California Law of Contracts

Chapter Outlines

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1

Introduction

          I.    SCOPE OF TREATISE   §1.1

         II.    SUMMARY OF CHAPTER CONTENTS   §1.2

        III.    NATURE OF CONTRACT

               A.   Definition of “Contract”   §1.3

               B.   Freedom of Contract and Its Limits   §1.4

               C.   Boundaries of Contract Law: Transactions Excluded and Included   §1.5

        IV.    SOURCES OF LAW

               A.   Civil Code: Its Origins and Relative Importance   §1.6

               B.   Commercial Code   §1.7

               C.   Other California Codes   §1.8

               D.   Decisions of California State Courts   §1.9

               E.   Federal and Out-of-State Decisions   §1.10

               F.   Restatement (Second) of Contracts   §1.11

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2

Contract Formation: Capacity to Contract

        I.    INTRODUCTION (CC §§1550, 1556)   §2.1

       II.    MINORS (CC §1557; Fam C §§6710–6713, 6751)   §2.2

           A.   Void Contracts: Contracts a Minor Cannot Make (Fam C §6701)   §2.3

                1.   Delegation of Power (Fam C §6701(a))   §2.4

                2.   Contracts Relating to Real Property (Fam C §6701(b))   §2.5

                3.   Contracts Relating to Personal Property Not in Minor’s Immediate Possession or Control (Fam C
§6701(c))   §2.6

           B.   Voidable Contracts: Contracts a Minor May Disaffirm

                1.   When Disaffirmance Permitted (Fam C §6710)   §2.7

                2.   Time for Disaffirmance (Fam C §6710)   §2.8

                3.   No Estoppel by Misrepresentation of Age   §2.9

                4.   No Need to Restore Consideration   §2.10

                5.   Disaffirmance of Releases and Settlements   §2.11

           C.   Binding Contracts   §2.12

                1.   Contracts for Necessaries (Fam C §6712)   §2.13

                2.   Contracts Authorized or Directed by Statute (Fam C §6711)

                    a.   Certain Contracts for Medical and Health-Related Services   §2.14

                    b.   Consent Relating to Adoption   §2.15

                     c.   Miscellaneous Contracts Authorized by
Statute   §2.16

                3.   Art, Entertainment, and Professional Sports Contracts (Fam C §§6750–6751)

                    a.   Generally   §2.17

                    b.   Coogan’s Law (Fam C §§6752–6753)   §2.18

                4.   Actions by Parents or Guardians Binding Minors   §2.19

                5.   Ratification on Attaining Majority   §2.20

                6.   Contracts by Emancipated Minors

                    a.   Requirements for Emancipation   §2.21

                    b.   Effect of Emancipation (Fam C §7050)   §2.22

           D.   Treatment of Minors Under Commercial Code   §2.23

      III.   MENTALLY INCAPACITATED PERSONS (CC §§38–41, 1557(b))

           A.   Defining Mental Incapacity   §2.24

           B.   Proving Mental Incapacity   §2.25

           C.   Judicial Determination of Incapacity   §2.26

           D.   Conveyance of Real Estate by Incapacitated Person   §2.27

           E.   Intoxicated Persons   §2.28

      IV.    PRISONERS AND PERSONS DEPRIVED OF CIVIL RIGHTS (CC §1556)   §2.29

       V.   AGENCY AUTHORITY (CC §§2295–2300)

           A.   Definition of Agency Relationship (CC §2295)   §2.30

           B.   Scope of Authority (CC §§2304–2326)   §2.31

           C.   Liability of Principal on Agent’s Contracts (CC
§2330)   §2.32

           D.   Actual and Ostensible Authority

                1.   Definitions; Creation (CC §§2299–2300,
2315–2317)   §2.33

                2.   Actual Authority (CC §§2299, 2316)   §2.34

                3.   Ostensible or Apparent Authority (CC §2317)   §2.35

           E.   Acting Without or in Excess of Authority (CC §2333)   §2.36

                1.   Ratification by Principal

                    a.   Time and Effect of Ratification   §2.37

                    b.   Equal Dignities Rule (CC §§2309–2310)   §2.38

                     c.   Ratification by Principal’s Conduct or
Acquiescence   §2.39

                    d.   Voluntariness Requirement for Ratification   §2.40

                    e.   Partial Ratification (CC §2311)   §2.41

                2.   Ratifications That Prejudice Third Persons (CC
§2313)   §2.42

                3.   Rescission of Ratification (CC §2314)   §2.43

            F.   Notices to Principal or Agent (CC §2332)   §2.44

           G.   Termination of Agency Relationship (CC §2355)   §2.45

      VI.   POWERS OF ATTORNEY (Prob C §§4000–4545)

           A.   Generally (Prob C §4022)   §2.46

           B.   Application of Power of Attorney Law (Prob C
§4050)   §2.47

           C.   Execution of Power of Attorney (Prob C §4120)   §2.48

           D.   Durable and Nondurable Power of Attorney (Prob C §§4022, 4124)   §2.49

           E.   Springing Power of Attorney (Prob C §§4030, 4129)   §2.50

            F.   Scope of Authority Granted in Power of Attorney (Prob C §4123)   §2.51

                1.   Limited or Special Powers of Attorney (Prob C
§4262)   §2.52

                2.   General Powers of Attorney (Prob C §4261)   §2.53

                3.   When Express Authority Is Required (Prob C
§4264)   §2.54

           G.   Modification of Power of Attorney (Prob C §§4121,
4150)   §2.55

           H.   Revocation or Termination of Power of Attorney (Prob C §4151)   §2.56

             I.   Attorneys-in-Fact

                1.   Qualifications (Prob C §4200)   §2.57

                2.   Multiple Attorneys-in-Fact; Successors (Prob C
§4202)   §2.58

                3.   Delegation of Authority by Attorney-in-Fact (Prob C §4205)   §2.59

                4.   Resignation of Attorney-in-Fact (Prob C §4207)   §2.60

                5.   Duties of Attorney-in-Fact (Prob C §4230)   §2.61

                6.   Revocation or Termination of Authority of Attorney-in-Fact

                    a.   Revocation of Authority (Prob C §4153)   §2.62

                    b.   Termination of Authority

                         (1)  Terminating Events (Prob C §4152)   §2.63

                         (2)  Affidavit of Lack of Actual Knowledge (Prob C §§4305–4306)   §2.64

                7.   Third Persons Dealing With Attorney-in-Fact (Prob C §§4300, 4302–4303, 4309–4310)   §2.65

            J.   Uniform Statutory Form Power of Attorney

                1.   Use of Form (Prob C §§4401–4402)   §2.66

                2.   Form Provisions (Prob C §4401)   §2.67

                3.   Form: Uniform Statutory Form Power of Attorney   §2.68

     VII.   AUTHORITY OF ENTITIES TO CONTRACT

           A.   Corporations

                1.   Contracts With Other Entities (Corp C §§207,
7140)   §2.69

                2.   Contracts With Directors or Other Entity in Which Director Has Interest (Corp C §310)   §2.70

                     3.   Preincorporation Contracts   §2.70A

                     4.   Contracts Made While Corporate Powers Suspended   §2.70B

           B.   General Partnerships

                1.   Mutual Agency Relationship (Corp C §16301)   §2.71

                2.   Transfers of Partnership Property (Corp C
§16302)   §2.72

                3.   Statement of Partnership Authority (Corp C
§16303)   §2.73

                4.   Authority of Former Partners to Bind Partnership (Corp C §16702)   §2.74

                5.   Liability of Dissociated Partner (Corp C §16703)   §2.75

           C.   Limited Partnerships

                1.   Authority of General Partners to Contract (Corp C §§15904.02, 15904.04, 15904.06)   §2.76

                2.   Authority of Limited Partners to Contract (Corp C §§15903.02, 15903.03)   §2.77

           D.   Limited Liability Partnerships (Corp C §16306)   §2.78

           E.   Limited Liability Companies (Corp C §17157)   §2.79

            F.   Trusts (Prob C §16200)   §2.80

           G.   Municipalities   §2.81

               H.   State; State and Local Agencies   §2.82

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3

Contract Formation: Consent, Legality, Consideration

          I.    INTRODUCTION (CC §1550)   §3.1

       II.   CONSENT

           A.   Generally (CC §1550(2))   §3.2

           B.   Mutual Consent

                1.   Generally (CC §1580)   §3.3

                2.   Meeting of the Minds   §3.4

                3.   Knowledge of and Assent to Contract Terms   §3.5

                4.   Fraud in the Execution   §3.6

           C.   Communication of Consent (CC §§1565, 1581–1583)   §3.7

           D.   Freedom of Consent (CC §1566–1568)   §3.8

                1.   Duress (CC §1569)   §3.9

                2.   Menace (CC §1570)   §3.10

                3.   Fraud

                    a.   Generally; Fraud in the Inducement (CC §§1571–1574)   §3.11

                    b.   Actual Fraud

                         (1)  Intentional Misrepresentation (CC §1572(1))

