Contracts Full Outline

Theories of Obligation
Agreement with Consideration
Promissory Estoppel
Unjust Enrichment
Promises for Benefit Received
Issues
Employment Contracts
Who breached?
Statute of Frauds?
Consideration
Mitigation
At-will?
Was there promissory estoppel?
Mutuality?
Construction Contracts
When did it occur?
Consideration?
Material Breach?
Remedy Available
Limitation on Remedy
Liquidated damages clause?
Foreseeability?
Reasonable Certainty?
Unfair Forfeiture (for minor breaches, ancillary breaches)
Damages
General
Consequential/Incidental
Sale of Goods Contracts
Who breached?
Statute of Frauds?
Consideration?
Remedy Available
Limitations of Remedy
Acceptance of Goods?
Mitigation? Cover?
Liquidated Damages?
Specific Performance?
 Foreseeability?
Sale of Land
Who breached?
Statute of Frauds
Consideration?
Remedy Available
Specific performance?
Foreseeability?
Promissory Estoppel Case
Sufficient PromEstop?
1. A promise which
2. the promisor should reasonably expect to induce action or forbearance
3. on the part of the promisee or a third person
4. and which does induce such action or forbearance
5. is binding IF
6. injustice can be avoided
7. ONLY by enforcement of the promise.
8. Remedy granted may be limited as justice requires
Limitations On Recovery
Reasonably Certainty in Profits?
Foreseeability?
Unjust Enrichment
Benefit conferred?
Unjust for D to keep?
Was promise made after benefit was conferred?
Remedies - Which to choose?
Lost expectancy
Must use contract
Must be able to prove expected profits with reasonable certainty
Limited by contract price (even if market value would have been higher)
Reliance
Restatement 90 - substitute as consideration, sue under K
PromEstop - reliance only
Value of benefit conferred
Cannot use if there has been substantial performance
Can exceed original contract price (so see if you can use market value instead to gain higher
profit)
If breach was willful, intentional, or malicious, likely cannot recover anything under quasi-
contract
Contract
Definition:
promise or set of promises for the breach of which the law gives a remedy or performance of
which the law in some way recognizes as a duty.
 promise or set of promises for the breach of which the law gives a remedy or performance of
which the law in some way recognizes as a duty.
Types of Contracts
As to Formation
Express K
formed by language, oral or written
Implied in Fact
formed by manifestations of assent, other than oral or written language
example- by conduct
person sits down in barber chair, barber cuts hair, person pays for haircut
Quasi-Contract or Implied in Law
not really a contract at all
constructed by courts to avoid unjust enrichment
permits P to bring action in restitution to recover the amount of the benefit conferred on the D
As to Validity
Void
one that is totally without any legal effect from the beginning
cannot be enforced by either party
example - contract to commit a crime
Voidable
one that one of both parties may elect to avoid
do so by raising a defense that makes it voidable
ex - infancy or mental illness
Unenforceable
agreement that is otherwise valid but which may not be enforceable due to various defenses extraneous to
the contract formation
ex. Statute of Frauds
Acceptance
Output Contracts
quantity of goods is left open-ended on the understanding that the quantity to be supplied
under the K will be determined either by the buyer's requirements or the seller's output
Reasons for Output Contracts
Seller is confident that it can produce enough to satisfy the buyer's demands, and the buyer is unsure of its
exact needs and wishes to avoid the risk of ordering a specified quantity which may turn out to be short or
excessive.
Seller wishes to dispose of its full production in one transaction and the buyer is confident that it can use
all that the seller can supply
Mutuality is derived from an implied obligation of good faith or reasonableness
Option Contracts
promise to keep an offer open (not revoke it) for a specified period of time.
must have consideration and must be binding on the promisor
option contract is granted to induce the grantee to enter a contract desired by the grantor, the common
law more readily accepts nominal consideration to validate options.
 GOOD FAITH definition
Honesty in fact in the conduct or transaction
Merchants held to higher standard of good faith
conduct is evaluated in light of what would be considered fair in the context
Conditional Contracts
If the contingency is an uncertain future event within realm of possibility and outside the
complete and discretionary control of the promisor, the it is genuine and can be seen as
consideration.
Legal detriment is suffered - promisor has bound his future in some way
Detriment of binding oneself on the happening of an uncertain future event outside one's control.
Creation of Contract
When a suit is brought in which one party seeks to enforce a K or obtain damages for
breach, a court must first decide whether there was in fact a K.
Ask 3 questions:
was there mutual assent?
was there consideration or some substitute for consideration?
are there any defenses to creation of the contract?
Common Law v. Article II Sale of Goods
Generally, common law governs contracts
Article 2 of the Uniform Commercial Code governs sale of goods
sale is where goods pass from one person to another
goods are movable things
if K involves goods and nongoods, court will determine which aspect is dominant and apply it
to the contract as a whole
some rules only apply is the seller/buyer is a merchant
Mutual Assent - Offer and Acceptance
In General
same bargain at same time (meeting of the minds)
court uses objective measure to determine - each party is bound to the apparent intention of
the other
The Offer
To be an offer, must create a reasonable expectation in the offeree that the offeror is willing to
enter into a contract on the baiss of the offered terms.
To decide this, ask:
Was there an expression of a promise, undertaking, or commitment to enter into a contract?
(must be intent to enter into K)
Language
Surrounding Circumstances
Prior Practice and Relationship of the Parties
Method of Communication
use of broad communicating media will likely have the courts find the communication as mere
solicitation
 advertisements are usually invitations for offers, but sometimes courts have seen them as offers
Industry Custom
generally accepted custom in the industry
Were there certainty and definiteness in the essential terms?
Were enough of the essential terms provided so that the K would be capable of being enforced?
Should include:
identity of the offeree
To be considered an offer, statement must sufficiently identify the offeree or a class to which she
belong to justify the inference that the offeror intended to create a power of acceptance
subject matter
must be certain bc court can only enforce promise if they can tell with reasonable certainty what
the promise is
1. Real estate - must identify land and price terms
2. Sale of goods - quantity must be certain
Requirement and output - quantity capable of being ascertained by referring to objective
extrinsic facts
Reasonable range of choices - allowable
3. Services - nature of the work to be performed is required in offer for services
If terms are missing, court may supply reasonable terms if it appears parties intended to make a
K.
terms will be supplied only where they are consistent with parties' intent
note: the more the parties' left open, the less likely it is that they
intended to enter into binding agreement
price to be paid
Except in K for real property, failure to state the price does not prevent formation of a K if parties
intended to form a K without the price being settled.
Vague Terms
Presumption of reasonable term to supply missing term cannot be used if parties have
included a vague term.
ex. "divide profits liberally"
Vagueness can be cured by:
part performance
uncertainty can be cured by acceptance

promise is still enforceable even if it does not spell out every material term as long as it contains
some objective standard
Was there communication of the above to the offeree?
offeree must have knowledge of the offer
Termination of Offer
Must establish whether the offer has been terminated, and if so, in what fashion
1. Termination by Acts of Parties
 Offeror - Revocation
Revocation is the retraction of an offer by the offeror. Revocation terminates the offeree's
power of acceptance if it is communicated to her BEFORE SHE ACCEPTS
Communication
1. Direct
publication
2. Indirect
offeree must receive
1. correct information
2. from a reliable source
3. of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes
to make the offer
Effective When Received
Revocation is generally effective when received by the offeree. When by publication, it's effective when
published.
Limitations
Option Contract
An option is a distinct contract in which the offeree gives consideration for a promise by the offeror not
to revoke an outstanding offer.
Example: An offeror offers to sell her farm - Blackacre- to an offeree for $1million and promises to keep
the offer open for 90 days if the offeree pays the offeror $1000 to keep the offer open. If the offere pays
the offeror $1000, an option contract is formed and the offeror must keep the offer open.
Compare: An offeror offers to sell her farm - Blackacre- to an offeree for $1million and promises to
keep the offer open for 90 days. Because there is no consideration to make enforceable the promise to
keep the offer open, the offeror may terminate her offer at any time despite her promise.
Merchant's Firm Offer Under Article 2 (2-205)
If a merchant
offer to sell goods in signed writing and
the writing gives assurance that it will be held open (specificity in time)
the offer is not revocable for lack of consideration during the time stated, or if no time is stated, for a
reasonable time (but in no event may such a period exceed three months)
Detrimental Reliance
Where the offeror could reasonable expect that the offeree would rely to her detriment on the offer,
and the offeree does so rely, the offer will be held irrevocable as an option contract for a reasonable
length of time.
Part Performance
An offer for a true unilateral contract 15
The Acceptance
Acceptance is a manifestation of assent to the terms of an offer.
Offeree exercises the power given her by the offeror to create a contract.
Who May Accept
1. Party to Whom Offer Is Addressed or Directed
 generally, only the person to whom the offer is addressed has the power of acceptance.
one may also have the power of acceptance if she is a member of the class to which an offer
has been directed.
if the offer has been made to the general public, anyone may qualify as an offeree.
If the offer requests the performance from an unlimited number of persons, performance by
anyone knowing of the offer will cut off the power of every other person to accept, provided
that the offeror desires only one performance and there is no indication that he is willing to
pay more than once.
2. Offeree's Power of Acceptance Cannot Be Assigned
Unlike rights under an existing contract, the offeree's power of acceptance cannot be assigned.
1. Exception: Option contracts
an exception exists for the right to accept under an option contract, becuase the power to accept is itself a
contract right in these contracts, and contract rights generally as assignable.
