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Contracts II Outline Professor Albert For Test: 35 multiple choice questions (2pts each); 2 writing questions with 2 sub

parts each -Spend 2 hrs on multiple choice, 1 hr on essay -One of the Essays: What are all of the arguments she can make and what is the likelihood of the success of each argument I. Defective formulation and indefinite agreements a. General rule: the terms of an agreement must be reasonably definite to create an enforceable contract, as per Restatement § 33. i. What approach should we take to determine if an agreement is too indefinite to be enforceable? 1. Make sure there is incurable uncertainty about what the parties agreed to. 2. Make sure the uncertainty relates to a material aspect of the relationship between the parties. ii. Raffles v. Wichelhause - The Peerless Case 1. Who should bear the risk of ambiguity of terms? a. Restatement § 206: Interpretation against the drafter: In choosing among the reasonable means of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds. 2. Suppose what was said was ambiguous but both parties had the same ship in mind- would there be a contract in that case? a. Ambiguities: Basic rule. If the agreement is ambiguous on its face, or becomes ambiguous in performance, parol evidence is admissible to clarify the parties’ intent. i. But, if the ambiguity is so fundamental that there is no way that the court could determine what the parties intended, there may be no enforceable contract at all. ii. Minority view: the trend is to admit parol evidence more frequently. Even where the terms of a contract appear to have a plain meaning; parol evidence will still be admitted to interpret the terms if the language of the contract is reasonably susceptible to the interpretation offered by the party wishing to admit the parol evidence. b. Restatement §20 Effect of Misunderstanding i. (1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and 1. (a) neither party knows or has reason to know the meaning attached by the other; or 2. (b) each party knows or each party has reason to know the meaning attached by the other.

 

ii. (2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if 1. (a) that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or 2. (b) that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party. iii. Comment B: The meaning given to words or other conduct depends to a varying extent on the context and on the prior experience of the parties. Almost never are all the connotations of a bargain exactly identical for both parties; it is enough that there is a core of common meaning sufficient to determine their performances with reasonable certainty or to give a reasonably certain basis for an appropriate legal remedy. See § 33. But material differences of meaning are a standard cause of contract disputes, and the decision of such disputes necessarily requires interpretation of the language and other conduct of the parties in the light of the circumstances. 3. What if the parties here actually did have different ships in mind when they struck their deal? Would there be a contract under § 20? a. Comment C: Interpretation and agreement... the parties may have different understandings, intentions and meanings. Even though the parties manifest mutual assent to the same words of agreement, there may be no contract because of a material difference of understanding as to the terms of the exchange. iii. UCC § 2-204 - Formation in General. 1. A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. 2. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. 3. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. II. Incomplete and deferred agreements; remedies a. What happens when the parties have the intent to be bound, have reached an agreement on some of the terms but have left other terms open or provided that the terms would be clarified or defined later on? i. “[W]here the parties have completed their negotiations of what they regard as essential elements, and performance has begun on the good faith understanding that agreement on the unsettled matters will follow, the court will find and enforce a contract even though the parties have expressly left these other elements for future negotiation and agreement,

 

if some objective method of determination is available, independent of either party’s mere wish or desire.” 1. Restatement § 204. Supplying An Omitted Essential Term - When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court. a. Omission of Price Term i. No K under §33 ii. § 2-305(4). Where they intend to conclude a contract for the sale of goods, however, and the price is not settled, the price is a reasonable price at the time of delivery if 1. (a) nothing is said as to price, or 2. (b) the price is left to be agreed by the parties and they fail to agree, or 3. (c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded. Uniform Commercial Code § 2-305(1). Or one party may be given power to fix the price within limits set by agreement or custom or good faith. Similar principles apply to contracts for the rendition of service. III. Infancy and mental incompetence a. Capacity to Contract Generally i. Restatement § 12. Capacity To Contract 1. No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances. 2. A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is a. §13 - under guardianship, or b. §14 - an infant, or c. §15 - mentally ill or defective, or d. §16 - intoxicated. b. Infancy - Voidable i. Restatement §14. "Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person's 18th birthday" 1. Those who deal with minors do so at their own risk, and knowing of the fact that the minor can void the contract at any time, but they (adult) cannot. ii. If minor turns 18 after the contract, after time silence will count as affirmation of its terms. iii. Bowling v. Sperry

 

1. Minor (P) buys a car (with help of aunt) from D for $140 and returns it after discovers that it is defective. D estimates that repairs will cost $45-95, so P tries to disaffirm the contract. D responds that P’s grandmother and aunt were present at the time of purchase. Trial court holds for D. Reversed. 2. Can a minor enter into a contract to purchase a non-necessary item? No. a. General rule that contracts of minors are voidable. Irrelevant whether adults were present at the time of purchase, or even loaned P money. b. Lying Exception: Contract valid if minor lies about his/her age (depends on jurisdiction). In this case, D was aware of P’s age when sale was negotiated. c. Necessity Exception: Infants can contract for necessities if they are offered at a reasonable price. Burden of proving this is on the D. In this case, it does not seem that the car was necessary to P. d. Standard remedy is restoration- just give back whatever the minor has. Does not matter even if P caused the damage to the car. The parties do not need to be placed in statu quo (whereas restoration would require the item to be back in its original state). c. Mental Incompetence - Void i. Restatement §15 - Mental Illness of Defect - a person incurs only voidable K duties if mentally incompetent. 1. Unable to understand nature and consequences of transaction 2. Unable to act in reasonable manner in relation to transaction & other party knows ii. CitiFinancial, Inc. v. Brown 1. D, a severely retarded individual, and his mother obtained a loan from P that consolidated their debts and lowered their monthly payments. The D was required to sign a contract with an arbitration clause that required any claims against P to be arbitrated. D brings suit alleging fraud and breach of contract, and seeks to avoid arbitration on the grounds that D is incompetent and thus the agreement is void. P argues that the D’s mother signed the agreement as guardian, and that the issue of competence should be decided by an arbitrator. 2. Can a party void a contract based on incapacity? Yes. a. If a party lacks capacity to consent, there is no contract. b. Whereas contracts with infants or incapacitated individuals are voidable, those with incompetent individuals are void. For instance, contacts with drunks can be affirmed once they sober up, but contracts with incompetents can probably never be confirmed. d. Intoxication – Voidable i. Restatement § 16 - Intoxicated Persons 1. A person incurs only voidable contractual duties by entering into a transaction if the other party has reason to know that by reason of intoxication a. (a) he is unable to understand in a reasonable manner the nature and consequences of the transaction, or b. (b) he is unable to act in a reasonable manner in relation to the transaction. ii. Evidence of impairment must be present

 

IV. Mistake a. Defined i. Restatement § 151 - Mistake Defined - A mistake is a belief that is not in accord with the facts. b. Mutual Mistake i. Restatement § 152 - When Mistake Of Both Parties Makes A Contract Voidable 1. Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154. 2. In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise. ii. Beachcomber Coins, Inc. v. Boskett 1. Facts: Pl purchases rare dime from Df. Both parties believe it is genuine and worth $500 (price); no fraud. 3rd party wants to buy dime from Pl for $700, provided it’s authentic. Then discovered it’s counterfeit. Pl sues to rescind K. a. No one assumed the risk; both thought it was real. Court decides to use industry custom of a “return privilege” for altered coins. Pl can return & get money back. c. Unilateral Mistake i. Restatement § 153. When Mistake Of One Party Makes A Contract Voidable - 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 material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and 1. (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or 2. (b) the other party had reason to know of the mistake or his fault caused the mistake. ii. Boise Junior College District v. Mattefs Construction 1. Facts: Bids for construction K, costs estimated at $150k. Df places bid for $141k + promise to pay diff with next lowest bid if they refuse to perform. Df bid very low due to mistake. Next lowest bidder $149k. Pl sues to recover diff. 2. Court uses a 5-part test to decide whether a mistake in bidding in public works K can be rescinded for mistake: don’t need to know this test. a. Mistake is material? – omission of an item represents 14% of total cost – yes. b. Unconscionable to enforce? – Cost for Df is $151. – yes. c. Mistake due to violation of positive legal duty or culpable negligence? Clerical error. –No d. Party to whom bid is submitted will not be prejudiced except by loss of bargain? Pl expected to pay $150k, next lowest $149k. –No hardship. e. Prompt notice of error given? Notice before Pl could accept. –Yes.

 

Quality (dissent) – b/c it was the same cow. f. at the time the contract is made. Theres a Mistake. Facts: Pickles buys property from Messerly. or c. Neither party knew that there was an illegal septic tank there. and refuses to sell. Mistake made on what was actually sold – the beef or the breeding cow. that he has only limited knowledge with respect to facts to which the mistake relates but treats his limited knowledge as sufficient 3. When Mistake Of Both Parties As To Written Expression Justifies Reformation . Lenawee County Board of Health v. quality as a basic assumption . 2. and offer sent to buyer for less than Pl wanted. the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so. Plaintiff sends offer for sale to buyer via telegraph (Df). 2. 1. Court allocates risk b/c it’s reasonable to do so. Walker 1. whether it was barren or breeding e. He is aware. Df discovers cow is not barren and worth $750+. that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient. A party bears the risk of a mistake when a. No relief if it is just a disagreement or mistaken belief over the quality or value. K said that buyer has inspected property & accepts in present condition. then sues Df for diff in value.Party excused from performance if there is a mistake about the very nature/character of the thing being bargained over. The person who chose the means of communication bears the risk. Ayer v. Western Union Telegraph Co. Pickle seeks to rescind/avoid K based on the mutual mistake.(majority view). and only worth price of its beef $80. Facts: Pl wants to buy cow from Df. Contract can’t be rescinded due to a mutual mistake as to the nature of the property when the K included an “as is” clause b/c buyer had assumed the risk. Board of health subsequently obtains an injunction & says it’s uninhabitable by humans until sewage fixed.Where a writing that evidences or embodies an agreement in whole or in part fails to express the agreement because of a mistake of both parties as to the contents or effect of the writing. quality a. g. ii. i. and chooses one that both parties believe is barren. Substance (nature/character) vs. iii. Sherwood v. b. Restatement § 155. Substance vs. When A Party Bears The Risk Of A Mistake 1. Substance . When by agreement risk is allocated to him 2. Restatement § 154. at time K made. or b. Messerly 1. 2. he is aware. the risk is allocated to him by agreement of the parties. When a Party bears the risk of mistake (§ 154) 1. “As is” Clauses – Buyer is assuming the risk i. Df makes a mistake in transmission. Pl still sold to buyer. Who bears the risk? i. Now What? i.d. the court may at the request of a party reform the writing to   6  .

ii. a negligent or even innocent misrepresentation may be sufficient to make a K voidable if it is material. V. If reasonable. Fraud a. Restatement § 164. or 2.A mistaken party's fault in failing to know or discover the facts before making the contract does not bar him from avoidance or reformation under the rules stated in this Chapter. A misrepresentation is an assertion not in accord with the facts. promisee may interpret a promise as an assertion that promisor intends to perform (§ 171(2)) 3. When a 3rd party makes a fraudulent or material misrep. Restatement § 156. i. However. Restatement § 171 1. Restatement § 162. Effect Of Fault Of Party Seeking Relief . When A Misrepresentation Is Fraudulent Or Material – when it induces a party to assent. (§ 172)   7  . He knows that he does not have the basis that he states or implies for the assertion. iii. ii. except to the extent that rights of third parties such as good faith purchasers for value will be unfairly affected. may not need to show reliance is justifiable. When A Misrepresentation Makes A Contract Voidable . if misrep is intentional. b. He knows or believes that the assertion is no in accord with the facts. A recipient's fault in not knowing or discovering the facts before making the contract does not make his reliance unjustified unless it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. When Reliance is Justified . on which a party justifiably relies.Must show that you in fact relied.If reformation of a writing is otherwise appropriate. i.express the agreement. unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. and: 1. and that it was justifiable. Not justified when it’s an assertion of Intention only. Restatement § 159 – Misrepresentation Defined 1. it is not precluded by the fact that the contract is within the Statute of Frauds. When Misrepresentation makes a K Voidable – not necessary that misrepresentation was intentional. on which other party justifiably relies 2. iv.when it induces a party to assent and: 1. Restatement § 160 – When an action is equivalent to an assertion (concealment) 1. (§ 171(1)) 2. An action intended or know to be likely to prevent another from learning of a fact is equivalent to an assertion that the fact does not exist iii. unless the other party to the transaction in good faith & w/o reason to know of misrep gives value or relies materially on the transaction. When one party makes a fraudulent or material misrep. Mistake As To Contract Within The Statute Of Frauds . as long as intention is consistent with reasonable standards of fair dealing. He does not have the confidence that he states or implies in the truth of the assertion. Restatement § 157. or 3.

a. and sellers knew and never told anyone. causing $5k in damages. Df answered that its water damage. even though   8  . and didn’t correct that mistake. and Pl buys the house. Seller didn’t know war is over. you cannot by implying or acting in a certain way to impose on the other party so that they would interpret it in a certain way. If the information is in the public domain where one party could have obtained it with due diligence. Looking at house. He knew they were making a mistake (§161(b)). Saying it is water damage may be factual. (c) Where he knows the disclosure would correct a mistake made by other party as to a writing 4. & if non-disclosure made in bad faith. Organ a. Jones 1. (a) Where he knows that it is necessary to correct a previous statement or false impression 2. ii. but asked buyer if there was any news.” iii.c. Non-Disclosure as a Misrepresentation and the Duty to Disclose i. Plaintiff to sell tobacco to Defendant. Positive Concealment § 160. Pl wants to buy house from Df. (b) Where he knows that disclosure would correct a mistake made by other party as to a basic assumption on which K made. Laidlaw v. But they asked. Even in contractual situations where a party to a transaction owes no duty to disclose facts within his knowledge or to answer inquiries respecting such facts. When Non-Disclosure Is Equivalent To An Assertion 1.– when you act in a way that is intended or you know it’s likely to prevent the other from learning a fact. failure to correct that misunderstanding will constitute a misrepresentation if the non-disclosure amounts to a “failure to act in good faith” or to act “in accordance with reasonable standards of fair dealing. then there is no duty to disclose. and price of tobacco expected to go up once war was over. the law is if he undertakes to do so he must disclose the whole truth. 1. Buyer calls seller next day and wants to buy the tobacco. but he probably knows that he is misleading them into believing that there are no termite problems by that statement. Restatement § 161. a. Then Pl finds out there had been termite infestation in the past. News was in public domain & both parties had access to info. (d) If there is a special relationship of trust& confidence btwn the parties. purchase made. Jury would need to decide if silence made in bad faith. b. Pl sees something that looks like termite damages & asks Df if it is. House passes a termite inspection. but one cannot falsely impose information on the other party (or if there is silence in bad faith). Non-disclosure does not necessarily amount to fraud. If Hill hadn't asked about the ripple. Hill v. Defendant had no duty to disclose. But court still has to decide if the misrepresentation was material or not. However. News spread that War of 1812 is over. Buyer silent. then probably no duty to disclose. Failure to Correct a Mistake (§161(b)) – If one party knows that the other is making a mistake as to a basic assumption. 3.

