as consistent with writing (no contradicting terms, but supplemental ones ok)
(3) Based on above, is it totally or partially integrated? If total PER applies unless exceptions
53
PER exceptions (cadss)
- Modifications or statements made after K was written permissible
- PE admissible when raising K formation or enforcement defense
- Evidence of condition precedent admissible
- Evidence of separate deal admissible
- Evidence is always admissible for interpreting or clarifying ambiguity in K or when K is silent on issue
Condition precedent
Ambiguity (interpret or clarify)
Defense
Statements made after K
Separate deal
54
PER exception: ambiguous terms
UCC provides following rules to aid in K interpretation:
- Course of performance refers to evidence of the conduct of these parties regarding the K at hand (best evidence to use if available)
- Course of dealing refers to evidence of the conduct of these parties regarding past contracts between them (second best).
- Usage of trade refers to evidence of the meaning of others in the same industry and/or locality would attach to a term. (least persuasive, only use if above two are unavailable).
55
Contract modification rule
After a valid contract has been formed, any change to the terms of the contract is a modification (can be made orally or in writing). Both parties must agree to the modification.
- CL: modification must be supported by consideration
- UCC: no consideration, just good faith
56
Modifications and SOF
Oral modifications are generally allowed. But if the oral contract modification falls within the SOF (MR. DOG), it must be in writing (unless an exception applies). If it must be in writing but isn’t, modification is not enforceable and original K stands.
*If modification is in writing and in SOF world, see if it satisfies requirements (essential terms, signed by party to be charged)
*Modifications that fall within and satisfy SOF generally don't need to be in writing because the enforceability of the initial K passes to any modifications. (e.g., seller contracts w/ buyer for sale of goods for 1,000, original signed K enforceable, future oral modifications ok bc of original written K)
57
Ks of two or more parties: third party beneficiary
- Intended beneficiary: who directly benefits from the K because the promisor intends so. An intended third party beneficiary can sue to enforce the K (can be creditor or donee)
- Incidental beneficiary: indirectly benefits from the K but that result is not the intent of the promisor. Incidental third party beneficiary cannot sue to enforce K.
58
Assignment rule
when a party to an existing contract transfers her rights under the K to a third party. General rule is that all rights are assignable unless K expressly prohibits it.
No consideration required.
*Assignee stands in shoes of assignor and takes subject to all defenses, but assignor still liable unless K says otherwise
*Exception: can't assign if material change in duty/risk
59
Delegation rule
when a party to an existing K transfers her duties under the K to a third party.
*Delegator still liable
*Exception: can't delegate duties of special skill or judgment
60
Novation rule
when BOTH parties agree that a substitute person will take over the contractual obligations. A novation terminates the liability of the original promisor.
61
Anticipatory repudiation common law approach
The promisor party clearly and unequivocally indicates through words/actions that she will not perform. Once AR happens, nonbreaching party can:
- Sue immediately for breach (unless party has fully performed, then have to wait),
- Suspend performance and wait til performance is due
- Treat K as discharged and repudiation as offer to cancel/rescind
- Wait for breach to occur then sue
*Retraction: The repudiating party can retract its repudiation of the contract until/unless the other party: (i) acts in reliance on the repudiation, (ii) accepts the repudiation, or (iii) has already filed an action for breach of contract.
62
AR under UCC approach
A buyer or seller unequivocally refuses to perform OR fails to provide adequate assurances within a reasonable time (must not exceed 30 days) of the other party demanding them.
- Right to demand adequate assurances: (1) Either party can demand assurances in writing if it has reasonable grounds to be insecure about the other party’s ability to perform and may suspend performance until it receives assurances. (2) A failure to provide reasonable assurances within a reasonable time (must not exceed 30 days), can be treated as a repudiation.
*Nonbreaching party can:
- Sue immediately
- Suspend performance and wait til performance due
- Treat K as discharged and repudiation as offer to rescind K
- Wait for breach to occur and sue
*Retraction: The promisor party (repudiating party) can retract its repudiation of the contract until/unless the other party has cancelled the contract or materially changed position on the basis of the repudiation.
