Find study materials for any course. Check these out:
Browse by school
Make your own
To login with Google, please enable popups
To login with Google, please enable popups
Don’t have an account?
To signup with Google, please enable popups
To signup with Google, please enable popups
Sign up withor
In particular, they must avoid making any statements about their companies' future prospects or financial health that they know to be false. If they do make a false statement on which a prospective employee relies to her or his detriment, they may be sued for fraudulent misrepresentation.
In one case, for example, an employee accepted a job with a brokerage firm because he relied on assurances that the firm was not about to be sold. In fact, negotiations to sell the firm were under way at the time he was hired. The employee filed a fraud claim against the firm and won, and the trial court awarded him more than $6 million in damages.aIn another case, Kevin Helmer filed a fraud lawsuit against Bingham Toyota Isuzu and Bob Clark, his supervisor at the firm. Helmer claimed that Clark fraudulently induced him to leave his job with another Toyota dealership by making false promises about the amount of compensation that he would receive at Bingham Toyota.
a. Bilateral (mutual) mistakes—When both parties are mistaken about the same material fact, such as identity, either party can avoid the contract. If the mistake concerns value or quality, either party can enforce the contract.
b. Unilateral mistakes—Generally, the party making the mistake is bound by the contract unless (a) the other party knows or should have known of the mistake or (b) the mistake is an inadvertent mathematical error—such as an error in addition or subtraction—committed without gross negligence.
2. Fraudulent misrepresentation—When fraud occurs, usually the innocent party can enforce or avoid the contract. To obtain damages, the innocent party must have suffered an injury.
3. Undue influence—Undue influence arises from special relationships in which one party can greatly influence another party, thus overcoming that party's free will. Usually, the contract is voidable.4. Duress—Duress is the use of a threat, such as the threat of violence or serious economic loss, to force a party to enter a contract. The party forced to enter the contract can rescind the contract.
All Ks are assignable and delegable
EXCEPT…(A) unique personal service Ks, and (2) long term requirement Ks
They can be done orally or in writing
Assignments can be for value or gratuitous
For value – normally irrevocable
Gratuitous (needs no consideration) – generally revocable (unless the assignee has relied to his detriment on the assignment)
. Assignments—An assignment is the transfer of rights under a contract to a third party. The third party to whom the rights are assigned has a right to demand performance from the other original party to the contract. Generally, all rights can be assigned, but there are a few exceptions, such as when a statute prohibits assignment or when the contract calls for personal services.
2. Delegations—A delegation is the transfer of duties under a contract to a third party, who then assumes the obligation of performing the contractual duties previously held by the one making the delegation. As a general rule, any duty can be delegated, except in a few situations, such as when the contract expressly prohibits delegation or when performance depends on the personal skills of the original party.
Discharge by performance—A contract may be discharged by complete (strict) performance or by substantial performance. In some instances, performance must be to the satisfaction of another. Totally inadequate performance constitutes a material breach of contract. An anticipatory repudiation of a contract allows the other party to sue immediately for breach of contract.
3. Discharge by agreement—Parties may agree to discharge their contractual obligations in several ways:
a. By rescission—The parties mutually agree to rescind (cancel) the contract.
b. By novation—A new party is substituted for one of the primary parties to a contract.
c. By settlement agreement—The parties agree to a new contract that replaces the old contract as a means of settling a dispute.
d. By accord and satisfaction—The parties agree to render and accept performance different from that on which they originally agreed.
4. Discharge by operation of law—Parties' obligations under contracts may be discharged by operation of law owing to one of the following:
a. Contract alteration.
b. Statutes of limitations.
c. Bankruptcy.d. Impossibility or impracticability of performance, including frustration of purpose.
In most contracts, promises of performance are not expressly conditioned or qualified. Instead, they are absolute promises. They must be performed, or the parties promising the acts will be in breach of contract.
When a party performs exactly as agreed, there is no question as to whether the contract has been performed. When a party's performance is perfect, it is said to be complete.
A party who in good faith performs substantially all of the terms of a contract can enforce the contract against the other party under the doctrine of substantial performance. Note that good faith is required. Intentionally failing to comply with the terms is a breach of the contract.
