“Armadillos from Texas play tennis, riding elephants.
”
1) Applicable law; 2) formation of contracts; 3) terms of contract; 4) performance; 5) third-
party problems; 6) remedies for unexcused nonperformance; 7) excuse of nonperformance
1. Note whether this transaction is governed by UCC or the Restatement.
2. Does the Statute of Frauds apply? The contract must be in writing if it is
in regard to land, if by its nature it takes more than one year to perform, or
if it is in regard to goods of greater than $500 value.
Is there a contract?
Was there an Offer?
Were the terms specific?
Did the offer indicate the party’s intent to be bound?
No
Was there an Acceptance?
Was there acceptance to exact terms of the offer
pursuant to mirror image rule?
If not, can UCC 2.207 or the parties’ performance No
be used to imply a contract? No contract
Was the acceptance made according to offeror’s to
instructions (Note: Silence can never be acceptance)?
Was the acceptance made within time specified?
Does the mailbox rule apply?
Yes
No
Was there Consideration? No Was there reliance so that §90
Was there legal detriment? Promissory Estoppel applies?
Was there benefit conferred?
Yes Yes
Are all of the material terms agreed on?
No
Yes No
THERE IS AN ENFORCEABLE Were parties far enough in
CONTRACT negotiations to implicate a
Yes
What are Material Terms? contract to negotiate in Good
Unilateral or Bilateral? Faith? Was such a contract
Was there an outright explicit?
breach or is it another Was an option created by
problem? partial performance of
acceptance?
“Armadillos from Texas play tennis, riding elephants.”
1) Applicable law; 2) formation of contracts; 3) terms of contract; 4) performance; 5) third-
party problems; 6) remedies for unexcused nonperformance; 7) excuse of nonperformance
Was there Substantial Breach?
Yes
Was there fraud, duress or
unconscionability?
Yes No
Breach is Was there a change in circumstances
excused or failure of a substantial assumption
of the contract?
Yes No
Breach is Could there be a waiver? Was
excused the breach excused by
implication of past performance?
Yes No
Breach is Breach unexcused; victim can
excused recover – GO TO DAMAGES
Is there vagueness/ambiguity in contract?
Can the Courts fill in vague/ambiguous terms Yes Can the Parol Evidence rule apply to
(Note: the court will not fill in material terms) clarify situation?
according to: EXCEPTIONS TO PAROL EVIDENCE -
Writing in the contract fraud/duress
Past performance of the contract unclear terms
Past dealing in other contracts scrivener’s error
Usage/Custom No
If courts cannot interpret
contract themselves and parol
evidence cannot be admitted,
the contract will be void for
vagueness.
“Armadillos from Texas play tennis, riding elephants.”
1) Applicable law; 2) formation of contracts; 3) terms of contract; 4) performance; 5) third-
party problems; 6) remedies for unexcused nonperformance; 7) excuse of nonperformance
Was there Mistake?
Unilateral
Mutual R153
R152
Was the mistake as to Was the mistake
a basic assumption? Scrivener’s Error or
General Unilateral?
Yes No
G.U. S.E.
Contract Contract enforceable
Risk allocation: R154, always
Voidable restitution and fairness If parties have agreed to
Did the other party
terms, and only the written
know or have reason document is defective, a
to know of the meeting of minds occurred
mistake? and the contract is
enforceable on original
Yes No understood terms. R155
Contract is voidable under Contract is voidable if party does not bear risk of
R153 mistake by R154. Also note that risk is allocated
depending on fairness; court will also see whether
risk has been allocated contract itself.
Was there a SURPRISE?
If contract term is Could also argue breach of
unconscionable, court will good faith
refuse to enforce it. U1.203, R 205
R208, U2.302
Did dealings breach Good Faith?
There is a warranty of good faith in
every contract negotiation process
R205, U1.203
“Armadillos from Texas play tennis, riding elephants.”
1) Applicable law; 2) formation of contracts; 3) terms of contract; 4) performance; 5) third-
party problems; 6) remedies for unexcused nonperformance; 7) excuse of nonperformance
Is MODIFICATION or WAIVER an issue?
If covered by If covered by
UCC, 2.209 Restatement, §148
Under the UCC, no Was there consideration given
consideration is necessary for for the modification?
a waiver if it is in good faith
AND it is written No Yes
Was the modification sought Modification is
in good faith due to changed enforceable
circumstances?
No Yes
Was the modification Modification is
based on Waiver? enforceable
No Yes
Modification is Was waiver
unenforceable revoked with
sufficient notice?
Yes No
Waiver properly revoked; Waiver is
modification unenforceable enforceable
“Armadillos from Texas play tennis, riding elephants.”
1) Applicable law; 2) formation of contracts; 3) terms of contract; 4) performance; 5) third-
party problems; 6) remedies for unexcused nonperformance; 7) excuse of nonperformance
Remedies
Legal Equitable – when remedy at
law is inadequate
DAMAGES SPECIFIC RELIEF
Is there a liquidated Damages
Clause in the contract? Injunction Specific Performance
Yes
No
Is specific performance of the
Are the liquidated damages contract will be awarded ONLY if:
a fair estimate of expectation Contract is clear
damages?
The remedy at law is
inadequate
No Yes There is mutuality of
performance
Uniqueness makes it
impossible to assess
Look to Expectation Damages which Court will
damages
are the benefit of the bargain, intended enforce
to put the victim where he would be if liquidated
the contract had been performed: damages
Are they either:
$0 or negative in amount;
Uncertain (i.e., new venture); or
Excessive given circumstances?
No Yes
Expectation Reliance damages awarded
Damages awarded intended to put the victim where
he would be had the contract
never been made.
These can include:
Lost opportunity
Difference between market
value and value as is
NOTE:
No punitive damages
No damages for mental distress
Has everyone mitigated/covered?
RESTITUTION always an option
“Armadillos from Texas play tennis, riding elephants.”
1) Applicable law; 2) formation of contracts; 3) terms of contract; 4) performance; 5) third-
party problems; 6) remedies for unexcused nonperformance; 7) excuse of nonperformance
Restitution Damages
Has there been:
Unjust Enrichment;
Partial Performance; OR
Benefit knowingly conferred but
not under contract?
Yes No
Is Plaintiff the breacher? No Restitution damages
Yes No
Damages will be benefit Damages will be the amount of benefit
conferred but limited to conferred, regardless to whether
contract price Lower price was specified in contract; or
Contract would have resulted in a loss
