Contracts and Uncertainty
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Requirements Contracts Under the Uniform Commercial Code
654 UNIVERSITY OF PENNSYLVANIA LAW REVIEW [Vol. 102 REQUIREMENTS CONTRACTS UNDER THE UNIFORM COMMERCIAL CODE The merchant whose selling market is subject to fluctuation often seeks a means, perhaps at a constant price, to assure a source of supply for his raw materials which will relieve him of the burden of predicting his needs beyond the time required for production. The common method of accom- plishing this is to negotiate a requirements contract whereby the buyer binds himself to purchase all of his requirements from the seller in exchange for a promise from the seller to supply the buyer's needs. A manufacturer, wishing to avoid the problem of correlating his production with future demand, may seek an output contract in which he binds himself to. sell all of his production to the buyer in return for the latter's promise to take all of the output. In this way the seller may shift the burden of marketing his production. Since the problems of output and requirements contracts are in many respects similar, this Note will utilize the term requirements contract to refer generally to both types of agreements.' Requirements contracts have been held void by courts which took the view that the terms of the agreement were too uncertain to be enforced, or that since the buyer did not bind himself to have requirements, performance of the contract depended on the buyer's whim and therefore lacked con- sideration.2 More recent authority, however, recognizes that in the bar- gained-for exchange of promises each party has limited his freedom to some extent and that the terms "requirements" or "needs" supply a suffi- ciently objective standard to be enforceable.3 Thus, today, the typical re- 1. -
Requirements and Output Contracts: Quantity Variations Under the Ucc
IukI 10urnal VOLUME 1973 AuGusT NUMBER 3 REQUIREMENTS AND OUTPUT CONTRACTS: QUANTITY VARIATIONS UNDER THE UCC JOHN C. WEISTART* INTRODUCTION: THE AMBIGUITY OF THE CODE Despite the many advantages which may attend revisions of basic commercial law such as that undertaken in the Uniform Commerical Code, there is a danger that proposal of a broad-based modification will invite commentary on many fronts and so diffuse the attention of both drafters and critics that the relative importance of a particular change may not be appreciated. Such appears to have been the case with re- spect to section 2-306 of the UCC dealing with requirements and out- put contracts. The section is a significant departure from prior uniform sales legislation which attempted no codification of the law in this area.1 If the originality of the codification did not prompt debate, then * Professor of Law, Duke University. A.B. 1965, Illinois Wesleyan University; J.D. 1968, Duke University. 1. Pre-Code decisions treating output and requirements contracts are discussed in IA A. CoRaiN, CoTIRa cTs §§ 156-58 & 168 (1963); 3 id. § 569 (1960); 1 S. WILLisToN, CoNTAcrs § 104A (3d ed. 1957); 3 id. § 421A (3d ed. 1960); 2 S. WmLisroN, SALES §§ 464(a)-(d) (1948); and Havighurst & Berman, Requirement and Output Contracts, 27 ILL. L. REV. 1 (1932). HEREINAFTER THE FOLLOWING CITATIONS WILL BE USED IN THIS ARTICLE: A. CORBIN, CoNTRAcTs (1960) [hereinafter cited as ColuIw]; 3 R. DtJsENBERG & L. KING, SALE AND BuLx SALES (1968) [hereinafter cited as DUESENBERG & KING]; Havighurst & Berman, Requirement and Output Contracts, 27 ILL. L. -
Limitations on the Availability of Specific Performance
COMMENTS past history so that they may impose an appropriate penalty,"s but this pro- cedure greatly increases the possibility that the verdict will be influenced by factors not relevant to the question of the defendant's guilt or innocence. 33 When the court imposes punishment the jury must be discouraged from ac- quitting defendants whose guilt is certain but whom they are unwilling to con- vict because they fear that the penalty will be too harsh. Permitting the jury to recommend mercy is therefore desirable, since it would tend to eliminate that fear. Yet if the rule of reasonable doubt is to be adhered to, either juries must be more strictly controlled in making recommendations of mercy, or it must be ad- mitted that the policy of the law has changed and that in doubtful cases it is now preferable to convict defendants and allow jurors to ease their consciences in so doing by convincing themselves that the penalty will be light. LIMITATIONS ON THE AVAILABILITY OF SPECIFIC PERFORMANCE Normally the damages which are awarded for breach of contract are intended to put a plaintiff in as good a position as he would have been in had the agree- ment been carried out. Such expectation damages insure a rough measure of compensation for hard-to-prove or hard-to-measure elements of reliance and for the distress and insecurity which result from failure to keep promises. In addition, good guesses about future needs in our free enterprise economy are rewarded. One would therefore naturally expect that the plaintiff would be given, whenever possible, an exact equivalent of performance, rather than its approximation in damages. -
