Contracts Outline Proper Order: Outline From Syllabus, Class Notes, Restatement or UUC Code/Rule, Cases, Hypotheticals

I.

What is Contract? A. A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty B. The State enforces contracts for a) moral and b) legal reason

Damages Damages are given when you breach in three possible ways 1) A failure without justification oto perform a contractual promise or bargain at the time agree; 2) a repudiation of the promise or bargain and 3) bad faith in the form of preventing or hindering the other partys performance or failing to cooperate. Types of Damages The purpose of it is to get a remedy, they cast a shadow Expectation Damages Putting the plaintiff where she would be if the contract were fully performed (Forward looking) Restatement. Because you voluntarily agreed to a contract, it is generally expected to be because it made you better off than you were prior to contract. Therefore, expectation damages are preferred to reliance damages in a case. Sullivan v. OConnor Woman sues her plastic surgeon after he botches her nose after three surgeries. She is entitled to recover for the worsening of her condition through reliance damages Reliance Damages Putting the plaintiff where she was ex ante or prior to the contract (Backward looking). Essentially reliance damages incorporate opportunity costs but how do you calculate how much an opportunity was worth? Opportunity Costs - Measure the value of the next best choice one gives up when pursuing a given option. Efficient Breach Principle Expectation damages if gains to breacher exceed losses to nonbreacher. i.e. you breach because it is economically efficient, what you would pay for the breach of contract does not harm the profit you made by breaching. Curtice Brothers Co. v. Catts Curtice contracted to buy Catts crop of tomatoes for his canning factory. The court held in favor of Curtice seeking specific performance damages because a) no

financial remedy would work here and b) Expectation remedies would still be inefficient because of the nature of the item in question. Here, specific performance is given as an equitable remedy where the legal remedy is inadequate. Specific performance is generally unusual but there has to be very specific reason for supporting it, in this case it was because it was unlikely to get tomatoes of the same quality at the same point in the season. The Court also wanted to ensure that a farmer doesnt breach contract every time the price for their crop goes up. Specific Performance Never available in a personal service contract because you cannot force a person to do something. You cant make someone perform a personal service unless its personal service between contracts with companies. Incalculable Expectation Damages > Specific or Reliance Damages Often unable to do i.e. cant tell the doctor to keep doing the nose over or the court cant tell if the order has been fulfilled. Sometimes magnitude is uncertain i.e. it is unclear how the company has been harmed by the loss Can order specific performance as a right conferred on the to a breaching party to an act If it is easy to avoid giving unclear damages through specific performance you are more likely to get a judgment for it (??????) Hadley v. Baxendale Hadley owned a mill but the shaft broke. They ordered a new one but the order went out late. The never commented to the shipper that they were losing business because they did not have the shaft. The Court held that you get what you pay for, if you dont say that you need it, dont assume tha thtere is an unlimited amount of liability for them to help you. You have to give enough information so that the price can be adjusted accordingly. Under the principle of efficient breach requires that you have an idea of the cost of the breach to the other party. Foreseeability rule favors the talkative.

The Hadley Rule benefits the consumers because they pay less; the sellers because they dont pay as much in damages and the market because if the alternative rule was adopted there would be cross sub. For those who pay more/less. Foreseeability Only disclose if you wish to be compensated. Inchaustegui v. 606 5th Ave. Limited Partnership The landlord bought a 3rd party claim against a sub tenant who did not put the landlord on his insurance information like he should have done. The landlord wants to collect for not only the $ he lost in the claim but also for if there had not been any insurance that he got . He wanted the court to pretend that he didnt have any $ even though he suffered no losss. In contract, your damages are limited to your actual injury. He doesnt get to collect a windfall for what he would have gotten. Bohac v. Dept. of Agriculture Bohac was fired for being a whistle blower and tries to get pecuniary damages for a nonpecunicary case since she is suing for wrongful termination which is a statute-based claim under the Whistleblower Act. The concept of consequential damages in contract law relats to the concept of ex ante foreseeability which applies to things known before the contract buut not thing foreseeable at the time of the breach. Emotional damages are not foreseeable in term of contract law otherwise it would be incorporated into their contract but there is no method to specify how upset someone will be if their contract is breached. A court will not be responsive to higher damages to someone who spoke up about emotional distress Transaction costs- its not that one cost is more important than another its just that the more substantial loss in contract law tends to be pecuniary rather than non-percuniary therefore most parties dont secure insurance on these claims because it is costly to do so and hard to quantify. Employment is not an except to the Restatement because a) it is a large portion of contracts made and b) we dont want to create a culture where this is possible Take away: There is a distinction between consequences and damages

Foreseeablity/Calculability to explain why some things are not recoverable. Acquista v. NY Life Physician became ill and tries to claim disability through his insurance but it is denied. He sues the company to get his insurance to cover him. The court found that damages recoverable on emotional distress because not giving him the insurance within a certain time frame damaged him and now they are trying to put him as close as possible to before the breach of contract. The court sees themselves as choosing an individual tort or allowing for a more expansive opportunity for recovery. Normally you are not allowed to receive tort like damages under a contract claim. There are exceptions to the Restatment covering emotional damages in contract claims such as a) if the claim relates to bodily injury and contracts related to insurance mean that someone is ill b) the willfulness of the breach most of the time is does not matter why you breached the contract, however in the case of the insurance companies behavior is culpable because a) reputational interest as an incentive (i.e. you dont want insurance companies to have a bad reputation) and b) any claimant that takes an insurance company is likely to be under-litigating because theyre trying to get their claim paid (broke and cant afford good attorney) c) under normal tort claim the insurance company would pay the appropriate payout and interest but that is still not enough because it gives no incentive to not breach this way again. The insurance industry is systematically under incentivized to payout even when it is not an efficient breach.

Property Rules v. Liability Rules Both protect entitlements Property rules generally require consensual transfer i.e. someone cant take your bicycle without your consent even if the resource would be better used by them In a functioning marking you can rest entitlements with someone who is interested in an item is relatively low however there may be a person who has a high value for that same item Specific performance approaches property rule protection. Liability Rules - Only compensate for the taking of an item. It is very costly to have an alternative rule and therefore property rule protection doesnt work in certain circumstances. In a property rule claim, the people invoke decide the price of transfer in liability. Protection of Contract Rights

Bilateral monopoly between two parties in a contract. Once there is an actual contract, you can only sell the item to the other party.