                              (a)   Elements; False Representation; Scienter   §3.12

                              (b)   Misrepresentations of Fact; Statements of Opinion   §3.13

                               (c)   Intent to Deceive   §3.14

                              (d)   Justifiable Reliance; Materiality   §3.15

                         (2)  Negligent Misrepresentation (CC §1572(2))   §3.16

                         (3)  Concealment, Suppression of Fact (CC §1572(3))   §3.17

                         (4)  Promissory Fraud (CC §1572(4))   §3.18

                         (5)  “Any Other Act Fitted to Deceive” (CC §1572(5))   §3.19

                     c.   Constructive Fraud (CC §1573)   §3.20

                4.   Undue Influence (CC §1575)

                    a.   Generally   §3.21

                    b.   Fiduciary and Confidential Relationships   §3.22

                         (1)  Particular Fiduciary Relationships: Trustee and Beneficiary (Prob C §16004(c))   §3.23

                         (2)  Particular Fiduciary Relationships: Attorney and Client   §3.24

                         (3)  Particular Fiduciary Relationships: Health Care Provider and Patient   §3.25

                         (4)  Particular Fiduciary Relationships: Husband and Wife; Registered Domestic Partners; Unmarried Persons

                              (a)   Husband and Wife (Fam C §721(b))   §3.26

                              (b)   Registered Domestic Partners (Fam C §297.5)   §3.27

                               (c)   Unmarried Persons   §3.28

                         (5)  Particular Fiduciary Relationships: Partnerships, LLCs (Corp C §§16404, 17153)   §3.29

