The Big Questions Love For Dogs, Treat Every Rover Terrifically L – Law - What law applies F – Formation - Do you have an agreement validly formed? o Do you have a legally valid offer? o Do you have a termination of offer before acceptance? o Do you have a legally valid acceptance? o Do you have consideration? o If not, do you have an alternative to consideration? D – Defenses - Is there something that renders the contract unenforceable? T – Terms - What are the terms of the contract? E – Excuses - Is performance due here? R – Remedies - What remedies are available? T – Third Party Rights and Obligations What is K Law? - Private law of the deal - Foundation of commercial law - Supports the formation and the enforcement of a K - Policy  pro-market ideologies or minimal regulation of the free market Sources of K Law 1. UCC Article 2 a. Sales of goods  tangible, moveable, personal property (+ unborn young of animals and growing crops) b. See UCC 2-102, 2-105 c. Supplemented by Common Law 2. Restatement 2d of K a. Everything else (real estate, services, employment, IP) b. State CL distilled into one document What does it mean to enforce a promise? Contract Definition - R2d 1: a K is a promise or a set of promises for which the law provides a remedy or performance if breached o RULE: Medical promises not generally used in a contract claim. However, there is an exception if the Dr. solicited the patient.  Hawkins v. McGee: “Hairy Hand Case”  The Dr. promised P that his hand would be 100% healed and solicited P. Court held the promise could be enforced. o RULE: Reliance on an opinion of how a product should work does not equate to a promised statement.  Bayliner v. Crow: “Boat Speed Case”  Man relies on prop matrix when determining if his boat will fit his needs. Court holds that the prop matrix predicted speed cannot be enforced, because (1) the statements made do not relate to the boat with the same weight and equipment and (2) the predicted speed was merely an opinion. Legal Basis for Recognizing and Enforcing a K/Preview of Damages Relief - Not punishing the breaching party, instead trying to make the victim WHOLE - Preference given to the breaching party is the benefit of the bargain/expectancy - K law assumes that all actors are economically rational and make promises that can be compensated with money, not a big fan of specific performance o §344(a) Expectancy/Benefit of the Bargain (COURT PREFERS)  The promisee is put in as good a position and he would have been if the contract was performed  Hawkins v. McGee: “Hairy Hand Case”  Court held that the plaintiff should receive the difference between what was promised and what was delivered. There should be no pain and suffering.  Sullivan v. O’Connor: “Nose Job Case”  Women goes into plastic surgeon to get her nose done, he ends up having to perform 3 surgeries (she consented to 2) and her nose turns out worse off than before. Court held that the woman was entitled to pain and suffering/emotional distress damages because of the breach in the contract. o Expectancy  difference between promised and resultant + pain and suffering from 3rd operation + hospital fee of 3rd operation = $33k o Restitution  the benefit that the dr. received = $300 operation fee o Reliance  different between result and SQA nose + pain and suffering from all 3 operations + entire out of pocket paid = $19k o §344(b) Reliance/Status Quo Ante for Injured (SQA)  The promisee is put in as good a position as he would had the contract not been made  reimbursed for expenses and other loses caused by the reliance on K o §344(c) Restitution/Status Quo Ante for Breacher (SQA)  The promisee is restored any benefit that he has conferred upon the other party o Disgorgement  prevent unjust enrichment (not a legit method)  Requires that the defendant give up any profits they made because of illegal or wrongful acts. This involves returning promisor to SQA regarding both benefits conferred by the promisee AND any gains wrongly incurred by the promisor.  RULE: Damages that exceed the defendant’s loss are punitive and not applicable in K law. o US Naval v. Charter: “Red Dawn Book Case”  Licensing agreement for paperback book which was supposed to release in October. Paperback co. released early, and hardcover sales took a hit. Court held that giving all the proceeds from the early release would be beyond the requirements of K law. Book sales are unpredictable, and the market of hardcover buyers is less than paperback buyers. Court based damages on the sale of hardcover books in August (pre paperback release). o §359 Special Performance (rare)  A specialized remedy used by courts when no other remedy (money) will adequately compensate the other party. The legal remedy puts the injured party in the position he or she would have enjoyed has the contract been fully formed.  RULE: special performance is generally unfavored unless there is no other way to remedy the situation. o Morris v. Sparrow: “Special Horse Case”  Ranch hand agrees to work on ranch in exchange for horse and after working he is denied the horse. Court holds that the horse was too particular because of unique training and connect that money damages are not applicable, so they order the breacher to give up the horse. Consideration - General idea that we should keep all the promises that we make, but not all promises are meant to be taken seriously. So, how do you decide what should be? - K law favors a quid pro quo exchange o §71 Consideration/Bargained for Exchange Definition  To constitute a consideration, a performance or return promise must be bargained for. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promise in exchange for that promise.  Example: dad and daughter agree to meet in exchange for ring. Dad gets meeting, daughter gets ring.  Performance may consist of (1) an act other than a promise, (2) a forbearance, or (3) the creation, modification, or destruction of a legal relation.  RULE: No benefit/detriment is required for consideration. Just the bargained for exchange. o Hamer v. Sidway: Nephew held off from drinking, gambling, smoking etc. based on uncles promise that he would give him $5k. Executor argued that nephew was benefitted (not harmed) and uncle was not benefitted. Court held that the abandonment of nephew’s rights to participate in those activities was sufficient consideration to uphold the contract.  §79 Adequacy of Consideration  once consideration is met, there is not additional requirement of (1) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee, or (2) equivalence of values exchanged, or “mutuality of obligation” o §74 Forbearance (abstaining from doing something)  RULE: Forbearance is a consideration if  Claim is plausible or credible because the facts are uncertain (objective plausibility) OR  The forbearing party believes that the claim is valid (subjective, good faith belief) o Dyer v. National-By-Products: P loses foot in accident. P agrees to forbear a lawsuit in exchange for lifetime employment. D says (1) forbearance not valid and (2) no consideration because P received workers comp. Court holds that the law favors compromise and remands the case to see if P had good faith basis for the claim.  Escape hatch: need both a valid claim and a subjective belief that its valid, escape hatch says not a factual deficiency but a legal definiceny o §86 Moral Obligation/Past Consideration