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Welcome to the Deep Dive. 
Today we're really digging into 

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contract law, specifically what 
you need to know to get through 

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those law school exams and yeah,
the bar exam too. 

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Exactly. 
It's fundamental stuff. 

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Think of this as like your 
survival guide to legally 

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binding agreements. 
Yeah, contract law can feel 

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dense, right? 
Lots of rules, exceptions, but 

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it really is everywhere in law 
and business. 

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So our aim today isn't just 
memorizing rules, it's about 

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understanding why they exist. 
Formation breach remedies. 

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Getting those core ideas down is
crucial, not just for exams, 

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but, you know, for actually 
practicing law later on. 

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Absolutely, and that's what 
we're trying to do here. 

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We're pulling together the core 
legal principles, looking at 

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what happens when contracts go 
wrong, the remedies, and 

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touching on things like drafting
defenses. 

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We're drawing on, you know, 
standard legal doctrine, case 

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law principles, maybe some real 
world example to illustrate. 

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The focus is really on what 
matters most for testing and 

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understanding. 
So think of this as our 

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intensive look at the whole life
cycle of a contract, from the 

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handshake or the click online, 
all the way to sorting things 

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out if someone doesn't hold up 
their end. 

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And we're zeroing in on the 
concepts that pop up again and 

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again on exams, giving you a 
solid framework for tackling 

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those tricky contract hypos. 
OK. 

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Let's jump in then. 
If you're facing a contracts 

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exam, where do you even start? 
I always felt like just figuring

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out if a contract exists was the
first hurdle. 

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Totally. 
Contract formation is Ground 

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Zero. 
So basically a contract is an 

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agreement the law will actually 
enforce. 

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It creates obligations on both 
sides. 

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And in the US, you're mainly 
looking at two big sources, 

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common law. 
Think services, real estate and 

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the UCC, the Uniform Commercial 
Code, Article 2 specifically, 

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which handles sales of goods. 
Knowing which one applies is 

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step one always. 
Absolutely critical first step. 

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And remember, it's not about 
what someone was secretly 

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thinking. 
That objective theory of 

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contracts? 
That's huge. 

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Yeah, that one comes up all the 
time. 

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It's So what you actually say 
and do, right? 

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Exactly. 
The law looks at outward actions

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and words. 
What would a reasonable person 

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standing in the other party's 
shoes think was intended? 

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Not some hidden private 
intention. 

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Just wouldn't work otherwise, 
practically speaking. 

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Makes sense. 
So how do those outward signs 

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turn into an actual agreement? 
Offer an acceptance. 

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That's the main mechanism. 
That's the classic path. 

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Mutual ascent. 
The meeting of the minds, though

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we look at it objectively, 
usually happens through a valid 

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offer from one person. 
The offer? 

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Uh huh. 
And then a clear acceptance from

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the person that's made to the 
offering. 

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The offer basically says here's 
the deal I'm willing to make and

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gives the offering the power to 
seal it by saying yes. 

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OK. 
But what makes an offer a real 

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offer, legally speaking, versus 
just, you know, talking about a 

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potential deal? 
What are the exam buzzwords we 

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need? 
Good question. 

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Few key things. 
First intent. 

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The offer has to actually intend
to be bound if the offer is 

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accepted. 
So like, ads usually aren't 

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offers. 
Right. 

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Most ads are seen as invitations
to negotiate. 

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A store isn't promising to sell 
TV's to literally everyone who 

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sees the ad if they run out, but
a very specific reward poster 

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like $500.00 for finding my lost
cat. 

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That probably shows intent. 
OK, intent. 

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Definite terms. 
The offer needs to be clear 

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enough. 
Under common law you generally 

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need to identify the parties, 
the subject matter, price, 

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quantity, time for performance, 
the core stuff. 

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The UCC is a bit looser for 
goods. 

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Even if some terms are missing, 
like price, you can still have a

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contract if the party's clearly 
intended to make one, and 

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there's a reasonable way for a 
court to figure out a remedy. 

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And finally, communication. 
The offer has to be communicated

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to the offeree. 
You can't accept an offer you 

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don't know exists. 
Right, OK, so we have a valid 

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offer on the table. 
How does it disappear before 

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someone accepts? 
That feels like prime exam 

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territory. 
Definitely. 

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Offers don't last forever. 
They can terminate. 

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The most obvious way is 
revocation. 

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The offer takes it back before 
acceptance. 

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But sometimes they can't take it
back, right? 

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Irrevocable offers. 
Exactly, key exceptions to know 

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option contracts where someone 
pays consideration even a small 

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amount to keep the offer open 
for a set time. 

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Then there's the UCC firm offer 
rule. 

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A merchant makes a written offer
for goods, promising to keep it 

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open. 
That's binding for the stated 

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time up to three months, even 
without consideration. 

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The merchant rule. 
And under the modern view, if 

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it's a unilateral contract 
acceptance by performance and 

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the offer is already started 
performing substantially, the 

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offer usually can't revoke them.
OK, what else kills an offer? 

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Rejection by the offeree or or a
counter offer that rejects the 

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original offer and proposes a 
new one. 

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Lapse of time is another if the 
offer specifies a deadline or if

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not, after a reasonable time 
passes. 

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And finally, death or incapacity
of either the offer or the 

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offeree before acceptance 
usually terminates the power of 

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acceptance. 
Got it. 

