Contracts

This lesson explores the contours of anticipatory repudiation, including the repudiating promisor's ability to retract his repudiation, the nonrepudiating promisee's right to demand adequate assurances of performance, and the effect of the promisor's repudiation on the promisee's obligation to perform.

This lesson introduces the student to the doctrine and processes involved in interpreting state and federal statutes. Statutes are a critical part of every substantive area of the law, so this is important background for every student, legal professional, lawyer and judge.

This lesson provides an overview of Contract Law, including the sources of Contract Law. The lesson can be run either as an introduction to Contract Law or as a review any time during or after your study of Contract Law.

This lesson explores one of the fundamental requirements for contract formation, mutual assent. Mutual Assent is a mutual manifestation of assent to the terms of an agreement. This lesson looks at how parties establish mutual assent, including manifestations of mutual assent by words and conduct and the effect of misunderstanding. However, the attributes of offer and acceptance are covered in other lessons. This lesson concludes with a sample analysis exercise involving mutual assent.

This lesson explores invitations to negotiate/preliminary negotiations and other statements and expressions that are not offers, including advertisements, invitations to bid, price quotations and statements of intention. Determining whether a particular communication is an offer or preliminary negotiation (a matter determined according to the surrounding circumstances) prior to the formation of contract is essential to the determination of whether a contract exists.

This lesson looks at the process of negotiations discussing the terms of a contract when the parties contemplate a final written agreement.

This lesson looks at formal preliminary agreements, often titled letters of intent or memorandums of understanding.

Contracts are sometimes referred to as express or implied. Implied contracts are in turn often referred to as contracts implied-in-fact or implied-in-law. The difference between express contracts and implied-in-fact ones results from the conduct of the party in making the promise constituting the assent to the contract. Implied-in-law or quasi-contracts, however, are not really contracts at all, but merely a remedy in restitution. This lesson explores the nature of express contracts, implied-in-fact and implied-in-law contracts.

Traditional contract law classifies contracts into bilateral and unilateral contracts. Bilateral contracts are those involving promises made by all parties, whereas unilateral contracts involve promises made by only one of the parties. This lesson explores the distinction between bilateral contracts (where both parties make promises) and unilateral ones (where only one party makes a promise) and the effect on the obligations of the parties resulting from the classification. This lesson ends with an analysis exercise on unilateral and bilateral contracts.

This exercise deals with offer, an essential element of the bargaining process. There are basically three requirements to establish an offer: (1) intent; (2) definiteness; and (3) communication to the offeree.

This lesson deals with the duration of offers. The existence of an offer is often an essential element of the bargaining process. Sometimes the offeree's power of acceptance will end so that the offer is no longer valid. This lesson will look at termination of the power of acceptance by termination of the offeror, revocation and counteroffer, rejection, death and lapse.

This lesson deals with option contracts and firm offers, both of which result in irrevocable offers. The existence of an offer is often an essential element of the bargaining process. Although most offers are revocable, sometimes the offeree's power of acceptance is irrevocable through the formation of an option contract. This lesson will look at formation of an option contract through part performance or tender, a signed writing supported by consideration, statutory firm offers and detrimental reliance.

This is the first of two advanced lessons on real estate purchase options. In so doing, the lesson covers their contract nature of options and their uses.

This is the second of two lessons about real estate purchase options. This lesson explains the problems in using purchase options that arise when the subject of the option is real estate.

This lesson deals with one aspect of contract formation, acceptance. Acceptance is the manifestation of assent that is made by the offeree in response to an offer. In this lesson, you will learn how a party can accept an offer at common law. The lesson takes up issues such as the manner of acceptance, who can accept, silence as acceptance, rejection and counter-offer. The lesson ends with a short analysis exercise on the subject of acceptance.

This lesson deals with the formation of contracts under Article 2 of the Uniform Commercial Code (excluding § 2-207 issues). Under UCC § 2-204, a contract can be formed in any manner sufficient to show agreement, even if the parties leave open terms. This lesson will explore the effect of the difference in formation between common law and Article 2.