Although Df had no duty to disclose. If conduct that appears to be a manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress. that recipient reasonably relies 2. When there is a special relationship of trust & confidence. Duress and undue influence a. w/o certainty as to the existence of a fact or expresses a judgment on something. Arthur Murray. b. A statement of a party having superior knowledge may be regarded as a statement of fact although it would be considered as opinion if the parties were dealing on equal terms. and encouraging her that she should keep progressing. rather than opinion (which is usually merely “puffing”). and Pl takes it at face value (& they’re not dealing on equal terms). but another portion is not. The essential rule is that duress consists of “any wrongful act or threat with overcomes the free will of a party. Restatement § 169. VI. Df believed the opposite of what they actually told her (he lied). ii. when in fact this was not true. there are special circumstances that make an assertion of opinion actionable. iv. Half-Truths (§ 159 comment b) – Of part of the truth is told. the conduct is not effective as manifestation of assent   9  . Misrepresentation of Fact vs. and that he knows enough facts to justify in him forming the opinion. Duress Generally i. or into modifying it. (Ex: Maybe in Hill they put boxes on termite holes specifically so that inspector wouldn’t have seen it). once he decides to disclose. so their opinion mattered. 2. this may constitute misrepresentation. Dfs were experts in the field (they had superior knowledge).it’s not verbal. the person whose giving the opinion has a special skill. Restatement § 168. Opinion i. A recipient may interpret that the assertion is not incompatible with his actual opinion. However. d. Reliance On Assertions Of Opinion – An opinion is one of belief. Misrepresentation must be of fact. Pl bought a whole bunch of dance lessons and is alleging that Df induced her into buying them by telling her she was a wonderful dancer. so as to create an overall misleading impression. as compared with himself. Recipient is for some other reason particularly susceptible to a misrep of the type involved. – Reliance on an opinion is not justified unless: 1. 1. 4. Vokes v. Defense of duress is available if Df can show that he was unfairly coerced into entering into the contract. he must tell the truth. Inc. Recipient reasonably believes that. Restatement § 174 When duress by physical compulsion prevents contract formation a. 1. judgment or objectivity with respect to the subject matter 3. iii.

Df told Pl that if it did not pay $31k. There will be duress if the threatened breach would. 2. i.Where assent is induced by an improper threat by other party that leaves victim with no reasonable alternative. Subjective standard: Look at the subjective to determine if someone’s free will has been overcome. No duty of good faith in negotiations. To find economic duress in a business K: 1. ii. Threat is improper if what is threatened or the threat itself is a crime or tort. She threatened to poison him w/ arsenic etc. Inc. This court used a subjective standard: the party’s state of mind is relevant in determining whether there is an interference of free will in contracting (eggshell plaintiff). Austin Instrument. and gives value or relies materially on the transaction. but no basis so in bad faith. so this shows he really believed she would do it. The threat to not do business in the future is not economic duress. and the threat is made in “breach of the duty of good faith and fair dealing. c. Pl conveyed to her property. a. Machinery Hauling. and no K exists for future business. Pl contracted to buy steel from Df. Economic Duress i. 4. v. a. if you threaten to sue. price of undelivered loads. doesn’t know of duress. and told Pl to return remaining undelivered loads. if carried out. and contracted with Austin for some goods it needed for the govt K. Under duress by his wife. 3. and have it delivered to a 3rd party.When a threat is improper a. Df has no obligation to Pl . Then Austin threatened to breach unless Loral agrees to some new K’s and a raise in the price of the existing K. a. Rubenstein i. Steel of West Virginia 1. b. result in irreparable injury that could not be avoided by a lawsuit or other means. Undue Influence   10  . it would cease doing business with Pl (this potential loss was over $1mm/year). Rubenstein v. 3rd party rejected the steel b/c it was defective. Ordinary remedies doesn’t cover the loss ii. There is a wrongful threat to breach 2.2. Inc. Loral Corp. v. plus her dad in jail for murdering ppl w/arsenic. if criminal prosecution is threatened. Also you would take into account if a person of ordinary firmness would have also been coerced in the situation.no legal duty to do business w/Pl. or the threat is a breach of the duty of good faith and fair dealing under a K with the recipient. 4. unless the other party enters in good faith. Restatement § 176 . Restatement § 175 When Duress by Threat Makes a Contract Voidable . There are no alternative sources of goods. Loral got a govt K. Also if it’s a 3rd party who threatens. Moral compulsion or psychological pressure may constitute duress if the subject of the pressure is overborne and he is deprived of the exercise of his free will..” 1. It overcomes free will 3.

Unconscionable contract or Term. She defaults.” d. Williams v. the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the undue influence either gives value or relies materially on the transaction VII. “Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. If a partys manifestation of assent is induced by undue influence by the other party. a. Ordinarily one who signs a K w/o full knowledge of its terms might be held to assume that risk. and store wants to get all her stuff. If a contract or term thereof is unconscionable at the time the contract is made. Contracts of Adhesion i. If a partys manifestation of assent is induced by one who is not a party to the transaction. Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare 2. Unconscionability a. ii. the court may refuse to enforce the K. Walker-Thomas Furniture Co. or may so limit the application of any unconscionable term as to avoid any unconscionable result. No definition of unconscionability – this gives courts discretion 1. UCC § 2-302. Buyer enters into installment Ks for sale of furniture.   11  . In such a case. K had a provision where debt incurred at time of purchase would be added onto outstanding debts. Policy: to prevent oppression and unfair surprise c. Contracts that have a standardized form and are presented on a take it or leave it basis 1.When Undue Influence Makes a contract Voidable 1. the court should consider whether the terms of the contract are so unfair that enforcement should be withheld (is it unconscionable?). it extended a security interest to everything she bought (even though she might have paid that balance already).i. so until everything paid off. But when a party of little bargaining power (no real choice) signs a commercially unreasonable contract with little or no knowledge of its terms. Restatement § 177 . Restatement § 208 – Unconscionable Contract or Term i. a court may refuse to enforce the contract or may enforce the remainder of the contract without the unconscionable term. or may limit the application of it to avoid an unconscionable result. i.excuse only when P able to show that the drafter actively caused the misrepresentation. or may only enforce part of it w/o unconscionable terms. b. 2. Provides that if the court as a matter if law finds the contract or any clause to have been unconscionable at the time of was made. The defense of unconscionability is mainly used by consumers ii. Consumer Transactions i. 1. it is hardly likely that consent was really given to those terms. At common law these Ks have been "presumptively enforceable" . the contract is voidable by the victim 3.

wouldn’t have a choice if you want the job. i. 1. Illegality a. that term won’t be part of the K. Unenforceable on Grounds of Public Policy i. There was procedural unconscionability – oppression." ii. One-sided coverage of claim (those that employee would bring covered. Pl brings tort claims against employer. a. no negotiations 2. Standardized K is enforceable unless it’s unconscionable – pattern of one-sided terms 1. In this type of situation. the denial of K's enforceability would help public policy by deterring parties from entering into these types of agreements b/c of the lack of judicial protection. However.2. unless unconscionable e.Although all the conditions of a K are satisfied. Inc. This may be unfair because one party will benefit at the loss of another. 2. to get him a beer license for $450.if a party has reason to know that the other party wouldn't assent to a particular term. Countrywide Credit Industries. Arbitration fees may be unconscionable if costs more than normal litigation c. Couldn’t get license. Where both Parties are guilty of Illegality – the court will do nothing. Df says K has an arbitration clause. 3. Agreements Unenforceable on Grounds of Public Policy . Ferguson v. Sinnar v. lacks meaningful choice). However. One-sided discovery provision – Df had certain advantages VIII. There was substantive unconscionability – terms so onesided it shocks the conscious a. For K to be unconscionable there must be procedural and substantive unconscionability (although a greater degree of one can make up for less of the other). He agrees with his friend that. ii. they are enforceable. the courts may allow restitution. Basically. Restatement § 211. a K can be held unenforceable if there's something in the bargain. Le Roy a. through a 3rd party. Procedural and Substantive Unconscionability i. no one can recover. Pl (owner) wants money back (3rd party has it).   12  . K can be substantively unconscionable where the actual terms of the agreement are so one-sided they shock the conscious (party benefits from unreasonably favorable terms). K can be procedurally (manner in which K was enacted) unconscionable if there is oppression or surprise (unequal bargaining power. sometimes a guilty party ends up being rewarded for engaging in the illegal transaction. those that employer would bring not covered) b. performance or objectives that are "illegal" or against "public policy. Store owner denied beer license. 1.

iv. but never married. may be utterly repudiated tomorrow. Df argues that relationship was immoral & illegal. The parties' justified expectations b. the illicitness was not what was bargained for. b. it would not be enforceable. Court will look at a legislative mandate to direct. she’s left with nothing. Inc. the strength of that policy as manifested by legislation or judicial decisions." 1. c. Clearly illegal b/c only state can give you this type of license. the likelihood that a refusal to enforce the term will further that policy. Data Management. vii. When none available. any special public interest in the enforcement of the particular term. the parties' justified expectations. When relationship ends. account is taken of a. b. Parties lived together for 13 years. any forfeiture that would result if enforcement were denied. the seriousness of any misconduct involved and the extent to which it was deliberate. Watts 1. However. Factors in weighing this interest: a. and which. The claim here would be unjust enrichment where Pl did a lot of work to help build the couple’s wealth. courts focus upon 2 aspects of the covenant: 2. 3. the promise or term is unenforceable if the "interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms. She files suit to get a portion of property accumulated during their relationship. account is taken of a. and c. In weighing a public policy against enforcement of a term. In weighing the interest in the enforcement of a term. 2. Watts v. vi.iii. A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms. Court points out that where the sole consideration was the illicit relationship. v. 2. and c. b. 3. also would be an argument of last resort "Public policy … is but a shifting and variable notion appealed to only when no other argument is available. viii. Any forfeiture that would result if enforcement were denied. but not deny restitution. so recognition would be against public policy. the directness of the connection between that misconduct and the term. Whether it is reasonable in scope a. v. Greene   13  . we want to discourage people from entering into illegal agreements. and d. In general. Any special public interest in the enforcement of a particular term. Pl cannot recover. if relied upon today. then yes." Court may decide that there is a public policy strong enough to deny enforcement of the K. Whether it protects some legitimate interest of the promisee. Non-Compete Agreements Unenforceable on grounds of public policy because overbroad 1. Hard to define public policy. Restatement § 178 – When a term is unenforceable on grounds of public policy 1.

Strict Method – if overbroad. ii. Rule of Reasonableness – If found to have been written in good faith. 2. 2) If the offense is not sufficiently serious. may be able to get restitution. a. Whether there is an integrated agreement is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule. reduces the incentive to enter into illegal contracts. then it’s unconscionable & won’t be enforced 2. 4) If one party repudiates before the commission of the illegality. ix. Suit for breach of non-compete. Court uses this method. iii. it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression. IX. When two parties have made a K and have and have express in a writing to which they have both assented as the complete and accurate integration of that K. ii. Exceptions: 1) If parties are not equally at fault. employee will not perform any other similar services for any person or firm in the state of Alaska. Remedies 1. b. reasonably alter the covenants to make I enforceable. may have a cause of action for fraud or other K action that may make the writing worthless ii. Blue Pencil method – Just strike out certain words that make it unconscionable 3. he then must prove that the writing was created with mutual intention to be final and complete   14  . Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement. Contracts are void when illegal.i. 3) the courts may sever the contract and enforce the non-illegal parts. Where both parties are equally guilty. An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. the typical remedy is for courts to leave the parties as it finds them. 3. A lot will depend on whether the P knew or should have known about the illegality. the courts may enforce it anyway (watering a lawn on a no-water day). court may choose to enforce or get involved via its equitable powers. Parol Evidence Rule a. Restatement § 209 – Integrated Agreements i. Clause says that for 5 years after termination. The person who is trying to exclude the evidence that is not in the writing will raise the parol evidence rule. Court proposes three methods with approaching overbroad covenants: 1. even if illegality is not raised at trial. evidence whether parol or otherwise of prior understandings or negotiations will not be admitted for the purpose of varying or contradicting the writing. i. Even if PER excludes evidence.

Four corners.MINORITY— subjective intent. NO→ parol does not apply c. NO→ PRE does not apply b. to the extent that the writing is not a final and complete expression of agreement. Consistent with K. explain. YES→ go to b ii. Differing interpretation of Contract 2.what would parties naturally do c.see approaches i. Questions to Ask when dealing with Parol Evidence a. NO → evidence in 3. NO → go to d d.iii. no parol evidence may be admitted to supplement. i. YES → evidence out ii. Is the K complete. Modification of the written agreement c.more likely to allow evidence in d. Is the K finali. that it be final and that the evidence of the prior agreement does not contradict the written K but only explain or supplement it by: i. The Parol Evidence Rule: provides that to the extent that the parties execute a writing that is and is intended to be a final expression of their agreement. (a) by course of dealing /or usage of trade /or by course of performance ii.look at the document in writing itself and see the intent of parties b. Challenge the contract d. but only terms agreed to orally at the time of the contract (no bar   15  . or contradict it. Four Ways to Get Parol Evidence In: (Must be collateral to K.to decide whether the K is complete the UCC looks at whether the parties would certainly put it on writing. Is the K writteni. Enforcement of an oral agreement b. This lets a lot of stuff in. b/c we must be CERTAIN that they people would have put it on writing c. Does the outside agreement contradict the writing i. YES → evidence out ii. The rule deals with both written and oral terms allegedly agreed to prior to the execution of the final agreement. Modern. However. UCC 2-202-requires that the K be in writing. consistent but not contradictory parol evidence may be admitted to supplement or explain those parts of it which have not been finally expressed. Traditional-MAJORITY—looks at the parties objective intent. Approaches to decide whether a K is complete a. YES→ go to c ii. The judge will then evaluate all relevant evidence to establish the intent of the parties and see if they intended the writing to be final and whether the evidence should came in or not 1. (b) By evidence of consistent additional terms unless the K is complete. and not expected to be included in the K) a.

