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Unformatted text preview: Performance of Contracts and Remedies for Breach PERFORMANCE OF CONTRACTS AND REMEDIES FOR BREACH Why can't I change the terms of my contract or extend it without consequences? I. Overview The first set of defenses to the enforcement of contracts in this chapter revolves around the issue of free will. Where free will is compromised, mutual assent is also compromised, and the agreement may not stand as a contract. What makes this area of the law difficult it that courts and juries are asked to exercise 20/20 hindsight when trying to determine what the parties were thinking when they were embarking on the road to contract formation. The subjectivity of measuring intent has always been a troublesome puzzle to unravel; yet without it, the objective facts placed before a court may not show the reality of consent. Because of the potential harshness of a bad contract, courts want to be sure that the assent element of a contract is just that--free and real consent to the agreement. Factors that mitigate or diminish the genuineness of assent can be tracked on a scale of incremental culpability. At the bottom of the scale is an innocent mistake which can be either unilateral of bilateral. In a contract mistake, one or both of the parties is acting under an erroneous belief about some aspect of the contract. Normally, if only one (unilateral) of the parties is mistaken, there will be no grounds for rescission unless that mistake is coupled with some sort of bad faith or abuse on the part of the nonmistaken party, i.e., one step further up the culpability ladder. Where the mistake is mutual (bilateral), either party may seek rescission if the mistake is considered material, i.e., so important that no real meeting of the minds ever occurred. The next increment up the slope of culpability is found in the area of misrepresentation or concealment. The shade of gray turns darker when a person is actively seeking to mark the cards or pass them under the table. Here we can see that freedom of assent is even further compromised than in mistake alone. Now the element of scienter (guilty mind) enters the picture, and the grounds for rescission are greatly increased. If the misrepresentation is material, known to be so by the maker, made with the intent to deceive, and is justifiably relied upon by an innocent and injured party, then the elements of fraud are in place. With a finding of fraud, the injured party may seek rescission and/or civil damages. In addition, the state may choose to prosecute the wrongdoer under the penal code. Contract fraud not only sits at the top of the culpability scale but can also be found at the top of the charts on the most popular white-collar criminal list. Its many permutations can be found in virtually all aspects of commercial activity, and as with so many areas of criminal behavior, the consumer pays the ultimate cost of these crimes through passed on costs for insurance, credit, and any number of other services undermined by these sorts of activities. Another highly sensitive area of mutual assent is found in the law of undue influence. Undue influence involves taking away a person's free will through any manner of physical, emotional, or psychological manipulation. It can happen in any relationship, and where it is alleged, the person claiming to be the victim of undue influence has the burden of proof in showing the alleged duress. One important exception to this general rule involves persons who act in a fiduciary role. Fiduciary is a term derived from the Latin 111 Chapter 12 word fides meaning faith, honesty, confidence, or trust. A person in a fiduciary role is entrusted with acting for the benefit of another. Most professionals in law, accounting, the healing arts, and business find themselves bound by fiduciary rules to one degree or another. As for the fiduciary, the burden of proof is now reversed. In dealing with their respective clients, patients, or beneficiaries, a contract is presumed to be under undue influence, and the burden of proof is on the fiduciary to show that the transaction is at arm's length, i.e., fairly arrived at. Most all of the so-called "learned professions" have codes of conduct and canons of ethics designed to address issues of this sort. The origins of the writing requirement for certain contracts are found in two roots: one historical and one practical. The historical root goes back to early English common law as developed under William the Conqueror and his successors. Status in that society was almost entirely measured by how much land one had control over. Being Lord of the Manor meant privilege, power, and rank. Thus contracts involving the transfer of land ownership were of utmost importance because of the bearing they had on social status. These important contracts were evidenced by highly ritualized written processes of titled transfers to land. The original title to the land was often traceable to a knight's fief or fee for services provided to the sovereign. From this phrase, the highest recognized ownership in land today is still called fee simple absolute. The second root of the writing requirement is found on a more mundane level, having less to do with knights in shining armor and more with practicality. A writing is considered the best and most neutral evidence of the parties' intent at the time the agreement was entered into. The writing does not lose its memory; it does not take sides. Thus when English lawmakers wrote the Statute of Frauds, they decided the statute would serve them with the best of both worlds--impose a writing