                         (6)  Other Fiduciary Relationships   §3.30

                         (7)  Legal Relationships That Are Not Fiduciary Relationships   §3.31

                5.   Mistake (CC §§1567(5), 1576–1579)

                    a.   Generally   §3.32

                    b.   Mistake of Fact (CC §§1577, 1579)   §3.33

                     c.   Mistake of Law (CC §1578)   §3.34

           E.   Ratification of Voidable Contract (CC §1588)   §3.35

      III.   LEGALITY

           A.   Generally (CC §§1550(3), 1595–1596, 1667)   §3.36

           B.   Contracts Contrary to Express Provision of Law (CC §1667(1))   §3.37

           C.   How Many Illegal Objects? (CC §§1598–1599)   §3.38

           D.   Balancing Test for Unenforceability   §3.39

           E.   Contracts Contrary to Public Policy (CC §§1667(2), 1668, 1669.7)   §3.40

            F.   Contracts Concerning Marriage; Morals (CC §§1667(3), 1669, 1669.5)   §3.41

      IV.   CONSIDERATION

           A.   Generally (CC §1605)   §3.42

           B.   Adequacy; Sufficiency   §3.43

           C.   Forbearance (CC §1606)   §3.44

           D.   Preexisting Duty Rule (CC §1606)   §3.45

           E.   Moral Obligations; Love and Affection (CC §1606)   §3.46

            F.   Past Consideration   §3.47

           G.   Mutuality of Obligation; Illusory Promises   §3.48

           H.   Unlawful Consideration (CC §1607)   §3.49

             I.   Unilateral Contracts

                1.   Generally   §3.50

                2.   Employment Policies; Personnel Manuals; Medical Staff Bylaws   §3.51

                3.   Options   §3.52

            J.   Promissory Estoppel   §3.53

           K.   Consideration in Commercial Code Contracts (Com C §1204)   §3.54

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4

Contract Formation: Offer and Acceptance, Formalities, Electronic Contracting

          I.   OFFER

           A.   Generally   §4.1

           B.   Definition of Offer   §4.2

           C.   Requirement of Certainty   §4.3

           D.   Preliminary Negotiations Distinguished

                1.   Generally   §4.4

                2.   Advertisements   §4.5

                3.   Application Forms   §4.6

                4.   Price Quotations   §4.7

                5.   Auctions   §4.8

                6.   Invitations to Bid; Requests for Proposals

                    a.   Generally   §4.9

                    b.   Acceptance of Bids   §4.10

                     c.   Subcontractor Bids   §4.11

                    d.   Offers by Merchants Under Com C §2205(b)   §4.12

           E.   Revocable Offers (CC §§1586–1587)   §4.13

            F.   Irrevocable Offers; Option Contracts   §4.14

           G.   Firm Offers by Merchants Under Com C §2205(a)   §4.15

           H.   Agreements to Agree, Contracts to Negotiate

                1.   Generally   §4.16

                2.   Letters of Intent   §4.17

                3.   Loan Commitment Letters   §4.18

             I.   Statutory Offers to Compromise (CCP §998)   §4.19

            J.   Lapse or Expiration of an Offer (CC §1587(2))   §4.20

       II.   ACCEPTANCE

           A.   Generally   §4.21

           B.   Manifestation of Assent (CC §1581)   §4.22

           C.   Content of Acceptance: Mirror Image Rule; Counteroffers (CC §1585)   §4.23

           D.   Who May Accept   §4.24

           E.   Communication of Acceptance

                1.   Generally (CC §1582)   §4.25

                2.   Timing of Acceptance; Mailbox Rules   §4.26

                    a.   Mailbox Rule: Acceptance (CC §1583)   §4.27

                    b.   Mailbox Rule: Revocation of Offer   §4.28

                     c.   Mailbox Rule: Later Rejection Overtaking Acceptance   §4.29

                3.   Ratification (CC §1588)   §4.30

            F.   Acceptance by Conduct

                1.   Generally   §4.31

                2.   Silence   §4.32

                3.   Unsolicited Sending of Merchandise (CC §§1584.5–1584.6)   §4.33

           G.   Implied-in-Fact Contracts (CC §1621)   §4.34

           H.   Rejection of Offers   §4.35

      III.   FORMATION OF CONTRACTS FOR SALE OR LEASE OF GOODS

           A.   Formation Generally (Com C §§2204, 10204)   §4.36

           B.   Manner of Acceptance (Com C §§2206, 10206)   §4.37

           C.   Nonconforming Acceptance (Com C §2207)   §4.38

      IV.   FORMALITIES

           A.   Generally   §4.39

           B.   Signatures (CC §14; Com C §1201(b)(37))   §4.40

           C.   Oral Contracts (CC §1622)   §4.41

           D.   Approval by Third Parties   §4.42

               E.   Consent of Spouse or Domestic Partner (Fam C §§297.5, 1100, 1102)   §4.43

            F.   Statute of Frauds

                1.   Civil Code Statutes of Fraud

                    a.   Civil Code §1624(a)   §4.44

                    b.   Certain Contracts for Sale of Personal Property (CC §1624.5)   §4.45

                     c.   Other Types of Contracts   §4.46

                2.   Commercial Code Statutes of Frauds (Com C §2201)   §4.47

                3.   Requirement of Written Contract   §4.48

                4.   Divisibility of Agreement   §4.49

                5.   Estoppel to Plead Statute of Frauds   §4.50

           G.   Delivery (CC §§1626–1627)   §4.51

           H.   Contract Modification

                1.   CC §§1697–1698   §4.52

                2.   Commercial Code §2209   §4.53

       V.   ELECTRONIC CONTRACTING

           A.   E-Sign (15 USC §§7001–7031)

                1.   Introduction   §4.54

                2.   Electronic Signatures   §4.55

                3.   Exceptions to Applicability of E-Sign   §4.56

                4.   Consumer Protection Features   §4.57

                5.   Electronic Record Retention   §4.58

           B.   Uniform Electronic Transactions Act (CC §§1633.1–1633.17)

                1.   Overview   §4.59

                2.   Scope of UETA; Exceptions   §4.60

                3.   Consent Under UETA   §4.61

           C.   Uniform Computer Information Transactions Act (UCITA)   §4.62

               D.   ALI Software Contract Principles   §4.62A

           E.   Enforceability of Shrink-Wrap, Click-Wrap, and Browse-Wrap Agreements

                1.   Introduction   §4.63

                2.   Shrink-Wrap Software Licenses   §4.64

                3.   Click-Wrap Agreements   §4.65

                4.   Browse-Wrap Agreements   §4.66

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5

Contract Interpretation, Modification, Waiver

          I.   GENERAL RULES OF INTERPRETATION

           A.   Objective Manifestations of Intention   §5.1

           B.   Titles and Headings in Contracts   §5.2

           C.   Civil and Civil Procedure Code Rules of Contract Interpretation   §5.3

                1.   Uniformity of Interpretation (CC §1635)   §5.4

                2.   Mutual Intention to Be Given Effect (CC §1636)   §5.5

                3.   Ascertaining Intention: Civil Code Rules (CC §1637)   §5.6

                4.   Ascertaining Intention: Contract Language (CC §§1638–1639)   §5.7

                5.   When Writing May Be Disregarded (CC §1640)   §5.8

                6.   Interpreting Whole Contract (CC §1641; CCP §1858)   §5.9

                7.   Interpreting Multiple Contracts in Single Transaction Together (CC §1642)   §5.10

                8.   Interpreting Contracts to Make Them Lawful and Effective (CC §1643; CCP §1866)   §5.11

                9.   Interpreting Words in Their Ordinary Sense (CC §1644; CCP §§1861, 1865)   §5.12

              10.   Technical Words (CC §1645)   §5.13

              11.   Law and Usage of Place (CC §§1646, 1646.5)   §5.14

              12.   Circumstances (CC §1647; CCP §1860)   §5.15

              13.   Restricting Contract to Its Apparent Object (CC §1648)   §5.16

              14.   Ambiguity or Uncertainty (CC §1649; CCP §1864)   §5.17

              15.   Particular Clauses Subordinate to General Intent (CC §1650; CCP §1859)   §5.18

              16.   Original Writing Controls Over Printed Form (CC §1651; CCP §1862)   §5.19

              17.   Reconciling Repugnancies (CC §1652)   §5.20

              18.   Inconsistent Words (CC §1653)   §5.21

              19.   Interpretation Against Persons Causing Uncertainty (CC §1654)   §5.22

              20.   Implied Stipulations (CC §1655; CCP §1856(c))   §5.23

              21.   Implied Incidentals (CC §1656)   §5.24

              22.   Presumptions Concerning Sales Tax, Schedules (CC §1656.1)   §5.25

              23.   Time of Performance (CC §1657)   §5.26

              24.   Joint and Several Liability Presumed if Joint Benefit Conferred (CC §1659)   §5.27

              25.   Joint and Several Liability Presumed in Joint Undertaking (CC §1660)   §5.28

              26.   Executed and Executory Contracts Defined (CC §1661)   §5.29

              27.   Uniform Vendor and Purchaser Risk Act (CC §1662)   §5.30

              28.   Euro as Form of Payment (CC §1663)   §5.31

              29.   Ascertaining Consideration (CC §§1610–1613)   §5.32

               D.   “Best Efforts” Provisions   §5.32A

       II.   PAROL EVIDENCE RULE

           A.   Generally (CC §§1625, 1639; CCP §1856)   §5.33

           B.   Parol Evidence Analysis   §5.34

                1.   Standard of Review   §5.35

                2.   Merger or Integration Clauses   §5.36

                3.   Collateral Agreements; Incorporation of Extrinsic Documents by Reference   §5.37

                4.   Contradictory Evidence   §5.38

                5.   Latent Versus Patent Ambiguities   §5.39

                6.   Evidence of the Circumstances (CCP §§1856(g), 1860)   §5.40

                7.   Exceptions for Mistake, Invalidity, Illegality, Fraud (CCP §1856(e)–(g))   §5.41

                8.   Course of Dealing, Usage of Trade, Course of Performance (CCP §1856(c))   §5.42

           C.   Commercial Code Parol Evidence Rule (Com C §2202)   §5.43

      III.   CHOICE OF FORUM, CONFLICTS OF LAW, CHOICE OF LAW

           A.   Forum Selection Clauses, Consent to Personal Jurisdiction

                1.   Generally   §5.44

                2.   Who May Enforce   §5.45

                3.   Mandatory Versus Permissive Forum Selection Clauses   §5.46

                4.   Venue Selection Clauses Distinguished   §5.47

                5.   Construction Contracts (CCP §410.42)   §5.48

                6.   Letters of Credit (Com C §5116(e))   §5.49

                7.   Consumer Lease Contracts (Com C §10106(b))   §5.50

           B.   Conflicts of Law; Choice of Law

                1.   In Absence of Choice-of-Law Clause   §5.51

                2.   Enforceability of Choice-of-Law Clauses

                    a.   Choice of California Law

                         (1)  Generally   §5.52

                         (2)  Transactions of $250,000 or More (CC §1646.5)   §5.53

                    b.   Choice of Non-California Law: Nedlloyd Lines B.V. v Superior Court   §5.54

                3.   Commercial Code Transactions (Com C §1301)   §5.55

      IV.   COMMERCIAL CODE RULES OF CONTRACT INTERPRETATION

           A.   Course of Dealing and Usage of Trade (Com C §1303)   §5.56

                1.   Course of Dealing Defined (Com C §1303(b))   §5.57

                2.   Usage of Trade Defined (Com C §1303(c))   §5.58

           B.   Course of Performance (Com C §1303(a))   §5.59

           C.   Gap-Filling Rules   §5.60

                1.   Course of Dealing; Usage of Trade; Course of Performance (Com C §1303(d))   §5.61

                2.   Open Price Term (Com C §2305)   §5.62

                3.   Open Quantity Term

                    a.   Output and Requirements Contracts (Com C §2306(1))   §5.63

                    b.   Exclusive Dealing Arrangements (Com C §2306(2))   §5.64

                4.   Open Delivery Terms

                    a.   Number of Deliveries (Com C §2307)   §5.65

                    b.   Place of Delivery (Com C §2308)   §5.66

                5.   Contract Duration: Time for Delivery or Other Performance (Com C §2309)   §5.67

                6.   Open Payment Terms (Com C §2310)   §5.68

                7.   Details of Performance (Com C §2311)   §5.69

       V.   SEVERABILITY; DIVISIBILITY

           A.   General Rules Concerning Severance of Unenforceable Terms (CC §1599)   §5.70

           B.   Severability Issues in Contract Drafting   §5.71

               C.   Divisible Contracts   §5.71A

      VI.   ADHESION CONTRACTS

           A.   What Is an Adhesion Contract? §5.72

           B.   Enforceability of Adhesion Contracts   §5.73

           C.   Examples of Adhesion Contracts   §5.74

     VII.   UNCONSCIONABILITY

           A.   Generally (CC §1670.5)   §5.75

           B.   Procedural Unconscionability   §5.76

           C.   Substantive Unconscionability   §5.77

           D.   Class Action Waivers   §5.78

           E.   Remedies   §5.79

    VIII.    FOREIGN LANGUAGE TRANSLATIONS (CC §1632)   §5.80

      IX.   CONTRACT MODIFICATIONS, WAIVERS, RELEASES

           A.   Non-Commercial Code Contracts   §5.81

                1.   Amendments or Modifications

                    a.   Generally   §5.82

                    b.   Oral Contracts (CC §1697)   §5.83

                     c.   Written Contracts (CC §1698)   §5.84

                2.   Supplemental Agreements   §5.85

                3.   Rescission; Cancellation   §5.86

                4.   Waiver   §5.87

                5.   Novation (CC §§1530–1532)   §5.88

           B.   Modification, Rescission, and Waiver Under Commercial Code (Com C §§1306, 2209, 10208)   §5.89

           C.   Settlement Agreements; Releases

                1.   Generally   §5.90

                2.   Covenants Not to Sue   §5.91

                3.   Releases of Existing Obligations (CC §1541)   §5.92

                4.   Scope of General Releases (CC §1542)   §5.93

                5.   Third Parties (CC §1543)   §5.94

                6.   Exculpation Agreements; Prospective Releases (CC §1668)   §5.95

           D.   Statutory Offers to Compromise (CCP §998)   §5.96

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6

Representations, Warranties, Covenants, Conditions, Indemnities

        I.    INTRODUCTION   §6.1

       II.   REPRESENTATIONS AND WARRANTIES

           A.   Representations

                1.   Generally   §6.2

                2.   Actionable Misrepresentations   §6.3

                3.   Financial Statements   §6.4

                4.   Insurance Contracts   §6.5

                5.   Statements of Opinion Distinguished   §6.6

           B.   Contractual Warranties

                1.   Generally   §6.7

                2.   Implied Warranties in Residential Real Estate Leases and New Construction   §6.8

                3.   Disclaimer of Warranties   §6.9

                4.   Survival of Warranties   §6.10

                5.   Common Law Requirement for Privity of Contract   §6.11

           C.   Commercial Code Warranties   §6.12

                1.   Express Warranties by Affirmation, Promise, Description, or Sample (Com C §2313)   §6.13

                2.   Implied Warranty of Merchantability (Com C §2314)   §6.14

                3.   Implied Warranty of Fitness for Particular Purpose (Com C §2315)   §6.15

                4.   Warranty of Title; Warranty Against Infringement (Com C §2312)   §6.16

                5.   Exclusion or Modification of Commercial Code Warranties (Com C §2316)   §6.17

                6.   Privity of Contract   §6.18

                7.   Conflict of Warranties (Com C §2317)   §6.19

                8.   Leases of Goods

                    a.   Generally   §6.20

                    b.   Implied Warranties Against Interference and Infringement (Com C §10211)   §6.21