Where the parties have adopted a writing as a complete and exclusive statement of the terms of the agreement. both form part of the integrated agreement. and require interpretation both of the integrated agreement and of the prior agreement. it supersedes inconsistent terms of prior agreements. iii. See §209. Where an agreement is partly oral and partly written. if the parties wanted it they would have included it. A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them. Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule) 1.. but the integrated agreement must be given a meaning to which its language is reasonably susceptible when read in the light of all the circumstances. iv. It renders inoperative prior written agreements as well as prior oral agreements. Contemporaneous Agreements-if another document is executed at the same time the formal document was signed then that document is treated as part of the K and will not be subject to the PER but if an oral agreement is made before or at the time the formal document is signed then the it must meet the elements of PRE in order to be admitted into evidence. To apply this rule. (b) Inconsistent terms. (c) Scope of a completely integrated agreement. A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope. the court must make preliminary determinations that there is an integrated agreement and that it is inconsistent with the term in question. Exception is when the subsequent agreement occurred during the same “process of formation” like a subsequent oral agreement during a closing that happened “contemporaneously. See §§212. iii. The existence of the prior agreement may be a circumstance which sheds light on the meaning of the integrated agreement. Whether a binding agreement is completely integrated or partially integrated. See §209. Where writings relating to the same subject matter are assented to as parts of one transaction. The fact that the written or oral term is not in the final agreement weighs heavily against allowing its use. even consistent additional terms are superseded. Restatement §213. 214. ii. 2. This Section states what is commonly known as the parol evidence rule.” 1. See §216. (a) Parol evidence rule. a. To apply the rule   16  . But there may still be a separate agreement between the same parties which is not affected.. ii.. the writing is at most a partially integrated agreement. Parol Evidence Rule does not cover terms agreed to after the execution of the written agreement – these are dealt with as modifications. Those determinations are made in accordance with all relevant evidence. Comments: i.of written contemporaneous evidence because a contract can consist of 2 writings so it could result in a bar of a part of the actual contract). Contemporaneous oral agreements are NEVER allowed in.

fraud. Those determinations are made in accordance with all relevant evidence.. duress. No i. v. Such a term as in the circumstances might naturally be omitted from the writing vii.Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented 1. Restatement § 216: Consistent Additional Terms 1. Was the additional term a condition of the acceptance? a. and 2. specific performance.. or other invalidating cause. lack of consideration. Agreements and negotiations prior or contemporaneous with the adoption of a writing are admissible evidence to establish a. Just as Review: Additional Terms (Battle of the Forms) i. That the writing is or is not an integrated agreement b. Did the offeror assent to new terms? 1. reformation. 2. whether or not integrated d. Ground for granting or denying rescission. other wise they are considered counter offers ii. Illegality. No – No K under 2-207 (1) but maybe an implied in fact contract based on new terms and the UCC gap fillers b. The meaning of the writing. UCC § 2-202. by course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208). e. Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated. Yes i. Conflicting Terms – Use the knockout rule   17  . must determine that the asserted prior agreement is within the scope of the integrated agreement. by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement .. At common law the mirror image rule was followed . Agreed to for separate consideration b. Restatement § 214 – Evidence to prior or contemporaneous agreements and negotiations 1.acceptance must be a mirror image of offer. UCC 2-207 1. or other remedy vi. is completely or partly integrated c. Final Written Expression: Parol or Extrinsic Evidence . mistake. An agreement is not completely integrated if the writing omits a consistant additional agreed term which is a. Yes – contract 2. That the integrated agreement. if any.of Subsection (2) the court in addition to determining that there is an integrated agreement and that it is completely integrated. d.

if the court finds that there is a disparity of bargaining power or the clause was hidden. If the evidence shows that the K is reasonably susceptible to that interpretation the court will admit the evidence 3. Johnson X. Reasonably Susceptible Test (minority)— the court will hear extrinsic evidence to determine if a party could have reasonably interpreted a terms as having a particular meaning. The relationship between parol evidence and interpretation i. the meaning of the language used in the contract is not determined purely by reference to the dictionary meaning of the words. Unless there is no evidence of context available. their previous course of dealings in prior contracts of the same kind.(majority)— follow the plain meaning approach in which they only let the evidence in if the document is ambiguous. Latent ambiguity→ cannot determine if the contract is ambiguous until parties begin performing iii. Although merger clause may make the court more likely to say the K is final. Patent ambiguity→ apparent on the face of the contract 2. or if there was a condition* to the entire K the merger clause may not preclude the evidence from being admitted.or totally integrated. The court in interpreting the K will consider: ( in order of importance)   18  . trade usage. and their post-formation course of perfomance. but if the meaning is clear they will not even let the evidence in 2. Approaches to Interpretation 1. the agreement is not final/integrated with respect to that condition UNLESS the oral evidence SPECIFICALLY contradicts the writing.a clause stating that the writing constitutes the sole and final agreement b/en the parties i.Williams v. Ambiguous→ admit extrinsic evidence to determine parties intent in order to interpret the K 1. This context includes discussions between the parties in forming the contract. but by reading the words in the entire context of the transaction.ii. Read K→ No ambiguity→ apply the plain meaning rule ii. If the plain meaning is of the contract is ambiguous then evidence can be admitted i. Interpretation a. iv.where parties agreed orally that the performance of the agreement is subject to a condition. course of dealings and course of performance even if the K is totally integrated as long as the evidence does not contradict the written K. The clearer and more comprehensive the writing the higher the barrier to admitting extrinsic evidence. UCC §2-202—the code encourages the use of extrinsic evidence by allowing trade usage. ii. Merger Clauses . Restatement §217. iii. b. The Plain Meaning. Additional Terms – In the contract unless they materially alter the contract e. 1. A written agreement serves to limit the extent to which some contextual evidence may be considered in deciding what the parties intended in entering the contract.explain or supplement.

we are only agreeing to the expectable term ii. Duty of Good Faith and Fair Dealing . the K should be interpreted w/ PP in mind d. When neither party knows nor had reason to know what the other party meant then there is no K b/c there was never a meeting of the minds 5. Restatement § 202. technical words or words of art are given their technical meaning f. i.Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." Good faith is defined in Uniform Commercial Code § 1-201(19) as "honesty in fact in the conduct or transaction concerned. trade usage.a. Restatement §211(3). Restatement § 201(2). Restatement §205.if a consumer manifest assent to a standard form. a term contained in the form which the consumer would not have reasonably expected is not part of the k unless the consumer expressly agrees to it XI. Meanings of "good faith.on previous K it always meant the 5 middle days of the month d. must follow ALWAYS b." "In the case of a merchant" Uniform Commercial Code §2-103(1)(b) provides that good faith means "honesty in fact and the observance of reasonable commercial   19  . unless a different intention is manifested i.that is the best evidence if it says middle of the month and then it says the 15th of each month then terms are express.what have we done on this K.what ever is the usage of that word in the trade 4. If A can show that B should have known through trade usage or common knowlegde then A can rebut presumption in favor of B c. the even must have happen more than once. UCC § 2-206. a writing interpreted as a whole and all writing are interpreted together e.Rules in Aid for Interpretation a. interpretation should favor specific over general terms c.you have received merchandise for 6 mth on the 20th c. If A knew. a. Words and conduct are to be interpreted in light of all the circumstances(course dealings and course performance. Comment: 1. Trade usage. Duty of Good Faith a.Whose meaning Prevails a. Interpreting Deceptive/Hidden/Surprise Terms in standardized agreements i. interpretation is usually against the drafter. Course dealing.) c.then the K is interpreted as is-Plain meaning b. Express terms. or had reason to know both meanings and B only knew one then B’s interpretation will prevail. Both parties understand the terms k. The intent of the parties is giving great weight b.surprise terms. Course of performance.normal way of doing business b/en those two partiesassuming that they have deal w/ each other before. b/c the drafter has more advantage g. words are interpreted w/in their prevailing meaning ii.

Bad faith in negotiation. Courts use an objective test to decide whether a reasonable person would have been satisfied with the goods. Wrongfulness: the prevention or hindrance must be wrongful. This Section. The court requires expressions of dissatisfaction to be made in good faith ii. They do this because there are set standard. self portraits are an example. The appropriate remedy for a breach of the duty of good faith also varies with the circumstances. the other party must know it is a subjective decision based on personal taste. however. Obligation of good faith. Good faith in negotiation.203. and the Duty of Good Faith 1. The clarity of the parties as to subjectivity will also come in to show intent. Cooperation. i. ii." The phrase "good faith" is used in a variety of contexts. Prevention & Cooperation: all courts read all contracts as containing an implied condition that the parties will act in good faith and will not hinder or prevent the other party from performing.standards of fair dealing in the trade. when the parties explicitly make it a subjective test if both parties agree to it b. like Uniform Commercial Code §1.. Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party. 3. this does not require a showing of bad faith or malice. fairness or reasonableness. Must act in good faith when rejecting goods and satisfying conditions a. a. Billman v Hensel i. it excludes a variety of types of conduct characterized as involving "bad faith" because they violate community standards of decency. and its meaning varies somewhat with the context. UCC § 1-203. whatever its motivation. Prevention.   20  . Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement. 1. iii. may be subject to sanctions. There must be a K in order for there to be a duty of good faith 2. he must at least look at the portrait and in good faith say he doesn't like it. just a showing that the other party would not have reasonably anticipated such conduct. does not deal with good faith in the formation of a contract. Although these contracts look like illusory the parties both have an obligation under the K. This applies to all conditions proceedings the party must make a reasonable and good faith effort to satisfy the condition 4. Must also make a good faith effort to secure a loan when this is a condition precedent to a party's performance.. and there is ma more utilitarian approach.. Nuemiller Farms was rejecting potatoes in bad faith b/c he found them at a better price from another dealer. Some instances require subjective test: matters of personal taste or fancy. although not within the scope of this Section.

The purpose of having a 3rd party decide is to get their subjective view on the decision. There is a duty to perform in good faith.5. This happens often in construction k. Satisfying 3rd parties i. Seubert i. Employment at will: in at will employment contracts a person could get fired for no reason at all. 7. So it is a subjective test. it is an objective test using "reasonable commercial standards" (UCC 2-103). Definitions   21  .engineers or architects ii. if there is evidence of bad faith. Conduct that makes the other party's performance more difficult a. when the party causing the difficulty does so in good faith and does not intend to interfere then no release.good faith of a merchant is honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade 6. In all contracts there is an implicit agreement by each party to not interfere with the other party's ability to perform the contract. Express Conditions a.service stations across the street b. that also means that one will exercise best efforts to sell or try to perform. one parties makes performance more difficult by making other purchases that decreased the supplied of those goods available b. UCC: under the UCC. This case was different b/c he did not know that when he bought from other party he was diminishing the supply of the market that is why he could still recover. If in bad faith. or by other K theories such as promissory estoppel. and he then may not recover damages for the breach d. but. or implied covenant of good faith or policies established by the employer a. Although he did not meet the quotas it was the employee who prevented him from performing thus his non-performance is excused ii. Implicit agreement not to interfere with other party a. then we will bring in others. Warranties. to see if it meets an objective standard. A party can not intentionally and purposefully do any thing to prevent the other party from performing. but the legislature has limited at will discharges by protecting employers form discrimination firings. He still could have a cause an action not for the termination but for the performance b/c seller misrepresented that the items were good b. then this would amount to a breach due to interference XII. c. so they were not acting in good faith 8. A party's action that only makes the other party's performance more difficult will not release the party that must perform from doing so. Many states say that the resumption of at will contracts can be altered by stmt in employee handbooks or manuals.

articulates the intent to make performance contingent on that event. i. they are not very strictly enforced . Implied Conditions – can be of two kinds 1. Warranties 1.to prove that the condition was fulfilled Most conditions are of this kind iii. He did not get the 5. Such as the notice that we know the parties intended to be given in the Wal-noon Case.e. Condition Precedent. We know this b/c no one would have written the contract without the notice. Burden of proof. Condition implied in fact. which must occur.this is a condition that we know the parties really intended to be a part of the contract (look at the contextual evidence to determine if one exists or not). The law will construe a condition. a. Condition implied in Law/Constructive . Therefore.on the Π. vii.event that terminates a duty. If the policy holder after the notice don’t make a claim to be paid then at some point the duty to pay is terminated. b/c it would not have made sense. Negative Conditions.000 b/c he missed 2 days. (notice was implied in fact condition) 2. so there was not contract. on its face and without reference to extrinsic evidence. that is the condition subsequent iv.this is a condition that the court will find was implied in the contract b/c it will reach a favorable and just outcome. Implied warranties. Dove v Rose Acre Farms: In this case the law student was working during the summer and he wanted to participate in the bonus program. He did not meet the condition. unless its non-occurrence is excused. This is a perfect example of a condition that must be met by him before his boss must perform the act of giving him his bonus. he is not held to pay for the roof b/c the tenant did not meet the condition of giving the landlord notice. Restatement § 224. vi. Condition Defined A condition is an event. Condition Subsequent.is the real agreement of the parties.-insurance requires damage and notice before they pay. Express condition.is not on the K and is not necessarily what the parties agreed on. before performance under a contract becomes due. Wal-Noon Case: If notice of the damaged roof was found to be an implied condition then the contract would not make sense. but there must also be a time frame. which was a condition of the duty of landlord to pay for the repairs.. that is the condition precedent. The court will generally apply the condition strictly. If it has not happen by the 10th then… v. It reaches an appropraiate decision by saying that the implied condition is one that reasonable parties would have intended in a contract of this type. He had to work ten weeks everyday and could not miss any day for any reason.clearly explicit and stated in the K and are always strictly enforced.i.to exclude or modify the implied warranty of merchantability the language must mention merchantability by using specific language   22  . How could the landlord inspect the roof to make sure no negligence existed on part of tenant if he was not made aware of damage before the roof was repaired. ii.condition that must be satisfied before a duty comes into existence. a condition is an express condition if the language of the contract. even if results of this are sometimes harsh (see below case) 1.things that must not occurred for the other party to perform. this conditions are treated like express conditions . not certain to occur. Burden on the Δ-condition not fulfilled.

