Patent and Copyright Law

Contract Defenses, Discharge, and RemediesEthical Considerations Question, p. 220 Reading of Contract same issue as next slide

The contract shall continue in force for a period of five years from the date it is made and thereafter for successive five year terms, unless and until terminated by one year prior notice in writing by either party. 1MistakeEnd of Chapter Question 8 , p. 250 Group 7

V. $92,885,000.00 or$92,855.002 Raffles v. WichelhausTwo Ships Peerless. Wichelhaus purchased a shipment of cotton from Raffles to arrive on a ship called the Peerless from Bombay, India. Wichelhaus meant a ship called Peerless sailing from Bombay in October; Raffles meant another ship called the Peerless sailing from Bombay in December. When the goods were finally delivered in December, Wichelhaus refused them.

Should Wichelhaus be forced to accept the goods?

One of the ships PeerlessEthical Considerations, P. 260$50 desk at garage sale worth $15kMap sold for $3 but worth $19 million?3

Examples of each45Genuineness of AssentMistake of Fact by both parties makes the contract voidable.Substantiality of the Mistake.Allocation of the Risks.CASE 7.5 Honda v. Board of Trustees of the Employees Retirement System of the State of Hawaii (2005).Timing.5Discharge by AgreementParties may agree to dischargetheir contractual obligations inseveral ways:By RescissionAnd RestitutionThe parties mutually agree to rescind (cancel) the contract.ByNovationA new party is substituted for one of the primary parties to a contract.By Accord and SatisfactionThe parties agree to render performance different from that originally agreed on.6End of Chapter Question 4 , p. 249Agreed to settle with insurance company for $15,000, the amount he thought was his policy limit.His policy in fact had a $250,000 limitWhen he learned of the higher limit can he rescind his contract to settle?

Agreement to Settle Based on Bad Information

Lanci v. Metropolitan Insurance 7Types of Damages

Compensatory Damages

Punitive Damages

Nominal Damages

Liquidated Damages

Consequential DamagesCase re: termination of catering job 5 days before picnic $7,000 contract for cateringCancelled 5 days beforeContract required full payment if cancelledPlaintiff asserts it's an unlawful penalty clause

8Hadley v. Baxendale (1854)The question before the court was whether Hadley (the mill owner) could recover for consequential damagesthe lost profitscaused by Baxendales delay in delivering a broken crankshaft.The court held that the Hadleys could recover only if Baxendale knew or should have known that the mill would have to be shut down while the crankshaft was being repaired. Was Baxendale aware of this?If it had not been the custom in the mid-1800s for mills to have extra crankshafts on hand, how would this circumstance have affected the courts ruling?9Mitigation of DamagesWhen breach of contract occurs, the innocent injured party is held to a duty to reduce the damages that he or she suffered.Duty owed depends on the nature of the contract.

Classic CaseYou install a window as part of your business and the window breaks after you leave due to your negligence. The homeowner fails to cover the window and additional damages in the home results.

10Punitive DamagesPunitive damages are awarded to punish the breaching party and deter similar conduct in the future.These are usually not awarded in an action for breach of contract unless a tort is involved.11Nominal DamagesNominal damages are those small in amount (such as one dollar) that are awarded when a breach had occurred but no actual damages have been suffered.They are often awarded only to establish that the defendant acted wrongfully.12End-of-Chapter Q. 2, p. 249

Sound Finacial, LLC v. Unisearch (2002). Liability limited to $25.

Liquidated DamagesDamages Stated in Contract. Damages that may be specified in a contract as the amount to be paid to the nonbreaching party in the event the contract is later breached.Damages Difficult to Estimate and Reasonable Amount. Clauses providing for liquidated damages are enforced if the damages were difficult to estimate at the time the contract was formed and if the amount stipulated is reasonable.If Penalty Not Enforced.Green Park Inn, Inc. v. Moore (2002). Sale of hotel - $500,000 liquidated damages14Reimbursement

Collision with semi left Deborah Shank permanently brain damaged. Her husband sued and won $700,000 compensatory damages. Wall-Mart insurance company sued for the money. 15

Specific PerformancePerformance Not Damages. An equitable remedy calling for the performance of the act promised in the contract.Limited Application. Specific performance is only available in special situations, such asthose involving contracts for the sale of unique goods or land, orwhen monetary damages would be an inadequate remedy.Not for Personal Services.

143216Oral Agreement End of Chapter Question 5 , p. 249Cindy Sawyer approached Melbourne Mills, an attorney, regarding an idea to sue on behalf of fen-phen users.Mills agreed to pay her $1 million, plus $65,000 over 10 years, if successful Oral agreement He won $23 million but only paid her $160,000

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18Parol EvidenceNo Oral Evidence. Terms of a written agreement intended to be the final expression of parties intentions, cannot be contradicted by prior or contemporaneous agreements.Exceptions to the rule: Contracts subsequently modified.Voidable or Void contracts.Contracts containing ambiguous terms.Prior dealing, course of performance, or usage of trade.Contracts subject to orally agreed-on conditions.Contracts with an obvious or gross clerical error that clearly would not represent the agreement of the parties. 1920Impossibility: an event causes obligations to be discharged.Impracticality: performance is possible but commercially impractical. Frustration of Purpose: performance is possible, but changed circumstances have made the contract useless to one or both of the parties.Sovereign Acts Doctrine: the government cannot be held liable for breach of contract due to legislative or executive acts. Changed Circumstances20Provisions Limiting RemediesExculpatory Clause. A contract may provide that no damages (or only a limited amount of damages) can be recovered in the event the contract is breached.Enforceability of Clauses. Whether such provisions are enforced depends on the type of breach that is excused by the provision. For example:Fraud. Clauses excluding liability for fraudulent or intentional injury or for illegal acts cannot be enforced.Negligence. Clauses excluding liability for negligence may be enforced if both parties hold roughly equal bargaining power.

Houseboat example21 Contrary to Public Policy and Quasi ContractContrary to Public PolicyRestraint of tradeCovenant not to competeUnconscionableAdhesion ContractExculpatory Clauses (exclude liability for fraud, intentional injury, or illegal acts)Quasi Contract - Implied In LawQuasi ContractUnjust enrichment22Restraint of trade usually also a violation of antitrust lawsCurrent Events Report ATT/Tmobile Antitrust week 4AnkurNick