Vallario Contract Formation Course Materials Fall 2020 Table of Contents
Vallario Contract Formation Course Materials Fall 2020 Table of Contents INTRODUCTION ................................................................................................................ 2 Sources of Law .............................................................................................................................2 Case briefing .................................................................................................................................3 Legal analysis and IRAC ..............................................................................................................3 MODULE ONE: OFFER ..................................................................................................... 7 A. Offer ........................................................................................................................................7 B. Destruction of the Offer ............................................................................................................9 C. Irrevocable Offers ................................................................................................................. 12 MODULE TWO: COMMON LAW ACCEPTANCE ........................................................ 13 MODULE THREE: OFFER AND ACCEPTANCE UNDER THE UCC ........................... 16 A. Offer and Acceptance under UCC ...................................................................................... 17 B. Battle of the Forms ................................................................................................................ -
The Fraud in the Inducement Exception to the Economic Loss Doctrine
Marquette University Law School Marquette Law Scholarly Commons Faculty Publications Faculty Scholarship 1-1-2007 The rF aud in the Inducement Exception to the Economic Loss Doctrine Ralph C. Anzivino Marquette University Law School, [email protected] Follow this and additional works at: http://scholarship.law.marquette.edu/facpub Part of the Law Commons Publication Information Ralph C. Anzivino, The rF aud in the Inducement Exception to the Economic Loss Doctrine, 90 Marq. L. Rev. 921 (2007) Repository Citation Anzivino, Ralph C., "The rF aud in the Inducement Exception to the Economic Loss Doctrine" (2007). Faculty Publications. Paper 10. http://scholarship.law.marquette.edu/facpub/10 This Article is brought to you for free and open access by the Faculty Scholarship at Marquette Law Scholarly Commons. It has been accepted for inclusion in Faculty Publications by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contact [email protected]. THE FRAUD IN THE INDUCEMENT EXCEPTION TO THE ECONOMIC LOSS DOCTRINE RALPH C. ANZIVINO* I. Introduction .............................................................................. 922 II. The Differences Between Contract and Tort Actions ......... 923 III. The Economic Loss Doctrine ................................................. 924 IV. The Genesis and Growth of the Economic Loss D octrine in W isconsin ............................................................. 928 V. Identifying Economic Losses ................................................. -
CONTRACTS October 2007 Question 3
FYLSX CONTRACTS October 2007 Question 3 Apple orchards ("Appre"), a grower of appres, entered into a written contract with Best Bakery ("Bakery") to supply Bakery with all of Bakery,s apple requirements for one year. Under the contract, Apple was required to deriver on the iirst dav of each month the quantity of appres that Bakery required. The contract price was $5,000 per month, payable upon detivery of eich shipment. Apple delivered the required quantity each month for the first six months. At the end of the sixth month, Apple assigned its contract with Bakery to FruitCo, which undertook to deliver the requisite quantities for the remainder of the contract term Bakery, having some doubts about FruitCo,s reliability, wrote both Apple'tirat and Fruitco a letter in which Bakery stated, "l want to be absolutely sure both Apple and Fruitco wirr guarantee that I receive the quantity of appres that I reeuire each month." Neither Apple nor FruitCo responded to Bakery's letter. In the seventh and eighth months of the contract, Fruitco made deliveries that were substantiallv short of the quantity that Bakery required and that Apple had previously delivered. Nevertheless, Bakery accepted and paid for the short shipments. At the end of the eighth month, Bakery entered into a contract with Davis Farms ("Davis") !o supply Bakery with its requirements for apples for the remaining four months of the year. The contract price was $7,500 per month, payablelpon delivery of each shipment. Bakery wrote a letter to Apple and Fruitco informing them that Bakery would no longer accept any apple shipments from either oi them. -
Contract Resources on Practical Law