If the act is a promise. just not when the agreement said they would) iv. when it is doubtful whether 1. and as to the nature of such an event.where two parties have freely fairly and voluntarily bargained for certain benefits in exchange for undertaking certain obligations. iii. it would be unfair to imply a different result and to w/draw from one party benefits for which he has bargain and to which he is entitled. unless the event is within the obligee's control or the circumstances indicate that he has assumed the risk. the event is made a condition of the obligor's duty. Words like “upon condition that” indicate an intent that the act be a condition. a promise not met = other party can sue for breach. a promise. Unless the contract is of a type under which only one party generally undertakes duties. the other party won’t have to perform. an interpretation is preferred that will reduce the obligee's risk of forfeiture. Example: 1. words like “I promise” or “I warrant” indicates a promise and failure to keep the promise will also generally constitute the failure of a constructive condition. Distinguishing: To determine whether a particular act is a condition. and it doesn’t occur. The first interpretation is preferred if the event is within the obligee's control. then the disclaimer is invalid.2.) ii. and the act fails to occur. RULE. the promisor has a defense and may be discharged from the contract without ANY obligation to compensate the promisee for part-performance iii. or 3. In resolving doubts as to whether an event is made a condition of an obligor's duty. SO.if k gives both disclaimer and warranty. Notes 1.Standards of Preference with regard to conditions . a. which are likely to be none. a duty is imposed on an obligee that an event occur. or 2. He still has a contract to paint your house. This is in his control so it is likely a promise. the main factor is the intent of the parties. Warranties v Disclaimers. The Court will treat condition as promises in order to avoid forfeiture where the default is grossly out of proportion to the forfeiture b/c where a condition has failed.helps decide whether a promise or a condition i. the event is made a condition of the obligor's duty. IF EVENT IS IN PERSON'S CONTROL = USUALLY A PROMISE   23  . the other party can sue for damages. Distinction between conditions and promises: If the act is a condition on the other party’s duty.the right to control over repairs as they see fit c. ii. and a duty is imposed on the obligee that the event can occur. a condition not met = no contract at all 3. This applies when the disclaimer is in writing or given orally BUT if the disclaimer in is in the K and the warranty is oral the warranty contradicts the K and the disclaimer stands b/c parol evidence bars the oral warranty b. but usually does not relieve them from their duty to perform if the other party performs their duty (they performed. He does not start until Tuesday. Restatement § 227. or both. A painter agrees to start painting your house on Monday. if the event is in the person's control then we can presume that it is a promise 2. but you can sue for the damages caused by his starting one day late. i.

conduct. or some performance before it is to be rendered. The event is made a condition of the obligor’s duty or. foreiture. If it is a promise then he will get pay but the other can sue for damages for not being finished XIII. Standards of performance with regard to conditions i. A duty is imposed on an obligee that an event occur or. Excuse of Express Conditions a. To the extent that the non-occurrence of a condition would cause disproportionate forfeiture. when it is doubtful whether 1. IF EVENT IS NOT IN THEIR CONTROL = USUALLY A CONDITION d. condition can be discharged by the court 5. Reasons for Excusing Conditions: 1. In any even the court will seek and interpretation that will not cause forfeiture f. BUT. the courts will hold this to be an binding   24  . 2. 3. The event is made a condition of the obligor’s duty and a duty is imposed on the obligee that the event occurs. unless the event is within the obligee’s control or the circumstances indicate that he has assumed the risk ii. a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange. Unless the contract is of a type under which only one party generally undertakes duties. Hypo-If you mow the lawn by 5pm on Friday I’ll pay you. Estoppel waiver Whenever a party indicates that she is waiving a condition before it is to happen. In resolving doubts as to whether an event is made a condition of an obligor’s duty. changed circumstances that make compliance by the promisee with the condition impracticable 4. However when the even is not in the control of either party the court will interpret as a condition. the court tends to interpret it to be a promise. by the party that is benefiting from the condition. an agreement by both parties modifying the contract to discharge the condition 2. a. A party can excuse a condition in several different ways i. Summary. e.b. The court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange ii. that waives the condition (Clark v West: he represented waiver of drinking condition) 3. see restatement § 84 & Aetna Casualty Insurance case b. The courts look at ways to waiver provision of K because the court deems that the provision is too harsh. If he does not finish mowing by 5pm and 5pm was a condition then no pay ii.when a particular event is under the control of the obligor. i. and as to the nature of such an event. and the person addressed detrimentally relies upon such an indication. The first interpretation is preferred if the event is within the obligee’s control i. Restatement § 229 – Excuse of Condition to Avoid forfeiture 1. an interpretation is preferred that will reduce the obligee’s risk of forfeiture. Reasons for Excusing a Condition i.

(3) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that the seller have a specific intention to make a warranty. ii.316). iv. iv.When a condition or a duty of performance is broken. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale. (d) run. Election waiver. 2. (1) Unless excluded or modified (Section 2. are of fair average quality within the description. Express waiver. Sample. 3.A waiver evidenced by a party’s decisive. i. Promise.a voluntary and intentional waives a known right 1. (1) terminate her liability. b/c gave false sense of reliance vi. This election waiver requires neither consideration nor estoppel. d. iii.   25  .(estoppel) waiver. iii. (1) In this section. (a) pass without objection in the trade under the contract description. “immediate buyer” means a buyer that enters into a contract with the seller. a warranty that the 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. (b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. quality and quantity within each unit and among all units involved. unequivocal conduct reasonably inferring the intent to waive v. UCC § 2-313. Remedial Promise. Implied waiver. (b) in the case of fungible goods. or (2) continue under the contract. 2. of even kind. i.clause in the K to prevent waiver’s but can still be waived if the waiver happens very often. but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty. If the court finds circumstances that makes compliance with the condition impractical c. Usage of Trade. Description. (c) Any sample or model that is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model. the beneficiary of the condition or duty has an election she may. (4) Any remedial promise made by the seller to the immediate buyer creates an obligation that the promise will be performed upon the happening of the specified event. 4. If she chooses to continue she will be deemed to have waived the condition or duty. within the variations permitted by the agreement. (a) Any affirmation of fact or promise made by the seller which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. Implied Warranty: Merchantability. (2) Goods to be merchantable must be at least such as: 1. 3. (2) Express warranties by the seller to the immediate buyer are created as follows: 1. ii. Express Warranties by Affirmation. UCC § 2-314. Note that the promise to waive a condition may be retracted at any time before the other party has changed his position to his determent. Anti waiver clause. and party does not cancel the K then the he has probably waived the right to cancel. (c) are fit for the ordinary purposes for which goods of that description are used.

Language to exclude all implied warranties of fitness in a consumer contract must state “The seller assumes no responsibility that the goods will be fit for any particular purpose for which you may be buying these goods. (b) if the buyer before entering into the contract has examined the goods or the sample or model as fully as desired or has refused to examine the goods after a demand by the seller there is no implied warranty with regard to defects that an examination in the circumstances should have revealed to the buyer. ii. the exclusion must be in a record and be conspicuous. and state “The seller undertakes no responsibility for the quality of the goods except as otherwise provided in this contract. for example. negation or limitation is inoperative to the extent that such construction is unreasonable. but subject to Section 2. (a) unless the circumstances indicate otherwise. (2) Subject to subsection (3). packaged.202. 2. (f) conform to the promise or affirmations of fact made on the container or label if any. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods. “with all faults” or other language that in common understanding calls the buyer's attention to the exclusion of warranties. and. (UCC 2-314 Only Applies to Merchants) i. that “There are no warranties that extend beyond the description on the face hereof. to exclude or modify the implied warranty of fitness. f. there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose. and 6. iii. in a consumer contract evidenced by a record. iii. makes plain that there is no implied warranty. (1) "Merchant" means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill. is set forth conspicuously in the record. Subject to subsection (3). (3) Unless excluded or modified (Section 2. and   26  . UCC § 2-104. (e) are adequately contained. i. Implied Warranty: Fitness for Particular Purpose. be conspicuous.” and in any other contract the language is sufficient if it states. Definitions: "Merchant”. g. Exclusion or Modification of Warranties.5. i. UCC § 2-315. and labeled as the agreement may require. e. (3) Notwithstanding subsection (2): 1. except as otherwise provided in the contract.” and in any other contract the language must mention merchantability and in case of a record must be conspicuous. to exclude or modify the implied warranty of merchantability or any part of it in a consumer contract the language must be in a record.316) other implied warranties may arise from course of dealing or usage of trade. (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other. all implied warranties are excluded by expressions like “as is”.” Language that satisfies the requirements of this subsection for the exclusion or modification of a warranty in a consumer contract also satisfies the requirements for any other contract. UCC § 2-316.

So. Waivers – a relinquishment of a known right by one of the parties. (c) an implied warranty may also be excluded or modified by course of dealing or course of performance or usage of trade. if the part waived is a material part of the K there must be consideration and that is really a modification. But for this rule to apply the moving party must prove: 1) unfairness if performance of the condition is   27  . the court asks the question of whether or not the notice requirement was a "material part of the agreed exchange". A waiver given w/o consideration can be can reestablish as long as he gives fair notice to the other party b. the waived condition was not a material part of the agreed exchange & 2. Differs from a modification – bilateral. Equitable Estoppel.a waiver is enforceable if it is given in exchange for separate consideration. He would have suffered great loss by not being able to get his claim and this was considered disproportionate forfeiture. of a claim a. Continuation of performance: If a promisor continues his own performance after learning that a condition of duty has failed to occur. his conduct is likely to be found to operate as a waiver of the condition i. uncertainty of the occurrence of the condition was not an element of the risk assumed by the party who gave the waiver 3. It was not found to be a "material part". both parties agree to a change in the contract – doesn’t need consideration i. No waiver clauses can be waived ii.A waiver is a voluntary relinquishment of a known right. despite his owns default may be entitled to relief from the rigorous enforcement of K provisions that would otherwise deny him recovery. a. A party can waive a non-material part of a K any time during the executory portion of the K w/out consideration.718 and 2.3. Disproportionate Forfeiture i. (4) Remedies for breach of warranty may be limited in accordance with Sections 2. so murphy had a chance to show that his failing to meet the condition did not prejudice the insurance company.719. h. Π failed to timely notify issuance co. the party making the waiver will be estopped from rescission of the waiver. RULE. iv. this case gave us a situation in which murphy did not give his insurance company adequate notice (this was the condition that he failed to meet). Restatement § 84(1) . 2. It is enforceable without consideration if: 1. 4. because there is not consideration for waivers they can be receded until the other party relies on the waiver to their detriment then.Under appropriate circumstances a party. Aetna Casualty Insurance Case (murphy & chubb) 1. Waiver – unilateral – happens when one party waives a condition of the contract – you don’t have to perform that’s ok im not gonna sue you. RULE. If he could prove this then he would get his claim and not suffer the disproportionate forfeiture. even if its material you can waive it. Clark v. he does not meet his burden of proof though.in this case party waive condition and refuses to pay party is bound to waiver b/c of reliance c. Write books for $2 and will pay $6 if abstained from drinking during k 2. West 1.

b/c of the late notice d.one party had little choice as to the terms of the K.so usually performance is due b/f pay.there was no bargaining process ii. Material Breaches i. if the K is divisible b.executed 2) that the condition is not material so that it would not prejudice the other party b. there was no prejudice to the insurance co. trade usage is to the contrary 3. Example: Jacob &Young v Kent case: (wrong plumbing pipe) i. Notice is a condition. So.Effect on other party's duties of a failure to render performance 1. but which is supplied by the court for fairness. Restatement § 237 . it is a condition of each party's remaining duties to render performances to be exchanged under an exchange of promises that there   28  . Disproportionate forfeiture. Considerationsi. (ie wrong plumbing pipe) a. Contract of adhesion. it is kind of the unconsionability concept but it focuses on the performance of the K as being unfair v the written k as is. whenever performances may be rendered simultaneously they re to be performed simultaneously unless the language or the circumstances indicate otherwise 2. Restatement § 229 ii.000 (pipe you wanted) ii. Good pipe worth = $5. RULE: Damages are measured by the difference in what you were supposed to get and what you actually got. performance must be fully or substantially completed but there are some exemptions a. if the parties have agreed upon installment payments c. the court also looks at the importance of the condition c. Π will lose insurance money even though he pays his premiums iii. the worker gets $ for the substantial performance. Constructive conditions -A constructive condition is a condition which is not agreed upon by the parties. Constructive conditions are normally satisfied by substantial performance while express conditions must be fully performed a.000) iii. it is not a material part of the K XIV. The principal use of constructive conditions is in bilateral contracts. REMEMBER: Substantial performance is not perfect performance though. Damages worth = $1. except as to number (1) where the performance of only one party requires a period of time his performance is due at an earlier time than that of the other party unless the language or circumstances indicate otherwise.000 (you get bad pipe + $1. Restatement § 234 1.forfeiture is the denial of compensation. minus any amount assessed for damages caused to the other party. that is why the party must pay the performer for the substantial performance and then sue them for any damages caused by the breach of contract. Except as stated in section 240. Bad pipe worth = $4. (difference in value) b.000 (pipe you got) iii.

