Contract Law Contract of Sale: A contract is a promise or set of promises, for breach of which the law gives a remedy or the performance of which the law recognizes a duty Contract of Sale: A contract is a promise or set of promises, for breach of which the law gives a remedy or the performance of which the law recognizes a duty Express Contract: formed by language, oral or written Express Contract: formed by language, oral or written Implied Contract: parties conduct indicates that they assented to be bound Implied Contract: parties conduct indicates that they assented to be bound Quasi-Contract: One party is unjustly enriched at the expense of the other party, so the party unjustly enriched must pay restitution to the other party equal to the unjust enrichment Quasi-Contract: One party is unjustly enriched at the expense of the other party, so the party unjustly enriched must pay restitution to the other party equal to the unjust enrichment

Contracts What is a sale and what is sold What is a sale and what is sold Governed by the Uniform Commercial Code (U.C.C.) Art. 2 Governed by the Uniform Commercial Code (U.C.C.) Art. 2 A sale is a contract in which title of goods passes from the seller to the buyer for a price A sale is a contract in which title of goods passes from the seller to the buyer for a price Goods – all things movable Goods – all things movable Tangible Tangible Intangible – representing something of value Intangible – representing something of value Examples? Examples? Who sales goods Who sales goods Non merchants Non merchants Merchants Merchants

Contracts Contracts Traditional view Traditional view Bilateral Contract Bilateral Contract A promise for a promise A promise for a promise Unilateral view Unilateral view A promise to pay upon completion of the requested act A promise to pay upon completion of the requested act Modern view – most contracts are bilateral Modern view – most contracts are bilateral Under the U.C.C. bilateral contracts can be formed by starting performance Under the U.C.C. bilateral contracts can be formed by starting performance

Contracts Under U.C.C. unilateral contract limited to Under U.C.C. unilateral contract limited to The completion of performance The completion of performance An offer to the public An offer to the public Void Contract: without legal force Void Contract: without legal force Voidable Contract: may elect to avoid or ratify Voidable Contract: may elect to avoid or ratify Unenforceable Contract: valid except for some legal defenses Unenforceable Contract: valid except for some legal defenses Lack of Capacity Lack of Capacity under 18 under 18 Insane persons Insane persons Intoxicated persons (if the other party has reason to know) Intoxicated persons (if the other party has reason to know) Duress or Coercion Duress or Coercion Does not comply w/ the Statute of Frauds Does not comply w/ the Statute of Frauds

Contracts Mutual Assent Mutual Assent Offer Offer creates the power of acceptance in the offeree creates the power of acceptance in the offeree Certainty and definiteness: of subject of sale and terms Certainty and definiteness: of subject of sale and terms Communicated to the offeree Communicated to the offeree Termination of the Offer Termination of the Offer Revocation: by offeror before acceptance Revocation: by offeror before acceptance Rejection: by offeree Rejection: by offeree Lapse of Time – offer good for 30 days Lapse of Time – offer good for 30 days Termination by Operation of Law Termination by Operation of Law Death of a party Death of a party Destruction of the subject matter Destruction of the subject matter

Contracts Acceptance Acceptance Only to whom the offer is addressed Only to whom the offer is addressed If general public anyone may accept If general public anyone may accept Must be communicated to offeror Must be communicated to offeror Acceptance by an act Acceptance by an act If offeree takes offered benefits, or prior dealings or trade practices create reasonable expectation by offeror silence represents acceptance If offeree takes offered benefits, or prior dealings or trade practices create reasonable expectation by offeror silence represents acceptance Consideration Consideration Bargained for exchange Bargained for exchange That which is bargained for has legal value That which is bargained for has legal value Benefit to promisor or detriment to the promisee Benefit to promisor or detriment to the promisee

