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The UCC / Restatement Field Guide

Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
The UCC applies to the sale of UCC 2-105 (Definition of "Goods" means all things which are moveable at time of
UCC generally
goods, is this a good? Goods) indentification to the contract for sale
But. . . the UCC doesn't say UCC 1-103 (Applicability of
unless displaced by provisions of the UCC, the principles of law this is legal realism. Judges will apply doctrines as they see fit
UCC generally anything about fraud, estoppel, Supplemental Principles of
and equity supplement the UCC to make cases come out the way they want them to.
misrepresentation Law)
The Statute may be satisfied by a signed writing not made a a
memorandum of a contract.
In Lucy v. Zehmer, the contract on the back
Restatement 2d. Sec 133 i.e.'s diary or minutes
Did the recorded note pass the of the receipt sufficed to pass the SoF because
SoF (Memorandum Not Made as
Statute of Frauds? it was signed by the party against whom
Such) -No requirement that the memo be communicated or delivered to
enforcement was sought.
the other party
-communication of the offer is essential
17) K requires a bargain where there is a manifestation of
Restatement 2d. Sec. 17
mutual assent to the exchange and also a consideration.
(Requirement of a Bargain)
Was a contract made?
2) (1) A promise is a manifestation of intention to act or refrain In Lucy v. Zehmer, the Zehmers did not
from acting, so made as to justify a promisee in understanding thatintend to make a contract – they were joking.
-OR- Restatement 2d. Sec 2
Formation a commitment had been made. "external expression is what But, by the objective theory of contract, only
(Promiese; Promisor; Promisee;
counts" the outward expression manifested by the
The party did not intend a contract, Beneficiary)
parties counts.
is it enforceable?
2-204 (1) a K for the sale of goods may be made in any manner
UCC 2-204 (Formation in
sufficient to show agreement, including the conduct by both
General)
parties which recognizes the existence of such a K
"Conduct by both parties which recognizes the existence of a K is
The conduct by the parties suggests UCC 2-207 (Additional Terms
Formation sufficient to establish a K even though the writings do not
a K but the writings do not? in Acceptance or Confirmation)
otherwise establish a K"

(3) Even if one or more terms are left open, the K does not fail for Comment: "their actions may be frequently conclusive on the
Terms There are some terms left open, UCC 2-204 (Formation in
indefiniteness if the parties intended to make a K and there is a matter despite the omissions for example where the have
does the K fail? General)
reasonable basis for giving an appropriate remedy. performed their agreement"
12) (2) a person who manifests assent to a transaction has full legal
capacity to incur contractual duties unless: under guardianship,
infant, mentally ill or defective, intoxicated
Restatement 2d. Sec 12
In Lucy v. Zehmer, the Zehmers tried to argueWhere there is no previous determination of incompetency the
(Capacity to Contract) 15/16) voidable contract duties if the party is unable to understand
Did the person have proper that intoxication prevented a contract from budern of proof is on the party alleging incompetence
in a reasonable manner or is unable to act in a reasonable manner
Formation capacity to be bound to the being formed. However, the judge held that
Restatement 2d. Sec 15 and 16 in relation to the transaction and the other party has reason to
contract? they weren’t drunk enough to prevent a Other good reasons…
(Mental Illness or Defect/ know.
binding from being made. Mental illness, minor status, duress
Intoxication) 15) (2) if the K is made on fair terms and the other part is without
knowledge of defect, then power of avoidance terminates to extent
of performance or the circumstances have so changed to make
avoidance unjust.
(2) a performance or return promise is bargained for if it is
In Petroleum Refractionating v. Kendrick sought by the promisor in exchange for his promise and is given
See if there was a legal detriment (an act, a forebearance, or a
Restatement 2d @ 71 Oil, consideration was found in buyer’s by the promisee in exchange for that promise
destruction of a legal relation) that was bargained for.
Consideration Was there consideration or not? (Requirement of Exchange; promise to buy, and seller’s promise to
[Remember - promisee's legal detriment doesn't have to be worth
Types of Exchange) discontinue selling the particular brand of oil (3)performance may consist of an act other than a promise, or
anything to the promisor!]
if could not sell to buyer. forebearance, or modification of a legal relation

Page 1 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
Restatement 2d. Sec 235 (Non-
235) When a performance of a duty under a K is due, any non- In NIPSCO v. CCC, NIPSCO tried to assert
Performance as a Breach)
Some freak thing happens which performance is a breach this as a defense for breaching its contract Want to be careful to not devalue the sense of K's.
Breach renders your participation in the because it could get coal cheaper somewhere Note: may insert "Force Majeure" clause that terminates the
2d Sec. 261 (Discharge by
contract impossible 261)Claim that something totally out of your control makes else, which violated their mandate to operate K if either party is partially excused for unforeseen hardships.
Supervening Impracticality)
further participation in the contract impracticable as cheaply as possible.
AKA Force Majeur
235) When a performance of a duty under a K is due, any non-
Restatement 2d. Sec 235 (Non- performance is a breach
Performance as a Breach)
265)Claim that something totally out of your control makes further In NIPSCO v. CCC, NIPSCO tried to assert Want to be careful to not devalue the sense of K's.
Some freak thing happens which Restatement 2d Sec. 265 participation unrealistic this as a defense for breaching its contract
Breach makes your participation in the (Discharge by Supervening because it could get coal cheaper somewhere Note: increased costs alone does not excuse performance
contract really hard Frustration) 615) (a) delay in delivery or non-delivery in whole is not a breach else, which violated their mandate to operate unless the rise in cost is due to some unforeseen event that
of K for sale if performance as agreed to has been made as cheaply as possible. alters the essential nature of the performance
UCC 2-615 (Excuse by Failure impracticable by the occurence of something that was basically
of Presupposed Conditions) assumed not to occur or by compliance with government
regulation
79) If consideration exists, there is no need for:
(a) a gain to the promisor or a detriment to the promisee
Restatement 2d. Sec 79
(Adequacy of Consideration; (b) equivilance in the values exchanged
There is consideration but it doesn't Mutuality of Obligation)
seem equal? (c) mutuality of obligation
Restatement 2d. Sec 71 71) (1) to constitute consideration a performance or promise must In Hamer v. Sidway, Little Willie’s promise
Consideration -OR- (Requirement of Exchange) be bargained for to forbear from sinful vices did not have to be
(2) it is bargained for if it is sought by the promisor in exchange equal to Uncle William’s promise to pay $5K.
Does pretense of consideration Restatement 73 (Performance for his promise and is given by the promisee in exchange for that
suffice? of a Legal Duty) promise

73) legal duty that is owed to promisor which is not in dispute is


not consideration, but a similar performance is consideration if it
differs and is more than just pretense
74) (1) forebearance to assert or the surrender of a claim or
defense which proves to be invalid is not consideration unless:
In Hamer v. Sidway, Little Willie’s promise
(a) the claim is in fact doubtful because of uncertainty in the facts to forbear from sinful vices did not have to be
At-will Non-compete agreements are sometimes enforceable
or law equal to Uncle William’s promise to pay $5K.
without additional consideration, sometimes not. (Only
Is forebearance from doing Restatement 2d. Sec 74 reasonable are enforceable)
consideration (b) the forebearing party believes that the claim may be fairly In Lake Land Employment v. Columber, the
something sufficient consideration? (Settlement of Claims)
determined to be valid court held that the employer’s forbearance of
Dissent: argues that employer has reliquished nothing and that
discharging the at will employee was
the employee still has the same right: thus no consideration
(2) written instrument surrendering claim when one does not have consideration for signing the non-compete
to is consideration if bargained for, even if party surrendering agreement.
party does not believe claim is valid

Page 2 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
NO. IT HAS CONSIDERATION.
Mutuality of Obligation is present, b/c the
seller or buyer is obligated to operate his plant Universally accepted today.
306)(1) actual output or requirements as may occur in good faith,
in good faith and according to commercial
except no quantity unreasonably disproprotionate to any estimate
Does a output/requirements UCC @ 2-306 (Output, standards of fair dealing so that his A company could pay a small premium to limit a suppliers
or otherwise comprable prior output or requirement
Consideration contract fail for lack of Requirements, and Exclusive outputs/requirements will approximate a ability to sell the extra parts left over to others.
consideration? Dealings) reasonably foreseeable figure.
(2) seller to use best efforts to supply, buyer to use best efforts to
Two implicit promises. “I promise to sell/buy everything” and
promote sale
In Petroleum Refractionating v. Kendrick “you promise to pay for it.”
Oil, the requirements contract did not fail for
lack of consideration.
Few cts follow restatement
86) (1) binding to the extent to prevent injustice
In Harrington v. Taylor, Harrington’s action
Is a promise to pay for a previously Restatement 2d. Sec. 86 The court was probably racist in its application of the
Consideration (2) not binding if (a)promisee confers it as a gift or the promisor was voluntarily undertaken before the
received benefit enforceable? (Promise for Benefit Received) restatement in Harrington.
has not been enriched (b) to the extent the value is disproportionatepromise was made, and was unenforceable.
to benefit given earlier
Humanitarian acts ARE NOT consideration.
Offer by merchant to buy or sell goods in signed writing whose
An option contract needs consideration from both buyer and
terms give assurance that it will be held open. . . is not void for
seller. Firm offer needs no consideration from either.
lack of consideration.
NOTE: the firm offer by the merchant needs to be in writing, an
Consideration Is a firm offer by a merchant UCC 2-205 (Firm Offers)
oral offer would remain revocable under this section.
revocable for lack of cosideration? The max length of time is 3 months.
If it is supported by consideration, then the firm offer can
continue as long as the parties specify.
There does not need to be consideration for this.
77) a promise is not consideration if by its terms it reserves a In Petroleum Refractionating v. Kendrick
choice of alternative performances unless: Oil, Kendrick tried to claim that seller could If there is enough pain in the condition, then the promise is not
The words of promise appear Restatement 2d Sec 77 either provide the oil or opt out, thus the illusory.
Consideration entirely optional, is there (Illusory and Alternative (a) each of the performances would have been consideration performance was illusory.
consideration? Promises) "may choose to order", or which buyer "wants If condtional promises were not valid then many business k's
(b) substantial possibility that before the choice is exercised, or wishes"- There is no mutuality of would be doomed.
events may eliminate the choices that were not consideration obligation, thus no consideration.
Does the promisor know the promised act can never happen? Is it
Restatement 2d. Sec 75
an illusory or alternative promise? Is it a promise that was not In Hamer v. Siday, Little Willie’s promise to
Consideration Is a promise is consideration? (Exchange of Promise for
bargained for? abstain from sinful vices was consideration.
Promise)
THEN NO!!!!
It might be consideration if the employer is aware of you having
In Fisher v. Jackson, the employee was
to give up several things to take their offer. i.e. enticing a
Restatement 2d. Sec 75 found to not have given consideration by
Are acts taken to accept an offer tenured professor to come
Consideration (Exchange of Promise for 75) The promise must be bargained for to constitute consideration quitting his job at a bakery when he took a job
consideration?
Promise) as a reporter. The newspaper did not bargain
Indefinite employment is considered at-will anyhow so no
for Fisher to quit his job.
reliance.

