GUIDE TO

NEW JERSEY

CONTRACT LAW (FOURTH EDITION)

EDITOR AND AUTHOR

Clark E. Alpert, Esq.

Associate Editor/Contributing Author

MARCO FERREIRA, ESQ. MARK A. ALPERT MELISSA R. ALPERT Executive Copy Editors

© 2016 New Jersey State Bar Association. All rights reserved. Any copying of material herein, in whole or in part, and by any means without written permission is prohibited. Requests for such permission should be sent to NJICLE, a Division of the New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey 08901-1520.

THIRD EDITION CONTRIBUTORS MATTHEW CONO CAPOZZOLI, ESQ. ASSOCIATE EDITOR/CONTRIBUTING AUTHOR MARK A. ALPERT Executive Copy Editor

SECOND EDITION CONTRIBUTORS: MATTHEW CONO CAPOZZOLI, ESQ. [ASSOCIATE EDITOR/CONTRIBUTING AUTHOR] DAVID N. BUTLER, ESQ. JEREMY WEISS, ESQ.

[CONTRIBUTING AUTHORS]

FIRST EDITION CONTRIBUTORS: Steven Rappoport (SENIOR EDITOR/CONTRIBUTING AUTHOR) Nicholas Bliablias, Esq. John H. Norton, Esq. William Beneduce, Esq. Martin Bearg, Esq. Scott Brown, Esq. Jonathan Dorman, Esq.

FOREWORD For more than 50 years, the New Jersey Institute for Continuing Legal Education (NJICLE) has endeavored to serve the continuing legal education needs of the New Jersey bench and bar. Our seminars, publications, CD-ROMs, and other educational materials are designed to facilitate the practice of law and to enable judges and lawyers to more effectively exercise their responsibilities.

As enter our second half-century of service, NJICLE has recently become a division of the NJ State Bar Association. We are excited about becoming a part of the state’s leading lawyer organization and serving the CLE needs of its leadership and members.

Our success in bringing the legal community the very best in educational materials would not be possible without the judges and lawyers who volunteer their efforts to serve as lecturers and authors. NJ ICLE is the conduit through which they share their knowledge, skills, and expertise with their fellow professionals.

The Guide to New Jersey Contract Law was conceived and developed by Clark Alpert, Esq. Without his commitment to continuing legal education, this publication would not be possible. NJICLE is extremely grateful for his efforts and perseverance.

A publication such as this would also not be possible without a dedicated publishing staff. It is, therefore, fitting to acknowledge the efforts of the New Jersey Institute for Continuing Legal Education, who together assure that orders are processed quickly and courteously.

Your satisfaction with the CLE products that we provide is very important to us. So that we may continue to serve you to the very best of our abilities, NJICLE always welcomes any comments or suggestions that you may have.

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DEDICATION

This book is again dedicated to my wife, Mona, and my children Melissa, Mark, and Melanie,

and with sincere gratitude to those who contributed their efforts to this volume (including Mark and

Melissa, the book’s Executive Copy Editors).

I would also like to thank my associate, Marco Ferreira, Esq., for his invaluable work on this

volume; and my assistant Suzette Morrison, for her tireless help.

It is my hope that these chapters may help to bring some organization to the sprawling topic

of contract law in New Jersey, which is in many ways unique. This Fourth Edition should assist the

practitioner further by (1) adding topics of increasing interest under our developing jurisprudence, (2)

refining virtually all topics in the book, (3) adding more case examples and correlating prior ones to

relevant principles, and (4) incorporating analysis of much recent case law, as well as (5) providing

many more forms--along with (6) a more user-friendly index.

Clark E. Alpert, Esq.

December, 2015

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TABLE OF CONTENTS

CHAPTER 1

INTRODUCTION: BASIC CONCEPTS

1.1 OVERVIEW ........................................................................................................................................ 1 1.2 DEFINITION OF A CONTRACT ........................................................................................................... 2

1.2.1 Quasi-Contract And “Contract-Substitute” Claims Distinguished ................................................ 3 1.2.2. Differences Between Commercial And Consumer Claims ........................................................... 3

1.2.2.1 Case Examples Of Consumer/Commercial Differences ............................................................... 4 1.2.2.2 Consumer Arbitration Contract Issues .......................................................................................... 6 1.3 SOURCES OF CONTRACT LAW .......................................................................................................... 7

1.3.1 Common Law ................................................................................................................................ 7 1.3.2 Uniform Commercial Code ........................................................................................................... 7

1.3.2.1 UCC Article 2: Sale Of Goods ...................................................................................................... 8 1.3.3 Other Statutory Sources .............................................................................................................. 10 1.3.4 Contracts Involving Highway, Rail Or Ocean Transit Of Goods ............................................... 12 1.3.5 United Nations Convention On Contracts For The International Sale Of Goods .................... 13 1.3.6 “E-Sign” And UETA ................................................................................................................... 13 1.3.7 Updated UCC Articles 3 And 4 ................................................................................................... 16

1.4 CLASSIFICATION OF CONTRACTS ................................................................................................... 17 1.4.1 In General .................................................................................................................................... 17 1.4.2 Unilateral And Bilateral .............................................................................................................. 17 1.4.3 Enforceable And Unenforceable Contracts ................................................................................. 18 1.4.4 Distinction Between Void And Voidable Contracts ................................................................... 20

1.4.4.1 Arbitration Clauses Severable ..................................................................................................... 22 1.4.5 Express And Implied Contracts................................................................................................... 22 1.4.6 Exculpatory Contracts ................................................................................................................. 23 1.4.7 Divisible And Indivisible ............................................................................................................ 24

1.5 COVENANT OF GOOD FAITH ........................................................................................................... 25 1.6 REMEDIES........................................................................................................................................ 25 1.7 LITIGATION AND DRAFTING ........................................................................................................... 25 1.8 APPLICABLE STATUTE OF LIMITATIONS ......................................................................................... 26

CHAPTER 2

FORMATION ESSENTIALS

2.1 OVERVIEW ...................................................................................................................................... 27 2.2 PARTIES COMPETENT TO CONTRACT ............................................................................................. 28 2.3 PROPER SUBJECT MATTER .............................................................................................................. 29 2.4 VALID CONSIDERATION .................................................................................................................. 30

2.4.1 In General .................................................................................................................................... 30 2.4.2 What Constitutes Consideration .................................................................................................. 30 2.4.3 The Effectiveness Of Consideration ........................................................................................... 34 2.4.4 The Adequacy Of Consideration ................................................................................................. 34

