ucsd—contract law
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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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