This lesson deals with the problem created by the Battle of the Forms. At common law, the mirror image rule requires an acceptance to be exactly like the offer. The rule is reversed under the Uniform Commercial Code, however. Under UCC § 2-207, an acceptance is still an acceptance even though it states different or additional terms from the offer. This lesson will explore the effect of such different or additional terms and when they are operative.

At common law, in order for a contract to be binding on the parties, the terms must be sufficiently definite or the contract will fail. This lesson explores the boundaries of the doctrine of indefiniteness.

This lesson takes a look at the Mailbox Rule. The offeror, as master of the offer, may insist that the offeree accept by means of the mail (or some similar form delivery, such as e-mail). Alternatively, the offer may not specify a means of acceptance and the offeree may decide to use the mail, where such acceptance would be permissible in accordance with the offer. This lesson sets out the ramifications of use of the mail (as well as e-mail and facsimiles, which follow the same rule). The general attributes of offer and acceptance are covered in other lessons.

This lesson takes a look at the basic aspects of the contractual element of Consideration. In a typical transaction, the consideration (described as a bargained-for-exchange) is what induces the making of the promise by the offeror. In turn, the promise induces the furnishing of the consideration by the offeree. Consideration is the ordinary means for justifying the enforcement of the promises by the parties. This lesson sets out the basic requisites for establishing consideration.

This lesson takes a look at one type of agreement that lacks consideration: gift promises.

This lesson takes a look at two types of agreements that lack consideration: those supported by past consideration or moral obligation. Consideration is often described as the bargained-for-exchange. The bargained-for-exchange is what induces the making of the promise by the offeror and the promise induces the furnishing of the consideration by the offeree. Consideration is the ordinary means for justifying the enforcement of the promises by the parties. Where consideration was given in the past or the promisee is only morally obligated to make the promise, bargained-for-exchange is lacking and the promises are not enforceable.

This lesson covers one of the fundamental components of contract formation - mutuality of obligation or commitment. Students learn why mutuality of obligation is an essential element of a contract.

This lesson is about satisfaction clauses. This is an area of special concern, as satisfaction clauses appear to make promises illusory.

This lesson addresses a number of issues involving consideration, including whether there was a bargain, whether there is consideration for the settlement of a claim, and whether one of the promises was illusory. You should run it after you have run the lesson on Consideration: The Basics of Consideration and the Bargain Theory.

This lesson assumes students are familiar with the requirement of consideration. This exercise covers one of the exceptions to this general rule. Historically, one situation where consideration was not required to create a binding contract was when the promise was made "under seal." The lesson explains the history of "the seal" and the seal's role in contract law today.

This lesson assumes you are familiar with the requirement of consideration and the rule that past consideration is not good consideration. Ordinarily, a promise is legally binding only if that promise is supported by a consideration. As the student may recall, "past consideration" is a misnomer. If a party makes a promise to pay for a benefit previously conferred, there is no consideration for the promise because the benefit was not bargained for in exchange for the promise. This lesson covers one of the exceptions to this general rule.

This lesson explores the remedy of reliance, which can be available both 1) where there is no contract and 2) where there is a contract and the non-breaching party chooses an alternative to the expectancy measure of damages. The lesson can be run either as an introduction to reliance or as a review after you have completed your study.

Overview of defenses to the formation of a contract.

This is an overview of vocabulary used in the lessons on Defenses. You might wish to run it prior to running those lessons.

This lesson explores the illegality defense to contract formation.

This lesson explores the capacity defense to contract formation, including when a contract may be avoided because of the minority, mental incapacity, or illiteracy of one of the parties.

This lesson explores the duress and undue influence defenses to contract formation.

This lesson presents an overview of unconscionability as a defense to contract formation or to particular clauses in the contract.

An overview of the fraud defense to the formation of a contract.

An overview of the defenses of misunderstanding and mistake to the formation of a contract.