requirement on certain contracts to act as the best evidence in a court of law. The English version of the Statute of Frauds has been carried over to our legal system virtually intact for over three hundred years. All U.S. states have adopted their own versions of the statute, and they are virtually uniform in that they require contracts involving interests in land, consideration of marriage, contracts that cannot be performed within one year, third party guarantees, and others to be in writing. The most significant addition to this list came with the adoption of the Uniform Commercial Code. Under the provisions of the UCC, contracts for the sale of goods for more than $500 need to be in writing. Thus, the first question which needs to be answered is: does the statute cover this contract or not? Once you have decided the contract is covered, what are the effects of having failed to use a writing? Several possibilities may occur at this juncture. The parties may proceed to voluntarily perform the contract. But if one or both decide to assert the statute, its teeth are found in it being used as a defense to enforcement, i.e., if the party against whom contract enforcement is sought has not signed, it may not be enforced against him or her. There are equity-based exceptions to this general rule based on partial performance and promissory estoppel. Once the contract is finally reduced to writing, the Parol Evidence Rule takes hold. The rule must be reviewed along with its exceptions. The exclusion face of the rule states that the writing is intended to express the final intent of the parties. All prior or contemporaneous statements must ultimately have been reflected in writing and will remain barred from the interpretation of the instrument. This provision is designed to prevent a fraudulent rewrite of the document after the fact with new evidence. The converse is found in the exceptions to the parol evidence rule. The exceptions to the parol evidence rule are designed to let in additional information not shown on the original writing in certain limited circumstances. These special circumstances are grounded in public policy and simple practical necessity. Public policy provides an overriding basis in cases involving fraud, misrepresentation, deceit, bad faith, power to avoid based on age or mental capacity, duress, undue influence, and mistake. All these elements are considered in the best interest of public policy and will be allowed into evidence, notwithstanding the statute if the facts warrant it. The second area of exception to the parol evidence rule involves the explanation of ambiguities. If the contract, as written, contains ambiguous language, parol evidence is allowable to clear the ambiguity as 112 Performance of Contracts and Remedies for Breach long as it is consistent with the original terms. The nature of the evidence allowable under this rule can range from oral statements made by the parties to entire standards of usage and trade used by a particular industry. This exception is particularly important to contracts covered by the UCC. An underlying theory is prevention of fraud. Fraud can be prevented by either keeping evidence in or out depending on the individual equities knocking at the contract door. The other objective of this chapter is to examine the basic rules with regard to the discharge of contracts. The rules of performance and breach of contract are rooted in common sense. Most contracts are completed legally when the parties have lived up to their reciprocal obligations under that contract. Conversely, a breach is found when a failure of performance is not somehow excused by law. We are expected to live up to our performance obligations and no more. If those obligations are not met, breach of contract is the result. The evaluation process of contract performance issues is best broken down into time sequence subparts: precontract, during the contract, and postcontract. In precontract issues, what are the covenants entered into before performance is to be initiated? Were there any conditions that may affect the rights and duties of the parties to contract? Conditions are certain events that have a triggering effect on the obligations of contract. The timing of conditions can be superimposed upon the contract. A precondition or condition precedent calls for the event to take place before the contract goes into effect. For example: "I will buy this car if my mechanic signs off on the engine inspection." A concurrent condition calls for two or more events to coincide in time. Consider an escrow where a third party is used as a holder of property and is instructed to act vis--vis that property only upon satisfaction of mutually dependent acts of third parties. This is a common form of property transfer used in the sale of real estate. The escrow holds the deed to the property from the seller until the buyer has delivered the purchase price in a form acceptable to both parties. A condition subsequent is found where performance may be excused by a certain event after the contract was entered into. For example, a parolee is allowed to stay out of prison as long as the conditions of the parole release are met. There are certain circumstances that will act to excuse nonperformance. These circumstances are also based in common sense. Can it really be reasonable to expect personal service contracts to be enforced after death or disability? Or does it make sense to accept performance after destruction of a unique subject matter of the contract? For example, if you bid millions of dollars for a Van Gogh's "Irises" at an auction, and it was destroyed by lightning, is