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2.4.5 Promissory Estoppel: Substitute For Consideration ................................................................... 34 2.4.5.1 Relationship Between (1) Fraudulent Misrepresentation Of Intent, And (2) Promissory Estoppel ................................................................................................. 35 2.4.5.2 Case Example: Pop’s Cones ......................................................................................................... 36 2.4.5.3 “Multiple-Theory” Reliance ........................................................................................................ 37 2.4.5.4 Specificity ................................................................................................................................... 37 2.4.5.5 Nature Of Reliance ...................................................................................................................... 38 2.4.5.6 Limitations Period ....................................................................................................................... 38 2.5 MUTUALITY OF AGREEMENT; MEETING OF THE MINDS ............................................................... 38

2.5.1 In General .................................................................................................................................... 38 2.5.1.1 Meeting Of The Minds ................................................................................................................ 39

2.5.2 Offers........................................................................................................................................... 39 2.5.3 Acceptances................................................................................................................................. 40 2.5.4 Case Study: When Is A Signed, Written Contract Not A Contract At All? ................................ 41

2.6 MUTUALITY OF OBLIGATION ......................................................................................................... 43 2.7 DRAFTING CONSIDERATIONS .......................................................................................................... 44 2.8 LITIGATION CONSIDERATIONS ........................................................................................................ 44

CHAPTER 3

PROBLEMS IN FORMATION

3.1 OVERVIEW ...................................................................................................................................... 45 3.1.1 Misrepresentation Of Material Facts (Fraudulent Misrepresentation) ........................................ 45 3.1.2 Mistake Of Law Or Fact .............................................................................................................. 46 3.1.3 Illegality/Public Policy ................................................................................................................ 47 3.1.4 Case Study: Interplay Among Issues Of Contractual Illegality, Unclean Hands And Unjust Enrichment ............................................................................ 47 3.1.5 Duress .......................................................................................................................................... 49

3.1.5.1 Case Study: Dms Farm ................................................................................................................ 49 3.1.5.2. The Lesson Of The “Horse Cases” ............................................................................................ 50

3.1.6 Undue Influence .......................................................................................................................... 50 3.1.7 Unconscionability Or Lack Of Capacity ..................................................................................... 51

3.2 MISREPRESENTATION ..................................................................................................................... 51 3.2.1 In General .................................................................................................................................... 51 3.2.2 Elements For Contract Avoidance Or Tort Damages.................................................................. 52

A. In General ................................................................................................................................ 52 B. Misrepresentation Of Fact ....................................................................................................... 53 C. Fact Must Have Been Material ................................................................................................ 53 D. Reliance On Representation .................................................................................................... 54 E. Concealment ............................................................................................................................ 54 F. Difficulties In Contracting Away Misrepresentations ............................................................. 55

3.3.3 Insurance Policies ........................................................................................................................ 59 3.4 MISTAKE ......................................................................................................................................... 60

3.4.1 In General .................................................................................................................................... 60

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3.4.2 Mistake Of Fact Versus Mistake Of Law .................................................................................... 60 3.4.3 Mutual Mistake ........................................................................................................................... 61 3.4.4 Unilateral Mistake ....................................................................................................................... 62

3.5 ILLEGALITY AND UNCONSCIONABILITY ......................................................................................... 63 3.5.1 Contracts In Violation Of Law Or Public Policy ........................................................................ 63 3.5.2 Exculpatory Contracts ................................................................................................................. 64 3.5.3 Non-Compete Agreements .......................................................................................................... 65 3.5.4 Forum Selection Clauses ............................................................................................................. 66

3.5.4.1 Case Study: Besler V. Coluccio: (Example Of Forum Selection Clause ...................................... 68 3.5.4.2 Case Study: "Floating" Forum Selection Clauses ....................................................................... 68

3.5.5 Unconscionability Under The Uniform Commercial Code......................................................... 69 3.6 DURESS ........................................................................................................................................... 70

3.6.1 In General .................................................................................................................................... 70 3.6.2 Improper Threats ......................................................................................................................... 71 3.6.3 Physical Force ............................................................................................................................. 72

3.7 UNDUE INFLUENCE ......................................................................................................................... 72 3.8 THE INCAPACITY OF PARTIES ......................................................................................................... 73

3.8.1 Historical Background................................................................................................................. 73 3.8.2 Modern Notions Of Incapacity .................................................................................................... 74 3.8.3 Mentally Incompetent Persons .................................................................................................... 75 3.8.5 Statutory Considerations ............................................................................................................. 76 3.8.4 Under-Age Contracting Partner .................................................................................................. 76

3.9 DRAFTING ISSUES ........................................................................................................................... 76 3.10 LITIGATION ISSUES ......................................................................................................................... 77 3.11 APPARENT AUTHORITY ................................................................................................................... 77

3.11.1 Case Study: Apparent Authority Must Be Shown Unambiguously ............................................ 78

CHAPTER 4

STATUTE OF FRAUDS

4.1 OVERVIEW ...................................................................................................................................... 79 4.1.1 In General .................................................................................................................................... 79 4.1.2 Revision Of The Statute Of Frauds ............................................................................................. 80

4.2 THE STATUTE OF FRAUDS FOR REAL PROPERTY ........................................................................... 81 4.2.1 In General .................................................................................................................................... 81 4.2.2 What Constitutes An Interest In Land ......................................................................................... 81 4.2.3 Leases .......................................................................................................................................... 82 4.2.4 Formal Requirements Of Documents .......................................................................................... 83 4.2.5 Brokers’ Commissions ................................................................................................................ 83

4.3 THE STATUTE OF FRAUDS FOR LOANS........................................................................................... 84 4.3.1 In General .................................................................................................................................... 84 4.3.2 Promise To Pay The Debt Of Another ........................................................................................ 85

4.4 UNIFORM COMMERCIAL CODE ....................................................................................................... 87 4.4.1 Overview ..................................................................................................................................... 87 4.4.2 Contracts For The Sale Of Goods In Excess Of $500 ................................................................. 88

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4.4.3 Contracts For The Sale Of Securities .......................................................................................... 88 4.4.4 Contracts For Grants Of Security Interests ................................................................................. 88

4.5 OTHER WRITING REQUIREMENTS ................................................................................................... 89 4.5.1 CFA ............................................................................................................................................. 89 4.5.2 Writing Requirements Regarding Legal Representation ............................................................. 89

4.6 ENFORCEMENT OF NON-COMPLYING CONTRACTS ........................................................................ 90 4.6.1 The Doctrine Of Part Performance .............................................................................................. 90 4.6.2 Fraud Or Deceit ........................................................................................................................... 91 4.6.3 Promissory Estoppel .................................................................................................................... 91

4.6.3.1 Case Study: Interplay Between Promissory Estoppel And Fraud ............................................... 92 4.6.4 Burden Of Proof .......................................................................................................................... 93

4.7 DRAFTING CONSIDERATIONS .......................................................................................................... 94 4.8 LITIGATION CONSIDERATIONS ........................................................................................................ 94