The Statute of Frauds is among the defenses to contract formation. This exercise assists the student in determining whether a transaction is within the statute of frauds, whether the agreement is evidenced by a writing, and whether an exception applies.

A hundred years ago, a law professor said of the parol evidence rule, "There are few things darker than this or fuller of subtle difficulties." Many students and professionals who have studied the rule would agree with that assessment. Hopefully this exercise will illuminate the rule. It does so by examining the functions served by the rule, taking the user through a series of questions that can be used to resolve most issues involving the application of the rule. The Uniform Commercial Code enactment of the rule is examined in detail.

Interpretation involves an ascertainment of the meaning of the words and provisions of a contract. Whereas "construction" of a contract relates to the legal effect of the words used by the parties, "interpretation" addresses the meaning of the parties. Whose meaning is to be given effect with respect to certain contract terms? What evidence may be taken into account when courts engage in interpretation? In this lesson, the parol evidence rule will be considered with respect to the admissibility of extrinsic evidence to determine the meaning of the contract as formed.

Interpretation involves ascertaining the meaning of the words and provisions of a contract. Article 2 of the UCC is intended not to regulate commercial activity, but to facilitate it. An important part of commerce is business practices in general and in particular, usages of trade and understandings of the parties to the contract. Therefore, this lesson emphasizes those parts of interpretation. For a broader discussion of interpretation in contract law, see the CALI Lesson Interpretation of Contracts.

The terms of a contract include express and implied promises, conditions, provisos and presuppositions that bind the parties. Contracts often have "gaps" in them, either intentionally or unintentionally left that way by the parties. This exercise considers how courts supply terms to fill those gaps both at common law and under the UCC.

This lesson considers probably the most common type of implied term, that of good faith. At common law, courts often supply a term requiring the parties to exercise "good faith" or "good faith and fair dealing". Moreover, for the sale of goods, the UCC provides that every contract is subject to good faith requirements, which cannot be disclaimed by agreement.

A contract can contain many different types of promises, made up of both express and implied terms. Express and implied warranty terms are the subject of this lesson. When parties contract for the sale of goods, they have certain expectations about the quality of the goods to be sold. These expectations form the basis of warranties that arise under UCC Article 2. That is, what has the seller agreed to sell?

The lesson on UCC Warranties explored the various Article 2 warranties and how they are created. But there is also freedom of contract to disclaim those warranties. This lesson explores the requirements for a successful disclaimer of warranties.

These terms are the building blocks of contracts. This lesson provides an overview of them. After running the lesson, you should be able to distinguish the different terms, recognize them when you find them in a contract, understand the legal effects that follow from their use, and decide which one is appropriate to use when drafting a term in a contract.

This lesson explores discharge of a contract by modification, both at common law and under the UCC. It can be run either as an introduction to the study of modification or as a review after you have completed your study.

This lesson presents an introduction to the doctrine that the performance of a pre-existing duty, or a promise to perform such a duty, does not constitute a sufficient consideration to make a promise binding. Through questions based on a series of hypothetical cases, underlying reasons for the doctrine are considered, as well as its ramifications in various contexts. Coverage includes: the performance of duties owed to the promise or third parties as consideration; modifications on one side of executory contracts; substituted contracts following rescission; executory accords; satisfaction; liquidated claims and offers to settle unliquidated claims.

This lesson explores discharge of a debt by accord and satisfaction. It can be run either as an introduction to the study of accord and satisfaction or as a review after you have completed your study.

This lesson takes a look at the doctrine of excuse. In particular, we will look at the doctrines of impossibility, frustration of purpose and impracticability. Each of these doctrines excuses performance of the parties to the agreement. This lesson sets out the basic requisites for when courts excuse contract performance and evaluating those situations that merit excuse. The general attributes of contract formation and breach are covered in other lessons.

Rescission is one of the ways in which contractual duties are discharged. This lesson discusses mutual rescission, rescission by one of the parties, and rescission as a remedy used by a court. This lesson may be used to introduce you to the subject or to review it.