it reasonable to expect the seller to come up with an exact duplicate? A third form of excuse is found in subsequent illegality. If a contract was legal at the time it was formed, but subsequent events have made its enforcement illegal, courts will no longer enforce its performance covenants based on the new illegality. In addition to excused nonperformance, there are a number of possible circumstances that may result in a discharge from any further contractual performance. These fall into two main categories: discharge by acts of the parties or by operation of law. Discharge by acts of the parties are voluntary postcontract formation events such as mutual rescission, reformation, accord and satisfaction, a substituted contract, or novation. In all these scenarios, the parties have, in effect, reentered the bargaining and created a new deal. In an operation of law discharge, something has happened where the court steps in and declares this contract performance obligation can no longer be enforced. Examples of such legal impediments to enforcement would include the running of a statute of limitation or bankruptcy. In both cases, any further performance under the contract has been legally ended. If, however, the contract duty has not been discharged, excused, or performed, and the absolute duty to perform has been breached, one must examine what remedies are available to the nonbreaching party. As noted in the previous chapter, certain questions must be answered in any contract analysis. In this chapter we will complete the following steps necessary to analyze most contractual issues: 1. Have all the elements of the contract been established?(offer, acceptance, consideration, legal capacity and legal subject matter) 2. Are there any defenses to the enforcement of the agreement? 113 Chapter 12 3. Are any third parties involved and what are their rights? 4. Are there any excuses for nonperformance? 5. If a breach has occurred what remedies are available? II. Hypothetical Multi-Issue Essay Question Mary Cheers is a pop singer who has been employed by the NFL franchise in Podunk to sing the national anthem at the football stadium before the weekly games for the next ten years. The contract is in writing with the terms mentioned above included. She is to be paid 1% of the ticket revenue for each game. This is also in the written agreement. Mary arrives at the stadium fifteen minutes before the scheduled starting time for the first game only to find that there are no fans. She tries to call the team officials but they are unavailable. Not knowing what to do, she goes onto the field and sings the Canadian National Anthem. She submits a bill to the team who refuses to pay her. Instead the team sues her for the extra money it cost them to get a replacement for her. It seems that the game went on but at a different stadium. Mary had not known that there were two football stadiums in Podunk. Mary then sues the team for her fee. What are the legal issues involved in the above set of facts? What are the possible results? III. Outline Defenses to the enforcement of a contract Lack of genuineness of assent Mistakes with possible rescission (undoing of the contract) Unilateral mistakes--one party is mistaken-nonmistaker can usually enforce Mutual mistakes--both parties are mistaken-rescission often possible Mutual mistakes of a past or existing material fact--rescindable Mutual mistake of value--nonrescindable Misrepresentation An assertion that is made that is not in accord with the facts Intentional misrepresentation--fraud Innocent misrepresentation 114 Performance of Contracts and Remedies for Breach Elements of Fraud The wrongdoer made a false representation of material fact The wrongdoer intended to deceive the innocent party The innocent party justifiably relied on the misrepresentation The innocent party was injured Types of Fraud: Fraud in the inception--void Fraud in the inducement--voidable by innocent party Fraud by concealment--voidable Duress Occurs where one party threatens to do a wrongful act unless the other party enters into a contract--not enforceable against innocent party Economic duress--often changes obligation if no way out Proving Undue Influence A fiduciary or confidential relationship must have existed between the parties The dominant party must have unduly used his or her influence to persuade the servient party to enter into a contract Voidable by the innocent party Statute of Frauds State statute that requires certain types of contracts to be in writing and signed by the party to be charged to be enforceable Typical Contracts Generally Required to Be in Writing (more explanation below): Contracts involving interests in land (unless partly performed) Contracts that by their own terms cannot possibly be performed within one year Collateral contracts where a person promises to answer for the debt or duty of another (guaranty contract) Promises made in consideration of marriage Contracts for the sale of goods for more than $500 Real estate agents' contracts Agents' contracts where the underlying contract must be in writing Further Explanation: Contracts Involving Interests in Land Real property The land itself as well as buildings, trees, soil, minerals, timber, plants, crops, and other things permanently affixed to the land Fixtures Personal property that is permanently affixed to the real property, such as built-in cabinets in a house, and becomes part of the real property Transfer of Other Interests in Real Property Mortgages--interest in real property as security for a loan Leases--rental Life estates--interest in land for person's lifetime Easements--right to