Restatement § 241.) 2. The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived. A delay in performance is not a total breached unless time was of the essence   29  . e. v. (so in the note case above. This basically means that if one party does not render his performance then the other party is discharged of his duties. The likelihood that the party failing to perform or to offer to perform will cure his failure. a. d. When there is a K that requires mutual concurrent conditional performance and one of them has breached a material part of then the condition is not met and the other may get out of the k and sue for total breach c. The extent to which the injured party will be deprived of the benefit which he reasonably expected. c. Circumstances Significant In Determining Whether A Failure Is Material 1. Palmer v Fox 1. The extent to which the party failing to perform or to offer to perform will suffer forfeiture. Where the acts or promises of the parties are concurrent and to be done or performed at the same time the K is dependent and neither party can maintained an action against the other without providing performance on his part b. a. Restatement § 240. this is why the other party was able to quit paying for the land. Goodison v Nunn a. Part Performances As Agreed Equivalents . b/c the other party did not make the agreed upon improvements. at least temporarily. a party's performance of his part of such a pair has the same effect on the other's duties to render performance of the agreed equivalent as it would have if only that pair of performances had been promised. Δ Bought property Π promise to put gravel on the street Π did not.If the performances to be exchanged under an exchange of promises can be apportioned into corresponding pairs of part performances so that the parts of each pair are properly regarded as agreed equivalents. One party backed out and the court said that since the other party did not tender the performance to the non-tendering party he could not bring suit. (must at least tender performance to bring a suit for breach of contract against other party) iv. this was the case where the parties contract for the buy/sell of land and there was a 21lb. The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing. Δ refused to pay the rest of the payments. In determining whether a failure to render or to offer performance is material. the following circumstances are significant: a. b. Penalty for backing out. taking account of all the circumstances including any reasonable assurances.be no uncured material failure by the other party to render any such performance due at an earlier time. vi.

There are some factors that helps decide whether a parties performance amounts to substantial performance. Since the Π breach his promises by not putting reading pipes.if a party has completed substantial performance on his promise but has committed a minor omission due to inadvertence he should be able to recover the money due to him less the amount necessary to fully compensate the other party for the damages caused by the omission 3. What purpose does the performance serves   30  .the contractor must have in good faith intended to comply with the K and should have substantially done so . he did but the roof was not uniform in color. because the way the house looks is very important. In the K there was a express condition that said that if Π did not get the certificate from the architect then no money. Π Promise to build a house with pipes of a certain kind. Doctrine of Substantial Performance. Substantial Performance i. The requirement of using reading pipes is not a condition.b. OW Grun Roofing v Cope 1. normally the courts go with the difference in value b/c the other option is economically disproportionate where there is no gain from replacing.the Δ did not receive a benefit. Π did not use the special pipe. RULE.Ask Whether the K purpose has essentially been fulfilled ii. the party must performed but just a small mistake 4. and had to pay the house owner extra money so that she could replace her ugly roof. RULE. in the sense that the defects are not pervasive nor do they constitute a deviation from the general plan contemplated and that the K and its purpose can not without difficulty be accomplish by remedying them-basically not material 4. if the part that was breached was immaterial and the rest of the performance is complete then the other party has substantially performed and he may recover 3.A promissory who has substantially performed is entitle to recover although he has failed in some particular way to comply with his agreement 5. the only condition was that the house be build 2. TEST. How do we determine if the work is substantial? a. 2. a.hired to pay one room or to pain building b. Restitution argument. but a promise b/c the payment was not conditioned on the using the reading pipes. because she is going to have to get a new roof 6. Δ realized and he refused to pay. The court said that there is a material breached. Jacob v Kent 1. look at the k in comparison to the breach. Substantial performance. they are: a.if the party has breached a material part of the K then they have not substantially perform. then he has to pay damages either by paying the cost of replacement OR the difference in values b/en the 2 pipes. Substantial performance does not apply to the sale of goods. so the Π did not recover. the UCC uses the perfect tender rule iii. Δ Promise to install a roof. Substantial Performance and Material Breach i. c.

Compare the following two examples: a. if the goods or the tender of delivery fail in any respect to conform to the contract. the buyer may 1.If a contract is severable. reject the whole. UCC 2-601: Buyer's Rights on Improper Delivery: subject to the provisions of this article on breach in installment contracts (2-612) and unless otherwise agreed under the sections on contractual limitations of remedy (2-718. The excuse for deviating from the K c. ii.000. The good must not be perfect. The cruelty of enforcing strict adherence or compelling the promisee to receive less than what he bargained for d. or 2. Divisible? Probably not due to the fact that the   31  . The difference between goods and performance is that the other party can keep the good and can sell to others. accept any commercial unit or units and reject the rest. Definition of Divisibility 1. Commercial unit.b.valve tester that needs to be 95% accurate. Material Breach and Substantial Performance UCC i.719).oven example 5. contract to build 50 houses @ $100.consideration for each part c. the number of parts due from each party is the same. Restatement § 241(e)-whether the party performed in good faith and in accordance with fair dealings d. This is controlled by the UCC. The difference b/en the tendered performance and the performance of the promisee e. or 3.000. the seller generally has the right to “cure” the defect e. i. it must only adhere to what you agreed to sell other wise the buyer has the right to reject 4. performance of each party is divided into two or more parts b.if the product does not conform to the K and it is not a perfect tendered then you may reject the product or keep it but the other has the choice.sale of goods 1. builder only builds 35 houses and then stops work = this is divisible and he will likely be paid for the 35 houses b. accept the whole. machine not good only 93% is this substantial performance? iii. 2.does not mean parts. Perfect tendered rule §2-601. Worker builds 35 and then stops work. A K is divisible where by its terms a. a lot of things for remodeling but you only wanted one job 2. contract to build 50 houses for a total of $5. and the intent of the parties on whether they intended the k to be divisiblekitchen remodeling. A contract is only divisible if it is expressly made so (ie stipulating a payment for each separate installment to be performed) or if a reasonable interpretation indicates that a failure to perform one installment would not constitute a failure of the basic consideration bargained for. the doctrine of substantial performance can be applied to a portion of it. Problem p 685. but you cant take back a performance 3. it must be the whole unit. Divisibility and Restitution .000 for each house built.

iii. the prize if it can be apportioned may be demanded for each lot 2.meaning not divisible then the party who breached the k is not entitled to recovery unless he has substantially performed 3. and therefore. If the K is entire. Restatement §240. RULE: employment k are normally divisible 2. The court will not find a K divisible if it would be unfair to the non breaching party 4. if the person seeking restitution has breach a fiduciary duty. b/c the Δ has received a benefit a. BUT in general construction K are not divisible Britton 1. UCC § 2-307.if the performance can be exchanged can be apportioning into corresponding pairs so that the part of each pair are properly regarded as agreed equivalents.Unless otherwise agreed all sale of goods must be tendered in a single delivery and payment is due only on the goods tendered but where the circumstances gives one party the right to make or demand delivery in lots. (look at the intent of the parties) Definition of Restitution 1. RULE: when a party has not substantially performed and has materially breach a k he may still recover even if the k is not divisible as long as the other party has received a benefit – the court tries to prevent unjust enrichment and allows him t recover for the benefit he conferred 3. a parties performance of his part has the same effect on the other party to performed as it would have if only that pair of performance had been promised b. the party in breach is never allowed to recover more than the K’s price and he will always get pay the lowest amount possible c. iv. then they have breach their right to fees Rule 1. Whether a k is divisible depends on the intent of the parties. the contract is not as easily divisible. building of each house may not be worth the same amount. Under both theories of restitution and divisibility the Πs award is always reduced by the damages caused to the non-breaching party Lowy 1. b/c the other party is continuously receiving a benefit and the worker is working under the expectation that he will get pay. lawyers…etc. the contractor cannot refuse to receive what he has already received   32  . 2) was to make improvement to the streets. and the intent can be inferred by the ease with which the agreed consideration can be apportioned to separate performances a. v.doctors. A hired laborer is entitled to compensation for his services though he does not continued to work for the entire duration of the K.ii. This was a divisible K that had to parts 1)grade. (benefit) – (damages caused by the breached) = RESTITUTION b. a Π who has committed a material breach and has not substantially performed can still recover the reasonable value of the work he has done up to the breach .

This was considered a material breach.000. a parties performance under it is impracticable w/o his fault b/c of the fact of which he had no reason to know and the none existence of which is a basic assumption on which the K is made no duty to render that performance arises unless the language or circumstances indicate to the contraryassumption of the risk.excuse for the seller 1. This doctrine as well as frustration of purpose excuses performance but does not excuses a condition. Some courts say nothing b/c he breached in bad faith. Elements of existing impracticability 1. The reasonable value to the other party of what he receive in terms of what it would have cost him to replicate the benefit from another person b. so no substantial performance doctrine applies here. increase in value to his property due to adding the pool = 5. Restatement § 266 – Existing Impracticability or Frustration 1. (a)Delay in delivery or non delivery in whole or in part by a seller who complies with paragraphs b and c is not a breach of his duty if performance as agreed has been made impracticable by the occurrence of the contingency the non occurrence of which was an assumption on which the K was made 2. How do we compensate builder under a restitution theory? 1. at time K is made performance is impracticable 2. Impracticability a. The pool he built was worth 10. (c) Where the caused mentioned in paragraph a affects only a part of the seller’ capacity to perform he must allocate production and delivery among his customers but may at his option include regular customers not then under k as well as his own requirements by further manufacture.Applies to both impracticalities and frustration. unless the conditions are really minor or just technical ii. UNLESS the party assumed the risk v. Problem p. UCC 2-615. 700: A was to build a pool for B for 15. not foreseeable by the party seeking to be excuse 4. where at the time a K is made. event is the basic assumption of K 5. iii.000 XV. cost to obtain the pool he got from another builder = 10. The Π will recover the lowest amount because they have breached 2. others say yes.000. Mineral v Howard   33  . The extend to which the other party’s property has been increased in value or his other interest advanced c.vi. without the fault of the party seeking to be excused 3. (b) The buyer then has an option to receive the goods or not but they have no claim 3. Existing Impracticability i. The court applies to different theories a. He may also allocate in any manner which is fair and reasonable iv.000 b. Others would compensate as follows: a. A intentionally built used an inferior product in the construction of the pool so he would make more money.

the non occurrence of which was a basic assumption on which the k was made-this goes to “foreseeability.Assumption of the risk ii. its failure to come into existence. a parties performance is made impracticable. Supervening Impracticability (after the parties have entered into the K) i. Where performance depends upon the existence of a given thing and such existence was assumed as the basis of the agreement performance is excuse to the extend that the thing ceases to exist or turns out to be non-existence. (2) if the parties did not know at the time that it was impracticable (3) Unless there was an assumption of the risk b.1. Follows restatement. – cows being pasture 3.Assumption of the Risk 1. Is the person necessary for the duty? 2. iii. after the contract is made. Restatement § 263 Destruction Deterioration or Failure to come into existence of a thing necessary for Performance. Normally increase in cost in performance is NOT an impracticable event UNLESS the cost was considerable increased due to the necessity of performing in a manner radically different from what was originally contemplated vi. and it must be absolutely impossible to perform. a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made. 1.the performance must be that exactly what is specified in the K. which was impracticable at the time of contracting. unless the language of the circumstances indicate contrary. The services involved must be personal. 1. which party should have foreseen the event and thus protect himself against it v.. is an event the non occurrence of which was a basic assumption on which the K was made. Restatement § 261 Discharge by Supervening Impracticability– where. A thing is impossible in legal contemplation when it is impractical and a thing is impractical when it can only be done at an excessive and unreasonable cost 2. Wegematic . his duty to render that performance is discharged. by the occurrence of an event iv. then they should be subject to the penalties 2. UNLESS the language or the circumstances indicate to the contrary. Restatement § 262 Death or Incapacity of Person Necessary for Performance. The Δ try to used the UCC. W/o the Δs fault iii. if no source specific then seller can go to another source ii.if the existence of a particular person is necessary for the performance of a duty his death or such incapacity as makes performance impractical.(1) a party has no duty to render a performance. The best test for whether services are “personal” is whether they could be validly delegated to a third person. to excuse non delivery b/c of impossibility to deliver but the court said that when a party assumes a risk that they may not be able to perform. Must Meet all 5 Requirements a.if the existence of an specific thing is necessary for the performance of a duty. destruction or deterioration that makes performance impracticable will discharge performance   34  . Where after a K is made: i.

Restatement § 269-Temporary Impossibility or Frustration . Δ must show that he intended to comply but was unable c.meaning who has possession and control of the goods id buyer then the risk has passed. the seller has suffered a casualty w/o fault then he is excuse from performance.Impossibility. UCC 2-6131. if the Δ had another hall then he should provide Π with it but it depends on the intent of the parties and whether the K called for a specific thing then Δ need not provide another viii. d. the duty reattaches. Impossibility: You may often here the doctrine of impracticability referred to as impossibility.applied where the bargained for performance is still possible but the purpose or value of the K has been totally destroy by some superseding event. Suspends (rather than discharges) the promisor’ s duty while the impossibility continues. Mistake: Impracticability under Restatement 266 sounds like Mistake under Restatement 152. XVI. Definition i.music hall burns down 1. 2. vii. Applies only when the goods are identifiable when the K is made. UNLESS 3. The difference is that mistake allows a party to void the contract (get a recession of the entire contract) and impracticability excuses the party’s performance. It appears that performance thereafter would be materially more burdensome had there been no impracticability or frustration. A party may not by its own conduct create the event causing the impracticability of performance. that is temporary merely. K does not identified source.iv. 1. Whether the risk has pass is a factor.then if impracticable to get from them you do not have to go find other sellers vi. Frustration of Purpose a. if you have a specific source named in the K. Impracticability v. Canadian Alcohol v Dumbar Molasses 1. The seller is excuse and free of liability the buyer then has the choice to either walk away from the K or stick to the K and he may then receive a reduce price caused by the casualty v. but in general the court will not find impracticability b/c can get the goods from any where 2. UCC—Two possibilities 1. then we will examine how difficult it is to get them. in fact he must make all reasonable efforts to avoid the impossibility and once the even occurs he must employ all possible efforts to fulfill the K even if it had originally been expected to meet it obligation in a particular way 2. The doctrine of impracticability is more modern and includes everything that will be covered under impossibility but also extends to include things beyond those that are impossible. Frustration. After the impossibility ceases.it does not said where he is going to get the goods from. Impracticability v. Taylor v Caldwell . If there is a reasonable alternative performance is then not impractical. The Δ must show that there were circumstances outside of their control that did not allowed them to perform. such frustration   35  .