The goal of this lesson is to take the user systematically through UCC Article 2. The lesson accomplishes this goal by having the user study a contract for the sale of goods. The concepts of Article 2 are thereby seen in the practical setting in which they are applied. Conversely, study of the contract reveals the source of each of the included provisions in the law. The user becomes familiar with the default rules and how those rules might be changed on behalf of a client. The user finishes with knowledge of the Code and how the Code may be applied in practice when drafting a contract.

A number of the provisions in Article 2 have special rules applicable to merchants, called the “merchant rules.” This lesson explores the definition of merchant in the UCC, key sections in Article 2 that rely on the concept of a merchant, and how different definitions of merchant apply in different provisions of Article 2.

This lesson explores the concept of conditions in the law of contracts. It distinguishes promises from conditions, discusses the various kinds of conditions, and explains ways the courts relieve parties from the harsh effect of conditions. The lesson concludes with two sample exam questions.

The goal of this program is to teach a substantial amount of Article 2 through the study of a single case. This exercise begins with a warranty case, ITT v. LTX.

This lesson enumerates some general principles of contract remedies. You may want to run it before you run any of the individual lessons on contract remedies. It may be run as an introduction before you have studied contract remedies or as a review after you have studied the topic.

For better understanding, you should run this lesson after you complete the lesson Contract Tutorials on Remedies - UCC Damage Rules for Buyers. In certain situations, the UCC gives the court the power to award "profit plus reasonable overhead." This lesson will help you understand the terms "profit" and "overhead." Moreover, the author explains the difference between fixed and variable overhead and discusses the concept of lost profits. The lesson ends with several review questions.

This exercise gives a basic overview of the types of equitable remedies. You need not have read any particular materials or taken any particular law school courses in order to complete the tutorial. It can be used to provide background in your courses where equity is especially relevant or to review the types of equitable remedies for use in a remedies course.

The principal remedies for breach of contract are specific performance and money damages. This lesson explores the circumstances in which a court is likely to award specific performance as a remedy. The lesson can be run either as an introduction to specific performance or as a review after you have completed your study.

This lesson examines specific performance as a remedy ordered by the court when the money damages will not be adequate. The author guides the student through common situations when the specific performance will be awarded as a remedy, such as the sale of unique goods (UCC § 2-716 and §2-709) or land and employment contracts. The considerations that courts bear in mind when awarding specific performance are also discussed. The lesson concludes with several review questions.

When the court awards money damages for breach of contract, it generally measures the damages by what is called the expectation measure or the expectancy. This lesson explains how those damages are calculated. It can be run either as an introduction to expectancy damages or as a review after you have completed your study.

The lesson takes a look at measuring expectation damages in a sale of goods contract governed by the UCC provisions. The author explains that even though the expectation/mitigation rule is not applicable to the sale of goods contracts, the UCC gives us the same results as common law. The concepts of incidental and consequential damages, as well as expenses saved, are also explained. The lesson ends with review questions on the subject.

In this lesson you will learn how to calculate damages when the Buyer does not deliver goods or repudiates the contract. First, the author reminds you about the concept of common law mitigation/expectation rule and then contrasts the results with the UCC provisions in this matter. Next, the differences between UCC § 2-713 and § 2-712 are explained. The lesson concludes with several review questions.

One of the rules that limits a plaintiff's recovery for breach of contract is the requirement that damages must be proven to a reasonable certainty. This lesson explores that principle. The lesson can be run either as an introduction to certainty or as a review after you have completed your study.

This lesson is part of a series that deal with contracts remedies. While proving the damages, a plaintiff has to prove damages with "reasonable certainty." This lesson explores that principle. The author discusses main concepts that explain the term "reasonable certainty" (the "new business rule", "traditional rule" and "current rule"). Examples of liberalization of the proof requirements for damages in the UCC and in the area of "psychic losses" are also covered.