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So the offer still alive and 
kicking, How does the offeree 

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lock it in acceptance? 
Acceptance is the offeree 

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clearly saying yes to the exact 
terms of the offer. 

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It has to be unequivocal mirror 
image rule at common law. 

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The acceptance has to match the 
offer perfectly. 

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Right. 
If you change terms, that's 

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usually a counter offer. 
Exactly. 

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And how you accept depends on 
the offer. 

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Maybe it requires a promise, 
Maybe it requires starting 

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performance. 
And timing mailbox rule. 

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Always a classic exam question. 
What's the short version? 

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Short version, acceptance is 
generally effective when sent 

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dropped in the mail, hit send on
the e-mail unless the offer says

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otherwise. 
Protection for the offeree. 

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Revocations, rejections, counter
offers. 

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Those are. 
Different. 

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Those are effective only when 
received by the other party. 

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Big difference. 
Mailbox rule prioritizes the 

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moment the offering commits. 
OK, offer acceptance, meeting of

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the minds achieved. 
But that's not enough, is it? 

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Need that other crucial peace? 
Consideration The oomph that 

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makes a promise legally 
enforceable. 

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It's the bargain for exchange. 
Each side has to give something 

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of legal value in return for the
other side's promise or 

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performance. 
Something of legal value could 

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be doing something, promising 
something. 

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Or even not doing something you 
have a legal right to do 

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forbearance. 
And it's about the exchange, the

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bargain aspect. 
Precisely, it has to be sought 

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by the promisor in exchange for 
their promise and given by the 

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promise in exchange for that 
promise, the. 

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Courts don't really care if it's
a fair exchange value wise. 

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Generally, no. 
Adequacy of consideration isn't 

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usually scrutinized. 
A peppercorn can be enough 

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theoretically, as long as it was
actually bargained for. 

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Courts don't remake bad deals. 
OK, but there are limits, right?

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Things that look like 
consideration but aren't. 

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Yes, definitely watch out for 
those. 

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Past consideration is no 
consideration. 

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If you did something before the 
promise was made, it wasn't 

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bargained for in exchange for 
that promise. 

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Right? 
And the pre-existing duty rule 

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promising to do something you're
already legally obligated to do,

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like a police officer promising 
to catch a thief, generally 

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isn't valid consideration for a 
new promise. 

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But the UCC has a twist there 
for goods contracts. 

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It does. 
Under the UCC, an agreement 

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modifying a contract for the 
sale of goods needs no new 

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consideration to be binding, as 
long as it's made in good faith,

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more flexible for business 
realities. 

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Important distinction. 
And what if there's no formal 

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consideration, but someone 
relied on a promise? 

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That's promissory estoppel, 
right? 

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A substitute. 
It's an equity concept if you 

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have a clear promise and the 
person receiving the promise 

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reasonably relies on it to their
detriment. 

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Like quitting a job based on a 
promise of another one. 

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Right and injustice can only be 
avoided by enforcing the promise

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that a court might enforce it 
even without traditional 

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consideration. 
Key elements promise foreseeable

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reliance, actual reliance 
injustice. 

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OK. 
So, agreement consideration, 

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What else can trip up formation?
A capacity seems like a big one.

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Huge Certain people just don't 
have the full legal ability to 

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contract minors, for instance. 
Contracts they enter are 

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generally voidable at their 
option. 

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They can get out of it. 
But not for necessities like 

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food, shelter. 
Right, exceptions for 

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necessaries and they can ratify 
the contract once they reach the

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age of majority. 
OK. 

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Who else lacks capacity? 
People with mental incapacities,

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depending on the nature and 
whether a court has adjudicated 

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them incompetent, their 
contracts might be void or 

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voidable. 
It depends on whether they can 

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understand the nature and 
consequences of the transaction.

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And intoxication. 
Severe intoxication can also 

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render a contract voidable, but 
only if the person was so 

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intoxicated they couldn't 
understand what they were doing 

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and the other party knew or 
should have known about their 

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condition. 
It's a high bar. 

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So capacity is key and the last 
piece, the contract itself, has 

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to be legal. 
Absolutely fundamental. 

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The subject matter or purpose of
the contract can't be illegal or

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violate strong public policy. 
A contract to commit a crime is 

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void from the start. 
And sometimes even legal things 

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can be against public policy, 
like really broad non compete 

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agreements. 
Exactly. 

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Courts might refuse to enforce 
them if they're unreasonable in 

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scope, time or geography. 
Also think about licensing. 

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If a statute requires a license 
to protect the public, like for 

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doctors or lawyers, a contract 
with an unlicensed person might 

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be unenforceable. 
If the license is just for 

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revenue, maybe not. 
OK, wow, that's a lot just to 

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get a contract formed. 
But even if you tick all those 

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boxes, it might still fail, 
right? 

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Defenses. 
That's a huge area. 

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Massive Just because it looks 
like a contract doesn't mean 

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it's enforceable. 
The first big category of 

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defenses attacks the genuineness
of the ascent. 

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Was it a real agreement? 
Like mistake. 

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Right. 
Mutual mistake about a 

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fundamental assumption on which 
the contract was based can make 

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it voidable, assuming the party 
seeking relief didn't bear the 

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risk of that mistake. 
Unilateral mistake is much 

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harder to get relief for. 
And fraud. 

