I.

DEFENSES TO ENFORCEMENT.

IS
a.

A SIGNED WRITING NECESSARY?

Statutes of Fraud: certain types of agreements must be in writing in order to be enforced. Is the agreement of a type that falls within a state‟s statute of fraud? (note: a K may be subject to a „choice of law‟ clause).

IS

THE AGREEMENT

“WITHIN”

THE STATUTE OF FRAUDS?

i. Restatement 2nd, § 110 – Classes of Contracts Covered (p. 53) 1. Marriage; 2. Ks that are not fully performed until a year after creation. a. However, that the K could be performed within a year is sufficient to escape the rule (evidence of gen. policy to enforce agreements). 3. Land sales; 4. Executor K (though not required that the will itself is in writing); 5. Sale of goods > $500: a. UCC 2-201, subsections… i. (1) general rule ii. Exceptions 1. (3)(a): note the built in exception to this. 2. (3)(b): confession rule a. DF v. Brown: party swore in affidavit to not having sold chair.  wants to depose in hopes that  will change testimony. Held: “…remote possibilities do no warrant subjecting the parties and the judiciary to proceedings almost certain to be futile.” (p.333). iii. (2) For Merchants. 6. Suretyship: a “surety” is one who steps in to pay the debt of another; to enforce this payment, K must be in writing. ii. Relief against hardship of statutes of fraud can be found in prom. estoppel, e.g. McIntosh v. Murphy. [outline 1]

WAS
b.

THERE A MISREPRESENTATION?

Silence, Concealment and Misrepresentation: are these ground for rescission, if so, when? i. MA: Swinton v. Whitinsville Bank (Mass. 1942) 1. owner never disclosed that there were termites 2. traditional view of misrepresentation 3. buyer beware 4. Silence: no. 5. Concealment, i.e. failure to reveal: no. “The law has not yet, we believe, reached the point of imposing upon the frailties of human nature a standard so idealistic as this” (p.350). 6. Misrepresentation: yes. ii. NJ: Weintraub v. Krobatsch (NJ 1974) 1. concealment of cockroaches 2. modern view of misrepresentation 3. Focuses on “material” item of contract 4. Silence: yes, if... 5. Concealment: yes, if... 6. Misrepresentation: yes, if 3 factors are met: 1) materiality (defined in relation to reasonable seller and buyer); 2) not observable; and 3) deliberate. Apply:  (seller) kept lights on when  visited for observation. The house was infested with cockroaches. This was a (1) material, (2) latent, and (3) deliberate concealment or nondisclosure. Held: rescission allowed. iii. Restatement 2nd, § 164 1. Silence: § 161 (when non-disclosure equivalent to an assertion) 2. Concealment: § 160 (when action equivalent to an assertion) 3. Misrepresentation: § 162 (on materiality) a. For relation between misrepresentation and opinion, see §§168 – 9. Note: unlike tort of fraud, K fraudulent misrepresentation does not require intent.