will discharge the K. it is with impracticability under § 615. Was the purpose of the K frustrated? a. Comment (a) R2K §265.I can not do it 2.to find frustration of purpose must ask three questions 1. Yes. Yes coronation was canceled 3. BUT normally where the seller’s cost has increased that will not be enough to frustrate the K. Old Rule. Restatement § 265 – Discharge by Supervening Frustration . d. The purpose of the contract is substantially frustrated due to this event 4.now lessees may be discharged but they are hardly ever granted 1. Yes.b. (By language of contract or circumstances) Paradine v. The party seeking relief must not have born the risk of the event occurring. The party seeking relief was not at fault in causing the event to occur 5. The ability to perform is there. BUT where the value of the performance is totally or nearly totally destroy by   36  . Follows Restatement § 265. there is really no frustration of purpose for buyers. 2. UCC does not provide an specific code for frustration. Cab ride to the Derby race is different b/c the cab had no special qualification that led to its selection and that was not the foundation of the K 2.there is an absolute duty to pay rent regardless of allege frustrating events ii. Occurrence some superseding act or event occurred. c. e. iii. Commentary states that the frustration must be substantial and that it is not enough that the transaction has become less profitable for the affected party or that he will sustain a lost. To say I don’t have the money is not an excuse b/c you have assume he risk that you may not have money 2.frustration deals with the problem that arises when a change in circumstances makes ones parties’ performance virtually worthless to the other. the parties had no reason to believe that the coronation will get canceled Goschie Farms Inc. his reminded duties to render performance are discharged unless the circumstances indicate the contrary 1. Buyers are said to always assume a risk when they order goods so. the non-occurrence of which was a basic assumption of the contract 3.where a party is made a party’s principal purpose is substantially frustrated w/o his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the K was made.that is the only time frustration applies Elements i. Leases are seen as contractual obligation and one is not very likely to be excuse Krell v Farms i. he cant get what he bargain for 1. but there is no present consideration and the K has been frustrated. Jane i. After the K was made. ii. Was the event so severe that cannot reasonably have said to be in the contemplation of the parties at the time of entering into the contract? a. ii. Modern. Subjective. the room was rented b/c of its position. Objective.It can be done. and it always protect the seller. Was the event or situation the foundation of the contract? a. i.

statement to the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach under Restatement § 243 OR ii. if not. and then the contract purpose has been found to have been frustrated. The obligee may treat as a repudiation the obligors failure to provide w/in a reasonable time such assurance of due performance as it is adequate under the circumstances i. A repudiation is: i. Answer: There are 2 possible ways to compensate the party for the performance: a. Repudiation i. f. if the contract is divisible. use Doctrine of Divisibility b. the buyer has assumed a risk. use restitution to compensate the party XVII. a voluntary affirmative act which makes performance impossible or apparently impossible b. The obligee may demand adequate assurance of due performance and may if reasonable suspend any performance for which he has not already receive the agreed exchange until he receives such assurance. Where reasonable grounds arise to believe that the obligor will commit a breach that would in itself give the obligee a claim for damages for total breach. The frustration must be severe that it is not fair to be regarded as w/in the risk parties assumed under the contract.in this case there was no reason to purchase the goods any more b/c they were outdated so useless iii. Designer Case i.when a failure to give assurance may be treated as repudiation a. Restatement § 250 . The court held in this case that the land though it could not be used for what it was rented it could still be used and taken advantage of. b.superseding events the court may find frustration if other circumstances beside the money exist. There must be substantial frustration – purpose frustrated and loss of total commercial value ii.When a Statement or an Act is a Repudiation a. Some courts do this but it is not the norm g. Lloyd i. She is going to design for model to wear to the Grammies awards. but the mere fact that even was foreseeable does NOT compel the conclusion of frustration. Essentially a statement that the party will not perform (may not perform is not good enough) 2. she has appendicitis and can go to the awards. Anticipatory Repudiation a. how do we compensate the party for their part performance? 2. and we do not penalize the seller 1. Definitions 1. iv. NOTE-under common law can demand assurance orally and no time limitations for reply   37  . Restatement § 251 . Question: If a party has partially performed. Foreseeability of the event is a factor in determining if a party should be excused.

the breaching party cannot retract the repudiation. making it impossible for the breacher to retract the repudiation. person who breach must make more money 5. 2. unequivocal. in either case suspend his own performance or proceed ii. which is basically an acceptance of the repudiation. UCC 2-609.the repudiation must occurred before performance is due under the K. the other party may possibly a.is a clear.Right to Adequate Assurance of Performance   38  .is the legal conclusion that a party has failed to perform.every one wins. his taking the job will be reliance on the repudiation and this will be his acceptance of the repudiation.results from conduct where the promissor puts it out of his power to perform so as to make substantial performance of his promise impossible ii. When either party repudiates the K w/ respect to a performance not yet due the loss of which will substantially impair the value of the K to the other. but. Plaintiff has three options of what he can do: a. Efficient breach .Anticipatory Repudiation 1. and see what the breacher does(remember: the breaching party can retract his repudiation during this time). wait it out and try to convince the breaching party to perform at the due date. change position or cancel the contract. If a party repudiates or appears unwilling or unable to perform. UCC 2-610. or b. c. They may be express or implied a. continue performance. Express. Implied. Rule . for a commercially reasonable time await performance by the repudiating party OR b. UCC and repudiation i. Effect of repudiation 1. suspend or withhold performance.3. the injured party may a. c. (breacher cannot retract) i. but it must be efficient. cancel the contract and bring suit for breach of contract against the party that gave the repudiation. If takes another job or something of this nature. act in reliance on the repudiation. without justification or excuse that which she was under an absolute duty to perform 4. once cancelled. b. the damages awarded to him will be mitigated due to his taking another job. After Repudiation. the person breaches and pays damages for the breach. refusal to perform b. (b/c he will be compensated at new job) b. positive. Breach of Contract . revert for any remedy for breach even though he has notified the repudiating party that he would await performance and has urged retraction AND c.

5. AND c. Has canceled the K 2. cancelled the contract. Effect of Retraction: a. AND b. and   39  . AND d. iii. A repudiation may be retracted and a prospective unwilling or inability to perform can be cured unless the injured party: 1. UCC 2-711. Time before Repudiation is assumed: A party who fails to provide adequate assurance under the circumstances of the contract (demand must be justified) within a reasonable time (NEVER MORE THAN 30 DAYS) will have repudiated the contract. 2. the party did not receive payment (or other return) for the obligations it plans to suspend.Buyers Remedies in General 1. a. 2. the repudiating party's rights under the contract are reinstated. Request for Retraction: a valid retraction of a repudiation must. Standards: reasonable grounds for insecurity and the adequacy of assurance will both be determined by commercial standards. the other party did not yet respond to the demand. Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or revokes acceptance the buyer may cancel the K c. a. the party had reasonable grounds for insecurity as to whether the other party will perform according to the contract. or iii. 3. AND b. otherwise indicate the K is canceled. UCC 2-611. Retraction of Repudiation i. Time for Retraction: repudiating party can retract if. it is commercially reasonable to suspend such performance. the aggrieved party has not: i. the party sends a written notice to the other party demanding adequate assurance of due performance. Has materially change position or 3. AND e. clearly indicate to the aggrieved party that the repudiating party intends to perform.1. include any adequate assurance justifiably demanded (2-609) 3. otherwise indicated that it considers the repudiation final. or ii. the K has reached performance time 5. UCC 2-611: Retraction of Anticipatory Repudiation 1.follows the rule above and adds that the retraction reinstates the repudiating party’s rights under the K with due excuse and allowance to the aggrieved party of any delay occasioned by the repudiation ii. Installments: an aggrieved party is not precluded from demanding adequate assurance of future performance even if he has already accepted an improper delivery or payment of earlier obligations. AND b. 4. his next performance is not yet due. A contract for sale creates an obligation of each party to maintain the other party's expectations of due performance. materially changed its position. A party will be excused from performing any contractual obligation if: a.by getting another job 4.

the effect of a statement as constituting a repudiation under § 250 or the basis for a repudiation is nullified by a retraction of the statement if notification of retraction comes to the attention of the injured party before he materially changes his position in reliance of the repudiation or indicates to the other party that he considers the repudiation to be final. those events ceased to exist before he materially changed his position in reliance on the repudiation or indicates to the other party that he considers the repudiation to be final. Effects of Apparent Insolvency i. The court does not require the party to wait till the other party had a duty to perform the court says that repudiations are treated like a breach b/c 1) there is a K relationship that has been broken 2) Π’s dilemma. Restatement § 254. this applies to the UCC as well iii. 2. a parties duty to pay damages for total breach for repudiation is discharged if it appears after the breach that there would have been a total failure by the injured party t perform his return promise 2. where the obligors insolvency gives the obligee reasonable grounds to believe that the obligor will commit a breach the obligee may suspend any performance form which he has not received the agreed exchanged until he receives assurance in the form of performance itself and offer of performance or adequate security 2. a person is insolvent who either has ceased to pay his debt as they become due or is bankrupt ii. if any invocable at the time of performance vi.Effects of Insolvency 1. The effect of events other than a statement (ie. Taylor 1. Restatement § 256: Nullification of Repudiation or Basis for Repudiation 1. McDonald’s Corp.Sellers Remedy on Discovery of Buyer’s Insolvency 1. The seller may reclaim goods already delivered on credit within 10 days after receipt. UCC 2-702 .   40  .Effect on Subsequent Events on duty to pay Damages 1. if the duty that he repudiated has been discharged by impracticability or frustration before any breach by non-performance a. When the seller discovers the buyer’s insolvency he may refuse delivery except for cash only.b. Voluntary. iv. affirmative act) that constitutes a repudiation under § 250 or the basis for a repudiation under §251 is nullified if. Restatement § 252. iii. the aggrieved party is excused for any delay due to the repudiation. If a party deliberately enter into a k to do an act in the future day and he wrongfully renounces the other party need not wait till the day of performance arrives before seeking remedy that renunciation may be treated as a breach of the K 2. De La Tour 1. to the knowledge of the injured party. If the injured party does not cancel the K but disregards the repudiation and treats the k as still in force and the repudiation is retreated prior to the time of performance then the repudiation is nullified and the injured party is left with his remedies.should he wait or should he try to get another K v. d.

Plotnick . but if the injured party accepts a non performing installment w/o timely notification of cancellation or if he brings an action regarding ONLY past installments the injure party is said to have reinstated the K (waived his right) 2. Before the buyer ask for assurance of performance he must have reasonable grounds for insecurities that the other party is not going to be able to performed as bargained 2. if the non-conformity or default impairs the value of the whole K there is a breach of K. An installment K is one which requires the delivery of goods in separate lots to be separately accepted b. Remedies – Basics a. UCC written demand. the buyer may refuse any installment which is non conforming. Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promisee:   41  . is it impossible or unreasonably burdensome from a financial point of view to make the seller supply the future installments b. has he waived? If depends whether the Δ could had cure if had known XVIII. the fact that the buyer did not pay creates a reasonable apprehension on the sellers mind that the buyer will not pay for the future installments either.Installments K 1.Breach of Installment K a. Person sues for breach on a K for a non-material there was also a material but he did not raised till later.look at the size of the breach.if the other party makes an offer to cure then the buyer must accept the installment c. The buyer refuses or neglects to pay for one or more installments it depends on the circumstances of each case whether the breach of K is so material that it would be justifiable for the injured party to cancel the K or whether the injure party only has a claim for damages 3.the code is to be liberally construe and a court may waived the requirement if both parties had a clear understanding that a party is suspending performance until adequate assurance of due performance is received vii. Restatement § 344 – Purpose of Remedies i. Circumstances to consider for the SELLER to find a breach of the whole K a.1. look at whether the shipments are interrelated – brick wall b. if that non conformity substantially impairs (so no perfect tender rule) the value of that installment AND the installment can not be cure.if you are insecure then ask for assurance 4. to determine if breach to the BUYER is substantial to impaired the whole K. UCC 2-612. if whole K is not impaired (from the point view of the buyer just being insecure that the rest of the shipments will also be bad is not a substantial impaired the value of the whole K) the party may request adequate assurance under § 2-609 and if not satisfy then cancel a.

including the money expend in preparation for the performance or in the performance less any cost the party in breach can prove with reasonable certainty the injured party would have suffered had the K been performed ii. If the breach caused no loss or if the amount of the loss is not proved under the rules stated in the chapter. Restatement § 345 . The judicial remedies available for the protection of the interests stated in §344 include a judgment or order 1. Restatement § 346 – Availability of Damages i. (a) his "expectation interest. b. use if losing k → You only have to prove what you spend and the other side will have to prove that you would have lost money. or 3. (f) enforcing an arbitration award. Remedies – Compensatory Damages Illustrations a. certain.damages. Restatement § 349 – Damages based on reliance interest i. c. Expectation damages are measured by 1. (d) awarding a sum of money to prevent unjust enrichment. (b) any other lost. Restatement § 347. (a) awarding a sum of money due under the contract or as damages. (c) any cost that he has avoided b/c of the breach ii. Restatement 352 – Uncertainty as a Limitation on Damages i. 2. (c) requiring restoration of a specific thing to prevent unjust enrichment. (c) his "restitution interest. a small sum fixed without regard to the amount of loss will be awarded as nominal damages. and 6. 2.Judicial Remedies Available i. Damages are not recoverable for loss beyond an amound that the evidence permits to be established with reasonable certainty. 5. (b) requiring specific performance of a contract or enjoining its non-performance. d. 3. calculable) caused by the breach LESS 3.Measure of Damages in General i. Usually there are not attorney fees XIX. Common Law – restatement i. Definition. b. The injured party has a right to damages for any breach by a party against who the contract is enforceable unless the claim for damages has been suspended or discharged ii." which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed.shifting the burden of proof   42  . (e) declaring the rights of the parties. (b) his "reliance interest. Expectation Damages = (LOST VALUE(K price) + OTHER LOSS) – COST AVOIDED c. (a) the lost in valued or expectations caused by the other party breach PLUS 2. 4.1." which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made. Reliance Damages = (money spend in performing the breached K) – money would had spend or lost had the K not been breached 1. K damages usually have limitations an a party hardly ever gets all its true damages paid ii. including incidental or consequential loss (foreseeable." which is his interest in having restored to him any benefit that he has conferred on the other party.