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Misrepresentation. 
Fraudulent misrepresentation, 

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Intentionally lying about a 
material fact that the other 

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party relies on makes the 
contract voidable by the 

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innocent party. 
Need to distinguish fraud in the

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inducement lying about the 
subject matter from fraud in the

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factum lying about the document 
itself. 

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OK. 
What else undermines ascent? 

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Undue influence, where someone 
in a dominant position unfairly 

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persuades the other party. 
Think caretaker and elderly 

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person and duress being forced 
into the contract by an improper

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threat, leaving no reasonable 
alternative. 

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Physical duress makes it void. 
Economic duress usually makes it

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voidable. 
So the agreement wasn't freely 

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made. 
Any other big defenses like 

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that? 
Unconscionability. 

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This is where the contract is 
just so incredibly unfair SO1 

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sided it shocks the conscience. 
Like how? 

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It can be procedural unfairness 
in the bargaining process 

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itself, like hidden terms, 
complex language, massive 

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inequality and bargaining power,
or substantive. 

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The terms themselves are just 
outrageously unfair. 

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Courts can refuse to enforce the
whole contract or just the 

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unfair. 
Part and the classic one that 

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00:10:52,840 --> 00:10:55,480
always seems to cause headaches,
the Statute of Frauds. 

237
00:10:55,800 --> 00:10:58,680
Yes, some contracts just have to
be in writing to be enforced. 

238
00:10:58,680 --> 00:11:00,800
You got to memorize the main 
categories for exams. 

239
00:11:00,800 --> 00:11:05,080
My legs is the mnemonic right? 
That's the one Marriage promises

240
00:11:05,080 --> 00:11:08,480
in consideration of year 
contracts. 

241
00:11:08,480 --> 00:11:10,360
Impossible to perform within one
year. 

242
00:11:10,800 --> 00:11:15,640
Land interests in real property.
Executor promises to pay estate 

243
00:11:15,640 --> 00:11:19,920
debts, personally goods, sale of
goods for $500 and more. 

244
00:11:19,960 --> 00:11:24,120
UCC Surety ship promises to 
answer for the dead of another. 

245
00:11:24,160 --> 00:11:27,640
And the writing needs what? 
Needs to identify the parties, 

246
00:11:27,840 --> 00:11:31,120
the essential terms and 
critically be signed by the 

247
00:11:31,120 --> 00:11:32,880
party you're trying to enforce 
it against. 

248
00:11:32,880 --> 00:11:36,000
But there are exceptions, ways 
around the writing requirement. 

249
00:11:36,000 --> 00:11:39,560
Oh yeah, always exceptions, part
performance for land contracts, 

250
00:11:39,840 --> 00:11:42,880
Sometimes promissory estoppel if
there was reliance on an oral 

251
00:11:42,880 --> 00:11:45,640
promise. 
And under the UCC, the merchants

252
00:11:45,640 --> 00:11:48,160
confirmation exception is a big 
one between merchants. 

253
00:11:48,160 --> 00:11:50,160
OK, crucial to know those 
exceptions. 

254
00:11:50,160 --> 00:11:52,920
And we mentioned illegality 
earlier as a formation issue, 

255
00:11:52,920 --> 00:11:56,520
but it's also a defense if the 
contract purpose becomes illegal

256
00:11:56,520 --> 00:11:57,280
later. 
Right. 

257
00:11:57,360 --> 00:11:59,920
Or if it violates public policy.
If the core of the deal is 

258
00:11:59,920 --> 00:12:02,400
illegal, courts generally won't 
touch it. 

259
00:12:02,640 --> 00:12:05,080
It's void. 
So spotting these defenses is 

260
00:12:05,080 --> 00:12:07,760
key on an exam. 
It's not just about formation. 

261
00:12:07,880 --> 00:12:10,480
Absolutely. 
It's about whether an apparently

262
00:12:10,480 --> 00:12:12,840
valid contract can actually be 
enforced. 

263
00:12:13,360 --> 00:12:16,560
Big points available for 
spotting and analyzing defenses.

264
00:12:16,560 --> 00:12:20,000
OK, so let's say we've navigated
formation, dodged the defenses, 

265
00:12:20,000 --> 00:12:23,000
we have a contract. 
How do we figure out exactly 

266
00:12:23,000 --> 00:12:25,600
what each person has to do? 
Interpretation. 

267
00:12:25,800 --> 00:12:28,840
Interpretation is all about 
figuring out the party's intent 

268
00:12:28,840 --> 00:12:31,040
when they made the deal. 
Where do we start? 

269
00:12:31,680 --> 00:12:34,560
The contract itself? 
The plain meaning rule. 

270
00:12:34,680 --> 00:12:37,200
So if the words are clear, 
that's what they mean. 

271
00:12:37,400 --> 00:12:40,280
Generally, yes. 
If the language is clear and 

272
00:12:40,280 --> 00:12:43,120
unambiguous on its face, courts 
enforce that meaning. 

273
00:12:43,360 --> 00:12:44,920
Look at the whole document, the 
context. 

274
00:12:44,920 --> 00:12:48,120
Well, what if it is ambiguous, 
reasonable time or something 

275
00:12:48,120 --> 00:12:50,360
vague? 
Then courts will allow extrinsic

276
00:12:50,360 --> 00:12:53,440
evidence stuff outside the 
written contract to help clarify

277
00:12:54,040 --> 00:12:57,320
things like prior negotiations, 
earlier drafts, how the parties 

278
00:12:57,320 --> 00:13:00,120
have been acting under the 
contract, industry customs. 