Page 3 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
90) (1)a promise which the promisor should reasonably expect to
induce action or forebearance and which does is binding if
injustice can be avoided only by performance.
In Ricketts v. Scothorn, the granddaughter
Restatement 2d Sec 90. quit her job relying on rich grandfather’s
(Promise Reasonably Inducing (2) charity subscription or marriage settlement are binding without promise to pay for her entire life.
Action or Forbearance) proof of action of forebearance Courts still prefer to use consideration in support of a promise
Reliance on Promise induced In Cohen v. Cowles Media, Cohen relied on than going the reliance route.
21) the intent of the promisor for the promise to be legally binding
action or forebearance, is it Restatement 2d. Sec 21 Cowles’ promise to keep Cohen’s identity
Promissory Estoppel doesn't
enforceable by specific (Intention to be Legally Bound) secret. There is a fear that reliance with take over bargaining theory.
matter.
performance? But . . . it is only binding if it is is the only way to to prevent an
But a manifestation that a promise shall not affect legal relations
Restatement 2d. Sec 129 In Midwest v. Orion, Midwest relied on injustice
may prevent a K.
(Action in Reliance; Specific Orion’s salesman’s words that a contract was
Performance) in place and spent money renovating the
129) K to transfer interest in land may be specifically enforced
truckstop to accommodate the contract.
notwithstanding Statute of Frauds if reliance was created and party
changed position so that justice could be avoided only by specific
enforcement
25) Ask: Is the promisor's power to revoke limited? If it was...

87) Was the contract...(1a) in writing signed by offeror, recites a


purported consideration, propose an exchange on fair terms
Restatement 2d. Sec 25
within reasonable time OR... 87) makes it seem like the consideration does not have to be
([definition of] Option In EMU v. Burgess, EMU never paid the
(1b) made irrevocable by statute paid. However, the restatement is not law.
Is there an option contract? Contracts) consideration, which affected the option
(2) Did the offeror reasonably expect the offer to induce action or
contract. It reduced it to a regular offer. So
Option Contract forbearance of a substantial character on part of the offeree, and it modern K law has become increasingly disapproving of
Does pretense of consideration Restatement 2d. Sec 87 until consideration was actually paid, the offer
is necessary to avoid injustice? If so, YES. It is kind of like "pseudo-bargains"
suffice? ([binding] Option Contract) was just a regular contract which can be
promissory estoppel. -skeptical of consideration that is mere pretense (i.e. $1000 for
revoked before acceptance.
that $1 book

In Baily v. West, there was no agreement and The source of the obligation is in the intention of the parties.
Can I enforce a K that was not
Formation [NO PROVISIONS IN BOOK] intent to contract to take care of the ghetto
expressed but "implied in fact?"
horse. Laundry dropoff = implied contract.
(1) A reasonable price at time of delivery is used if...(a) nothing is
set as to price (b) parties fail to agree on price, even though agreed
to agree (c) price is to be fixed to a standard, but standard is not
set.

(2) When a seller/buyer has sole discretion in deciding the open


How do you fill an open price term
Open Terms UCC 2-305 (Open Price Term) price, it must be in good faith.
in the contract?
(3) if one party interferes with the determination of a standard, the
other party may cancel or set their own price

(4) if there is no intention to be bound until there is a price, there is


NO CONTRACT.
unless specified
What if there is no time for UCC 2-310 (Open Time for
Open Terms 310(a) payment is due at the time and place which the buyer is to
payment mentioned? Payment)
receive the goods
511(2) payment is sufficient when made by any means or in any
What if no payment method is UCC 2-511 (Tender of
Open Terms manner current in the ordinary course of business unless the seller
mentioned? Payment by Buyer)
demands payment by legal tender.

Page 4 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
unless otherwise agreed:
UCC 2-308 (Absence of
308(a) the place is the seller's business, if he has none, then his
Specified Place for Delivery)
What if no delivery place or time residence
Open Terms
specified?
UCC 2-309 (Absent Specific
309(1) the time for shipment or delivery shall be a reasonable time
Time Provisions)
309(2) It is valid for a reasonable time but unless otherwise agreed
may be terminated at any time by either party i.e. Todd appoints Randy to be a dealer for
What if their is no mention of the
UCC 2-309 (Absent Specific (3) termination by one party except on happening of agreed event Todd. Todd will manufacture and Randy will
Open Terms duration of a K for specific
Time Provisions) requires that reasonable notification be received by the other sell but the K doesn't say how long they have
performances?
party. Agreement dispensing with notification is invalid if to deal with each other.
unconscionable.
60) if an offer prescribes the time, place, or manner of acceptance
its terms must be complied with to create a K. If they are mere
suggestions another method is not precluded.
comment: shipment of non-conforming goods would constitute
Restatement 60 (Acceeptance 206(a) unless otherwise indicated an offer shall invited acceptance
both an acceptance and a breach of K.
of offer which states time, in any manner and by any medium reasonable in the circumstances
What is the manner and medium of place, manner) (b) an order to buys goods for prompt or current shipment shall
Acceptance comment: If the seller does not have the goods requested by the
acceptance? invite acceptance by either prompt promise to ship or by prompt of
buyer but thinks he has a substitute, he can send the substitute
UCC 2-206 (Offer and current shipment of conforming or non-conforming goods.
without breaching the K if he lets the buyer know its an
Acceptance) Shipment of non-conforming goods are not an acceptance if seller
accommodation.
notifies buyer that is only an accommodation to the buyer.
(2) where the beginning of a requested performance ifs a
reasonable mode of acceptance an offeror who is not noitified
withing a reasonable time may treat the offer as lapsed.
What constitutes acceptance of UCC 2-606 (What Constitutes
Acceptance of goods -the buyer takes particular goods as the buyer's own by words,
goods? Acceptance of Goods)
action, or silence when it is time to speak
The effect of acceptance of goods:
-the buyer must pay the K rate.
What are the effects of acceptance UCC 2-607 (Effect of -precludes rejection. Note: the burden is on the buyer to establish any breach with
Acceptance of goods
of goods? Acceptance) -the buyer must within a reasonable after he should have respect to the goods accepted
discovered defects notify the seller or be barred from any remedy.

Is there the manifestation of the willingness to enter into a bargain


which could justify someone else understanding that their assent to
that bargain is invited and conclude it?
Restatement 2d Sec 24 (Offer
Offer/Acceptance Is there an offer or not?
Defined)
If so...YES!

(remember - manifestation is objective)


If the person recieving the quote should know a "yes" would not
Is an advertised price quote an Restatement 2d Sec 26 seal the deal, it is not an offer. In advertising, there need to be
Offer/Acceptance
offer? (Preliminary Negotiations) words of commitment to sell the item if it will be an offer. (IE
"They go Saturday! First come, first served.)
If (1) (a) you rejected or counter-offer (b) let too much time lapse
(c) the offer gets revoked (d) death or incapacity
Restatement 2d Sec 36
OR ...
Offer/Acceptance When is an offer terminated? (Methods of Termination of the
Power of Acceptance)
(2) there was a condition for acceptance which was not met ...

NOT BINDNG/VALID. It's like resurrecting Jesus.

