Contract July 2007 Q5
Can Paula obtain specific performance of Sally’s agreement to sell Paula the painting[User1]?
Applicable law
The UCC applies to contracts for the sale of goods (movable, tangible property), and merchants (entities/individuals who regularly deal in goods of the kind sold[User2]).
Here, the contract between Paula and Sally is a sale of a good, a painting (movable, tangible property). It is a sales of goods contract, thus, the UCC applies here. Neither Paul and Sally is merchants who does regular business in this area because Paul is an art agent and Sally is a private collector, thus, the special rule between merchants does not apply here. It[User3] is a sale of goods over $500, because the agreed price is $200K, thus, the statue of fraud applies here. Statue of Fraud requires the sales of good contract over $500 be in writing unless exception applies[User4].
Thus, the UCC applies[User5].
Specific Performance
To obtain specific performance, there must be (1) a valid contract with[User6] definite and certain contract terms, (2) an inadequate legal remedy, (3) feasible enforcement, (4) mutuality of performance, (5) satisfaction of plaintiff’s contract conditions, and (6) no unfairness (e.g. defenses, hardship, mistake, inadequate consideration).
Valid contract
A contract is valid when there is effective (1) offer, (2) acceptance, (3) consideration and (4) no defense of the formation[User7].
Offer
An offer is a (1) manifest present intent to create a power of acceptances (2) with certain and definite terms, and (3) communicated to the identifiedofferee[User8].
Here[User9], Paula offers to buy Sally’s painting. During the negotiation, as a reasonable person in Sally’s situation would believe there is valid offer to buy her painting[User10].
Acceptance
An acceptance is the offeree unequivocal assent to the offer with knowledge with the terms of the offer.
Here, Sally stated that she only sold to private collectors. And she orally agreed to sell to Paula. It can be argue that Sally did not unequivocal consent because she though Paula was a private collector.
Thus[User11],
Consideration
The[User12] valid consideration is one of the paintings of Sally and $200k. Both have legal detriment.
Defense of formation
Fraud / Misrepresentation
Fraud exist when the party misstate or undisclosed substantial material of fact, which induce the other party to rely on it and make the contract.
Here[User13], the fact does not discuss whether Paula misstates any material of fact to Sally to induce here. However, Sally expressed offhandedly how proud she was that she only sold to private collectors. It can be inferred from the statement that Sally only sell the painting to private collectors and she presumed Paula to be a private collector. When Paula hears this statement, he failed to disclose his identity as art acquisition agent. This undisclosed information is substantial material of fact which induces Sally to make the contract. Because if Paula disclose this information, Sally would not sell the painting to him. Sally made this contract on the reliance of her believe Paula is a private collector. This is also a misrepresentation because Paula intentionally to hide his identity and to make a contract with Sally as private collector.
Paula would argue that he did not intentionally deceit Sally because he never expressly state he is a private collector. Also, he asks the Museum to wire the money directly to Sally shows that he has no intent to hide his relationship with the museum. In addition, there is confidentialityrequirement in her working area. However, Sally would counter that the confidential requirement does not applies to Sally as bona fide third party.
Therefore, the contract is likely to be invalid as fraud or misrepresentation.
Mistake
A mutual mistake makes a contract voidable. A[User14]unilateral mistake only make the contract voidable when the non-mistake party know or has reasonable to know the misstate exist, and the mistake party make the contract on the reliance on the mistake[User15]. Here is a unilateral mistake because Sally mistake Paula as private collectors. Paula know or has reasonable to know Sally’s mistake because Sally expressly said that she only sold to private collectors and she agreed to sell it to Paula.
Paula would argue that he did not express identify herimself[User16] as private collector, and Sally never asked whether he is a private collector or not. However, as a reasonable person in Paula’s situation can infer that Sally thought Paula is a private collector. Sally makes the contract reliance on this mistake.
Thus, the contract is voidable by the mistake party.
Statue of Fraud
The contract should be in writing for the sales of goods over $500, unless the exception applies. Here[User17], it is a sale of good over $500 because the agreed price on the painting is $200K. Sally only orally agreed to sell to Paula, it did not write it down as a contract[User18].
