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Contracts1-Steve Yang

Contracts1-Steve Yang - Steven Yang Professor Weiskoff...

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Steven Yang Professor Weiskoff – Contracts - 1 Contracts I. Introduction: The meaning of contract-- consists of one or more legally enforceable promises. No question for the law of contracts arises unless the dispute is one over a promise-commitment as to future behavior. History : Covenant, debt, assumpsit Unilateral Contract: one in which a promise is made in exchange for actual performance as opposed to a promise to perform. Bilateral Contract: formed by a mutual exchange of promises by the contracting parties. Distinction between unilateral and bilateral contracts: once parties exchange promises in bilateral contracts they are obligated to perform their promises. In a unilateral contract the non-promising party is not obligated to perform and the promissors obligation does not arise until the requested act is completed. In a unilateral contract there is a promise on one side only, there is a duty on one side only, and a right on the other side. II. Enforceability: The purpose of damages for breach of contract is to compensate the injured party (not to award punitive damages). A disgorgement of the breaching party’s profits would be punitive. Remedy for breach is usually with money. Punitive damages are rarely awarded, exceptions are “bad faith breaches.” Efficient breach: (Pareto efficiency)- the view that a party should be allowed to breach a contract and pay damages if doing so would be more profitable (even after compensating the other party). Two fundamental assumptions made by courts in enforcing promises 1. Law is concerned mainly w/ relief of promises to redress breach and not with punishment of promisors to compel performance. 2. Relief granted to the aggrieved promisee should generally protect the promisee’s expectation by attempting to put the promise in the position in which it would have been had the promise been performed. Three Interests: Restitution : Return the fee (refund)-focused on the gain of the breaching party not the loss the breachee. Reliance : Puts plaintiff back in the position he occupied just before the parties entered upon the agreement. (Restoring the status quo) Expectancy: difference in value between what was promised and what was delivered Specific Relief: (Injunctions) equitable relief. Mandatory injunction: enforces an action Prohibitory injunction: prohibits an action “Bad Faith Breach”: Punitive damages not traditionally granted for breach of contract but some courts have departed from this strict rule when the breach is particularly vexatious. (example insurance company has a policy not to pay on first request).
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CONSIDERATION : “A promise must be paid for to be contractually binding.” To be legally enforceable, a promise must have the necessary consideration. A) Bargained for Exchange:
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