use another's land 115 Chapter 12 One Year Rule An executory contract that cannot be performed by its own terms within one year of its formation must be in writing. May not need a writing if there is a possibility of performance. Collateral Promises Any secondary contract must be in writing. This does not include primary contracts. Promissory Estoppel An equitable doctrine that permits enforcement of oral contracts that should have been In writing. It is applied to avoid injustice. Needs inducement and foreseeable reliance. Sufficiency of the Writing Formality--contains essential terms of agreement Required signature of party to be changed Fax can constitute a suitable guarantee E-sign gives legal effect to electronic signatures (loosely defined) Integration of several writings allowed Incorporation by reference Standards of interpretation E-sign--federal statute recognizes electronic contracts as meeting writing requirements Parol Evidence Rule Parol evidence is any oral or written words outside the four corners of the written contract If a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract. Exceptions to the Parol Evidence Rule Parol evidence may be admitted in court if it: Shows that a contract is void or voidable Explains ambiguous language Concerns a prior course of dealing or course of performance between the parties or usage of trade Fills in the gaps in a contract Corrects an obvious clerical or typographical error Third-party Rights Assignment Obligor ? ? Assignor Assigns Rights (Obligee) ? Assignee ? Can assign all rights With a few exceptions Beneficiary ? No privity of contract ? Intended third-party beneficiary can enforce against the party who promised to render performance 116 Performance of Contracts and Remedies for Breach Promises of Performance Covenant A covenant is an unconditional promise to perform. Nonperformance is a breach. Conditions A conditional promise only becomes a covenant if the condition is or is not met Condition Precedent no duty until event has occurred Condition Subsequent duty to perform is excused by event occurrence Discharge of Contracts (excuses for nonperformance) By agreement Mutual rescission--both agree to a new deal Novation--agreed substitution of parties Accord and satisfaction--compromise by different performance By excuse in some jurisdictions Impossibility of performance--cannot be done Commercial impracticability--unforeseeable event causes impractical performance Frustration of purpose--can be performed but to no purpose By operation of law Remedies for Breach of Contract (nonexcused nonperformance) always available for material breach and in degrees for minor breach: Damages - $ - reasonable efforts must be made to avoid or reduce (mitigate) damages Compensatory put in position as if no breach Consequential foreseeable arising from known circumstances Punitive punishment (not available for contracts) Liquidated pre-agreed amount only sometimes Specific Performance requires performance in certain situations not available for service contracts but available for land deals and those involving unique items of property Rescission put in a position as if no contract (restitution) examples of when used: fraud, duress, mistake Reformation court rewrites a contract to express the parties' true intentions Injunction court order prohibiting a certain act IV. Objective Questions Terms: 1. When only one party is mistaken about some aspect of a contract, this is called _______________ ________________. However, the mistaken party is not usually allowed to rescind the contract. 2. A fact that is important to the subject matter of a contract is known as a _______________ fact. 3. When one party consciously decides to induce another party to rely and act on a misrepresentation, this is called _______________. 117 Chapter 12 4. A rule that says that if a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract is called the _______________ _______________ rule. 5. The clause in a contract that stipulates that it is a complete integration and the exclusive expression of the agreement and that parol evidence may not be introduced to explain, alter, contradict, or add to the terms of the contract is called a _______________ clause. 6. Land as well as buildings, trees, soil, minerals, timber, and other things permanently affixed to the land are called ________________ property. 7. Contracts for the sale of land must be in writing because of the _____________ ____ ____________. 8. A _______________ is an unexcused nonperformance of a contract. 9. An agreement that substitutes a third party for one of the original contracting parties and makes the new party obligated to perform the contract is called a(n) _______________. 10. The best excuse for nonperformance of a singing contract where the singer has lost his voice is ___________________ ____ __________________. True/False: 1. ____ 2. ____ Either party may rescind the contract if there is a mutual mistake in value. Where a party has been fraudulently induced to enter a contract, the innocent party can either rescind the contract or enforce the contract and sue for damages. To be actionable, a fraudulent misrepresentation must be in spoken or written words. The Statute of Frauds requires a written contract be signed by the party against whom enforcement is sought. Parol evidence is permitted to show a contract is void or voidable, to explain ambiguities, and to correct obvious clerical or typographical errors. Contracts to construct buildings or insure buildings do not have to be in writing under the Statute of Frauds because no ownership interest in the real property is being transferred. Promissory Estoppel is a substitute for consideration. Commercial Impractability is always an excuse for nonperformance of a contract. If a professional basketball player refuses to honor his contract and play basketball, the team may avail itself of the remedy of specific performance. 