CONTRACT LAW

I. WHAT IS A CONTRACT	
A. GENERAL DEFINITION	
B. TYPES OF CONTRACTS	
1. Classified by Formation	
2. Classified by Acceptance	
3. Void, Voidable, and Unenforceable Contracts	
C. CREATION OF A CONTRACT	
1. Mutual Assent, i.e. offer and acceptance;	
2. Consideration or a substitute; and	
3. No defenses to formation	
II. MUTUAL ASSENT - OFFER AND ACCEPTANCE	
A. IN GENERAL	
B. THE OFFER	
1. Promise, Undertaking, or Commitment	
2. Terms Must Be Definite and Certain	
3. Communication Requirement	
C. TERMINATION OF OFFER	
1. Termination by Act of Parties	
2. Termination by Operation of Law	
D. THE ACCEPTANCE	
1. Who May Accept	
2. Acceptance Must Be Unequivocal	
3. Generally Acceptance Must Be Communicated	
E. UNILATERAL OR BILATERAL CONTRACT	
1. Interpreting Contract as Unilateral or Bilateral	
2. Formation Problems	
III. CONSIDERATION	
A. INTRODUCTION	
B. ELEMENTS OF CONSIDERATION	
1. Bargained-for Exchange	
2. Legal Value Element	
C. MUTUAL AND ILLUSORY PROMISES - REQUIREMENT OF MUTUALITY	
1. Examples	
2. Right to Choose Alternative Courses	
D. NO REQUIREMENT THAT ALL CONSIDERATION BE VALID	
E. SUBSTITUTES FOR CONSIDERATION	
1. Promisory Estoppel or Detrimental Reliance	
2. Modification Under the UCC	
3. Promises to Pay Legal Obligations Barred by Law	
4. Seal	
IV. REQUIREMENT THAT NO DEFENSES TO FORMATION EXIST	
A. DEFENSES TO FORMATION	
1. Absence of Mutual Assent	
2. Absence of Consideration	
3. Public Policy Defenses - Illegality of Contract	
B. DEFENSES BASE ON LACK OF CAPACITY	
C. DEFENCES TO ENFORCEMENT	
1. Statute of Frauds	
2. Unconscionability	
V. RIGHTS AND DUTIES OF NONPARTIES TO CONTRACT	
A. INTRODUCTION	
B. THIRD-PARTY BENEFICIARIES	
1. Who Is Third-Party Beneficiary?	
2. When Does Beneficiary Acquire Contractual Rights?	
3. Who Can Sue Whom?	
C. ASSIGNMENT OF RIGHTS AND DELEGATION OF DUTIES	
1. Assignment	
2. Delegation of Duties	
D. NOVATION DISTINGUISHED	
VI. RULES OF CONTRACT CONSTRUCTION AND THE PAROL EVIDENCE RULE	
A. RULES OF CONTRACT CONSTRUCTION	
B. PAROL EVIDENCE RULE	
1. Exceptions	
VII. INTERPRETATION AND ENFORCEMENT OF THE CONTRACT	
A. INTRODUCTION	
B. WHEN HAS A CONTRACTING PARTY’S DUTY TO PERFORM BECOME ABSOLUTE?	
1. Distinctions Between Promises and Condition	
2. Classification of Conditions	
3. Have the Conditions Been Excused?	
C. HAS THE DUTY TO PERFORM BEEN DISCHARGED?	
1. Discharge by Performance or Tender of Performance	
2. Discharge by Condition Subsequent	
3. Discharge by Illegality	
4. Discharge by Impossiblity, Impracticability, or Frustration	
5. Discharge by Rescission	
6. Partial Discharge by Modification of Contract	
7. Discharge by Novation	
8. Discharge by Cancellation	
9. Discharge by Release	
10. Discharge by Substituted Contract	
11. Discharge by Accord and Satisfaction	
12. Discharge by Account Stated	
13. Discharge by Lapse	
14. Discharge by Operation of Law	
15. Effect of Running of Statute of Limitations	
VIII. BREACH OF CONTRACT AND AVAILABLE REMEDIES	
A. WHEN DOES BREACH OCCUR?	
B. MATERIAL OR MINOR BREACH	
1. Test for Materiality	
2. Timeliness of Performance	
C. REMEDIES FOR BREACH	
1. Damages	
2. Suit in Equity for Specific Performance	
3. Rescission and Restitution	
4. Quasi-Contractual Relief	

I.	WHAT IS A CONTRACT
A.	GENERAL DEFINITION
A contract is a promise or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.
B.	TYPES OF CONTRACTS
Contracts are classififed by how they are formed and how they can be accepted.
1.	Classified by Formation
Contracts may be express (formed by language, oral or written) or implied (formed by manifestations of assent other than oral or written language, i.e., by conduct)
a.	Quasi-Contract
Quasi-contracts are not contracts, but a way to avoid unjust enrichment.  Thus, even if an agreement does not qualify as a contract, under a quasi-contract, a party can recover the benefit she has conferred on the other party.

THEORIES OF CONTRACT LIABILITY	
Theory	Description	Example	
Express Contract	Promises are communicated by language	Xpromises to paint Y’s car in return for Y’s promise to pay X $100.	
Implied Contract	Parties’ conduct indicates that they assented to be bound	(i) X fills her car with gas at Y’s gas station.  There is a contract for the purchase and sale of the gas.	
Quasi-Contract 
(Not a contract at all)	One party is unjustly enriched at the exense of another party, so that the enriched party must pay restitution to the other party equal to the unjust enrichment.	X contracts with Y to build a house for Y. X becomes ill and is unable to continue after completing a third of the work.  X cannot sue on the contract, but may recover the benefit conferrred on Y.	

2.	Classified by Acceptance
Contracts are either bilateral or unilateral.  Bilateral contracts require an exchange of promises.  Unilateral contracts require the exchange of an act for a promise.  Under the modern view, most contracts are bilateral..  Unilateral contracts are limited to two circumstances: (i) where the offeror clearly indicates that performance is the only manner of acceptance; or (ii) where there is an offer to the public clearly contemplating acceptance by performance (e.g., a reward offer).
3.	Void, Voidable, and Unenforceable Contracts
Certain contracts may not be enforceable:
1.	A void contract  is one without any legal effect from the beginning (e.g., an agreement to commit a crime).
2.	A voidable contract is on that a party may elect to avoid or ratify (e.g., a contract by a minor).
3.	An unenforceable contract is one otherwise valid but for which some defense exists extraneous to formation (e.g., the Statute of Frauds).
C.	CREATION OF A CONTRACT
Three elements are required to creat a contract:
1.	Mutual Assent, i.e. offer and acceptance;
2.	Consideration or a substitute; and
3.	No defenses to formation

IS THERE AN ENFORCEABLE CONTRACT?

E
L
E
M		{
{
{
{	Offer (promise, undertaking, or commitment with definite and certain terms communicated to offeree)	
E	Mutual Assent	{	and	
N
T
S		{
{
{	Acceptance before termination by revocation, rejection, or operation of law	
				
		{
{	Bargained for exchange of something of legal value	
	Consideration	{	or	
O
F		{
{
{
{	Substitutes for consideration, such as promissory estoppel, detrimental reliance, or good gaith modification under U.C.C.	
				