4.8.1 What Can Happen If A Significant Business Relationship Develops Without A Master Agreement ................................................................................................. 94

4.8.1.1 Case Study: What To Do When (1) An Informal Arrangement Becomes Operational, And/Or (2) Agreements Overlap ........................................................ 96

CHAPTER 5

CONTRACT INTERPRETATION AND THE PAROL EVIDENCE RULE

5.1 OVERVIEW .................................................................................................................................... 100 5.2 NEW JERSEY’S EXPANSIVE APPROACH TO BACKGROUND EVIDENCE ......................................... 101 5.3 CONSTRUCTION BY THE COURT OR THE JURY ............................................................................ 102

5.3.1 In General .................................................................................................................................. 102 5.3.2 Issues Decided As A Matter Of Law ......................................................................................... 102 5.3.3 Issues Decided As A Matter Of Fact ......................................................................................... 103 5.3.4 Standards Of Review On Appeal .............................................................................................. 103

5.4 RULES OF INTERPRETATION ......................................................................................................... 104 5.4.1 Determining And Enforcing The Intent Of The Parties ............................................................ 104 5.4.2. Ambiguities ............................................................................................................................... 104

B. What Constitutes An Ambiguity ........................................................................................... 104 5.4.2.1 Case Studies: Ambiguity Is In The Eye Of The Beholder ........................................................ 105 5.4.2.2 Case Study: Paradigm Of Ambiguity ........................................................................................ 107 5.4.2.3 Case Studies: Fusaro And Rutigliano: (1) A Contract Can Arise In A Non-Contract Setting;And (2) How Do You Enforce A Mediated Settlement ................................................................. 108 5.4.2.4 Can Crystal Clarity Be Achieved In Drafting? ......................................................................... 110 5.4.2.5 Case Study: Course Of Performance Cures Ambiguity And Supplies Missing Term .............. 111 5.4.2.6 Case Study: Facial Ambiguity Gives Way To Common Sense ................................................ 111 5.4.2.7 Case Study: Settlement Agreements Invariably Do Not ‘Spell Everything Out’...................... 114

H. Must Ambiguities Be Construed Against The Drafter ........................................................... 115 I. Straying From Pacifico ......................................................................................................... 116 J. How To Avoid An Ambiguity .............................................................................................. 120 K. The Overriding Purpose Of A Contract Clause Helps Determine Whether

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An Ambiguity Exists, And The Meaning Of The Ambiguity ........................................... 122 5.4.3 The Contract As The Best (But Perhaps Not Exclusive) Evidence Of The Parties’ Intent ....... 123 5.4.4 Recitals ...................................................................................................................................... 124 5.4.5 Plain And Ordinary Meaning Precludes Other Interpretations ................................................. 124 5.4.6 The Parties’ Knowledge Of The Law At The Time Of Contracting ......................................... 125 5.4.7 Presumption The Parties Have Read And Understood The Contract ........................................ 125 5.4.8 Disputed Contract Terms: Maxims Of Construction ................................................................ 126

A. The Contract Must Be Read As A Whole .............................................................................. 126 B. All Terms Must Be Given Meaning And Effect .................................................................... 126 C. Terms Must Not Be Given Unreasonable Or Unconscionable Meanings Or ....................... 127 D. Construction Against Forfeiture And Windfalls .................................................................... 127 E. Construction By Performance ............................................................................................... 127 F. Unlawful Performance Must Be Avoided ............................................................................. 128 G. Greater Weight Must Be Given To Negotiated Instead Of Preprinted Terms ....................... 128 L. Expression Of One Thing Implies Exclusion Of Another ..................................................... 129 M. General Words To Be Construed As Applying Only To Those Similar To Specific ............ 129 N. In Pari Materia: Whether You Want It Or Not ...................................................................... 130

5.4.8.1 Case Study: Court Allows Good Deed To Go Unpunished ...................................................... 132 5.4.8.2 Reliance Upon Extrinsic Evidence ............................................................................................ 134

A. No Requirement Of Ambiguity For The Use Of Extrinsic Evidence .................................... 134 B. Types Of Extrinsic Evidence Courts Recognize ................................................................... 134

1. Circumstances Of Contracting .......................................................................................... 134 2. Construction By The Parties .............................................................................................. 135 3. Other Contracts Between The Parties ................................................................................ 135 4. Custom And Usage ............................................................................................................ 135 5. Transmittal/Cover Letters .................................................................................................. 136

5.5 THE PAROL EVIDENCE RULE ........................................................................................................ 139 5.5.1 Purpose ...................................................................................................................................... 139 5.5.2 Arguable Weakening Of The Original Parol Evidence Rule .................................................... 140 5.5.3 Case Study: A Strong Vote For The Parol Evidence Rule ........................................................ 140 5.5.4 Elements Of The Rule ............................................................................................................... 141 5.5.5 Effect On Agreements And Expressions Of Intent “Outside” The ........................................... 142

A. In General .............................................................................................................................. 142 B. Parol Evidence Allowed As “Intepretative Aid” In Ascertaining Meaning

Of An Ambiguous Contract ................................................................................................. 142 C. Parol Evidence Allowed To Interpret Unambiguous Contract .............................................. 143 D. Parol Evidence Admissible To Provide Absent Terms .......................................................... 143

5.5.6 Exceptions To Applicability...................................................................................................... 144 5.5.7 Prior Contractual Negotiations And The Parol Evidence Rule ................................................. 145

5.6 THE BATTLE OF THE FORMS ........................................................................................................ 146 5.6.1 The “Problem” .......................................................................................................................... 146 5.6.2 The “Solution”: UCC § 2-207 ................................................................................................... 146 5.6.3 Supplying Omitted Or Implied Terms ...................................................................................... 149

A. In General .............................................................................................................................. 149

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B. Uniform Commercial Code ................................................................................................... 151 C. Duration Of The Contract ...................................................................................................... 152 D. Time And Other Details Of Performance .............................................................................. 152 E. Price....................................................................................................................................... 152

CHAPTER 6

JOINT AND SEVERAL CONTRACTS

6.1 OVERVIEW .................................................................................................................................... 154 6.2 DEFINITIONS ................................................................................................................................. 155

6.2.1 In General .................................................................................................................................. 155 6.2.2 Joint Obligations ....................................................................................................................... 155 6.2.3 Several Obligations ................................................................................................................... 156 6.2.4 “Joint And Several” Obligations ............................................................................................... 156

6.3 DETERMINING WHETHER A CONTRACT INVOLVES JOINT, SEVERAL, OR JOINT AND SEVERAL OBLIGATIONS......................................................................................................................... 157 6.4 ACTIONS AGAINST JOINT, SEVERAL, AND JOINT AND SEVERAL PROMISORS .............................. 158

