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Contracts OutlineSpoonFall 2018Goal of the court is to uphold most contractsElements of a contractPromise of something in the futureExchange of valueEnforcementSources of lawCommon lawCourtsBased on state lawRestatement: not actual lawSome courts adopt itIncorporates concepts of UCC article 2UCC Statutory lawArticle 2 applies to sales of goodsUETARemoves barriers to recognition of electronic recordsCISGInternational sale of goodsIntent to be legally boundReasonable Person StandardLetters of IntentMust look at surrounding circumstances to determine whether something is a letter of intentMeans nothing until contents are knownBinding agreement to negotiate in good faithVenture v. ZenithNot binding contract but includes certain binding obligationsGood Faith (1-201(20); 2-103)“honesty in fact and the observance of reasonable commercial standards of fair dealing”Acting in self interest is not necessarily bad faithId.In the performance of every contract parties are obligated to act in good faithUntil there is a contract, there is no good faith obligationContemplation of final writingWhat is the significance of the contemplation?Are they bound to it?Depends on the circumstancesDepends on the subjective intent based on the objective conduct of the parties.Mutual manifestations of assent that are sufficient to make a contract will not be prevented from so operating by the fact that the parties also intend to prepare and adopt a written memorialPalmerReason for not having final writing taken into accountDefinition of a “good” (2-105)“all things which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid; also the unborn young of animals and growing crops and other identified things attached to realty”Missing terms --- UCC gap fillers (UCC 2-307-310 for delivery times and place)Not every detail must be included for the parties to be boundIf they intend to be bound, but left out a term, the UCC will fill in the gaps Specific place or time of delivery, time of payment, shipping locationPrice should be reasonableOffersOffer: manifestation of willingness to enter into a bargain so made as to justify another person in understanding that his assent to that bargain is invited and will conclude itPreliminary negotiationsWhere a reasonable person would construe something as an offer, it isSouthworth v. OliverFactors to determine if offer was madeWords used in communicationSignificant terms included or omittedWhether or not it is directed to a particular personRelationship of partiesCommon practices or trade usages (UCC)Price quotations/adsNot an offer except when it isZanakis-Pico v. Cutter DodgeInterstate v. BarclayIdentification of offeror and offereeAccidental offerorWhen you sign a form given by another party, you might be making an offerImportant to determine if offeror is aware he made an offerIneffective late acceptance can create a counter-offer which offeror can accept by performing original contract termsOffer can be Accepted: contracts on term of offerRejected: no contractCountered: new terms which can be Accepted: contract on terms of counterRejected: no contractCounteredRevoked before acceptance: no contractDuration of offerOfferor is master of offerIf not specified offer is open for reasonable period of timeMailbox rule and variationsDefault ruleAll major events with offers and revocations are effective upon receipt except acceptance Acceptance is effective when mailedExcept in option contract where acceptance must be received by the deadlineIn general, offers are revocable before acceptanceRevocation can come from someone other than the offerorAs long as it is a reliable source it is an acceptable revocationDickinson v. DoddsMaking offers irrevocableOption contractAgreement not to revoke offerUsually paid for as considerationFirm offers by merchant (2-205)“an offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror”Sale of a goodIf you say offer will be effective for a certain amount of time, it will be so but only for 90 days maxMust sign provision that makes it a firm offer, in order to protect accidental offerorsDon’t need consideration for firm offer to be irrevocableSect. 87“An offer is binding as an option contract if it (a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or (b) is made irrevocable by statute. An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice”Reliance type situationDetrimental reliance makes offer irrevocablePart performance (Sect 45) for unilateral contracts“where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. The offeror’s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.”Offers for unilateral contracts become irrevocable when offeree begins performancePreparing for performance does not equal performanceCommon law may allow for offer to be revoked before performance is completed AcceptancesKnowledge, volition (distinguish between acceptance and condition for performance)Carlill v. Carbolic Smoke Ball Co. (she accepted by taking the smoke ball; she gets the money because she got sick)Manner of acceptance – 2-206; section 30“unless otherwise unambiguously indicated by the language or circumstances (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances”Can accept in any manner reasonable in the circumstancesShipment of nonconforming goodsAccommodation notice makes shipment not an acceptanceCorinthian Pharmaceutical v. LederleUnilateral contractsIe: performance as acceptance (one right and one duty at time of formation)Usually only applicable where expressly requires a performance acceptance exclusively or nature of offer (offers to the public) contemplates only such performanceAcceptance is full