To qualify as substantial performance, the performance must not vary greatly from the performance promised in the contract, and it must create substantially the same benefits as those promised in the contract. If the omission, variance, or defect in performance is unimportant and can easily be compensated for by awarding damages, a court is likely to hold that the contract has been substantially performed.
A contractual obligation may also be discharged through novation. A novation occurs when both of the parties to a contract agree to substitute a third party for one of the original parties. The requirements of a novation are as follows:
1. A previous valid obligation.
2. An agreement by all the parties to a new contract.
3. The extinguishing of the old obligation (discharge of the prior party).
4. A new contract that is valid.
For a contract to be discharged by accord and satisfaction, the parties must agree to accept performance that is different from the performance originally promised. An accord is a contract to perform some act to satisfy an existing contractual duty. The duty has not yet been discharged. A satisfaction is the performance of the accord agreement. An accord and its satisfaction discharge the original contractual obligation.
Once the accord has been made, the original obligation is merely suspended. The obligor (the one owing the obligation) can discharge the obligation by performing either the obligation agreed to in the accord or the original obligation. If the obligor refuses to perform the accord, the obligee (the one to whom performance is owed) can bring action on the original obligation or seek a decree compelling specific performance on the accord.
Damages that compensate the nonbreaching party for the loss of the bargain are known as compensatory damages. These damages compensate the injured party only for damages actually sustained and proved to have arisen directly from the loss of the bargain caused by the breach of contract. They simply replace what was lost because of the wrong or damage. The standard measure of compensatory damages is the difference between the value of the breaching party's promised performance under the contract and the value of her or his actual performance. This amount is reduced by any loss that the injured party has avoided, however.
Expenses that are caused directly by a breach of contract—such as those incurred to obtain performance from another source—are known as incidental damages.
The measurement of compensatory damages varies by type of contract. Certain types of contracts deserve special mention. They are contracts for the sale of goods, the sale of land, and construction.
Foreseeable damages that result from a party's breach of contract are referred to as consequential damages , or special damages. Consequential damages differ from compensatory damages in that they are caused by special circumstances beyond the contract itself. They flow from the consequences, or results, of a breach. When a seller fails to deliver goods, knowing that the buyer is planning to use or resell those goods immediately, consequential damages are awarded for the loss of profits from the planned resale.
Mitigation of damages—The nonbreaching party frequently has a duty tomitigate (lessen or reduce) the damages incurred as a result of the contract's breach.4. Liquidated damages—Damages that may be specified in a contract as the amount to be paid to the nonbreaching party in the event the contract is breached in the future. Clauses providing for liquidated damages are enforced if the damages were difficult to estimate at the time the contract was formed and if the amount stipulated is reasonable. If the amount is construed to be a penalty, the clause will not be enforced
There are basically four broad categories of damages:
1. Compensatory (to cover direct losses and costs).
2. Consequential (to cover indirect and foreseeable losses).
3. Punitive (to punish and deter wrongdoing).
4. Nominal (to recognize wrongdoing when no monetary loss is shown).Compensatory and punitive damages were discussed in Chapter 5 in the context of tort law. Here, we look at compensatory and consequential damages in the context of contract law
Also known as contracts that are implied by law
- Usually used to prevent unjust enrichment
- A contract in which a party promises to render a certain performance not to the promisee but to a third person is called a third-party beneficiary contract.
- The third person is not a party and the general rule of law is that a person who is not a party to a contract has no rights in it and therefore cannot enforce its performance
- However, if the parties intended (intention is the only test) to give the third party the right to enforce the contract then he may do so.
Another exception to the doctrine of privity of contract occurs when the original parties to the contract intend at the time of contracting that the contract performance directly benefit a third person. In this situation, the third person becomes a third party beneficiary of the contract. As an intended beneficiary of the contract, the third party has legal rights and can sue the promisor directly for breach of the contract.
The benefit that an incidental beneficiary receives from a contract between two parties is unintentional. Because the benefit is unintentional, an incidental beneficiary cannot sue to enforce the contract.
Sign up for free and study better.
Get started today!