C
O		{
{	Mistake (mutual or, under certain conditions, unilateral)	
N		{	or	
T
R		{
{	Lack of capacity (makes contract void or voidable)	
A	No Defenses	{	or	
C
T		{
{	Illegality (usually renders contract void)	
S		{	or	
		{	Statute of Frauds	

II.	MUTUAL ASSENT - OFFER AND ACCEPTANCE
A.	IN GENERAL
For an agreement to be enforced as a contract, there must be mutual assent.  In other words, one party must accept the other’s offer.  Whether mutual assent is present will be determined by an objective standard; i.e., did words or conduct manifest a present intention to contract?
B.	THE OFFER
An offer creates a power of acceptance in the offeree.  To be valid, an offer must be: (i) an expression of promise, undertaking, or commitment to enter into a contract; (ii) definite and certain in its terms; and (iii) communicated to the oferee.
1.	Promise, Undertaking, or Commitment
It is important to distinguish between preliminary negotiations (not offers) and promises (offers). Consider:
1.	The language used;
2.	The surrounding circumstances;
3.	The prior relationship of the parties;
4.	The method of communication - the broader the communicating media (e.g., an advertisement), the less likely it is an offer;
5.	The custom of the industry; and
6.	The degree of definiteness and certainty of terms.
2.	Terms Must Be Definite and Certain
Enough of the essential terms of a contract must be provided to make it capable of being enforced.
a.	Identification of Offeree
The offer must sufficiently identify the offeree or class of offerees to justify the inference that the offeror intended to creat a power of acceptance.
b.	Definiteness of Subject Matter
Whether the subject matter is sufficiently definite depends on the kind of contract.
1.	Real estate transactions require identification of land and price terms.
2.	In contracts for the sale of goods, the quality must be certain or capable of being made certain. (“Requirements” and “output” offers are generally sufficient, as a good faith intendment is usually read into the contract.  The subject matter is also suffiently identified if the offers specifies a reasonable  range of choices.)
3.	In an employment contract, the duration of employment must be specified.
(1)	Inference of Reasonable Terms
Some specific terms are sometimes supplied if consistent with the parties’ intent. Under the UCC, a price term and a specific time provision for performance may be reasonably implied.
(2)	Vaugueness and Terms to Be Agreed on
Vagueness may defeat formation of a contract unless acceptance or part performance makes the vague term clear.  Formation fails if there is a material term left to be agreed on.
3.	Communication Requirement
The offer must be communicated to the offeree.
C.	TERMINATION OF OFFER
An offer may be accepted only as long as it has not been terminated.  It may be terminated by (i) an act of either party or (ii) operation of law.
1.	Termination by Act of Parties
a.	Termination by Offeror - Revocation
The offeror may terminate by: (i) directly communicating the revocation to the offeree; or (ii) acting inconsistently with continued willingness to maintain the offer, and the offeree receives correct information of this from a reliable source.  Offers made by publication etc., may be terminated only by use of comparable means of publication.
(1)	Effective When Received
Revocation is effective when received by the offeree (but publication of revocation is effective when published).
(2)	Offeror’s Power to Revoke
Offers not supported by consideration or detrimental reliance can be revoked for a certain period of time.
(a)	Limitations
The offeror’s power to revoke is limited if:
1.	There is an option contract supported by consideration (i.e., the party with the power of acceptance has paid for the offer’s irrevocability);
2.	There is a firm offer under the UCC (a signed writing by a merchant promising to hold the offer open for some period of time);
3.	the offeree has detrimentally relied upon the offer and the offeror could reasonably have expected such reliance; or
4.	In the case of a unilateral contract, the offeree has embarked on performance (this is usually construed as an option contract giving the offeree reasonable time to complete performance).
b.	Termination of Offeree - Rejection or Lapse of Time
(1)	Rejection
An offeree may reject an offer (i) expressly or (ii) by making a counteroffer (as distinguished from a mere inquiry).
(a)	Effective When Received
A rejection is effective when received.  Once an offer has been rejected, the original offer is not valid (i.e. cannot be accepted)  unless the offeror makes another offer.
(2)	Lapse of Time
An offer may be terminated by the offeree’s failure to accept within the time specified by ther offer or within a reasonable period if no deadline was specified.
2.	Termination by Operation of Law
The following events will terminate an offer:
a.	Death or insanity of either party
(Unless the offer is of a kind the offeror could not terminate, e.g., an option supported by consideration).  Death or insanity need not be communicated to the other party;
b.	Destruction of proposed contract’s subject matter; or
c.	Supervening illegality.

TERMINATION OF OFFER

	Revocation by Offeror	Rejection by Offeree	Termination by Operation of Law	
When Effective	Effective when received	Effective when received	Effective as soon as illegality arises	
Methods	Express revocation or implied (e.g., offeree discovers offeror sold subject matter to someone else)	Express rejection, counteroffer, or lapse of reasonable time	Death of either party, destruction of subject matter, supervening illegality	
Limitations on Power to Terminate	Option contract, merchant’s firm offer, detrimental reliance, beginning performance on unilateral contract	Generally cannot reject if already accepted		