Exceptions
Promissoryestoppel[User19]
A promissory estoppel excuses the statue of fraud requirement if the party detrimental relies on the contract and make substantial step. Here, Paula would argue that even if it is an oral agreement, he has promissory estoppel because he contacted the museum, made the selection, and wire the money to Sally’s account. However, Sally would counter that this is not detrimental reliance and it is not enough substantial step because merely made the selection and wire the money does not cause too much effect and does not take must detriment. And Sally has written the check to refund the money. The reliance is curable. Thus, there is no promissory estoppel
Substantial performance[User20]
Substantialperformance excuses the SoF if the party reliance on the contract has substantial fulfill his obligation. Paula[User21] would argue that he has substantial perform his duty of the contract by wiring the money to Sally. However, Sally would counter the fraud and mistake as discuss before make the substantial performance meaningless.
Waiver[User22]
If both party agree and has no problem with the oral agreement, the performance by both of them can waive the SoF. Here, it can be argue that Sally waive the SoF by writing a check in the notation of it, “refund on 1st Monay Pond series”. The language indicates that she also agrees on the existence of the oral agreement. However, as discuss before, the fraud and mistake makes it meaningless.
Excuse of performance
Frustrate of purpose[User23]
Frustrate of purpose is unexpected event frustrate the purpose of either party when the contract was made. Here, Sally would argue that her purpose was to sell and keep the painting in the hand of private collector. Now thereal buyer is the museum frustrates her originalpurpose, thus make the contract cannot be performed.
Specific performance
If there is valid contract and no excuse of performance[User24], Paula can only be granted specific performance if the goods is unique, and money damage is inadequate, and the enforcement by the court is feasible.
Unique[User25] Inadequate Remedy at Law
Legal[User26] (monetary) damages are inadequate if (1) they are speculative, (2) defendant is insolvent, (3) multiple suits are necessary, or (4) the thing bargained for is unique.
The contract of the painting is one of the three original in a series of painting by Monay. It is rare and cannot be replaced.
Thus, a legal remedy is inadequateit is unique.
Money damage is inadequate[User27]
As discussed before, the painting is rare and unique, it is impossible to find another replacement. In additional, Paula works as an art acquisition agent, which business counts a lot on reliability and confidentiality. If he cannot get the painting, her budding career as an art agent was over. All these cannot be measure by money. Thus, mere money damage is inadequate.
Feasibility of enforcement[User28]
The painting is still available on the hands of Sally, it is a onetime transaction. There is no much work involve by the court, thus, it is feasible[User29].
Balancing the hardship[User30]
As discuss before, Paula’s career might be end if specific performance will not be granted. Sally can still receive the money she desire as agreed before. On balancing the hardship, the specific performance will be granted.
However, the specific performance is on the condition of there is valid contract and there is no excuse of formation and performance. If Paula failed to prove these as discussed above, the specific performance will not be granted[User31].
Conclusion[User32]
In conclusion, Paula could obtain specific performance of Sally to sell her the painting, though unilateral mistake was a factor in not granting specific performance[User33].
[User1]Mirror the call of the question so you repeat to yourself what is being asked. When you read the questions, identify all the tested subjects. This question is testing on remedies, not just contracts.
[User2]Put the complete rules first before going to the facts.
[User3]good analysis on merchants
[User4]Discuss one issue at a time. Statute of Frauds belongs belong in the “No Defenses to Formation” element when you are analyzing contract validity. Right here, you are only concerned w/what the governing law is.
[User5]Have a conclusion for each issue.
[User6]The question is asking about specific performance so put the contract analysis inside. “Valid Contract” is one of the elements of specific performance.
[User7]You have the right elements. Number the elements so you create a checklist for yourself when you are analyzing. Also, this will help you repeat how many elements are in a rule, and make it easier for you to later memorize the rules.
[User8]Good you know the rules.
[User9]Try to use 3 paragraphs so it is easier for the grader – Rules, Analysis, Conclusion
[User10]You miss giving the definite and certain terms. Make sure you show each part of the rule is met.
[User11]Make sure to have a conclusion for each issue.
[User12]you miss the rules statement
[User13]Ok – this is good. You discuss both sides.
[User14]Unilateral mistake applies here so do not use up time to define mutual mistake. Give only the rules that apply to the situation.
[User15]the rule is on track, but you miss a second part of the rule: A unilateral mistake by one party is insufficient to make a contract voidable, unless the non-mistaken party: (1) knew or had reason to know of the mistake, or (2) had a duty to disclose the fact about which the other party was mistaken.
[User16]Try not to make distracting grammar errors that may require the grader to guess at what you are writing.
[User17]Be more complete on the rules – say the party to be charged needs to sign the writing; Also, the writing need not be an actual contract, or the terms be contained on one piece of paper. A series of correspondence between the parties may suffice.
