Justin Straub Business Law I Chapter 16: Contracts: Performance and Discharge 1.

A party may be discharged from a valid contract by: A. A condition occurring or not occurring. B. Full performance or material breach by the other party. C. Agreement of the parties. D. Operation of law.

Chapters 16-18 Outline

DE Question 239: The elements of a valid contract include: E. All of the above (agreement, consideration, legality, capacity) II. Conditions Definition: Possible future event, the occurrence or non-occurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract. 1. Types of Conditions: A. Conditions Precedent. B. Conditions Subsequent. C. Conditions Concurrent. I. Express. II. Implied in Fact. III. Implied in Law III. Discharge by Performer

1. The Contract comes to an end when both parties fulfil their respective duties by performing the acts they have promised. 2. Types of Performance: A. Complete Performance B. Substantial Performance (minor breach) DE Question 18: The Non-breaching party normally may not recover punitive damages in a breach of contract claim, True or False? Ans. T C. Performance to the Satisfaction of One of the Parties or a Third Party IV. Material Breach of Contract 1. Breach of Contract: the non-performance of a contractual duty. 2. Material Breach occurs when there has been a failure of consideration. Discharges the nonbreaching party from the contract. 3. In a non-material breach, the duty to perform is not excused and the non-breaching party must resume performance of the contractual obligations undertaken. 4. Case 17.2: Van Steenhouse v. Jacor Broadcasting of Colorado, Inc. (1998). V. Anticipatory Repudiation 1. If before performance is due, one party refuses to perform his or her contractual obligation, this results in a material breach 2. The non-breaching party should not be required to remain ready and willing to perform when the other party has repudiated the contract. contract. 3. The non-breaching party should have the opportunity to seek a similar contract elsewhere.

4. Case 16.3 Manganaro Corporation v. Hitt Contracting Inc. (2002) VI. Discharge by Agreement 1. Discharge by Rescission 2. Discharge by Novation A. Previous Obligations B. All parties agree to new contract. C. Extinguishment of old obligations. D. New contract formed 3. Discharge by Substituted Agreement 4. Accord and Satisfaction VII. Discharge by Law 1. Alteration of the contract. 2. Statutes of limitations 3. Bankruptcy DE Question 166: Filing a petition for bankruptcy automatically stays most legal actions filed against the debtor, True or False? Ans: True 4. Impossibility or Impracticability VIII. Impossibility or Impracticability of Performance 1. Objective Impossibility of Performance A. Death or incapacitation prior to performance

B. Destruction of the subject matter C. Illegality in performance 2. Commercial Impracticability. A. Circumstances not foreseeable B. Case 16.4: Cape-France v. Estate of Peed (2001) 3. Frustration of Purpose 4. Temporary Impossibility Chapter 17: Contracts: Breach of Contract and Remedies I. Most Common Remedies: 1. Damages 2. Rescission and Restitution 3. Specific Performance 4. Reformation 5. Recovery Based on Quasi Contract. II. Damages 1. Compensatory Damages Direct losses. A. Sale of Goods: Differences between contract and market price B. Sale of Land: specific performance DE Question 109: The UCC, not Common Law, covers the sale of real-estate and services, True or False? Ans: False

C. Construction Contracts: varies 2. Consequential (Special) Damages foreseeable losses. A. Breaching party is aware or should be aware, cause the injury party additional loss. B. Case 17.1: Hadley v. Baxendale (1854) 3. Punitive Damages punish or deter future conduct DE Question 143: Punitive damages are intended to punish the defendant, True or False? Ans: True A. Generally not available for mere breach of contract. DE Question 367: Damages intended to punish a defendant and deter the defendant and others from engaging in the same tortious conduct in the future are called? Ans: C. Punitive B. Usually tort (e.g.; fraud) is also involved. 4. Nominal Damages no financial loss. A. Defendant is liable but only a technical injury. III. Mitigation of Damages 1. When breach of contract occurs, the innocent party is held to a duty to reduce the damages that he or she suffered. 2. Duty owed depends on the nature of the contract. 3. Case 17.2: Fujitsu Ltd. v. Federal Express Corp. (2001) IV. Liquidated Damages 1. A contract provides a specific amount to be paid as damages in the event of future default or breach of contract.