6.4.1 Historical Development............................................................................................................. 158 6.4.2 Court Rules Governing Joinder ................................................................................................. 159 6.4.3 Judgment For Or Against A Co-Promisor ................................................................................. 160 6.4.4 Statute Of Limitations ............................................................................................................... 161 6.4.5 Death Of A Joint Promisor ........................................................................................................ 162

6.5 THE RIGHTS OF CO-PROMISORS INTER SE ................................................................................... 163 6.5.1 In General .................................................................................................................................. 163 6.5.2 Suretyship .................................................................................................................................. 163 6.5.3 Guaranty .................................................................................................................................... 165

A. In General .............................................................................................................................. 165 B. Guarantee Must Be Clear ...................................................................................................... 166 C. Waiver ................................................................................................................................... 166 D. Public Policy ......................................................................................................................... 167

6.5.4 Case Study: Confusing Language Ignored Where The Overall Intent Of The Guarantee Was Clear ............................................................................................................. 171

6.5.4.1 Case Study: The End Of A Guarantee ....................................................................................... 172 6.5.5 Indemnity .................................................................................................................................. 174 6.5.6 Relief To Co-Promisor .............................................................................................................. 175

6.6 JOINT, SEVERAL, AND JOINT AND SEVERAL PROMISEES ............................................................. 176 6.6.1 Multiple Promisees Of The Same Performance ........................................................................ 176 6.6.2 Joinder Of Multiple Promisees .................................................................................................. 176 6.6.3 Release By A Co-Promisee ....................................................................................................... 177

6.7 PARTNERSHIPS .............................................................................................................................. 177 6.8 NEGOTIABLE INSTRUMENTS ......................................................................................................... 178

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CHAPTER 7

MODIFICATIONS

7.1 OVERVIEW .................................................................................................................................... 179 7.2 THE MEETING OF THE MINDS REQUIREMENT .............................................................................. 181 7.3 CONSIDERATION ........................................................................................................................... 181

7.3.1 Contracts Not Subject To The Uniform Commercial Code ...................................................... 181 7.3.2 Contracts Subject To The Uniform Commercial Code ............................................................. 182

7.4 REQUIREMENT THAT MODIFICATIONS BE MADE IN WRITING ..................................................... 182 7.4.1 Contracts Not Subject To The Statute Of Frauds ...................................................................... 182 7.4.2 Contracts Subject To The Statute Of Frauds ............................................................................. 183 7.4.3 Contracts Subject To The Uniform Commercial Code ............................................................. 185 7.4.4 Amendments Evidenced By The Conduct Of The Parties ........................................................ 186 7.4.5 Case Study: The Written Contract Is As Clear As Day--And It Was Reaffirmed In Writing--But It Can't Be Enforced In Light Of Neo-Modification ............................. 186 7.4.6 Case Study: An Alleged Oral Modification Of A Formal Contract Is Defeated By Summary Judgment ................................................................................................... 187 7.4.7 Case Study: With Uncertain Documentation, “Fervent” ........................................................... 188 7.4.8 Case Study: Clear Proofs........................................................................................................... 189 7.4.9 Point Summary .......................................................................................................................... 189

7.5 SUPERSEDING AGREEMENTS AS MODIFICATIONS ........................................................................ 190 7.5.1 In General .................................................................................................................................. 190 7.5.2 Effect Of Duress ........................................................................................................................ 191

7.6 NECESSARY PARTIES TO MODIFICATION ..................................................................................... 191

CHAPTER 8

THIRD-PARTY BENEFICIARIES

8.1 OVERVIEW .................................................................................................................................... 192 8.2 GENERAL CONSIDERATIONS ......................................................................................................... 193 8.3 THIRD-PARTY BENEFICIARY CONTRACTS UNDER NEW JERSEY LAW ......................................... 194 8.4 THE UNIFORM COMMERCIAL CODE AND THIRD-PARTY BENEFICIARIES .................................... 195 8.5 REMEDIES...................................................................................................................................... 196

8.5.1 Remedies Of The Promisee ....................................................................................................... 196 8.5.2 Remedies Of The Third-Party Beneficiary ............................................................................... 197

8.6 THE PROMISOR’S DEFENSES ......................................................................................................... 197 8.7 COMMON APPLICATIONS .............................................................................................................. 197

8.7.1 Construction Contracts .............................................................................................................. 197 8.7.2 Loans ......................................................................................................................................... 198 8.7.3 Public Contracts ........................................................................................................................ 198 8.7.4 Insurance ................................................................................................................................... 199 8.7.5 Agreements To Make A Will .................................................................................................... 200 8.7.6 Divorce Or Separation Settlements ........................................................................................... 201

8.8 RELATED DOCTRINES DISTINGUISHED ......................................................................................... 201 8.8.1 Trusts Or Fiduciary Duties ........................................................................................................ 201

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8.8.2 Novation .................................................................................................................................... 201 8.8.3 Assignment ................................................................................................................................ 202 8.8.4 Indemnity .................................................................................................................................. 203 8.8.5 Breach Of Warranty And Product Liability .............................................................................. 203

8.9 DRAFTING CONSIDERATIONS ........................................................................................................ 204 8.10 LITIGATION CONSIDERATIONS ...................................................................................................... 204

CHAPTER 9

ASSIGNMENT AND DELEGATION

9.1 OVERVIEW .................................................................................................................................... 206 9.2 ASSIGNMENT OF RIGHTS .............................................................................................................. 209

9.2.1 Requirements For A Valid Assignment .................................................................................... 209 A. In General .............................................................................................................................. 209 B. Form Of Assignment ............................................................................................................. 209

1. Contracts Subject To Uniform Commercial Code ............................................................. 210 2. Real Estate Contracts ......................................................................................................... 210 3 . Accounts Receivable ........................................................................................................ 210 4. Settlements ........................................................................................................................ 210

C. Immediacy Of Effect Of Transfer ......................................................................................... 213 D. Notice .................................................................................................................................... 214 E. Consideration ........................................................................................................................ 214

9.2.2 Rights Of The Assignee ............................................................................................................ 215 9.2.3 Limitations On Assignment ...................................................................................................... 216 9.2.4 Assignment Of Particular Rights ............................................................................................... 217

A. Expectancies .......................................................................................................................... 217 B. Wages .................................................................................................................................... 217 B. Lottery Winnings ................................................................................................................... 217 C. Causes Of Action................................................................................................................... 218

9.2.5 Defense And Counterclaims Of Promisor Against Assignee .................................................... 218 9.3 DELEGATION OF DUTIES .............................................................................................................. 219

9.3.1 In General .................................................................................................................................. 219 9.3.2 Limitations On Delegation ........................................................................................................ 220

9.4 BANKRUPTCY AND ANTITRUST ISSUES ........................................................................................ 221 9.5 DRAFTING CONSIDERATIONS ........................................................................................................ 221 9.6 LITIGATION CONSIDERATIONS ...................................................................................................... 221

