American Contract Law I - Uni Trier: Willkommen Promissory’Estoppel’ – Voiding’Contracts’ – Performance’Problems’ • PerformanceandBreach(5 ... • Pre’1066.’’Anglo’Saxon’tribesM’Fluid.’’’

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Contract Law

Lawrence Siry

Overview •  What is a Contract? (1)

–  Contract Forma9on –  Offer –  Acceptance

•  Enforcing a Contract (2) –  Considera9on –  Statue of Frauds

•  Terms of Contract (3) –  Parol Evidence Rule –  Interpreta9on of Contracts

•  Modifica<on and Avoidance of Contracts (4) –  Promissory Estoppel –  Voiding Contracts –  Performance Problems

•  Performance and Breach (5) –  Execu9on of Contractual Du9es –  Warran9es –  Non-‐Performance –  Remedies –  Discharge

•  Other Par<es (6) –  Assignment and Delega9on –  Third Party Contracts

WHAT IS A CONTRACT

• An Agreement between two or more par9es which creates rights and obliga9ons between the par9es, with the inten9on of the par9es to create legally binding responsibili9es.

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WHAT IS A CONTRACT

•  Express Contract •  Implied Contract •  Contract implied in law

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Sources of Law

•  Cons9tu9on •  Common Law •  State Contract Codes •  Uniform Commercial Code •  Restatements •  UN Conven9on on Contracts and the Sales of Goods (CSIG)

Sources of Law

•  US Cons9tu9on

•  Ar9cle I Sec9on 10 •  No State shall enter into any Treaty, Alliance, or Confedera9on; grant LeYers of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of AYainder, ex post facto Law, or Law impairing the Obliga9on of Contracts, or grant any Title of Nobility.

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Sources of Law

•  Cons9tu9on •  Common Law

Hi The Common Law rical Background

– Brief History – 1066 – Development – The Writs – Stare Decisis/Precedents/Res Judicata – Common Law v. Equity

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The Development of the Common Law

•  Pre 1066. Anglo Saxon tribes-‐ Fluid.

•  Localized Government and Judiciary

•  Customary Law-‐ based upon Ecclesias9c Courts and local tradi9on and custom.

•  Jus9ce not terribly efficient

Adapted from, American Contract Law PPT, Crystal, N. U. So Carolina

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Historical Background

•  Common Law Judges – Very few -‐ below 20-‐ I9nerate – Met in London to compare notes. –  Judges were oben religious men. – Noble class.

•  Doctrine of Stare Decisis (let the decision stand) developed.

•  System of Appeals developed to provide a check and balance.

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Historical Background –The Writs

•  System of no9ces and orders that required ac9on by one party or another.

•  A standard form that was easily recognizable and requested the Court to order another person do something very specific.

•  These ac9ons became formalized and became causes of ac9ons. Very strict parameters for fit into which writ.

•  If a party used the wrong writ, relief would be denied: If there is no writ there is no remedy.

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•  Types of Writs/ Causes of Ac9on : Contract

– Trespass on the Case

–  Replevin (recovery of property)

– AYachment

– Assumpsit 14

Writ of Habeas Corpus

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•  Benefit of stability, and fairness. Like cases are seYled in like ways. If a court wishes not to follow precedent, the court must either overrule or dis9nguish.

•  Disadvantage of rigidity. If there is no writ, there is no remedy

•  Contracts did not fit neatly into any par<cular Writ •  Humber Ferry Case (Bukton v. Tounesende (1348))

–  P contracted with D to ferry his horses across the Humber River . Boat sank. Horses were lost. P sued under Writ of Trespass of the Case.

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Writ of Assumpsit •  Writ to deal with Contractual Disputes •  Promise to pay: •  Made obsolete in England with the aboli9on of the causes of ac9on in 1852 and the Judicature Acts of 1875.

•  Made obsolete in US Federal Courts with the passage of the Federal Rules of Procedure in 1932.

–  Implied Assumpsit –  Express Assumpsit


•  Stare Decisis– A judgewas obligated to let the decision of the lower court stand.

•  Precedents-‐-‐ Decisions of the court (or higher level Court) that were binding on the lower court.

•  Res Judicata– When an issue in a par9cular case is decided, it should not be re-‐li9gated.

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•  This rigidity lead to injus9ce. Individuals would pe99on the king for relief from this inequity.

