Today Discuss chapters 16 and 17 Discuss assignment extra credit Exam 2 Misrepresentation Four elements to analyze 1 Material fact Effect on reasonable person s decision to enter the contract 2 Intent to deceive By words By conduct By silence 3 Justifiable reliance on misrepresentation 4 Harm to collect damages but not for rescission In Class Assignment 1 Is it possible for a seller to be liable for contractual misrepresentation if the seller remains completely silent about a known defect and the buyer never asks about it 2 If a seller blatantly lies about an unimportant minor detail in the contract is the seller likely liable for contractual misrepresentation Chapter 16 Statute of Frauds Writing is interpreted broadly Five contracts that must be in writing not verbal Real estate Cannot possibly be performed in one year Collateral secondary guarantor contracts Marriage as consideration prenups UCC sale of goods over 500 banking Exceptions to Statute of Frauds Sometimes oral contracts are enforceable even though they are supposed to be in writing 1 Partial Performance 2 Promissory Estoppel 3 Admission No Writing No Problem Oral contract partial performance can equal exception to writing requirement Example Stillwater Bicycle Store Commercial lease oral contract 5 years 15 sq ft Two other exceptions also apply Admission Promissory estoppel promise reliance injustice Common Law Form over substance Flexibility to do justice More litigation Culture of lawsuits Chapter 17 Three Concepts Assignment Delegation Third Parties Assignment Definition Assignor and assignee Focus is usually on assignment of rights But obligations are also included Assignment means Entire contract is given to a new party a third party All rights and obligations of the original party are extinguished after the date of assignment Assignment Examples Business transactions Real estate mortgage Loan originator makes loan to home owner Loan originator transfers loan to bank servicer Merger agreement HealthTest Co has a contract with DataAnalytics Co HealthTest Co is acquired by Insurance Co Contract may require consent for assignment Delegation Delegator and delagatee Narrow focus on delegation of obligations Contract obligations are given to a third party Real estate mortgage example Loan originator bank servicer home owner Can home owner delegate obligation to pay to tenants Exception Personal Services Consent required to assign or delegate contracts for personal services even if the contract is silent Piano teaching example Anton Barney James Julie Mike Mary Consent of service provider is required for assignment Consent of customer is required for delegation Third Parties Privity of Contract party to the contract Third Party not a party to the contract Intended Third Party Beneficiary Third party that can sue to enforce a contract Incidental Third Party Beneficiary Third party that can not sue to enforce a contract Third Party Beneficiaries Business contracts often state that there are no third party beneficiaries But foreseeability is the analytical focus Did the third party have involvement in the contract Was the third party mentioned in the contract Example breach of skyscraper construction contract Third party beneficiaries nearby residents vs specialty glass contractor Intended beneficiary can sue after the party to the contract refuses Condominium Association Condo owners agree to abide by certain rules including keeping appliances in order All contracts are between individual owners and the condo association Can one condo owner sue another for breach of contract Court yes each condo owner is an intended third party beneficiary Life Insurance Single mom with daughter in college Daughter is named as intended third party beneficiary Daughter has rights under the contract even though she is not a party to the contract Key man insurance on executives Company insurance on employees Wal Mart example Schedule Coming soon D2L study guide for Exam 2 D2L assignment due in class on exam day Thursday 10 22 bonus material on intellectual property Tuesday 10 27 clicker review day Thursday 10 29 Exam 2