279
00:13:00,120 --> 00:13:03,360
And the UCC has some specific 
tools for goods contracts here. 

280
00:13:03,640 --> 00:13:08,400
Yes, very helpful course of 
performance, how parties acted 

281
00:13:08,400 --> 00:13:11,080
under this contract so far 
course of dealing, how they 

282
00:13:11,080 --> 00:13:14,840
acted and passed contracts with 
each other and usage of trade 

283
00:13:14,840 --> 00:13:16,560
common practices in their 
industry. 

284
00:13:16,560 --> 00:13:18,800
These are given weight in that 
order to interpret the 

285
00:13:18,800 --> 00:13:20,480
agreement. 
OK, but isn't there a rule that 

286
00:13:20,480 --> 00:13:22,840
stops you from bringing in 
outside evidence? 

287
00:13:22,840 --> 00:13:25,600
The parole evidence rule? 
That one always seemed tricky. 

288
00:13:26,000 --> 00:13:28,520
It is tricky. 
The parole evidence rule aims to

289
00:13:28,520 --> 00:13:32,360
protect a final written 
agreement, one that's fully 

290
00:13:32,360 --> 00:13:36,280
integrated, from being 
contradicted by earlier or 

291
00:13:36,280 --> 00:13:38,840
simultaneous agreements, whether
oral or written. 

292
00:13:39,280 --> 00:13:42,120
The idea is, if you wrote it all
down, that's the deal. 

293
00:13:42,200 --> 00:13:44,640
But it doesn't block everything.
No, definitely not. 

294
00:13:44,640 --> 00:13:47,200
Lots of exceptions. 
You can bring in parole evidence

295
00:13:47,200 --> 00:13:50,000
to explain ambiguous terms. 
You can use it to show the 

296
00:13:50,000 --> 00:13:52,640
writing wasn't meant to be the 
final complete agreement. 

297
00:13:52,720 --> 00:13:55,760
You can use it to prove defenses
like fraud, duress, mistake. 

298
00:13:55,920 --> 00:13:58,880
Also to show there was a 
condition precedent, something 

299
00:13:58,880 --> 00:14:01,200
that had to happen before the 
contract became effective. 

300
00:14:01,480 --> 00:14:04,200
Or to clarify technical terms or
trade jargon. 

301
00:14:04,760 --> 00:14:08,280
And the UCC explicitly allows 
course of performance dealing 

302
00:14:08,280 --> 00:14:12,240
and trade usage unless the 
contract specifically excludes 

303
00:14:12,240 --> 00:14:14,640
them. 
So it's more nuanced than just 

304
00:14:14,880 --> 00:14:18,840
no outside evidence allowed. 
Much more nuanced, it bars 

305
00:14:18,840 --> 00:14:21,760
evidence that contradicts a 
final writing, but allows 

306
00:14:21,760 --> 00:14:24,880
evidence that explains or 
supplements it or proves issues 

307
00:14:24,880 --> 00:14:27,160
with formation. 
OK, we know the terms now. 

308
00:14:27,320 --> 00:14:29,840
Performance. 
How perfectly do you have to 

309
00:14:29,840 --> 00:14:31,040
perform? 
Depends. 

310
00:14:31,480 --> 00:14:34,840
Under common law for services or
real estate, the standard is 

311
00:14:34,840 --> 00:14:38,520
usually substantial performance.
Did the party perform the 

312
00:14:38,520 --> 00:14:41,240
essential purpose of the 
contract, even if there were a 

313
00:14:41,240 --> 00:14:43,680
minor flaws? 
So if a builder uses slightly 

314
00:14:43,680 --> 00:14:46,880
different but still decent 
quality tiles than specified. 

315
00:14:46,880 --> 00:14:48,400
Possibly substantial 
performance. 

316
00:14:48,920 --> 00:14:51,320
The owner would likely still 
have to pay, but could get 

317
00:14:51,320 --> 00:14:53,840
damages for the difference in 
value caused by the minor 

318
00:14:53,840 --> 00:14:56,240
breach. 
It prevents unfair forfeiture 

319
00:14:56,240 --> 00:14:57,840
for small deviations, but the 
UCC. 

320
00:14:58,160 --> 00:15:00,040
For goods is different, 
stricter. 

321
00:15:00,280 --> 00:15:03,240
Much stricter. 
Generally, the UCC has the 

322
00:15:03,240 --> 00:15:06,880
perfect tender rule with the 
goods delivered and the way 

323
00:15:06,880 --> 00:15:10,200
they're delivered must conform 
exactly to the contract terms. 

324
00:15:10,760 --> 00:15:14,320
Any deviation, however small, 
can technically allow the buyer 

325
00:15:14,320 --> 00:15:17,360
to reject the whole shipment. 
Wow, that seems harsh. 

326
00:15:17,840 --> 00:15:20,400
Are there exceptions? 
Yes, important ones. 

327
00:15:21,040 --> 00:15:24,440
The seller often has a right to 
cure the non conforming tender 

328
00:15:24,600 --> 00:15:27,760
if the time for performance 
hasn't expired, or sometimes 

329
00:15:27,760 --> 00:15:30,000
even after if they had 
reasonable grounds to believe 

330
00:15:30,000 --> 00:15:33,080
the tender would be acceptable. 
And rules are different for 

331
00:15:33,080 --> 00:15:34,920
installment contracts. 
OK. 