           D.   Consumer Protection Warranties

                1.   Generally   §6.22

                2.   California Law

                    a.   Consumers Legal Remedies Act (CC §§1750–1784)   §6.23

                    b.   Song-Beverly Consumer Warranty Act (the “Lemon Law”; CC §§1790–1795.8)   §6.24

                     c.   Motor Vehicle Warranty Adjustment Programs (CC §§1795.90–1795.93)   §6.25

                    d.   Standards for Warranty Work (CC §§1796, 1796.5)   §6.26

                    e.   Mobilehome Warranties (CC §§1797–1797.7)   §6.27

                     f.   Grey Market Goods (CC §§1797.8–1797.86)   §6.28

                    g.   Home Roof Warranties (CC §§1797.90–1797.96)   §6.29

                3.   Federal Law

                    a.   Magnuson-Moss Warranty—Federal Trade Commission Improvement Act   §6.30

                    b.   FTC Regulations Concerning Written Consumer Warranties   §6.31

      III.   COVENANTS

           A.   Generally

                1.   Express Covenants   §6.32

                2.   Implied Covenants   §6.33

           B.   Implied Covenant of Good Faith and Fair Dealing

                1.   Generally   §6.34

                2.   Requires a Contract   §6.35

                3.   In Exercise of Discretion   §6.36

                4.   Insurance Contracts   §6.37

           C.   Covenants Not to Compete   §6.38

               D.   Covenants Not to Solicit Employees   §6.38A

           E.   Covenants in Contracts Regulated by Civil Code   §6.39

            F.   Attorney Fee Agreements (Bus & P C §6148)   §6.40

      IV.   CONDITIONS

           A.   Generally (CC §§1434–1435)   §6.41

           B.   Express and Implied Conditions   §6.42

           C.   Conditions Precedent, Concurrent, Subsequent

                1.   Conditions Precedent (CC §§1436, 1439)   §6.43

                2.   Concurrent Conditions (CC §§1437, 1439)   §6.44

                3.   Conditions Subsequent (CC §1438)   §6.45

           D.   Condition of “Satisfaction”   §6.46

           E.   Condition of “No Material Adverse Change”   §6.47

            F.   Waiver of Conditions   §6.48

           G.   Conditions Resulting in Forfeiture (CC §1442)   §6.49

           H.   Excuse of Conditions (CC §§1440–1441)   §6.50

       V.   INDEMNITY AGREEMENTS

           A.   Generally (CC §2772)   §6.51

           B.   Indemnity Agreements Under the Civil Code

                1.   Agreements to Indemnify Against Past or Future Wrongful Acts (CC §§2773–2774)   §6.52

                2.   Extension to Acts of Agents (CC §2775)   §6.53

                3.   Multi-Party Indemnifications (CC §§2776–2777)   §6.54

                4.   Rules of Interpretation (CC §2778)   §6.55

                5.   Reimbursement (CC §2779)   §6.56

                6.   Indemnification Provisions in Construction and Hauling Contracts (CC §§2782–2784.5)   §6.57

           C.   Equitable Indemnity   §6.58

           D.   Guaranty and Suretyship Contracts Distinguished   §6.59

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7

Assignment and Delegation, Third Party Beneficiaries, and Joint and Several Obligations

        I.    INTRODUCTION   §7.1

       II.   ASSIGNMENT AND DELEGATION

           A.   Definition of Assignment (CC §1039)   §7.2

           B.   Principles of Assignment

                1.   Assignment of Contract Rights (CC §1458)   §7.3

                2.   Assignments of Rights to Payment; Nonnegotiable Instruments

                    a.   Relationship to UCC; Definition of “Account” (Com C §§9102, 9109)   §7.4

                    b.   Transfers of Nonnegotiable Instruments (CC §1459)   §7.5

                3.   Assignments of Choses in Action (CC §§953–954; CCP §§368, 368.5)   §7.6

                4.   Assignments of After-Acquired Rights, Future Interests (CC §1045)   §7.7

                5.   How Made

                    a.   Assignments of Contract Rights Generally (CC §§1040, 1052–1056, 1084)   §7.8

                    b.   Notice of Assignment   §7.9

                     c.   Perfection of Transfers of Nonnegotiable Instruments and Certain Payment Rights (CC §§955, 955.1)   §7.10

                    d.   Equitable Assignments   §7.11

                6.   Effect of Assignment

                    a.   Generally (CC §1084)   §7.12

                    b.   Assumption of Obligations (CC §1589)   §7.13

                     c.   Effect of “Successors and Assigns” Clause   §7.14

                    d.   Assignments for Security   §7.15

                    e.   Assignee Subject to Obligor’s Claims and Defenses Against Assignor (CC §1459; CCP §368); Waiver of Defenses   §7.16

                7.   Priority Among Successive Assignees   §7.17

           C.   Restrictions on Assignment   §7.18

                1.   Contractual Restrictions

                    a.   Enforcement of Anti-Assignment Clauses Generally   §7.19

                    b.   When Assignment Requires Consent of Nonassigning Party   §7.20

                         (1)  Commercial Real Estate Leases (CC §1995.260)   §7.21

                         (2)  Franchise Agreements   §7.22

                         (3)  Other Contracts   §7.23

                     c.   When Contractual Restrictions Not Enforceable

                         (1)  Assignments of Money Due   §7.24

                         (2)  Assignments of Accounts; Grants of Security Interests (Com C §§9406(d), 9408(a))   §7.25