performanceNo contract till full performanceSilence as acceptance (Sect. 69)“Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only: (a) where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation. (b) where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer. (c) where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept”Based on circumstances and what is reasonable to believeUsually only acceptable when prior relationship is presentBattle of the forms(2-207)“a definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.”Figuring out what it is the parties agreed toUnder traditional contract theory, where buyer has opportunity to review vendor’s terms and chooses to ignore them, terms will be enforced under “duty to read” rule.Knockout rule: expressly conflicting terms are not a part of the contract, only the agreeing and possibly additional terms are enforceable Rolling offers (2-204)“A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such contract. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.”Fact that money is paid does not necessarily mean that a contract is madeHill v. Gateway (bought a computer and didn’t send the computer back, so bound to terms in the box)Death of offeror = revocation of the offerValidation devicesSealSection 98 (adoption of seal by delivery of a document)“Unless extrinsic circumstances manifest a contrary intention, the delivery of a written promise by the promisor amounts to the adoption of any seal then on the document which has apparent reference to his signature of to the signature of another party to the document.”ConsiderationLegal value (benefit to promisor or detriment to promisee)Bargained-for-exchange (promise exchanged for detriment and detriment exchanged for promise)Nominal ConsiderationWhen this is a problemIt isn’t bargained forMere pretense for a giftIf consideration stated and not paid for (though not applicable to options under sect. 87 or to surety situation according to sect. 88)In equitable reliefCourt will examine consideration for the disparity between detriment and benefitModificationsPre-existing duty rule and exceptions: Sect 89“A promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or (b) to the extent provided by statute; or (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.”Slattery v. Wells Fargo Armored Service Corp. (if there is a pre-existing duty for one to do something, no extra reward given)Accord and satisfactionA doesn’t have the money to pay B what he owes, so B says he will take A’s car instead. (Accord)A delivers the car (satisfaction)Disputed ClaimsPromissory Estoppel: Section 90“A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.”Can be applied to precontractual situationsPast consideration and moral obligation: not validation devicePassante v. McWilliam (he had already sent loan through when he was promised a share of the company. It was a promise to make a gift)Section 86: promise for benefit received (material benefit doctrine) – minority view“A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. Except (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or (b) to the extent that its value is disproportionate to the benefit.”As long as it wasn’t intended as a gift, lack of consideration is okayStatute of limitations – sect 82 “A promise to pay all or part of an antecedent contractual or quasi-contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for a statute of limitations. The following facts qualify as such a promise: (a) a voluntary acknowledgment to the obligee, admitting the present existence of the antecedent indebtedness; or (b) a voluntary transfer of money; or (c) a statement that the statute of limitations will not be used as a defense”No need for consideration if obligor says he will pay for a debt that is past the statute of limitationsFirst Hawaiian Bank v. ZukerkornUCC 2-306: output, requirements, and exclusive dealing contracts“a term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate may be tendered or demanded.”Require good faith in their performanceExclusive dealing requires best efforts, not just good faithBest efforts: reasonable efforts, due diligence, and good faithCapacity to contract: sections 12-16 (guardianship, minor, mentally ill or defective, intoxicated)Can void contracts in these situationsLucy v. Zehmer Milicic v. The Basketball Marketing Co.Statute of FraudsPromises in consideration of Marriage (pre-nup)“part” performance exception (substantial part performance)Dewberry v. GeorgeContracts not performable within one YearSome courts construe narrowlyAgreement must explicitly say that performance cannot happen within one yearKlewin v. Flagship PropertiesSale of Land“part” performance exceptionMust pay for the land and then make some sort of improvementCain v. CrossExecutorSale of Goods (UCC 2-201)Writing requirement less comprehensive than common lawsExceptionsBetween merchants, if within a reasonable time a writing in confirmation of the contract and sufficient against sender is received and party receiving has reason to know its contents, it satisfies the writing requirements unless written notice of objection to its contents is received within 10 days.Specially manufactured goodsParty admits there was a contractGoods have been paid for and received (contract has been performed)SuretyshipException is the leading object ruleDid it for your own benefit not the benefit of someone elseArmbruster v. BarronMemorandum necessary – sect. 131“writing signed by or on behalf of the party to be charged which (a) reasonably identifies the subject matter of the contract, (b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and (c) states with reasonable certainty