D.	THE ACCEPTANCE
Valid acceptance of a bilateral contract require: (i) an offeree with the power of acceptance; (ii) unequivocal terms of acceptance; and (iii) communication of acceptance.
1.	Who May Accept
The person to whom the offer was addressed has the power of acceptance, as does a member of the class to whom the offer was addressed.  Although the right to acceot most contracts cannot be assigned, option contracts supported by consideration can be assigned to a “new” offeree.
2.	Acceptance Must Be Unequivocal
a.	Common Law
Acceptance must mirror the offeror’s terms, neither omitting nor adding terms.  Otherwise, it may be a counteroffer (i.e., a rejection.
b.	UCC Rules
In contracts involving the sale of goods, an acceptance need not mirror the offer’s terms (i.e., an acceptance that deviates from the offer is not necessarily a rejection and counteroffer).  Any acceptance that indicates an intention to enter into a contract is valid unless it is made conditional on the acceptance of new or different terms.  Whether the offer terms or the acceptance terms govern depends on the status of the parties.
(1)	Nonmerchants - Terms of Offer Govern
If one of the parties is not a merchant, the terms of the offer control.  The new or different terms are condered mere proposals.
(2)	Merchants - Acceptance Terms Usually Included
In transactions between merchants (i.e., both parties are merchants), the new or different terms proposed in the acceptance  become a part of the contract unless they materially alter the agreement, the offer  expressly limits acceptance to the terms of the offer, or the offeror  has already objected to the new or different terms.  Additional terms that materially alter the agreement do not prevent contract formation, but become part of the contract  only if the offeror expressly assents to inclusion.
3.	Generally Acceptance Must Be Communicated
Acceptance is judged on an objective standard (i.e., would a reasonable person think there was an acceptance?); the offeree’s subjective state of mind is irrelevant.  The modern rule and the UCC permit acceptance by any reasonable means unless the offeror unambiguously limits acceptance to particular means.
a.	“Mailbox Rule”
Under the mailbox rule, if acceptance is by mail or similar means and properly addressed and stamped, it is  effective at the moment of dispatch. (If it is improperly sent, it is effective upon receipt.)
(1)	Limitations on Mailbox Rule
The following  limitations apply to the mailbox rule:
1.	The rule does not apply if the offer stipulates that acceptance is not effective until received.
2.	The rule does not apply if an option contract is involved (acceptance effective upon receipt).
3.	If the offeree sends a rejection and then sends an acceptance, whichever arrives first is effective.
4.	If the offeree sends an acceptance and then a rejection, the acceptance is effective (i.e., the mailbox rule applies) unless the rejection arrives first and the offeror detrimentally relies on it.
b.	Acceptance by Unauthorized Means
An acceptance transmitted by unauthorized means is effective if it is actually received by the offeror while the offer is still in existence.
c.	“Crossing” Offers
Since an offer is effective on receipt, offers stating the same terms that cross in the mail do not give rise to a contract.
d.	Exception - Acceptance Without Communication
An executory bilateral contract may be formed without communication of acceptance where (i) there is an express waiver of communication in the offer; (ii) the offer requires an act as acceptance; or (iii) the offeree silently takes the offered benefits.
E.	UNILATERAL OR BILATERAL CONTRACT
1.	Interpreting Contract as Unilateral or Bilateral
In a unilateral contract, acceptance is by performing a stipulated act.  In a bilateral contract, acceptance is by promising to do a stipulated act.  Modern courts generally interpret an offer as unilateral only if its terms clearly warn that an act is required for acceptance.  If the offer is ambiguous, the Second Restatement and the UCC allow either an act or a promise.
2.	Formation Problems
a.	Unilateral Contracts
Generally, the offeree of a unilateral contract must act with knowledge of the offer and be motivated by it. There is a duty to give notice of performance to the offeror if he requests notice or if the act would not normally come to his attention; otherwise, there is no duty to notify.
b.	Bilateral Contracts
An offeree’s ignorance of certain contractual terms may be a defense to formation of a bilateral contract.  Also, oppressive terms or provisions contrary to public policy may prevent contract formation.  Blanket forms recitals that state that the offeree has read and understood all terms will not prevent a court from holding that there is no contract if a reasonable person would not understand the provisions.
III.	CONSIDERATION
A.	INTRODUCTION
Courts will enforce a bilateral or unilateral contract only if it is supported by consideration or a substitute for consideration.
B.	ELEMENTS OF CONSIDERATION
1.	Bargained-for Exchange