1

then was injured. extreme emphasis on untoward consequences of delay. (1974): re. Lack of Capacity: 1. iii. Duress and Undue Influence i. 4. Undue Influence: Odorizzi v. Held: though no statutory basis.e. Power Ridge (Conn. § 154 „When a Party Bears the Risk of a Mistake‟ (p. insistent demand that business be finished at once. not just experts. Bloomfield: rescission allowed if agreement made under undue influence. ii. remanded for further proceedings. e. a mistake must be (1) mutual. adoption of UCC 2-302(p. THERE A MISTAKE? Mistake: i. e. of Columbia 1965): K for payment plan which divided payment pro-rata among purchased items. a. no sleep for 40 hours). §§ 151-8 (p. Public Policy: 1.g. (1) absence of meaningful choice on part of one party. K of adhesion. Overpersuasion is generally accompanied by… i. and iii) content of the agreement. IS d. 153 (one party). Rule: unconscionable K generally understood to include a.g. vi. ii. Economic Duress: Austin Instrument v. total weakness of mind (e. § 178 (p. the use of multiple persuaders by the dominant side against a single servient party. 152 (mutual). Restatement 2nd. 154. 151. Whether a K is against “public policy” depends on totality of circumstances against backdrop of societal expectations. payment plan unenforceable. (2) contract terms which are unreasonably favorable to the other party. and iv) action for breach would be inadequate. iv. b. 2. 1.  provided gear and supplies. statements that there is no time to consult counsel. 78) 2. i. vii.g. e. Restatement 2nd. absence of 3rd party advisors to servient party.64 – 74) ← lots of illustrations! 2. Restatement. failure to comply with a licensing statute. Physical Duress: Restatement. 1. 3. Facility open to public. 2005) [4/3 split]: at snow tubing facility. 79): note the balancing provision at subsection (b). application of excessive strength by a dominant subject against a subservient object. 2. ii) overcoming of other party‟s free will. v. and 5. Significant factors: i) inequality of bargaining power. Illegality: e. sub-K for submarine parts. 2. Illegality and Public Policy: i. 2nd § 12 WAS IT A HIGH PRESSURE SITUATION OR UNEVEN BARGAINING POWER? ii.  signed waiver of liability. 2 . Restatement 2nd. and b. Factors necessary for rescission by econ. 257) persuasive. buyer can‟t obtain the goods from elsewhere. WAS f. 2nd § 174 iii. Walker 1887: re. iii) no other reasonable options. Roots found in… i. 71) 3. Family activity. ii) manner the agreement is presented. 2.g. Duress: i) a wrongful threat (pertaining to underlying K). Sherwood v.c. and (2) go to the “root of the matter”. Dist.App. Rule: Freedom to K on whatever terms is limited by public policy. discussion of the transaction at an unusual or inappropriate time. Duress: 1. 2 elements: a. Rule: to rescind a K. 1. consummation of the transaction in an unusual place. Loral Corp. Rest § 177 (p. 1. threaten to breach by non-delivery unless a further demand is met. Held: waiver unenforceable on grounds of public policy. 78) Unconscionability: looks to both the manner of the agreement and the terms of the agreement. THERE A LEGAL OR PUBLIC POLICY REASON TO PREVENT ENFORCEMENT? e. Facility in a better position to ensure safety at resort. Walker-Thomas (US Ct. and b. Apply: [significant factors] 1. DID AT LEAST ONE PARTY LACK THE CAPACITY TO CONTRACT? Capacity [lack of].g. a. § 181(p. small print. Rose the cow. Hanks v. Williams v.

216. UCC gap filler applies. § 213. ARE b. Rogers v. ii. Nelson v. Minority/modern approach: merger and integration clauses are to be afforded varying weight depending on the circumstances (see Nelson v. (iii) trade usage. Evidence of new term after K created does not fall under scope of parole evidence rule. It was significant that both parties were “sophisticated parties… represented by counsel” and the K was the product of extensive negotiation and numerous drafts. (iv) gov‟t regulations which incorporated by reference. “merger clauses”: i. iii.WHAT II.e. Elway (Co. i. iii. Held: . Applied: a. 1. Jackson (Me. §210 (comment b) b. however ct. (ii) communications between parties. 449):  defaults under written agreement. place. 215. can look beyond four corners of K to evidence from before the agreement was struck. Govt regulations significant. UCC will not fill gap if parole evidence can establish instead. WERE THE TERMS OF THE DEAL? LOOK ARE TO THE PARTIES WORDS AND ACTIONS: IS THERE A WRITING? THERE ALSO CONTEMPORANEOUS OR PRIOR WRITTEN OF ORAL EXCHANGES/AGREEMENTS? i. 4. Majority: this is indicative of fully integrated agreement. Meaning of writing: another exception to parole evidence rule is that parole evidence can be used to interpret the agreement to establish the meaning of the writing. Riley.” (Goode v.441): K with merger clause precluded consideration of parole evidence. Court added terms. Ct. b. Frigaliment v. 3. Modern rule: where the K is “partially integrated” (not intended to be a full & final expression of the agreement). i. will look to side-agreement between parties to help determine “reasonable time”. §2-202 ii. Elway dissent). Fully integrated agreement. “cannot prove a mere private convention between the two parties to give language a different meaning from its common one. but date of delivery not addressed. these will come into K regardless of full integration. §213. moreover. Re. ii. Traditional rule: courts cannot look beyond the four corners of the K. And. c. merely provides condition. allowed by UCC 2-209(1). Parole evidence: course of dealing and business practice do not pertain. oral evidence does not contradict written agreement. Not fully integrated agreement missing date of delivery. And if “chicken” meant  alleged then  would be trading at a loss. looked to (i) K itself. a. did not discharge burden of proof that “chicken” = young chicken. Apply: trade usage unhelpful because  had just entered the trade and ‟s witness controverted himself. 1995)(p. ii. 2. 214. UCC gap-fillers: (output. Re. having raised the issue of breach. Whether a K is “fully integrated” is a question of law. i. THERE TERMS THE COURTS IMPOSE? 3 . price and time) (2-305-309) (p. 260) i. However. whether or not it is integrated. b. TERMS. Holmes. Rest § 217 applies „integrated agreement subject to oral requirement‟.  alleges he was not to pay until “if and when he could”. (v) effect on price according to different meanings. a. See Restatement 2nd. International Sales: sale of “chicken”. 2002)(p. J).

