UCSD—Contract Law Jack Friery Contract Law UCSD Extension © 2010 Jack Friery, Esq. 1

Course Overview Objective ▫Practical knowledge of contract elements ▫Recognition of contract issues Approach ▫Analyze contract law principles ▫Examine the elements of a contract ▫Do team and individual practical exercises © 2010Jack Friery, Esq. 2

Contract Overview What’s a “Contract”? ▫Risk allocation? ▫Express? ▫Implied? ▫Enforceable? ▫Void or voidable? © 2010Jack Friery, Esq. 3

Overview (con’t) Contract types Express or implied? Written or oral? “Quasi-contracts” © 2010Jack Friery, Esq. 4

Overview (con’t) Elements of valid contract ▫Offer ▫Acceptance ▫Consideration ▫Lawful purpose ▫Competent parties © 2010Jack Friery, Esq. 5

Offer Defined ▫Offeror proposes ▫Offeree disposes Elements ▫Intent/jokes ▫Communication ▫Definiteness © 2010Jack Friery, Esq. 6

Offer (con’t) Essential terms: ▫Price ▫Subject matter ▫Parties ▫Time of performance © 2010Jack Friery, Esq. 7

Offer (con’t) Communication to offerees Are ads offers? Revocation of offers Expiration of offers © 2010Jack Friery, Esq. 8

Acceptance Defined ▫Legal manifestation of assent ▫Saying “yes” the right way Mirror image rule ▫Common law rule ▫Clarifications © 2010Jack Friery, Esq. 9

Acceptance (con’t) Identity of offeree ▫Offers to a group Bilateral or unilateral contract? ▫Act or promise? ▫Who decides? ▫Significance: when contract arises Counteroffers ▫Common law ▫UCC © 2010Jack Friery, Esq. 10

Acceptance (con’t) How to accept ▫Conduct ▫Words Mailbox rule ▫Acceptance effective when mailed? Silence as acceptance ▫Common law © 2010Jack Friery, Esq. 11

Consideration Defined Contracts vs. gifts Mutuality ▫Benefit? ▫Detriment? © 2010Jack Friery, Esq. 12

Consideration (con’t) Past consideration Moral consideration Illusory promises Preexisting duties Is the consideration sufficient? ▫One dollar © 2010Jack Friery, Esq. 13

Consideration (con’t) Contract modifications ▫New consideration needed? Accord & satisfaction ▫Good-faith disputes © 2010Jack Friery, Esq. 14

Legality & Capacity Capacity ▫Age  Necessaries ▫Mental capacity  Temporary  Declared incompetence ▫Intoxication ▫Does other party have to be aware? © 2010Jack Friery, Esq. 15

Legality & Capacity (con’t) Legality: ▫Inherently illegal ▫Technically illegal ▫Severability clause Voidability © 2010Jack Friery, Esq. 16

Contractual Intent Intent defined: subjective or objective? How would a reasonable person view these facts and circumstances? © 2010Jack Friery, Esq. 17

Mistake ▫Unilateral  Examples  Remedy? (limited) ▫Bilateral (mutual)  Rescission  Reformation © 2010Jack Friery, Esq. 18

Fraud & Duress Fraud & misrepresentation ▫Negligent misrepresentation vs. active fraud Duress ▫Physical ▫Economic ▫Psychological/mental ▫Form contracts: enforceable? © 2010Jack Friery, Esq. 19

Writings Statute of Frauds: do you need a writing? ▫Real property ▫Goods >$500 ▫Marriage ▫One-year rule  Lifetime contract? Part performance—the panacea (cure-all) © 2010Jack Friery, Esq. 20

Writings (con’t) What’s a “writing”? ▫Cocktail napkin? ▫Series of incomplete writings? ▫ s? Parol evidence rule ▫Conflicting verbal and written deals © 2010Jack Friery, Esq. 21

Third Parties Assignment ▫Rights Delegation ▫Duties Contract novation—switching a party © 2010Jack Friery, Esq. 22

Enforcement by a Third Party Third party beneficiaries Mentioned in contract? Differing status—can a 3 rd party sue either party to the contract? ▫Creditor ▫Donee © 2010Jack Friery, Esq. 23

Contract Conditions Covenants vs. conditions Covenant=promise ▫Every contract contains a covenant Conditions ▫Examples: insurance policy; alimony agreement ▫Can initiate or kill a duty © 2010Jack Friery, Esq. 24

Contract Conditions(con’t) Conditions ▫Precedent ▫Subsequent ▫Concurrent ▫Implied-in-fact ▫Implied-in-law © 2010Jack Friery, Esq. 25

Performance & Discharge of Obligations Effect of performance Performance/breach ▫Material breach ▫Minor breach ▫“Punch list” items Rescission by the parties © 2010Jack Friery, Esq. 26

Discharge of Obligations (con’t) Conditions: met or missed Failure to cooperate Anticipatory repudiation ▫Saying “no” before your time comes ▫Test: unequivocal statement © 2010Jack Friery, Esq. 27

Discharge of Obligations (con’t) Insolvency ▫Bankruptcy—is the contract over, or is it still being performed?  Executory contracts  Executed contracts © 2010Jack Friery, Esq. 28

Discharge of Obligations (con’t) Impossibility ▫Objective impossibility ▫Commercial impracticability ▫Role of Force Majeure Death of party Destruction of subject matter ▫Failure of consideration © 2010Jack Friery, Esq. 29

Breach, Damages & Remedies Compensatory damages ▫“Make whole” damages  Buyer—”cover”  Seller—lost profits Incidental damages ▫Expenses Consequential damages ▫Test: foreseeabilty © 2010Jack Friery, Esq. 30

Remedies (con’t) Liquidated damages ▫Rules for imposing ▫Can’t be penal Caps on damages ▫Limitation of damages ▫Third-party liability Specific performance Punitive damages for breach? © 2010Jack Friery, Esq. 31

E-Contracts Electronic contracts ▫ ? Electronic signatures--Federal E-SIGN Act ▫Defined ▫Effect © 2010Jack Friery, Esq. 32

UCC Article 2: Sale of goods ▫Applicability  Dollar amount?  Merchant or not? ▫What are “goods”? Article 2A: Leases of goods CISG: International sales of goods © 2010Jack Friery, Esq. 33

UCC (con’t) General principles ▫Merchant or non-merchant? ▫Good faith & fair dealing ▫Course of dealing ▫Trade usage & custom © 2010Jack Friery, Esq. 34

UCC (con’t) Offer/acceptance/consideration ▫Relaxed rules/commercial reality Battle of the forms: new and different terms in the acceptance ▫Merchants ▫Non-merchants © 2010Jack Friery, Esq. 35

UCC (con’t) Writing requirement ▫Rule ▫Exceptions Effect of missing terms ▫Fill-in-the-blanks rules © 2010Jack Friery, Esq. 36

UCC (con’t) Warranties ▫Express  Samples/models/catalog ▫Implied  Merchantability (Hong v. Marriott)  Fitness for a particular purpose © 2010Jack Friery, Esq. 37

UCC (con’t) Shipment terms ▫Risk of loss ▫Role of insurance Written request for adequate assurances © 2010Jack Friery, Esq. 38

UCC (con’t) Performance Breach Damages ▫Buyer ▫Seller Statute of limitations © 2010Jack Friery, Esq. 39

Conclusion Questions? © 2010 Jack Friery, Esq. 40