332
00:15:35,160 --> 00:15:37,600
And what if a contract has 
conditions like I'll buy your 

333
00:15:37,600 --> 00:15:39,760
house if I get financing? 
Conditions are huge. 

334
00:15:40,000 --> 00:15:43,200
A condition is an event not 
guaranteed to happen, that 

335
00:15:43,200 --> 00:15:45,160
triggers or terminates a legal 
duty. 

336
00:15:45,640 --> 00:15:47,320
Your example is a condition 
precedent. 

337
00:15:47,320 --> 00:15:50,440
Getting financing must happen 
before the duty to buy arises. 

338
00:15:50,440 --> 00:15:52,640
Can they be implied, not just 
written out? 

339
00:15:52,880 --> 00:15:55,360
Yes. 
Express conditions are stated. 

340
00:15:55,840 --> 00:15:58,440
Implied conditions arise from 
the nature of the deal. 

341
00:15:58,920 --> 00:16:01,480
Constructive conditions are 
imposed by law to ensure 

342
00:16:01,480 --> 00:16:03,640
fairness. 
Like the duty to pay being 

343
00:16:03,640 --> 00:16:06,880
conditioned on the other party, 
performing failure of a 

344
00:16:06,880 --> 00:16:10,000
condition generally excuses the 
performance that depended on it.

345
00:16:10,280 --> 00:16:12,120
Unless the condition itself is 
excused. 

346
00:16:12,160 --> 00:16:14,240
Right, like if the party who 
benefits from the condition 

347
00:16:14,240 --> 00:16:16,440
weighs it or prevents it from 
occurring. 

348
00:16:16,480 --> 00:16:19,400
OK, so failure to perform 
properly or failure of a 

349
00:16:19,400 --> 00:16:23,400
condition that leads to breach, 
but are all breaches created 

350
00:16:23,400 --> 00:16:25,720
equal? 
No, definitely not under common 

351
00:16:25,720 --> 00:16:29,080
law. 
Big distinction, material breach

352
00:16:29,080 --> 00:16:32,280
versus minor breach. 
Material means serious. 

353
00:16:32,280 --> 00:16:34,560
Very serious. 
It goes at the essence of the 

354
00:16:34,560 --> 00:16:37,560
contract. 
A material breach means the non 

355
00:16:37,560 --> 00:16:39,880
breaching party didn't get the 
substantial benefit of their 

356
00:16:39,880 --> 00:16:42,600
bargain. 
Crucially, it excuses the non 

357
00:16:42,600 --> 00:16:45,480
breaching party from their own 
performance obligations and they

358
00:16:45,480 --> 00:16:47,840
can sue for total damages. 
And minor breach. 

359
00:16:47,880 --> 00:16:51,200
Less serious, the non breaching 
party still got the main benefit

360
00:16:51,200 --> 00:16:53,040
of the deal but suffered some 
loss. 

361
00:16:53,520 --> 00:16:56,360
They can sue for damages caused 
by the minor breach, but they 

362
00:16:56,360 --> 00:16:58,400
still have to perform their side
of the contract. 

363
00:16:58,600 --> 00:17:02,880
How do you tell the difference? 
Courts look at factors like how 

364
00:17:02,880 --> 00:17:05,800
much performance occurred? 
Was the breach willful? 

365
00:17:06,240 --> 00:17:08,040
Can damages adequately 
compensate? 

366
00:17:08,240 --> 00:17:09,960
Is the breaching party likely to
fix it? 

367
00:17:10,240 --> 00:17:14,880
Cure and under Ucc's perfect 
tender, any deviation is a 

368
00:17:14,880 --> 00:17:18,160
breach. 
Technically yes, but remember 

369
00:17:18,440 --> 00:17:21,280
the seller's right to cure and 
the buyer's options. 

370
00:17:21,280 --> 00:17:24,480
Reject all, Accept all except 
some reject rest. 

371
00:17:24,720 --> 00:17:27,800
Depend on the situation. 
The consequences vary more than 

372
00:17:27,800 --> 00:17:30,720
the definition of breach itself.
What if someone tells you before

373
00:17:30,720 --> 00:17:32,680
performances do that they're 
going to breach? 

374
00:17:32,680 --> 00:17:35,600
That's anticipatory repudiation.
Exactly. 

375
00:17:35,960 --> 00:17:39,080
A clear, unequivocal statement 
or action indicating they won't 

376
00:17:39,080 --> 00:17:42,280
perform when the time comes. 
It's treated as an immediate. 

377
00:17:42,280 --> 00:17:44,560
Breach so the non breaching 
party doesn't have to wait. 

378
00:17:44,720 --> 00:17:46,960
Nope. 
They can sue right away or 

379
00:17:46,960 --> 00:17:48,960
suspend their own performance 
and wait to see if the other 

380
00:17:48,960 --> 00:17:51,240
party changes their mind or try 
to urge performance. 

381
00:17:51,480 --> 00:17:54,680
They have options. 
And the UCC has that demand for 

382
00:17:54,680 --> 00:17:56,240
assurances thing. 
Right. 