Contracts Defenses to Contract Creation Defenses to Contract Creation Mistake – basic assumptions, material effect Mistake – basic assumptions, material effect Capacity (Voidable) Capacity (Voidable) Age Age Mental Incapacity Mental Incapacity Intoxication Intoxication Defenses to Enforcement Defenses to Enforcement Statute of Frauds–Contracts which must be in writing Statute of Frauds–Contracts which must be in writing Marriage – promise made in consideration of marriage Marriage – promise made in consideration of marriage Year – by terms cannot be completed w/in one year Year – by terms cannot be completed w/in one year Land – sale of real property Land – sale of real property Executor/administrator of a will promises to pay estate debt Executor/administrator of a will promises to pay estate debt Goods priced over $ (there is a U.C.C. exception) Goods priced over $ (there is a U.C.C. exception) Suretyship – promises to pay the debt of another Suretyship – promises to pay the debt of another

Writing must include Writing must include The identity of the party being charged The identity of the party being charged Identification of the contract ’ s subject matter Identification of the contract ’ s subject matter Terms and conditions of the agreement Terms and conditions of the agreement Recital of consideration Recital of consideration Signature of the party or the person to be charged Signature of the party or the person to be charged

Contracts Rules of Construction Rules of Construction Construed as a Whole Construed as a Whole Ordinary Meaning of Words Ordinary Meaning of Words Preference to Construe Contracts as Valid and Enforceable Preference to Construe Contracts as Valid and Enforceable Ambiguities construed against party preparing Contract Ambiguities construed against party preparing Contract Parol (not parole!) Evidence Rule – not a rule of evidence but a rule of substantive contract law Parol (not parole!) Evidence Rule – not a rule of evidence but a rule of substantive contract law Contract in writing with the intent that it embody the full and final expression of the bargain Contract in writing with the intent that it embody the full and final expression of the bargain prior or contemporaneous negotiations that contradict, modify, or vary contractual terms is inadmissible to vary terms of the writing prior or contemporaneous negotiations that contradict, modify, or vary contractual terms is inadmissible to vary terms of the writing

Contracts Merger Clause – something to the effect that this contract is a complete representation of the terms of this agreement Merger Clause – something to the effect that this contract is a complete representation of the terms of this agreement Remedies for Breach Remedies for Breach Damages Damages Sale of Goods Sale of Goods Buyer breaches – seller stop/withhold/resale goods & recover difference in resale and contract price goods Buyer breaches – seller stop/withhold/resale goods & recover difference in resale and contract price goods Seller breaches – buyer reject nonconforming goods cancel/cover/ recover damages for nondelivery Seller breaches – buyer reject nonconforming goods cancel/cover/ recover damages for nondelivery

Contracts Compensatory - to put the person in as good a position as they would have been had the other party fully performed Compensatory - to put the person in as good a position as they would have been had the other party fully performed Consequential – what a reasonable person would have foreseen that such damages would result if breach Consequential – what a reasonable person would have foreseen that such damages would result if breach Punitive – to Punish, generally not awarded Punitive – to Punish, generally not awarded Nominal – if no actual loss is proven Nominal – if no actual loss is proven Liquidated Liquidated Damages are difficult at the time contract was formed Damages are difficult at the time contract was formed Amount must be agreed to and reasonable forecast of compensatory damages Amount must be agreed to and reasonable forecast of compensatory damages

Specific Performance Specific Performance Subject matter of Contract is rare or unique Subject matter of Contract is rare or unique Land – not making any of that any more Land – not making any of that any more Unique or rare goods Unique or rare goods

E L E M E N T S OF C O N T R A C T Mutual Assent Consideration No Defenses Offer Acceptance Bargained for Exchange Mistake Lack of Capacity Illegality Statute of Frauds

Insurance A legal term for insurance would be? A legal term for insurance would be? Aviation Insurance Aviation Insurance Actual damage: to the aircraft is called HULL INSURANCE Actual damage: to the aircraft is called HULL INSURANCE Aviation Liability – who, what, where something gets hurt Aviation Liability – who, what, where something gets hurt Insurance premiums based on: Insurance premiums based on: Type of Aircraft: New, Old, Hangared Type of Aircraft: New, Old, Hangared Airworthiness Airworthiness Pilot Warranties Pilot Warranties Experience: Age, Ratings, Hours (Total and in Type), Pilot Limitations Edmonds v. USA, Biennial flight review Note: Contract Conditions Experience: Age, Ratings, Hours (Total and in Type), Pilot Limitations Edmonds v. USA, Biennial flight review Note: Contract Conditions

