Contracts Flashcards
(5 cards)
Doctrine of Anticipatory Breach
The doctrine of anticipatory breach allows a party who can reasonably foresee a breach to demand assurances that that breach will not happen. This can be the result of a strike, such as the one at issue here, which would have the effect of forcing the other party to breach the contract. Because this breach is foreseeable, the party asking for assurances is allowed to give notice to the burdened party expressing their concerns for the performance of the contract and demand assurances. If assurances are not provided, the party anticipating the breach is entitled to mitigate the damages which may include terminating the contract and buying elsewhere.
Mitigate Losses
The builder is under a contract obligation to mitigate his losses by selling the boat to a third party. Because the boat was “specifically manufactured for the sailor” the builder will be limited to the difference between the contract price and what he actually obtains from a purchaser. This is because the boat is not one of many produced, it is unique, and as such the seller cannot show that a subsequent purchaser would have bought a copy anyway. Thus, the builder is required to sell his boat, and he may recover from the sailor the difference in price and any cost associated with selling the boat and mitigating his losses.
Article 2
Under Article 2 of the UCC, a sale of goods for more than $500 must be evidence by one or more writings that include material terms, the identity of the parties, the identity of the subject matter of the contract and the ‘signature of the party to be charged’. Most contract law requires that the price be included in the contract under the Statute of Frauds, but under Article 2, a ‘reasonable price’ will be filled into the contract if it is excluded.
Mirror Image Rule
Usually, under the Mirror Image Rule, an acceptance is only valid if it is an acceptance of the offer under the offer’s terms. Otherwise, it is a rejection of the first offer and a counteroffer. Under Article 2, however, a ‘seasonable expression of acceptance’ along with more terms will be a valid acceptance without the new terms in the ‘acceptance’. However, an exception is made to the terms so long as both parties are merchants and the terms are not material to the contract. In this case, there is no doubt that the number of knives to be delivered is a material term and the only enforceable contract between the parties is therefore for 6 knives.
Statute of Frauds
Even if the chef were able to argue around the ‘material terms’ and the Mirror Image Rule, the ultimate decider in this case is the fact that a contract for 10 knives must be signed by the party to be charged in order to be enforceable. A merchant’s letter on the merchant’s official letterhead is deemed satisfactory of a signature. However, in this case, the manufacturer’s letterhead is on the letter which evidences a contract for 6 knives. Therefore, in order for the chef to enforce a contract for 10 knives, the manufacturer would have had to sign the chef’s handwritten note of May 17.
Because the manufacturer did not respond, and did not sign the handwritten note for a further 4 knives (for a total of 10) there is no enforceable contract for the sale of 10 knives.