3. ____ 4. ____ 5. ____ 6. ____ 7. ____ 8. ____ 9. ____ 118 Performance of Contracts and Remedies for Breach 10. ____ A temporary impossibility excuses a party from performance if he withdraws during the time the contract performance is suspended. Multiple Choice: 1. Ted enticed Fred to enter into a sales contract by intentionally telling Fred certain material facts that Ted knew were untrue. Assume no other relevant facts. On what legal basis can the contract be voided? A. Voidable because of undue influence, which created no real assent. B. Voidable because of fraud, where no real assent took place. C. Voidable because of duress, which prevented real assent. D. Voidable because of mistake, which did not allow real assent to take place. 2. Ed, an auditor for the IRS, became emotionally involved with Rhonda. At the urging of Rhonda, and fearing that she would sever their relationship, Ed reluctantly waived a tax audit settlement that was grossly unfair to the IRS, Ed's employer's best chance for rescinding this outcome is to show that Ed acted under: A. A lack of express authority. B. Duress. C. Undue influence. D. There was no consideration. 3. On June 1, Farmer Brown contracted to sell a red barn to Rancher Ron. However, unknown to either party, the barn had burned down on May 20. If Ron sues Brown for breach of contract, Brown's best defense is: A. Fraud. B. Economic duress. C. Mutual mistake of fact. D. Misrepresentation. 4. Hardware Co. verbally contracts to buy $2,000 worth of hammers from Heavy Duty Co. Heavy Duty delivers $300 worth of the hammers and sends a bill for $300. Hardware Co. seeks to avoid the contract, alleging that it is unenforceable under the Statute of Frauds. Which of the following is correct? A. Under the doctrine of promissory estoppel, the court may order Hardware to complete the contract. B. Under the doctrine of part performance, the court may order Hardware to complete the contract. C. Under the equal dignity rule, Hardware must pay $300. D. None of the above. 5. Ann makes a written contract with Betty to sell her car for $5,000. Two days later, Betty asks if Ann will throw in the bike rack with the car. Ann agrees. Which of the following is correct? A. The sale of the bike rack is enforceable if the contract has a merger clause. B. The sale of the bike rack is enforceable if the contract is a form contract. C. The sale of the bike rack is unenforceable under the parol evidence rule. D. The sale of the bike rack is unenforceable under the equal dignity rule. 119 Chapter 12 6. A written agreement was signed by both parties that was intended to be their entire agreement. The parol evidence rule will prevent the admission of evidence that is offered to: A. Explain the meaning of an ambiguity in the written contract. B. Establish that fraud had been committed in the formation of the contract. C. Prove the existence of a contemporaneous oral agreement that modifies the contract. D. Prove the existence of a subsequent oral agreement that modifies the contract. D. None of the above. 7. A contract would be required to be in writing in which of the following situations? A. B. C. D. A contract for the sale of 200 radios at $1.50 each. A contract requiring a teacher to give a special lecture in two days for a $600 fee. A contract for the sale of a small parcel of land for $400. None of the above. 8. Employee Ellen contracts with Calloway Co. to perform certain home services for three years. However, within six months, Ellen sells her house and must move away. Which of the following is correct? A. Ellen is excused from performance of the contract because of the objective impossibility of performance. B. Ellen is excused from performance of the contract because of frustration of purpose. C. Ellen is not excused from the contract and is liable for damages. D. None of the above. 9. If a homeowner sues to get a kitchen redone because the first contractor did not do the job properly, they would probably be entitled to: A. Compensatory Damages B. Consequential Damages C. Punitive Damages D. All of the above 10. Rescission is a remedy for: A. Mistake B. Duress C. Undue Influence D. All of the above V. Answers to Objective Questions 120 Performance of Contracts and Remedies for Breach 1. Unilateral mistake. Rescission is allowed only under limited circumstances where the unilateral mistake is tied in with other parties' actual or constructive knowledge of the mistake, where there are clerical or mathematical errors, or where enforcement would lead to an unconscionable result. 2. Material. Look at the essential purpose of the contract when trying to identify material facts, i.e., but for this element, would the parties be in this contract at all? 3. Fraud. The elements of fraud are intentional false misrepresentation by the wrongdoers coupled with justifiable reliance by the injured innocent party. 4. Parol evidence (rule). The parol evidence rule keeps evidence out unless the evidence qualifies under one of its exceptions based on public policies or clarification of ambiguities. 5. Merger. In spite of the wide-spread use of these clauses, they cannot be used to keep out public policy exceptions to the parol evidence rule. 6. Real property. This classification is based on traditional case law combined with statutory definitions. These issues will be further detailed in the chapters on real and personal property. 