383
00:17:56,280 --> 00:17:59,320
UCC 26O9. 
If you have reasonable grounds 

384
00:17:59,320 --> 00:18:02,160
to feel insecure about the other
party's performance, you can 

385
00:18:02,160 --> 00:18:03,880
demand adequate assurance in 
writing. 

386
00:18:04,320 --> 00:18:07,760
If they don't provide it within 
a reasonable time, Max 30 days, 

387
00:18:08,200 --> 00:18:11,120
that acts as a repudiation. 
Very useful tool. 

388
00:18:11,240 --> 00:18:16,040
OK, before we hit remedies, 
quick detour third parties, can 

389
00:18:16,040 --> 00:18:18,960
people not originally in the 
contract get involved? 

390
00:18:19,120 --> 00:18:23,160
Yes, rights can be assigned to a
third party assignment unless it

391
00:18:23,160 --> 00:18:26,600
materially changes the other 
party's duty or is prohibited. 

392
00:18:27,000 --> 00:18:30,120
Duties can be delegated 
delegation, but the original 

393
00:18:30,120 --> 00:18:33,240
party usually stays liable 
unless there's an ovation, a 

394
00:18:33,240 --> 00:18:35,200
three-way agreement substituting
the new party. 

395
00:18:35,200 --> 00:18:37,720
And third party beneficiaries. 
That's where the contract was 

396
00:18:37,720 --> 00:18:39,640
made, intending to benefit a 
third person. 

397
00:18:40,080 --> 00:18:42,080
If they're an intended 
beneficiary, not just 

398
00:18:42,080 --> 00:18:44,720
incidental, they can sue to 
enforce the contract. 

399
00:18:44,720 --> 00:18:47,840
Once their rights vest, for 
example, they rely on it, a cent

400
00:18:47,840 --> 00:18:49,840
to it or sue on it. 
OK, good overview. 

401
00:18:49,880 --> 00:18:53,040
Now the payoff, or lack thereof 
remedies What happens when 

402
00:18:53,040 --> 00:18:55,560
someone breaches? 
What can the non breaching party

403
00:18:55,560 --> 00:18:57,400
get? 
This is the bottom line, right? 

404
00:18:57,520 --> 00:19:00,600
What does the law do? 
The default remedy is usually 

405
00:19:00,600 --> 00:19:02,520
money damages. 
Legal remedies. 

406
00:19:03,080 --> 00:19:05,440
The main type is expectation 
damages. 

407
00:19:05,600 --> 00:19:08,120
Putting the person where they 
would have been if the contract.

408
00:19:08,120 --> 00:19:11,040
Was performed exactly the 
benefit of the bargain. 

409
00:19:11,680 --> 00:19:14,640
Calculate the value they 
expected, subtract what they 

410
00:19:14,640 --> 00:19:18,680
actually got or save by not 
performing, and add in certain 

411
00:19:18,680 --> 00:19:21,200
other losses. 
Like incidental and 

412
00:19:21,200 --> 00:19:23,760
consequential damages? 
What's the difference there? 

413
00:19:23,760 --> 00:19:27,520
Again, incidental damages are 
the direct costs of dealing with

414
00:19:27,520 --> 00:19:32,160
the breach, like paying to ship 
back defective goods or costs of

415
00:19:32,160 --> 00:19:34,800
finding a substitute. 
Pretty straightforward. 

416
00:19:35,320 --> 00:19:38,280
Consequential damages are the 
bigger downstream losses 

417
00:19:38,280 --> 00:19:41,000
resulting from the breach 
because of the injured parties 

418
00:19:41,000 --> 00:19:44,240
particular circumstances. 
Think lost profits because the 

419
00:19:44,240 --> 00:19:46,880
machine didn't arrive on time. 
But those aren't always 

420
00:19:46,880 --> 00:19:48,240
recoverable. 
Correct. 

421
00:19:48,360 --> 00:19:50,560
They must have been reasonably 
foreseeable to the breaching 

422
00:19:50,560 --> 00:19:52,120
party at the time the contract 
was made. 

423
00:19:52,440 --> 00:19:54,640
That's a classic rule from 
Hadley V Baxendale. 

424
00:19:54,920 --> 00:19:56,960
If the breaching party didn't 
know about the special 

425
00:19:56,960 --> 00:20:00,360
circumstances causing these 
losses, they're generally not 

426
00:20:00,360 --> 00:20:02,680
liable. 
For them, foreseeability is key.

427
00:20:03,200 --> 00:20:07,440
Any other limits on damages? 
Yes, damages must be proven with

428
00:20:07,440 --> 00:20:10,360
reasonable certainty. 
No pure speculation. 

429
00:20:10,840 --> 00:20:14,760
And the big one, mitigation. 
The non breaching party has a 

430
00:20:14,760 --> 00:20:18,080
duty to take reasonable steps to
reduce their losses. 

431
00:20:18,440 --> 00:20:21,760
You can't just sit back and let 
damages pile up if you could 

432
00:20:21,760 --> 00:20:23,400
have reasonably avoided some of 
them. 

433
00:20:23,520 --> 00:20:25,920
So you have to try and find 
another job if you're wrongfully

434
00:20:25,920 --> 00:20:27,520
fired for example. 
Exactly. 

435
00:20:27,560 --> 00:20:30,200
You can't recover damages you 
could have reasonably mitigated.