[User18]The analysis is not complete: Here, neither Paula nor Sally was a merchant. After Museum’s bank wired $200,000 into Sally’s account, Sally declined to go through with the sale, and tendered to Paula a certified check evidencing a contract with the notation “Refund,” identity of the parties in the check, quantity term “1st of Monay Pond series,” and signature of Sally, the party charged.
Thus, the Statute of Frauds was met with a writing signed by Sally.
[User19]This is not applicable. Promissory estoppel is a substitute for consideration. Since you show there is consideration, promissory estoppel does not apply.
[User20]Off track. What you should discuss is part performance or part payment:
For the sale of goods, when part of the purchase price has been paid, the contract is enforced and outside the Statute of Frauds only to the extent of the purchase.
Here, if the certified check did not constitute a signed writing to satisfy the Statute of Frauds, payment by Museum was an exception to the Statute of Frauds.
Thus, Paula’s payment through Museum could take the contract outside the Statute of Frauds.
[User21]Get the names of the parties right. Make sure not to have too many typos or make unnecessary errors that the grader has to guess at who you are discussing.
[User22]Off track. The facts about the check are to be used for the Statute of Frauds issue. See comment above.
[User23]Off track. This is for a performance discharge analysis; not for contract validity discussions.
[User24]you are missing several elements; see comment above
[User25]Unique good is not an element of specific performance; the element should be “Inadequate Remedy at Law”. Uniqueness of the good is analysis for determining the inadequate remedy at law.
[User26]make sure you have your rules right because it affects the analysis
[User27]put this discussion in the same place as when you analyze uniqueness of the good
[User28]Missing the rules: A court will not specifically enforce a promise if enforcement imposes burdens on the court that are disproportionate to the advantages gained from enforcement, and the harms suffered from denial. Performance that entails continuous supervision, or involves judgment as to suitability of performance will generally not be ordered.
[User29]ok on analysis
[User30]this is not right – this element is for injunction issue (which does not apply to this question) not specific performance; To remember the elements for specific performance, you can use this mnemonic: Cha Cha Is My Favorite Dance: Contract, Certain and Definite Terms, Inadequate Remedy at Law, Mutuality of Performance, Feasible Enforcement, Defenses
[User31]You miss the rest of the elements:
Mutuality of Performance
The aggrieved party must show that the breaching party can also secure performance.
Here, Sally received $200,000 from Museum.
Thus, there was mutuality of performance.
Plaintiff’s Conditions Satisfied
To compel specific performance of a defendant, any conditions precedent to the performance must be satisfied or excused.
Here, Paula paid Sally $200,000.
Thus, conditions precedent to Sally selling the painting was satisfied.
No Unfairness
Specific performance will not be granted if such relief would be unfair. Factors in determining unfairness include: (1) defenses and (2) mistake.
Defenses
A defendant may assert defenses against specific performance, including (1) unclean hands and (2) laches.
Unclean Hands
The party seeking relief must not have been guilty of illegal or wrongful conduct with respect to the subject matter of the transaction.
Here, no facts indicated any wrongdoing by Paula. Sally expressed “offhandedly” how proud she was that she only sold to private collectors, but Paula did not hold herself out to be a private collector, and this was not a term in the agreement.
Thus, unclean hands did not apply.
Laches
The right to equitable relief is cut off when there has been unreasonable delay in initiating the claim, and the delay prejudices the defendant.
Here, no facts indicated Paula delayed too long in bringing a claim.
Thus, laches was not a defense.
Unilateral Mistake
See rules above. A defendant’s actions that do not rise to the level of a contract defense for mistake can nevertheless be a factor that results in the denial of specific performance.
See analysis above. Here, though unilateral mistake was unlikely a formation defense, it could be a factor in denying specific performance.
Thus, Sally’s unilateral mistake was a factor in denying specific performance.
[User32]Have a conclusion at the end that goes back to answer the call of the question.
[User33]Possible score: 60
Issues: Missing several elements for specific performance analysis.
Rules: On track, but be more complete because it will affect your analysis. If you do not know the elements when you are practicing, it is ok to take some time to look them up.
Analysis: On track for issues you caught, but make sure to show each part of the rule is met.
Organization: Deconstruct the questions to make sure you identify each subject tested. Discuss the issues in the order given by the question. For instance, if the question is asking about specific performance, begin with that, not contracts. Valid contract is an element of specific performance so discuss it inside.