CHAPTER 10

WARRANTIES, PERFORMANCE, AND BREACH OF CONTRACT

10.1 OVERVIEW .................................................................................................................................... 223 10.2 EXPRESS WARRANTIES ................................................................................................................. 224

10.2.1 In General................................................................................................................................. 224 10.2.2 Common Law Express Warranties .......................................................................................... 225 10.2.3 Uniform Commercial Code Warranties .................................................................................... 229

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A. Formation Of UCC Warranties ............................................................................................. 229 1. In General .......................................................................................................................... 229

B. Warranty Or Affirmation Of Fact Distinguished From Puffing Or Opinion ............................ 231 C. Sample Or Model .................................................................................................................. 234 D. Warranty Of Title To Goods ................................................................................................. 234 E. Statute Of Limitations ........................................................................................................... 236

10.2.4 Tolling The Contractual Statute Of Limitations; Including Due To Insanity ........................... 236 10.2.4.1 Practice Pointers On Insanity Tolling ................................................................................... 239

10.2.5 Case Study: Express Warranties ............................................................................................... 240 10.2.6 Other Statutory Warranties ....................................................................................................... 242

A. New Jersey’s “Lemon Law ................................................................................................... 242 B. The Magnuson-Moss Act ...................................................................................................... 242

10.3 IMPLIED WARRANTIES .................................................................................................................. 243 10.3.1 In General................................................................................................................................. 243 10.3.2 The Uniform Commercial Code .............................................................................................. 244

A. The Implied Warranty Of Merchantability ............................................................................ 244 1. In General .......................................................................................................................... 244 2. Merchant ........................................................................................................................... 245 3. Merchantability Standard .................................................................................................. 246

B. The Implied Warranty Of Fitness For A Particular Purpose.................................................. 246 1. In General .......................................................................................................................... 246 2. Non-Merchant ................................................................................................................... 247 3. The Seller’s Knowledge .................................................................................................... 247 4. Reliance ............................................................................................................................. 248 5. The Trade Name Exception ............................................................................................... 248

10.3.3 New Jersey Consumer Fraud Act............................................................................................. 249 10.3.4 Case Study: Business Use; Equitable Tolling; And CFA ......................................................... 252 10.3.5 Common Law Implied Warranties ............................................................................................ 252

10.4 DISCLAIMER OF WARRANTIES ..................................................................................................... 254 10.4.1 In General .................................................................................................................................. 254 10.4.2 Warranty Limitations ............................................................................................................... 254

A. Express Warranties ................................................................................................................ 254 B. Disclaiming The Implied Warranty Of Merchantability........................................................ 255 C. Disclaiming The Implied Warranty Of Fitness For A Particular Purpose ............................. 256

10.4.3 Defeating Disclaimers ............................................................................................................... 257 A. Conspicuousness ................................................................................................................... 257 B. Unconscionability ................................................................................................................. 257

10.5 LIMITATION OF REMEDIES AND DAMAGES .................................................................................. 258 10.5.1 In General................................................................................................................................. 258 10.5.2 Liquidated Damages ................................................................................................................ 259

A. In General .............................................................................................................................. 259 10.5.3 Contractual Modification Of Limitation Of Remedies ............................................................. 260

A. In General .............................................................................................................................. 260 B. Remedies In Addition To Or Substitution For Those Provided In Article 2 .......................... 260

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C. Types Of Limiting Provisions ............................................................................................... 261 D. Repair/Replacement .............................................................................................................. 262 E. Failure Of Essential Purpose ................................................................................................. 262 F. Consequential Damages ........................................................................................................ 264

10.6 TERMINATION FOR CONVENIENCE ............................................................................................... 266 10.7 WARRANTIES: DRAFTING CONSIDERATIONS ............................................................................... 266

10.7.1 In General................................................................................................................................. 266 10.7.2 Drafting Or Disclaiming Express Warranties .......................................................................... 267 10.7.3 Purchase Orders ....................................................................................................................... 267 10.7.4 Drafting Effective Warranty Disclaimers ................................................................................ 268 10.7.5 Drafting Effective Remedy And Damage Limitations ............................................................. 269

10.8 LITIGATION CONSIDERATIONS ...................................................................................................... 270

CHAPTER 11

IMPLIED TERMS

11.1 GENERALLY .................................................................................................................................. 272 11.2 COVENANT OF GOOD FAITH ......................................................................................................... 273

11.2.1 Case Study: Whitman V. Herbert: Best Efforts And The Cogf ................................................ 275 11.2.2 Mediated Settlement Agreements ............................................................................................ 276 11.2.3 Point Summary .......................................................................................................................... 276 11.2.4 Other Similar-Sounding Covenants .......................................................................................... 276 11.2.5 Case Study: Violation Of The Duty To Negotiate In Good Faith: ............................................ 276

CHAPTER 12

CONTRACT CONDITIONS

12.1 OVERVIEW .................................................................................................................................... 279 12.2 NATURE OF A CONDITION ............................................................................................................ 280 12.3 TYPES OF CONDITIONS ................................................................................................................. 281

12.3.1 Condition Precedent .................................................................................................................. 281 12.3.2 Conditions Subsequent ............................................................................................................. 282 12.3.3 Implied Conditions................................................................................................................... 283

12.4 SATISFACTION OF CONDITIONS .................................................................................................... 283 12.4.1 In General................................................................................................................................. 283 12.4.2 Substantial Performance .......................................................................................................... 284 12.4.3 Impossibility And Good Faith ................................................................................................. 285 12.4.4 The Franchise Practices Act ...................................................................................................... 286

12.5 NON-OCCURRENCE OF CONDITIONS ............................................................................................ 287 12.5.1 In General................................................................................................................................. 287 12.5.2 Excused Non-Occurrence .......................................................................................................... 288

12.6 DRAFTING CONSIDERATIONS ........................................................................................................ 290 12.7 LITIGATION CONSIDERATIONS ...................................................................................................... 291

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CHAPTER 13

PERFORMANCE, BREACH, AND EXCUSED NON-PERFORMANCE

13.1 OVERVIEW .................................................................................................................................... 293 13.2 PERFORMANCE AND BREACH ....................................................................................................... 296

13.2.1 In General................................................................................................................................. 296 13.2.1.1 Material Breach; Substantial Performance......................................................................... 296

13.2.1.2 Substantial Performance .................................................................................................... 297 13.2.1.2 First Material Breach .......................................................................................................... 300 13.2.1.3 Case Study: An Application Of The “First Material Breach” Rule:

Strong Justice Against Ostensible Diversion Of Funds Under “First Material Breach” Doctrine ...................................................................................................................... 301

13.2.2 Performance Due ..................................................................................................................... 301 A. In General .............................................................................................................................. 301 B. Duty To Comply With The Terms Of The Contract.............................................................. 302