The parties must exchange something.  In the case of a bilateral contract, they exchange promises.  In the case of a unilateral contract, they exchange a promise for an act.
a.	Gift
There is no bargain involved (i.e., no consideration) when one party gives a gift to another.
(1)	Act or Forbearance by Promisee
An act or forebearance will be sufficient if it benefits the promisor.
(2)	Economic Benefit Not Required
If one party gives the other peace of mind or gratification in exchange for something, it may be sufficient to establish a bargain.
b.	Past or Moral Consideration
A promise given in exchange for something already done does not satisfy the bargain requirement.
(1)	Exceptions
Where a past obligation is unenforceable because of a technical defense (e.g., statute of limitations), that obligation will be enforceable if a new promise is made in writing or is partially performed.  Also, under the modern trend, if a past act was performed by the promisee at the promisor’s request, a new promise to pay for that act will be enforceable.
2.	Legal Value Element
a.	Adequacy of Consideration
In general, courts do not inquire into the adequacy or fairness of consideration.  However, if something is entirely devoid of value (token consideration), it is insufficient.  Sham consideration (recited in the contract, but not actually paid) may also be insufficient  Where there is a possiblity of value in the thing bargained for, consideration will be found even if the value never comes into existence.
b.	Legal Benefit and Legal Detriment Theories
The majority of courts require that a party incur detriment (by doing something he is not legally obligated to do or by refraining from something he has a legal right to do) to satisfy the legal value element.  Under the minority rule, conferring a benefit on the other party is also sufficient.
c.	Specific Situations
(1)	Preexisting Legal Duty
Traditionally, performing or promising to perform an existing legal duty is insuficient consideration.
(a)	Exceptions
The preexisting legal duty rule is riddled with exceptions; there is conderation if:
1.	New or different consideration is promised;
2.	The promise is to ratify a voidable obligation (e.g., a promise to ratify a minor’s contract after reaching majority, a promise to go through with a contract despite the other party’s fraud);
3.	Preexisting duty is owed to the thrid person rather than to the promisor;
4.	There is an honest dispute as to duty; and
5.	There are unforeseen circumstances sufficient to discharge a party
Any good faith agreement modifying a contract subject to the UCC needs  no consideration to be binding.
(2)	Forebearance to Sue
A promise to refrain from suing on a claim may constitute consideration if the claim is valid or the claimant  in good faith believed the claim was valid.
C.	MUTUAL AND ILLUSORY PROMISES - REQUIREMENT OF MUTUALITY
Consideration must exist on both sides of contract (although the benefit of the consideration generally need not flow to all parties).  If only one party is bound to perform, the promise is illusory and will not be enforced.  Courts often supply implied promises (e.g., party is to use best efforts) to infer mutuality.
1.	Examples
The following are common examples of contracts that satisfy the mutuality requirement:
1.	Requirement and output contracts;
2.	Conditional promises, unless the condition is entirely within the promisor’s control;
3.	Contracts where a party has the right to cancel, if that right is somehow restricted (e.g., must give 60 days notice);
4.	Voidable promises (e.g., one made by an infant);
5.	Unilateral and option contracts; and
6.	Gratuitous suretyship promises made before consideration flows to the principal debtor.
2.	Right to Choose Alternative Courses
A promise to choose on of several alternatives means of performance is illusory unless every alternative involves legal detriment to the promisor. The promise will not be found illusory if the power to choose rests with a third party or if a valuable alternative (i.e., one involving legal detriment) is actually selected.
D.	NO REQUIREMENT THAT ALL CONSIDERATION BE VALID
There is no requirement that each of the promises given as consideration be sufficient as consideration (i.e., one promise may be defective and another sufficient).
E.	SUBSTITUTES FOR CONSIDERATION
In some special situations, consideration as defined above is not necessary to create contractual liability. In these cases, a “substitute” for consideration will suffice.
1.	Promisory Estoppel or Detrimental Reliance
Promissory estoppel is a sufficient substitute.  The following elements must be present: (i) the promisor should reasonably expect her promise to induce action or forbearance, (ii) of a definite and substantial character, and (iii) such action or forbearance is in fact induced.
2.	Modification Under the UCC
Under the UCC, consideration is not  necessary to a good faith written modification of a contract.
3.	Promises to Pay Legal Obligations Barred by Law
If a legal obligation is not enforceable under law (e.g., a debt barred by the statute of limitations), a new promise to fulfill the legal obligation is enforceable if in writing. However, it will be enforceable only according to the new terms, not the terms of the original legal obligation.
4.	Seal
In many states and under the UCC, a seal is no longer a substitute for consideration.
IV.	REQUIREMENT THAT NO DEFENSES TO FORMATION EXIST
A.	DEFENSES TO FORMATION
1.	Absence of Mutual Assent
a.	Mutual Mistake
A mistake by both parties is a defense if:
1.	The mistake concerns a basic assumption on which the contract was made;
2.	The mistake has a material adverse effect on the agreed-upon exchange; and
3.	The adversely affected party  did not assume the risk of the mistake.
(1)	Assumption of Risk
Note that when the parties know that their assumption is doubtful (so-called conscious ignorance), mutual mistake is not a defense - parties will be deemed to have assumed the risk that their assumption was wrong.
(2)	Mistake in Value Generally No Defense
A mistke in value generally goes unremedied, as courts presume parties assume the risk of determining value.  But note: There are exceptions (such as when the parties rely on a third party to establish value).
b.	Unilateral Mistake
Where it be of identy, subject matter, or computation, a mistake by one party is generally insufficient to make a contract voidable. However, if the nonmistaken party knew or should have known of the mistake, the contract is voidable by the mistaken party.
c.	Mistake by Intermediary (Transmission)
Where there is a mistake by an intermediary (e.g., a telegraph company makes a mistake), the message usually will be operative as transmitted unless the other party should have been aware of the mistake.
d.	Latent Ambiguity Mistakes
If the contract includes an ambiguous term, the result depends on the parties’ awareness of the ambiguity:
1.	Neither party aware - no contract unless both intended the same meaning;
2.	Both parties aware - no contract unless both parties intened the same meaning;
3.	One party aware - binding contract based on what the ignorant party reasonably believed to be the meaning of ambiguous words.
Ambiguity is one area where subjective intent is taken into account.
e.	Misrepresentation and Fraud
Misrepresentation and fraud are valid defenses; i.e., they prevent mutual assent.  The misrepresentation or fraud must go to a material factor in the contract.  In the case of an innocent misrepresentation, there must be  reasonable reliance; fraudulent misrepresentation requires only  actual reliance.  Fraud in the factum (i.e., where a party is tricked into assenting without understanding the significance of her action) results in no contract.  Fraud in the inducement (i.e., fraud as to the underlying transaction) makes the contract voidable by the deceived party.
2.	Absence of Consideration
If promises exchanged at the formation stage lack elements of bargain or legal detriment, no contract exists.
3.	Public Policy Defenses - Illegality of Contract
If the consideration or subject matter of a contract is illegal (e.g., contract to commit a murder), the contract is void. Exceptions: Plaintiff unaware of illegality while defendant knows of illegality; parties not in pari delicto (i.e., one party not as culpable as the other); or the illegality is the failure to obtain a license when the license is for revenue-raising purposes rather than for protection of the public.  If only the purpose behind the contract is illegal, the contract voidable by a party who was (i) unaware of the purpose; or (ii) aware but did not facilitate it and the purpose does not involve serious moral turpitude (e.g., murder).
B.	DEFENSES BASE ON LACK OF CAPACITY
In most jurisdictions, persons under age 18 lack capacity to contract.  (Some exceptions exist, e.g., contracts providing for the incapacitated party’s necessities.)  Upon reaching majority, the infant may affirm her contractual obligation (if there is no express disaffirmance, this will be construed as affirmance).  A contract between an infant and an adult is voidable by the infant but binding on the adult.  Insane persons lack capacity, although such persons may contract during a lucid interval.  Intoxicated persons may also lack capacity if the other party has reason to know of the intoxication.  Contracts induced by duress and coercion are voidable.
C.	DEFENCES TO ENFORCEMENT
1.	Statute of Frauds
a.	When Agreement Is Unenforceable
Certain agreements must be in writing (evidenced by a memorandum) to be enforced. These agrements are:
1.	Promises by executors or administrators to pay estates’ debts out of their own funds;
2.	Promises to answer for the debt or default of another (i.e., toact as a surety);
3.	Promises made in consideration of a marriage;
4.	Promises creating an interest in land (but leasehold interests for one year or less generally are not subject to the Statute);
5.	Promises that by their terms cannot be performed within one year (the year runs from the date of agreement, not the date of performance; lifetime contracts are not within the Statute because they could be performed within a year); and
6.	Agreements for the sale of goods (movable, tangible property) for $500 or more, except (i) specially manufactured goods, (ii) written confirmation of oral agreement between merchants, (iii) admission in pleadings or court that a contract for goods existed, or (iv) partial payment or delivery made and accepted.
b.	Memorandum Requirements
The Statute is satisfied if the writing contains the following:
1.	The identify of parties sought to be charged;
2.	The identification of the contract’s subject matter;
3.	Terms and conditions of the agreement;
4.	Recital of the consideration; and
5.	The signature of the party to be charged or his agent.
c.	When Statute Is Not Applicable
Noncompliance with the Statute renders a contract unenforceable.  The Statute is not applicable to the extent of admissions in court that a contract was formed or to the extent there was part performance.  For a  sale of goods, part payment or acceptance and receipt of part of the goods takes the contract out of the Statute to the extent of the part payment or partial acceptance and receipt of goods.  For a sale of land, most jurisdictions do not apply the Statute if there is performance that unequivocally indicates that the parties contracted for the sale of land.  Most jurisdictions require two of the following: payment (in whole or in part), possession, and/or valuable improvements. And note: In cases where it would be inequitable to allow the Statute of Frauds to defeat a meritorious claim, courts will occasionally use the doctrine of promissory estoppel to remove the contract from the Statute.