The damages a plaintiff can recover for breach of contract are limited to those that are reasonably foreseeable at the time of contracting. This lesson explores the concept of foreseeability from its origin in the Hadley rule to more contemporary applications. The lesson can be run either as an introduction to foreseeability or as a review after you have completed your study.

In this lesson the concept of foreseeability is illustrated by studying Hadley v. Baxendale. The author explains the meaning of the term "reasonably foreseeable" and presents multiple examples. The lesson ends with a several review questions on this subject.

One of the limitations on the damages a plaintiff can recover for breach of contract is that the plaintiff has a duty to keep the damages as low as reasonably possible. This lesson explores this principle, which is called mitigation. The lesson can be run either as an introduction to mitigation or as a review after you have completed your study.

This lesson deals with the doctrine of Mitigation of Damages, and examines Rockingham County v. Luten Bridge Co. The basic issues about mitigation are illustrated in a hypothetical scenario followed by a number of questions. Prior understanding of Expectation Measure of Damages is necessary to complete your study. The lesson ends with several summary questions.

This lesson explores the issue of whether, in computing the expectation remedy, the court will award the cost of completion or the diminution in value. The lesson can be run either as an introduction to this aspect of damages or as a review after you have completed your study.

This lesson discusses cost of completion as a remedy that is awarded when there is work still to be completed under a contract, or when the work called for under the contract was completed improperly. The author explains the relationship between expectation damages and cost of completion remedy. The lesson concludes with review questions.

If a contracting party does not complete performance, that party is in breach. But if the party has given most of the promised performance, there may be substantial performance. Another way of saying this is that the breach is not material. This lesson examines the grounds for determining whether a breach is material and explores the consequences if it is. The lesson can be run either as an introduction to substantial performance or as a review after you have completed your study.

The lesson begins with explanations of the terms substantial performance and substantial breach, followed by examples of each. The next section discusses factors listed in the Restatement that are taken into consideration when determining whether there has been a substantial breach. The doctrine of substantial performance in the sale of goods (UCC § 2-508) is described. The lesson ends with review questions.

This lesson explains the concept of excuse of performance by referring to K & G Construction Co. v. Harris. The author discusses factors that are taken into consideration when determining whether a breach was substantial and illustrates them in analysis of Walker & Co. v. Harrison. The next section covers interference as a basis for excuse, followed by a discussion about damages in excuse of performance cases. This lesson ends with a number of review questions to help you better understand the concept.

Reliance damages put the non-breaching party back in the same position the party was in before the contract was made. In this lesson, you will explore the distinction between reliance and expectation damages. Both concepts are illustrated by case law. Then, the author explains how the courts apply reliance and expectation rules when awarding damages. The lesson ends with review questions on this subject.

This lesson explores the remedy of restitution, which can be available both where there is no contract and where there is a contract and the non-breaching party chooses an alternative to the expectancy measure of damages. The lesson can be run either as an introduction to restitution or as a review after you have completed your study.

The lesson addresses the concept of restitution as a remedy alternative to the expectation measure. The author discusses the elements that one has to prove to be awarded restitution. Next, the differences between reliance and restitution are explained. The material also covers the rule that contract bars the suit in restitution as well as exceptions to it. In the last part, the ways of measuring restitution damages are explained. The lesson ends with review questions on that subject.

Liquidated damages clauses are provisions in a contract in which the parties agree on the amount of damages to be paid in the event of breach instead of having a court decide that issue. This lesson explores whether liquidated damages clauses are enforceable under the tests used in the Restatement, the UCC, and a California statute. The lesson can be run either as an introduction to liquidated damages or as a review after you have completed your study.

This lesson explains the concept of liquidated damages. A liquidated damages clause in a contract states what damages the breacher will owe the non-breacher in the event of breach. You will have a chance to familiarize yourself with some sample clauses. Moreover, the material deals with enforceability of the clause under the common law as well as the UCC (§ 2-718). The lesson ends with a number of review questions on this subject.