1. Full Performance ............................................................................................................... 302 2. Satisfaction And Best Efforts Contracts ............................................................................ 302 3. Personal Contracts And Substituted Performance ............................................................. 305

C. Performance Of Contracts Subject To The UCC ................................................................... 306 1. In General .......................................................................................................................... 306 2. The Seller’s Duty: Tender Of Delivery ............................................................................. 306 3. The Buyer’s Duty And Rights ........................................................................................... 309

A. Payment And Inspection ................................................................................................ 309 B. Buyer’s Rejection And Seller’s Right To Cure ............................................................. 311

D. Implied Aspects Of The Performance Terms ........................................................................ 314 E. Time For Performance........................................................................................................... 316

13.2.3 Types Of Breach ...................................................................................................................... 318 A. Material Breach ..................................................................................................................... 318 B. Material Breach: Effect .......................................................................................................... 319 C. Compensation For Material Or Non-Material Breaches ....................................................... 319 D. Anticipatory Breach Or Repudiation ..................................................................................... 320 E. Executory Contracts .............................................................................................................. 323 F. Termination For Convenience ............................................................................................... 323 G. Tortious Breach ..................................................................................................................... 324 H. Bad Faith Breach ................................................................................................................... 325

13.3 EXCUSES FROM COMPLETE PERFORMANCE ................................................................................. 327 13.3.1 In General .................................................................................................................................. 327 13.3.2 Impossibility .............................................................................................................................. 328

A. In General .............................................................................................................................. 328 B. Objective Versus Subjective Impossibility ............................................................................ 328 C. Acts Of God .......................................................................................................................... 330 D. Impossibility Under The UCC ............................................................................................... 332

13.3.3 Frustration Of Purpose ............................................................................................................. 333 13.4 CANCELLATION OR ALTERATION OF CONTRACT TERMS ............................................................ 335

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13.4.1 In General................................................................................................................................. 335 13.4.2 Abandonment, Mutual Rescission, And Cancellation .............................................................. 335

A. Abandonment ........................................................................................................................ 335 B. Mutual Rescission And Cancellation .................................................................................... 341

13.4.3 Novation: Discharge By Superseding Contract ......................................................................... 342 13.5 WAIVER OF STRICT PERFORMANCE ............................................................................................. 344

13.5.1 Accord And Satisfaction .......................................................................................................... 344 13.5.1.1 Important New Case On Accord And Satisfaction .................................................................. 346

13.5.2 Release And Covenant Not To Sue ........................................................................................... 347 A. In General .............................................................................................................................. 347 B. Release .................................................................................................................................. 347 C. Covenant Not To Sue ............................................................................................................ 349

CHAPTER 14

DAMAGES AND OTHER REMEDIES FOR BREACH OF CONTRACT

14.1 OVERVIEW .................................................................................................................................... 350 14.2 COMMON LAW MEASURES OF RECOVERY ................................................................................... 351

14.2.1 Compensatorydamages.............................................................................................................. 351 A. In General .............................................................................................................................. 351 B. Calculating A Party’s Expectation Damages ......................................................................... 352 C. Lost Profits ............................................................................................................................ 355 D. Present Value ......................................................................................................................... 357 E. Medical Treatment ................................................................................................................ 358 F. Mental Suffering ................................................................................................................... 360

14.2.2 Reliance Damages ..................................................................................................................... 361 14.2.3 Restitution ................................................................................................................................ 362 14.2.4 Punitive Damages ...................................................................................................................... 364

14.3 LIMITATIONS ON RECOVERY ........................................................................................................ 364 14.3.1 The Contract............................................................................................................................. 364 14.3.2 Causation ................................................................................................................................... 364 14.3.3 Foreseeability ........................................................................................................................... 365 14.3.4 Certainty ................................................................................................................................... 366 14.3.5 Mitigation ................................................................................................................................. 367 14.3.6 Economic Loss Doctrine .......................................................................................................... 368

A. Background ........................................................................................................................... 368 B. Conclusion............................................................................................................................. 382 C. Other Applications Of The Economic Loss Doctrine ............................................................ 383

14.4 LIQUIDATED DAMAGES CLAUSES ................................................................................................. 385 14.4.1 In General................................................................................................................................. 385 14.4.2 Reasonableness .......................................................................................................................... 386

A. In General .............................................................................................................................. 386 B. Anticipated Or Actual Harm .................................................................................................. 387 C. Difficulty Of Proof ................................................................................................................ 387

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14.4.3 Circumstances Of The Case ..................................................................................................... 388 14.4.4 Fixed Amount .......................................................................................................................... 389 14.4.5 Language .................................................................................................................................. 390 14.5.1 Case Studies On Related Topics ............................................................................................... 390

14.5.1.1 Case Studies: Stipulations Of Settlement/Late Fees ........................................................... 390 14.5.1.2 Case Study: (1) Liquidated Damages, And (2) Lost-Volume Sellers .................................. 392 14.5 DAMAGES REMEDIES UNDER THE UCC ........................................................................................ 394

14.5.1 Introduction .............................................................................................................................. 394 14.5.2 Seller’s Damages ....................................................................................................................... 395

A. N.J.S.A. 12a:2-706 - Resale Damages ................................................................................... 395 B. N.J.S.A. 12a:2-708 - Market Damages And Lost Profits ....................................................... 395 C. N.J.S.A. 12a:2-709 - Action For The Price............................................................................ 396 D. N.J.S.A. 12a:2-710 - Incidental Damages ............................................................................. 397

14.5.3 Case Study: Seller Overcomes Missing Documentation To Recover For Goods, Special Orders, Finance Charges, And Attorneys Fees, But Not Collateral Storage Charges........................ 397 14.5.4 Buyer’s Damages ..................................................................................................................... 398

A. N.J.S.A. 12a:2-712 - Cover Damages .................................................................................... 398 B. N.J.S.A. 12a:2-713 - Market Damages .................................................................................. 399 C. N.J.S.A. 12a:2-714 - Nonconformity Of Accepted Goods .................................................... 400 D. N.J.S.A. 12a:2-715 - Incidental Damages ............................................................................. 401 E. N.J.S.A. 12a:2-715 - Consequential Damages ....................................................................... 401

CHAPTER 15

SPECIFIC PERFORMANCE OF A CONTRACT

15.1 OVERVIEW .................................................................................................................................... 403 15.2 THE ENFORCEMENT OF PERFORMANCE ....................................................................................... 404

15.2.1 Prerequisites ........................................................................................................................... 404 15.2.2 Effect Of Provision For Liquidated Damages........................................................................ 405