2.	Unconscionability
A contract may be violated where the clauses are so one-sided as to be unconscionable.  This includes contracts with inconspicuous risk-shifting provisions (e.g., disclaimers of warranty) and contracts of adhesion (“take it or leave it”).  Unconscionability is tested at the time the contract was made, not later (i.e., the contract must have been unfair when it was entered into). The defense is often applied where one party has substantially superior bargaining power.
V.	RIGHTS AND DUTIES OF NONPARTIES TO CONTRACT
A.	INTRODUCTION
Nonparties to a contract may have rights or duties in connection with the contract.
B.	THIRD-PARTY BENEFICIARIES
In the typical third-party beneficiary situation, A (the promisee) contracts with B (the promisor) that B will render some performance to C (the third-party beneficiary).
1.	Who Is Third-Party Beneficiary?
a.	Intended vs. Incidental Beneficiary
Only intended beneficiaries have contractual rights, not incidental beneficiaries.  In determining if a beneficiary is intended, consider whether the beneficiary (i) is identified in the contract, (ii) receives performance directly from the promisor, or (iii) has some relationship with the promisee to indicate intent to benefit.
b.	Creditor vs. Donee Beneficiary
Theree are two types of intended beneficiaries: (i) creditor beneficiary - a person to whom a debt is owed by the promisee, and (ii) donee beneficiary - a person the promisee intends to benefit gratuitously.
2.	When Does Beneficiary Acquire Contractual Rights?
A third party can enforce a contract only when his rights have vested.  This occurs when he (i) manifests assent to a promise in the manner requested by the parties; (ii) brings a suit to enforce the promise; or (iii) materially changes position in justifiable reliance on the promise.  Prior to vesting, the promisee and promisor are free to modify or rescind the beneficiary’s right under the contract.
3.	Who Can Sue Whom?
a.	Third-Party Beneficiary vs. Promisor
A beneficiary may sue the promisor on the contract.  The promisor may raise against the third- party beneficiary any defense that the promisor has against the promisee.  Whether the promisor may use the defenses the promisee would have against the third-party beneficiary depends on whether the promisor made an absolute promise to pay or only a promise to pay what the promisee owes the beneficiary.  If the promise is absolute, the promisor cannot assert the promisee’s defense; if the promise is not absolute, the promisor can assert the promisee’s defenses.
b.	Third-Party Beneficiary vs. Promisee
A creditor beneficiary can sue the promisee on the existing obligation between them.  She may also sue the promisor, but may obtain only one satisfaction.  A donee beneficiary has no right to sue the promisee unless grounds for a detrimental reliance remedy exists (see III.E.1., supra).
c.	Promisee vs. Promisor
A promisee may sue the promisor both at law and in equity for specific performance if he is not performing to the third person.
C.	ASSIGNMENT OF RIGHTS AND DELEGATION OF DUTIES
1.	Assignment
In the typical assignment situation, X (the obligor) contracts with Y (the assignor).  Y assigns his right to X’s performance to Z (the assignee).
a.	What Right May Be Assigned?
Generally, all contract rights may be assigned.  Exceptions: (i) assignment that would substantially change the obligor’s duty or risk (e.g., personal service contracts where the service is unique, requirements and output contracts where the assignee will substantially vary the quantity); (ii) assignment of future rihgts to arise from future contracts (not future rights in already existing contracts); and (iii) assignments prohibited by law (e.g., wage assignments).
(1)	Nonassignment Provisions
A clause prohibiting assignment of “the contract” will be construed as barring only delegation of the assignor’s duties.  A clause prohibiting assignment of contractual rights generally does not bar assignment, but merely gives the obigor the right to sue for damages.  However, if the contract provides that attempts to assign will be void, the parties can bar assignment.  Also, if the assignee has notice of the nonassignment clause, an assignment will be ineffective.
b.	What Is Necessary for an Effective Assignment?
For an assignment to be effective, the assignor must manifest an intent to immediately and completely transfer her rights.  A writing is usually not required to have an effective assignment.  The right to be assigned must be adequately described.  It is not necessary to use the word “assign”; any accepted words of transfer will sufice.  A gratuitous assignment is effective; consideration is not required.
c.	Is Assignment Revocable or Irrevocable?
An assignment for consideration is irrevocable. An assignment not for consideration is generally revocable.  However, in certain situations even a gratuitous assignment is irrevocable: (i) the obligor has already performed; (ii) a token chose (e.g., a stock certificate) is delivered; (iii) assignment of a simple (an intangible) is put in writing; or (iv) the assignee can show detrimental reliance on the gratuitous assignment (i.e., estoppel).  A gratuitous assignment may be terminated by death or bankruptcy of the assignor, notice of revocation by the assignor to the assignee or the obligor, the assignor taking performance directly from the obligor, or subsequent assignment of the same right by the assignor to another.
(1)	Effect of Assignment
The effect of an assignment is to establish privity of contract between the obligor and the assignee while exstiguishing privity between the obligor and the assignor.
d.	Who Can Sue Whom?
(1)	Assignee vs. Obligor
The assignee can sue the obligor, as the assignee is the real party in intest; i.e., the assignee - not the assignor - is entitled to performance under the contract.  (The obligor has as a defense against the assignee any defense inherent in the contract, e.g., failure of consideration and other defenses that came into existence before the obligor had knowledge of the assignment.)  The obligor cannot raise by way of defense any defenses the assignor might have against the assignee.
(2)	Assignee vs. Assignor
The assignee can sue the assignor for wrongfully exercising the power to revoke in an irrevocable assignment situation.  An action by the assignee against the assignor may also lie where the obligor successfully asser4ts a defense against the assignor in an action brought by the assignee against the obligor to enforce the obligation.  The assignor will not be liable to the assignee if the obligor is incapable of performing.
e.	Problems If There Have Been Successive Assignments of Same Rights
If the first assignment is revocable, a subsequent assignment revokes it.  If it is irrevocable, the first assignment will usually prevail over a subsequent assignment.  Several exceptions exist (if the second assignee has paid value and taken without notice of the first assignment): (i) subsequent assignee gets first judgment against obligor, (ii) subsequent assignee gets first payment of a claim from obligor, (iii) subsequent assignee gets delivery of a token chose, (iv) subsequent assignee is party to a novation releasing assignor, and (v) subsequent assignee can proceed against first assignee on an estoppel theory (estoppel could, of course, operate against subsequent assignee as well).
2.	Delegation of Duties
In the typical delegation situation, Y (the obigor/delegator) promises to perform for X (the obligee).  Y delegates her duty to Z (the delegate).
a.	What Duties May Be Delegated?
Generally, all duties may be delegate.  Exceptions: (i) the duties involve personal judgment and skill; (ii) delegation would change the obligee’s expectancy (e.g., requirements and output contracts); (iii) a special trust was reposed in the delegator by the other party to the contract; and (iv) there is a contractual restriction on delegation.
b.	Requirements for Effective Delegation
The delegator must manifest a present intention to make a delegation.  There are no special formalities to be complied with to have a valid delegation.  It may be written or oral.
c.	Rights and Liabilities of Parties
The obligee must accept performance from the delegate of all duties that may be delegated.  The delegator remains liable on the contract; thus, the obligee may sue the delegator for nonperformance by the delegate.  The obligee may sue the delegate for nonperformance, but can require the delegate to perform only if there has been an assumption (i.e., the delegate promises he will perform the duty delegated and this promise is supported by consideration or its equivalent).  This promise creates a contract between delegator and the delegate in which the obligee is a third-party beneficiary.
d.	Terminology
Today, words assigning “the contract” or “all my rights under the contract” are usually construed as including an assumption of the duties by the assignee, unless a contrary intention appears.
D.	NOVATION DISTINGUISHED
Novation substitutes a new party for an original party to the contract.  It requires assent of all parties and completely releases the original party. (See VII.C.7, infra.)
VI.	RULES OF CONTRACT CONSTRUCTION AND THE PAROL EVIDENCE RULE
A.	RULES OF CONTRACT CONSTRUCTION
A contract is construed as “whole,” and according to the ordinary mening of words.  If there is an inconsistency between provisions, written or typed provisions prevail over printed provisions.  Ambiguities are construed against the party preparing the contract, absent evidence of the intention of the parties.  Courts look to the custom and usage in a particular business and in a particular locale to determine the parties’ intent when it is unclear.  Courts generally will try to reach a determination that a contract is valid and enforceable.
B.	PAROL EVIDENCE RULE
Evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary contractual terms is inadmissible if the written contract is intended as a complete and final expression of the parties.  A “merger clause” (recital that the contract is complete on its face) strengthens the presumption that the written document is final.
1.	Exceptions
Evidence of the following is admissible: (i) formation defects (e.g., fraud, duress, mistake, illegality); (ii) the existence of a condition precedent to a contract; (iii) the parties’ intent regarding ambiguous terms; (iv) consideration problems (e.g., consideration stated in the contract was never paid); (v) a prior valid agreement which (as by mistake) is incorrectly reflected in the writing; (vi) a collateral agreement if it does not contradict or vary the main contract and if it is not so closely connected as to be part of the main contract; and (vii) subsequent modifications.
VII.	INTERPRETATION AND ENFORCEMENT OF THE CONTRACT
A.	INTRODUCTION
Two basic questions must be asked: (i) whether a present duty to perform has arisen (i.e., is there an absolute promise or have all conditions been met or excused); and (ii) whether the duty to perform has been discharged. In short, if a present duty to perform has arisen and has not been discharged, nonperformance will be a contractual breach.