This lesson demonstrates how the principles of remedies are found in the UCC and provides some guidance for working with the UCC. This lesson may be run either as an introduction before the material is studied or as a review after it is studied.

This lesson explores the remedies that are available in UCC Article 2 for the Seller when the Buyer is in breach. We first examine the remedies when the Buyer has the goods, and then when the Seller has the goods. This lesson may be run either as an introduction before the material is studied or as a review after it is studied.

This lesson explores the remedies that are available in UCC Article 2 for the Buyer when the Seller is in breach. We first examine the remedies when the Seller has the goods, and then when the Buyer has the goods. This lesson may be run either as an introduction before the material is studied or as a review after it is studied.

This lesson is part of a series of lessons that examines contract remedies. It discusses a breach by the buyer. The author deals with problems of measuring damages when the seller does resell the goods (UCC § 2-706), as well as when the goods are not resold (UCC § 2-708(1)). Prior understanding of common law expectation rule is required to work this lesson. The lesson ends with several review questions on this subject.

This lesson is part of a series that examines contract remedies. It covers the situation when the Buyer caused the breach and the UCC § 2-706 and § 2-708(1) are not the right measure of the seller's damages. You should run it after you have run the Contract Tutorials on Remedies - UCC Damage Rules. At the end of the lesson, you will find a number of review questions to help you better understand the subject.

This lesson deals with third party beneficiary contracts. The initial questions in this exercise are intended to familiarize students with the various types of contract beneficiaries. Since there is no general agreement on terminology, the questions test the students on both the First Restatement of Contracts types, i.e., creditor, donee, and incidental, and the Second Restatement of Contract types, i.e., intended and incidental. Subsequent questions deal with vesting of contract beneficiaries' rights and with defenses which can be asserted by a promisor against a beneficiary.

This lesson covers assignment of contract rights and delegation of contract duties. You can run it either as an introduction to the topic or as a review after you have studied it.

This exercise reviews some substantive principles of contract law and demonstrates the application of that substance to the process of drafting. The exercise begins with a form contract that the user must rewrite to suit the needs of the client. On completion, the user has reviewed applicable principles from both the common law and the U.C.C. In addition, the user has learned principles of drafting that can be applied either to revision of a form or to drafting from scratch.

Drafters of contracts, wills and statutes are plagued with the ambiguities inherent in the use of these two connectors. This lesson is designed to identify these ambiguities and then help students to draft with conjunctions which eliminate those ambiguities.

A large percentage of litigation arising out of contracts results from poor drafting. In order to eliminate this litigation, it is imperative that students and legal professionals master good drafting skills. One of the most important aspects of drafting a contract is the operative language--language that affects legal relationships. This lesson is designed to introduce law students to operative language commonly used in drafting contracts, in particular, language of obligation (shall), language of authorization (may) and language of condition precedent (must).

This lesson is first in a series that takes a look at the basics of agreements governed by the U.N. Convention on the International Sale of Goods (CISG). The CISG provides a uniform set of rules for international sales contracts where the parties are located in different signatory countries. While some of the rules parallel those under the common law and Article 2 of the U.C.C., many are different. This lesson sets out the basic requisites for determining when the CISG applies and evaluating contracts governed by the CISG. The general attributes of domestic contracts and CISG contracts are covered in other lessons.

This lesson is second in a series that takes a look at formation of agreements governed by the U.N. Convention on the International Sale of Goods (CISG). The CISG provides a uniform set of rules for international sales contracts where the parties are located in different signatory countries. There are 11 separate provisions on contract formation under the CISG. This lesson sets out the basic requisites for determining whether an offer exists, when it is accepted and how to address a battle of the forms if the CISG applies. The general attributes of domestic contracts and other CISG contracts are covered in other lessons.

This lesson is third in a series that takes a look at performance of agreements governed by the U.N. Convention on the International Sale of Goods (CISG). The CISG provides a uniform set of rules for international sales contracts where the parties are located in different signatory countries.

This lesson tries to explain Coasean irrelevance (which is often known as the "Coase Theorem").