Page 5 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
(1) NO CONTRACT if...(a) both parties know of only their
meanings (b) both parties know of both meanings
What if there is misunderstanding Restatement 2d Sec 20 (Effect
Interpretation (2) CONTRACT IF... if one party knows or should know of both
between two parties? of Misunderstanding)
party's meanings. In this case, the party oblivious to both
meaning's interpretation wins.
UCC(1) A definite and seasonable expression of acceptance
UCC 2-207 section 1
operates as an acceptance even though there are different or
Is there an acceptance between non (Additional Terms in
additional terms, unless the acceptance is expressly made
Terms merchants because there are Acceptance or Confirmation)
conditional on those terms).
additional terms? section
The additional terms if a non-merchant is involved are to be
construed as proposals for addition to the K.
The UCC changes the"mirror image" rule of Restatement 59 by
207(2) the additional terms are to be construed as proposals to for stating that a "definite and seasonable expression of acceptance"
additon to the K: even though it states additional or different terms than those in
-Between merchants such terms become part of the contract the offer
unless: The UCC finds the "mirror image" and "last shot" rule that says
(a) the offer expressly limits the additional terms the person who accepts the goods must take the terms of the
Are additional terms are to be example: occurs a lot with pre-printed
UCC 2-207 (Additonal Terms (b) they materially alter it other undesireable.
Terms considered a counter-offer between purchase order and acceptance forms where
in Acceptance of Confirmation) (c) notification of objection to them has already been given or is materially alter= unreasonable surprise or hardship (if it the
two merchants? the terms do not correspond.
given within a reasonable time after notice of them is received clause is not too different than K's used in trade. . . does not
(3) If the conduct of the parties recognizes the existence of a K for materially alter)
sale (performance), the terms of the K consist of those terms on NOTICE: the terms between merchants say "additional" terms
which the parties agree. . . the terms which the parties do no agree become part of the K but does not say anything about terms that
are "knocked out" are "different"

• White Theory
o J.J. says that the different term acts as a
rejection of the original term sent by the
offeror, and thus both terms fall out and we
use a U.C.C. “gap-filler”/default rule to
determine the term.
o He says his support is found in comment 6:
whether a “different” term can
UCC 2-207 (Additonal Terms The language of 2-207(2) mentions only “additional,” not different “Where clauses on confirming forms sent by
Terms come into the contract under any
in Acceptance of Confirmation) terms both parties conflict … the requirement that
circumstances.
there be notice of objection which is found in
subsection (2) is satisfied and the conflicting
terms do not become a part of the contract.
The contract then consists of the terms
originally expressly agreed to.”
o Known as the “knockout rule,” and adoped by
many, if not most, courts.
Restatement 58 (Necessity of Restatement Acceptance must comply with the requirements of
Is an acceptance invalid because a
Offer/Acceptance Acceptance Complying With the offer as to the promise to be made or the performance to be
technicality was not followed?
Terms of Offer) rendered
(a) valid as soon as the offeree accepts regardless of whether the
Restatement 63 (Time When
Offer/Acceptance At what point is acceptance valid? offeror receives it
Acceptance Takes Affect)
(b) in an option contract, it is not valid until the offeror gets it
Restatement 61 (Acceptance Requests to change or add terms of the offer does not invalidate
Is an acceptance invalid because
Offer/Acceptance Which Requests Change of the acceptance unless the acceptance is made to depend on the
there is a request to change terms?
Terms) assent to the changed or added terms
Parol Evidence

Page 6 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
In Thompson v. Estate of Coffield, parol
evidence was allowed to explain that the
An integrated contract cannot be contradicted, but can be mineral royalty sharing agreements from
explained or supplemented by (a) course of dealing or usage of silent leases were not to be included in the
Can you use parol evidence if the UCC 2-202 (Final Written
trade or by course of performance and (b) evidence of consistent sale of the land.
Parol Evidence K is a complete and exclusive Expression: Parol or Extrinsic
additional terms may be admitted unless the court finds the writing
statement? Evidence)
to have been intended also as a complete and exclusive statement In Nanaluki v. Shell Oil, the court found that
of the terms parol evidence could be introduced about
Hawaiian asphalt price protection through a
usage of trade and course of performance.
(1) If the writing or writings constitute a final expression of
one or more terms in the agreement, INTEGRATED. In Baker v. Bailey, the contract for the water-
well use agreement was very explicit and had
a merger clause which said that it was the
(2) The court will determine this before interpreting the
Restatement 209 (Integrated final expression of the deal. So, it was
Parol Evidence Is an agreement integrated? contract, or applying the parol evidence rule.
Agreements) completely integrated, and parol evidence
could not be admitted.
(3) When an agreement looks integrated, it will be treated as such
unless there is other (parol) evidence that the writing was not a
final expression
(1) If the contract is *complete* and exclusive statement of the
terms, COMPLETELY INTEGRATED.
In Masterson v. Sine, the court found the
What is the difference between a (2) A partially integrated agreement is not completely deed to convey Masterson’s land to Sine was
Restatement 210 (Completely integrated
completely integrated agreement not integrated as to the parties’ intent on Masterson was a Traynor opinion, so like usual, he liberally
Parol Evidence and Partially Integrated
and a partially integrated assignability. So, parol evidence was allowed testimony to get what he thought was a fair result.
Agreements)
agreement? admissible to keep the land in the family, and
out of the bankruptcy trustee’s hands.
*an agreement may be shown to be incomplete by other writings
(cmt. C)
(1) A binding integrated agreement discharges prior
agreements to the extent that it is inconsistent with them
Restatement 213 (Effect of
What happens when an integrated
Integrated Agreement on Prior (2) A binding completely integrated agreement discharges
Parol Evidence agreement conflicts with prior
Agreements) [Parol Evidence prior agreements to the extent that they are within its scope
agreements?
Rule]
(3) A nonbinding integrated agreement does nothing to prior
agreements
When there is a legit contract, the court may supply a term which In Masterson v. Sine, the parties omitted the
is reasonable in the circumstance. essential term that the option was not
Can you use parol evidence to assignable (it was not on the deed), and the In Masterson, the court recognized that deeds are not very
Restatement 204 (Supplying an
Parole Evidence show the need for an essential court allowed parol evidence to show that the conducive to showing parties’ intent. That’s why Traynor
Essential Omitted Term) Cmmt E (Effect of Parol Evidence Rule): The fact that an essential term was really a part of the contract.
Omitted Term? allowed parol evidence.
term was omitted may clue you in to the fact that the agreement is
not integrated, and parol evidence may be appropriate.
209) (1)An agreement modifying a K within this article needs no
consideration to be binding
Is an agreement to modify a K (2) signed agreement which excludes modification except by
A market shift would be a good faith reason NOTE: the modifications must meet the test of "good faith"1-
binding if one side simply keeps its UCC 2-209 (Modification, writing cannot be ignored, but it must be separately signed by the
Modifications for modifying the price of the apples the seller 201
preexisting duty with no additional Recission, and Waiver) other party
is providing
consideration? (3) Modifications are still subject to the SOF

Page 7 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
(a)the promise is binding under a K not fully performed if (a) fair
Is the promise that modified a duty Restatement 89 (modification and equitable in view of unanticipated circumstances
Modifications
under the K binding? of executory contract) (c) to extent justice requires enforcement b/c of material change in
position in reliance on promise
Restatement 2d Contracts @ Usually, both parties have to make a mistake to reform the
Can you change (reform) a contract A court may reform the agreement to meet the both parties’ actual In Thompson v. Estate of Coffield, the
155 (When Mistake of Both contract. The Estate was wrong to ask for this. This should
to reflect the true expression of expectations. However, the court will not change the contract if 3rdEstate tried to get the contract reformed,
Modifications Parties As to Written have been governed by the rules in Merced County – since
what the parties want if both parties parties are affected. This is about the way the contract was claiming that words in the contract did not
Expression Justifies Thompson had no reason to know of Estate’s meaning, they are
made a mistake when making it? expressed – not the substance of the contract. mean what they intended.
Reformation) held to the contract.
Can you change (reform) a contract Restatement 166 (When a If a party is induced by misrepresentation, that party may ask for
(this was just mentioned in the notes of
Modification where one party misrepresented the Misrepresentation As to a reformation if (a) they were justified on relying on the contract (b)
rd Thompson v. Estate of Coffield)
facts? Writing Justifies Reformation) it won’t affect 3 parties.
Is failure to read grounds for Restatement 172 (When Fault (this was just mentioned in the notes of
Breach No, it does not, unless it amounts to a failure to act in good faith.
reformation? Makes Reliance Unjustified) Thompson v. Estate of Coffield)
What are the general rules of Restatement 202 (Rules in Aid This is too long to list here. There are 5 general principles of (this was in the notes in WWW Associsates
Interpretation
contract interpretation? of Interpretation) interpretation you should check out. v. Gianconterri)
If there is a dickered term which is
Restatement 203 (Standards of d) separately negotiated or added terms are given greater weight this was in the notes in WWW Associsates v.
Terms inconsistent with a standardized
Preference in Interpretation) than standard/not negotiated terms Gianconterri )
term, which term wins?
(1) Interpret contract In light of the circumstances in which it In Pacific Gas v. GW Thomas, Traynor
was made allowed GW Thomas to bring in extrinsic
How Do you Interpret a term in an Restatement 212 (Interpretation Traynor thinks language is too imperfect to be totally in line
Parol Evidence evidence to show that their interpretation of a
Integrated Agreement? of Integrated Agreement) with the parties’ intent 100% of the time.
contract one was correct, even though on its
(2) Extrinsic evidence can be used to interpret if credible. face, the term was totally unambiguous.
In ZRL v. Great Central Insurance, the
Who gets the benefit of the doubt Restatement 206 (Interpretation When it is a toss-up, the draftsman usually loses an interpretation court held that the insurance company’s term We want to give the little guy who often has no power to
Interpretation
when interpreting a contract? Against the Draftsman) question. “improper eviction” could be broad enough to negotiate a form contract the edge in some disputes.
cover racial discrimination.
Who can be held to the implied UCC 1-303 (Course of Parties who regularly deal in a certain industry will be expected to
In Nanaluki v. Shell Oil, Shell Oil was held
Implied Terms terms set by course of performance Performance, Course of obey the industry customs and follow implied terms in contracts
to the trade use of price protection for asphalt.
or trade usage? Dealing, Usage of Trade) with parties in those industries
In Nanaluki v. Shell Oil, Shell raising its
prices while previously protecting them was
not in good faith.
What is a seller’s posted price at (2) A price to be fixed by the seller or by the buyer means a price
Term UCC 2-305 (Open Price Term)
the time of delivery? for him to fix in good faith.
In Shell Oil v. HRN, the open price term was
good faith because it was not discriminatory
and within a window of acceptable prices
Restatement 230 (Event that 230) It is generally agreed that where a duration may be fairly and
What happens if there is an Terminates a Duty) reasonably supplied by implication, a contract is not terminable at In Haines v. City of New York, the court
Term indefinite (time) term in the will. decided that the term was until the city no
contract? UCC 2-309 (Absence of longer needed the sewage plant.
Specific Time Provisions) 2-309) it shall be a reasonable time.
304)Yes, you have to act in good faith and deal fairly.