•  Addi9onally, the Common Law Courts primarily awarded damages.

•  The King established a Court of Chancery or “Equity” to hear cases and to rec9fy the unfairness and rigidity of the Common Law Courts.

•  These courts could issue Equitable Remedies

Adapted rom, American Contract Law PPT, Crystal, N. U. So Carolina

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•  Equity Courts were not bound by precedence and sought a just or equitable resolu9on to the problem. However, with 9me, tradi9ons, procedures and even precedents evolved in the Courts of Equity.

•  Courts of Equity could order a party to take posi9ve ac9on. Equitable remedies included Injunc?ons and Specific Performance as opposed to Common Law Courts which could only give money damages

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•  In Re The Earl of Oxford. (1615) Equity prevails over Common Law.

•  Difficulty developed as two par9es would oben be in two courts on similar Issues.

•  The Common Law and Equity Courts stood side by side un9l 1875 when Parliament enacted the Judicature Acts, merging the Common Law and Equity Courts. This Act also codified many of the Common Law Writs into causes of Ac9ons.

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Common Law v. Civil Law

•  What are the pros of each? •  What are the cons of each? •  How are rights protected in each? •  What are the impacts on par9es who enter into contracts?

•  Who does the common law favour?

Sources of Law

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Civil Law

Organized

Top down

Apply the Rule to the case

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Common Law

Disorderly

BoYom up

Develop Rule by solving the case

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Sources of Law

•  Cons9tu9on •  Common Law •  Statutory Provisions

– State and Federal Law – Uniform Commercial Code – Statute of Frauds

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Statutory Provisions

•  State and Federal Contract Law – Consumer Protec9on – Environmental Protec9on – Fraud – Labour Protec9ons

Statutory Provisions •  State and Federal Contract Law

Statutory Provisions •  State and Federal Contract Law

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•  UCC (Uniform Commercial Code) – Established to harmonize contract law between the states

– Affects sales contracts primarily. – Takes the analysis out of Common Law. Yet where silent, Common Law applies.

– Adopted in 49 states


•  Statute of Frauds-‐ Certain contracts MUST be reduced to wri9ng.

•  Marriage. •  Land. •  Contracts that take longer than a year. •  Executor •  Surety •  IT IS RAISED AS A DEFENSE

Sources of Law

•  Cons9tu9on •  Common Law •  Statutory Provisions •  Restatement of Law

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Sources of Law

•  Restatement of Law – American Law Ins9tute (group of lawyers) – Restates development of Common Law – Black LeYer Law – Secondary source (not binding, yet persuasive) – hYp://lexinter.net/LOTWVers4/restatement_%28second%29_of_contracts.htm

What is a Contract? (1)

– Contract Forma9on – Offer – Acceptance

What is a contract? •  An Agreement between 2 or more par9es that generates rights and obliga9ons and is intended to have legally enforceable consequences.

•  Agreement-‐ means a mee9ng of the minds consensus ad item-‐Mutual Assent

•  The par9es agree about the same thing and intend for the agreement to be enforceable.

•  Enforcement may be for damages or for performance.

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Peerless Case •  Raffles v. Wichelhaus (1864)

•  P contracted to sell 125 bales of coYon to D. The goods were to be shipped from India to England, on the ship “Peerless”. Unknown to either party, there were two ships names “Peerless” carrying coYon one arriving in October and the other in December.

•  D thought he had purchased the coYon arriving on the October ship, but P sent his coYon on December ship. D refused to accept delivery of the coYon arriving on the December ship and Raffles brought this lawsuit for breach of contract.

Peerless Case •  Raffles v. Wichelhaus (1864)

•  Restatement (Second) Sec9on 20(1): If the misunderstanding concerns a material term and neither party knows or has reason to know of the misunderstanding, there is no contract. Parol evidence is admissible to determine the meanings of terms when a latent ambiguity arises later.

Contract Forma9on

•  Carbolic Smoke Ball Case (1892)

•  Facts: •  Controversy: •  New Rule:

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Carbolic Smoke Ball

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Session II

•  Is there a Contract? – Offer – Acceptance – Considera9on – Also

•  Statute of Frauds •  Parole Evidence Rule

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Is there agreement? •  Offer v. Invita9on to Treat

•  Invita9on to treat-‐ an expression of a willingness to nego9ate.

• Shop window displays. • Adver9sement of price. • Auc9on offerings. • Invita9on for bids.

