PA: Contracts

  1. Pre-Existing Legal Duty -- Extension
    PA: Where parties agree to an extension of time w/o specification, use a reasonable time period.
  2. Consideration Substitutes
    Promises in writing: express written statement that signer intends to be legally bound is valid/enforceable.

    Promises under seal: okay for services, NOT for goods.
  3. Fraud
    PA: Court will generally not enforce a K if its formation or performance is criminal, tortious or otherwise against pub policy (including aviolation of the Rules of Prof. Conduct).

    • REQS (FRAUD): Aggrieved party must show --
    • (1) False rep of a material fact;
    • (2) Made w/ knowledge of its falsity or with reckless disregard of its truth/falsity;
    • (3) By the person charged with having knowledge of the fact;
    • (4) Who intended that the recipient would act on the fact; AND
    • (5) Which misled the recip, causing injury.

    REMEDY: Rescind and collect money paid, OR affirm and recover fraud damages.
  4. Duress
    GEN: If duress, contract voidable.

    KEY: Look for loss of free agency.

    NOTE: Courts consider whether the injured party has an immediate remedy to make her whole w/o voiding.
  5. Statute of Frauds
    • Leases: more than $3 years or $1000 or more in consideration.
    • >> If such a lease it not writing, lease at will UNLESS:
    • >>>>T canotinued for more than one year AND LL+T have recognized its rightful existence by claiming/admitting rent liability.
    • >>>>>> In this case, it becomes a year-to-year lease.

    • (1) Performance not within a year -- No writing needed.
    • (2) Ks with less than $20 in consideration.
    • >> Also -- does not apply to Ks to die intestate or to make or not revoke a will -- but such promises nonetheless still gen need to be in writing.
  6. SoF: Oral Contracts for Land
    • GEN: Have been enforced where there's partial performance -- vendee takes continuous and exclusive possession of the land AND made improvements.
    • >> Specific performance the approp remedy.

    • Ks for land include:
    • (1) coal, surface rights and rights of support
    • (2) mortgages and agreements to forbear from foreclosure
    • (3) easements in land
    • (4) Ks for sale of land by auction.
  7. Unconscionability
    • GEN: Determined by a judge, two-part test --
    • (1) Signing party must have lacked a meaningful choice in accepting the challenged contract or clause; AND
    • (2) Challenged contract/clause must unreasonably favor the party asserting it.

    NOTE: Disparity in bargaining power INSUFFICIENT.

    REMEDY: (1) refuse to enforce K or clause; (2) enforce remainder of K minus clause; or (3) limit application of unconscionable clause.
  8. Exculpatory Clauses
    GEN: Any provision providing for immunity from liability will be strictly construed against the party seeking its protection.

    • (1) Not contravene public policy;
    • (2) K must be between persons relating entirely to their own private affairs; AND
    • (3) Each party must be a free bargaining agent to the agmt so that the K is not one of adhesion.

    NOTE: Courts consider -- K language (strictly construed); intention of parties (particularity); language constructed against party seeking immunity; burden of establishing immunity on the party invoking protection.
  9. Necessary Implication Exception to PER
    GEN: Where an obligation is within the parties' contemplation when making a K or is necessary to carry out their intention, PA courts imply that obligation and enforce it even though it's not specifically expressed.
  10. Express/Implied Warranties
    GEN: Applicable to sales AND leases of goods.

    BUT: Not applicable to finance leases (lener/borrower).
  11. Scope of Warranties
    ** Important **
    KEY: Warranties extend to any natural person who is in the family/household of the buyer OR who is a guest in the home where there is a personal injury.
  12. Raising Affirmative Defenses
    GEN: Must be raised in a responsive pleading in a "New Matter" heading or deemed waived.
  13. Punitive Damages
    ** Insurer **
    • GEN: Not available. But in an action arising under an insurance policy, where insurer acted in BAD FAITH --
    • (1) Award equal to prime rate plus 3% (date claim made);
    • (2) Award punitive damages against insurer; AND
    • (3) Assess court costs and atty fees against insurer.
  14. Liquidated Damages
    • GEN: Cannot be tantamount to an unenforceable penalty.
    • >> Keeping deposit for a failed home sale okay.
  15. Construction COntracts
    Breach by Builder
    • KEY: Protect the expecation interest of the injured party.
    • >> AWARD: Cost of repair/completion if there's a remedy.
    • >> BUT: If loss in value > cost of repair/comp, then loss in value proper measure.
  16. Third-Party Beneficiaries
    ** Intended Beneficiaries **
    • CREATION: If not explicitly mentioned in the agreement, wo-part test --
    • (1) Court's recognition of TPB's right is appropriate to effectuate the intention of the parties; AND
    • (2) (a) Performance satisfies an obligation of promisee to pay money to the TPB, or (b) the circums indicate that the promisee intended to give the beneficiary the benefit of the promised performance.

    • NOTE: Unlike UCC, in PA donee beneficiaries' rights VEST IMMEDIATELY.
    • >> No modification unless expressly reserved by K.

    • NOTE: In UCC, vesting requires --
    • (1) Third party manifests assent to K (at request of a party);
    • (2) Third party materially knows of his position and detrimentally relies on his rights; OR
    • (3) Third party files a lawsuit to enforce contract.
  17. Novation (PA)
    • REQS:
    • (1) Displacement/extinction of a valid K.
    • (2) Substitution of a valid K either between the same parties or by the introduction of a new creditor/debtor.
    • (3) Sufficient legal consideration for new K; AND
    • (4) Consent of the parties.
Card Set
PA: Contracts