the essential terms of the unperformed promises in the contract.”Must be signed by the party that is asserting statute of frauds defenseSection 139Reliance to avoid statute of fraudsPromissory estoppelEvidence has to be super clear that action was taken in response to a promiseAlaska Democratic Party v. RiceParol Evidence RuleIntended the writing to be completely integrated?Yes: no evidence of other terms admittedIf partially integrated, can admit evidence of consistent additional termsRules to determine if integratedNatural omission (restatement)Separate consideration (restatement)Certain inclusion (UCC)UCC 2-202“[Terms of any contract] may be explained or supplemented (a) by course of performance, course of dealing, or usage of trade.”Writing may be explained or supplemented by course of performance, course of dealing, or usage of trade even if complete integrationSubsequent ModificationUCC 2-209No consideration necessary, but must be in good faithNo oral modification clause (NOM) and compliance with statute of fraudsWaivers and retraction of waiversBackdoor way of enforcing an unenforceable modificationMistakeMutual mistake (Sect. 152)“Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake.”Unilateral mistake (sect. 153)“Where a mistake by one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake, and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.”When party bears the risk of the mistake (154) “A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.”InterpretationWhat did the parties mean by what they put in the contractIf there is no ambiguity, the court won’t hear extrinsic evidence of what the parties meantMost modern courts will say they have to hear what the parties sayWhat kind of evidence will the courts hearWhatever is relevantLooks at why the provision was in the contractWho wants the provision in the contract says a lot about what it is supposed to meanParol evidence rule does not bar the court from hearing evidence of the parties intentionsUsually interpretation issues are dealt with by draftingRules about interpretationContra ProferentemEspressio UniusEjusdem GenerisAbuse of the Bargaining ProcessContinuum of abusePhysical Duress: really badImproper threatsEven with no basis to sue: “if you don’t sign, I will sue you and make you spend thousands of dollars on court”Doesn’t give innocent party much of a choiceRestatement 175Restatement 176FraudTell someone a fact which you know will induce them to enter the contract even though you know it isn’t trueMisrepresentation which maker of statement knows is falseMaterial misrepresentation/nondisclosurePerson tells other party something, not known to be incorrect by the maker of statement but known to induce the other party to contract, and it is falsePerson fails to mention something that would have been material to the other partyTypes of misrepresentationFraudulentConcealment: affirmative act designed to prevent another from learning the factNondisclosure: involves no affirmative actMaterialRestatement Section 162Restatement Section 164Restatement 159Restatement 160Restatement 161Undue influenceRelationship of trust where one party sort of dominates the otherDominating party induces other party to agree to something that is clearly not in the other party’s best interestContracts of adhesionUnconscionabilityDoctrine that gives the court the right to not enforce the contractPresence of unconscionability determined by the court not the trier of factUCC 2--302ProceduralNot merely a contract of adhesion but something moreAt least must be a contract of adhesionAlso must have terms difficult to understand or buried in the contract where reasonable consumers wouldn’t see itSubstantiveImpact of the provision itself is inherently unfairDuty to discloseOfferee who knows or should know that the offeror is making a mistake has a duty to disclose the fact that he is apparently making a mistake Unconscionable arbitration agreements are not okay but the ones that allow for about the same processes as the courts are okayBad faithCan’t sue for it but court may not enforce provision if there is bad faith in the way it was performed Not in formation of contract but in performance and enforcement of contractGood faithHonesty in fact and observance of reasonable commercial standards of fair dealingRestatement 205UCC 1-304UCC 1-201(20)UCC 2-103(1)(b)Public policy considerations: not so badIf statute or regulation expressly prohibits a certain agreement, the court will not enforce itPublic policy is never argued except when other points failCourt will not enforce a provision because of relevant public policy in the jurisdictionPublic policy in legislationRestatement 181Does it affect the enforceability of a contract if someone didn’t have a license?Is the interest in enforcing the contract clearly outweighed by the public policy that is the purpose of the legislation?Court usually determines thisContracts in restraint of tradeRestatement 188Does the covenant not to compete protect a legitimate interest?If so, interest to the public balanced with interest of enforcing contractAncillary agreementRestraint on trade that is in connection with another agreementDirect (non-ancillary) agreementSimply an agreement not to competeNot enforceableGamblingCourt will leave you where it found youDuty to readIf you should read but you don’t you will probably be liable for whatever is in the clauseStandardized contractsReasonable expectationsWhen there is ambiguity or terms are hidden by technical language or in policy provisions, doctrine is invokedCircumstances under which court will look into the reasonable expectations doctrineAdhesion contracts (take it or leave