•  Consumer protec9on Laws do however limit the above.

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•  NO REPRESENTATION IS MADE THAT THIS FORM OF CONTRACT FOR THE SALE AND PURCHASE OF REAL ESTATE COMPLIES WITH SECTION 5-‐702 OF THE GENERAL OBLIGATIONS LAW ("PLAIN LANGUAGE"). THIS IS NOT A FORM CONTRACT. THIS CONTRACT IS NOT IDENTICAL TO FORMS PROMULGATED BY ANY ORGANIZATIONS, INCLUDING, BUT NOT LIMITED TO, THE NEW YORK STATE BAR ASSOCIATION. CONSULT YOUR LAWYER BEFORE SIGNING THIS AGREEMENT.

•  •  NOTE: FIRE AND CASUALTY LOSSES AND CONDEMNATION. •  This contract does not provide for what may happen in the event of fire, or other casualty loss or condemna?on before the ?tle closing. Unless different provisions are made in this

contract, Sec?on 5-‐1311 of the General Obliga?ons Law will apply; part of that law makes a Purchaser responsible for fire and casualty loss upon taking possession of the Premises before the ?tle closing.

•  •  CONTRACT OF SALE •  •  CONTRACT OF SALE made as of NOVEMBER ____, 2011 , BETWEEN •  •  •  Samir Gerkhan •  •  •  •  hereinaber called "Seller" and •  •  •  Thom Becke •  •  •  •  hereinaber called "Purchaser". •  •  •  The par?es hereby agree as follows: •  •  1. Premises. Seller shall sell and convey and Purchaser shall purchase the property, together with all buildings and improvements thereon (collec9vely the "Premises"), more fully

described on a separate page marked "SCHEDULE A", annexed hereto and made a part hereof and also known as: •  •  Street Address: Autobahn polizei Barracks, •  Fachbereich Rechtswissenschab

54286 Trier •  •  Tax Map Designa9on: No. •  •  Together with Seller's ownership and rights, if any, to land lying in the bed of any street or highway, opened or proposed, adjoining the Premises to the center line thereof, including any

right of Seller to any unpaid award by reason of any taking by condemna9on and/or for any damage to the Premises by reason of change of grade of any street or highway. Seller shall deliver at no addi9onal cost to Purchaser, at closing (as hereinaber defined), or thereaber, on demand, any documents that Purchaser may reasonably require for the conveyance of such 9tle and the assignment and collec9on of such award or damages.

•  •  2. Personal Property. Anything aYached to the real property, including the plumbing, hea9ng and ligh9ng fixtures, bathroom and kitchen cabinets, hot water heater, mantels, exis9ng

appliances, fixtures, screens, awnings, storm windows, storm doors and shrubbery, if present on the premises, are included in this sale. All appliances and items of personal property included in the sale are included in "AS IS" condi9on, with no express or implied warran9es of any kind. The following appliances are included in the sale:

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3.  Purchase Price. 4.  (a) The purchase price is: 1million Euros (b) The purchase price shall be paid by the Purchaser to the Seller as follows: The Purchaser shall pay the Seller the sum of: 100,000.00 Euros as and for a down payment upon the signing of this Contract (this includes $ paid to Broker), which shall be made payable to the order of "BALDWIN & BLOOMSTEIN, AYorney Trust Account" aYorney for the Seller, and shall be held in escrow pending closing of 9tle or default by the Purchaser. (c) The Purchaser shall, at the 9me of the closing, pay the Seller the sum of: 900,000.00 Euros being the balance of the purchase price, by cer9fied bank check or checks, or mortgage account closing checks, payable in accordance with the Sellers instruc9ons. 12. Condi9on of Property. (a) Purchaser acknowledges and represents that Purchaser is fully aware of the physical condi9on based on Purchaser's inspec9on and inves9ga9on thereof, and shall accept the same "AS IS" in their present condi9on and state of repair, subject to reasonable use, wear, tear and natural deteriora9on between the date hereof and the date of Closing (except as otherwise set forth in paragraph 16(d), without any reduc9on in the purchase price or claim of any kind for any change in such condi9on by reason thereof subsequent to the date of this contract. (b) PROPERTY CONDITION DISCLOSURE STATEMENT (PCDS) -‐ The Purchaser acknowledges that Purchaser has been furnished with a Property Condi9on Disclosure Statement prior to the execu9on of this Contract, and the Purchaser shall sign a copy of the PCDS in order to acknowledge receipt of this document prior to the execu9on of this Contract. Purchaser further acknowledges and agrees that maYers set forth in the PCDS are for informa9onal purposes only and do not in any manner effect or modify the terms of this Contract; in par9cular, but without limita9on, the "condi9on of property" which provides in part that the property is sold "AS IS" without any warran9es, guarantees or representa9ons by the Seller as to its condi9on. The Purchaser further expressly acknowledges and agrees that none of the maYers set forth in the PCDS shall survive the closing.