436
00:20:30,360 --> 00:20:33,960
OK, so money damages are 
standard, but what if money just

437
00:20:33,960 --> 00:20:37,000
won't fix the problem like a 
unique piece of land? 

438
00:20:37,000 --> 00:20:38,760
That's where equitable remedies 
come in. 

439
00:20:38,840 --> 00:20:41,080
These are discretionary court 
orders, not money. 

440
00:20:41,480 --> 00:20:43,760
Specific performance is the main
one. 

441
00:20:43,920 --> 00:20:46,560
Ordering the breaching party to 
actually do what they promised. 

442
00:20:46,560 --> 00:20:50,320
Yes, typically granted only when
the subject matter is unique. 

443
00:20:50,320 --> 00:20:52,080
Real estate is the classic 
example. 

444
00:20:52,360 --> 00:20:56,360
Sometimes rare art or heirlooms.
Money damages wouldn't be 

445
00:20:56,360 --> 00:20:58,920
adequate because you can't just 
buy an identical replacement. 

446
00:20:59,560 --> 00:21:01,400
But not for personal service 
contracts. 

447
00:21:01,400 --> 00:21:03,600
Courts won't force someone to 
work for someone else. 

448
00:21:03,600 --> 00:21:05,680
Makes sense? 
What other equitable remedies? 

449
00:21:05,920 --> 00:21:08,840
Injunctions, court orders 
prohibiting someone from doing 

450
00:21:08,840 --> 00:21:13,080
something like violating A valid
non compete agreement and 

451
00:21:13,080 --> 00:21:15,280
rescission. 
This basically cancels the 

452
00:21:15,280 --> 00:21:19,120
contract, unwinds it, puts the 
parties back where they started.

453
00:21:19,600 --> 00:21:21,680
Often used for fraud or mutual 
mistake. 

454
00:21:22,040 --> 00:21:23,760
Usually requires restitution 
too. 

455
00:21:24,080 --> 00:21:27,000
Restitution Returning benefits 
received. 

456
00:21:27,000 --> 00:21:29,320
Exactly. 
If the contract is rescinded, 

457
00:21:29,560 --> 00:21:32,800
any benefit one party conferred 
on the other generally has to be

458
00:21:32,800 --> 00:21:35,120
returned. 
Restitution can also be a 

459
00:21:35,120 --> 00:21:38,680
standalone remedy to prevent 
unjust enrichment, even without 

460
00:21:38,680 --> 00:21:41,360
a contract sometimes. 
Like quasi contract? 

461
00:21:41,360 --> 00:21:44,880
That always seemed a bit weird. 
It's an implied in law contract,

462
00:21:45,040 --> 00:21:48,280
a legal fiction. 
No real contract exists, but one

463
00:21:48,280 --> 00:21:51,200
party received a benefit from 
another and it would be unjust 

464
00:21:51,200 --> 00:21:52,480
for them to keep it without 
paying. 

465
00:21:52,720 --> 00:21:55,440
Thank emergency medical services
to an unconscious person. 

466
00:21:55,600 --> 00:21:57,760
They didn't agree, but they 
benefited, so they owe the 

467
00:21:57,760 --> 00:21:59,840
reasonable value. 
Quantum merit. 

468
00:22:00,040 --> 00:22:01,960
Got it. 
What about those clauses in the 

469
00:22:01,960 --> 00:22:03,960
contract that set damages ahead 
of time? 

470
00:22:04,080 --> 00:22:07,040
Liquidated damages. 
Yeah, parties can agree in 

471
00:22:07,040 --> 00:22:09,640
advance on the amount of damages
for a potential breach. 

472
00:22:10,200 --> 00:22:12,920
These are enforceable if two 
conditions are met. 

473
00:22:13,560 --> 00:22:16,760
First, actual damages must have 
been difficult to estimate at 

474
00:22:16,760 --> 00:22:20,680
the time of contracting, and 
2nd, the amount fixed must be a 

475
00:22:20,680 --> 00:22:22,720
reasonable forecast of the 
likely harm. 

476
00:22:22,960 --> 00:22:25,720
And if it's not reasonable, if 
it looks like a penalty? 

477
00:22:25,880 --> 00:22:28,400
Then courts will strike it down 
as an unenforceable penalty. 

478
00:22:28,960 --> 00:22:32,080
The goal is compensation, not 
punishment. 

479
00:22:32,560 --> 00:22:35,440
Can parties also limit remedies 
in other ways in the contract? 

480
00:22:35,600 --> 00:22:39,040
Yes, they can try. 
Exculpatory clauses attempt to 

481
00:22:39,040 --> 00:22:42,680
excuse liability altogether. 
Courts scrutinize these 

482
00:22:42,680 --> 00:22:44,600
carefully, especially for 
negligence. 

483
00:22:45,080 --> 00:22:48,120
Limitation of liability clauses 
might cap damages at a certain 

484
00:22:48,120 --> 00:22:50,480
amount. 
Exclusive remedy clauses might 

485
00:22:50,480 --> 00:22:53,160
say, for example, that repair is
the only remedy for defective 

486
00:22:53,160 --> 00:22:54,960
goods. 
Are those always enforced? 

487
00:22:55,200 --> 00:22:57,600
Not always. 
The UCC, for instance, says 

488
00:22:57,720 --> 00:23:00,760
limitations can be invalid if 
they're unconscionable or if the

489
00:23:00,760 --> 00:23:04,080
specified remedy fails of its 
essential purpose, meaning it 

490
00:23:04,080 --> 00:23:06,680
leaves the injured party with 
basically no real remedy. 