+ any dr.nose she has now (this puts her back where she was) + pain & suffering for all 3 operations (b/c if you put her back to where she was before then she would not have to go thru any surgery. bills she has paid up to date. so add in the consequential or incidental damage caused by the new nose. Good for loosing Ks also b. Usually expectancy is best result though. "loss in value": would be the difference b/w the value of the nose she had before operation. only gives her back any dr. but does subtract any damages that the other party can prove that you would have suffered had there not been a breach 4. So it would be any Dr. so they hold doctor in this case accountable.business ventures 3.nose she has now (worse nose than the original) + 3rd operation (other losses/ pain and suffering) . Sullivan –Nose job i. (difference in the value of the nose she had from the one she ended up with due to the breach) c. 1. does not give you profits. Nose she had .   43  . Restitution Damages: a. → if the NON-BREACHING party sues a. If you non-breaching party then give them the higher value 2. Restitution Damages = benefit conferred or increased value of the property 1. b. So. Most jurisdictions don’t let you recover for more than the restatement price but others do e. the burden is on the moving party so use when it is though to prove lost value(lost profit) d. bills she paid up to this point = damages 3. NOTE: in this case it seems that reliance may be better b/c it gives her pain and suffering for all three operations.nose she had) + nose she had . but we don't want them making promises to get patients in the office.any unpaid doctor's bills = damage 2. Restatement § 371. is good when you can prove that you were going to earn profits. "cost avoided": you subtract any cost that the injured party avoided by the breacher's breach of contract. (a) The reasonable value to the other party of what he received in terms of what it would have cost him to get it from someone else in the same position of theΠ. Expectancy Damages: a. "consequential or incidental loss": She is worse off now than when she began. 4. the formula looks like this: (Nose expected . d.'s bills she has not paid yet. Restitution can be measure by either 1. (b) The extend to which the others parties property has been increased in value or his other interest advanced → if the BREACHING party sues remember 2 ways and always gets the lowest value ii. and the value of the nose she expected to get from the surgery. Reliance Damages: a. Doctor guaranteed the girl a certain result (normally doctors cannot be sued under contract theory.2.Restitution Interest i.

Restatement § 353. there is no need to show physical consequences of the mental distress 3.like in the nose case b. If you can prove that the other party engaged in intentional wrongful actsindependent tortuous act. Allan v Jones 1. refuses to pay or when the K involves fiduciary duties iv. this case the dealership rolled back the mileage on the vehicle.punitive damages 1.fraud→ rolling back the odometer. Clark: 1. punitive=$12. did he plan or have a scheme to do the act. Remedies – Mental Anguish and Punitive Damages a. Boise Dodge v.when a party refuses to pay or negotiate in bad faith you can get punitive. but you can get them when they are the direct result of the breach. and they look to punish so it will hurt particular Δ (actual damages=$350. you may get damages for mental distress if a. look at the motives behind the D's conduct 4. like McDonald's) 2. 2. punitive damages must bear a “reasonable relation to the amount of actual damages” – the court will examine how malicious was the conduct. usually you don’t get damages for mental anguish or pain and suffering for a breach of K b/c there is usually none. The independent tort is fraud. 2.foreseeable result of the breached 2. when a K is of the kind that puts the Δ on notice that a failure on their part will probably produce mental suffering mental damages are allowed. look to deter so that it is not profitable to do it again. Punitive Damages i. Some areas where punitive damages are awarded in contract cases:   44  . but applies more when insurance Co. v. (takes more $ to deter big corp. look to see if D's conduct was calculated. the breached caused the bodily harm b.XX. Punitive damages must be "reasonably related" to the actual damages suffered by the 3.500 and the actual damage was 350. Duty of good faith. Damages for Mental Distress i.500 the court said this was reasonable) iii. Four things to look to when considering Punitive Damages: 1. Punitive damages→ To punish and deter 1. (as in the Dodge case) 3. not recoverable for the breach of K unless the conduct constituting the breach is also a tort for which punitive damages are recoverable ii. must look to see if the amount will be enough to deter the from doing the act again. not building good to save money…etc. Restatement § 355. The court said these were ok b/c of policy of consumer protection.emotional disturbance1. It was done in bad faith with the intent to defraud the consumer. the harm was especially foreseeable from the breach of the K ii. extent of D's disregard of the rights of others vi. In this case the punitives were 12.

When can a party get specific performance? 1. iii.1. Defenses to Specific Performance: 1. Subject to the rules stated in §§ 359-69. There are 2 ways to bifurcate a trial: 1. allow the worth of in at beginning stage of punitive damage question 2. Hard ship: SP will be refused if the relief is too burdensome and unfair b/c the exchange is grossly inadequate. breach of fiduciary duty 2. meaning that if the court ask on party to perform the other must also must be willing to perform too 3. This can be on the defendant or on 3rd parties   45  . there is no jury. This is discretionary by the trial judge. which cannot be estimated in advance. 2. Specific Performance i. Restatement § 357 – Availability of Specific Performance and Injunction i. but there must be mutuality of performance. Subject to the rules stated in §§ 359-69. bad faith failure to pay by an insurance company 3. Burden to prove that deserve equitable damages is on the party seeking it ii. only allow the worth of D after the jury has decided if punitive damages are proper in the case XXI. contract cases involving an independent tort (see above) vii. (1) THRESHOLD Adequate: Specific Performance can only be obtained if the another remedy cannot be obtained except at considerable expense. The duty is one to act and specific performance would be denied only for reasons that are inapplicable to an injunction b. specific performance of a contract duty will be granted in the discretion of the court against the party who has committed the breach of the duty ii. Remedies – Equitable Relief a. The R2K. viii. trouble or loss. Damages must be estimated with certainty and if the court cannot do that then they will grant SP.says that adequacy is relative and that the modern approach is to compare remedies and decide which is more effective in serving the ends of justice. (3) Supervision: the court may refuse to grant SP if that would require constant court supervision. The duty is one of forbearance 2. an injunction against a breach of contract duty will be granted in the discretion of the court against the party who has committed or is threatening to commit a breach of duty if 1. but this is a discretionary rule that is frequently ignored specially when there a re public interest involved 4. 3. (4) Certainty: the terms of the K must be so express that the court must determine with reasonable certainty what is the duty of each party and the condition under which performance is due. When the legal damages for the breach are inadequate 2. (2) Mutuality: there is no requirement in the law that the parties be mutually entitled to the remedies of specific performance in order that one of them be given that remedy by the court. Trials are usually bifurcated to separate the punitive damages from liability. Factors used in determining if specific performance should be granted 1.

b.§ 2-708. They look at the appropriateness of the consideration…etc.§ 2-508. though in most jurisdictions this requirement has been defeated a. the seller has a hard time proving but the law is nice and it allows either party to get SP. Damages are not collectable. Marilyn Monroe dress. When are damages inadequate? 1. Terms of the K have not expire the court can enjoin the performer from performing elsewhere during the time of the contract 1) he was an employee providing unique services. 2. Temporary Injunctions: only granted if a. the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery. 2. irreparable harm AND b. When damages are unascertainable. RULE-an injunction may be granted if a. a. personalized property such as art. (1) Where any tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired. UCC . Replacement.must make sure they do it 3. this is for buyers mostly. Terms of the K have expiredIf the employment contract has terminated equitable relief is potentially available only to prevent injury from unfair competition or similar tortious behavior or to enforce an express and valid anticompetitive covenant 4. jewelry. antiques v.2.   46  . UCC . this is the mutuality argument. Injunctive Relief 1. Cure by Seller of Improper Tender or Delivery. Advantages: Outcome will protect the parties reliance interests b/c they will receive the benefit of the bargain. Seller's Damages for Non-acceptance or Repudiation. (2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender. Disadvantages: Supervision by the court . there must be a likelihood of success on the merits OR there are questions on the merits and the balance of harm is in favor of the plaintiff vi. 2) breaching party has some other reasonable means to make a living 3) the employer is exposed to irreparable injury— this boils down to economic pressure b.if it is going to be very hard for the plaintiff to collect damages iv.tough to calculate w/ certainty 2. Real property. Laches: If there was a delay in making the claim and whether such a delay caused prejudice to the other party.there is a presumption real property is unique. then the court will evaluate whether b/c of the delay the plaintiff has waived his right to specific performance 4. UCC—Goods 1. Clean hands: if a party seeks equitable relief then they must come in with clean hands (act in good faith). 3. When the subject of the contract is unique 3. Examples-Hope diamond.

5. a. Action for the Price. (1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (Section 2-723).§ 2-710. Incidental damages to an aggrieved seller include any commercially reasonable charges. c. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him to any goods not resold. a seller who is held not entitled to the price under this section shall nevertheless be awarded damages for non-acceptance under the preceding section. the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article (Section 2-710). UCC . (2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer. (a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer. b. b. together with any incidental damages under the next section. 4. and ii. care and custody of goods after the buyer's breach.§ 2-711. the price i. (b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing. together with any incidental damages provided in this Article (Section 2710). Seller's Incidental Damages. but less expenses saved in consequence of the buyer's breach. (1) When the buyer fails to pay the price as it becomes due the seller may recover. UCC . (1) Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any   47  . due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.§ 2-709. in connection with return or resale of the goods or otherwise resulting from the breach. Buyer's Security Interest in Rejected Goods. expenses or commissions incurred in stopping delivery. a.a. Buyer's Remedies in General. UCC . in the transportation. (2) Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment. 3. (3) After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (Section 2610). a.

transportation and care and custody of goods rightfully rejected. (3) On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection. (1) Subject to the provisions of this Article with respect to proof of market price (Section 2-723). a. (b) recover damages for non-delivery as provided in this Article (Section 2-713). 6. (2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (Section 2715). b. Buyer's Procurement of Substitute Goods. any commercially reasonable   48  . (a) if the goods have been identified recover them as provided in this Article (Section 2-502). or ii. UCC . UCC . the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article (Section 2-715). (1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection. Buyer's Damages for Non-delivery or Repudiation. UCC .§ 2-715. transportation. "Cover".goods involved. as of the place of arrival. 7. in cases of rejection after arrival or revocation of acceptance. (b) in a proper case obtain specific performance or replevy the goods as provided in this Article (Section 2-716). (2) Market price is to be determined as of the place for tender or. but less expenses saved in consequence of the seller's breach. 8. receipt.§ 2-712. c. the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid i. b. Buyer's Incidental and Consequential Damages.§ 2-713. but less expenses saved in consequence of the seller's breach. a. or ii. (1) After a breach within the preceding section the buyer may "cover" by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller. (3) Failure of the buyer to effect cover within this section does not bar him from any other remedy. care and custody and may hold such goods and resell them in like manner as an aggrieved seller (Section 2706). (a) "cover" and have damages under the next section as to all the goods affected whether or not they have been identified to the contract. a. b. receipt. (2) Where the seller fails to deliver or repudiates the buyer may also i. and with respect to the whole if the breach goes to the whole contract (Section 2-612). c.

We do not grant SP if the result is not right. b. the court also reviews the economic advantages and disadvantages in deciding on whether to grant the SP iv. damages. c. a. Plaintiff wants injunction to force defendant not to lease to another pharmacy ii. then we must also allow the seller to have this remedy. The mine wants the defendant to keep buying from them. b. and ii. and no much court supervision needed from the court to enforce iii. Buyer— 2-716—goods are unique or other circumstances: if the goods are necessary for buyer's business and cannot be obtained elsewhere or something like that. UCC – 2-716 . Seller— may get specific performance also if dealing with real estate b/c of the concept of mutuality. (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise. 9. the impact on others. and not too expensive e. Walgreens i. (1) Specific performance may be decreed where the goods are unique or in other proper circumstances. the court granted SP b/c damages hard to estimate. unjust enrichment…or over recovering d. (b) injury to person or property proximately resulting from any breach of warranty. court will do this sometimes if negotiation is feasible. on deciding whether or not to grant SP iii. Northern Indiana v Coal Mine i. Output contracts are usually given Specific Performance when the K requires a particular available source 11. the court refused. damages were adequate ii. (3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. the court also grants SP b/c this will force the parties to negotiate and settle for a deal that would be beneficial to both parties. 3rd party beneficiaries-are not allowed to claim SP b/c they are not parties of the K. c.charges. Personal Services and Employment contracts:   49  . 10. or other relief as the court may deem just. expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach. a. (2) Consequential damages resulting from the seller's breach include i. (2) The decree for specific performance may include such terms and conditions as to payment of the price. if we allow buyers to have this remedy.Buyer's Right to Specific Performance or Replevin. ideal. but this may be a factor that can be weight.

employment Ks ii. The employee has to make a reasonable effort to mitigate the damages then. + Other lost incurred ii. the constructor will still recover b/c he has substantially perform he has conferred a benefit h. The total cost the builder incurred in building the house i. If the OWNER breaches Forster 1. Construction Contracts i. it amounts to involuntary servitude 3. Occurs mostly on the sale of business. If the owner refuses to pay then the contractor is entitled to either (a) or (b) a. minus the amount the employer can affirmatively prove that the employee has earned or with reasonable efforts would have earned from other employment ii. — Whatever payments he has already received ii. Contractor materially breached→ the owner will get: a. if a loosing K) ii. + The profits that he was going to make (could be negative. (hard to enforce the quality of their performance) ii. Courts will enforce these and grant injunction as long as they are not unreasonable in terms of time and geographic location. for the K period agreed upon. If the CONTACTOR breaches Rivers and American 1. K price i. difference in value b. A person who is wrongfully discharged will recover the amount of salary agreed. Covenant Not to Compete i. SP is almost never granted for construction Ks f. It is hard to supervise the performance of the contract. Cost to replicate or replace. esthetic defects always get cost of replace 2. Personal Services/ Employment K-the court NEVER grants specific performance when there is a personal service involved for 3 main reasons. the difference b/en the value of the property as constructed minus the value if performance had been properly completed b. If you get injunction you don’t get the injunction and vice versa unless there was some competition b/f trial g. or subject matter iii. Contractor non-material breached→If the constructor has substantially perform in good faith and has not intentionally breached the K and only trivial defects exist— using the wrong pipe—then the owners damages may be measure by a. — Cost avoided for not having to build b.i. but he only needs to take those jobs that are comparable or substantially similar to the one she was   50  . 1. It is undesirable to compel continuation of a personal relationship after a disputelose trust 2. Unless the K is divisible or the contractor has substantially performed an action for the agreed price for he job will not lie but Construction Ks are hardly ever divisible 2.Safety. Employment Contracts i.

only some jurisdictions will focus on the intent of the parties   51  . UCC – § 2-718(1) Liquidation or Limitation of Damages. and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose. The clause must be a reasonable forecast of the actual damages the reasonable forecast is measured at the time the contract was made. and 2. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. iii. 1. Intent. Deposits. (1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach. remedy may be had as provided in this Act. (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive.the amount of actual could not or was very difficult to be determine by the parties at the time of the K was made. i.the party invoking the clause has the burden of proof that: (the test is one or two but some jurisdictions examine 2 and 3) i. UCC .clauses that specified the amount to be paid in case of a breach . d. i. iii. A term fixing unreasonably large liquidated damages is void as a penalty. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not. welfare. Contractual Modification or Limitation of Remedy. the difficulties of proof of loss. A term fixing an unreasonably large liquidated damage is unenforceable on the grounds of public policy as a penalty ii. Restatement § 356 – Liquidated Damages and Penalties i.deprived.§ 2-719. moonlighting. Remedies – Liquidated Damages a. The damages have to be difficult to determine. ii. There is no deduction from collateral sources such as unemployment benefits. but if could of taken the jobthen they will not get damages for something to which they could have mitigated for iii. Liquidated damages. (a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article. A term in a bond providing for an amount of money as a penalty for non occurrence of the condition of the bond is unenforceable on grounds of public policy to the extent that the amount exceeds the loss caused by such non occurrence b. The amount of liquidated damages must bear a reasonable proportion to the probable loss ii. employee is usually not allow to recover punitive damages XXII. You don’t have to relocate iv.she does not have to take another job. as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts. (1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages. Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipate or actual loss caused by the breach and the difficulties of proof of loss. in which case it is the sole remedy. c.