Offeree Must Know of Offer
Offeree must know of the offer in order to accept, and this is whether the offer is for bilateral or
unilateral contract
Acceptance of Offer for Unilateral Contract
If an offer provides that it may be accepted only by performance, rules apply:
1. Completion of performance
most courts hold that an offer to form a unilateral contract is not accepted until performance is completed.
Beginning of performance may create an option so that the offer is irrevocable. However, the offeree is not
obligated to complete perofrmance merely because he has begun performance, as only complete
performance constitutes an acceptance of the offer.
2. Notice
generally, the offeree is NOT required to give the offeror notice that he has begun the requested
performance, but is required to notify the offeror within a reasonable time after performance has been
completed. If a required notice is not given, a contract is formed, but the offeror's duties are discharged for
failure of an implied condition subsequent. However no notice is required if:
1. the offeror waived notice; or
2. the offeree's performance would normally come to the offeree's attention within a reasonable
time.
3. Compare - Article 2
Article 2 has a slightly different rule regarding notice, although the end result is basically the same. It
provides that when a contract is accepted by the beginning of performance, if the offeree fails to notify the
offeror of the acceptance (i.e. the beginning of performance rather than the completion of performance)
within a reaosnable time, the offeror may treat the offer as having lapsed before acceptance (i.e. no
contract was ever formed, as opposed to Restatement view that a contract was formed but performance is
excused by failure of a condition)
Acceptance of Offer for Bilateral Contract
Unless an offer specifically provides that it may accepted only through performance, it
will be construed as an offer to enter into a bilateral contract and may be accepted either
by a promise to perform or by the beginning of performance.
Generally, Acceptance Must be Communicated
1. Exception: Waiver in Offer
If an offer provides that acceptance need not be communicated, then no communication of the
acceptance is required
2. Silence as Acceptance
Although offeree cannot be forced to speak under penalty of having her silence treated as acceptance, if
the offeree silently takes offered benefits, the courts will often find an acceptance. This is especially true if
prior dealings between parties, or trade practices known to both, create a commercially reasonable
expectation by the offeror that silence represents an acceptance. In such a case, the offeree is under a duty
to notify the offeror if she does not intend to accept.
Method of Acceptance
Unless otherwise provided an offer is construed as inviting acceptance in any reasonable
manner and by any meidum reasonable under the circumstances. Any objectives manifestation
of the offeree's counterpromise is usually sufficient
1. Act as Acceptance
The offeror is the master of her offer and may require an act to signify acceptance.
2. Offers to Buy Goods for Current or Prompt Shipment
Under Article 2, an offer to buy goods for current or prompt shipment is construed as
inviting acceptance either by a promise to ship or by current or prompt shipment of
conforming or nonconforming goods.
1. Shipment of non-conforming goods
The shipment of non-conforming goods is an acceptance creating a bilaterla contract as well as a
breach of the contract unless the seller reasonably notifies the buyer that a shipment of nonconforming
goods is offered only as an accommodation. The buyer is not required to accept accommodation
goods and may reject them. If he does, the shipper is not in breach and may reclaim the
accommodation goods because her tender does nto constitute and acceptance of the buyer's original
offer.
Acceptance Must Be Unequivocal
Traditional contract law insisted on an absolute and unequivocal acceptance of each and every
term of the offer (mirror image rule)
1. Common Law Rule
Any different or additional terms in the acceptance make the response a rejection and a counteroffer
1. Distinguish - Statements that make implicit terms explicit
does not prevent acceptance
2. Distinguish - Grumbling Acceptance
effective acceptance as long as it stop short of actual dissent
3. Distinguish - Request for clarification
does not necessarily amount to a rejection and counteroffer
2. Article 2 Rule - Battle of the Forms Provision
Article 2 has abandoned the mirror image rule, providing instead that the proposal of additional or
different terms by the offeree in a definite and timely acceptance does not constitute a rejection and
counteroffer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional
on assent to the additional or different terms. Whether the additional or different terms become part of the
 counteroffer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional
on assent to the additional or different terms. Whether the additional or different terms become part of the
contract depends on whether or not both parties are merchants.
Bilateral Contracts Formed by Performance
Sometimes in business, a contract is not formed by the parties' communications, either
becuase (1) the mirror image rule is not satisfied or (2) in a contract for the sale of goods, the
original offeror's form contains a clause objecting in advance to any new or inconsistent
term and the offeree sends a response with new or different terms that states it is not an
acceptance unless the original offeror agrees to these terms. Clearly no contract is formed at
this point. BUT , as is sometimes the case, if the parties begin to perform as if they formed a
contract, a contract is formed.
RATIONALE: At common law, the last communication sent to the party who performed is
considered a counteroffer. In contracts for the sale of goods, Article 2 provides that conduct
by both parites that recognizes the existence of a contract is sufficient to establish the
contract.
Consideration
The Leading Theory - Bargained-for change in legal position between the parties (i.e.
valuable consideration).
While substitute doctrines may permit enforcement of an agreement, only the presence of
valuable consideration on both sides of teh bargain will make an executory bilateral contract
fully enforceable from the moment of formation.
Consideration is the price for enforceability in the courts.
Restatement (First) of Contracts Rule
Consideration for a promise is
an act other than a promise
a forebearance
the creation, modification, or destruction of a legal relation
a return promise, bargained for, and given in exchange for the promise
Fuller, Consideration and Form
Consideration is "for the sake of evidence" and is intended to remove mistaken or perjured
testimony
Promises are not enforceable because they often lack proper deliberation and are made
impulsively.
objection relates not to the content and effect of the promise,but to the manner in which it
was made
Functions performed by legal formalities
Evidentiary - K is the evidence and if it signed by the person denying the K, there is good
evidence this is an enforceable K. Writing is more reliable than oral recollections.
Cautionary - require a formal step which enables a deliberation and have time for parties to
consider consequences to prevent inconsiderate engagements
Channeling - if parties go ahead and put their agreement in writing, they are more apt to
think about other possibilities and other terms to include int heir agreement. Leads us to
come up with a more complete and full agreement.
 think about other possibilities and other terms to include int heir agreement. Leads us to
come up with a more complete and full agreement.
Cardozo
The promise and consideration must purport to be the motive for each other, in whole or at
least in part.
Courts and Consideration
Consideration is often used to determine the legitimacy of a transaction
Used by courts to serve the purpose of policing bargaining behavior - preventing advantage-
taking, unfair dealing
Lack of consideration only means you cannot recover under a contract. There are other
remedies to recover under instead
CaseLaw
Hardesty v. Smith Rule:
The doing of an act by one at the request of another, which may be a detriment or
inconvenience, however slight, to the party doing it, or may be a benefit, however slight,
to the party at whose request it is performed, is a legal consideration for a promise by such
a requesting party.
When a party gets all the consideration he honestly contracted for, he cannot say he gets
no consideration or that it has failed.
Doughetery v. Salt Rule:
Promise without consideration is not enforceable.
Nothing is consideration that is not regarded as such by both parties
Aunt gave promissory note of $3000 to nephew. Dies. Nephew wants to collect from estate. Cannot
collect - no contract, simply gratuitous gift, there was no consideration or bargaining.
Stonestreet v. Southern Oil Rule:
When one receives a naked promise and such promise is not kept, he is no worse off than
he was before the promise was made. He gave nothing for it, loses nothing by it, and upon
its breach, he suffers no recoverable damages.
Maughs v. Porter Rule
Must have legal purpose in conjunction with consideration
Sufficient consideration was present because on one side, Maughs was promised a car and
on the other side, Porter by advertising the giveaway had more people come to the auction
and while some may have just come for the drawing, many may have bid on items.
Hamer v. Sidway Rule
Giving up lawful freedom to do as you wish is a form of consideration
He had given up something in return for the $5000 he was to receive. Thus K was
enforceable and was not considered simple promise or gift
Baehr v. Penn-o-Tex Oil Rule
Forbearance of a suit made in "good faith" can be grounds for consideration
But, in this case, the P seemed to not file immediately out of convenience, not one our of
necessity, so it doesn't count as consideration
Springstead v. Nees Rule
 Must have right to what you are promising for it to be consideration
Ps never had rights to Atlantic Ave because deed was left for Ds and forbearance of a claim
to such property was never shown
Dyer v. National By-Products Rule
Forbearance of litigation is enough to constitute consideration, even if said litigation is
invalid as long as such forbearance was done in good faith
(fact that invalidity of the claim is obvious may indicate it was not made in good faith
however)
Consideration Elements
1. Bargained-for exchange (agreed to exchange)
quid pro quo for the promise could be furnished by a detriment to the promisee or a benefit to
the promisor
benefit can be seen as simply "getting what one bargained for"
motive does not need to be shown or investigated, as long as it is apparent that the intention was to
exchange promise for promise
requires that promise induce the detriment and the detriment induce the promise.
legal detriment is any relinquishment of a legal right
not necessarily harm, just the yielding of a legal right
can take the form of an immediate act, a forbearance, or the partial or complete abandonment of an
intangible right or a promise to act, forbear, or abandon in the future
must limit my future in some way
BOTH ELEMENTS MUST BE PRESENT
1. Gift are not consideration
Conditions of gifts are not consideration
EX: Al says, "If you walk over to my car, I'll give you my skis" Even though Buster has given up his legal
right to remain where he stands, this detriment seems incidental to Al's promise." There's no evidence
to help us reasonably understand that Al was so desirous of having Buster walk to the lot that he felt it
was worth promising him skis to induce him to do it
2. Act or Forbearance by Promisee Must be Of Benefit to Promisor
It is not enough that the promisee incurs detriment; the detriment must be the price of the exchange, and
not merely fulfillment of certain conditions for making the gift.