Restatement 205 (Duty of


Good Faith and Fair Dealing)
Good Faith Do you Have to Act in Good Faith? UCC 1-201 says good faith is “honesty in fact in the conduct or (this was from the good faith intro)
UCC 1-304 (Obligation of transaction concerned”. UCC 2-103b says good faith is, in the
Good Faith) case of a merchant, “honesty in fact and the oberservance of
reasonable commercial standards.” Merchants appear to have
a higher standard.

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The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
A contract that leaves particulars of UCC 2-311(Options and examople: assortment of goods at the buyer's
(1) any such specification must be made in good faith an within
Good Faith a performance to be specified by Cooperation Respecting option, K for 600 pens; 100 blue and 500
the limits set by commerical reasonableness
one party, requires good faith? Performance) green is ok.
(1) Express warranties by the seller can be created by (a) an
affirmation of fact or promise about a good (b) a description
of the good which is made part of the basis of the bargain (c) -No specific intention to make a warranty is required
any sample or model which creates part of the basis of the -No words such as "fact" or "guarantee" are needed
bargain In Carpenter v. Chrysler, the used car
2-313 (Express Warranties by -The following do not create express warranties: statements of
When is there an express warranty salesman was held to have made a warranty
Warranty Affirmation, Promise, opinion, affirmations of the value of the goods, or statements of
by the seller? about the car’s fitness when he said “this was
Description, Sample) -The affirmation, promise, description of sample must create commendation aka "puffing"
a good car…this is a car for you…”
part of the basis of the bargain Be careful to differentiate this from PUFFING.
-Expressed warranties rest on the "dickered" aspects
(2) You don’t have to say the words “warrant” or “guarantee,” or
even have the specific intention to make a warranty.
- The precise time when express warranties are made or samples
UCC 2-313 (Express example: Sales clerk hands over purchased - While this warranty becomes a modification, it does not need
Can statements made after the sale are shown is not material.
Warranty Warranties by Affirmation, eye solution and say this is absolutely additional consideration because "an agreement modifying a K
be an expressed warranty? - The sole question is whether the language or samples are fairly to
Promise, Description, Sample) harmless to the eyes withing the UCC needs no additional consideration" (2-209)
be regarded as part of the K.
How can a dealer protect himself -The statements might be kept from the trier of fact if "the writing
UCC 2-202 (Final Written
from agents making warranties that is intended by the parties as a final expression of their
Warranty Expression: Parol or Extrinsic
could come back to bite him in the agreement. . . it may not be contradicted by evidence of any prior
Evidence)
ass? agreement or of a contemporaneous oral agreement"
-Whether such warranty is full or limited (under a full a
warrantor must remedy a defect in a reasonable time without
charge)
What warranties must be fully and Magnuson-Moss Federal -A warrantor must not limit the duration of implied warranties
Warranty
conspicuously disclosed? Warranty Act -Exclusion or limitation of consequential damages must appear
conspicuously on the face of the warranty
-After a reasonable number of attempts to remedy defects, the
consumer may elect either a refund or replacement
Unless excluded or modified:
(1) A warranty that goods shall be merchantable is implied in a
contract for their sale if the seller is a merchant with respect to
goods of that kind

(2) goods to be merchantable must at least: Example: Shotgun shells that prematurely
explode or cattle feed that causes sterility NOTE: In an action based on the breach of warranty, it is
When is there an implied warranty UCC 2-314 (Implied Warranty: (a) pass without objection under the K description necessary to show not only the existence of a warranty but that
Warranty
of merchantability? Merchantability) (b) be of fair average quality within the description -particular problem areas include design the warranty was broken and that the breach was the proximate
(c) be fit for the ordinary purposes defects. cause of the loss sustained.
(d) run, within variations permitted by the agreement
(e) are adequately packaged as agreement may require
(f) conform to the promise or affirmations of fact made on the
container if any

(3)(b) "if the buyer before entering the K has examine the goods or
How does an implied warranty of sample as fully as desired or has refused to examine the goods NOTE: a particular purpose differs from the ordinary purpose in
UCC 2-316 (Exclusion or
Warranty merchantability if I examine the after a demand by the seller, there is no implied merchantability that it contemplates a specific use that is peculiar to the nature
Modification of Warranties)
goods or refuse to examine them? with regard to defects that an examination in the circumstances of the business
should have reveled to the buyer"
Can an implied warranty arise from UCC 2-314 (Implied Warranty (3) unless excluded or modified other implied warranties may example: for a pedigreed dog, trade usage
Warranty
course of dealing or trade usage? of Merchantability) arise from course of dealing or trade usage. may require that pedigree papers be produced

Page 9 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
When at the time of contracting, the seller has reason to know of example: shoes are ordinarily used to walk
UCC 2-315 (Implied Warranty: NOTE: you can have both an implied warranty of
When is there an implied warranty any particular purpose for which the goods are required and the with, but a seller may know that a particular
Warranty Fitness for a Particular merchantability ad one of fitness for a paticular purpose. In fact
of fitness? buyer is relying on seller's skill or judgment to select or furnish pair was selected to be used for climbing
Purpose) they may overlap.t
suitable goods mountains
What if there is an expressed
(1) express warranties shall be construed, if possible, as consistent example: contract says the cloth will not fade
warranty in the agreement and then UCC 2-316 (Exclusion or
Warranty with disclaimers of warranty. If such construction is not and also says all warranties excluded. The
also a clause that disclaims all Modification of Warranties)
reasonable, the disclaimer is inoperative. disclaimer is inoperative to this warranty.
warranties?
example: a cattle buyer inspects cattle and
Can an implied warranty be (3)(c) an implied warranty can be excluded or modified by cuts out those that do not suit him. According
UCC 2-316 (Exclusion or
Warranty excluded by course of dealing, evidence of the parties' course of dealing, performance, or trade to trade usage his acceptance of others is
Modification of Warranties)
performance or trade usage? usage irrevocable and excludes all implied
warranties.
example: "sold as is and with all faults"
(3)(a) all implied warranties are excluded by language that calls
or NOTE: In the case of a writing, the exclusion or modification
the buyer's attention to the exclusion of warranties and makes
of merchantability or fitness must be CONSPICUOUS
How does one exclude implied UCC 2-316 (Exclusion or plain that there is no implied warranty.
Warranty "there is no warranty of merchantability"
warranties? Modification of Warranties)
"there are no warranties which extend beyond Remember: it will be hard to exclude everything because there
Other language may also be used: to exclude merchantability must
the description of the face hereof" (fitness) is usually a description of the product
mention merchantability, to exclude fitness must be by writing

Note: watch out for unconscionability.


-minimum adequate remedies should be available.
UCC 2-316 (Exclusion or 316)(4) remedies for breach of warranty can be limited on
example: "it is expressly understood that the Note: In the case of consumer goods, limitation of
Modification of Warranties) liquidation or limitation of damages and on contractual
Can the seller limit the remedies buyer's sole and exclusive remedy shall be consequential damages for injury to person is
modification of remedy
Warranty available to the buyer for breach of repair and replacement of defective parts, and unconscionable. 2-719(3)
UCC 2-719 (Contractual
warranty? the seller shall not be liable for damages or
Modification or Limitation of 719)(1)(a) may limit the damages to return and repayment of the
injuries to persons or property" Note: A term fixing unreasonably large liquidated damages
Remedy) goods or repair and replacement
is void as a penalty.
-a unreasonably small amount is stricken for
unconscionability. 2-718
(c) extends to any person who may be reasonably be expected to
use, consume or be affected by the goods and who is injured by the
Does the express warranty or seller
UCC 2-318 (Third Party breach of warranty"
Warranty misrepresentation apply to third
Beneficiaries of Warranties)
parties?
-(torts) misepresentations extend to consumers but makes no
mention of a non-consumer
UCC 2-312 (Warranty of title
Is there an implied Warranty of titleand Against Infringement;
Warranty There is a warranty by the seller that the title will be good. (this was mentioned in the notes)
when selling land? Buyer’s Obligation Against
Infringement)

Page 10 of 21
The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
(1) Express warranties, once given, cannot be disclaimed