PERFORMANCE OF CONTRACT

IS THERE A CONDITION TO A PARTY’S PERFORMANCE IN THE CONTRACT?

YES	Has the condition been excused?
NO	Has the condition been satisified?
NO	The party has no present absolute duty to perform.

NO
If there is no condition, the condition has been excused, or the condition has been satisfied then the party has an absolute duty to perform.
Has the duty been discharged by:
- Performance
- Impossibility
- Impracticability
- Frustration of purpose
- Mutual rescission
- Release
- Modification
- Accord and satisfaction
- Novation or
- Lapse?

NO	Performance due or party is in breach.

YES	Party’s contractual duties have been discharged

B.	WHEN HAS A CONTRACTING PARTY’S DUTY TO PERFORM BECOME ABSOLUTE?
1.	Distinctions Between Promises and Condition
a.	Definitions
A promise is a commitment to do or refrain from doing something.  It may be conditional or unconditional.  A condition is an event the occurrence or nonoccurrence of which will create, limit or extinguish the absolute duty to perform; it is a promise modifier.
b.	Interpretation of Provision as Promise or Condition
It is not always clear whether a contract provision is a promise or a condition.  The basic test is “intent of the parties,” as judged by the words of the agreement, the prior practices of the parties, and custom in the business.  In doubtful situations, the courts prefer a promise, since a promise will support the contract.
c.	Condition or Promise
A provision may be a promise for one party and a condition for the other, as in an exchange where the second party’s duty to pay is conditioned on the first party’s performance of her promise.  A provision may also be both a promise and a condition for the same party, as where a party is under a duty to reasonably ensure that a condition comes about (e.g., to secure financing).
2.	Classification of Conditions
a.	According to time of Occurence
A condition precedent is one that must occur before an absolute duty of performance arises in the other party.  Conditions concurrent are those that are capable of occuring together, as where property is tendered in exchange for cash.  A condition subsequent is one that cuts off an already existing duty of performance.
b.	Express, Implied, and Constructive Conditions
Express conditions are those expressed in the contract.  Implied conditions (called “implied in fact” conditions) are those to be inferred from evidence of the parties’ intention. Constructive conditions (called “implied in law” conditions) are those read into a contract by the court without regard to the parties’ intention in order to ensure that the parties receive what they bargained for. Constructive conditions may relate to time of performance, i.e. which party performs first.
3.	Have the Conditions Been Excused?
A duty of performance becomes absolute when conditions are either performed or excused. Conditions may be excused in several ways:
a.	Excuse of Condition by Failure to Cooperate
A party who wrongfully prevents a condition from occuring will no longer be given the benefit of it.
b.	Excuse of Condition by Actual Breach
An actual, material breach by one party excuses the other’s duty of counterperformance. (A minor breach might suspend the duty, but will not excuse it.)
c.	Excuse of Condition by Anticipatory Repudiation
Anticipatory repudiation must be unequivocal, not just an expression of doubt.  It applies only if there are executory (unperformed) duties on both sides of a bilateral contract. (If the nonrepudiating party has nothing futher to do at the time of repudiation - he has performed his part of the contract - he must wait until the time originally set for perfomance; the repudiator may change his mind up to that time.)  Anticipatory repudiation gives the nonrepudiating party four alternatives:
1.	Treat the contract as totally repudiated and sue immediately;
2.	Suspend his own performance and wait until the performance is due to sue;
3.	Treat the repudiation as an offer to rescind and treat the contract as discharged; or
4.	Ignore the repudiation and urge performance.
Repudiation may be contracted until the nonrepudiating party has accepted the repudiation or detrimentally relied on it.
d.	Excuse of Condition by Prospective Inability or Unwillingness to Perform
A party might have reaonable grounds to believe the other party will be unable or unwilling to perform when performance is due.
(1)	Distinguish from Anticipatory Repudiation
Prospective inability to perform merely raises doubts about performance; thus, it does not meet the unequivocality requirement of anticipatory repudiation.
(2)	What conduct Will Suffice?
Conduct is judged according to a reasonable person standard.
(3)	Effect of Prospective Failure
The innocent party may suspend her own performance until she receives adequate assurance of performance.  If these are not forthcoming, she may treat the failure as repudiation.
(4)	Retraction
Retraction is possible, but may be ineffective if the other party has changed her position in reliance on the prosepective failure.
e.	Excuse of Condition by Substantial Performance
Where a party has almost completely performed his duties, but has breached in some minor way, the rule of substantial performance avoids forefeiture of a return performance.
(1)	Application
The rule is generally applied only where constructive conditions are involved; applying it to express conditions might defeat the express intent of the parties that performance be perfect.  Substantiality of performance is judged by the same standards as materiality of breach. (See VIII.B.1, infra.) The rule is usually not applied if the breach was willful.
(2)	Damages Offset
The substantially performing party may be required to pay damages to compensate the other party for the incomplete performance.
(3)	Applicability of Substantial Performance to Sale of Goods
Although the UCC sets forth a “perfect tender rule,” it is subject to exceptions, such as the provision for a seller’s right to cure defective tender.
f.	Excuse of Condition by Divisibility of Contract
Where a party performs on of the units of a divisible contract, she is entitled to the agreed equivalent for that unit even though she fails to perform the other units.
(1)	What Is a Divisible Contract?
Three tests must be met to find that a contract is divisible:
1.	The performance of each party is divided into two or more parts under the contract;
2.	The number of parts due from each party is the same; and
3.	The performance of each part by one party is the agreed equivalent of the corresponding part by the other party.
(2)	Installment Contracts
Under the UCC, a contract that authorizes or requires delivery in separate lots is an installment contract.  The buyer may declare a total breach only if defects in an installment are such as to materially impair the value of the entire contract.
g.	Excuse of Condition by Waiver or Estoppel
(1)	Estoppel Waiver
A party may “waive” a condition by indicating that he will not insist upon it.  However, such a waiver may be retracted at any time unless the other party relies on the waiver and changes her position to her detriment.  Upon such detrimental reliance, the waiving party is estopped from asserting the condition.
(2)	Election Waiver
If a condition is broken, the party who was to have its benefit may either terminate his liability or continue under the contract.  If he chooses the latter, he is deemed to have waived the condition.
(3)	Conditions that May Be Waived
If no consideration is given for the waiver, the condition must be one that is ancillary or collateral to the main purpose of the contract.  Otherwise, the waiver amounts to a gift and is thus not enforceable.
(4)	Right to Damages for Failure of Condition
Waiving a condition does not waive one’s right to damages for the other’s defective performance.
h.	Excuse of Condition by Impossibility, Impracticability, or Frustration
Conditions may be excused by impossibility, impracticability, or frustration of purpose according to the tests described under discharge. (See, C.4., infra.)