                         (3)  Assignments by Operation of Law   §7.26

                2.   Legal Restrictions

                    a.   Contracts Requiring Unique Personal Skill   §7.27

                    b.   Assignments of Patent and Copyright Licenses   §7.28

                     c.   Assignments of Wages (Lab C §300)   §7.29

           D.   Delegation of Duties

                1.   Definition of Delegation   §7.30

                2.   Principles of Delegation (CC §1457)   §7.31

                3.   Novation Compared (CC §§1530–1532)   §7.32

                4.   How Made   §7.33

                5.   Nondelegable Duties; Personal Services Contracts   §7.34

           E.   Revocability of Assignments; Modification of Assigned Contract   §7.35

            F.   Assignments for Benefit of Creditors   §7.36

      III.    ASSIGNMENT AND DELEGATION OF CONTRACTS FOR THE SALE OR LEASE OF GOODS   §7.37

           A.   Contracts for the Sale of Goods (Com C §2210)

                1.   Scope of Com C §2210   §7.38

                2.   Distinction Between Assignment and Delegation   §7.39

                3.   Financing Assignments   §7.40

           B.   Assignment of Rights   §7.41

                1.   Creation of Security Interest Not Deemed Material   §7.42

                2.   Contractual Restrictions on Assignment   §7.43

                3.   When Restrictions on Assignment Are Unenforceable

                    a.   Fully Executed Contracts   §7.44

                    b.   Creation of Security Interest   §7.45

                4.   Material Adverse Effect on Nonassigning Party   §7.46

           C.   Delegation of Duties

                1.   Principles of Delegation   §7.47

                2.   Delegation Implied by Assignment   §7.48

                3.   Effect of Delegation

                    a.   As Between Nondelegating Party and Assignee   §7.49

                    b.   As Between Nondelegating Party and Assignor   §7.50

                     c.   As Between Assignor and Assignee   §7.51

                4.   When Delegation of Duties Prohibited   §7.52

           D.   Leases of Goods (Com C §10303)

                1.   Scope of Com C §10303   §7.53

                2.   Assignment and Delegation   §7.54

                3.   Subleases of Goods   §7.55

                4.   Restrictions on Lease Transfers   §7.56

                5.   When Restrictions on Transfer Unenforceable

                    a.   Transfers of Right to Payment or Damages on Default   §7.57

                    b.   Creation of Security Interest   §7.58

                     c.   Material Adverse Effect on Other Party   §7.59

                6.   Priorities Among Conflicting Claimants   §7.60

      IV.   THIRD PARTY BENEFICIARIES

           A.   Generally (CC §1559)   §7.61

           B.   Scope of Third Party’s Rights   §7.62

           C.   Creditor and Donee Beneficiaries   §7.63

           D.   Intended and Incidental Beneficiaries

                1.   Intended Beneficiaries   §7.64

                2.   Incidental Beneficiaries   §7.65

           E.   Who Qualifies as Third Party Beneficiary   §7.66

            F.   Defenses to Enforcement by Third Party Beneficiary   §7.67

           G.   Rescission or Modification of Third Party Beneficiary Contracts   §7.68

       V.   JOINT AND SEVERAL OBLIGATIONS

           A.   Introduction (CC §1430)   §7.69

           B.   Two or More Obligors

                1.   Interpreting the Contract   §7.70

                2.   When Joint and Several Liability Presumed (CC §§1659, 1660; Corp C §16306)   §7.71

                3.   Joint Obligations Distinguished (CC §1431)   §7.72

                4.   Several Obligations Distinguished   §7.73

                5.   Suretyship Relationships Distinguished   §7.74

                6.   Effect of Joint and Several Liability

                    a.   Performance by One Obligor (CC §1474)   §7.75

                    b.   Release of One Obligor (CC §1543; CCP §877)   §7.76

                     c.   Assignment by Obligee to One Obligor   §7.77

                    d.   Rights of Contribution (CC §1432)   §7.78

                    e.   Joinder of Joint Obligors in Action on Contract   §7.79

           C.   Two or More Obligees (CC §§1431, 1475)   §7.80

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8

Performance or Breach of Contract

          I.    INTRODUCTION   §8.1

       II.   PERFORMANCE OF CONTRACTS UNDER THE CIVIL CODE

           A.   Full and Part Performance

                1.   Full Performance Discharges Obligation; Substantial Performance (CC §§1473–1475)   §8.2

                2.   Performance in Manner Directed by Creditors (CC §1476)   §8.3

                3.   Effect of Partial Performance (CC §1477); Indivisible and Divisible Contracts   §8.4

                4.   Payment Defined (CC §1478)   §8.5

                5.   Payment by Check or Promissory Note (Com C §3310)   §8.6

                6.   Application of Performance to Two or More Obligations (CC §1479)   §8.7

                7.   Time for Performance

                    a.   Time of Performance of Contract (CC §1657)   §8.8

                    b.   Contracts of Indefinite Duration   §8.9

                     c.   When “Time Is of the Essence”   §8.10

                    d.   When Time for Performance Falls on a Holiday (CCP §13)   §8.11

                8.   Performance of Conditions (CC §1439)   §8.12

           B.   Offer or Tender of Performance

                1.   Obligation Extinguished by Offer of Full Performance (CC §1485)   §8.13

                2.   Effect of Offer of Partial Performance (CC §1486)   §8.14

                3.   Offer of Performance by or on Behalf of Debtor to Creditor (CC §§1487–1488)   §8.15

                4.   Place of Offer of Performance (CC §1489)   §8.16

                5.   Time of Offer of Performance (CC §§1490–1491, 1806.3)   §8.17

                6.   Delay in Performance (CC §1492)   §8.18

                7.   Good Faith; Ability and Willingness to Perform (CC §§1493, 1495)   §8.19

                8.   Production of Thing to Be Delivered (CC §§1496–1497; CCP §2074)   §8.20

                9.   Conditional Offers of Performance (CC §§1494, 1498)   §8.21

              10.   Debtor’s Right to Written Receipt (CC §1499, CCP §2075)   §8.22

              11.   Extinction of Pecuniary Obligation by Deposit (CC §1500)   §8.23

              12.   Waiver of Objections to Tender of Performance (CC §1501; CCP §2076)   §8.24

              13.   Title to, and Custody of, Thing Offered (CC §§1502, 1503)   §8.25

              14.   Effect of Offer of Performance on Interest and Other Incidents (CC §1504)   §8.26

              15.   Creditor’s Retention of Thing Without Acceptance (CC §1505)   §8.27

           C.   Excuse of Performance

                1.   Generally   §8.28

                    a.   Prevention of Performance by Act of Creditor or Operation of Law (CC §1511(1))   §8.29

                         (1)  Act of Creditor   §8.30

                         (2)  Operation of Law   §8.31

                    b.   Force Majeure (CC §1511(2))   §8.32

                     c.   Creditor Induces Debtor’s Nonperformance (CC §1511(3))   §8.33

                    d.   Nonoccurrence or Nonperformance of Condition   §8.34

                    e.   Impossibility or Impracticability

                         (1)  Generally (CC §1598)   §8.35

                         (2)  Temporary Impossibility or Impracticability   §8.36

                         (3)  Death or Incapacity   §8.37

                     f.   Frustration of Purpose   §8.38

                2.   Debtor’s Entitlement to Contract Benefits (CC §1512)   §8.39

                3.   Ratable Recovery of Consideration (CC §1514)   §8.40

                4.   Refusal to Accept Performance (CC §1515)   §8.41

           D.   Accord and Satisfaction

                1.   Generally (CC §§1521, 1523)   §8.42

                2.   Intent of Parties (CC §§1524–1525)   §8.43

                3.   Distinguished From Novation (CC §1522)   §8.44

                4.   Accord and Satisfaction by Use of Instrument (Com C §3311; CC §1526)   §8.45

           E.   Novation (CC §§1530–1532)   §8.46

            F.   Release (CC §§1541–1543)   §8.47

      III.   PERFORMANCE OF COMMERCIAL CODE CONTRACTS

           A.   Performance Standards

                1.   General Obligations of Parties (Com C §§2301, 10301)   §8.48

                2.   Manner of Seller’s Tender of Delivery (Com C §2503)   §8.49

                3.   Seller’s Performance by Shipment (Com C §2504)   §8.50

                4.   Seller’s Shipment Under Reservation (Com C §2505)   §8.51

                5.   Perfect Tender Rule (Com C §2601)   §8.52

                6.   Seller’s Cure of Improper Tender or Delivery (Com C §§2508, 2614, 10406)   §8.53

                7.   Tender of Payment by Buyer (Com C §2511)   §8.54

                8.   Payment by Buyer Before Inspection (Com C §2512)   §8.55

                9.   Buyer’s Right to Inspection of Goods (Com C §2513)   §8.56

              10.   Preserving Evidence (Com C §2515)   §8.57

              11.   Right to Adequate Assurance of Performance (Com C §2609)   §8.58

              12.   Acceptance of Performance

                    a.   Sales of Goods (Com C §§2301, 2606–2607)   §8.59

                    b.   Revocation of Acceptance (Com C §2608)   §8.60

                     c.   Acceptance of Leased Goods (Com C §10515)   §8.61

           B.   Excuse of Performance

                1.   Excuse by Failure of Presupposed Conditions; Commercial Impracticability (Com C §§2615, 10404)   §8.62

                2.   Buyer’s Rights on Seller’s Notice of Inability or Delay in Performance (Com C §§2616, 10405)   §8.63

                3.   Casualty to Identified Goods (Com C §§2613, 10221)   §8.64

           C.   Installment Contracts (Com C §2612)   §8.65

      IV.   BREACH OF CONTRACT

           A.   Contracts Not Subject to Commercial Code

                1.   Generally   §8.66

                2.   Elements of Cause of Action for Breach   §8.67

                3.   Need for Demand for Performance   §8.68

                4.   Total or Partial Breach   §8.69

                5.   Material and Immaterial Breach   §8.70

                6.   Anticipatory Repudiation (CC §1440)   §8.71

                7.   Waiver of Breach   §8.72

                8.   Abandonment of Construction Contracts   §8.73

           B.   Breach of Contracts for Sale of Goods

                1.   Generally (Com C §§2601–2603, 2605, 2607)   §8.74

                2.   Anticipatory Repudiation (Com C §2610)   §8.75

                3.   Retraction of Anticipatory Repudiation (Com C §2611)   §8.76

           C.   Breach of Personal Property Leases (Com C §10501)   §8.77

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9

Selected Enforcement Issues

          I.    INTRODUCTION   §9.1

       II.   CONTRACT STATUTES OF LIMITATION

           A.   Written Contracts and Leases: Four Years (CCP §§337, 337.2)   §9.2

           B.   Accrual of Cause of Action for Breach   §9.3

           C.   Special Rules (CCP §§336a, 337(1), 338, 339)   §9.4

           D.   Agreements Regarding Statutes of Limitation (CCP §§360, 360.5)   §9.5

           E.   UCC Statutes of Limitation (Com C §§2725, 3118, 5115, 10506)   §9.6

      III.   JURISDICTION; VENUE

           A.   Jurisdiction, Forum Selection Clauses   §9.7

           B.   Venue Rules for Breach of Contract Actions (CCP §§395, 395.2, 395.5, 396a)

                1.   If Defendant Is an Individual Person

                    a.   Non-Consumer Contracts (CCP §395(a))   §9.8

                    b.   Consumer Obligations (CCP §§395(b)–(c), 396a)   §9.9

                2.   If Defendant Is a Corporation, an Unincorporated Association, or an Executor or Trustee (CCP §§395.1–395.2, 395.5)   §9.10