(2) The modifications to merchantability must mention


merchantability and be conspicuous In Carpenter v. Chrysler, the dealer could
2-316 (Exclusion or
Modification of Warranties) not disclaim the express warranties its
(3) You can disclaim warranties by saying “as is/with all salesman had made.
Can a Warranty be Modified or
Warranty faults”, or by course of dealing, performance, or trade use.
Excluded?
In Massey-Ferguson v. Utley, the disclaimer
of warranties was not conspicuous, and was
Magnuson-Moss Act held invalid.
M.M.A.) If a seller makes a written warranty of a product, it
cannot be disclaimed by 2-316. It is in there for good, and cannot
be disclaimed.
(A) Extends a seller’s obligations to a remote consumer, like a
warranty in a computer box
Do warranties apply to remote REVISED 2-313 (Express JJ SAYS THIS WILL NEVER BECOME PART OF US LAW,
Warranty (this was just mentioned in the notes)
purchasers? Warranties) SO DON’T USE THIS AUTHORITATIVELY
(B)Extends a seller’s obligations to remote consumers through
advertising (buying used items)
2-314) There is a warranty that goods will be merchantable. There
UCC 2-314 (Implied Warranty
is a list of qualifications; QUOTE FROM LIST ON TEST.
of Merchantability)
In Vlases v. Montgomery Ward, the chicken
What if the seller sells a defective
Warranty buyer used 2-314 to obtain relief from the sale
product to the buyer?
of diseased chicks.
2-315) When the seller knows what the buyer will use things for,
UCC 2-315 (Fitness for a
there is an implied warranty that the things sold are fit for that
particular purpose)
purpose.
UCC 2-209(3): If there has been acceptance of the goods, you can
introduce parol evidence to show that the contract was orally In Angel v. Murray, the garbageman was in
Can you modify a contract without UCC 2-209 (Modification, modified This only works for goods delivered in the past. This cannot be
Modification good faith able to modify his contract because
consideration? Recission, and Waver) shown for goods to be delivered in the future.
of an unexpected increase in garbage.
149) the modified contract would take place of the old one
Restatement 175 (When Duress
175 – (1) If the threat leaves the victim with no alternative,
by threat makes a contract
contract is voidable. (2) If the threat is made by a third party,
What if a contract is made under voidable) (This was from the Jury Instructions
Formation contract is voidable unless other parties in good faith rely on it
duress? Example…no cases illustrate this)
Restatement 176 (When a
176 – a threat is improper if it is a tort, criminal, in bad faith.
threat is improper)
278) If the obligor gives something different than what was In Wong v. Paisner, Paisner tendered a check
Restatement 278 (Substituted originally due, and the oblige accepts, the obligor’s duty to pay is that was “paid in full,” even though Wong
Can you substitute an original Performance) discharged. said more was owed. Wong cashed it, and the
Performance promised performance for court held there was an accord an
something else? Restatement 281 (Accord and 281) A contract which an obligee promises to accept a stated satisfaction. The offer of the check was an
Satisfaction) performance in satisfaction of the obligor's existing duty. accord, which was instantly accepted by
Performance of the accord discharges the original duty. cashing it.
Restatement 2d Sec 151 Defines mistake: "A mistake is a belief that is not in accord with
Mistake What is the definition of a mistake?
(Mistake Defined( the facts."
Is there really a difference between a mistake that goes to the
substance of the contract and one that merely affects the value?
Restatement 2d Sec 152(1) It can't just be any mistake, but "one that goes to a basic
How vital does the mistake have to The "barren cow" case was rescinded because it was deemed a
Mistake (When Mistake of Both Parties assumption on which the contract was made (and) has a material
be to the execution of the contract? mistake that went to the heart of the substance of the agreement
Makes a Contract Voidable) effect on the agreed exchange of performances"
- but modern courts, in particular Lenawee, seem to be moving
away from that distinction

Page 11 of 21
The UCC / Restatement Field Guide
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Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
A mistake made by one party when the other party is aware of the
mistake: "Where a mistake of one party at the time a contract was
made as to a basic assumption on which he made the contract has a
Important to understand that this doesn't merely mean that the
Restatement 2d Sec 153 (When material effect on the agreed exchange of performances that is
What is a unilateral mistake and party took on a knowing risk of the contract and then things
Mistake Mistake of 1 Party Makes a adverse to him, the contract is voidable by him if he does not bear
how is it handled? went poorly compared to his expectations. There has to be an
Contract Voidable) the risk of the mistake. ... and (a) the effect of the mistake is such
actual mistake of fact, not merely a bad bet.
that enforcement would be unconscionable, or (b) the other party
had reason to know of the mistake or his fault caused the
mistake."
"The court should look first to whether the parties have agreed to
What about an instance where a Restatement 2d Sec 154 (When the allocation of risk between themselves." (Lewanee County
Mistake party merely made a decision to a Party Bears the Risk of a Board of Health v. Messerly). In other words, the first thing the
bear a certain amount of risk? Mistake) court needs to do in determining a mistake case is figure out if the
adversely affected party merely took on voluntary risk
Public Policy
and
Illegality
Courts rendering contracts unenforceable because of public
"A promise or other term of an agreement is unenforceable on
What if the contract the parties Restatement 2d Sec 178(1) policy have an easy job when the act bargained for is prohibited
grounds of public policy if legislation provides that it is
entered into was an illegal contract (When A Term is by statute, but are urged to tread carefully otherwise: "Courts
Illegality unenforceable or the interest in its enforcement is clearly
to begin with (i.e. the act bargained Unenforceable on Grounds of need ... to face the real danger of treading where they are not
outweighed in the circumstances by a public policy against the
for was illegal)? Public Policy) welcome, even though they walk with the best intentions."
enforcement of such terms."
(from the casebook)
Where are rules governing
Only briefly mentioned in a casebook note after Clouse v.
"restitution when contracts are Restatement 2d Sec 197-199
Public Policy Myers, a case we did not discuss in class, so it's difficult to
unenforceable on public policy (Restitution)
believe this would come up on an exam.
grounds?
What can courts do when they find 1. A court cannot add terms to the contract (cmt. b)
Restatement 2d Sec 184 (When
that one portion of a noncompete 2. This is different than the 1st RST, in which Sec 518 said that
Public Policy Rest of Agreement is Today, a court can selectively enforce terms of a non-compete.
contract is unenforceable while the the unreasonableness of even one term of a non-compete
Enforceable)
rest of it is fine? rendered the entire contract unenforceable.
How should we balance the Restatement 2d Sec 188 "A restraint is reasonable only if it (1) is no greater than is required
Public Policy competing interests of employees, (Ancillary Restraints of for the protection of the employer, (2) does not impose undue Called the "Rule of Reason" in the Hopper decision.
employers and the public? Competition) hardship on the employee, and (3) is not injurious to the public."
Unconscionability
Gives courts sweeping statutory authorization to refuse to
U.C.C. Sec 2-302 The widening use of standardized form contracts was the impetus.
Why was unconscionability enforce all or parts of contracts for the sale of goods if "the
Unconscionability (Unconscionable Contract or Llewellyn, the writer of the U.C.C., thought people should be able
codified in the U.C.C.? court as a matter of law finds the contract or any clause of the
Clause) to sign standard form contracts without worrying about unfairness.
contract to have been unconscionable at the time it was made"
Basic Test: In the Light of the general commercial
background and the commerical needs of the particular trade or
case, the clauses are so one-sided so as to be unconscionable at
Examples: unconscionability has been found the time if the making of the K.
U.C.C. Sec 2-302
Who makes determinations in warranty disclaimers particularly when -The goal is prevention of oppression and unfair surprise
Unconscionability (Unconscionable Contract or Judges make the determination, not juries.
regarding unconscionability? physical injury results, remedy limitations, and not disturbance of the allocation of risks because of
Clause)
superior bargaining power.

U.C.C. Sec 2-302


When must unconscionability be It must be present at the time the contract is made, not something
Unconscionability (Unconscionable Contract or
present? that arises later due to circumstances.
Clause)
What rights does the seller have U.C.C. Sec 2-302(2) The seller has the right to at least present evidence on his own
Unconscionability when accused of (Unconscionable Contract or behalf that there were legitimate reasons for the way the agreement
unconscionability? Clause) was structured:

Page 12 of 21
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Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
-It may refuse to enforce the K
U.C.C. Sec 2-302(2) -It may enforce the remainder of the K without the unscionable
What may the court do if it finds a
Unconscionability (Unconscionable Contract or clause
contract or term unconscionable?
Clause) -It may limit the application of the clause as to avoid
unconscionable results
Which Restatement provision
Restatement 2d Sec 208
incorporated the unconscionability
Unconscionability (Unconscionable Contract or
doctrine first put to paper in the
Term)
U.C.C.?
Negotiation & Formation
Courts must enforce certainty in contracts. Not role of courts to
Role of Courts What is the role of Courts?
revise when should be construing.
Restatement 57(Effect of
Equivocal Acceptance)
57) Acceptance must be unequivocal
59) If an acceptance adds terms, a counteroffer is made (Mirror
Restatement 59 ( Purported
Image Rule).
Under Common Law, what effect Acceptance Which Adds
Offer/Acceptance 61) If an acceptance merely requests additional terms, it is still a
does a Counteroffer have? Qualifications)
valid acceptance
Once a counteroffer is made, it voids the original offer unless there
Restatement 61 (Acceptence
is an option.
which Requests Change of
Terms)
Under the UCC, what affect does
UCC 2-207 (Additional Terms Abolishes "Mirror Image Rule". Knock out rule for different
Offer/Acceptance an acceptance w/ material
in Acceptance or Confirmation) terms. Additional terms may enter contract.
differences do?

Non-deliberate attachment of materially different means by one or 3 Possible Scenarios for Misunderstanding:
Restatement 20 (Effect of
Mistake What is Misunderstanding? both parties. Tension between "ambiguity" and attaching different Clear (SJ) -> Ambiguous (Judicially interpreted) ->
Misunderstanding)
meanings. Misunderstanding (No K)

206) (1)unless unambiguously indicated, any manner or


medium reasonable in the circumstance works.
(2) an order for a prompt shipment invites acceptance by
promise to ship or prompt shipment, BUT a shipment of non-
conforming goods does not constitute acceptance if seller notifies
UCC 2-206 (Offer and
buyer that it is only an accommodation
Acceptance in Formation of
(2) where beginning of performance is reasonable, if buyer is not
Contract)
notified of acceptance within reasonable time, may treat offer as
What constitutes acceptance of the lapsed before acceptance
Offer/Acceptance Restatement 30 (Form of
offer?
Acceptance Invited)
30) (1) may require acceptance by words, performance, or may
allow offeree to make selection of terms
Restatement 62 (Effect of
(2) unless indicated, any reasonable manner is acceptable
Performance by Offeree)
62) where offere invites accpetance by promise or performance,
the tender or beginning of it is an acceptance by performance
(2) such acceptance operates as a promise to render complete
performance
Two different approaches- Judge Learned Hand: No contract if
Restatement 90 (Promise Promissory Estoppel- When a promise to perform is reasonably Arrango v Success Roofing (1986)
reneges. Could have created bilateral contract beforehand.
Promissory Estoppel Effects of Reliance Reasonably Inducing Action or relied upon- may make an otherwise unenforceable contract When sub-contractor reneges. Reliance meant
Judge Traynor: Reliance makes the sub-contractor's bid
Forbearance) enforceable (circumvent statute of frauds). had to pay damages.
irrevocable.