C.	HAS THE DUTY TO PERFORM BEEN DISCHARGED?
Once it is established that htere is an immediate duty to perform (either because the duty is unconditional or the condition has been satisfied or excused), that duty must be discharged.
1.	Discharge by Performance or Tender of Performance
The duty may be discharged by complete performance or tender of performance, assuming the tendering party possesses the present ability to perform.
2.	Discharge by Condition Subsequent
The duty may be discharged by occurrence of a condition subsequent.
3.	Discharge by Illegality
The duty may be discharged by supervening illegality of the subject matter.
4.	Discharge by Impossiblity, Impracticability, or Frustration
a.	Discharge by Impossiblity
The duty may be discharged by impossibility (measured by an objective standard - nobody could perform according to the terms of the contract).  This impossibility must arise after the contract was entered into.  A party who has rendered part performance prior to the imossibility may recocer in quasi-contract.  Impossibility examples include: (i) death or physical incapacity of a person necessary to effectuate the contract, (ii) a subsequently enacted law rendering the contract subject matter illegal, and (iii) subsequent destruction of the contract’s subject matter or means of performance, as long as the promisor was not at fault and it is truly impossible to fulfill the terms of the contract at any price.
b.	Discharge by Impracticability
Modern courts will also discharge a duty because of impracticability (subjective test). Impracticability requires that a party encounter extreme and unreasonable difficulty or expense that was not anticipated.  A mere change in the difficulty or expense due to normal risks that could have been anticipated (e.g., increase in price of raw materials) will not warrant discharge by impracticability.
c.	Discharge by Frustration of Purpose
A duty may also be discharged by frustration of purpose.  This requires (i) a supervening event; (ii) that was not reasonably foreseeable at the time of entering into the contract; (iii) which completely or almost completely destroyed the purpose of the contract; and (iv) the purpose was understood by both parties.
5.	Discharge by Rescission
a.	Mutual Rescission
Duties may be discharged by mutual rescission, i.e., where both parties expressly agree to it.  the contract to be rescinded must be executory on both sides. A mutual agreement to rescind will usually be enforced where a bilateral contract has been partially performed.  Where the contract is unilateral, a contract to mutually rescind where only one party still has a duty to perform will be ineffective (unless there is an offer of new consideration by the nonperforming party, there are lements of promissory estoppel, or the original offeree manifests an intent to make a gift of the obligation owed her).  Mutual rescission may be made orally unless the subject matter is within the Statute of Frauds or it involves a contract for the sale of goods.
b.	Unilateral Rescission
Rescission may be unilateral where only one of the parties to the contract desires to rescind it.  In this case, the party must have adequate legal grounds (e.g., mistake, misrepresentation, or duress).
6.	Partial Discharge by Modification of Contract
A duty may be discharged partially by modification of the contract.  There must be mutual assent to the modifying agreement.  Generally, consideration is necessary, although courts will usually find it where each party has limited his right to enforce the original contract.  Consideration is not necessary where the modification is only a correction or for a modification of a contract for the sale of goods
7.	Discharge by Novation
A duty may be discharged by a novation, i.e., a new contract substituting a new party.  Necessary elements are: (i) a previously valid contract; (ii) an agreement among all parties, including the new party; (iii) immediate extinguishment of contractual duties as between the original contracting parties; and (iv) a valid new contract.
8.	Discharge by Cancellation
Duties may be discharged by cancellation of the original agreement.
9.	Discharge by Release
Duties may be discharged by a release and/or covenant not to sue.  The release must be in writing and supported by new consideration or promissory estoppel elements.
10.	Discharge by Substituted Contract
There is a discharge by substituted contract where the parties to a contract enter into a second contract that expressly or impliedly immediately revokes the first contract.
11.	Discharge by Accord and Satisfaction
a.	Accord
An accord is an agreement to discharge an esisting contractual duty.  Generally, an accord requires consideration.  Consideration less than that of the original contract will be sufficient if it is of a different type or is to be paid to a third party (e.g., an accord that agrees to exchange a $500 TV set for a $700 cash debt is valid).
(1)	Effect
An accord does not discharge a contractual duty.  It merely suspends the other party’s right to enforce it
(2)	Partial Payment of Original Debt
Payment of a smaller amount than is due on a claim is valid consideration if made in good faith and there is a bona fide dispute as to the claim.  This is often accomplished by tendering a check conspicuously marked “payment in full.”
b.	Satisfaction
Satisfaction is the performance of the accord.  It discharges both the accord and the original debt.
12.	Discharge by Account Stated
Duties may be discharged by an account stated; i.e., parties agree to an amount as a final balance due from one to the other as settlement of all previous transactions between them.  It is necessary that there have been more than one prior transaction.  A writing is required only if one or more of the original transactions was subject to the Statute of Frauds.
13.	Discharge by Lapse
Duties may be discharged by the lapse of time if each party’s duty is a condition to the other’s duty and neither party performs her duty.
14.	Discharge by Operation of Law
Duties may be discharged by operation of law (e.g., the contractual duty of performance is merged in a court judgment for breach of the duty; discharge in bankruptcy bars any right of action on the contract).
15.	Effect of Running of Statute of Limitations
Where the statute of limitations on an action has run, it is generally held that an action for breach of contract may be barred.  Note,  however, that it is only the judicial remedies that are barred; the running of the statute does not discharge the duties.
VIII.	BREACH OF CONTRACT AND AVAILABLE REMEDIES
A.	WHEN DOES BREACH OCCUR?
If (i) the promisor is under an absolute duty of performance and (ii) this duty has not been discharged, then this failure to perform is accordance with the contractual terms may be held to be a breach of contract.
B.	MATERIAL OR MINOR BREACH
A breach is material if, as a result of the breach, the nonbreaching party does not receive the substantial benefit of her bargain.  If the breach is material, the non-breaching party (i) may treat the contract as at an end (any duty of counterperformance is discharged), and (ii) has an immediate right to all remedies for breach of the entire contract, including total dsamages.  (Note that a minor breach if coupled with anticipatory repudiation is treated as a material breach.)
1.	Test for Materiality
In determining whether a breach is material or minor, courts look at:
1.	The amount of benefit received by the nonbreaching party;
2.	The adequacy of compensation for damages to the injured party;
3.	The extent of part performance by the breaching party;
4.	Hardship to the breaching party;
5.	Negligent or wilful behaviour of the breaching party; and
6.	The likelihood that the breaching party will perform the remainder of the contract.
The nonbreaching party must show that he was both willing and able to perform.
2.	Timeliness of Performance