                3.   Venue Selection Clauses Void   §9.11

      IV.   ATTORNEY FEES

           A.   American Rule Prohibits Attorney Fee Award (CCP §1021)   §9.12

           B.   Recovery of Attorney Fees by Contract

                1.   General Rule (CCP §§1032, 1033.5; CC §1717(a))   §9.13

                2.   CC §1717 Is Mutual and Reciprocal   §9.14

                3.   Attorney Fees if Contract Is Invalid or Rescinded   §9.15

                4.   CC §1717 Not Waivable   §9.16

                5.   Determination of “Prevailing Party” (CC §1717(b)(1); CCP §1032(4))

                    a.   Definition; Procedure for Determination   §9.17

                    b.   Voluntary Dismissals   §9.18

                     c.   Effect of CCP §998 Settlement Offer on Attorney Fee Award   §9.19

                    d.   Tender of Payment by Defendant   §9.20

                6.   Rights of Third Party Beneficiaries   §9.21

                7.   Fees Must Be “Reasonable”   §9.22

                8.   Fees on Appeal   §9.23

                9.   Costs of Litigation   §9.24

              10.   Attorney Fees in Actions Including Tort or Other Noncontract Claims   §9.25

              11.   Pro Se Litigants; In-House Counsel   §9.26

              12.   Attorney Fee Clauses   §9.27

           C.   Statutes Allowing Recovery   §9.28

       V.    PREDISPUTE WAIVER OF RIGHT TO JURY TRIAL (CCP §631)   §9.29

      VI.   ARBITRATION OF CONTRACT DISPUTES

           A.   Introduction   §9.30

           B.   Advantages and Disadvantages of Arbitration

                1.   Advantages   §9.31

                2.   Disadvantages   §9.32

           C.   Drafting Arbitration Clauses

                1.   AAA Forms of Arbitration Clause   §9.33

                2.   JAMS Forms of Arbitration Clause   §9.34

                3.   Self-Executing Arbitration Clauses   §9.35

                4.   Special Requirements   §9.36

                5.   Discovery Provisions   §9.37

           D.   Enforcement of Arbitration Clauses

                1.   California Arbitration Act (CCP §§1280–1294.2)   §9.38

                2.   Federal Arbitration Act (9 USC §§1–16)

                    a.   Generally   §9.39

                    b.   FAA Preemption of State Law   §9.40

                3.   Arbitrability; Scope of Arbitration Clause   §9.41

           E.   Defenses to Enforcement of Arbitration Clause

                1.   Unconscionability   §9.42

                    a.   Procedural Unconscionability   §9.43

                    b.   Substantive Unconscionability   §9.44

                2.   Fraud in Execution   §9.45

                3.   Waiver of Right to Compel Arbitration   §9.46

                4.   Unwaivable Statutory Rights

                    a.   Armendariz: Enforceability Subject to Particular Scrutiny   §9.47

                    b.   Armendariz Requirements   §9.47A

                     c.   Public Purpose   §9.47B

                    d.   Enforceability Analysis   §9.47C

                    e.   Private Claims   §9.47D

                5.   Other Defenses   §9.48

            F.   Arbitration of Attorney Fee Disputes   §9.49

           G.   Obligation of Nonsignatories to Arbitrate   §9.50

           H.   Scope of Arbitrator’s Authority to Grant Relief   §9.51

             I.   Finality of Arbitration Award; Judicial Review   §9.52

            J.   Judicial Arbitration (CCP §§1141.10–1141.31)   §9.53

     VII.   MEDIATION

           A.   Generally   §9.54

           B.   Forms of Mediation Clauses   §9.55

    VIII.   ELECTION OF REMEDIES

           A.   Scope of Doctrine   §9.56

           B.   When Made   §9.57

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10

Remedies: Damages

        I.    INTRODUCTION   §10.1

       II.    DAMAGES FOR BREACH OF PARTICULAR TYPES OF CONTRACTS   §10.2

      III.   DAMAGES FOR BREACH OF CONTRACT: GENERAL PRINCIPLES

           A.   Benefit of the Bargain (CC §3300)   §10.3

           B.   Requirement of Foreseeability (CC §3300)   §10.4

           C.   Requirement of Reasonableness (CC §3359)   §10.5

           D.   Requirement of Reasonable Certainty (CC §3301)   §10.6

           E.   Rule Against Windfalls (CC §3358)   §10.7

            F.   General and Special Damages

                1.   General Damages   §10.8

                2.   Special Damages   §10.9

           G.   Nominal Damages (CC §3360)   §10.10

           H.   Distinguished From Tort Damages   §10.11

      IV.    MITIGATION OF DAMAGES   §10.12

       V.   SPECIFIC ITEMS RECOVERABLE

           A.   Failure to Pay Money Due (CC §3302)   §10.13

           B.   Lost Profits

                1.   Generally   §10.14

                2.   Requirement of Proximate Causation   §10.15

                3.   Evidence of Lost Profits; Measure of Damages   §10.16

                4.   Breach of Contract Versus Tort Measures   §10.17

                5.   Interruption or Destruction of Business   §10.18

                6.   Lost Profits of New Businesses   §10.19

                7.   Contract Price/Market Value Differential   §10.20

                     8.   Minority Discount   §10.20A

                     9.   Loss of Goodwill   §10.21

           C.   Interest (CC §§3287, 3289, 3289.5)

                1.   Express Contractual Provision for Interest (CC §§3289(a), 3289.5)   §10.22

                2.   No Contractual Provision But Damages Certain or Calculable (CC §3287(a))   §10.23

                3.   No Contractual Provision; Damages Unliquidated (CC §3287(b))   §10.24

                4.   Date From Which Interest Runs   §10.25

                5.   Prejudgment Interest in Indemnity Actions   §10.26

                6.   Cost of Borrowing   §10.27

                7.   Postjudgment Interest   §10.28

           D.   Out-of-Pocket Expenses; Reliance Damages   §10.29

           E.   Tort Damages

                1.   Generally   §10.30

                2.   Damages for Emotional Distress   §10.31

                3.   Breach of Implied Covenant of Good Faith and Fair Dealing

                    a.   General Rule   §10.32

                    b.   Insurance Cases   §10.33

                     c.   Other Circumstances   §10.34

            F.   Damages for Breach of Employment or Service Contracts

                1.   Contract Measure of Damages   §10.35

                2.   Tort Remedies   §10.36

           G.   Attorney Fees (CC §1717)   §10.37

           H.   Expert Witness Fees   §10.38

      VI.   LIQUIDATED DAMAGES

           A.   Introduction   §10.39

           B.   Contracts Made Before July 1, 1978 (Former CC §§1670–1671)   §10.40

           C.   Contracts Made On or After July 1, 1978 (CC §1671(b))

                1.   General Rule   §10.41

                2.   Rule Against Penalties or Forfeitures (CC §3275)   §10.42

           D.   Liquidated Damages Under Other Applicable Law (CC §1671(a))   §10.43

           E.   Security Deposits as Liquidated Damages   §10.44

            F.   Commercial Code Contracts   §10.45

           G.   Consumer Contracts (CC §1671(c)–(d))   §10.46

           H.   Real Property Purchase Contracts (CC §§1675–1681)   §10.47

     VII.   EXEMPLARY (PUNITIVE) DAMAGES (CC §§3294–3296)

           A.   Generally   §10.48

           B.   Cases Involving Breach of Insurance Contract or Existence of Independent Tort   §10.49

           C.   Not Available for Bad Faith Denial of Contract’s Existence   §10.50

           D.   Proof of Defendant’s Financial Condition   §10.51

    VIII.   CONSUMERS LEGAL REMEDIES ACT (CC §§1750–1784)

           A.   Application (CC §§1751, 1754, 1761, 1770)   §10.52

           B.   Remedies (CC §1780)   §10.53

           C.   Special Notice and Demand Procedures (CC §1782)   §10.54

           D.   Class Actions (CC §1781)   §10.55

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11

Remedies: Injunctive and Declaratory Relief; Other Remedies

          I.    INTRODUCTION   §11.1

         II.    INJUNCTIVE RELIEF GENERALLY

               A.   Specific or Preventive Relief (CC §§3367, 3368, 3422)   §11.2

               B.   Not Available to Enforce a Penalty or Forfeiture (CC §§3275, 3369)   §11.3

               C.   Preventive Relief for Breach of Contract

                     1.   When Contract Is Specifically Enforceable (CC §3422; CCP §526(a))   §11.4

                     2.   When Contract Is Not Specifically Enforceable (CC §3423(e); CCP §526(b))   §11.5

                     3.   Certain Personal Service Contracts (CC §3423(e); CCP §526(b))   §11.6

        III.    SPECIFIC PERFORMANCE

               A.   When Available (CC §3384)

                     1.   Introduction   §11.7

                     2.   Inadequacy of Legal Remedy   §11.8

                     3.   Mutuality of Remedy (CC §3386)   §11.9

