Class Notes for Exam 1 January 23 2013 Chapter 10 Third party rights o Privity of Contract Only original parties to a contract have rights and liabilities under the contract Ex I put flowers on someone s lawn and then someone else pays me o Intended Promisee intended to confer on the beneficiary the right to bring suit to enforce the contract Ex Someone can sue me because I didn t plant flowers but someone can t sue me if I didn t know they were for someone else o Unintentional beneficiary cannot sue Performance and Discharge o Discharged by A condition occurring or not occurring Possible future event that will trigger performance of a legal objection Must be fulfilled before a performance can be required 1 Precedent 2 Subsequent 3 Concurrent o When performance is conditioned on the other party s performance or tender o Ex Buying something at a store Express and Implied Understood to be part of the contract Full performance Did what they each promised 1 Complete 2 Substantial Party in good faith performs substantially all of the terms can enforce the contract o Be as specific as possible in contract o Performance to the satisfaction of another Reasonable person standard Material breach Not substantial Excuse party from completing Minor Non material breach o Duty to perform is not excused o Must resume performance of contractual obligations undertaken Anticipating Repudiation o One party refuses to perform contractual obligations o Material breach Can sue for damages o Time for performance Reasonable time Cannot sit on rights Agreement of both parties Discharge by rescission o Must make a new contract oral or written o Under UCC contracts MUST be in writing o Must have additional consideration with new contract Discharge by Novation Both parties agree to substitute a new third party for one of the original parties o Requirements See powerpoint Settlement Agreement Accord and Satisfaction o Accord contract to perform existing contractual duty not yet discharged o Satisfaction Performance of the accord Operation of law Alteration of contract Innocent party discharged after material alteration Statute of Limitations Bankruptcy o Impossibility or Impracticability of Performance Supervening event was not foreseeable Death incapacitation Destruction of subject matter Change of law makes contract illegal Temporary impossibility Commercial Impracticability contract Frustration o Remedies Damages Extremely difficult and costing but unknown at time of Compensatory Damages Designed to compensate non breaching party for loss of bargain o Sustained out of pocket o Standard measure Difference between value of promised performance and value of actual performance o Measurement of damages for construction Consequential Special Damages Foreseeable losses o Breaching party should be away Punitive Damages Punish or deter future conduct o Generally not available for mere breach of contract o Usually fraud is involved Nominal Damages No financial loss Mitigation of Damages o Innocent injury party is held to a duty to reduce damages that he she suffered o Keep damages at a minimum o Depends on nature of contract o Ex Breaking a lease Liquidated Damages Specific amount agreed to be paid as damages in the event of a future breach Penalties Generally unenforceable Equitable Remedies beginning Rescission and Restitution Puts back where they were in the o Not always hand in hand o Restitution not always necessary because money already went through or preparation fees o Trying to be even Reformation o Allowed to be rewritten to reflect parties true intentions o Ex Accidental put 3 hour instead of 30 hour o Fraud or Mutual Mistake o Quasi Contract Remedy created by courts to obtain justice and prevent unjust enrichment Recovery in quantum meruit as much as she deserves compensated the average amount Purpose of Doctrine Prevent double recovery o Cannot be better off than before contract o UCC rejects election of remedies Specific performance Waiver of breach Accepts defective performance of contract o Waiving of one breach does not waive the next one