Page 13 of 21
The UCC / Restatement Field Guide
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Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
Situation Management v Maloof (2000)
Restatement 90 (Promise
Oral Agreements that contemplate Oral agreements enforceable if parties are beyond a preliminary Oral agreement to give 5 year contract if P
Implied Terms Reasonably Inducing Action or
written contracts. stage, foreseeably rely, and history of doing business like this. buys another company. D reneged, P had
Forbearance)
relied upon.
Arnold Palmer v Fuqua (1976)
Letter of intent to merge. Since board
approval was mere formality (Fuqua
Restatement 26 (Preliminary
controlled board), there was a K. Also made a
Negotiations) Mutual manifestation of intent may be a K, but other facts may
press release that there was a K.
Letters of Intent- How do they show manifestations are merely preliminary expressions (RS 27).
Formation
come out? Restatement 27 (Existence of Not a K if other party has reason to know not really interested (RS
Empro v Ball-Co (1989)
Contract Where Written 26).
Came out opposite from above case. Basically
Material is Contemplated)
condition requiring shareholder approval was
not formality. Not a K, merely K not to
negotiate w/ other people.
UCC 2-204 (Formation in
General)
City of Kenai v Ferguson (1987)
Even if no price term is included, there is still a K (2-204). If
Agreements to Agree and Open 55 year lease at airport. City raised price very
Terms UCC 2-305 (Open Price Term) parties do not intend to form K w/o price, then no K (2-305). RS
Terms. high. Duty to negotiate non-set price terms in
205 imposes an obligation of good faith for all contracts.
good faith.
(By analogy for both)
Restatement 205
Racine v Dept' of Parks (1992)
P entered agreement to operate park. Wanted
UCC 1-304 Every contract imposes upon its parties good faith in its to build restaurant, but negotiations broke
Good Faith Good Faith in Contract Formation Obviously difference between California and New York here.
Restatement 205 performance down. Good faith limited to complying with
terms- can't create additional terms not
comtemplated by K.
New England Insulation v General
-> Dynamics Corp. (1988)
This could have been decided by reliance, but due to relationship Rare pre-contractual violation of good faith.
w/ contractors/ subs, put under good faith. Engaged in sham negotiations and showed P's
bid and specs to other competitors.
Gardner v Zemke (1993)
2-207 Too big to cover here- see Lesson of day:
UCC 2-207 (Additional Terms If nothing is made expressly conditional in counter-form, not a P and D sent contrasting form. P claimed
BoF seperate attachment/ go over in Adding different terms = knockout rule. Point is to try not to let
in Acceptance or Confirmation) counteroffer. form was controlling- b/c D's form was not
group. Battle of the Forms. the last sender have an advantage.
expressly conditional.
Step-Saver Data Systems v Wyse
Technology (1991)
Box-top contract for software. When was
contract made? By telephone, or when opened
UCC 2-207 (Additional Terms box? Should telephone convo be a contract?
in Acceptance or Confirmation) Or box-top?
If different terms, do not get included (2-207). But contract exists
BoF
even if exact moment of creation cannot be pinpointed (2-204).
UCC 2-204 (Formation in Hill v Gateway (1997)
General) P purchased computer over phone, came in
box with terms. Must return in 30 days
otherwise accept. Rolling contract OK-even if
small burden.

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Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
Usage of Trade: any practice or method of
dealing regularly observed in a trade.
303)(d) "a course of performance or course of dealing between the
parties or a usage of trade in the vocation or trade in which they
Course of Dealing: conduct of previous
How should one begin to ascertain UCC 1-303 (Course of Trade, are engaged or should be aware is relevant in ascertaining the NOTE: UCC rejects using a dictionary or legal definition
transactions between the parties that
Terms the meaning the meaning of terms Performance, and Usage of meaning of agreement" approach and rather uses the commerical context in which the
establishes a common basis for a particular
in the parties' agreement? Trade) terms were used.
transaction.
-may give particular meaning to specific terms
-may supplement or qualify the terms
Course of Performance: sequence of action
after or under the agreement in dispute
303)(e) the course of trade, performance, and trade usage should
What if the construction of course NOTE: Only after the parties have not agreed after examining
UCC 1-303 (Course of Trade, be construed as consistent with each other when reasonable.
of trade, performance, and trade their language or inferring from other circumstances does the
Terms Performance, and Usage of -When not reasonable, the following order:
usage are not consistent with each UCC fill in points that parties have not considered and in fact
Trade) (1) express terms (2) course of performance (3) course of dealing
other? agreed upon.
(4) trade usage
Carnival Line v Shute (1991)
Terms Clause that forum state would be far from P. Unsure of how this one fits in....
No duress, so controls.
C&J Fertilizer v Allied Mutual Insurance
(1975)
Restatement 211 (Standardized If one party had reason to know that other side would not consent Extremely rare, usually only enforced when different
Interpretation Reasonable Expectation doctrine Break-in at plant, P of limited education.
Agreements) to K if term was in it, that term is excluded. bargaining power.
Definition of burglary was extremely limited.
P could not have expected this.

Rule holding that in instances of contractual ambiguity, should be Encourage drafters to write comprehensibly. All things equal,
Interpretation Contra Proferentem
construed against drafter. better to hold source of confusion liable.
Statute of Frauds
C.R. Klewin v Flagship Properties (1991)
110) Transfer of land, $500 or more, not to be performed
P contracted D to build. Agreement
within 1 year, long-term leases, creditor-debtor dealings,
publicized and taped. Began performance
consideration for marriage.
within a year, but then wanted to get out of.
Because oral contract did not specify that was
2-201) K for sale of goods of $500 or more,
impossible to do in a year, statute of frauds
quantity not enforced above stated amount
did not apply. The point: many judges think statute of frauds old fashioned, so
Exceptions:
Restatement 110 (Classes of example: after phone order for 100 widgets, will restrict use greatly. Unless a contract specifies performance
What is subject to the SOF's -w/ merchants confirmation within reasonable time and receiver
Contracts Covered) the seller sends a confirmation that names the will not begin in one year, then even if practical impossibility to
SoF requirement of sufficient writing has reason to know of its contents unless objection w/in 10 days or
quantity, B fails to object and had reason to perform in a year, Courts will say could be performed in a year.
signed by defendant? receipt
UCC 2-201 (SoF) know of the contents NOTE: Just because the SOF does not apply to the confirmation
-specially manufactured goods, that are not suitable for sale to to
example: The partial acceptance of 4 fridges letter, the seller must still prove that there was an oral K made.
others, and before notice of repudiation the seller makes a
substitutes for a writing signed by the buyer
substanital beginning or commitment for procurement, and the
but the 6 units which have not been accepted
circumstances reasonably indicate that the goods are for the buyer.
are not supported.
-admittance in pleadings,
example: Buyer sends a check for $2,000 for
-payment has been made/ accepted (performance)or goods have
4 machines and the seller cashes it, this
been received and accepted
substitutes for a signed writing on 4 machines.
201)Writings must be sufficient to show contract has been made,
signed by party against whom performance sought, specify
quantity, many documents may be combined where one would
UCC 2-201 (SoF) Migerobe v Certina USA (1991)
not work alone .
What type of writing required for P contracted to buy watches from D- oral In this regard 2-201 functions as an evidentiary rule. Main
SoF -A writing is not insufficient because it omits or incorrectly states
the SoF? Restatement 132 (Several contract. Integration of D's documents enough concern finding a contract existed.
a term agreed upon
Writings) to show contract- two signed.
-The K is not enforceable beyond the quantity of goods shown
in such writing
132)Signature need not be manual- letterhead suffices (RS 132)