The test is whether the act or forbearance by the promisee would be of any benefit to the promisor. In
other words, if the promisor's motive was to induce the detriment, it will be treated as consideration. If
motive was no more than to state a condition of a promise to make a gift, there is no consideration
3. Economic Benefit Not Required
the benefit to the promisor need no have economic value. Peace of mind or the gratification of
influencing the mind of another may be sufficient to establish bargained-for consideration, provided that
the promisee is not already legally obligated to perform the requested act
4. Past or Moral Consideration
General Rule - not sufficient - If something was already given or performed before the promisee was made,
it will not satisfy the bargain requirement. The courts reason that it was not given in exchange for the
promise when made.
 Ex. Al agrees to sell Buster his skis for $100. A week later, Al says he wants to sell the skis for $150.
Even if Buster accepts the new price, it is not binding because Al has not offered anything new in
exchange (no new consideration)
Exception - supervening difficulties affect the basic assumption under which the K was made -
courts will generally find the modification enforceable since the modification was likely to have
been an attempt to take into account the unexpected burden
Exceptions
1. Debt Barred by a Technical Defense
If a past obligation would be enforceable except for the fact that a technical defense to enforcement
stands in the way (statute of limitations) courts will enforce a new promise if it is in writing or had
been partially performed. However, courts will only enforce the contract only to the extent of the
new promise.
2. Promise to Pay Arising Out of Past Material Benefit (Material Benefit Rule)
Some courts will enforce a promise if it is based on a material benefit that was preivously conferred
by the promisee on the priomisor and if the promisee did not intend to confer the benefit as a gift.
This includes situations in which the promisee perofmraned an act at the primosor's request or
perofrmed an unrequested act during an emergency. Restatement follows rule except to the etext it
is disproportionate to the benefit conferred.
2. legal value
the detriment element is emphasized in determining whether an exchange contains legal value
Adequacy of Consideration
courts of law normally will NOT inquire into the adequacy of consideration. If a party
wishes to contract to sell an item of high market value for a relatively low price, so be it.
However, courts of equity may inquire into relative values and deny an equitable remedy if
they find the K to be unconscionable. (sufficiency)
HOWEVER - if it appears that the unbalance in value was caused by fraud, duress, unconscionability, or
mistake, they will not enforce it - not fairly bargained for
1. Token Consideration
If the consideration is only token (something entirely devoid of value), it will usually not be legally
sufficient. The courts reason that this indicates a gift rather than a bargained-for consideration.
2. Sham Consideration
Parties to a written agreement often recite that it was made in consideration of $1 of some other
insignificant sum. Frequently, this recited sum was not in fact paid and indeed it was never intended to be
paid. Most courts hold that evidence may be introduced to show that the consideration was not paid and
no other consideration was given in its stead.
3. Possibility of Value
Where there is a possibility of value in the bargained-for act, adequacy of consideration will be found
even though the value never comes into existence.
Legal Benefit and Legal Detriment Theories
1. Majority Rule
Detriment to the promisee in performing an act or making a promise is the exclusive test of consideration.
The fact that this act or promise may confer a legal benefit on the other party, taken alone, is not sufficient
consideration.
 The fact that this act or promise may confer a legal benefit on the other party, taken alone, is not sufficient
consideration.
2. Minority and First Restatement
Either detriment or benefit to the party will suffice
3. Second Restatment
Where something was bargained for and given in exchange - only question asked
4. Detriment and Benefit Defined
Legal Detriment to Promisee
Legal detriment will result if the promisee does something he is under no legal obligation to do or
refrains from doing something taht he has a legal right to do. It is important to remember that the
tdetriment to the promisee need not involved any actual loss to the promisee or benefit to the
promisor.
Legal Benefit to the Promisor
Reverse side of legal detriment. It is forbearance or performance of an act by the promisee which the
promisor. IOW, it is forbearance or performance of an act by the promisee which the promisor was not
legally entitled to expect or demand, but which confers a benefit on the promisor
Specific Situations
1. Preexisting Legal Duty
1. General Rule - promise to perform an existing legal duty will not be sufficient consideration
2. Exceptions
1. New or Different Consideration Promised
If promisee has given something in addition to what she already owes in return for the promise she
now seeks to enforce, or has in some way agreed to vary her pre-existing duty, such as by
accelerating performance, there is consideration
2. Voidable Obligation
A promise to perform a voidable obligation is enforceable despite the absence of new
consideration.
3. Preexisting Duty Owed To Third Party
when a preexisting duty was owed to a third party, courts held the new promise did not constitute
consideration. Second Restatement says new promise constitutes consideration.
4. Honest Dispute As To Duty
If the scope of legal duty owed is the subject of honest dispute, then a modifying agreement relating
to it will ordinarily be given effect. The compromise by each party is a detriment.
5. Unforeseen Circumstances
Mere unforeseen difficulty in performing is not a substitute for consideration. But if the unforeseen
difficulty rises to the level of impracticability, such that the duty of performance would be
discharged, most states will hold that the unforeseen difficulty is an exception to the pre-existing
legal duty rule.
6. Modification of Contract for the Sale of Goods
A contract modification is generally unenforceable unless it is supported by new consideration.
Article 2 does not follow this rule. Under Article 2, contract modifications sought in good faith are
binding without consideration. Modifications extorted from the other party are in bad faith and are
unenforceable.
 binding without consideration. Modifications extorted from the other party are in bad faith and are
unenforceable.
3. Existing Debts
Payment of a smaller sum than due will not e sufficient consideration for a promise by the creditor to
discharge the debt. Neither a legal detriment nor a benefit would be present.
Courts will attempt to avoid this result by application of exceptions.
2. Forbearance to Sue
The promise to refrain from suing on a claim may constitute consideration. If the claim is valid, the
forebearance to sue is sufficient consideration. If the claim is invalid and the claimant is aware of this fact,
he has no such right; his suit is not more than the wrongful exercise of a power.
Statute of Frauds
A contract within the SoF may not be enforced unless a memorandum of it is written and
signed by the party to be charged.
does not require entire K to be written, but only a memorandum of it.
Only the party against whom enforcement is sought needs to have signed it
consequence of non-compliance is usually unenforceability, not invalidity.
Purpose
Statute of Frauds keeps one person from perpetrating a fraud on another and on the court by
requiring more certain proof that an oral contract was made
GENERAL RULE - oral contracts are perfectly good
SoF is an exception, and a pretty narrow exception
Compliance with Statute of Frauds does not itself prove the existence of a contract.
Plaintiff must still show all the requirements of an agreement with consideration
Seems most often, SoF is used as a defense by D against enforcement of K
REMEMBER - compliance with statute is different from adequate proof of the contract for the
purpose of relief
Requirements
Common Law:
1. Identify the parties
2. Nature of the exchange
3. all or most of the material terms
U.C.C.
1. quantity of goods sold
2. some writing sufficient to indicate a K for sale has been made between the parties
What is sufficient writing?
Restatement
A contract within the Statute of Frauds is enforceable if it is evidenced by:
any writing signed by or on behalf of the party charged (person wishing to use SoF as a defense),
which:
writing is any intelligible marks on a tangible surface
Common law - any mark or symbol placed by the party on the paper with the intention of
authenticating it
 letterhead will also suffice
U.C.C. - "any symbol executed or adopted by a party with present intention to authenticate a
writing"
technology must be accommodated in the statute - emails, voice recording, photos?
reasonably identifies the subject matter of the contract
is sufficient to indicate that a contract with respect thereto has been made between the parties or
offered by the signer to the other party
states with reasonable certainty the essential terms of the unperformed promises in the contract
does not need to BE the contract, just needs to be evidence of a K
Can be "tacked" or linked together
UCC 2-201(1)
"some writing sufficient to indicate that a contract for sale has been made between the parties and signed
by the party against whom enforcement is sought"
What kind of contract requires signed writing?
1. sale of goods of $500 or more
2. contract to answer for the day of another (suretyship)
3. contract for the sale of an interest in land
4. contract this is not to be performed within one year from the making thereof
contract does not need to LAST for longer than a year, but will not be completed within a
year of the contract
ex. If on July 1, 1996, a customer makes a contract with a popular resort to rent a room for a long weekend
on July 4, 1997, the contract falls within the statute even though performance will only last three days.
Statute of Frauds applies to modifications of contracts, too
Three question checklist
Is the oral agreement within the Statute of Frauds?
No - it's enforceable
Yes - go to next question
Is the agreement evidenced by writing?
Yes - it's enforceable
No - go to next question
Is there an exception?
Yes - enforceable
No - not enforceable
Statute of Frauds Problem Procedure
1. Does the statute apply - "is this case within the statute?"
2. If the case is within the statute, does a memo, note, or other writing satisfy the statute?
3. If the case is within the statute and there is no complying writing, does the statute or case
law recognize an exception?
4. If the case is within the statute, there is no complying writing, and there is no applicable
exception, does any other doctrine mitigate what would otherwise be the effect of non-
compliance?
