PA Contracts Distinctions

1) Consideration Substitutes a) Promissory Estoppel i) Promise ii) Reasonably expected to induce reliance iii) Reliance in fact induced iv) Promise is binding if injustice avoidable only by enforcement [Remedy limited as justice requires] b) Promises in Writing (Letters of Intent are Enforceable) Express written statement that signer intends to be legally bound is valid and enforceable even for lack of consideration Warranties c) Promises under seal do not require consideration Cover buyer, his family, household, and guests i) unless fraud Consequential Damages re: personal injuries ii) n/a in UCC cases Failure to achieve special purpose of the Express warranties - cover sales & leases contract or from unusual circumstances known to the parties when contract executed Implied warranties - cover sales & leases, but Statute of Frauds not to lender/borrower finance leases No recovery for emotional distress General Requirements Can be limited or eliminated by contract Construction Ks - implied W of habitability for 1. Writing new homes sold to residential buyers provision 2. Signed by the party to be charged - Expectation interests > cost of repair OR No Punitive Damages in breach of K case, 3. Sufficient indication of terms - Loss in value where cost of repair except insurer bad faith 4. Terms are ascertainable with certainty exceeds its benefits - IF loss in value is Liquidated Damages -- Preclude claim for 5. Intent of the party to be charged to be bound calculable actual damages! In PA, SoF does not apply to contracts: Must be reasonable / not penalty Req'g Performance Exceeding One Year Must have been difficult to adequately Leases of Real Property for terms of less than three years predict actual damages Lack of Capacity Defense Ks w/ less than $20 consideration Accord & Satisfaction a) Economic duress or business compulsion & Ks to die intestate/ make/ not revoke a will: SoF does Req's same elements as K formation: b) Economic loss as a result, then not apply -- but probate req's a writing anyway meeting of minds, consideration c) >> K becomes voidable, if court finds pressure Enforcement of SoF Ks w/o a Writing, when: Consideration = acceptance of less $ on on P adequate to remove her independent will, Buyer has continuous & exclusive possession & a disputed claim and no other immediate legal remedy would Has made improvements make P whole without voiding the K Remedy = specific performance Unconscionability Matter of Law for the judge Fraudulent misrepresentation a/k/a Mere disparity of bargaining power Fraud in the Inducement Third Party Beneficiaries Two-part Penna test: 1. False representation of material fact a) Intended Beneficiary Test 1. Signing party lacks meaningful choice in 2. Made w/ K of or reckless disregard for falsity i) Intent of the parties and accepting the challenged K or clause; & 3. By person charged w/ knowledge ii) Performance satisfies promisees 2. Challenged contract or clause must 4. Who intended P would act on it obligation to pay the beneficiary unreasonably favor the asserting party 5. Which misled P, causing injury or Remedy: P's Options: iii) Promisee intended to give the - Strike the offensive clause Rescind & recover $ paid OR beneficiary the benefit of the - Not enforce clause or K; or Affirm & recover damages for fraud & deceit promised performance - Limit the application of the uncon. Clause b) Vesting of Rights NOVATION i) Immediately Exculpatory Clauses 1. Displacement & extinction of a valid K ii) Cannot be modified unless Strictly construed, but valid if: 2. Substitution of a new valid K, supported by expressly reserved in the contract a. clause is not violative of public policy 3. Sufficient legal consideration & iii) Party to the contract can assert all b. In a K re: the Personal Affairs of 2 folks & 4. Consent of the parties defenses against the 3dP B c. Parties are not victims of K of adhesion Parol Evidence/ Unmentioned Obligations When an obligation is w/I parties' contemplation, or necessary to carry out the K's intention, it will be implied & enforced by PA courts even if not expressly contained in the K

- PA wont enforce Ks the performance of which is criminal, tortious, or public policy [, precedent, & Rules of Prof. Conduct] - Atty rec'g $ in manner violative of his prof. obligation must return it, even to a criminal client

Non-complete clauses valid if reasonable in duration and scope Forum Selection Clauses are prima facie valid unless unreasonable under the circumstances Acquisition of knowledge of an offer during performance & prior to completion >> creates power of acceptance All affirmative defenses must be raised in "new matter" section of responsive pleading or are waived

PA Bar Review Notes Page 1