Contract Resources on Practical Law Below is a list of essential Practical Law resources to help you get up to speed on the basics. These helpful resources include: • Practice Notes: Plain language, how-to-guides. • Standard Documents: Sample templates of pleadings, motions, and other documents that include helpful drafting notes which provide guidance and direction. • Checklists and Flowcharts: Process oriented guides to give you a quick overview of required steps for various issues. Acceptance of Goods Learn more about a buyer's rights under the Uniform Commercial Code (UCC) to accept, reject and revoke its acceptance of a seller's delivery or tender of goods. Anticipatory Repudiation and Adequate Assurances of Future Performance – Practice Note Gain an understanding of the Uniform Commercial Code (UCC) concepts of anticipatory repudiation and the right to demand adequate assurances of performance of a contract for the sale of goods. Consumer Remedies for Defective Goods or Services – Practice Note A description of the options available to a consumer that has purchased a defective product or service. It includes a discussion of warranty and contract breach claims, litigation considerations, federal, state and local governmental support and organizations like the Better Business Bureau that can offer assistance. Contracts: Equitable Remedies – Practice Note Learn more of the application of equitable remedies under US contract law. Courts generally favor legal remedies for breach of contract, but they have the discretion to award equitable relief if legal damages are inadequate to compensate the aggrieved party for its losses. This Note covers types of equitable remedies (including specific performance, injunction, reformation and rescission), limitations and defenses, the use of contractual provisions expressly addressing the availability of equitable relief, and the availability of equitable remedies under major commercial contract types. -
Stroock POSITIVE ENERGY
STROOCK POSITIVE ENERGY Issue 4 April 2015 What’s Required in Requirements A requirements contract is an agreement Contracts between a buyer and a seller whereby the seller promises to sell to the buyer, and the buyer Requirements contracts are prevalent in various promises to purchase from the seller, all of a industries because they serve the purposes of buyer specific type of good that the buyer requires over and seller alike. In the last six months, the term of the contract.2 Requirements contracts requirements contracts in the amounts of hundreds differ from traditional contracts for the purchase of millions of dollars were entered into for the and sale of goods because they do not specify a supply of goods such as geospatial mapping specific quantity of goods to be purchased by the products for use by the U.S. intelligence buyer. community and the supply of mechanical parts for use by the U.S. Navy.1 Although requirements contracts are a valuable ALSO IN THIS ISSUE tool for certain businesses, they are not without their own set of unique risks and issues. This Update: Power Up in the Air (Part II): article focuses on some of the key elements that EPA Proposed Regulations for New and parties should consider when structuring a Existing Power Plants………………………7 requirements contract, and provides important pointers to parties that are considering entering into requirements contracts. 2 Although this article focuses on requirements contracts, a corollary contract exists, known as an output contract, in which a seller promises to sell and 1 See the following news links: a buyer promises to purchase, all of the output http://www.afcea.org/content/?q=node/13661; produced by the seller for a certain commodity http://www.huntingtonnews.net/98739; during the term of such output contract. -
Specific Performance Versus Damages for Breach of Contract
ISSN 1045-6333 HARVARD JOHN M. OLIN CENTER FOR LAW, ECONOMICS, AND BUSINESS SPECIFIC PERFORMANCE VERSUS DAMAGES FOR BREACH OF CONTRACT Steven Shavell Discussion Paper No. 532 11/2005 Harvard Law School Cambridge, MA 02138 This paper can be downloaded without charge from: The Harvard John M. Olin Discussion Paper Series: http://www.law.harvard.edu/programs/olin_center/ The Social Science Research Network Electronic Paper Collection: http://papers.ssrn.com/abstract_id=###### JEL Classifications: D8, K12 Specific Performance versus Damages for Breach of Contract Steven Shavell* Abstract: When would parties to a contract want performance to be specifically required, and when would they prefer payment of money damages to be the remedy for breach? This fundamental question is studied here, and an answer is provided that is based on a simple distinction between contracts to produce goods and contracts to convey property. Setting aside qualifications, the conclusion for breach of contracts to produce goods is that parties would tend to prefer the remedy of damages, essentially because of the problems that would be created under specific performance if production costs were high. In contrast, parties would often favor the remedy of specific performance for breach of contracts to convey property, in part because there can be no problems with production cost when property already exists. The conclusions reached shed light on the choices made between damages and specific performance under Anglo- American and under civil law systems, and they also suggest the desirability of certain changes in our legal doctrine. * Samuel R. Rosenthal Professor of Law and Economics, Harvard Law School. -
