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UVA Notes > COMM 341 > COMM 341: Breach of contract

Facet I

• 1. Promise
  • 1. A
  • 1. B
  • 1. C
• 2. Consideration
  • (this is the two way street)
  • A PROMISE MUST BE A TWO WAY STREET
• 3. Agreement
• 4. Conditions
• 5. Broken

1.

1. A

Promisor makes a promise to promisee

Defaults for 1.A

1. Signed documents

• Only prima facie. You make any promise in a document you sign.
• "Sub species:" Parole evidence rule
  • If a contract contains "Entire agreement" - you do not get ANYTHING else, additions or changes
  • If you email with a lender & agree on XYZ and only get Z in the document (and sign it). You CAN NOT even submit evidence (such as the email) that proves otherwise.
  • In other words, you're a lot better off with NO document rather than A BAD document.

2. Partners and profits

• Divided equally unless otherwise agreed in contract

3. Multiple promisors or Joint and several liability in contract

• Each promises everything, but the promisee can only collect once.

4. Employment termination

• Default: "At will" employment
  • Employee can be terminated at any time for any (or no) reason. No notice, severance, or anything else is required.
• How to protect yourself: change the default
  • Agreed reasons for termination
    • E.G. - "just cause"
  • Agreed conditions of terminaton
    • E.G. - notice, severance pay, etc.
  • For term

5. Service providers

• Default: Service provider promises to perform authroized service in a reasonable fashion. The customer in return promises to pay this service provider's customary charges for authorized service.
  • Fault is not material, but it is relevant? (I think)
  • Note: in this situation, estimates aren't even relevant (for Breach of contract - but maybe for Tort of Fraud)
  • Also don't forget Quasi-contract: reasonable expectations & reasonable benefit conferred. Possible for Mechanic to win for unauthorized emergency work.

6. Sales of real property (land)

• OLD DEFAULT before this exception: COMM 300: Caveat Emptor II - no implied promises except good title
• NEW DEFAULT: There are now four statutory implied warranties for new residential real property (only new the first time it's sold)
  • 1. Good title
  • 2. Structural soundness for 1 year
  • 3. Habitability for 1 year
  • 4. Foundation soundness for 5 years

7. Sales of goods

• He says this is the most important of all 7.
• Goods are touchable and movable
• OLD DEFAULT: COMM 300: Caveat Emptor II (Meaning good title only)
• NEW DEFAULT: For a non-merchant seller (not in the business of selling) the rule is still COMM 300: Caveat Emptor II. For a merchant selling in the buisness of selling goods make two promises: Good title and that the goods are fit for their ordinary purpose. When considering fit, you must consider ALL factors (price, etc.)
  • Limit: Statute of Limitations is 4 years, so after 4 years you can't even bring the lawsuit.
  • Fault is not relevent
  • Comes from the Uniform Commercial Code
    • A code is a compliation of statutes (or legislative enactment)
    • Written by a PRIVATE CLUB (American Law Institute)
    • Based on the French Commercial Code of 1816
  • Ways to change the default:
    • If the merchant sells sells the good "AS IS"
    • "The card in the box", which states:
      • Expressed warranty for 3 months.
      • Implied warranty for merchantibility is limited to 3 months.
      • If you send it in, you limit your implied warranty but get the express warranty. Otherwise, you can also "tear it up" and not limit the implied warranty

Default agreements for sales of goods

• Hybrid default agreements
• Default service: - service must be "reasonable" < this reasonable term brings fault in the back door
• Default sales of goods: - goods must be "fit" < no fault

• Many situations are "hybrid" - where one entity both provides a service & sells parts. In this case, applie the predominance characteristic test.
• Examples:
  • Auto mechanics, builders, and doctors are service providers.
    • risk: low, because there is a low level of fault (there must be neglience)
  • Stores and restaurants sell goods.
    • risk: higher, because not fault is required.

1. B

The Plantiff was the intended third party benefeactor of a promise made to someone else.

• For example:
  • House is sold, with the four default promises (good titile, foundation, structural soundness, & foundation soundness)
    • Buyer then sells to someone else a month later, making the house old
    • The house then fails for the second buyer
      • The second buyer can sue under 1-B!!!

1. C

Plaintiff was the assignee of the right to sue the promisor for breach of contract.

• Promisor makes promise to promisee.
  • Promisee now has a right to sue under breach of contract
  • This right can be transferred to asignee, who can sue under breach of contract.
• Note: these rights are infinately divisable & assignable

• The right of a company to sue a customer for $$$ is called an account. The assignment of that to an assignee is called a "sale of accounts". The assignee is called the "account buyer'.
• The promisor has a "duty to perform" which can be "delegated" to a "delegate".
• Important notes about assignment & delegation:
  • Assignment of a right extinguishes that right in the assignor
  • Delegation of a duty does not extinguish that duty in the delegor

2.

Consideration was returned for the promise made

• All this means is that it is a two way street. Promisor must get something back for making the promise
  • Consideration is either a benefit conferred or a promise to confer a benefit

Option Agreements:

This is an agreement to extend the decision of a potential agreement. For example, if a landlord want's a renewall, and you pay $10 to extend the response deadline... If the landlord ignores this you can SUE.

This is because of the two way street - a promise must benefit both parties. If you didn't pay the landlord $10, the promise is empty.

3.

There was an agreement between the promisor and the promisee

• An agreement is an offer plus an acceptance of that offer.
• Possible scenario:
  • Fact finding
  • Solicitation of offers
  • Offer - An offer indicates (objectively viewed) the intention to be contractually obligated.
  • Counter offer(s)
  • Acceptance = fianlization of offer
  • Doucmentation of agreement

Operational rules

• An acceptance is effecitve immediately
• Offer may be revoked until it is accepted

4.

Conditions agreed to by the defendent were either met or excused

• Conditions
  • Condition is met (payments made on time, for example)
  • Condition is excused (late payment excused by Insurance co.)

Burden of proof: most proove above. Therefore in most Breech of Contract cases the burden of proof is almost always on the customer!

Mental Picture

Imagine that a BoC lawsuit is a TV show called american gladiator. The "dressing room" is the negotiation. There are two things you can put on:

• Sword - offensive only - promise to the plaintiff
  • "I promise" creates a sword - LANGUAGE IS KEY
• Shield - defensive only - condition sheltering promise to the defendent
  • "If" creates a shield
    • IFs or SHIELDS are element 4!!

Also see COMM 341: Creating contracts.

Facet 2

By in large, we need to get this from the book.

1. Novation

A 3 party agreement in which a new party takes the place of one original party to an original agreement and the original party is released from liability.

Difference between a novation and a sublet

The difference is in what you call the agreement. If you call it a sublet, for example, there is infinate liability, where as in novation there is none.

2. Statute of Frauds

Has nothing to do with fraud.

• This determines what is covered and what is not covered by oral agreements.
  • Some agreements are covered and some or not - SEE BOOK FOR DETAILS
  • ITEMS ARE COVERED ARE INVALID IN ORAL FORM.

Suretyship

• A collateral promise - Covered by Statute of Frauds
• Example:
  • Kid makes promise to pay dealership for car.
  • To make dealer more SURE - parent promises to pay dealer if kid does not (This is a collateral promise)
  • Parent is the SURETY - and kid must always promise to pay back SURETY

vs. Insurance

• Note: Insurance and suretyship are DIRECT opposites.
• In insurance, you pay someone to assume risk.
• In surety, you pay someone to promise to pay losses, and YOU WILL PAY THEM BACK.

Facet 3 - remedy structure

READ 331 (bottom) - 334 - WILL BE ON TEST