UCSD—Contract LawJack FrieryContract LawUCSD Extension

© 2010Jack Friery, Esq.

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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.

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Contract Overview•What’s a “Contract”?

▫Risk allocation?▫Express?▫Implied?▫Enforceable?▫Void or voidable?

© 2010Jack Friery, Esq.

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Overview (con’t)•Contract types•Express or implied?•Written or oral?•“Quasi-contracts”

© 2010Jack Friery, Esq.

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Overview (con’t)•Elements of valid contract

▫Offer▫Acceptance▫Consideration▫Lawful purpose▫Competent parties

© 2010Jack Friery, Esq.

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Offer•Defined

▫Offeror proposes▫Offeree disposes

•Elements▫Intent/jokes▫Communication▫Definiteness

© 2010Jack Friery, Esq.

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Offer (con’t)•Essential terms:

▫Price ▫Subject matter▫Parties▫Time of performance

© 2010Jack Friery, Esq.

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Offer (con’t)•Communication to offerees•Are ads offers?•Revocation of offers•Expiration of offers

© 2010Jack Friery, Esq.

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Acceptance•Defined

▫Legal manifestation of assent▫Saying “yes” the right way

•Mirror image rule▫Common law rule▫Clarifications

© 2010Jack Friery, Esq.

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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.

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Acceptance (con’t)•How to accept

▫Conduct▫Words

•Mailbox rule▫Acceptance effective when mailed?

•Silence as acceptance▫Common law

© 2010Jack Friery, Esq.

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Consideration•Defined•Contracts vs. gifts•Mutuality

▫Benefit?▫Detriment?

© 2010Jack Friery, Esq.

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Consideration (con’t)•Past consideration •Moral consideration•Illusory promises•Preexisting duties•Is the consideration sufficient?

▫One dollar

© 2010Jack Friery, Esq.

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Consideration (con’t)•Contract modifications

▫New consideration needed?•Accord & satisfaction

▫Good-faith disputes

© 2010Jack Friery, Esq.

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Legality & Capacity•Capacity

▫Age Necessaries

▫Mental capacity Temporary Declared incompetence

▫Intoxication▫Does other party have to be aware?

© 2010Jack Friery, Esq.

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Legality & Capacity (con’t)•Legality:

▫Inherently illegal▫Technically illegal▫Severability clause

•Voidability

© 2010Jack Friery, Esq.

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Contractual Intent•Intent defined: subjective or objective?•How would a reasonable person view

these facts and circumstances?

© 2010Jack Friery, Esq.

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Mistake•Mistake

▫Unilateral Examples Remedy? (limited)

▫Bilateral (mutual) Rescission Reformation

© 2010Jack Friery, Esq.

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Fraud & Duress•Fraud & misrepresentation

▫Negligent misrepresentation vs. active fraud

•Duress▫Physical▫Economic▫Psychological/mental▫Form contracts: enforceable?

© 2010Jack Friery, Esq.

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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.

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Writings (con’t)•What’s a “writing”?

▫Cocktail napkin?▫Series of incomplete writings?▫Emails?

•Parol evidence rule▫Conflicting verbal and written deals

© 2010Jack Friery, Esq.

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Third Parties•Assignment

▫Rights•Delegation

▫Duties•Contract novation—switching a party

© 2010Jack Friery, Esq.

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Enforcement by a Third Party•Third party beneficiaries•Mentioned in contract?•Differing status—can a 3rd party sue

either party to the contract?▫Creditor▫Donee

© 2010Jack Friery, Esq.

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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.

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Contract Conditions(con’t)•Conditions

▫Precedent▫Subsequent▫Concurrent▫Implied-in-fact▫Implied-in-law

© 2010Jack Friery, Esq.

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Performance & Discharge of Obligations•Effect of performance•Performance/breach

▫Material breach▫Minor breach▫“Punch list” items

•Rescission by the parties

© 2010Jack Friery, Esq.

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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.

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Discharge of Obligations (con’t)•Insolvency

▫Bankruptcy—is the contract over, or is it still being performed? Executory contracts Executed contracts

© 2010Jack Friery, Esq.

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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.

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Breach, Damages & Remedies•Compensatory damages

▫“Make whole” damages Buyer—”cover” Seller—lost profits

•Incidental damages▫Expenses

•Consequential damages▫Test: foreseeabilty

© 2010Jack Friery, Esq.

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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.

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E-Contracts•Electronic contracts

▫Email?•Electronic signatures--Federal E-SIGN Act

▫Defined▫Effect

© 2010Jack Friery, Esq.

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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.

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UCC (con’t)•General principles

▫Merchant or non-merchant?▫Good faith & fair dealing▫Course of dealing▫Trade usage & custom

© 2010Jack Friery, Esq.

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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.

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UCC (con’t)•Writing requirement

▫Rule▫Exceptions

•Effect of missing terms▫Fill-in-the-blanks rules

© 2010Jack Friery, Esq.

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UCC (con’t)•Warranties

▫Express Samples/models/catalog

▫Implied Merchantability (Hong v. Marriott) Fitness for a particular purpose

© 2010Jack Friery, Esq.

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UCC (con’t)•Shipment terms

▫Risk of loss▫Role of insurance

•Written request for adequate assurances

© 2010Jack Friery, Esq.

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UCC (con’t)•Performance•Breach•Damages

▫Buyer▫Seller

•Statute of limitations

© 2010Jack Friery, Esq.

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ConclusionQuestions?

© 2010Jack Friery, Esq.

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