A. Penalties I. Specify a certain amount to be paid in the event of a default or breach of contract and are designed to penalize the breaching party. V. Rescission and Restitution 1. Rescission A. A remedy whereby a contract is cancelled and the parties are restored to the original positions that they occupied prior to the transaction. 2. Restitution. A. Both parties must return goods, property or money previously conveyed. VI. Specific Performance 1. Equitable remedy calling for the performance of the act promised in the contract. 2. Remedy in cases where the consideration is: A. Unique (land) B. Scarce C. Not available remedy in contracts for personal services. VII. Reformation. 1. Equitable remedy allowing a contract to be reformed, or rewritten to reflect the parties true intentions. DE Question 307: Mark and Jacob enter a contract in which Mark agrees to deliver cement to Jason at a construction site. They neglect to include a price in the agreement. The court will: C. Determine a reasonable price for the cement and insert it into the context.

2. Available when an agreement is imperfectly expressed in writing VIII. Recovery based on Quasi Contract. 1. Equitable theory imposed by courts to obtain justice and prevent unjust enrichment. 2. Parties seeking quantum meruit must show the following: A. A benefit was conferred to the other party B. Party conferring did so with the reasonable expectation of being paid C. The benefit was not volunteered. D. Retaining benefit without paying for it would result in unjust enrichment of the party receiving the benefit. IX. Election of Remedies 1. Doctrine created to prevent double recovery. 2. Non-breaching party must choose which remedy to pursue. 3. UCC rejects election of remedies A. Cumulative in nature and include all the available remedies for breach of contract. X. Contract Provisions and Limiting Remedies 1. Exculpatory Clauses. A. Provisions which state that no damages can be recovered. DE Question 290: The doctrine of caveat emptor means? Ans: C. Let the buyer beware. 2. Limitation of Liability Clauses A. Provisions that affect the availability of certain remedies.

Chapter 18: E-contracts I. Online Contract Formation: 1. Online Contracts should include: A. Remedies for buyer B. Statute of limitations C. What constitutes buyer's acceptance D. Method of Payment. E. Seller's Refund and Return Policies F. Disclaimers of liability. G. How seller will use buyer's information (Privacy) 2. Dispute Settlement Provisions. A. Choice of Law B. Choice of Forum I. (e.g.; E-Bay uses online dispute resolution) 3. Displaying the Offer (via hyperlink). 4. How Offer Will be Accepted. A. Checkout B. I Accept Button to click II. Online Acceptance 1. Click-on agreements

2. Shrink-wrap agreements A. Contract terms are inside the box B. Party opening box agrees to terms by keeping merchandise. 3. Enforceable Contract Terms (UCC 2-204) 4. Additional Terms A. Case 18.1: Klocek v. Gateway Inc. (2000) 5. Click-On Agreements occur when Buyer checks out or clicks on I Accept button on Sellers website or when software is installed. A. Case 18.2: iLan Systems Inc. v. NetScout Service Level Corp. (2002) 6. Browse-Wrap Terms. A. Case 18.3: Specht v. Netscape Communications (2002) III. E-Signatures. 1. E-signature Technologies. A. Asymmetric Cryptosystem. B. Cyber Notary 2. State Law Governing E-signatures A. Uniform Electronic Transactions Act (1999) 3. Federal Law. A. E-SIGN (2000) gives e-signatures and e-documents legal force IV. Partnering Agreements

1. Sellers and buyers agree as to protocols to create online agreements. 2. Useful for electronic inventory (Just-in-time) V. UETA 1. Purpose is to remove barriers to forming electronic commerce 2. E-Signature is electronic sound, symbol or process...associated with a record and...adopted by a person with intent to sign the record. 3. UETA applies only to e-records and e-signatures relating to a transaction. 4. E-SIGN explicitly refers to UETA 5. Provides that E-SIGN is pre-empted by state passing of UETA 6. BUT state law must conform to minimum E-SIGN procedures 7. Parties must agree to Conduct Transactions Electronically. A. A party can opt-out of UETA terms. 8. Attribution process to ensure person sending an electronic record is in fact the real person. 9. Electronic Errors. 10. E-Mailbox Rules A. Dispatched when leaves control of sender B. Received when enters recipient's processing system. DE Question 276: The mailbox rule means that? Ans: C. In some cases, a properly dispatched, or sent, acceptance is effective even if the offeror never received it. VI. UCITA

1. Applies to computer information. 2. Software is not a good but intellectual property 3. Software is licensed, not sold 4. License contract gives buyer (licensee) only specific rights. 5. Attribution and Authentication. 6. Mass Market Licenses.