iii. 2. Alaska Sales:  rented car with insurance policy. Ct. Capable of attaining national shows again. And the protection of constitutional rights must be measured against value of dispute resolution clauses. Recall imperfect acceptances: [outline 1] a. 3. and 5. 2-306: output & requirement K v. Held: term valid. c. (2) BUT. UCC 2-314: Merchantability 3. UCC 2-315: Fitness for Particular Purpose (note. iii. Leal v. mirror-image rule. UCC 2-312: Title 4 . 1) Seller must have reason to know of buyer‟s particular purpose. but will not simply excise or ignore terms merely because they operate to perceived detriment of weaker party. used following test to determine whether such a warranty existed: i. Earns $20. Apply:  argues term was “reasonable” as no reasonable person would think they could drunk drive a car that didn‟t belong to them.e. Promise. nor anything unconscionable about it. Special construction of „K of adhesion’: has been defined as one that is drafted unilaterally by the dominant party and then presented on a „take-it-or-leave-it‟ basis to the weaker party who has no real opportunity to bargain on its terms (Meyer v. i. 4. UCC gap-fillers: 1. was whether purchaser of damage waiver reasonably expected waiver to be subject to exclusions. a. Lauvetz v. UCC 2-207. “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. 501) a. Rules: i. once established. c. ii. Foals selling for $6-10. 2) Seller must have reason to know that buyer is relying on seller‟s skill or judgment: Applied: relationship between seller and buyer was like that of a teacher and student. 4. Held: as a K of adhesion. The fact that a K is one of adhesion does not necessarily mean it is unenforceable. ii. THERE TERMS THE LEGISLATURE IMPOSES (STATUTES)? b. Held: a promise is implied as the whole agreement is “instinct with an obligation. For SoG: UCC 2-313 „Express Warranties by Affirmation. Agreement rendered  exclusive agent – accepting this role requires the assumption of duty.i. Description. Holtvogt: Ohio Ct. ii. b. reads in a requirement of reasonable reliance. cannot amount to an express warranty. Wood v. i. Lucy Duff-Gordon:  argued agreement is not an enforceable K because the  does not bind himself to do anything (i. To effectuate assumed intent: 1. Sample‟ i. b. Waiver of constitutional rights not ordinarily valid unless made knowingly and voluntarily.” Significant factors: a. Express warranties: a. (p. 2-309: time 4. Product of the parties bargain. 2. The written document: first place to look. Apply: nothing ambiguous about the term. Meyer v.” Following statements about a horse were mere puffs: 1. 2. All-around winning stallion. § 211 + comment f: customers under K of adhesion are not bound to unknown terms which are beyond the range of reasonable expectation.‟ or merely stating the seller‟s opinion. These are default warranties. Implied warranties: 1.000/each. Though Alaska hadn‟t adopted the R 2nd.000/year. Legislature added terms.” ii. Ct. Rule: Restatement 2nd. A national top ten champion in three categories. and b. it had adopted the “reasonable expectation” test in analogous situations. 2. This term failed and therefore severed. Lady. State Farm: buyer contends dispute resolution clause. State Farm quoting R 2nd of Conflict of Laws § 187). 1. Holtvogt: “„Puffing. ARE a. 2-305: price 2. no consideration). condition in policy was that it would be invalidated if  drove drunk. for exclusion see UCC 2-316. iv. b. 1.e. The agreement provided terms for  compensation. must then led evidence of breach to recover). believed the proper Q. 2-308: delivery 3. for other K of adhesion. will construe ambiguities against the draftsman (§206). 3) Buyer must in fact rely on seller‟s skill or judgment: Applied: Ct. Leal v. a. the policy must be construed according to principle of reasonable expectations.

