You are on page 1of 3

Analyzing Contracts Question Step One: Is there a contract? Is there a valid offer?

r? o No there is probably not a contract Is there valid acceptance? o Acceptance can be either by performance (unilateral contract) or by promise to perform (bilateral contract) o No there is probably no contract Is there consideration? o Check for the bargain and detriment elements o No is this the type of promise that would be binding without consideration? (promissory estoppel) YES to all three questions and there is a contract

Step Two: What are the terms of the contract? Do the terms of the acceptance vary from the offer? o Yes, discuss mirror image rule Is a party trying to introduce evidence to either supplement or contradict a written contract? o Yes, apply parol evidence rule Is there an issue of interpretation of the contract? o Yes, apply the maxims of interpretation o Answer will be yes if a party is trying to show the meaning of term contained in the writing. o If the conflict concerns the meaning of a key term, it may be that there was no mutual assent and therefore no contract Do the facts involve any warranties? o Yes, check for issues of express and implied warranties Does the contract involve more than two parties? o Yes, check for issues of assignment and delegation as well as third-party beneficiary issues

Step 3: Can the contract be enforced? Does the statute of frauds apply? o Yes, the contract is generally unenforceable unless there is a writing o No, Is the contract void or voidable due to mistake, illegality, duress, misrepresentation, unconsionability/contract of adhesion, or capacity (i.e. mental incompetents)? Yes, if the contract is void it cannot be enforced. If it is voidable, party has the option to cancel the contract. No, is a party discharged from the duty to perform as a result of impossibility, impracticability or frustration? Yes, contract cannot be enforced

No, are the obligations under the contract subject to condition(s)? o No, contract is enforceable o Yes, have the condition(s) been either satisfied or excused? Check for (1) substantial performance of the condition (thats enough, if the condition is constructive rather than express) or (2) facts that show the condition has been waived or otherwise excused (thats enough for either express or constructive conditions) Yes, the contract is enforceable No, the contract is unenforceable

Step 3: Has there been a breach? Has the contract been discharged? o Yes, no breach. Neither party is entitled to any damages. Answer will be yes if for example, there has been a rescission or an accord of satisfaction Check for the possibility of a non-contractual restitution or reliance award (common where the contract was discharged for impossibility, frustration, etc.) o No, has the party committed a total/material breach? Yes, the non-breaching party is entitled to cancel the contract and recover damages Answer will be yes if a party has not substantially performed her obligations. Be sure to include cases of anticipatory repudiation here. No, has one party committed a partial breach? Yes, the non-breaching party may not cancel the contract, but may recover damages Answer will be yes if a party has substantially performed, but nonetheless failed to comply perfectly with the contracts requirements. In that case, the other party will be entitled to damages to compensate the nonconformity

Step 4: What remedies are available to the plaintiff? Are any equitable remedies appropriate under the facts? o Yes, determine which equitable remedies apply Is the plaintiff entitled to expectation (benefit of the bargain) damages? o Yes, analyze the plaintiffs duty to mitigate. Include incidental and consequential damages if appropriate Is the plaintiff entitled to reliance damages?

o This will be the most common form of damages in (1) suits brought on the contract, where the plaintiffs lost profits (expectation measure) cant be shown with sufficient certainty and (2) suits brought in quasi-contract o Yes, analyze the plaintiffs duty to mitigate. Include incidental and consequential damages if appropriate o No, the plaintiff may be entitled to restitution damages Restitution is used most often to prevent unjust enrichment, including cases in which both parties have been discharged (e.g. cases of impossibility or frustration) o The defendant may also be entitled to offsetting damages on a counterclaim (even if plaintiff subsequently performed but committed a minor breach)

You might also like