63
Material breach under CL
A contract breach is material where there was not substantial performance on the K. A material breach will excuse the performance of the non-breaching party. The following are factors to consider in determining whether a material breach occurred:
- Party didn't receive benefit of bargain
- Extent of any part or full performance
- Willfulness of breach (more intentional more likely)
- Divisible K: where parties have divided their performance into agreed equivalents (similar to installment Ks)
64
Material breach under CL: Time is of the essence clause
Time is not of the essence in a K unless specifically agreed to, and thus a delay will not amount to a material breach.
*if language in K clearly makes timely performance essential, OR if K expressly says that "time is of the essence," then failure to perform on time is a material breach.
65
Material breach under UCC (perfect tender rule)
Parties must strictly perform all duties under the contract, or they will be in breach.
66
Material breach under UCC: Non-conforming tender
The buyer has a right to inspect the goods and once he accepts them, he has an obligation to pay (note: buyer can revoke acceptance if goods fail to conform and their defect couldn’t have been discovered prior to)
If either the tender or goods are nonconforming, then the buyer has the right to accept or reject all or part of the goods.
67
Material breach under UCC: Exception, installment Ks
perfect tender rule does not apply to installment K’s where the parties have contracted for more than one delivery.
- Instead, the right to reject is determined by “substantial conformity” and whether the nonperfect tender substantially affects the contract; buyer cannot reject if seller can cure.
68
Material breach under UCC: Seller's right to cure
The buyer’s right to reject nonconforming goods is subject to the seller’s right to cure the defect. A seller has the right to cure a defective tender if
(1) time for performance under K is not yet due OR
(2) seller has reasonable grounds to believe the buyer would accept the goods despite the nonconformity.
- In that situation, seller must give notice of intent to cure and may have additional time after time for performance was initially due.
69
Shipment K
(often identified by the words “F.O.B. (free on board) seller’s place of business”), the seller must
- (i) deliver the goods to the carrier,
- (ii) make a proper contract for their shipment,
- (iii) obtain and deliver any document necessary for the buyer to obtain possession of the goods, and
- (iv) give the buyer notice that the goods have been shipped.
*Risk of loss transfers to buyer when goods are given to carrier
70
Destination K
(often identified by the words “F.O.B. (free on board) followed by a location”), then the seller must
- (i) deliver the goods to a particular place (specified in the contract) and
- (ii) tender them there by holding the goods at the buyer’s disposition and giving the buyer notice.
*Risk of loss passes to buyer when goods are delivered at their named location
71
Minor breach under CL
If a breach is not material, it is a minor breach and the nonbreaching party may recover damages but must still perform.
*always analyze if a breach is material or minor. There is rarely a clear answer, so use all the facts and argue both ways where appropriate
72
Approach for warranties
(1) Identify the type of warranty (if one is provided for in the facts)
(2) Determine whether any disclaimers were made and whether they were valid.
(3) Determine whether there was a breach of warranty (was the good defective or fail to conform to std?). If disclaimer invalid, then warranty is breached. If disclaimer is valid, then warranty may not be breached (argue both sides, like if the product had to be consistently repaired, then that might go against upholding the disclaimer but if disclaimer met requirements, it will be upheld). (go step by step from 1-3 for each warranty before you go to damages)
(4) Determine damages (difference between value of goods accepted and value of goods had they been what they purported to be) (separate breach of K damages and breach of warranty damages)
73
Express warranty
A warranty that's made explicitly, usually warrants that product is free against defects
- This warranty can be expressly disclaimed but can't be inconsistent (court will ignore inconsistent disclaimers)
74
Implied warranty of merchantability
applies when
- the seller is a merchant and
- warrants that goods will be fit for their ordinary purpose.
*To sue for breach, breach of IWM must have been present at time of sale
*Disclaimer: can be disclaimed through clear written "as is" statement or an oral statement that uses term "merchantability"
75
Implied warranty of fitness for a particular purpose .
applies whenever
(1) seller has reason to know (from any source, not just from the buyer) that the buyer has a particular use for the goods, and
(2) the buyer is relying upon the seller’s skill to select the goods.
*The seller need not be a merchant for this implied warranty to apply.