c. The amount must not be disproportionate to the actual loss (thereby becoming a penalty). THERE IS A MATERIAL BREACH. Note: if a liquidated damage clause severed. UPON REMEDIES Liquidated Damages: generally. first avenue sought. 1. i. NY 1986). Moreover.” 1. Langley: two part test to allow liquidated damages: 1. 1. Specific Performance: “The point at which breach of a K will be redressable by SP thus must not lie in any inherent physical uniqueness of the property but instead in the uncertainty of valuing it. J: “injunctions to enforce exclusivity clauses are quite likely to be justifiable by just the considerations present here – (1) damages are difficult to estimate with any accuracy and (2) the injunction is a one-shot remedy requiring no continuing judicial involvement. 2.ASSUMING III. therefore injunctions are not granted as a matter of course. Too speculative: Denied – “it is hardly novel in the law for damages to be projected into the future”. Walgreen v. SP would have been granted. b. O’Brian v. AGREED b. lease). Too conjectural: Denied . Inappropriate to measure “reasonableness” by balancing non-breaching party‟s income prior to K against liquidated damages sought. SPECIFIC PERFORMANCE – a. Kvassay v. under economic theory of Posner. Significant factor:  would be forced to comply with 3 yr. J). rather interpreted other court‟s use of word “unique” to mean that the court “cannot obtain.  challenges valuation on following grounds: a. iv. Ct. at reasonable cost. S&M: subject matter not “unique” because money could be fixed with reasonable certainty without imposing unacceptably high risk of under-compensation. i. a. App. Injunction: efficient breaches are good for society (at least.” iii. traditional rule: always available for sale of real property. Sara Creek: Posner. WHAT IS IT? Specific Performance/Injunction: i. didn‟t abandon traditional “uniqueness” test. Restatement 2nd. render calculation speculative. Murray: applying UCC provision a. § 356: subsection 2 prohibits penalties and defines these via proportionality. UCC 2-718: a reasonableness test with three indicators. Wagner: SP found unfair because harm to  would be disproportionately worse than gain to . If either of above two arguments generated enough uncertainty. a. The party opposing the imposition of liquidated damages is entitled to conduct discovery and present relevant evidence that the damages resulting from the breach are susceptible to exact definite measurement or that the damages are grossly in excess of actual damage suffered by non-breaching party (O’Brian v. Langley). § 364: Effect of Unfairness. and 2. the subject matter. 5 . S&M (Ct. Applied: Wagner v. especially where subject matter value can be determined by comparison. ii. Restatement 2nd. was bought) do not. ii. enough information about substitutes to permit it to calculate an award of money damages without imposing an unacceptably high risk of under-compensation on the injured promissee. Actual damages contemplated at time of agreement are uncertain & difficult to determine with exactness. non-breaching party may still pursue normal avenues for damages. but only when ‟s damages remedy is inadequate. WHAT REMEDIES ARE AVAILABLE? REMEDIES: Restatement 2nd. lease with options (potential total of 7 yr.” (Wagner v. contingencies raised by  (sale of the building in which the lease. iii. as a practical matter. Both: 1. § 360: general guidelines for determining adequacy of damages.

Incidental Damages: loss in dealing with breach. 7th Circuit. ii. Three limitations… a. Market value test: difference between market price and K price. 3. JUDICIALLY DETERMINED DAMAGES c. Note: almost universally. Certainty: i. § 347). 2. Lost Volume Seller Exception: if non-breaching party a “lost volume seller”. seller is in business of specialized goods. In K for construction. d. c. then can recover lost profits under UCC 2-708(2). 20th Century Fox: non-breaching party is entitled to reject different OR inferior opportunities. R 2nd. c. Heim (Ct. Held: market value difference = damages. Non-breaching party entitled to the “benefit of the bargain” (Hawkins v. b. decided there was no material Q. cr.000. if clearly disproportionate. Hadley v. It would have been profitable to make an additional sale. Baseball: 1. and difference in market value = $300. and iii.000. Cost of Performance: i. perhaps it was significant that under 1 st K. Grovers v. § 348. Parker v. Appropriate method is to balance actual lost profits caused by breach against liquidated damages sought. then non-breaching party may choose cost of performance provided it is not “clearly disproportionate to the probable loss in value to him” (Panorama v. damages = loss in market value. App. Cost of Repair: same test as for cost of performance. Apply: Ct. Dovetail). 1. Judge Posner.000. § 348(2)).” Ct. then cost of performance will = damages. NOT generic goods. Garland (OK 1962):  breached. b. 6 .b. UCC 2-710: Seller‟s incidental damages. Wunder (MN 1939):  breached. 1. Golden Rule and R 2nd. of fact that two K weren‟t comparable. Baxendale 1854: where K has been broken.e. Direct Damages: a. AND (2) gave consent to  to compensate for these consequences (Leister v. 2. i. NM 1997): [applying UCC 2-715) “The law does not require those who enter into contracts to disclose to other parties the profits they expect to make from the contract. Note: if breaching party provides no evidence of diminution of value or cost of repair. three factors… i. Significant that this “was not a sale of a mass-produced item to an anonymous buyer. Consequential Damages: loss resulting from breach. non-breaching party had near complete control. b. injured party may recover cost of completing performance if the cost is not clearly disproportionate to loss in market value. § 350(1)). suggests that if  truly promised what  alleged. reasonably for non-breaching party to rely on breaching party‟s assertions thereby extending period over which damages result. Held: remand for evidence on what  actually promised to do. ii. 3. in circumstances this will lead to damages being reduced (R 2nd. of fact for the jury. Money Damages Decided by Court i. ii. a.” Held: recovery of profits not unforeseeable. Mitigation: non-breaching party does not have a “duty” to mitigate. Whether one is a “lost volume seller” is a Q. ESPN v. Heim: [applying UCC 2-715] non-breaching was entitled to recover lost profits for month long period because breaching party had made assurance that breach would be remedied. i. Seller possessed capacity to make an additional sale. Cost of performance = $29. McGee) = direct damages + incidental damages + consequential damages – avoided costs (Restatement 2nd. or (2) in the reasonable contemplation of both parties at the time the K was made. recognizes that reasonableness will demarcate outer limit of foreseeability. An additional sale would probably have been made if not for the buyer‟s breach iv. Cost of performance = $60. The damages alleged must be susceptible to ascertainment and cannot be the product of mere guesswork or conjecture. 2. UCC 2-715: Buyer‟s incidental and consequential damages. and difference in market value = $12. 1. Mancouchehri v.  seeking compensatory damages bears the burden of proof. but if they don‟t. restatement of the law: Hadley bars consequential damages for breach unless (1)  was on notice of what consequences of the breach would be. non-breaching party ought to receive such damages as may fairly and reasonably be considered either (1) arising naturally from the breach. Foreseeability: i. Peevyhouse v. Mancouchehri v.

