Constitutional Law 05 15 2013 I NATURE OF CONTRACTS chpt 9 Nature of Contracts Not every promise is legally enforceable But when a set of promises has the status of contract a person injured by a breach of that contract is entitled to call on the government courts to force the breaching party to honor the contract Contract law is ancient law but has evolved to reflect social change Basic elements of a contract Agreement Consideration Capacity Lawful object Contract classifications Valid contract one that meets all of the legal requirements for a binding contract Unenforceable contract one that meets the basic legal requirements for a contract but may not be enforceable because of some other legal rule Voidable contract one in which one or more of the parties have the legal right to cancel their obligations under the contract Void contract agreements that create no legal obligations and for which no remedy will be given Express contract parties have directly stated the terms of their contracts orally or in writing at the time the contract was formed Implied contract when the surrounding facts and circumstances indicate that an agreement has been reached o contract is executed when all of the parties have fully performed their duties and is exucatory until such duties have been fully performed Sources of contract law Common law Uniform commercial code sale of goods only Conventional on the international sale of goods CISG Non contract obligations Quasi contract as if like I don t have a contract but I want one as if I have one Promissory estoppel someone has made a promise that you have relied on to your detriment o Promise o Reasonable reliance o Actual reliance o injustice UCC Sale of Goods Goods tangible movable personal property Does not apply to Sale of services Intangible property stocks intellectual property Real estate Mixed sale situation whether goods or services predominates in the contract vs gravamen test focuses on part of contract at issue Four elements promissory estoppel Promise Reasonable reliance Actual reliance Injustice Pass v Shelby Aviation Facts Plaintiff s descendants killed in plane crash Crash of single engine Piper airplane owned and piloted by Max E Pass Jr Pass and wife Martha Pass hit turbulence over Alabama and crashed and both died Defendant appellant is fixed base operator that services aircraft at Charles Baker Airport in Millington TN Approximately four and a half months prior to crash Pass took plane to Shelby Aviation for inspection and service In servicing aircraft Shelby replaced both rear wing attach point brackets on plane Defendant argued for summary judgment Argued that transaction not subject to Article 2 of UCC Uniform Commercial Code because it was predominantly service not good Procedural history Three and a half years after crash Max Pass Sr and Shirley Williams parents of husband and wife respectively filed suit Alleged that rear wing attach point brackets were defective because they lacked bolts Asserted a claim against defendant for breach of express and implied warranties under Article 2 of Uniform Commercial Code Trial court denied defendant s motion to dismiss Transaction subject to warranty provisions of Article 2 of Uniform Commercial Code Permission for interlocutory appeal granted Interlocutory appeal in breach of warranty case Appeal of a ruling by a trial court before trial has actually ended Appeal of denial of motion to dismiss Issues Whether denial of dismissal of motion to dismiss was appropriate Holding Transaction in this case was predominantly the provision of a service not subject to the warranty provisions of the UCC and thus dismissal of movement for summary judgment was inappropriate Hurdis v Town of North Providence Holt v Home Depot USA II CONTRACTS PERFORMANCE REMEDIES Chpt 18 Breach of contract Material breach did not perform contract at all or performed it very terribly Non material breach substantial performance did not perform the contract completely difference not always clear o ask did the breach deprive the party of reasonable expectation damages Factors magnitude of breach good faith timing extent that injured party can be compensated by Anticipatory breach occurs if a party indicates the party is unwilling or unable to perform Excuse for non performance o impossibility death supervening illegality contract was legal when made but when formed it became illegal destruction of subject matter o impracticality Remedies for breach of contract o Legal remedies money damage Compensatory damages nominal damages liquidated contractual damages and in certain circumstances punitive damages o Equitable remedies Specific performance or injunction o Restitution Legal Remedies Compensatory Damages Loss of value of performance the plaintiff expected expectation interest or losses suffered in reliance on other party promises reliance interest o Seller failure to perform example difference in contract price and market price o Seller defective performance difference in value as warranted and value in defective condition Incidental after breach to avoid future loss Limitations on legal remedies Reasonable certainty Foreseeable Duty to mitigate III CONTRACTS OFFER Chpt 10 Offer a promise Conditional on an act return promise or forbearance refraining from doing something o Offeror makes the offer o Offeree receives the offer 1 agreement offer initial promise acceptance Requirements for an offer Parties to a contract must have o Intent to enter binding agreement Courts use the objective theory of contracts would a reasonable person judge the offeror s words and acts in the context of the cidcumstances to signify intent not obviously joking haggling eqivocating o Terms must be definite o Offer must be communicated to the offeree Special problems Termination of an offer o Action of the parties Revocation any time before acceptance Rejection Counteroffer o Operation of law Lapse of time Death or insanity of either party Destruction of the subject matter Intervening illegality Definiteness of terms Common law o Parties price subject matter quantity time of performance o Policy ID breach and give remedy UCC o Open terms okay o Gap filing rules o Policy reasonably certain basis to provide a remedy Advertisements negotiate General rule not offers but are invitations to offer or o Flying handbills catalog listing prices for sale ads in newspaper or yard o Sales puffery is not an offer Meram v MacDonald Armstrong v Rohm Haas Co
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