HYPO
 B admits to oral contract but says that court can't enforce it because Statute of Frauds, no
signed writing. How should court react?
find an exception to the rule
in this case, B admitted to making the K, which makes it enforceable for sales of goods (as long as the
admittance is during the course of the trial)
narrow its application through interpretation and other devices
Exceptions/Special Situations
UCC exceptions
goods are specially manufactured
party against whom enforcement is sought admits the K was made
REMEMBER - rationale for Statute of Frauds is to prevent fraud, not help parties cause fraud
REMEMBER - this is for sale of goods, not land/houses
REMEMBER - UCC requires that the admission be in court
REMEMBER - NO COMMON LAW EXCEPTION
concerned about impact on litigation - incentive for parties to commit perjury
concerned that admission may not be truly voluntary because parties can be compelled to admit
things during litigation
goods have been received and accepted
UCC 2-201(2)
1. Both parties are merchants
2. Within a reasonable time of the oral contract, one of the parites sends a written confirmation to the
other, which is signed by the sender and satisfies the statute against the sender
3. recipient has reason to know its contents
4. recipient does not give written notice of objection to it within ten days of receipt
Complete Performance in a Year
If there is ANY possibility that performance could be completed before a year, the statute is
held to be inapplicable.
ex. A contract entered into on July 1, 1996 provides that a builder must complete the construction project
by August 1, 1997. Although it may be shown to be impossible, as a practical matter, for the builder to
complete the work ahead of schedule, the contract does not require performance of more than a year
because it would not be a breach for the builder to complete ahead of schedule. Thus, Statute does not
apply.
ex. Fitness freak purchases lifetime membership in a gym, the contract clearly contemplates a long-term
relationship, extending for many years. However, such a contract is typically treated as performable within
a year because at the time of the contracting there is a possibility performance will last less than a year -
customer's remaining lifetime may terminate before the year is over.
Main Purpose Rule - Suretyship Exception
If one promises to answer for the debt of another, but the promise is made mainly to
benefit the surety, the Statute of Frauds does not apply
Part Performance Rule
Reliance in the form of part performance may be sufficient to bar assertion of SoF defense.
All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a
real transaction.
 All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a
real transaction.
In an action for damages, part performance of an oral land sale contract does not remove the bar of the
statute of frauds
An employee's part performance of an employment contract with a duration of more than one year
generally does not take the contract out of the statute of frauds.
McIntosh v. Murphy Rule
"Don't make the law look ridiculous." - Justice Levinson
There is considerable discretion for a court to implement the true policy behind the Statute
of Frauds, which is to prevent fraud or any type of unconscionable injury. When P's reliance
was such that injustice could only be avoided by enforcement of the contract, court will
rule for P.
P moved to Florida in reliance on D's promise of employment. D raises SoF defense because employment
could not have been completed in one year from K date because K was made on Saturday and P couldn't
start working until Monday.
Lost Writing Rule
General - If no writing, then no cause of action
HOWEVER - if you say that you had a writing and you lost it, the courts will allow you to bring your cause
of action
unless they don't believe you, then no cause of action
Technology
Where technology substitutes some different means of identifying authorship, this must be
viewed as the equivalent of signature, provided that it serves to authenticate the
communication.
Promissory Estoppel
Restatement 139 recognizes the function of prom-estop in these cases
Could be useful as a supplementary basis for enforcement when there is some evidence of
performance, but the evidence is not sufficient to invoke the part performance exception.
Using the Statute of Frauds in Court
Must be raised as an affirmative defense
If defense succeeds, contract is considered unenforceable
Party who has received performance no longer has right to keep it, so it must be returned
under principles of RESTITUTION
Mutual and Illusory Promises
both parties must be bound or neither is bound
consideration consists in the exchange of mutual promises, undertakings on both sides
must be real and meaningful
Illusory Promise is a statement which appears to be promising something but which in
fact does not commit the promisor to do anything at all.
Promises are illusory when they do not limit the promisee's future
Ex. "I promise to sell you my skis unless I change my mind"
Conditional Promises
 A promise is not illusory simply because it is conditional
Illusory conditional promise:
I will pay for skis if Elvis is returned to Earth by aliens.
Genuine conditional promise:
I will pay for skis if I work next Friday.
CaseLaw
Mattei v. Hopper Rule
Illusory promise is not supported by consideration and is therefore not enforceable.
De Los Santos v. Great Western Sugar Company Rule
Mutual Obligation
An agreement which depends upon the wish, will, or pleasure of only one of the parties is
unenforceable.
Weiner v. McGraw Hill Rule
If an employer made a promise, either express or implied, that the employment should
continue for a period of time that is either definite or capable of being determined, that
employment is not terminable by him "at will." This is true even though the employee has
made no return promise and has retained the power and legal privilege of terminating the
employment "at will".
D's agreement in the handbook created a contract and in fact did not create an employment "at will". D's
claim that the K was not valid because it didn't create a mutual obligation fails. Mutuality simply means
that both parties have an obligation, not that said obligations are of the same type/nature.
Breach
If it is found that
promisor is under absolute duty to perform and
this absolute duty of performance has not been discharged, then
failure to perform constitutes a breach
Breach can only occur when performance is due.
Total and Material Breach
promisee may
withhold performance
rescind
claim full damages from breach
Breach if material, but not total
promisee may
suspend performance
await cure
claim compensation for any loss suffered
Breach is not material (substantial performance)
promisee may
claim compensation for any loss suffered
Anticipatory Repudiation
If a party commits an anticipatory repudiation by making it clear before the time for
performance that she will not honor her promise when the date to do so arrives, the
 If a party commits an anticipatory repudiation by making it clear before the time for
performance that she will not honor her promise when the date to do so arrives, the
promisee does have the right to take action immeidately in response to the repudiation
and it not required to wait until the due date.
If a part commits an anticipatory repudiation, then promisee must mitigate damages by
STOPPING performance immediately, unless it is more reasonable to finish project in
order to salvage materials.
Minor v. Material Breach
1. Effect of breaches
a. Minor Breach
obligee gains the substantial benefit of her bargain despite the obligor's defective
performance.
ex. insignificant delay in completing performance or small deficiencies in quality or quantity in
performance (when precision is not critical)
Aggrieved party IS NOT relieved of duty of performance under the contract
b. Material Breach
obligee does not receive the substantial benefit of her bargain as a result of failure to
perform of defective performance
consequences more severe
non-breaching party may treat contract as at an end
ex. any duty of counterperformance owed by her will be discharged
will have an immediate right to all remedies for breach of the entire contract, including total
damages
c. Minor Breach with Anticipatory Repudiation
If minor breach is coupled with anticipatory repudiation, the non-breaching party may treat
it as a material breach (she may sue immediately for total damages and is permanently
discharged from any duty of further performance)
Aggrieved party MUST NOT continue on because to do so would be a failure to mitigate
damages.
HOWEVER - U.C.C. modified this to allow party to complete manufacture of goods to avoid
having to sell unfinished goods at the lower salvage price
2. Determining Materiality of Breach
General Rule
1. Amount of benefit received
greater the extent, the less material the breach
2. Adequacy of Damages
greater the extent, less material the breach
3. Extent of part performance
greater the extent, the less material the breach
4. Hardship to the breaching party
If a finding of materiality and termination of the contract would cause great hardship to the breaching
party, the breach is less likely to be found to be material
 5. Negligent or willful behavior
greater the extent, the more material the breach
6. Likelihood of full performance
greater the extend, the less material the breach
Failure of Timely Performance
basic question is whether the parties to the contract must perform on time. Assuming that the
defaulting party had a duty of immediate performance when his failure to perform occurred,
then his failure to perform on time will always be a breach of contract.
1. As specified by nature of contract
unless the nature of the contract is such as to make performance on the exact day agreed upon of vital
importance, or the contract by its terms provides that time is of the essence, failure by a promisor to
perform at the stated time will not be material
2. When delay occurs
delay at the onset of performance before the delaying party has rendered any part of his agreed-upon
performance is more likely to be considered material than delay where there has been part performance
3. Mercantile Contracts
In mercantile contracts, timely performance as agreed is important and unjustified delay is material
4. Land contracts
more delay in land contracts is required for materiality than in mercantile contracts
5. Availability of Equitable Remedy
in equity, the courts are generally much more lenient in tolerating considerable delay. Thus, tend to find
the breach immaterial and award compensation for the delay where possible
Limitations on Expectation Recovery
Certainty
P must show that breach resulted in financial loss, and must provide adequate evidence of the
monetary extent of the loss.
Plaintiff must prove that losses suffered were certain in their nature and not speculative.
Traditionally - courts would not allow lost profits from prospective business as damages
because they are too speculative.
Modern - courts may allow lost profits as damages if they can be made more certain by
observing similar businesses in the area or other businesses previously owned by the same
party
Foreseeability
Extent and scope of damages should be consistent with what was reasonably contemplated by
the parties at the time of contracting.
Mitigation
Law does not allow P to recover for increased losses resulting from her own irrational or unfair
behavior
If P unreasonably or dishonestly worsens the loss following a breach, damages will not be
included in compensation
Causation
P can only claim those damages caused by the breach - must show causal connection between
breach and the loss
 P can only claim those damages caused by the breach - must show causal connection between
breach and the loss
Unfair Forfeiture
Courts may temper the enforcement of contract rights when rigid enforcement would have an
unjustifiably harsh effect on the party against whom those rights are asserted
discretion when normal damages would result in windfall for the P
Duty to Mitigate
Nonbreaching party has a duty to mitigate damages. Must refrain from piling up losses
after she receives notice of the breach; she must not incur further expenditures or costs,
and she must make reasonable efforts to cut down her losses by procuring a substitute
performance at a fair price. Should she not do so, she will not be allowed to recover
those damages that might have been avoided by such mitigation after the breach.
Generally a party may recover the expenses of mitigation.
1. Employment Contracts
If employer breaches, the employee is under a duty to use reasonable care in finding a
position of the same kind, rank, and grade in the same locale (although it does not
necessarily have to be at the same exact pay level). BUT, burden is on the employer to show
that such jobs were available.