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Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
Exceptions:
-Parties concede to K in court
ConAgra v Nierenberg (2000)
-Between merchants: Receiver doesn't object to confirmation in 10
Farmer said would sell grain orally,
days
Exceptions to Statute of Frauds confirmation was sent, didn't respond in 10
SoF UCC 2-201(2) & (3) (SoF) -Goods Specially manufactured and not suitable for sale to others Evidentiary rule once again
written requirement days, then tried to sell to someone else. Court
and the seller has made either a substantial beginning of
did not allow statute of frauds to be used as a
manufacture of commitments for their procurement
defense b/c of confirmation exception.
-Performance: Made and accepted payment, or received and
accepted goods
UCC 2-201 (SoF) Lige Dickson v Union Oil Co. (1981)
When the statute of frauds seems to help committ fraud
When the statute of frauds conflicts with promissory estoppel (ie, Oral contract to purchase asphalt. D raised
Statute of Frauds v Promissory
SoF Restatement 139 (Enforcement relied upon oral contract), UCC should win. Otherwise, would price, P sued. P relied on representations, but
Estoppel Revised UCC may allow PE to overcome Statute of Frauds, but
by Virtue of Action in undermine statute of frauds entirely. since unwritten, statute of fraud said no
demands more "substantial reliance.”
Reliance) contract.
UCC 2-209(3): If there has been acceptance of the goods, you
UCC 2-209 (Modification, can introduce parol evidence to show that the contract was In Brookside v. Mama Rizzo’s, the court
Recission, and Waver) orally modified allowed Brookside to show that the contract
Can you orally modify a written This only works for goods delivered in the past. This cannot be
SoF had been orally modified because the amount
ccontract governed by the SoF? shown for goods to be delivered in the future.
Restatement 149 (Oral was over $500 and the goods had been
Modification) accepted.
149) the modified contract would take place of the old one
210) (1) Buyer and seller may always delegate their performance,
UCC 2-210 (Delegation of - unless they agree otherwise or example: A contracts with B to make cookies, Policy: delegation of performance is recognized as a normal
Performance; Assignment of -unless the other party has a substantial interest in having the B then delegates his performance to make and permissible incident of K for the sale of goods so long as
May the seller or buyer delegate Rights) original promisor perform or control the acts required by the K. cookies to C there is no substantial reason why the delegated performance
Assignment/Delegation
their performance to a 3rd party? will not be satisfactory as personal performance.
Restatement 318 (Delegation of 318) yes, unless contrary to public policy or terms of his promise In Contemporary Mission v. Famous Music
Performance of Duty) OR the obligee had a substantial interest in particular person Corp.,
perform
UCC 2-210 (Delegation of
210) (1) No delegation of performance relieves the party
Performance; Assignment of
delegating of any duty to perform or any liability for breach
Rights)
Does delegation to a 3rd party 318) unless obligee agrees otherwise does not discharge duty or In Contemporary Mission v. Famous Music
Restatement 318 (Delegation of
Assignment/Delegation relieve the original party from duty liability Corp., the transfer of its record to ABC to not
Performance of Duty)
to perform or liability? get it off the hook.
329) where obligee agrees to to accept performanse by the
Restatement 329 (Repudiation
delegated person, the K is said to be "novated" aka the obligor is
by Assignor and Novation with
relieved of liability for performance and drops out of the picture
Assignee)

UCC 2-210 (Delegation of


Can you delegate a duty to Performance; Assignment of
someone if the other party really Rights) If the party has a substantial interest having the original promisor Example: You contract with a certain brain
Assignment/Delegation
wanted the original promisor to do perform. . . .then NO surgeon
it? Restatement 318 (Delegation of
Performance of a Condition)
What should a party do if it is UCC 2-210 (Delegation of
Assignment/Delegation worried about the 3rd party's ability Performance; Assignment of (5) demand assurances from the assignee (UCC 2-609)
to perform? Rights)

Page 16 of 21
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Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
210) (3) unless the circumstances indicate otherwise, it only bars
UCC 2-210 (Delegation of delegation of performance
In Contemporary Mission v. Famous Music
Performance; Assignment of
How do you construe a prohibition Corp., there was a non-assignability clause in
Assignment/Delegation Rights) 322) (1) Same as above
of assignment of "the contract"? the Virgin K. The Ct. held that it barred
delegation of performance.
Restatement 322

UCC 2-210 (Delegation of


Performance; Assignment of 210) (4) assignment of all rights and unless circumstances indicate
How do you construe an Rights) otherwise, it is also a delegation of performances.
Assignment/Delegation assignment of "the contract" or of
"all my rights under the contract'? Restatement 328 (Interpretation 328) operates as a promise to perform delegated duties and and
of Words of Assignment; acceptance of the assigned rights
Effect of Accpetance)
example 1: A contracts to sell B "all B's
requirements of widgets from Dec. 1 to Jan.
210) (2) All rights of seller or buyer can be assigned 1". . . B then assigns its right to C. Assuming
Unless the assignment would: they have different requirements, this could
1. materially affect the duty of the other party not be assigned b/c it would materially affect
2. increase the burden or risk imposed on the other party A's duties.
3. impair the other party's chance of obtaining return performance
Note: the following two rights can be assigned even if the
4. the parties have agreed to no assigments example 2: A sells to B per B's quality
parties have agreed otherwise:
standards. B assigns to C, who has much
UCC 2-210 (Delegation of -a right to damages for breach of whole K
higher standards. . . (this increases the burden)
Performance; Assignment of -a right arising out of the assignor's due performance of its
317) A contractual right can be assigned. . . Unless it would: or the Sally Beauty Products case where Ct.
May the rights of the seller or Rights) entire obligation
Assignment/Delegation ANY of the above OR found K to distribute could not be assigned to
buyer be assigned to a 3rd party?
- materially reduce its value to obligor wholly owned subsidiary of a direct
Restatement 317 (Assignment example: A fulfills its obligation to to tender or deliver and B
- the assignment is forbidden by statute or is inoperative on competitor. . . (increase risk)
of a Right) wrongfully rejects. A may assign its right to payment even if
grounds of public policy
the agreement prohibits assignment.
example 3: Seller who has continuing
obligation in regard to goods already
delivered under K by which Buyer is to pay at
least part of price at future dates. . .(such an
assignment may diminish the seller's interest
in continuing performance)

-A term of a contract manifesting obligor's assent is effective


despite any subsequent objection
The other party consented to Restatement 323 (Obligor's
'Assignment/Delegation assignment/delegation, can they Assent to Assignment or
-manifestion after the formation of the contract is effective if made
object later? Delegation)
for consideration or if change of position takes place in reliance on
the manifestation

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The UCC / Restatement Field Guide
Created by Adam Dickson , Paul Kuppich, Brenton Kinker, and Jeff Carroll

Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
3 Alternatives to extend expressed and implied warranties:

(A) any natural person who is in the family or household of the


Note: Alternative C is quite broad as it allows a corporation to
buyer or who is a guest in his home if it reasonable to expect that
sue and the person does not have to be injured in person.
such a person may use the good and is injured in person by
UCC 2-318 (Third Party Alternative A seems to limiting in terms of parties.
What 3rd parties are covered by breach of warranty.
3rd Party Beneficiary Beneficiaries of Warranties
expressed and implied warranties?
Express of Implied) Note: The 3rd party steps into the shoes of the buyer, if there
(B) any natural person who may reasonably be expected to use
are terms that limit the warranty then they will apply to the 3rd
the good and who is injured in person by breach of the warranty.
party too. Limits on physical injury are usually invalid.
(C) any person who may reasonably be expected to use the
good and who is injured by breach of the warranty.
3rd Party Beneficiary Can members of the public sue a Restatement 313 (Government (2) No, not subject to contractual liability for consequential A contracts with the city to maintain a certain
government contractor for Contracts) damages resulting from performance or failure to perform. pressure for the fire hydrants. A member of
consequential damages? the public cannot sue b/c failure to maintain
pressure led to his house burning down.
(1) Must be an intended beneficiary and either:
-performance satisfies obligation of promisee to pay the
beneficiary (Pay my Creditor)
What 3rd parties can sue to for Restatement 302 (Intended and In Lawrence v. Fox, Lawrence was an Note: Many can be incidental beneficiaries, but few are
3rd Party Beneficiary -circumstances indicate the promisee intends to give the
breach of K? Incidental Beneficiaries) intended beneficiary Holly had an obligation intended
beneficiary the benefit of the promised performance (Donee
to pay Lawrence
Beneficiary)

Can the parties make the right of a


Restatement 311 (Variation of (1) can put in terms that discharge or modification of a duty to an
3rd Party Beneficiary 3rd party intended beneficiary
a Duty to a Beneficiary) intended beneficiary ineffective.
irrevocable?
(2) in the absence of an irrevocable term, parties retain the
Can the parties change the power to discharge or modify the duty to the intended beneficiary
Restatement 311 (Variation of
3rd Party Beneficiary agreement so there is no longer an (3) Unless, the intended beneficiary learns of the duty and
a Duty to a Beneficiary)
intended beneficiary? justifiably relies on it first, brings suit on it, or manifests assent to
it at the request of a party
1. if the the K was voidable or unenforceable at the time of
formation
What kind of defenses can be made Restatement 309 (Defenses 2. if the K ceases to be binding in whole or part b/c of
3rd Party Beneficiary
against an intended beneficiary? Against the Beneficiary) impracticability, public policy, non-performance of a condition, or
present or perspective failure of performance
3. limited b/c of beneficiaries own conduct or agreement
Restatement 237 (Effect on In a bargain that is an exchange of promises, it is implied that the
Conditions What is an implied condition Other Party's Duties of a promise that comes second in the timeline will only be performed (this was in the notes only)
Failure to Render Performance) if the promise that comes first in the timeline is performed.

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Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
(a) withhold delivery of such goods;

(b) stop delivery by any bailee as hereafter provided (Section 2-


705);

(c) proceed under the next section respecting goods still


What can a seller do when the unidentified to the contract;
2-703 (Seller’s remedies in
Repudiation buyer revokes acceptance of goods (this was in the notes only)
general)
or repudiates the contract? (d) resell and recover damages as hereafter provided (Section 2-
706);

(e) recover damages for non-acceptance (Section 2-708) or in a


proper case the price (Section 2-709);