15.3 DEFENSES ...................................................................................................................................... 405 15.3.1 Delay: Waiver, Estoppel, Statute Of Limitations, Or Laches .................................................. 405 15.3.2 Case Study: What Was Probably A Fully Integrated Agreement Was ..................................... 406 15.3.3 Unclean Hands ......................................................................................................................... 408

15.4 PARTICULAR TYPES OF CONTRACTS ............................................................................................ 409 15.4.1 Real Estate ............................................................................................................................... 409 15.4.2 Personal Property ...................................................................................................................... 409 15.4.3 Output And Requirement Contracts .......................................................................................... 410 15.4.4 Service Contracts ...................................................................................................................... 410 15.4.5 Insurance ................................................................................................................................... 411 15.4.6 Arbitration ................................................................................................................................. 411 15.4.7 Arbitration Waiver: A Primer .................................................................................................... 412 15.4.8 Case Study: Arbitration Waiver Will Not Be Lightly Found .................................................... 414 15.4.9 Under A Broad Arbitration Clause, Everything Except The Validity Of That Clause Is Arbitrable ......................................................................................................... 415

15.4.9.1 Threshold Determination Of Arbitration ............................................................................ 415

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15.4.9.2 Case Study: Outcome Unpredictable When One Related Agreement Calls For Arbitration, And Others Do Not ................................................................... 416 15.4.9.3 Case Study: Wolf V. Galex: When Are Basic Contract-Formation Issues For The Court In An Arbitration Setting; When Is A Settlement Conditional, And When Is It Binding? ............................................................................................. 417 15.4.9.4 Case Study:Arbitration Clause Ostensibly Applicable To Components Of Transaction May Not Apply To Master Agreement ................................................. 418 15.4.9.5 Case Study: Can Parties Agree To Waive The Right To Appeal From An Arbitration Award? ................................................................................................... 421 15.4.9.6 Case Study:The Intersection Of Arbitration Law And The Consumer Fraud Act ........... 423 15.4.9.7 Case Study: Arbitration Clause Not Applied Retroactively Even To Related Entity ................................................................................................................ 424 15.4.9.8 Case Study: Who Are “Agents” For Arbitration Purposes, And When Can Agent Claims Be Forced Into Arbitration? ................................................................. 425 15.5 VARIATIONS ON THE ENFORCEMENT OF PERFORMANCE ............................................................ 425

15.5.1 In General................................................................................................................................. 425 15.5.2 Additional Or Incidental Relief ............................................................................................... 426

15.5.2.1 Damages ............................................................................................................................ 427

CHAPTER 16

THE EQUITABLE REMEDIES OF REFORMATION, RESCISSION, AND RESTITUTION; FURTHER REMEDIES OF INJUNCTION AND DECLATORY JUDGMENT

16.1 OVERVIEW .................................................................................................................................... 428 16.2 REFORMATION .............................................................................................................................. 429

16.2.1 When Reformation Is Appropriate ............................................................................................ 429 A. In General .............................................................................................................................. 429 B. Mutual Mistake Of Fact ......................................................................................................... 429 C. Unilateral Mistake Involving Fraud Or Unconscionability ................................................... 430 D. Mistake Of Law ..................................................................................................................... 431

16.2.2 Unilateral Mistake Without Fraud ............................................................................................. 431 16.2.3 Burden Of Proof ........................................................................................................................ 432 16.2.4 Election Of Remedies .............................................................................................................. 433 16.2.5 Standard Of Review On Appeal ............................................................................................... 433

16.3 RESCISSION ....................................................................................................................................... 434 16.3.1 When A Contract May Be Rescinded ...................................................................................... 434

A. Mutual Agreement ................................................................................................................. 434 B. Fraud Or Misrepresentation ................................................................................................... 434 C. Material Breach ..................................................................................................................... 435 D. Invalidity Of Contract ........................................................................................................... 435

1. Illegality Of The Contract ................................................................................................. 435 2. Duress And Mental Incapacity .......................................................................................... 436

E. Unilateral Mistake ................................................................................................................. 437 F. Failure Of Consideration ....................................................................................................... 438

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G. Mutual Mistake ..................................................................................................................... 438 16.3.2 Requirements For Rescission .................................................................................................... 439

A. In General .............................................................................................................................. 439 B. Clear Notice........................................................................................................................... 440 C. Reasonable Time ................................................................................................................... 440 D. Status Quo Ante..................................................................................................................... 441 E. Clean Hands .......................................................................................................................... 441

16.3.3 Statutory Provisions Regarding Rescission ............................................................................. 441 A. The UCC Generally ............................................................................................................... 441 B. The UCC’s Fraud Exception ................................................................................................. 442 C. Door-To-Door Home Repair Sales Act ................................................................................. 443

16.4 RESTITUTION ................................................................................................................................. 444 16.4.1 In General .................................................................................................................................. 444 16.4.2 Elements .................................................................................................................................... 444

A. In General .............................................................................................................................. 444 B. Lack Of An Enforceable Contract ......................................................................................... 444 C. Unjust Enrichment ................................................................................................................. 445

16.4.3 Measure Of Restitution ............................................................................................................ 447

CHAPTER 17

QUASI-CONTRACT AND CONTRACT-SUBSTITUTE CLAIMS

17.1 GENERALLY .................................................................................................................................. 449 17.1.1 Contract Law & Business Torts ................................................................................................. 449 17.1.2 Quasi-Contract .......................................................................................................................... 450 17.1.3 Case Study: Interplay Among Concepts Of (1) Express Contract, (2) Contract-Substitute Claims Such As Quantum Meruit; (3) Breach Of Covenant Of Good Faith; And (4) Punitive Damages ................................................................... 451 17.1.4 Case Study: Minuto V. Genesis ................................................................................................ 453

17.2 RECAP: QUASI-CONTRACT CLAIMS AND CONTRACT-SUBSTITUTE CLAIMS ................................ 454 17.3 OTHER PARTY’S PROFESSIONALS ................................................................................................. 454

17.3.1 Breach Of Contract By A Professional May Not Be Shielded By The Corporate Veil ........ 455 17.3.1.1 Proactive Considerations .................................................................................................... 455 17.3.1.2 Case Example: Brant Screen .............................................................................................. 456

17.3.2 Case Study: Contract-Substitute Claims Forbidden Where Contract Clearly Pleaded ............. 457 17.3.3 Case Study: Equitable Fraud (Sometimes Sub Silentio) ........................................................... 457 17.3.4 Case Study: Suarez V. Eastern International College ............................................................... 459

17.4 CASE STUDY: CONTRACT-SUBSTITUTE CLAIM AGAINST COMPANY’S PRINCIPAL ...................... 461 17.5 CASE STUDY: SHOULD QUASI-CONTRACTUAL RELIEF BE AVAILABLE WHEN A STATUTE PRECLUDES COLLECTING ON A CONTRACT? .......................................................................... 463 17.6 ALTER EGO CLAIM LIMITATIONS ................................................................................................. 463 17.8 CASE STUDY: BREACH OF CONTRACT CLAIM CAN ALSO ENTAIL COPYRIGHT AND JOINT VENTURE ISSUES ........................................................................................................................ 465