                     4.   Contracts to Transfer Real Property (CC §§3387, 3395)   §11.10

                     5.   Contracts to Transfer Personal Property   §11.11

                     6.   Incidental Damages   §11.12

                     7.   Contracts Signed by One Party Only (CC §3388)   §11.13

                     8.   Contracts With Liquidated Damages Clauses (CC §3389)   §11.14

                     9.   Plaintiff’s Partial Performance Is Immaterial or Fully Compensable (CC §3392)   §11.15

               B.   When Specific Performance Is Not Available

                     1.   Personal Service Contracts

                           a.   Contracts to Render Personal Services (CC §3390(1); Lab C §2855)   §11.16

                           b.   Contracts to Employ Another in Personal Service (CC §3390(2))   §11.17

                           c.   Collective Bargaining Agreements (Lab C §1126)   §11.18

                           d.   Special or Unique Services   §11.19

                           e.   Contracts to Make a Will: Quasi-Specific Performance   §11.20

                            f.   Marvin Agreements   §11.21

                     2.   Inability Lawfully to Perform (CC §3390(3))   §11.22

                     3.   Agreement to Procure Act or Consent of a Third Party (CC §3390(4))   §11.23

                     4.   Agreements With Uncertain Terms (CC §3390(5))

                           a.   Requirement of Certainty   §11.24

                           b.   Extrinsic Evidence   §11.25

                           c.   Future Agreement of Parties   §11.26

                     5.   When Performance Is Impossible   §11.27

                     6.   Uniform Vendor and Purchaser Risk Act (CC §1662)   §11.28

                     7.   When Damages Are Adequate   §11.29

                     8.   Parties Who Cannot Be Compelled to Perform (CC §3391)   §11.30

                           a.   Inadequate Consideration (CC §3391(1))   §11.31

                           b.   Unjust or Unreasonable Contracts (CC §3391(2))   §11.32

                           c.   Misrepresentation, Concealment, or Unfair Practices (CC §3391(3))   §11.33

                           d.   Mistake, Misapprehension, Surprise (CC §3391(4))   §11.34

                     9.   Lack of Full Performance by Plaintiff (CC §3392)

                           a.   General Rule   §11.35

                           b.   Time for Performance   §11.36

                           c.   Relief From Forfeiture   §11.37

                   10.   Seller’s Inability to Convey Marketable Title (CC §3394)   §11.38

                   11.   Continuous Supervision   §11.39

        IV.    DECLARATORY RELIEF

               A.   Availability in Contract Disputes (CCP §1060)   §11.40

               B.   Equitable Remedy   §11.41

               C.   Requirement of Actual Controversy (CCP §1060)   §11.42

               D.   Requirement of Urgency (CCP §1061)   §11.43

               E.   Cumulative Nature of Remedy (CCP §1062)   §11.44

               F.   Res Judicata Effect   §11.45

         V.    RESCISSION (CC §§1688–1695.17)

               A.   General Rules (CC §§1688, 1689, 1690–1693)   §11.46

               B.   As Distinct From Restitution   §11.47

               C.   Who May Rescind   §11.48

               D.   Grounds for Rescission

                     1.   Mutual Consent (CC §1689(a))   §11.49

                     2.   Unilateral Rescission (CC §1689(b))   §11.50

                     3.   Mistake or Fraud (CC §§1689(b)(1), 1690)   §11.51

                     4.   Failure of Consideration (CC §1689(b)(2)–(4))   §11.52

               E.   Must Involve Entire Contract   §11.53

               F.   Procedure for Rescission (CC §1691)   §11.54

                     1.   Notice of Rescission (CC §§1691(a), 1693)   §11.55

                     2.   Restoration of Consideration (CC §§1691(b), 1693)   §11.56

               G.   Relief Based on Rescission (CC §1692)   §11.57

               H.   Statutory Rescission Rights for Particular Types of Contracts   §11.58

        VI.    CANCELLATION

               A.   Extrajudicial Cancellation (CC §§1699–1701)   §11.59

               B.   Judicial Cancellation (CC §§3412–3414)   §11.60

       VII.    ABANDONMENT   §11.61

      VIII.    REFORMATION

               A.   Generally (CC §§3399, 3402)   §11.62

               B.   Presumption of Intent; Principles of Revision (CC §§3400–3401)   §11.63

               C.   Reformation for Mistake   §11.64

        IX.    LOST OR DESTROYED DOCUMENTS (CC §3415)   §11.65

         X.    QUASI-CONTRACT, RESTITUTION

               A.   What Is Quasi-Contract? §11.66

               B.   Effect of Express Contract   §11.67

               C.   Benefit or Enrichment   §11.68

               D.   Benefit or Enrichment Must Be Unjust   §11.69

               E.   Restitution as Remedy for Unjust Enrichment   §11.70

               F.   Common Counts

                     1.   Generally   §11.71

                     2.   Quantum Meruit   §11.72

                     3.   Money Had and Received   §11.73

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12

Remedies: Commercial Code

          I.   PRELITIGATION REMEDIES FOR BREACH OF CONTRACTS FOR THE SALE OF GOODS

           A.   General Considerations

                1.   Remedies Cumulative   §12.1

                2.   Supplementary Principles of Law Applicable (Com C §1103(b))   §12.2

           B.   Seller’s Remedies   §12.3

                1.   Refusing Delivery Except for Cash on Buyer’s Insolvency (Com C §2702(1))   §12.4

                2.   Withholding Delivery (Com C §2703)

                    a.   Grounds   §12.5

                    b.   Effect   §12.6

                3.   Stopping Delivery (Com C §2705)

                    a.   Grounds and Effect   §12.7

                    b.   Limits on Right to Stop Delivery (Com C §2705(2))   §12.8

                     c.   Procedure for Stopping Delivery (Com C §2705(3))   §12.9

                    d.   Buyer’s Forfeiture of Its Deposit (Com C §2718)   §12.10

                4.   Reclamation of Goods

                    a.   Grounds and Effect (Com C §2702(2))   §12.11

                    b.   Ten-Day Limitation and Exception (Com C §2702(2))   §12.12

                     c.   Other Limitations   §12.13

                    d.   Rights of Third Parties   §12.14

                5.   Identifying Goods to the Contract (Com C §2704)

                    a.   Grounds and Effect   §12.15

                    b.   What Constitutes Identification?  (Com C §2501(1))   §12.16

                     c.   Unfinished Goods   §12.17

                    d.   Seller’s Security Interest (Com C §2505(1))   §12.18

                6.   Reselling Goods (Com C §2706)

                    a.   Grounds, Purpose, Good Faith Standard   §12.19

                    b.   Public or Private Resale?  §12.20

                     c.   Private Sale Procedures (Com C §2706(3))   §12.21

                    d.   Public Sale Procedures (Com C §2706(4))   §12.22

                7.   Canceling the Contract (Com C §2703(f))

                    a.   Grounds and Effect   §12.23

                    b.   Limitation on Right to Cancel   §12.24

           C.   Buyer’s Remedies

                1.   Selection of Responses (Com C §2711)   §12.25

                2.   Buyer’s Identification of Goods to the Contract (Com C §§2501–2502)   §12.26

                3.   Buyer Remedies for Seller Defaults (Com C §§2711–2717)   §12.27

                4.   Notice to Seller (Com C §2607(3)(A))   §12.28

                5.   Remedies Available

                    a.   Rejecting Goods (Com C §2601)   §12.29

                         (1)  Perfect Tender Rule (Com C §2601)   §12.30

                         (2)  Limitations   §12.31

                         (3)  Effect   §12.32

                         (4)  Partial Acceptance (Com C §2601(c))   §12.33

                         (5)  Time and Manner of Rejection (Com C §2602)   §12.34

                         (6)  Duties of Buyer With Respect to Rejected Goods (Com C §§2602–2603)   §12.35

                    b.   Revoking Acceptance

                         (1)  What Constitutes Acceptance? (Com C §2606(1))   §12.36

                         (2)  Effect of Revocation of Acceptance   §12.37

                         (3)  Circumstances in Which Acceptance May Be Revoked   §12.38

                         (4)  Time and Manner of Revocation   §12.39

                     c.   Covering

                         (1)  Purpose and Consequences   §12.40

                         (2)  Time and Manner   §12.41

                         (3)  Effect of Inability or Failure to Cover   §12.42

                    d.   Duty to Repair or Replace Nonconforming Consumer Goods Under Warranty   §12.43