2. Contracts for Sale of Goods
If the buyer is in breach, recall that the seller generally cannot bring an action against the
buyer for full contract price unless the goods cannot be resold at a reasonable price or were
damaged or lost when the risk of loss was on the buyer.
3. Manufacturing Contracts
If the person for whom the goods are being manufactured breaches, the manufacturer is
under a duty to mitigate by not continuing to work after the breach. However, if the facts
are such that completion of the manufacturing project will decrease rather than increase the
damages, the manufacturer has the right to continue.
EX. partly manufactured goods may be without value because they cannot be sold. The non-breaching
manufacturer may complete production and recover for his expenses in doing so, because finished goods
usually can be resold, and the damages will be decreased as a result.
4. Construction Contracts
A builder does not owe a duty to avoid the consequences of an owner's breach (by securing
other work), but does have a duty to mitigate by not continuing work after the breach.
Again, however, if completion will decrease damages, it will be allowed.
Expectation/Mitigation Measures
1. Figure out what the position of the non-breaching party would have been if the promise had
been kept
2. Figure out the position that the non-breaching party would be in after the breach - provided
the non-breaching party did whatever was reasonably possible to mitigate damages (proper
mitigation)
3. Figure out how much we need to give the non-breaching party to move them from the
position they are in after the breach to the position they would have been in had the contract
been performed.
 position they are in after the breach to the position they would have been in had the contract
been performed.
Mitigation applies to EVERY way a non-breaching party can save money
For example, construction company is non-breaching party, owner breaches
Construction company must stop work immediately AND figure out if they can sell/salvage
already purchased materials
Court assumes non-breaching party is a proper mitigator
SO, they only give damages to move you from the position of a proper mitigator to the position
you would have been in had the contract been performed as promised.
Reasonable mitigation?
Courts look at how much mitigation steps would cost versus how much the non-breaching
party would save by taking those steps. If the non-breaching party has to spend money to
reduce losses, but is still spending less than he or she gains, then spending money is probably
proper mitigation
HYPO:
Suppose market price of construction materials is falling. A nevertheless decides to sell the
materials. It costs $800 to transport construction materials to another site, and when they get
there, A can only sell them for $700, so Luten actually lost $100 on the deal. B does not
want to pay the $100 loss because Luten did not mitigate. Should A be allowed to recover
$100?
It depends.
the non-breaching party is required to act reasonably based on the circumstances at the time, not from
the advantage of hind-sight. If it appeared reasonable at the time to transport the materials and try to
sell them for more than $800, the court will not penalize A for being wrong. That is when it figures
what A lost as a result of the breach, it will include the $100 it lost in trying to mitigate. Of course, if at
the time it was not reasonable to transport the materials, then A could not recover the $100.
Employment Contracts
Yes, you can recover damages spent in trying to reasonably get another job
Consider - if employee could have taken job after they are fired without being fire (i.e. could have taken
the part-time job, had been considering part-time job) then it doesn't necessarily mean they are mitigating -
same with construction company that accepts new job after the breach - could they have performed both?
Burden of proof?
Breaching party must show the non-breaching party did not mitigate - the Non-breaching party
must prove damages
Mitigation Main Points
Limitation of Damages
non-breaching party is not permitted to recover damages that the party could have avoided
by making reasonable efforts
Duty to mitigate
The damages are the same whether the party mitigates or not. This is because the
expectation measure of damages treats the non-breaching party as a proper mitigator
whether the non-breaching party properly mitigated or not.
 Reasonableness
In an employment contract, the employee does not have to take inferior job in mitigation.
Money earned is not deducted in mitigation if the party could have earned the money even
if there had not been a breach (Contractor able to do two jobs at once, for example)
Expenses occurred in reasonable mitigation are recoverable even if the effort to mitigate was
not successful, as long as the expenses were reasonable at the time.
Walters v. Marathon Oil Co.
Ps were charged with failing to mitigate; court found that reasonable persons in their position
(unfamiliar with the business, not professionals, little experience) did as much as they could
have - treat like persons alike, different persons differently with respect to reasonableness to
mitigate...
Standard Measures of Damages for Every Situation
Contracts for Sale of Goods
Buyer's Damages
1. Seller does not deliver OR Buyer rejects goods or revokes acceptance
Buyer gets difference between contract price and either the market price (benefit of the bargain) or the cost
of buying replacement goods (cover), plus incidental and consequential damages, if any, less expenses
saved as a result of the seller's breach.
In case of buyer's anticipatory repudiation, buyer's damages are measured as of time she learns of breach
1. Difference between contract price and market price
if the buyer measures the damages by the difference between the contract price and market price,
market price usually is determined as of the time the buyer learns of the breach and the place of tender
(2-713)
NOTE - BUYER DAMAGES ARE MEASURED AS OF TH TIME SHE LEARNS OF THE BREACH, SELLER
DAMAGES ARE MEASURED AS OF THE TIME FOR DELIVERY
2. DIfference between contract price and cost of replacement goods "Cover"
if the buyer choose the cover measure, the buyer must make a reasonable contract for substitute goods
in good faith and without unreasonable delay (2-712)
2. Seller delivers nonconforming goods that buyer accepts
1. Warranty Damages
If buyer accepts goods that breach one of the sellers warranties, the buyer may recover as damages
"loss resulting in the normal course of events from the breach" The basic measure of damages in such
a case is the different between the value of the goods as delivered and the value they would have
had if they had been according to the contract, plus incidental and consequential damages.
2. Notice Requirement
to recover damages for any defect as to accepted goods, the buyer must within a reasonable time after
she discovers or should have discoered the defect, notify the seller of the defect. If she does not notifiy
the seller within a reasonable time, she loses her right to sue. "Reasonable time" is a flexible standard.
3. Seller anticipatorily breaches contract
(2-713) - Difference between the market price at the time the buyer learned of the breach and the contract
price.
Seller's Damages
 1. Buyer refuses to accept goods or anticipatorily breaches contract
Basic damages, plus incidental (BUT NOT CONSEQUENTIAL) damages, if any less expenses saved as a
result of the breach.
If damages based on difference between the contract price and market or resale price, do not put the
seller in as good a position as performance would have, then the seller may recover lost profits plus
incidental damages (2-706, 2-708, 2-710)
Anticipatory Breach - seller's damages are measured as of the actual time for performance, unless the
suit comes to trial before the time for performance, in which case damages are measured as the time
seller learned of the breach.
1. Difference between contract price and market price
market price is measured as of the time and at the place for delivery
2. Difference between the contract price and resale price
seller must resell under provisions of 2-706. Section requires good faith, commercially reasonable sale
that may be either price or public (auction). In the case of a private sale, the breaching buyer must be
given reasonable notice of intention to resell. In the case of auction, sale must be at usual market for
such goods if such a market is reasonably available. Notice of the sale must be given to the breaching
buyer unless the goods are perishable or threaten to decline rapidly in value. Only existing and
identified goods may be sold, unless there is a market in futures for the particular goods. The seller
may buy the goods at an auction sale.
3. Damages based on lost profits
If two other measures do not give adequate compensation for buyer's breach...
1. Lost Volume Seller (seller can obtain or manufacture as many goods as he can sell)
Lost profit is measured by contract price with the breaching buyer minus cost to the seller
(because although he is able to resell the goods for the same or similar price, he loses volume of
business - would have made two sales instead of just the one
2. Action for Price
If buyer accepts goods and has not paid, or has not accepted the goods and the seller is unable to resell
them at any reasonable price, or if the goods have been lost or damaged at a time the risk of loss was on
the buyer, the seller may maintain an action against the buyer for full contract price
Contracts for Sale of Land
Difference between contract price and the fair market value of the land
Employment Contracts (Check to see who breached - employee or employer)
1. Breach by Employer
Regardless of when the breach occurs (i.e. before performance, after part performance, or
after full performance), the standard measure of employee's damages is full contract price
2. Breach by Employee (Check to see whether breach was intentional or unintentional)
Intentional Breach - employer is entitled to a standard measure of damages computer
according to what it costs to replace the employee - difference between the cost incurred to
get a second employee to do the work and the cost to the employer had the first breaching
employee done the work (modern view allows employee to offset any monies due from
work done to date)
Unintentional Breach - same for intentional breach, but employee may have right to a
quasi-contract recovery for work done to date
 Unintentional Breach - same for intentional breach, but employee may have right to a
quasi-contract recovery for work done to date
Construction Contracts (Check to see whether owner or the builder is breaching)
1. Breach by Owner (Check to when breach occurred)
1. Breach before construction started
builder is entitled to profits he would have had derived from the contract
2. Breach during construction
builder is entitled to any profit he would have derived from the contract + any costs he has incurred to
date OR
contract price minus the cost of completion
either formula will give same result
3. Breach after construction occurs
builder is entitled to the full contract price plus interest thereon
2. Breach by builder (check to see when breach occurred)
1. Breach before construction started
owner's measure of damages is the cost of completion (the amount above the contract price that it will cost
to get the building completed) + reasonable compensation for any delay in performance
2. Breach during construction
owner is entitled to cost of completion + reasonable compensation for any delay in performance
IF COMPLETION INVOLVES UNDUE ECONOMIC WASTE, the measure of damages will be the difference
between the value of what the owner would have received if the builder has properly performed the
contract and the value of what the owner actually received
3. Breach by late performance
Owner has right to damages for any loss incurred by not being able to use the property when performance
was due - loss of rental value. BUT if damages for "lost use" are not easily determined or were not
foreseeable at the time the contract was entered into, the owner can only recover the interest on the value
of the builder as a capital investment
3. Cost of Performance Rule
Groves v. John Wunder Co. - only case where the cost of performance rule has been
followed under circumstances where the cost of performance greatly exceeded the
diminution in value resulting from the breach.