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CHAPTER 18

SPECIAL CONTRACT SETTINGS

18.1 SOME TYPES OF CONTRACTS ARE SUI GENERIS .......................................................................... 467 18.2 GOVERNMENT CONTRACTS .......................................................................................................... 468

18.2.1 Case Study: Governmental-Settlement Uncertainties ............................................................... 468 18.2.2 Case Study: Another Risk Of Enforcing A Governmental Contract: Potentially Violating The Bidding Statutes ......................................................................................... 470 18.2.3 Contract Applicators V. Park Ridge: Sui Generis Contract Issues Involving Government (And Construction) ....................................................................................... 470

18.3 CASE STUDY: AN INSTRUCTIVE OPINION ON (1) PERFORMANCE "UNDER PROTEST\ .................. 471 18.4 SETTLEMENTS: GENERALLY ......................................................................................................... 472

18.4.1 Case Studies: Rutigliano And Willingboro ............................................................................... 473 18.5 AN INSTRUCTIVE OPINION WITH MANY TWISTS AND TURNS REGARDING ................................. 475

CHAPTER 19

PRINCIPLES OF CONTRACT DRAFTING

19.1 INTRODUCTION ............................................................................................................................. 477 19.1.1 Legal And Tax Issues ................................................................................................................ 479

19.2 CONTRACT STRUCTURE ................................................................................................................ 479 19.3 PRELIMINARY CONSIDERATIONS .................................................................................................. 480

19.3.1 Client Attitudes Toward Contracts ............................................................................................ 480 19.3.2 The Preliminary Client Conference ........................................................................................... 482 19.3.3 Preliminary Documents: Letters Of Intent ............................................................................... 485 19.3.4 The First Draft ........................................................................................................................... 485 19.3.5 Forms And Checklists ............................................................................................................... 487

19.4 PRINCIPLES OF DRAFTING ............................................................................................................ 488 19.4.1 Clarity ........................................................................................................................................ 488 19.4.2 Completeness ............................................................................................................................ 490 19.4.3 Case Study: Formalities Count When Transferring Stock ........................................................ 491 19.4.4 Consumer Contracts: New Jersey’s Plain Language Act ......................................................... 491

19.5 SUBSEQUENT DRAFTS OF THE CONTRACT ................................................................................... 492 19.5.1 The Lawyer’s Role ................................................................................................................... 492 19.5.2 Negotiation Strategy .................................................................................................................. 493

19.6 TYPICAL CONTRACT STRUCTURES ............................................................................................... 494 19.6.1 Structure .................................................................................................................................... 494

19.6.1.1 Building Blocks ................................................................................................................. 494 19.6.2 Recitals ...................................................................................................................................... 498 19.6.3 Subject Matter ........................................................................................................................... 499 19.6.4 Consideration ............................................................................................................................ 499 19.6.5 Warranties And Representations .............................................................................................. 500 19.6.6 Risk Allocation .......................................................................................................................... 502 19.6.7 Condition ................................................................................................................................... 502

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19.6.8 Performance ............................................................................................................................. 503 19.6.9 Dates And Term ........................................................................................................................ 506 19.6.10 Boilerplate ............................................................................................................................... 507

A. The ‘Boilerplate’ Misnomer .................................................................................................. 507 B. Choice Of Law ...................................................................................................................... 507 C. Arbitration Clause ................................................................................................................. 508 D. Attorneys Fees ....................................................................................................................... 512 E. Severability ........................................................................................................................... 513 F. Choice Of Venue ................................................................................................................... 514 G. Other Adr .............................................................................................................................. 515 H. The Irrelevancy Of Headings ................................................................................................ 515 I. Integration Clause .................................................................................................................. 515 J. No Oral Modification ............................................................................................................ 516 K. Force Majeure ....................................................................................................................... 516 L. Jury Trial Waivers ................................................................................................................. 518 M. Boilerplate Forms In General ................................................................................................ 518

19.6.11 Signatures ................................................................................................................................. 524 19.6.12 Interrelated Documents ........................................................................................................... 526

A. Overview ............................................................................................................................... 526 B. Special Case: Cover Letters ................................................................................................... 527

19.7 FURTHER ANALYSIS OF ARBITRATION CLAUSES ......................................................................... 527 19.7.1 Introduction ............................................................................................................................... 527 19.7.2 Case Study: Class-Action Issues Arising From Arbitration Agreeements ................................ 528 19.7.3 Arbitration Pros And Cons ........................................................................................................ 528 19.7.4 Determining The Type Of Arbitration Clause To Include ........................................................ 530 19.7.5 Choices In Drafting Arbitration Clauses ................................................................................... 530 19.7.7 More Sample Arbitration Clauses ............................................................................................. 531 19.7.8 Arbitration Of Employment Claims .......................................................................................... 533

19.7.8.1 Garfinkel ............................................................................................................................. 533 19.7.8.2 Aaa Rules, Etc. ................................................................................................................... 533 19.8 EMPLOYMENT CONTRACTS: SPECIAL CONSIDERATIONS ............................................................. 534 19.9 PRENUPTIAL AND PALIMONY AGREEMENTS: SPECIAL CONSIDERATIONS ................................... 535

19.9.1 Standard Prenuptial And Palimony Agreements ....................................................................... 535 19.9.2 Drafting Prenuptial And Palimony Agreements ....................................................................... 537

CHAPTER 20

LITIGATING CONTRACT DISPUTES

20.1 OVERVIEW .................................................................................................................................... 538 20.2 PRE-FILING INVESTIGATION ......................................................................................................... 538

20.2.1 Factual Investigation ................................................................................................................. 539 20.2.1.1 A Litigating Entity Requires Counsel ...................................................................................... 540

20.2.2 Witnesses................................................................................................................................... 540 20.2.3 Documents................................................................................................................................. 541 20.2.4 Initial Legal Research................................................................................................................ 541

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20.3 PRE-FILING ISSUES ........................................................................................................................ 544 20.3.1 Pre-Filing Settlement Possibilities ............................................................................................ 545 20.3.2 Choice Of Forum ....................................................................................................................... 548 20.3.3 Case Studies: Where To Sue On Contract Issues ...................................................................... 551 20.3.4 Removal .................................................................................................................................... 554 20.3.5 Choice Of Law .......................................................................................................................... 554

20.4 APPEALS ........................................................................................................................................ 555 20.4.1 Case Study: Contractual Attorneys Fees: When To Appeal ...................................................... .555

20.5 CONCLUSION ................................................................................................................................. 556

INDEX .......................................................................................................................................................... 557