7. Statute of Frauds. This requires that certain contracts, land deals included, must be in writing to be enforceable. 8. Breach. This gives rise to various remedies. 9. Novation. This term is derived from the Latin term meaning "new." 10. Impossibility of Performance. The performance is impossible. True/False: 1. False. Generally, the contract remains enforceable by either party because the identity of the subject matter of the contract is not at issue. 2. True. The innocent party in such a situation has an option of doing either of these things. 3. False. A misrepresentation may occur by the party's conduct. 4. True. Ordinarily, both parties will sign the contract. 5. True. Those are all exceptions to the parol evidence rule. 6. True. These contracts do not fall under the equal dignity rule requirement, but as a practical matter, they too should be in writing. 7. False. Promissory Estoppel is used to prevent unjust enrichment. 8. False. Unforeseeable events can give rise to this excuse but only in some jurisdictions. 9. False. Specific performance is not available in service contracts. 10. False. A temporary impossibility excuses a party from performance only during that time. Once this circumstance no longer exists, the party must perform. Multiple Choice: 1. B. Ted made a false misrepresentation of a material fact with an intent to deceive. Fred detrimentally relied on this representation. Therefore, the elements of fraud are in place. A is incorrect because undue influence is the use of some sort of control which makes the decision involuntary. C is incorrect because duress is a threat that is associated with fear. D is incorrect because only mutual mistakes would make this contract voidable, and there was no showing from the facts given that a mutual mistake took place. 2. C. Here, the emotional involvement was so overwhelming that the decision was not voluntary and was the product of undue influence. A is incorrect because Ed probably had express authority to waive the 121 Chapter 12 audit. B is incorrect because duress is a threat that induces fear. D is incorrect because there was probably consideration involved in the audit settlement. 3. C. Both parties were unaware of a material fact. A is incorrect because Brown did not fraudulently misrepresent the fact to Ron. B is incorrect because there was no duress. 122 Performance of Contracts and Remedies for Breach 4. A. Under promissory estoppel, a court may order partial or complete performance of the contract to avoid an unjust result against Heavy Duty. B is incorrect because the doctrine of part performance applies to contracts for real property. C is incorrect because the equal dignity rule applies to agents who sell real property. 5. C. The written contract for the sale of the car is the final statement of the parties' agreement. Verbal testimony will not be allowed to alter such a contract except in special circumstances. A is incorrect because a merger clause explicitly disallows any parol evidence. B is incorrect because whether this is a form contract is irrelevant in this case. D is incorrect because the equal dignity rule applies to agents for the sale of real property. 6. C. If the contract was intended to be their entire agreement, the rule will not allow evidence to show a contemporaneous oral agreement that modifies the contract. A is incorrect because the rule allows evidence to explain the meaning of ambiguous words or phrases. B is incorrect because the rule allows evidence to prove fraud. D is incorrect because subsequent oral agreements may be proven under the rule. 7. C. All contracts for the sale of land must be in writing. Contracts for the sale of goods must only be in writing if the amount is greater than $500. Service contracts do not have a dollar limit and need no writing if they can be completed within one year. 8. C. Ellen has breached the contract and is liable for damages. A is incorrect because Ellen's inability to complete the contract is subjective, not objective. B is incorrect because the doctrine of frustration of purpose is not applicable here. 9. A. Compensatory damages would allow suit for additional costs of completion. Consequential damages refer to special known foreseeable damages which do not seem to be relevant in this case. Punitive damages are not available in contract. 10. D. Rescission is a remedy in all of the situations listed in the question. VI. Answer to the Essay Question All of the elements of the contract were present. Additionally since the contract could not be completed within one year it had to be in writing and it was. The problem, however, was that the terms were ambiguous with respect to which stadium and to which anthem was to be sung. The Parol Evidence Rule allows for the introduction of extraneous evidence to clarify an ambiguity. Thus, Mary would be allowed to show that there were ambiguities in the written contract. Since Mary did not know that there were two stadiums but the team did, she probably would win in a suit with respect to not having appeared at the correct stadium. However, with respect to the anthem, since the game was in the United States, the American National Anthem can be implied. Since she did not go the right stadium and therefore did not perform but through no fault of her own, she probably will not lose the case for compensatory damages. She probably will not be able to collect the fee, however, for the first day since she did not perform but she probably will be able to enforce the remainder of the contract with the corrected terms. 123 ...
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