                    e.   Enforcing Buyer’s Security Interest

                         (1)  Purpose and Scope of Security Interest   §12.44

                         (2)  Procedure for Sale   §12.45

                     f.   Buyer’s Right to Possession of Goods   §12.46

                    g.   Offsetting Buyer’s Damages Against Price   §12.47

                    h.   Canceling the Contract

                         (1)  Grounds and Effect   §12.48

                         (2)  Notice of Cancellation   §12.49

                         (3)  Contract Reinstatement   §12.50

       II.    REMEDIES IN LITIGATION OVER CONTRACTS FOR THE SALE OF GOODS   §12.51

           A.   Seller’s Remedies

                1.   Damages   §12.52

                    a.   Damages Measured by Market Price   §12.53

                    b.   Damages Measured by Resale   §12.54

                     c.   Incidental and Consequential Damages   §12.55

                    d.   Lost Profits   §12.56

                    e.   Lost Volume Sellers   §12.57

                     f.   Component Sellers   §12.58

                    g.   Jobbers or Middlemen   §12.59

                    h.   Punitive or Exemplary Damages   §12.60

                     i.   Attorney Fees   §12.61

                2.   Contract Price Recovery (Com C §2709)

                    a.   When Available   §12.62

                    b.   Procedural Aspects   §12.63

           B.   Buyer’s Remedies

                1.   Damages Generally (Com C §§2711, 2713)   §12.64

                    a.   Damages Measured by Market Price (Com C §2713)   §12.65

                    b.   Damages Measured by Cover (Com C §2712)   §12.66

                     c.   Damages After Acceptance (Com C §2714)   §12.67

                         (1)  Determining Value of Goods as Accepted   §12.68

                         (2)  Determining Value of Goods as Warranted   §12.69

                         (3)  Choosing Appropriate Measures of Damages   §12.70

                2.   Notice of Breach (Com C §2607(3))   §12.71

                3.   Incidental Damages (Com C §2715(1))   §12.72

                4.   Consequential Damages (Com C §2715(2))   §12.73

                    a.   Lost Profits   §12.74

                    b.   Loss of Goodwill   §12.75

                     c.   Contractual Exclusion of Consequential Damages (Com C §2719(3))   §12.76

                    d.   Mitigation of Damages (Com C §2715(2))   §12.77

                5.   Attorney Fees   §12.78

                6.   Punitive or Exemplary Damages   §12.79

                7.   Deduction of Damages From Price (Com C §2717)   §12.80

                8.   Replevin (Com C §2716(3))   §12.81

                9.   Specific Performance (Com C §2716(1)–(2))   §12.82

              10.   Restitution of Payments

                    a.   After Breach by Seller (Com C §2711(1))   §12.83

                    b.   After Breach by Buyer (Com C §2718(2))   §12.84

      III.   RESTRICTION, QUALIFICATION, AND ENLARGEMENT OF REMEDIES

           A.   Liquidated Damages (Com C §2718)   §12.85

           B.   Contractual Modification of Remedies (Com C §2719)

                1.   Power to Modify   §12.86

                2.   Limitations

                    a.   Overview   §12.87

                    b.   Types of Clauses   §12.88

                     c.   Repair Time   §12.89

                    d.   Consumer Goods   §12.90

           C.   Cumulation and Election of Remedies   §12.91

      IV.   REMEDIES FOR BREACH OF LEASES OF GOODS

           A.   Lessee’s Remedies

                1.   General Provisions   §12.92

                2.   Notice to Lessor (Com C §10502)   §12.93

                3.   Rejection of the Goods (Com C §§10509–10510, 10513–10514)   §12.94

                4.   Revocation of Acceptance (Com C §10517)   §12.95

                5.   Security Interest (Com C §10508(e))   §12.96

                6.   Damages

                    a.   Measure of Damages Following Cover (Com C §10518)   §12.97

                    b.   Measure of Damages Without Cover or Nonqualifying Cover (Com C §10519)   §12.98

                     c.   Incidental and Consequential Damages   §12.99

                7.   Specific Performance and Other Remedies (Com C §10521)   §12.100

                8.   Restitution   §12.101

           B.   Lessor’s Remedies

                1.   General Provisions (Com C §10523)   §12.102

                2.   Retention or Repossession of Goods (Com C §10525)   §12.103

                3.   Disposition of Goods Under Substantially Similar Lease (Com C §10527)   §12.104

                4.   Damages

                    a.   Measure of Damages in Absence of Qualifying Disposition (Com C §10528)   §12.105

                    b.   Recovery of Rent for Balance of Lease Term (Com C §10529)   §12.106

                     c.   Incidental Damages (Com C §10530)   §12.107

                    d.   Consequential Damages   §12.108

           C.   Other Remedies

                1.   Liquidated Damages (Com C §10504)   §12.109

                2.   Cancellation; Termination (Com C §10505)   §12.110

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13

Selected International Issues

          I.    INTRODUCTION   §13.1

       II.   UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW (UNCITRAL)

           A.   Overview   §13.2

           B.   Selected UNCITRAL Model Codes, Rules, and Conventions   §13.3

      III.   UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG)

           A.   Introduction   §13.4

           B.   Some Key Differences Between CISG and UCC   §13.5

           C.   Application of CISG

                1.   Application; Choice of Law   §13.6

                2.   Scant U.S. Case Law   §13.7

           D.   Scope of CISG   §13.8

           E.   Preemption Issues   §13.9

            F.   Jurisdiction and Venue Issues   §13.10

           G.   Terms and Definitions   §13.11

                1.   Incoterms   §13.12

                2.   Goods   §13.13

           H.   Intent

                1.   Objective and Subjective   §13.14

                2.   Relevant Factors   §13.15

             I.   Contract Formation

                1.   Offer   §13.16

                2.   Acceptance   §13.17

                    a.   Time Limits   §13.18

                    b.   New or Different Terms   §13.19

                3.   Statute of Frauds   §13.20

                4.   Parol Evidence Rule   §13.21

            J.   Risk of Loss   §13.22

                1.   Third Party Claims   §13.23

                    a.   Intellectual Property Rights   §13.24

                    b.   Need to Notify   §13.25

                2.   Conforming and Nonconforming Goods   §13.26

           K.   Buyer’s Duties

                1.   Examination of Goods   §13.27

                2.   Notice of Nonconformity   §13.28

                    a.   Seller’s Opportunity to Cure   §13.29

                    b.   Breach   §13.30

                3.   Terms of Delivery

                    a.   Place of Delivery   §13.31

                    b.   Consignment   §13.32

                     c.   Time of Delivery   §13.33

                    d.   Documentation   §13.34

                4.   Payment   §13.35

                    a.   Price of Goods   §13.36

                    b.   Place of Payment   §13.37

                     c.   Preservation of Goods Pending Payment or Return   §13.38

            L.   Anticipatory Breach

                1.   Suspending Performance   §13.39

                2.   Installment Contracts   §13.40

           M.   Excusing Performance   §13.41

           N.   Remedies for Breach

                1.   Remedies for Buyer’s Breach   §13.42

                    a.   Delayed Performance   §13.43

                    b.   Failure to Provide Specifications   §13.44

                2.   Remedies for Seller’s Breach   §13.45

                    a.   Nonconforming Goods   §13.46

                    b.   Imperfect Delivery   §13.47

                     c.   Avoiding the Contract   §13.48

                         (1)  Refund and Restitution   §13.49

                         (2)  Damages   §13.50

                         (3)  Current Price   §13.51

      IV.   INTERNATIONAL INSTITUTE FOR THE UNIFICATION OF PRIVATE LAW (UNIDROIT)

           A.   Introduction   §13.52

           B.   UNIDROIT Instruments   §13.53

           C.   List of UNIDROIT Instruments Issued   §13.54

       V.   UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS

           A.   Introduction   §13.55

           B.   Summary of UNIDROIT Principles

                1.   Purpose and Scope   §13.56

                2.   Application of UNIDROIT Principles   §13.57

                3.   Contract Form   §13.58

                4.   Meaning of Terms   §13.59

                5.   Good Faith and Fair Dealing   §13.60

                6.   Prohibition of Inconsistent Behavior   §13.61

                7.   Elements of Contracting

                    a.   Offer   §13.62

                    b.   Acceptance   §13.63

                     c.   Acceptance With Different Terms   §13.64

                    d.   Missing Terms   §13.65

                    e.   Authority of Agents   §13.66

                8.   Forming a Valid Contract   §13.67

                    a.   Mistake   §13.68

                    b.   Reasons for Avoidance   §13.69

                9.   Interpretation

                    a.   Determining Intent   §13.70

                    b.   Words and Terms   §13.71

              10.   Express and Implied Obligations   §13.72

              11.   Third Party Rights   §13.73

              12.   Performance   §13.74

                    a.   Part Performance   §13.75

                    b.   Hardship   §13.76

              13.   Nonperformance   §13.77

                    a.   Option to Cure   §13.78

                    b.   Clauses Limiting Liability   §13.79

                     c.   Force Majeure   §13.80

                    d.   Specific Performance   §13.81

              14.   Termination   §13.82

                    a.   Anticipatory Repudiation   §13.83

                    b.   Damages   §13.84

                         (1)  Interest   §13.85

                         (2)  Payment Methods   §13.86

              15.   Set-off   §13.87

              16.   Assignment of Rights, Transfer of Obligations, and Assignment of Contracts   §13.88

              17.   Limitation Periods   §13.89

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