Lesson 8-1 Outline Lesson 8-1 Review
Name ______________________________________Date__________Class _______________ LESSON 8-1 TYPES OF CONSIDERATION Lesson 8-1 Outline I. Consideration A. Promise, Act, or Forbearance B. Contracted Exchanges C. Legal Value D. Adequacy of Consideration E. Nominal Consideration Lesson 8-1 Review Vocabulary Review Define the following vocabulary terms. 1. consideration That which is given or received in a contract. 2. gift The transfer of ownership without receiving anything in return. 3. donor The person giving a gift. 4. donee The person receiving a gift. 5. forbearance A promise to not do something. 6. promisor The person who promises an action or forbearance. 7. promisee The person to whom a promise is made. 8. legal value Means there has been a change in a party’s legal position as a result of a contract. 9. nominal consideration The token amount, for example, “one dollar ($1) and other good and valuable consideration,” identified in certain written contracts when neither party can state the amount precisely nor do they want to publicize it. Chapter 8 Consideration 45 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Lesson 8-1 Review (continued) Concept Review 10. Define consideration. Consideration is what a person demands and generally must receive in order to make his or her promise legally binding. 11. How can legal value be found in the exchange of benefit for a detriment? With legal value, the detriment is the giving up of a legal right. -
Sales Revision of Uniform Commercial Code Article 2
DRAFT FOR DISCUSSION ONLY REVISION OF UNIFORM COMMERCIAL CODE ARTICLE 2 - SALES NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS DECEMBER 1, 1998 REVISION OF UNIFORM COMMERCIAL CODE ARTICLE 2 - SALES WITH COMMENTS COPYRIGHT© 1998 by THE AMERICAN LAW INSTITUTE and the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS The ideas and conclusions set forth in this draft, including the proposed statutory language and any comments or reporter’s notes, have not been passed on by the National Conference of Commissioners on Uniform State Laws, the American Law Institute, or the Drafting Committee. They do not necessarily reflect the views of the Conference and its Commissioners, the Institute and its Members, and the Drafting Committee and its Members and Reporters. Proposed statutory language may not be used to ascertain the intent or meaning of any promulgated final statutory proposal. DRAFTING COMMITTEE TO REVISE UNIFORM COMMERCIAL CODE ARTICLE 2 - SALES LAWRENCE J. BUGGE, 313 Walnut Grove Drive, Madison, WI 53717-1228, Chair JOHN FOX ARNOLD, 714 Locust Street, St. Louis, MO 63101 BORIS AUERBACH, 332 Ardon Lane, Wyoming, OH 45215 GERALD L. BEPKO, Indiana University, 355 N. Lansing Street, Indianapolis, IN 46202 AMELIA H. BOSS, Temple University, School of Law, 1719 N. Broad Street, Philadelphia, PA 19122, The American Law Institute Representative BRUCE A. COGGESHALL, One Monument Square, Portland, ME 04101 CHRISTOPHER D. DINGELL, P.O. Box 30036, Room 910, Farnum Building, Lansing, MI 48909 HENRY DEEB GABRIEL, JR., Loyola University, School of Law, 526 Pine Street, New Orleans, LA 70118 BION M. GREGORY, Office of Legislative Counsel, State Capitol, Suite 3021, Sacramento, CA 95814-4996 WILLIAM H. -
Damages for Breach of Contract
I. Damages in General 2 II. Limitations on Damages 3 A. Remoteness/Foreseeability 3 B. Uncertainty 4 C. Avoidability 5 III. Liquidated Damages 7 IV. Specific Performance 11 A. Land or Goods 11 B. Personal Services 12 V. Restitution 13 A. On the Contract 13 B. For the Party in Breach 14 C. Quasi-Contract 14 VI. Consideration 15 A. Consideration in General 15 B. Pre-Existing Duty Rule 18 VII. Reliance/Promissory Estoppel 22 VIII. Offer and Acceptance 27 A. Introduction to Objective Theory 27 B. Preliminary Negotiations 28 C. Agreements in Principle/Letters of Intent 32 D. Revocation 33 E. Acceptance by Correspondence 34 F. Acceptance by Performance 35 G. Acceptance by Silence 37 H. Acceptance in General 38 IX. Interpreting Assent 39 A. Agreements to Agree 39 B. Illusory Promises 40 C. Ambiguous Terms 42 D. Context 45 X. Unconscionability, Good Faith, Warranties 46 A. Unconscionability 46 B. Good Faith 48 C. Implied Warranties 50 D. Express Warranties 51 XI. Writings as Evidence 52 A. Parol Evidence Rule 52 B. Statute of Frauds 55 XII. Constructive Terms: Material Breach 56 XIII. Mistake 57 A. Mutual Mistake 57 B. Unilateral Mistake 61 XIV. Impossibility/Impracticability/Frustration 63 A. Impossibility/Impracticability 63 B. Frustration 64 1 I. Damages for Breach of Contract Three ―Damage Interests‖ •Expectation [Benefit of the Bargain]: Put promisee in position he would have been in had the contract been performed: •Measure: Wealth of promisee if promise had been performed – Actual Wealth •Reliance (losses incurred due to expectation): Put