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•  13. Title. Seller shall give and Purchaser shall accept such insurable 9tle as ANY TITLE INSURANCE COMPANY LICENSED TO DO BUSINESS IN THE STATE OF NEW YORK shall be willing to approve and insure in accordance with its standard form of 9tle policy, at standard premium rates, as approved by the New York State Insurance Department, subject only to the maYers provided for in this contract.

•  •  14. Closing, Deed and Title. "Closing" means the seYlement of the obliga9ons of Seller and Purchaser to each

other under this contract, including the payment of the purchase price to Seller and the delivery to Purchaser of a BARGAIN AND SALE DEED WITH COVENANT AGAINST GRANTOR'S ACTS deed in proper statutory short form for recording, duly executed and acknowledged, so as to convey to Purchaser fee simple 9tle to the Premises, free of all encumbrances, except as otherwise herein stated. The deed shall contain a covenant by Seller as required by subd. 5 of Sec9on 13 of the Lien Law.

•  •  15. Closing Date and Place. Closing shall take place on January 1, 2012, at the office of:

_________________________________, or as agreed upon by the aYorneys for the par9es. •  •  16. Condi9ons to Closing. This contract and Purchaser's obliga9on to purchase the Premises are also subject to

and condi9oned upon the fulfillment of the following condi9ons precedent: •  (a) The accuracy, as of the date of Closing, of the representa9ons and warran9es of Seller made in this contract. •  (b) The delivery by Seller to Purchaser of a valid and subsis9ng Cer9ficate of Occupancy or other required

cer9ficate of compliance, or evidence that none was required, covering the building(s) and all of the other improvements located on the property authorizing their use as a ONE family dwelling at the date of Closing.

•  (c) The delivery of the premises and all building(s) and improvements comprising a part thereof in broom clean condi9on, vacant and free of leases or tenancies, together with keys to the Premises.

•  (d) All plumbing (including water supply and sep9c systems, if any), hea9ng and air condi9oning, if any, electrical and mechanical systems, equipment and machinery in the building(s) located on the property and all appliances which are included in this sale being in working order as of the date of Closing. This clause shall not be considered a warranty surviving closing.

•  (e) If the Premises are a one or two family house, delivery by the par9es at closing of affidavits in compliance with state and local law requirements to the effect that there is installed in the Premises a smoke detec9ng alarm device(s) and carbon monoxide detector(s).

•  (f) The delivery by the par9es of any other affidavits required as a condi9on of recording the deed. •  (g) Subject to all easements, covenants, and restric9ons of record.

•  8. Mortgage Con9ngency. -‐ (a) The obliga9ons of Purchaser hereunder are condi9oned upon issuance on or before 25 December, 2011, (the "Commitment Date") of a wriYen commitment from any ins9tu9onal Lender pursuant to which such Ins9tu9onal Lender agrees to make a first mortgage loan, excluding VA, FHA or other governmentally insured loan, to Purchaser at Purchaser's sole cost and expense of $_________, or such lesser sum as Purchaser shall be willing to accept at prevailing rates of interest. Purchaser shall (i) make prompt applica9on to an ins9tu9onal Lender for such mortgage loan, (ii) furnish accurate and complete informa9on regarding Purchaser and members of Purchaser's family, as required, (iii) pay all fees, points and charges required in connec9on with such applica9on and loan, (iv) pursue such applica9on with diligence, (v) cooperate in good faith with such Lender to obtain such commitment and (vi) promptly give No9ce to Seller of the name and address of each Lender to which Purchaser has made applica9on. Purchaser shall comply with all requirements of such commitment and shall furnish Seller with a copy thereof promptly aber receipt thereof.