(f) cancel.
What can a buyer do when a seller 2-711. (Buyer's Remedies in ( 1) buyer can cover or recover for damages for non delivery (2)
Repuditaion fails to make delivery or General; Buyer's Security recover or replevy the goods (3) hold the goods and resell if goods (this was in the notes only)
repudiates? Interest in Rejected Goods) are in buyer’s possession.
A condition is an event, not certain to occur, which must occur,
Restatement 224 (Condition
Conditions What is a condition in a contract? unless its nonoccurrence is excused, before performance under a (this was in the notes only)
Defined)
contract becomes due.
In Merritt Hill Vineyards v. Windy Heights
Vineyards, there was a condition in the
Restatement 225 (Effects of the contract that the seller must provide proof of
What happens if a condition in a The contract can be broken by the person whose performance is
Conditions Non-Occurrence of a insurance and mortgage confirmation by
contract is not met? dependent on the condition.
Condition) closing. This condition was not met, and the
contract was able to be cancelled by the
buyer.
A term should be interpreted as a promise unless the event is
within the obligee’s control or the circumstances indicate that
obligee has assumed the risk. In Howard v. FCIC, the clause about not
Restatement 227 (Standards of disking the destroyed crops was unclear, and
Conditions Is it a condition, or is it a promise? Preference With Regard to was decided to be a promise, rather than a
Conditions) condition which would have caused total
forfeiture of Howard’s remedy.
*cmmt b:the test is whether a particular interpretation would have
avoided the risk of forfeiture at the time the contract WAS MADE.
What if a condition causes
Restatement 229 (Excuse of a A court can excuse the non-occurrence of a condition unless its
Conditions substantial forfeiture to one of the In Jacobs…
Condition to Avoid Forfeiture) occurrence was a material part of the agreed exchange.
parties?
Restatement 84 (Promise to
An obligor can waive a condition, and if the condition is not met
Conditions Can a condition be waived? Perform a duty in spite of non- (this was in the notes only)
by the obligee, the contract can still stand.
occurrence of a condition.)
In Morin Building Products v. Baystone
What is a contract holds that the Construction, it was more practiceable to use
If it is practiceable to determine if a reasonable person would be
Conditions seller’s performance must be to the Restatement 228 an objective standard because the contract
satisfied, that standard should be used.
buyer’s satisfaction? would not likely have considered aesthetics
upon approval.
What if a seller does not deliver UCC 2-716(3) (Buyer’s Right
Breach after buyer pays, and the goods to Specific Performance or If you can’t cover for the goods, you can replevy them. (this was in the notes only)
have been identified in the K? Replevin)
Restatement 253(2) (Effect of a A repudiation of the contract discharges the other party’s duty to
What happens if one party
Repudiation Repudiation as a breach and on perform and gives him a right to commence suit for breach of the (this was in the notes only)
repudiates the contract?
other parties’ duties) entire contract.

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Category Question to Resolve You Should Use... The Basic Gist of What To Do Is... A Case Example Is... Insights and Notes (and legal realism)
Restatement 241 In K&G v. Harris, the subcontractor’s
How do you determine if a breach (Circumstances Significant in destruction of the wall of a the contractor’s
Breach There are 5 factors to look at. LOOK AT THEM!
is material? Determining Whether a Failure house was a material breach of their duty to
is Material) perform in a workmanlike manner.
(b) if a delay would cause problems making suitable arrangements
or
In K&G v. Harris, the contractor could not
Restatement 242
How does the party who has been (c) if performance by a certain important day is not fulfilled… break the contract immediately after the
(Circumstances significant in
Breach breached know if their remaining breach. There is usually a period for cure
determining when remaining
duties are discharged? unless performance cannot be done because
duties are Discharged)
time is passed.

DISCHARGED!
Seller can cure if…
Can a seller cure improper UCC 2-508 (Cure by Seller of
Breach (this was in the notes only)
delivery? Improper Tender or Delivery) time for performance has not expired and buyer has been timely
notified
In K&G v. Harris, the contractor did not
If the other party has an uncured Restatement 237 (Claims for
have to pay the subcontractor after the wall
breach material breach, do I still have to Damages for Total and for If the other guy materially breached, you don’t have to perform.
was destroyed because it was a material
perform? Partial Breach)
breach.
The stud-owner in Taylor v. Johnston
Restatement 250 (When a If the party (a) makes a statement that they will commit a breach or
How can you tell if the other party repudiated his horse husbandry contract by
Repudiation Statement or act is a (b) a voluntary affirmative act which renders the obligor unable to
repudiates? selling his stud horse to another party after he
Repudiation) perform.
made the stud contract with the mare owner.
Restatement 256 (Nullification In Taylor v. Johnston, the horse stud owner
If the other party has not relied on the repudiation, it can be
Breach Can repudiation be retracted? of Repudiation or Basis for retracted his repudiation and tried to arrange
retracted.
Repudiation) for the mares to be bred.
UCC 2-609 (Right to Adequate
When is it proper to seek assurance
Assurance of Performance.) 2-609) When there are reasonable grounds for insecurity In Koch Materials v. Shore Slurry, the
that a contract will be performed?
plantiff had one of their deals assigned to
another company, and rightfully demanded
Breach
assurance of proper performance. When
Restatement 251 (When a 251) the obligee can treat non-assurance within a reasonable time assurance was not given, the plaintiff
If no assurance is given, is it a rightfully judged it as a repudiation.
Failure to Give Assurance may as repudiation
repudiation?
be treated as repudiation)
In Jacob and Youngs v. Kent, the builder
Restatement 241(e)
If a party breaches unwillfully, can If a party accidentally breaches in good faith, it may not be judged mistakenly put in the wrong brand of pipe. This was a Cardozo decision. He gave the builder a bit of
Breach (Circumstances in Determining
he have some leeway? as a material breach. This was judged not to be a material breach in leeway by imposing his own moral standards on this case.
Whether a Failure is Material)
order to avoid overly harsh consequences.
If a party’s purpose is
frustrated/made impossible, and the
party has already spent money in Restatement 272 (Relief If you’ve spent money in reliance on a contract which becomes
Reliance (this was in the notes)
reliance of the purpose as a down Including Restitution) frustrated/impossible, you can get some money back.
payment/advance to the other party,
can he get restitution?
What is the "central objective"
Purpose of remedies behind our system of contract Restatement 356 "The central objective behind the system of contract remedies is
remedies? compensatory, not punitive"
When might punitive damages be
Purpose of remedies
available in a contracts case? Restatement 355 Only when there is a tort connected with the breach, as well

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Subject to limitations stated in Sec. 350-53, the injured party has a


right to damages based on his expectation interest as measured by:
(a) the loss in the value to him of the other party's performance
Measure of damages in What is the general framework for
Restatement 347 caused by its failure or deficiency, plus
general which
(b) any other loss, including incidental or consequential loss,
caused by the breach, less
(c) any cost or other loss that he has avoided by not having to
perform
A lost volume seller is a seller who cannot effectively mitigate his
damages after a breach because he would have made the second
Lost volume sellers What is a lost volume seller? U.C.C. Sec. 2-708(2) sale anyway. This is often the case when the seller has an
unlimited (in theory) amount of products to sell, as opposed to
someone who is selling something unique.
Reliance damages include "expenditures made in preparation for
Under what circumstances can an
performance or in performance, less any loss that the party in
Reliance damages aggrieved party pursue reliance Restatement 349
breach can prove with reasonable certainty the injured party would
damages?
have suffered had the contract been performed."
When a part to a contract has been
aggrieved in some manner, what
damages may he be owed to place
Expectation damages
him in the position he would have
been in had the contract been fully
performed?
Incidental damages are those incurred by reasonable inspection or In Manourchehri v. Heim (the X-Ray case
Incidental and U.C.C. 2-715 (Buyer's
What is the difference between the delivery costs or other expenses directly related to the breach. that we didn't talk about in class), the buyer
Consequential Incidental and Consequential
two? Consequential damages are those indirectly related damages which claimed $2,500 in lost business. These were
Damages Damages)
the seller could reasonable have foreseen at the time of exchange. consequential damages.
The mall case of Walgreen Co. v. Sara Creek
The U.C.C. says that specific performance is available when the Property Co. covers a specific damages case.
Judge Posner wrote the decision in this case and gave a very
"Goods are unique or in other proper circumstances." Obviously Walgreen drug store does not want Phar-More
U.C.C. 2-716(1) (Buyer's Right good description of when and why injunctions might be the
When is it warranted instead of this is open-ended, and it's more instructive to look at a case. One to come into an empty storefront at the mall,
Specific Performance to Specific Performance or proper remedy ("Here damages would be a costly and
monetary damages? thing that might trigger specific performance is if it is very which would break its contract that says it is
Replevin) inaccurate remedy"), mostly relating to trying to keep the
difficult or impossible to figure out damages. Know this, though - the exclusive pharmacy at the mall. The mall
overall efficiency balanced.
specific performance as a remedy is quite rare. developer just wants to pay damages, but
Walgreen does not feel that this is adequate.
Liquidated damages must be "reasonable." The Restatement
What limits does the Restatement
RST 356(1) (Liquidated believes that high liquidated are against public policy. This is also
Liquidated Damages place on liquidated damages
Damages and Penalties) because they usually go against the buyer and favor the seller (who
clauses?
is attempting to keep his damages to a minimum).
What does the U.C.C. think about Using the same "reasonableness" mandate as the Restatement, the
using liquidated damages to U.C.C. says that liquidated damages clauses should not be used as
Liquidated Damages U.C.C. 2-718(1)
enforce penalties for non- or under- a penalty: "A term fixing unreasonably large liquidated damages is
performance? void as a penalty."
An aggrieved buyer may try to "cover" his damages by purchasing
comparable goods on the open market. This way, he still meets the This comes up in the KGM Harvesting
What does "cover" mean for a U.C.C. 2-712 ("Cover"; Buyer's A buyer who covers waives the right to sue under 2-713. You
"essential need" of fulfilling a third-party contract that he has Company v. Fresh Network case. This is
Cover buyer seeking a remedy for a Procurement of Substitute can't cover, then try to sue under 2-713 because the market
made. He then can seek the price difference between the cover when the seller breached on his delivery of
breached contract? Goods") price suits you better.
goods and the contract as his remedy. (together, of course, with lettuce and sold to someone else instead.
any incidental and consequential goods)
U.C.C. 2-713 (Buyer's To recover under 2-713, an aggrieved buyer simply uses the
What is the difference between Note that the market price used is the market price "when the
Market Price Damages Damages for Non-Delivery or difference between the market price and the price of the goods that
market price differential and cover? buyer learned of the breach."
Repudiation) he were not delivered.

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