Failure to perform by the time stated in the contract is generally not a material breach if performance is rendered within a reasonable time.  However, if the nature of the contract makes timely performance essential, or if the contract expressly provides that time is of the essence, then failure to perform on time is a material breach.
C.	REMEDIES FOR BREACH
There are several remedies for breach of contract, e.g., damages, specific performance, and rescission and restitution.
1.	Damages
There are three kinds of damages: compensatory, nominal, and punitive. Compensatory damages are the most important for exam.  The goal of compensatory damages is to put the nonbreaching party into as good a position as the party would have been had the other party fully performed.  There are two kinds of compensatory damages and the nonbreaching party may recover both: the “standard measure” (cost of a substitute) and consequential damages.
a.	Standard Measure of Damages
In most cases, the standard measure of damages will be expectation damages that would permit the plaintiff to buy a substitute.  In cases where expectation damages are speculative, plaintiff may recover reliance damages (i.e., the cost she has incurred by performing).
(1)	Contracts for Sale of Goods
Damages are measured by the difference between the contract price and the market price when the seller tenders the goods or when the buyer learns of the breach.  If the buyer breaches, under the UCC the seller may withhold delivery or stop delivery by the carrier, resell the goods and recover the difference, or recover ordinary contract damages for nonacceptance.  If the buyer has already accepted the goods, or if the seller is unable to resell identified goods, the seller may recover the contract price.  If the seller breaches, under the UCC the buyer may reject nonconforming goods, cancel, cover, recover goods identified to the contract, obtain specific performance (in some cases), or revoer damages for nondelivery.
(2)	Contracts for Sale of Land
Damages are measured by the difference between the contract price and fair market value.
(3)	Employment Contracts
If an employment contract is breached by the employer, the measure of damages is full contract price (less wages actually earned elsewhere after the breach); if breached by the employee, the measure is whatever it costs to replace the employee.  The modern view allows the employee to offset any monies due from work done to date.
(4)	Construction Contracts
If a construction contract is breached by the owner, the builder will be entitled to profits that would have resulted from the contract plus any costs expended.  (If the contract is breached after construction is completed, the measure is the full contract price plus interest.)  If the contract is breached by the builder, the owner is entitled to the cost of completion plus reasonable compensation for the delay.  Most courts allow the builder to offset or recover for work performed to date to avoid unjust enrichment of the owner.  (If the breach is only late performance, the owner is entitled to damages incurred because of late performance.)
b.	Consequential Damages
Consequential damages are in addition to the standard measure and will be given if a reasonable person would have foreseen at the time of entering the contract that such damages would result from the breach.  Note that plaintiff bears the burden of proving the foreseeability of damages where “special circumstances” are involved (i.e., whether those special circumstances were made clear to the other party at the time of contract formation).
c.	Punitive and Nominal Damages
Punitive damages are generally not awarded in commercial contract cases.  Nominal damages may be awarded where a breach is shown but no actual loss is proven.
d.	Liquidated Damages
A liquidated damages provision will be valid if (i) damages were difficult to ascertain at the time the contract was formed, and (ii) the amount agreed upon was a reasonable forecast of compensatory damages.  If these requirements are met, plaintiff will receive the liquidated damages amount even though no actual money damages have been suffered.  If the liquidated damages amount is unreasonable, the courts will construe this as a penalty and will not enforce the provision.
(1)	UCC Rule
Under the UCC, a court can consider the actual damages incurred in determining whether a liquidated damages clause is valid.
e.	Dut to Mitigate Damages
The nonbreaching party has a duty to mitigate damages.  If she does not do so, her damages will be reduced by the amount that might have been avoided by mitigation.  In employment contracts, the employee is under a duty to use reasonble care to find a like position.  In sale of goods contracts, cover must be reasonable, in good faith, and without unreasonable delay.  In contruction and manufacturing contracts, mitigation requires the builder or manufacturer to cease work unless completion would decrease damages, e.g., finishing partly manufactured goods.
2.	Suit in Equity for Specific Performance
Where the legal remedy (i.e., damages) is inadequate, the nonbreaching party can seek specific performance - esentially an order from the court to perform or face contempt of court charges.  The legal remedy is considered inadequate when the subject matter of the contract is rare or unique.
a.	Available for Land and Unique Goods But Not for Services
Specific performance is always available for contracts involving the sale of land (because all land is considered unique) and for contracts for the sale of unique or rare goods (e.g., a unique painting or gasoline in short supply because of an embargo).  However, even where services are unique, specific performance will not be granted in a service contract because of difficulty in supervision and because the courts feel it is tantamount to involuntary servitude.
b.	Equitable Defenses Available
In addition to standard contract defenses, an action for specific performance is subject to the equitable defenses of:
1.	Laches - a claim that the plaintiff has delayed bringing the action and that the delay has prejudiced the defendant;
2.	Unclean hands - a claim that the party seeking seeking specific performance is guilty of wrongdoing in the transaction being sued upon; and
3.	Sale to a bona fide purchaser - a claim that the subject matter has been sold to a person who purchased for value and in good faith.
3.	Rescission and Restitution
The nonbreacher may rescind (i.e., cancel) and sue for damages at law or in equity.  If the nonbreacher transferred a benefit to the breacher while attempting to perform, the nonbreacher is entitled to restitution for the benefit transferred.
4.	Quasi-Contractual Relief
Otherwise, if there is no contractual relief available under these rules, quasi-contractual relief might be proper.
a.	Failed Contract
Where quasi-contractual relief is used to remedy a failed contract, all that is necessary is that the failed contract results in unjust enrichment of one of the parties.  Even the breaching party may be able to recover in quasi-contract, as long as the breach did not involve seriously wrongful or unconscionable conduct.
b.	Where No Contract Is Involved
Where there is no contractual relationship between the parties, quasi-contractual relief requires that:
1.	One party has conferred a benefit on the other by rendering services or expending properties;
2.	The conferring party had a reasonable expectation of being compensated;
3.	The benefits were conferred at the express or implied request of the other person; and
4.	Unjust enrichment would result if defendant were allowed to retain the benefits without compensating plaintiff.
The modern rule grants relief even though defendant, in fact, received no benefit, as long as plaintiff expended something on defendant’s behalf.  The measure of relief is the benefit received by defendant, or the detriment suffered by plaintiff where the plaintiff has not breached the contract and where the benefits are difficult to measure or where the benefit measure would achieve an unfair result.  Relief may exceed the proposed contract price.