•  (b) If such commitment is not issued on or before the Commitment Date, then, unless Purchaser has accepted a commitment that does not comply with the requirements set forth above, Purchaser may cancel this contract by giving express and specific wriYen no9ce to Seller on the Commitment Date that Purchaser is canceling this contract, in which case this contract shall be deemed cancelled and thereaber neither party shall have any further rights against, or obliga9on or liabili9es to, the other by reason of this contract, except that the Down Payment shall be promptly refunded to Purchaser. The Purchaser shall, as a condi9on of any such cancella9on, furnish Seller with a wriYen statement from Lender seung forth the reason(s) a mortgage commitment was not issued. If Purchaser fails to give express and specific no9ce of cancella9on pursuant to and in accordance with this paragraph, or if Purchaser shall accept a commitment that does not comply with the terms set forth above, then Purchaser shall have waived Purchaser's right to cancel this contract and shall not be en9tled to receive a refund of the

•  10% deposit, or the down payment of whatever amount, by reason of the con9ngency contained in this sec9on. •  •  9. PermiYed Excep9ons. The Premises are sold and shall be conveyed subject to: •  (a) Zoning and subdivision laws and regula9ons, and landmark, historic or wetlands designa9on, provided that

they are not violated by the exis9ng buildings and improvements erected on the property or their use; •  (b) Real estate taxes that are a lien, but are not yet due and payable. •  • 

10. Governmental Viola9ons and Orders. (a) Seller shall comply with all notes or no9ces of viola9ons of law or municipal ordinances, orders or requirements noted or issued on or before the closing date by any governmental department having authority as to lands, housing, buildings, fire, health, environmental and labor condi9ons affec9ng the Premises.

•  30. The premises sold are to be conveyed subject to the following addi9onal maYers: •  (a) Any state of facts which an accurate survey might disclose provided the same do not render 9tle uninsurable. Purchaser agrees to take, subject

to minor survey varia9ons between fences, hedges, retaining walls and the record lines, provided said varia9ons are not so substan9al as to render 9tle uninsurable.

•  (b) Any easements or rights of use created in favor of any public u9lity corpora9on for electricity, water, sewage, gas, telephone or other service over the property or to any street or avenue abuung the premises, or the right to use and maintain wires, cables and equipment upon or across the premises provided the same does not materially restrict the use of the premises or otherwise render 9tle uninsurable.

•  (c) Covenants, easements and restric9ons of record provided the same do not render the 9tle uninsurable or prohibit the use of the premises as presently used and maintained; and any such restric9ons as may be contained in the SCHEDULE "A" legal descrip9on, if any.

•  •  31. In the event that the check given by the Purchaser to the Seller on the signing of this contract shall not be honored for any reason by the bank on

which it is drawn Seller, in addi9on to any other available remedies, may cancel and terminate this contract without further no9ce. •  •  32. Purchaser shall have the right to inspect the premises within twenty-‐four (24) hours prior to the closing, provided reasonable no9ce thereof is

given to the Seller. Purchaser shall no9fy seller of any problem disclosed by such inspec9on as soon as possible aber discovery of the problem. •  • 

33. It is agreed that by the delivery and acceptance of the deed at the closing of 9tle, the liabili9es and responsibili9es of the Seller shall be deemed to have been fully complied with and all of the Seller's covenants under this contract to have been fully performed, except only as to those provisions which are expressly represented to survive the closing.

•  •  •  This Agreement cons<tutes the en<re contract between the par<es hereto. The Seller is not liable or bound in any manner, by express or implied

warran<es, guarantees, promises, statements or representa<ons pertaining to said premises, the condi<on thereof or any other mager whatsoever, made or furnished by any real estate broker, agent, employee, servant or other person represen<ng or purpor<ng to represent the seller, unless such warran<es, guarantees, promises, statements or representa<ons are expressly or specifically set forth herein.

•  •  •  IN WITNESS WHEREOF, this contract has been duly executed by the par9es hereto. •  •  •  __________________________________________ _________________________________________ •  SELLER PURCHASER •  DATE: DATE: •  •  SOCIAL SECURITY NO.______________________ SOCIAL SECURITY NO.______________________ •  • 

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Vielen Dank

[email protected]

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Documents

American Contract Law I - Uni Trier: Willkommen Promissory’Estoppel’ – Voiding’Contracts’ – Performance’Problems’ • PerformanceandBreach(5 ... • Pre’1066.’’Anglo’Saxon’tribesM’Fluid.’’’