it)Disparity in bargaining powerOne party gives contract and will not negotiate itMost contractsAmbiguityIn languageTerms buried or in such technical language that an insured would not understand itDoctrine often looked at in terms of insurance policiesNot every state adopts itConditionsCondition is an event, not certain to occur, which must occur before performance under a contract becomes dueDetermining whether a provision is a condition or a promise is the first issueIt is possible for the same event to be a promise and a condition at the same timeRestatement Section 227In situations of doubt, the courts will construe a provision as a promise rather than a conditionPromissory conditionEvent that terminates a dutyCurrent obligations to performEvent happensNo more obligation to performRestatement section 230Standards to be applied to determine satisfactionRestatement 228Objective reasonable satisfactionStandard by which you measure satisfactionSubjective personal satisfactionLimitation of a good faith requirementParties can contract to which standard will be appliedIf parties are not specific in the contract the court will apply the subjective standardExpress conditionParties have manifested an intention that the duty to render a promised performance shall be subject to the occurrence of some fact or event other than a mere lapse of timeEstablished by the agreement which can be manifested by words or conductImplied in fact is the name for those which are manifested by conductConstructive conditionA court determines that a contractual duty should be subject to a condition even though the parties have manifested no such intentionConstructed by the court in the interest of equity or justiceDetermining existence is a question of whether the court should add to the terms of the contract in a situation not foreseen and not provided for by the partiesOrder of performanceRestatement Section 234Constructive condition of cooperation obligates each party to do what is necessary to enable the other to performExcusing non-occurrence of conditionsHave to perform even if condition has not occurredAvoid disproportionate forfeitureRestatement 229WaiverRestatement 84Can waive a condition by performance of the contractIf you waive a condition, the court will read the contract as if the condition were not thereBreach of contractual condition of cooperation (bad faith)Repudiation Severable/Divisible ContractsRestatement Section 183Restatement 240Agreed equivalentsInstallment ContractsOne that requires or authorizes delivery of goods in separate lots to be separately acceptedCreate a relationship and the UCC makes it difficult to get out of the contract just because one of the installments is messed upUCC 2-612BreachKinds of breachesMaterial and totalInnocent party can withhold performanceCan terminate contractCan sue for damagesMaterialWithhold performance until breach is curedSue for damagesImmaterialSue for damagesThere isn’t really a test to determine what kind of breach something isSubstantial performanceRestatement Section 241Restatement 242If the failure to perform or delay in performing is so material that it will or may result in the other party not getting substantially what he bargained for, the latter is excused from his promised dutyIf there is substantial performance and an immaterial breach, the damages are not the cost of redoing an entire project, but the difference in value between the contract being performed correctly and the way it was actually performed.Jacob & Youngs, Inc. v. KentCourts may excuse even express conditions if it determines that the nonoccurrence of the condition was so relatively unimportant to the owner that the resulting forfeiture to the builder would be extreme Restatement Section 229UCC Perfect TenderIf the goods or tender of delivery fail in any respect to conform to the contract, the buyer may reject themExceptionsIf buyer rejects for a super technical thing, could be said to be acting in bad faithWith merchants, if there is usage of trade that allows for a margin of error, can’t reject for the acceptable margin of errorUCC 2-508UCC 2-608UCC 2-602UCC 2-606UCC 2-601If you use a product, you will be deemed to have accepted but can still get damages for any defectsIf you don’t effectively reject within a reasonable time, you will be deemed to have acceptedRevoking acceptance has a much higher standard than simply rejectingIf you reject and then they cure and you do not accept, you are in breachRepudiationManifestation by a party to a contract that he will not perform his contractual dutyCan occur through words or conductTypically amounts to clear material and total breachReasonable person standard for what counts as a repudiationBut common law requires clear and unequivocal statementRestatment Section 250Restatement Section 256Retraction of repudiationCan’t retract if innocent party has materially changed his positionCan’t retract if innocent party makes it clear that he is treating your repudiation as finalUCC 2-610UCC 2-611If you act as if the other party has repudiated and you are wrong, you have repudiatedDemanding adequate assurance UCC 2-609If you demand adequate assurances and you have no basis for it and you suspend performance, you have repudiatedRestatement Section 251Risk AllocationImpracticability Has to be something beyond just market changeForce MajeureParties enter into agreement that if certain things happen, performance won’t be necessaryRestatement Section 261UCC 2-615Only applies to sellersUCC 2-613Frustration of PurposeRestatement Section 265Parties can always assume greater obligations than necessary Relationship between mistake and concepts such as frustration