23 O.S.1961 Section 96 - No person can recover a greater amount in damages for the breach of an
obligation, than he would have gained by the full performance thereof on both sides
23 O.S.1961 Section 97 - Damages must, in all cases, be reasonable, and where an obligation of any kind
appears to create a right to unconscionable and grossly oppressive damages, contrary to substantial
justice no more than reasonable damages can be recovered.
Contracts Calling for Installment Payments
if a payment is not made, there is only a partial breach. The aggrieved party is limited to
recovering only the missed payment, not the entire contract price. HOWEVER, the contract
may include an acceleration clause making the entire amount due on any late payment, in
which case the aggrieved party may recover the entire amount.
Expectation Damages
 Restatement 347
First element that must be estimated in attempting to fix a sum that will fairly represent the
expectation interest is the loss in value to the injure party of the other party's performance that
is caused by the failure of, or deficiency in, performance.
requires determination of the value of that performance to in the injured party himself not
some reasonable person
General Damages
losses from a breach that arise naturally or ordinarily
Special/Consequential Damages
damages incurred that would not have ordinarily arose - subjective
Limits on Recovery
Damages resulting from a breach of K which they would reasonably contemplate, would be the amount of
injury which would ordinarily follow for a breach of K under these special circumstances so know and
communicated
Nonlegal Sanctions
Sacrifice of Relationship-specific Prospective Advantage
Committing party places a particular asset under the control of another party; that party will
confiscate or destroy the asset if the promisor breaches.
ex. posting of collateral
ex. revoking right to use trademark (franchisee)
Loss of Reputation Among Market Participants
reputation for reliability among market participants who are potential transactors, thus
breaches result in loss of opportunities in future trade
Sacrifice of Psychic and Social Goods
loss of opportunities for important or pleasurable associations, loss of self-esteem, feelings of
guilt
ex. business person snubbed at local club or guilt during Sunday sermon
Essentially, the legally enforceable contract formally states parties' obligations, but
nonlegal pressures - particularly concern for business reputation - actually induce
compliance
Monetary Remedies (Damages)
1. Compensatory Damages
Put the innocent non-breaching party in the position she would have been in had the promise
been performed
1. Expectation
"Simulate as closely as possible the P's economic situation in the absence of breach."
P's loss in value caused by the D's non-performance
+ any other loss
- any cost or loss the P avoided by not having to perform
Substitute Contracts
P's cost to obtain equivalent services
- contract price for services
 OR
P's cost to obtain equivalent services (market price)
- contract price for services
Service Contracts
P's expected profit (K price - variable costs)
Lost Income, Saved Costs
P's expected profit
- any cost or loss P avoided by not having to perform
Breach in midst of performance
(Contract Price
-total direct cost) = gross profit
+ reliance expenses
- payments received
= RECOVERY
Breach in midst of performance (Customized Dress example)
(Contract Price
-total direct cost) = gross profit
+ reliance expenses
- payments received
- and salvage/cover
= RECOVERY
Lost Volume Seller
Contract Price
- total direct cost
NO COVER NEEDED - new sales will not be considered "substitute"

2. Punitive
generally not awarded in contract cases
3. Nominal
breach is shown but no actual loss is proven
4. Liquidated Damages
Parties stipulate what damages are to be paid in the event of a breach. These liquidated
damages must be in an amount that is reasonable in view of the actual or anticipated harm
caused by the breach.
Liquidated Damages
UCC 2-718
Damages for breach by either party may be liquidated in the agreement but only at an amount
which is REASONABLE in the light of the anticipated or actual harm caused by the breach, the
difficulties of proof of loss, and the inconvenience of nonfeasibility of otherwise obtaining an
adequate remedy. A term fixing unreasonably large liquidated damages is VOID AS PENALTY.
1. Requirements for Enforcement
1. Damages for a contractual breach must have been difficult to estimate or ascertain at the
time the contract was formed.
 1. Damages for a contractual breach must have been difficult to estimate or ascertain at the
time the contract was formed.
2. The amount agreed on must have been a reasonable forecast of compensatory damages in
the case of breach.
The test for reasonableness is a comparison between the amount of damages prospectively
probable at the tiem of contract formation and the liquidated damages figure.
If the liquidated damages amount is unreasonable, the courts will construe this as a penalty
and will not enforce
U.C.C. Rule
allows a court to consider actual damages to validate a liquidated damages clause. Even if
the clause was not a reasonable forecast of damages at the time time of the contract
formation, it will be valid if it was reasonable in light of the subsequent actual damages.
(2-718(1))
Drafting Liquidated Damages Clauses
1. Make sure damages stipulated will fall within range between the upper and lower limits
of potential actual damages foreseeable at the time of the making of the contract. (Otherwise
provision will likely be held to be invalid as penalty)
2. Parties must actually, seriously negotiate on the question of the amount of measure of the
liquidated damages, with full consideration of all foreseeable consequences of breach.
Then, for added protection, incorporate in the contract recitals which will show that they
have done so.
3. If the contemplated breach is of a covenant which requires the party to perform a
particular act within a time limit, provide suitable machinery for reasonable extensions to
adjust for delays which may result from actions or derelictions of the other party or of third
parties. (especially do so in construction contracts)
4. Make the amount of damages agreed upon vary with extend of the breach, such as
duration of the delay or period of default.
5. Incorporate a suitable recital indicating that it was the intention of the parties to provide
for liquidated damages; at least, characterize by labeling LIQUIDATED DAMAGES.
6. Recite the facts which caused the parties to incorporate the provision in the contract such
as that for stated reasons the amount of damages upon the breach will very very difficult to
ascertain with precision.
2. Recoverable Even If No Actual Damages
If one of both of the above requirements are not met, the provision fails, and the P will reover
only those damages she can prove.
CaseLaw
H.J. McGrath v. Wisner Rule
Penalties are unenforceable
Court felt that the damages were in fact determinable and that the damages in the clause were not
reasonable in terms of the breach.
Better Food Markets v. American Dist. Telegraph Co. Rule
Reasonable for parties to assume that a multitude of damages might occur
$50 was in range of possible damages.
 in the event of a break in, from a ham being stolen to vandalism to the safe being robbed.
Difficult to ascertain to what extent D would be liable in the event of a break-in. He could
have contacted the police immediately, and the store might still have lost their money.
BUT - this clause seems more like LIMITATION OF DAMAGES CLAUSE
Limitation of Damages clauses state that regardless of what the damage of a breach is, the non-breaching
party would only be liable up to a certain amount.
To not get a damage clause thrown out, important to state that it is not a liquidated damages clause,
and not an estimated amount of damages.
Promissory Estoppel
Consideration is not necessary if the facts indicate the promiser should be estopped from
not performing.
Restatement §90
1. A promise which
2. the promisor should reasonably expect to induce action or forbearance
3. on the part of the promisee or a third person
4. and which does induce such action or forbearance
5. is binding IF
6. injustice can be avoided
7. ONLY by enforcement of the promise.
8. Remedy granted may be limited as justice requires.
PARTIAL ENFORCEMENT
A promise is enforceable if necessary to prevent injustice if:
1. the promisor should reasonably expect to induce the action or forbearance
2. of a definite and substantial character
3. and such action or forbearance is in fact induced
4. remedy may be limited as justice requires
Exception: charitable subscription and marriage settlements is binding under promissory
estoppel without proof the promise induced action
Typically the court will grant reliance damages - courts following the first restatement
might grant expectation damages.
Limit Estoppel-based Liability
use conditional or indefinite promises
attach termination date to the promise
revoke and promptly communicate this to the promisee
anything that affects the foreseeability and reasonableness of reliance on the promise
Promissory Estoppel and Statute of Frauds
Restatement §139 recognizes the function of prom-estop in these cases
Could be useful as a supplementary basis for enforcement when there is some evidence of
performance, but the evidence is not sufficient to invoke the part performance exception.
Case Law
Wood v. Lucy, Lady Duff-Gordon Rule
 Implied-in-Law Contract: A promise may be lacking within a contract, and yet the whole
writing may be taken by a court to imply such a promise, which creates an obligation.
Implied promise to faithfully market D's product amounts to fair consideration creating performance
obligations by both parties.
Two Important Questions to Consider:
1. Did she promise anything in return?
2. Did he understand that he would be the only person with this right? Was that the implied promise?
Weiner v. McGraw Hill Rule
If an employer made a promise, either express or implied, that the employment should
continue for a period of time that is either definite or capable of being determined, that
employment is not terminable by him "at will." This is true even though the employee has
made no return promise and has retained the power and legal privilege of terminating the
employment "at will".
D's agreement in the handbook created a contract and in fact did not create an employment "at will". D's
claim that the K was not valid because it didn't create a mutual obligation fails. Mutuality simply means
that both parties have an obligation, not that said obligations are of the same type/nature.
Ryerss v. Trustees of Presbyterian Congregation Rule
Well-proved promise relied upon by another is enough to imply consideration.
Seavey v. Drake Rule
Promissory estoppel may be used as a substitute for compliance with the statute of frauds
just as it may be used to substitute for consideration.
A promise to make a gift of land is not enforceable for lack of consideration, but may be
enforced under the promissory estoppel doctrine.
Valuable additions were made to the gift of land and such additions were induced by reliance on promise
to give it, and that is enough for consideration.
Partial performance of a gift of land was made (by son taking possession of land) even though it wasn't
done in writing.