*Disclaimer: can be disclaimed by general language such as “as is,” but the disclaimer must be in writing and be conspicuous.
76
Implied covenant of good faith and fair dealing
Implied and inherent in every K
77
Accord and satisfaction
In limited situations, if there is a dispute over the validity of the contract or the amount owed, a party can agree (accord) to accept a different performance (satisfaction) than what was agreed upon in the contract.
- Accord = new agreement
- Satisfaction = when diff. performance completed by other party, discharges both new and original agreement.
*If accord is breached, other party can sue on accord or original K
*Consideration is required and satisfied (both are incurring legal detriments)
78
Defenses to enforcement list of failure of underlying K (can arise any time during K life cycle)
AND IIF
Defense discharges the duty to perform under the K. Failure of underlying K defenses:
- No mutual assent
- Lack of consideration
- No writing, where required under SOF
- Misrepresentation, fraud or duress at time of contracting
- Unconscionability
- Lack of capacity to contract bc of minority or mental incapacity (illness or intoxication)
*IMPORTANT ONES (IIF):
- Impossibility
- Impracticability
- Frustration of purpose
79
Defenses to enforcement: Impossibility
An unforeseeable event occurs, making it objectively impossible for the party to perform. (destruction of K subject matter, illegality, death or incapacity)
80
Defenses to enforcement: Impracticability
Applies when:
(1) an unforeseeable event occurs (e.g., a natural disaster) making the performance of the contract extremely difficult;
(2) The nonoccurrence of the event was a basic assumption at the time of the contract; and
(3) The party seeking discharge was not at fault.
**Financial losses or increases in cost of performance NOT a sufficient basis.
81
Defenses to enforcement: Frustration of purpose
- an unforeseeable event occurs, destroying the party’s purpose for entering the contract,
- The nonoccurrence of the event was a basic assumption at the time of the contract and
- the party seeking discharge was not at fault.
the party will be entitled to rescind the contract, even if the performance is still possible.
82
Damages limitations
- Foreseeability
- Certainty
- Causation
- Duty to mitigate
**applicable to expectation, consequential and incidental damages (consequential requires an analysis on limitations)
83
Damage limitation: Foreseeability
The damages must be natural and probable consequences of the breach or contemplated by the parties at the time the contract was formed.
84
Damages limitation: Certainty
The damages must be proved with reasonable certainty.
85
Damages limitation: Causation
The damages must have been caused by the defendant’s breach.
86
Damages limitation: Duty to mitigate
P has a duty to avoid or mitigate its damages seeking replacements/substitutes for goods and/or services. P will be held to a standard of reasonable conduct. A failure to mitigate damages will reduce the damages recovered by the plaintiff.
*Often comes up in situations where buyer "covered" in event of seller's breach. Cover must be reasonable
87
Expectation damages
- Default contract remedy.
- Seek to place the non-breaching party in the position he would have been in had the breaching party fully performed
- RP: difference between K price and market price
- Services: cost of sub. performance
88
UCC expectation damages formulas: Buyer's ucc damages (seller has goods and seller in breach)
Damages = the K price – cover price (if buyer covered) OR the K price – market price at the time the buyer learned of the breach.
*Can recover consequential and incidental
89
UCC expectation damages formulas: Buyer's UCC damages (buyer has goods and seller in breach)
Damages are the difference between perfect goods and the value as tendered.
90
UCC expectation damages formulas: Seller's UCC damages (seller has goods and buyer in breach)
- If the seller resold the goods: damages are the difference between the K price and the resale price.
- If the seller did not resell the goods: damages are the difference between the K price and the market price (as of the time delivery was to occur)
- Lost volume seller: A lost volume seller is one who has a virtually unlimited supply of good to sell. A lost volume seller can recover lost profits if the seller:
1. Has a big enough supply to make both the contracted sale and the resale,
2. Would have likely made both sales, and
3. Would have made a profit on both sales.
91
UCC expectation damages formulas: Seller's UCC damages (buyer has goods and buyer in breach)
Damages is the full K price.