Assignment of Rights 1. they do this b/c there is no harm. An assignment of a right is a manifestation of the assignor's intention to transfer it by virtue of which the assignor's right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance. this is not really a liquidation clause v. No delegation of performance relieves the delegator of any duty to perform or any liability for breach. or materially reduce its value to him. then the contract cannot prohibit this. OR b. The R2K will look at either the forecast OR the actual lost iv. f. the assignment is forbidden by stature or is against public policy. Alternative Performance: He can perform in two different ways. some jurisdictions follow this but on deciding look at the control of the parties had. A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. by choosing to performed what he promised or by paying the money agreed for not performing. Notes i. No Damages. then we look at whether the liquidation clause was unconscionable. or materially impair his chance of obtaining return performance. or materially increase the burden or risk imposed on him by his contract. A contractual right can be assigned unless a. OR c. Restatement § 356: follows the CL BUT it takes the view that if the actual damages are zero the liquidation clause is not valid. XXIII. UCC looks also at either the reasonable forecast OR the actual lost. Assignment of Rights i. Restatement § 317: Assignment of a Right 1. Under the UCC: liquidated damages are allowed under the same conditions of the CL. Clause was not intended as a penalty for breach. meaning way lower than the actual losses were. 2.amount in the clause can not be grossly disproportionate to the probable loss e. UCC 2-210: Delegation of performance.iv. The UCC also allows you to limit the damages recoverable to return the goods or to replace or repair…etc. the substitution of a right of the assignee for the right of the assignor would materially change the duty of the obligor. but any limitation of damages when personal injury is involved is prima facie unconscionable. Liquidated Damages as a limitation/cap on damages: (2-719) liquidated damages may serve as a cap to liability if the parties agreed to it and they are not unconscionable. the assignment is validly precluded by the terms of the contract ii.   52  .CL→Claiming that there was no harm done by the breach will not excuse a party from liquidated damages ii. 2. If you are merely assigning a right to payment.unequal bargaining power iii. If the liquidation damages provided for too little. Third Party Interests – Assignment & Delegation a.

5. b. Gives the obligor a right to damages for breach of the terms forbidding assignment but does not render the assignment ineffective. unless a different intention is manifested. b. when ever there is an assignment all duties and rights are given up completely 3.both the obligor and the assignee can bring any defense that was available to the original parties under the K 7. Standby Liability. The assignee is said to “stand on the shoes of the assignor” so that is the assignor has no rights (to the money) neither does the assignee 8. 1. Restatement § 322: Contractual Prohibition of Assignment 1. a. RULE: As a matter of law. WARRANTIES OF ASSIGMENTS . a term prohibiting assignment of the contract only bars the delegation of the performance or condition to an assignee. there is a presumption for assignability and there are two limitations that will make an assignment invalid: a.Allhusen   53  . Unless the circumstances indicate otherwise. 2. then the delegator retains liability for breach. If no novation.iii.when the assignor retains liability after delegating his duties to someone else. you are also warranty that you don’t do anything to interfere 9. and does not prevent the assignee from acquiring rights against the assignor or the obligor from discharging his duty as if there were no such prohibition. Novation. the assignment cannot violate a statute or public policy. the assignment cannot change the K in any way→duties or rights or increase the risks or burdens on the other party b. Is for the benefit of the obligor. does not forbid assignment of a right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation.when an assignor assigns a right the is only warranting that he has a right not that it is collectable. if the K prohibits assignment— when a K contains clear and plain language limiting the freedom of alienation of rights and parties agree no to assign such stmts are valid a the parties can not assign their rights under the K. a manifestation of a parties intention to transfer a right by virtue of which that parties right to performance by the obligator is extinguished in whole and another party acquires a right to such performance 2. DEFENSES.in some jurisdictions assignment of wages to pay debts is against PP c. If a debtor wants a discharge from his debt he must get the discharge from the assignee. contracts can NEVER be assigned 4. Contracting Around the Right to Assign i. rights can be assigned. Original parties can not modify the K 6. ii. c. This is when the parties get together and decide that a new contract is formed with the new person now liable for performance and breach. A contract term prohibiting assignment of rights under the contract.Only way the delegator can be relieved is through a novation. 1. Definitions and Rules 1. Govt. He can only get rid of this liability by a novation.

This is different b/c you are NOT making an assignment.. Assignment gives ownership. (Any instrument that shows the assignee has the right to collect). Fitzroy v Cave a. So. This was not really a COA but a debt. b. the motive of the Π are irrelevant b/c it has nothing to do with whether the assignment is valid or not Notice 1. iv.iii. the rights vest in the assignee Gratuitous Assignments 1. rather you are making a contract. After notice he is liable for paying to the assignor what is due to the assignee. this is against PP (professional litigators that take on other peoples suits) AND that Π’s motive of was to drive Δ into bankruptcy.. But. Continental Purchasing a. Once notice is given.discount – money due to him when the other party owes him money but if the second party assigns his rights then if the first party was given notice before the money was due then he can not set off that the 2nd party owes him 7. contract does not. 3. If you have no job or not contract you have nothing to assign 2. A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor   54  . and it is a better right. you could contract with the bank to give you money and then the first job you get you will pay them back. UCC. 6. inventories. UCC § 2-210. 3. The rights vest at the time the notice is given 2. 5. The Ireland creditors assigned the right to collect the debt. Once the notice has been given. A party can set off. 10. A debtor is not affected by an assignment until he has CLEAR notice. You don’t have any thing. The UCC also requires a notice. If he pays to the assignor in ignorance of the assignment he is relieved form liability and he may set up against the assignee any defense acquired prior to notice which he would have available against the assignor had there been no assignment. became the assignee. Can only be assigned if you have a job or a K and have not earned the money yet but have a right to it. Argues this is maintenance. which is the buying and selling of legal actions. v. 4. Π Took over the 's debt for some creditors in Ireland. etc. the obligor is liable for any damages caused by him paying the wrong person. you don’t have any thing to assign.allows you to assign although there is no K of any type as long as you have people who owes you money like accounts receivable. The obligor must be given notice by the assignor or the assignee that the rights of the obligee/assignor have been assigned to the assignee. But the person can always take the assignment back if not in writing Assignment of Future Rights 1. These can be made as long as the assignment is in writing or is accompanied by delivery of a something that is customarily accepted as a symbol or as evidence of the right assigned. vi.Delegation of Performance and Assignments of Rights 1.

The UCC also requires that the K not be alter in a way that may change the duties of the parties or create burdens. and it does not release the assignor of any duties unless agreed by the parties that it will. You also have a right to ask for verification by documentation when notified about an assignment. under UCC assignment really means that duties can not be delegated rather than rights can not be assigned vii. Question: If a contract is assigned does this mean that both the rights under the contract are assigned.Third Party Beneficiaries a. Personal services— A party can NEVER delegate a personal service contract 2. You can contract around 3rd party beneficiaries iii. c. *** UCC is different from CL in that you can NOT prohibit assignments of a right to future payments of money $ a. Third Party Interests . Sally Beauty Case 1.   55  . 2. (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. delegation permissible unless substantial interest in having original person perform. a. (1) Unless otherwise agreed between promisor and promisee. **NO delegation of performance relieves the delegator of any duty to perform or any liability for breach. a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either a. Also allows good faith modification of contracts once assignments have been made as long as they keep the corresponding rights of the assignees. and the duties under the contract are delegated? Yes.Intended And Incidental Beneficiaries 1. Restatement § 302 . UCC 9-318: same as 2-210 it says that an "accounts general" is always assignable even if stated otherwise. The obligor was under a contract to used their best efforts. 1. Delegation of Duties i. This means payments under Ks. Generally i. If an assignment that delegates performance creates reasonable grounds for insecurity. There was a conflict of interest b/c the delegatee is the competitor of the obligee. the obligee can request assurance under §2-609 2.perform or control the acts required by the contract. 2. Restatement §318. Rule: in general there is a presumption that duties can be delegated UNLESS there is a reason why the non-assigning party would find performance by another substantially different from what he bargained for. (2) An incidental beneficiary is a beneficiary who is not an intended beneficiary. b. We are giving 3rd party beneficiaries the ability to enforce the contract ii. presumption that when a contract is assigned. (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary. and not the best efforts of some third party) XXIV. both the rights and duties are transferred ii. or b.follows the UCC delegation language.

Restatement § 308. KMART Corporation (Plaintiff). the promisor and promisee retain power to discharge or modify the duty by subsequent agreement. or of a judgment thereon. (1) Discharge or modification of a duty to an intended beneficiary by conduct of the promisee or by a subsequent agreement between promisor and promisee is ineffective if a term of the promise creating the duty so provides. by ending it we all benefit – we don’t have the power to sue on this – unintended 3rd party beneficiary. The promisor's duty is discharged to the extent of the amount received by the beneficiary. he can obtain a judgment or judgments against either the promisee or the promisor or both based on their respective duties to him. Creditor can sue both the promisor and promisee. both the buyer. Reimbursement Of Promisee a. (2) In the absence of such a term. How do we know which type of beneficiary we are dealing with? i. Creditor under Restatement § 302(a) – contract is to pay a debt 1. 2. Can agree to require 3rd party consent for modification 3. It is not essential to the creation of a right in an intended beneficiary that he be identified when a contract containing the promise is made.b. It vests when the 3rd party acts in reliance 2. Cant sue the promisee because it is an unenforceable gift promise d. (Defendant). 3. 2. Balfour Beaty. Satisfaction in whole or in part of either of these duties. subject to the promisee's right of subrogation. (1) Where an intended beneficiary has an enforceable claim against the promisee. only the promisor a. materially changes his position in justifiable reliance on the promise or brings suit on it or manifests assent to it at the request of the promisor or promisee. What happens if we change the 3rd party? Can we make a 3rd partys rights irrevocable? i. 3rd party in a donee beneficiary cant sue the promisor and the promisee. Restatement § 311. is a tenant of TPL. Incidental Beneficiaries (cant sue) – Railroad goes on strike. before he receives notification of the discharge or modification. When the   56  . Identification Of Beneficiaries 1. (TPL) to build a shopping center. Remedies Of The Beneficiary Of A Promise To Pay The Promisee's Debt. (4) If the promisee receives consideration for an attempted discharge or modification of the promisor's duty which is ineffective against the beneficiary. Balfour Beatty Inc. Intended Beneficiaries i. satisfies to that extent the other duty or judgment. ii. Inc – i. he could always sue the seller because they were in privity a. Variation Of A Duty To A Beneficiary 1. Donee under Restatement § 302(b) – contract is to confer a benefit on benefitiary 1. Can contract to make the 3rd party benefit irrevocable f. the beneficiary can assert a right to the consideration so received. 4. The power to modify a 3rd partys rights terminates when they reasonably relied on the benefit 1. (3) Such a power terminates when the beneficiary. c. Kmart v. entered into a contract with Tutu Park Ltd. ii. look to whether e. Restatement § 310.

There are two ways in which the courts determine whether a party is an intended beneficiary to a contact: (1) they attempt to determine if the performance of the contract runs to the part or. and (2) they determine whether the promisor understood that premises had intent to benefit the third party. If Plaintiff is an intended beneficiary of the contract between TPI and Defendant. ii. i. creditor beneficiary   57  . Expert witness called to show that Defendant car company should have provided what the plaintiff expected. Is Plaintiff an intended beneficiary of the contract between Defendant and TPI? a. Defendant entered into a contract with TPL to build a shopping center where Plaintiff would be a tenant. then prove the contract g. Can tenants. Holmes Tuttle Lincoln-Mercury. Tweeddale a. The car buyer could definitely sue. of Housing and Urban Development which determines maximum rent? i. Essentially become 3rd party. 1. During the planning. Inc. what full coverage meant? a. Prove 3 party intended status. Plaintiff is an intended third party beneficiary under either approach. Plaintiff will have to adhere to the arbitration clause in the contract. Vesting i. but this means that they must arbitrate i. the modern approach.shopping center where Plaintiff had a store was damaged in a hurricane. The two parties seem to have different ideas of what full coverage was i. 2. Court finds that Kmart is a 3rd party beneficiary. Only way out of the Contract for car salesman is to contract around 3rd party beneficiaries h. Tweeddale v. the roof of the shopping center was damaged by the winds from Hurricane Marilyn. as 3rd partys. Car buyers get into a car accident with the Johnsons. ii. rd ii. Supreme Court i. Defendant’s construction schedules were required to comply with Plaintiff’s schedule and the drawings made in the design phase of performance were to be submitted Plaintiff. Plaintiff sued Defendant for negligence. Due to the involvement Plaintiff had in the building of the shopping center. but can the 3rd party? 1. Johnsons argue that the car dealer by not getting insurance policy filed breached the contract that they are 3rd party beneficiaries too. Johnson v. enforce contract between landlord and Dept. Zigas v. In September of 1995. Was there a meeting of the minds? Did the dealer know the terms of the contract – ie. Yes. When can a 3rd party count on their rights? When do they vest? 1.