Siegal v. Spear & Co Rule
Mere agreement to provide a trust voluntarily is not obligatory, but when the party relied
upon the agreement and it is reasonable to do so, there is sufficient consideration present
to make the agreement binding.
P did not get himself insurance because he relied upon D to do so for him, this serves as consideration in
their agreement.
Wheeler v. White Rule
Classic Promissory Estoppel
D knew P was relying on him to obtain a loan.
P proved reliance by tearing down old building
P unable to obtain a loan through any other channel
Local 1330 United Steel Workers V. United States Steel Corp Rule
If P does not perform it send of the "alleged agreement", P cannot claim that they actually
relied on D's promise.
D knew that P was relying on its promise, but since P did not make the plants profitable, D was justified in
shutting them down, regardless of whether the promise by D was actually enforceable or not.
 D knew that P was relying on its promise, but since P did not make the plants profitable, D was justified in
shutting them down, regardless of whether the promise by D was actually enforceable or not.
Goodman V. Dicker Rule
"True measure of damages is the loss sustained by expenditures made in reliance upon the
assurance of a dealer franchise" - no loss of profits damages allowed.
No contract, but P had acted in reliance on the promise made by D
D & G Stout v. Bacardi Imports Rule
P was entitled to recover the quite fixed, definite sum that it turned down in reliance on D's
promise, but not the "profits" that it would have made from a continuation of the P-D
relationship.
Loss incurred resulted from an opportunity forgone in reliance on the promise
Walters v. Marathon Oil Co. Rule
Since it was unclear what they would have made in another investment, but it was clear
what they would have made in profits from the Marathon deal, the court said most likely the
profits from another investment would have been about the same as profits would have
been from the Marathon deal, and therefore the P forbore that amount
Grouse v. Group Health Plan Rule
Reliance on at-will job offer entitled P to damages in what he lost in quitting the job he held
and forgoing one other offer of employment elsewhere NOT what he would have earned
from D at job
P was assured job with new company, told he would have to resign from old company. P does so, then is
never given the chance to take new job. Court held that P was denied "good faith opportunity" to perform
his duties to the satisfaction of D once he was on the job.
Restitution (remedy) - Unjust Enrichment (cause of action)
RESTITUTION - The act of restoring something or its value.
Available when there isn't a contract
not predicated on accountability for promise
usefulness is greatest when no promise has been made
Available as an alternative remedy when there is a contract
Based on preventing UNJUST ENRICHMENT (cause of action)
one has conferred a benefit on another without gratuitous intent.
unjust to allow the beneficiary to keep the benefit
is unjust when:
one has conferred benefit with intent to charge for it
benefit was not imposed on the beneficiary
examples of actions defeating imposition
1. request
2. emergency
3. acceptance (you didn't ask for the benefit, but you accepted it and could have returned it, but
didn't)
Party that breaches K cannot use K to limit what other party can recover under unjust
enrichment
can provide remedy:
when a K exists and has been breached
when a K is unenforceable
even when no formal contractual relationship exists between parties
1. Terminology - when a contract is unenforceable or no contract exists between the parties, an
action to recover restitutionary damages often is referred to as an action for an implied in law
contract or a quasi-contract.
2. Measure of Damages - value of benefit conferred
usually based on the benefit received by the defendant (e.g., the increase in defendant's
property or the value of the goods received), recovery may also be measured by "detriment"
suffered by the plaintiff (reasonable value of the work performed or the services rendered) if
the benefits are difficult to measure or the benefit measure would achieve an unfair result.
focus of restitutionary damages is recipient's gain
Market Value (helpful when benefit consists of receipt of property or services)
Quantum Meruit (as much as deserved)
used when services are involved
used to express market value
Quantum Valebant (as much as they are worth)
Recipient's Net Gain
actual amount by which the recipient's wealth has been increased
can be measured subjectively
what is the benefit in relation to recipient's needs, circumstances, and intentions
can be measured objectively
what is the benefit based on the worth in market terms
example of measure of damages
Contractor builds patio on Owner's property without authorization, but under circumstances making
contractor neither intermeddler or volunteer. Market value of the work is $1000. Patio enhances the
value of the house by $400. However, Owner has no intention of selling the house and hates sitting
outside. Owner has received labor and materials worth $1000 on the market, but her objective gain is
$400 and her subjective gain is $0.
Examples:
Builder finishes building half of a house before homeowner unjustifiably repudiates the K, and the builder
then sues for the reasonable value of the half-completed house, that value could be measured in several
different ways:
1. any increase in the market value of the homeowners land resulting from the half-completed house
on it
2. whatever price the homeworner would have to pay another builder, at the current construction
rates, to build that half-completed house
3. half of the price the homeowner originally agreed to pay this builder for the fully completed house
4. whatever this builder spent to build the first half of the house, taking the builder's actual costs as a
rough measure of the house's value.
How do choose a measure:
 1. Market value tends to be preferred because it is fairest and most balanced basis of compensation
conceptually most consistent with underlying theory because the market value would likely have been
used to create the terms of the K.
2. If benefit was not requested and there is some element of imposition (but not enough to constitute
intermeddling - think doctor rendering life-saving services), lowest measure of relief tends to be used.
3. If party materially breaches a K after have partially performed, breacher is limited to smallest recovery
measure
4. if one measure is disproportionately large or small, it may not be selected.
5. If the recipient has been guilty of dishonest or improper conduct, the highest measure is likely to be
used.
6. If benefit was requested (there's a K, but conferrer chooses to recover under restitution), any price
agreed to by the parties is probitive evidence of value and may be used in preference over other measures
7. Court discretion in making an award keep with the circumstances
3. Specific Applications
1. When a contract is breached
When a contract has been breached and the non-breaching party has not fully performed,
he may choose to rescind the contract and sue for restitution to prevent unjust enrichment.
NOTE: If plaintiff has fully performed, he is limited to his damage under the contract. This
may be less than he would have received in a restitutionary action because a restitutionary
remedy is not limited to the contract price.
1. "Losing" contracts
A restitutionary remedy often is desirable in the case of a losing contract (i.e. a contract in which the
actual value of the services or goods to be provided under the contract is higher than the contract
price), because normal contract expectation damages or reliance damages would be for a lesser
amount.
2. Breach by Plaintiff
Typically, the plaintiff will be seeking restitution because the defendant breached the contract.
However, under some circumstances, a plaintiff may seek restitution even though the plaintiff is the
party who breached. If the breach was intentional, some courts will not grant the breaching party
restitution; modest courts, however will permit restitutionary recovery but limit it to the contract price
less damages incurred as a result of the breach.
2. When contract is unenforceable - quasi-contract remedy
Restitution may be available in a quasi-contract action when a contract was made but is unenforceable
and unjust enrichment otherwise would result.
3. When no contract involved - Quasi-Contract Remedy
Restitution may also be available in a quasi-contract action when there is no contractual
relationship between the parties if:
1. the P has conferred a benefit on the D by rendering services or expending properties;
2. the P conferred benefit with the reasonable expectation of being compensated for its value;
3. the D knew or had reason to know of the P's expectation;
4. the D would be unjustly enriched if he were allowed to retain the benefit without compensating the P.
NOTE: Where the parties are in a close relationship to one another, it is usually presumed that the benefits
were given gratuitously and the party claiming relieft bears the burden of showing that they were conferred
 NOTE: Where the parties are in a close relationship to one another, it is usually presumed that the benefits
were given gratuitously and the party claiming relieft bears the burden of showing that they were conferred
with an expectation of being paid therefor.
4. Exam Tactic
ALWAYS KEEP QUASI-CONTRACTUAL RELIEF IN MIND
esp if P has suffered a loss or rendered services
4. Material Benefit Rule
"Moral Obligation": Prior Benefit + Latter Promise
Consider: Officious meddlers impose a benefit onto you. You promise to pay them for that benefit, even
though you never requested it. Your promise validates the benefit and the acceptance of it.
The other prerequisites for relief - prior benefit, enrichment, intent to charge - are satisfied so now you can
turn to question of relief
Court discretion for relief
do not want to reinforce meddlesome behavior
will consider the evidentiary and cautionary functions of legal formality v promise making
was original imposition outrageous?
Restatement §371
If a sum of money is awarded to protect a party's restitution interest, it may as justice requires
be measured by either:
1. the reasonable value to the other party of what he received in terms of what it would
have cost him to obtain it from another person in the claimant's position
usually based on market price of such a substitute
2. the extent to which the other's party's property has been increased in value or his other
interests advanced
3. out-of-pocket expenses + reasonably certain profit
Person seeking restitution for part performance is commonly allowed the more generous
measure of reasonable value, unless that measure is unduly difficult to apply, except when he is
in breach.
Restatement §372
An injured party who has performed in part will usually prefer to seek damages based on his
expectation interest instead of a sum of money based on his restitution interest because such
damages include his net profit and will give him a larger recovery
Even if he cannot prove what his net profit woudl have been, he will ordinarily seek damages
based on his reliance interest, since this will compensate him for all of his expenditures,
regardless of whether they resulted in a benefit to the party in breach
CaseLaw
U.S. w. Susi Contracting v. Zara Contracting Rule
Non-breaching party is attempted to recover so court will allow the most generous form of
recovery to be used.
Contract rate of work completed + increased cost of dealing with clay + rental value of
equipment used by D - amount paid up front by D
Once a contract has been breached (particularly in construction cases) the promisee has an
option to forgo any suit on the contract and claim the reasonable value of his performance
on the theory of quantum meruit
 Once a contract has been breached (particularly in construction cases) the promisee has an
option to forgo any suit on the contract and claim the reasonable value of his performance
on the theory of quantum meruit
Oliver v. Campbell Rule
If contractor has nearly completed the contract (all the work is done and all that remains is
the payment of money), the innocent nonbreaching party cannot waive the contract and sue
for unjust enrichment. They have to sue for the value of the contract.
