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Sources of contract law

Common law
uniform commercial code (UCC0
International Sales Contract Law (CISG)


UCC governs...

contracts for the sale and lease of goods


what makes a contract

a legally binding agreement between two or more parties who agree to perform or refrain from performing some act now or in the future
-promises, favors, gifts and contracts


requirements for common law contracts

1. agreement
2. consideration
3. contractual capacity
4. legality


define "agreement"

an offer and an acceptance


define "consideration"

-"bargained for" consideration
-something of value received or promised such as money to convince the person to make the deal. -does not have to be of equal value, but must show there was exchange e.g. selling a house for $1
-prior contracts or something you already have a legal obligation to do is not a sufficient consideration
-negated by being able to demonstrate fraud, coercion or distress, language barrier, mental capacity or anything that would make them an inferior bargaining party


define "contractual capacity"

law must recognize the parties as possessing characteristics that qualify them as competent


define "legality"

purpose of contract must be to accomplish something legal, and not against public policy


unilateral contract

one side has all the risk. one side will perform and the other will pay later
e.g. any service contract
NOT a simultaneous promise for a promise
high risk for the common man so special rules are in place


bilateral contract

both parties perform at the same time


executory contract

one that has not been performed yet


executed contract

one that has already been performed


illusory consideration

fiction, imagined
consideration for the act never actually happened
e.g. loose promise for a bonus "we'll see"


accord and satisfaction

even though performance wasn't exactly as specified, the parties agree it's good enough to satisfy the contract
-some money is paid based on contract



release the right to sue over a contract


covenant not to sue

typically included as part of a release



reverses a contract.
-can be reversed as of today, or reverse it back to the very beginning of the contracg


compensatory damages

covers direct losses.
-you buy something and its defective, you're awarded cost of what you paid plus the time value of money.
-pay your own court costs
-usually written into a contract to protect you incase it comes up


mitigation of damages

you must try to do everything in your power to come to court with clean hands. must show you've tried to help yourself, try to solve your own problem and minimize the damages to you


nominal damages

suing for a small amount just to prove that the other party has done wrong and prove a point.
it'll create a record of their breach of contract and wrong-doing


waiver of breach of contract

even though the other party breached, you agree not to sue


Hadley v. Baxendale

limitations on consequential damages.
-where special circumstance apply, the parties must communicate them, you can't assume the other party just knows


bad faith

breaking a contract to sell to someone else at a higher price
-illegal in the US
-not necessarily illegal outside the US


damages in equity

court forces a non-monetary payment. requires specific performance
-doesn't apply well to labor contracts--seems too much like slavery (except union contracts)
e.g. union strike- can order teachers back to work


anticipatory repudiation

you must communicate with the other party as soon as you anticipate a breach.
-gives either side time to cancel the contract and find a substitute before the breach actually occurs
-also gives you a chance to amend the contract. the goods will be late--can you work around that?



substitute a new buyer or seller into the contract (3rd party) so no breach occurs


consequential damages

breaching party is responsible for lost profit damages or direct yet unforeseeable damages that arise from the breach
e.g. homeowners rental fees from our negotiating exercise


punitive damages

monetary damages to punish and deter wrongdoing and prevent it from happening again
-gives warning to chill the industry


rescission ab initio

restore both parties to before the contract even started


rescission ab initio

restore both parties to before the contract even started