Restatement 2nd. c. 2. “possible” = economical.” 4. Fresh: i. . but also consider following unique remedies… 1.emphasis indicated on Prof. Did the goods in substitution differ substantially from the goods K for? 3. 187: uncertainty. Buyer‟s remedies. irrelevant that buyer that “cost plus” K with another party (thereby passing portion of cost onto 3rd party yet recovering that portion from the breaching seller). Held: consequential damages DENIED. “what is it „possible‟ to present in a suit for a million dollars may be an excessive burden for a small claim”.e. 1. UCC: apply above equation for “benefit of the bargain”. Restitution: money either party has received under K (unjustified enrichment). § 371? ii. 3. i. o Pg. Both breaching and non-breaching party entitled. Reliance: non-breaching party‟s out of pocket reasonable expenses spent in reliance on K. 96: parole evidence. IF NO CONTRACT/BREACH. i. o Pg. or UCC. 2-706(1): Seller‟s resale. Alternatives i. those directly and uniquely connected to completion of K (Leingang v. cost of performance/repair. iii. . Did buyer act in good faith? 2. Critique. 1. ii.Restatement: illustrations… o Pg. o Pg. c. Heim: non-breaching party‟s only evidence on as to how exact damage figure was reached was his own testimony. R 2nd. § 349. 7 . 2-715: incidental and consequential damages.ESSAY QUESTION: o Choose a doctrine/rule. the party upon whom the burden rests to prove damages must present such evidence. i. 262-5: warranties. Avoided Costs: only specific overhead expenses will be deducted. . Did buyer unreasonably delay in purchasing substitute in mistaken belief that price would go down? 4.e. business reputation or future profits – the proof requirements are “much more stringent”. OR IN COMBINATION WITH A BREACHED CONTRACT. Restatement 2nd. 178: damages – loss of value v. damages for loss of goodwill.e. Did buyer pay too much for the substituted goods? b. supplements subsection 1 to include following considerations… 1. o Pg. 4. Held: though evidence was minimal. 2-708: Seller‟s damages for non-acceptance. Apply: ‟s own witnesses‟ could not provide a figure.Offer and Acceptance will only come up in “mirror image” type issue. Ct. b. Seller‟s remedies. 2-709(1)(a-b): Seller‟s action for price. Offer new approach than one taken by courts.Moreover. 257-8: unconscionability (explained) o Pg. Rule: when it is possible to present accurate evidence on the amount of damages. 195: Restitution o Pg. it was adequate in the circumstances.‟s checklist will dictate substance of exam. not remote or the result of other intervening forces. generally: 2-703 a. Applied in KGM v. 356: liquidated damages and penalties. ii. Recession Exam Notes: . 56: statutes of fraud o Pg. HOWEVER. Manchouchehri v. ii. 2-714(2): direct damages. generally: 2-711 a. Mandan Weed Board). o Pg. 2-712 „Cover‟ remedy: damages = cost of cover – cost under K. “the damages may not be merely possible speculative or imaginary but must be reasonably certain and directly traceable to the breach. ANY OTHER CHOICES? d. 351: Unforeseeability. 66: mistake o Pg.

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