Restatement (Second) of Contracts Flashcards Preview

Contracts I > Restatement (Second) of Contracts > Flashcards

Flashcards in Restatement (Second) of Contracts Deck (24):
1

R2d § 178. When A Term Is Unenforceable On Grounds Of Public Policy

R2d § 178. When A Term Is Unenforceable On Grounds Of Public Policy

1) A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.

2) In weighing the interest in the enforcement of a term, account is taken of

(a) the parties' justified expectations,

(b) any forfeiture that would result if enforcement were denied, and

(c) any special public interest in the enforcement of the particular term.

3) In weighing a public policy against enforcement of a term, account is taken of

(a) the strength of that policy as manifested by legislation or judicial decisions,

(b) the likelihood that a refusal to enforce the term will further that policy,

(c) the seriousness of any misconduct involved and the extent to which it was deliberate, and (d) the directness of the connection between that misconduct and the term.

2

R2d § 179. Bases Of Public Policies Against Enforcement

R2d § 179. Bases Of Public Policies Against Enforcement

A public policy against the enforcement of promises or other terms may be derived by the court from

(a) legislation relevant to such a policy, or

(b) the need to protect some aspect of the public welfare, as is the case for the judicial policies against, for example,

(i) restraint of trade (§§ 186-188),

(ii) impairment of family relations (§§ 189-191), and

(iii) interference with other protected interests (§§ 192-196, 356).

3

R2d § 26 Preliminary Negotiations

R2d § 26: PRELIMINARY NEGOTIATIONS

A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

4

R2d § 12. Capacity To Contract

R2d § 12. Capacity To Contract

1) No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances.

2) A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is:

(a) under guardianship, or

(b) an infant, or

(c) mentally ill or defective, or

(d) intoxicated.

5

R2d § 17. Requirement Of A Bargain

R2d § 17. Requirement Of A Bargain

(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§ 82- 94.

6

R2d § 18. Manifestation Of Mutual Assent

R2d § 18. Manifestation Of Mutual Assent Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance.

7

R2d § 19. Conduct As Manifestation Of Assent

R2d § 19. Conduct As Manifestation Of Assent

(1) The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act.

(2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.

(3) The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause.

8

R2d § 22. Mode Of Assent: Offer And Acceptance

R2d § 22. Mode Of Assent: Offer And Acceptance

(1) The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties.

(2) A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.

9

R2d § 33. Certainty

R2d § 33. Certainty

(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.

(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.

(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

10

R2d § 34. Certainty And Choice Of Terms; Effect Of Performance Or Reliance

R2d § 34. Certainty And Choice Of Terms; Effect Of Performance Or Reliance

(1) The terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance.

(2) Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed.

(3) Action in reliance on an agreement may make a contractual remedy appropriate even though uncertainty is not removed.

11

R2d § 35. The Offeree's Power Of Acceptance

R2d § 35. The Offeree's Power Of Acceptance

(1) An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer.

(2) A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the ways listed in §36.

12

R2d § 36. Methods Of Termination Of The Power Of Acceptance

R2d § 36. Methods Of Termination Of The Power Of Acceptance

(1) An offeree's power of acceptance may be terminated by (a) rejection or counter-offer by the offeree, or (b) lapse of time, or (c) revocation by the offeror, or (d) death or incapacity of the offeror or offeree.

(2) In addition, an offeree's power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer.

13

R2d § 42. Revocation By Communication From Offeror Received By Offeree

R2d § 42. Revocation By Communication From Offeror Received By Offeree An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.

14

R2d § 43. Indirect Communication Of Revocation

R2d § 43. Indirect Communication Of Revocation An offeree's power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. Comment: a. Direct and indirect communication. This Section extends the principle giving effect to a revocation communicated directly by the offeror to the offeree, and is subject to the same qualifications. See § 42. Thus a revocation is ineffective, whether communication is direct or indirect, if the offer is itself a contract, or after the power of acceptance has been duly exercised. On the other hand, no communication at all is necessary for revocation if the offer so provides. Where a revocation is communicated through a person or persons having power to act for the offeror or offeree, the case is governed by § 42, supplemented by the law of agency.

15

R2d § 351 Unforeseeability And Related Limitations On Damages

R2d § 351. Unforeseeability And Related Limitations On Damages (1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made. (2) Loss may be foreseeable as a probable result of a breach because it follows from the breach (a) in the ordinary course of events, or (b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know. (3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.

16

R2d § 347. Measure Of Damages In General

R2d § 347. Measure Of Damages In General Subject to the limitations stated in §§ 350-53, the injured party has a right to damages based on his expectation interest as measured by (a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that he has avoided by not having to perform.

17

R2d § 350. Avoidability As A Limitation On Damages

R2d § 350. Avoidability As A Limitation On Damages

(1) Except as stated in Subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation.

(2) The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.

18

R2d § 346. Availability Of Damages

R2d § 346. Availability Of Damages

(1) The injured party has a right to damages for any breach by a party against whom the contract is enforceable unless the claim for damages has been suspended or discharged.

(2) If the breach caused no loss or if the amount of the loss is not proved under the rules stated in this Chapter, a small sum fixed without regard to the amount of loss will be awarded as nominal damages.

19

R2d  § 349. Damages Based On Reliance Interest

R2d  § 349. Damages Based On Reliance Interest

 

As an alternative to the measure of damages stated in § 347, the injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed.

20

R2d  § 352. Uncertainty As A Limitation On Damages

R2d  § 352. Uncertainty As A Limitation On Damages

Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.

21

R2d  § 350. Avoidability As A Limitation On Damages

R2d  § 350. Avoidability As A Limitation On Damages

(1) Except as stated in Subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation.

(2) The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.

22

R2d § 355. Punitive Damages

R2d § 355. Punitive Damages

Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.

23

R2d § 356. Liquidated Damages And Penalties

R2d § 356. Liquidated Damages And Penalties

(1) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.

(2) A term in a bond providing for an amount of money as a penalty for non-occurrence of the condition of the bond is unenforceable on grounds of public policy to the extent that the amount exceeds the loss caused by such non-occurrence.

24