92
Consequential damages
Reasonably foreseeable damages other than expectation damages that are related to the breach of the contract and are unique to P (example, loss of profit). In order to recover consequential damages, three elements must be met:
- Foreseeability
- Causation
- Certainty
93
Incidental damages
damages that arise when the non-breaching party is trying to remedy the breach
*e.g., in a commercial contract, the cost of finding a replacement seller of goods, or reselling the goods or storing them)
94
Reliance damages
put the non-breaching party in the position he would have been in had the contract never been made.
*Damages = expenses incurred in reliance that the k would be performed
*Party CANNOT recover expectation and reliance, must choose
95
Liquidated damages
damages in an amount stipulated to in the contract. They are allowable when actual damages are difficult to calculate and the amount agreed to is a reasonable approximation of anticipated loss from a breach.
*Clause cant be punitive
96
Nominal damages
If P established the elements of a cause of action, but the harm or loss is slight, the plaintiff may be awarded a “nominal”, or small/trivial amount of money.
97
Punitive damages
NOT awarded for std breach of K (but might be for fraud)
98
Restitution
Restitution allows both non-breaching and breaching parties to recover damages under an unjust enrichment theory (not based on the contract).
99
Quasi-K
Where there is no K but D gained some benefit and it would be unfair to let D retain the benefit.
100
Replevin
when the P wants her personal property returned.
101
Ejectment
when the P wants her real property returned.
102
Reformation
Reformation is an equitable remedy wherein the court rewrites a K (or other doc like deed) to reflect the parties’ true intent.
- Reformation requires:
(1) the existence of an agreement,
(2) grounds for reformation, and
(3) no equitable defenses
Grounds:
- Mutual mistake: If both parties were mistaken as to the content or effect of a writing, court may rewrite K to honor parties’ intent.
- Unilareral mistake: : if one party is aware of the mistake and either fraudulently induced the mistake or does nothing to correct the mistake, court may rewrite K
- Fraud
103
Rescission
Cancellation of K
(1) P must first show grounds for rescission
(2) P must give notice of rescission to D as soon as grounds discovered;
(3) Return or deliver any of the benefits of the contract it has received from the defendant.
*After court grants rescission and rescinds K, P can bring actions against D: for replevin or restitution
104
Grounds for rescission
fraud, mistake (unilateral or mutual), misrepresentation, duress, undue influence, lack of capacity, material breach.
105
Constructive trust
a judicially created remedy that imposes a duty to convey specific property to the plaintiff if the defendant would be unjustly enriched by retaining the property. P must show:
(1) D holds title to the property that is to be subject to the constructive trust; (if 3P has title, P can seek CT against them unless BFP)
(2) D's retention of the property would unjustly enrich the defendant; and
(3) Legal remedy is inadequate (money damages are not adequate).
*Tracing allowed
*P gets increase in value
106
Equitable lien
a judicially created remedy that imposes a lien on the defendant’s property. The plaintiff is not seeking to take ownership of defendant’s property, but rather claiming a creditor-like interest in the defendant’s property.
Same requirements as CT
*Can trace
*Can't recover increase in value
*Can seek additional money from D if D's house purchased with P's money and sale price of house did not cover money owed to P
107
Equitable defenses: Laches
unreasonable delay by P in bringing suit that is prejudicial to the defendant.
108
Equitable defenses: Unclean hands
the plaintiff engaged in unethical or immoral acts relating to the contract.
109
TRO approach
- Rule: A TRO is an injunction issued for a short period of time (usually 14 days) that does not require notice to the defendant or an opportunity to be heard. A TRO is usually issued to maintain the status quo until a preliminary injunction hearing is held.
- To obtain TRO, P must show:
(1) Irreparable harm if injunction not issued
(2) Balancing hardships (P's hardship outweighs D's)
(3) Likelihood of success on merits
(4) Enforceability
110
Preliminary injunction approach
Rule: A preliminary injunction is issued before or during a trial and is effective until the final judgment of the court. Defendant must be given notice and an opportunity to be heard.
- To obtain PI, P must show:
(1) Irreparable harm if injunction not issued
(2) Balancing hardships (P's hardship outweighs D's)
(3) Likelihood of success on merits
(4) Enforceability