Nonmonetary Remedies
1. Buyer's Non-monetary Damages Under Article 2
1. Cancellation
If a buyer rightfully rejects goods because they do not conform to the contract, one of her
options is simply to cancel the contract
2. Buyer's Right to Replevy Damaged Goods
1. on buyer's prepayment
if buyer has made at least part payment of the purhcase price of goods that have been identified under a
contract and the seller has not delivered the goods, the buyer may replevy the goods from the seller in two
circumstances.
1. The seller becomes insolvent within 10 days after receiving the buyer's first payment
2. the goods were purchased for personal, family, or household purposes
in either case, buyer must tender any unpaid portion of the purchase price to the seller
2. on buyer's inability to cover
the buyer may replevy undelivered, identified goods from the seller if the buyer, after reasonable effort, is
unable to secure adequate substitute goods.
3. Buyer's Right to Specific Performance
right to specific performance even where the goods have not yet been identified.
Court may not decree (even if parties agree to it) specific performance if the breaching
party's sole remaining contractual obligation is payment of money
2. Seller's Non-monetary Damages Under Article 2
1. Seller's Right to Withhold Goods
if buyer fails to make a payment due on or before delivery, the seller may withhold delivery
of goods
may also withhold goods when the goods are sold on credit and before the goods are
delivered, seller discovers buyer is insolvent
2. Seller's Right to Recover Goods
1. Right to Recover from Buyer on Buyer's Insolvency
Seller may reclaim the goods upon demand made within 10 days after buyer's receipt of the goods.
2. Right to Recover Shipped or Stored Goods from Bailee
1. On buyer's insolvency
2. On buyer's breach
3. When goods may not be stopped
4. Obligation of Carrier or Bailee
3. Right to Demand Assurances
 If the party reasonably fears that the other party will not perform, he may demand assurances
that the performance will be forthcoming at the proper time. Until he receives adequate
assurances, he may suspend his own performance. If the proper assurances are not given within
reasonable time, he may then treat the contract as repudiated.
Specific Performance
Order from court to the breaching party to perform or face contempt of court charges
If the legal remedy is inadequate, the non-breaching party may seek specific
performance
Legal remedy is generally inadequate when the subject matter of the contract is rare or unique
1. Available for land and rare or unique goods (always available for land sale contracts)
2. Not available for service contracts
Court feels it is tantamount to involuntary servitude
1. Injuction as alternate remedy
court may enjoin a breaching employee from working for a competitor throughout the duration of the
contract if the services contracted for are rare or unique.
3. Covenant not to compete
4. Equitable Defenses Available???
Court may not decree (even if parties agree to it) specific performance if the breaching party's
sole remaining contractual obligation is payment of money
Defenses to and Limitations on Availability of Specific Performance
1. Grounds of unfairness is decreeing performance
ex. old, ill, illiterate farmer tricked into selling his land. Discovers trickery, will not be
forced to sell land (even though unique)
2. Lack of mutuality of performance
ex. Court will not grant specific performance unless D can be reasonably assured of
receiving the return performance for which he has contracted.
3. Indefiniteness of Agreement
Ex. Contract is not so indefinite to be held invalid, but is too indefinite to serve as basis for
decree of specific performance
4. Impracticability of Performance
Ex. performance is difficult in enforcement or supervision
5. Personal Services
Ex. Performance of K to play music at P's restaurant is denied
Ex. Employment
Courts can issue injunction preventing that person from performing for a third-party
UCC Remedies
1-106 Remedies to be Liberally Administered
The remedies provided by this Act shall be liberally administered to the end that the aggrieved
party ma be put in as good a position as if the other party had fully performed.
SELLER BREACHES - No delivery, Repudiates
2-713 Buyers Damages for Non-Delivery or Repudiation
Difference between market price at the time when the buyer learned of the breach and the
K price together with any incidental and consequential damages, less expenses saved in
 Difference between market price at the time when the buyer learned of the breach and the
K price together with any incidental and consequential damages, less expenses saved in
consequence of seller's breach
Determine market price as of the place for tender, or in cases of rejection after arrival, or
revocation of acceptance, as of the place of arrival.
BUYER MUST COVER
2-712 "Cover"; Buyer's Procurement of Substitute Goods
After a breach within the preceding section, the buyer may cover by making:
1. in good faith and
2. without reasonable delay
3. any reasonable purchase of of contract to purchase goods
4. in substitution for those due from seller.
Buyer may recover from seller as damages the difference between the cost of cover and the
K price together with any incidental or consequential damages, but less expenses saved in
consequence of seller's breach.
2-714 Buyer's Damages for Breach in Regard to Accepted Goods
Buyer has accepted goods and given notification
he may recover as damages for any non-conformity of tender the less resulting in the
ordinary course of events from the seller's breach as determined in any manner which is
reasonable
The measure of damages for breach of warranty is the difference at the time and place of
acceptance between the value or the goods accepted and the value they would have had if
they had been as warranted, unless special circumstances show proximate damages of a
different amount.
BUYER BREACHES - Non-acceptance, Repudiates
2-708 Seller's Damages for Non-Acceptance or Repudiation
Difference between market price at the time and place for tender and the unpaid contract
price together with any incidental damages, less expenses saved in consequence of the
breach.
If measure of damages is inadequate to put seller in as good a position as performance
would have done, then the measure of damages is the profit including REASONABLE
OVERHEAD which the seller would have made from full performance by the buyer,
together with any costs reasonably incurred and due credit for payments or proceeds of
resale.
SELLER RESALE
2-706 Seller's Resale Including Contract for Resale
Seller may resell the goods concerned or the undelivered balance. Where the resale is made
in (1) good faith and in a (2) commercially reasonable way, the seller may recover the
difference between the resale price and the contract price together with any incidental
damages allowed under the provisions of this article, less expenses saved in consequence of
the buyer's breach.
Perfect Tender Rule - Sale of Goods
Article 2 generally does not follow the common law substantial performance doctrine.
Instead is follows perfect tender
If goods or their delivery fail to conform to the contract in any way, the buyer generally
may reject all, accept all, or accept any of any commercial units and reject the rest
1. Commercial Unit Defined
The test for the "commercial unit" is "not only what unit has been the basis for the contract, but
also whether the partial acceptance produces so materially an adverse effect upon the
remainder as to constitute bad faith" 2-601
2. Right to Reject Cut Off by Acceptance
A buyer accepts when:
after a reasonable opportunity to inspect the goods, she indicates to the seller that they
conform to requirements or that she will keep them even though they fail to conform
she fails to reject within a reasonable time after tender or delivery of the goods or fails to
reasonably notify the seller of her rejection
she does any act inconsistent with the seller's ownership
Notice
if in connection with rejection, the buyer fails to state that the goods have a particular defect that
is ascertainable by reasonable inspection, she cannot rely on that defect to justify rejection of to
show seller's breach if:
1. seller could have cured the defect if he had been told about it
2. between merchants, when seller has after rejection, made a request in writing for a full
and final written statement of all defects upon which the buyer proposes to rely
3. Buyer's Responsibility for Goods After Rejection
1. Buyer must hold goods with reasonable care
2. When seller gives no instructions on disposal of goods
3. When buyer resells goods
4. Buyer's Right to Revoke Acceptance
Once goods are accepted, the buyer's power to reject the goods generally is terminated and the
buyer is obligated to pay the price less any damages resulting from the seller's breach.
Under limited circumstances, buyer may revoke an acceptance already made.
Proper revocation of acceptance has the effect of a rejection.
Buyer may revoke her acceptance of goods if the goods have a defect that substantially
impairs their value to her and
1. she accepted them on the reasonable belief that the defect would be cured and it has not been, or
2. she accepted them because of the difficulty of discovering defects or because the seller's assurance that
the goods conformed to the contract
Revocation of Acceptance must occur:
1. within a reasonable time after the buyer discovers or should have discovered the defects
and
2. before any substantial change in goods occurs that is not caused by a defect present at the
time the seller relinquished possession.
5. Exceptions to the Perfect Tender Rule
 1. Installment contracts
the right to reject on an installment contract is much more limited
can only be rejected if the installment delivery substantially impairs the value of that
installment and cannot be cured.
Whole contract is breached only if the nonconformity substantially impairs the value of the
entire contract
2. Seller's Right to Cure
1. Single Delivery Contracts
seller can cure by notice and new tender within time for performance
ex. if buyer has rejected goods because of defects, seller may within the time originally provided for by
performance "cure" by giving reasonable notice of her intention to do so and making a new tender of
conforming to goods that the buyer must then accept
seller's right to cure beyond original contract time
usually, seller would have no right to cute
BUT, in cases where the buyer rejects a tender of nonconforming goods that the seller reasonably
believed would be acceptable "with or without money allowance" the seller, upon reasonable
notification to buyer, has reasonable time to complete beyond original contract
2. Installment Contracts
Article 2 provides that a defective shipment in an installment contract cannot be rejected if the defect can
be cured.
ex. buyer could reject, but then be forced to accept under above stated terms or
ex. if a deficiency in quantity occurs, seller can cure by delivering more, etc
Requirement that No Defenses Exist
Article 2 Provision for Interpreting Contracts
Performance at Common Law
Performance Under Article 2
Party's Duty to Perform Absolute
Absolute Duty to Perform Discharged