of purpose and impracticabilityTiming of the mistake and the event in frustration and impracticabilityTypically a mistake is present at the time of the making of the contract Frustration and impracticability typically include an event that occurs after the contract has been made Effect Mistake has to have material effect Impracticability implies something more than material effectForce Majeure clauseSeeks to protect parties from certain forces beyond their controlRemediesThe three interestsRestitution interestAsking for damages based on the amount of benefit that you gave the breaching party through your performanceThey wrongfully got value and you want it backSometimes measured by the value added and sometimes by the contract priceLosses are not offset for these damagesAlso applies to quasi contractual situationsReliance interestReimbursement of your out of pocket costsPut you in the position you were in before the contractRestatement 349as 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 performedoffset damages by the amount party would have lost had the contract been completedExpectation interestMost commonPut you in the position you would be if the contract had been fulfilledOffset damages by the amount the party would have lost had the contract been completedHadley v. BaxendaleBroken mill shaft taken to the manufacturer and asked to be fixed. It was promised to be fixed within a day. It wasn’t and the plaintiff did not have an extra on hand. The plaintiff lost profits because it had to close for a few days. Since the defendant did not know the plaintiff would need the shaft so quickly, it wasn’t liable.Consequential damages Damages which are a consequence of the breach Breaching party is responsible for all the consequences it knows or should know would flow from the breachGeneral damagesDamages a reasonable person would know would flow from a breachSpecial damagesDamages someone would not know would flow from the breach unless they were toldEmotional distress damagesGenerally courts are reluctant to allow emotional distress damages in breach of contractGenerally recognized exceptionsNature of the contract is such that serious emotional distress is clearly foreseeableNature of breach is such that serious emotional distress is clearly foreseeableIf bodily harm is associated with the breach, you are more likely to be able to collect emotional distress damagesRestatement 353Recovery for emotional disturbance will be excluded unless the breach also caused bodily harm or the contract or breach is of such a kind that serious emotional disturbance was a particularly likely resultUCC 2-715Limitations on expectation damagesForeseeability limitationRestatement Section 351UCC 2-715Can apply to reliance damages and expectationCertainty limitationOnly reasonable certainty will be required as a limitation upon the recovery of damagesEnough data for a court to say it is not purely speculativeRational basis for whatever the calculation isNew business rule is not the modern ruleIf you cannot prove lost profits, reliance or restitution damages are the way to goUCCDamages are not recoverable for a loss beyond an amount the evidence permits to be established with reasonable certaintyMitigation limitation --- avoidance of damagesUsually in the context of losing a job and not trying to find a new oneDuty to mitigate: duty in the sense that if you don’t do it, damages may be reducedIf you get a job that is incompatible with the job you were fired from, those wages will not reduce your damagesLoss could have been avoided without undue risk, burden, or humiliationApplies to acts or omissionsRestatement 350except as stated in subsection 2, damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliationinjured party is nor precluded from recovery to the extent that he has made reasonable but unsuccessful efforts to avoid lossUCC 2-715Liquidated damagesRestatement 356damages 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. Term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penaltywhat loss did they anticipate and was the amount they agreed on reasonable in light of the anticipated losshave to be reasonable at one of the 2 timeseven if you are reasonable in your estimate, the court may not enforce liquidated damages if they are disproportionalterm 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-occurrenceUCC 2-718damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penaltyif the court says the damages are easy to calculate, the party asking for the liquidated damages clause has to prove that they were not easy to calculate at the time the contract was madereasonable in light of loss and difficulties of proof of lossconstruction contractsMust have substantial performance and cost of completion must be out of proportion with the value of the change in order to change the measure of damages to diminution in value instead of cost of completionContract price – cost of completion (cost + profit)Specific performanceIf not adequate remedy at law, such as where there is uncertainty in damages or unique or scarce goodsUCC 2-716 CISGSubjective (if know the intent) v. Objective theoryTime for acceptance of offerRuns from date of letter, not date receivedNo mailbox ruleIt is when acceptance reaches offeror, not when mailedFirm offersIrrevocable if states durationLast shot principles applyJust like our common lawNo statute of frauds or parol evidence ruleForeseeability is broader than UCCCaptures things that are “possible” result of the breach as opposed to “probable” result used in the UCCBasic remedy is specific performance, not damages ................
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