Causal connection between the crash of an aircraft and its insured Causal connection between the crash of an aircraft and its insured Some states require causal connection Some states require causal connection Some states do not Some states do not

Hawkins v. State Life "'Death of the Insured as a result of travel or flight in, or descent from or with any kind of aircraft, provided the Insured is [**2] a pilot, officer, or member of the crew of such aircraft, or is giving or receiving any kind of training or instruction or has any duties aboard such aircraft or requiring descent therefrom.'" "'Death of the Insured as a result of travel or flight in, or descent from or with any kind of aircraft, provided the Insured is [**2] a pilot, officer, or member of the crew of such aircraft, or is giving or receiving any kind of training or instruction or has any duties aboard such aircraft or requiring descent therefrom.'"

Hawkins v. State Life "DIED 11 June 1968 in Vietnam from burns received while pilot aboard military aircraft which was hit by hostile fire, crashed and burned." "DIED 11 June 1968 in Vietnam from burns received while pilot aboard military aircraft which was hit by hostile fire, crashed and burned." Even if the policy taken as a whole is not ambiguous, a strict reading of the Aviation Provisions indicates that the insured's death was within an insured risk. The key phrase is "death... as a result of [aviation]." The facts of this case show that the insured did not die as a result of aviation. On the contrary his death was a result of an act of war. Had it not been for an act of war his plane would not have crashed. In all probability he died before his plane crashed. Either way death was not the result of an aviation risk. Aviation was merely an incidental condition (circumstance) at the time of death. Even if the policy taken as a whole is not ambiguous, a strict reading of the Aviation Provisions indicates that the insured's death was within an insured risk. The key phrase is "death... as a result of [aviation]." The facts of this case show that the insured did not die as a result of aviation. On the contrary his death was a result of an act of war. Had it not been for an act of war his plane would not have crashed. In all probability he died before his plane crashed. Either way death was not the result of an aviation risk. Aviation was merely an incidental condition (circumstance) at the time of death.

Indemnifying and hold harmless clauses Indemnifying and hold harmless clauses Indemnification: restoring victim of loss in whole or in part Indemnification: restoring victim of loss in whole or in part Hold harmless: Agreement or contract in which one party agrees to hold the other w/out responsibility for damage or other liability arising out to the transaction Hold harmless: Agreement or contract in which one party agrees to hold the other w/out responsibility for damage or other liability arising out to the transaction These are important clauses in lease or easement agreements and should be fully understood These are important clauses in lease or easement agreements and should be fully understood

Duty to Defend: The insurance has a legal duty to defend the insured when an event is covered by the policy Duty to Defend: The insurance has a legal duty to defend the insured when an event is covered by the policy Rights involved: whatever the policy says and to which you have agreed Rights involved: whatever the policy says and to which you have agreed You may agree to pay any deductibles/or not- affects price You may agree to pay any deductibles/or not- affects price Right to counsel at all stages of the proceedings Right to counsel at all stages of the proceedings They choose who represents you, not you They choose who represents you, not you

Subrogation: the right of the insurer to “ step into the shoes of the insured ” Subrogation: the right of the insurer to “ step into the shoes of the insured ” The insurer pays your claims, then you give up the right to make claims against the other party. The insurer pays your claims, then you give up the right to make claims against the other party. In some circumstances if you have paid deductibles you will be reimbursed as the subrogee is now seeking all the expenses they and you incurred In some circumstances if you have paid deductibles you will be reimbursed as the subrogee is now seeking all the expenses they and you incurred

Terminology Appraisal clause – if parties cannot agree on the amount of a loss covered, impartial and qualified 3 rd party Appraisal clause – if parties cannot agree on the amount of a loss covered, impartial and qualified 3 rd party What is going to affect the appraisal price? What is going to affect the appraisal price? Arbitration clause – arbitration of disputes that may arise between the insurer and the insured Arbitration clause – arbitration of disputes that may arise between the insurer and the insured Antilapse clause – policy will not automatically lapse if no payment is made by the due date – grace period Antilapse clause – policy will not automatically lapse if no payment is made by the due date – grace period State law normally imposes specific requirements governing insurance State law normally imposes specific requirements governing insurance