491
00:23:06,760 --> 00:23:08,680
OK. 
And lastly, any procedural 

492
00:23:08,680 --> 00:23:11,480
issues that can block remedies 
even after a breach. 

493
00:23:11,680 --> 00:23:13,880
Sure. 
We mentioned statute of frauds 

494
00:23:13,880 --> 00:23:16,320
and parole evidence rule 
earlier, which can prevent 

495
00:23:16,320 --> 00:23:18,040
proving the contractor certain 
terms. 

496
00:23:18,480 --> 00:23:21,800
There's also latches. 
If you wait an unreasonably long

497
00:23:21,800 --> 00:23:25,600
time to assert an equitable 
claim like specific performance,

498
00:23:25,880 --> 00:23:28,880
and it prejudices the other 
party, your claim might be 

499
00:23:28,880 --> 00:23:31,240
barred. 
Estoppel and waiver can also 

500
00:23:31,240 --> 00:23:33,920
prevent us their rights you 
previously indicated you 

501
00:23:33,920 --> 00:23:37,520
wouldn't enforce. 
Wow, OK, that's a lot on 

502
00:23:37,520 --> 00:23:39,280
remedies. 
Super important though. 

503
00:23:39,280 --> 00:23:41,600
Absolutely. 
Identifying the breach is only 

504
00:23:41,600 --> 00:23:44,120
half the battle. 
Knowing what you can actually 

505
00:23:44,120 --> 00:23:46,560
get for it is critical for exams
and practice. 

506
00:23:46,560 --> 00:23:49,960
So we've gone from start to 
finish formation to remedies. 

507
00:23:50,000 --> 00:23:53,000
If you had to boil it down for 
someone cramming for a contracts

508
00:23:53,000 --> 00:23:55,680
final, what are the absolute 
must know takeaways? 

509
00:23:55,680 --> 00:23:59,280
OK #1 see the whole picture. 
Formation, defenses, 

510
00:23:59,280 --> 00:24:01,040
interpretation, performance, 
breach, remedies. 

511
00:24:01,040 --> 00:24:02,680
They all link together. 
Don't study them in total 

512
00:24:02,680 --> 00:24:09,600
isolation #2 Always, always ask 
common law or UCC that changes 

513
00:24:09,600 --> 00:24:11,480
so many rules. 
Perfect tender versus 

514
00:24:11,480 --> 00:24:14,160
substantial performance is a 
huge 1 consideration for 

515
00:24:14,160 --> 00:24:15,880
modifications. 
Yeah, that fork in the road is 

516
00:24:15,880 --> 00:24:19,920
key. #3 for every rule know the 
major exceptions. 

517
00:24:20,440 --> 00:24:23,920
Statute of frauds, exceptions. 
Parole evidence rule exceptions.

518
00:24:24,120 --> 00:24:27,360
Irrevocability, exceptions, 
exams, love exceptions. 

519
00:24:28,160 --> 00:24:30,960
And finally, practice applying 
it. 

520
00:24:30,960 --> 00:24:33,200
Don't just read outlines, work 
through hypos. 

521
00:24:33,560 --> 00:24:36,480
Think about why the rule exists.
What policy is it serving? 

522
00:24:36,600 --> 00:24:40,000
And how does nailing this stuff 
on an exam translate to being a 

523
00:24:40,000 --> 00:24:41,760
lawyer? 
Oh, directly. 

524
00:24:42,000 --> 00:24:43,240
I mean, contracts are 
everywhere. 

525
00:24:43,240 --> 00:24:45,840
You'll be drafting them, 
reviewing them, arguing about 

526
00:24:45,840 --> 00:24:49,040
what they mean, advising clients
at the other side breached, 

527
00:24:49,040 --> 00:24:51,960
figuring out damages. 
This isn't just theory, it's a 

528
00:24:51,960 --> 00:24:54,400
language of business and many 
legal relationships. 

529
00:24:54,720 --> 00:24:56,680
Understanding it deeply is non 
negotiable. 

530
00:24:57,160 --> 00:25:00,480
So as we wrap up, any final 
piece of advice for listeners 

531
00:25:00,480 --> 00:25:02,840
heading the books on contracts? 
Just keep working at it. 

532
00:25:03,040 --> 00:25:05,840
Use flash cards for rules, maybe
flow charts for analysis. 

533
00:25:06,120 --> 00:25:09,080
But most importantly, actively 
think through problems. 

534
00:25:09,640 --> 00:25:12,200
Argue both sides in your head. 
Why might this be an offer? 

535
00:25:12,200 --> 00:25:14,120
Why not? 
Why is this breach material? 

536
00:25:14,120 --> 00:25:16,960
Why might it be minor that 
active engagements would really 

537
00:25:16,960 --> 00:25:19,680
solidify his understanding? 
It's a challenging subject, but 

538
00:25:19,680 --> 00:25:22,520
you can definitely master it. 
Great advice, thanks so much for

539
00:25:22,520 --> 00:25:25,720
breaking down this complex beast
of contract law. 

540
00:25:25,800 --> 00:25:28,880
Hopefully this deep dive gives 
you all a much clearer path 

541
00:25:28,880 --> 00:25:30,600
through it. 
Good luck with the studying.