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

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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.”

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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

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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

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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 5

When a Party bears the risk of mistake (§ 154) 1. Messerly 1. Df discovers cow is not barren and worth $750+.Party excused from performance if there is a mistake about the very nature/character of the thing being bargained over. Mistake made on what was actually sold – the beef or the breeding cow. e. the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so. i. next lowest $149k.d. b. d.(majority view). and chooses one that both parties believe is barren. Substance (nature/character) vs. Quality (dissent) – b/c it was the same cow. Facts: Pickles buys property from Messerly. f. and refuses to sell. –No hardship. A party bears the risk of a mistake when a. the risk is allocated to him by agreement of the parties. at the time the contract is made. Party to whom bid is submitted will not be prejudiced except by loss of bargain? Pl expected to pay $150k. Pickle seeks to rescind/avoid K based on the mutual mistake. 2. When A Party Bears The Risk Of A Mistake 1. Who bears the risk? i. When by agreement risk is allocated to him 2. Restatement § 154. and only worth price of its beef $80. Prompt notice of error given? Notice before Pl could accept. He is aware. No relief if it is just a disagreement or mistaken belief over the quality or value. or c. at time K made. “As is” Clauses – Buyer is assuming the risk i. Walker 1. ii. or b. Board of health subsequently obtains an injunction & says it’s uninhabitable by humans until sewage fixed. Sherwood v. quality as a basic assumption . quality a. Substance vs. whether it was barren or breeding e. Neither party knew that there was an illegal septic tank there. 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. that he has only limited knowledge with respect to 6 . Lenawee County Board of Health v. Facts: Pl wants to buy cow from Df. that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient. K said that buyer has inspected property & accepts in present condition. 2. Substance . –Yes. he is aware.

Court allocates risk b/c it’s reasonable to do so. Fraud a. Restatement § 164. Restatement § 156. Western Union Telegraph Co. When Mistake Of Both Parties As To Written Expression Justifies Reformation . a negligent or even innocent misrepresentation may be sufficient to make a K voidable if it is material. Effect Of Fault Of Party Seeking Relief .facts to which the mistake relates but treats his limited knowledge as sufficient 3. 1. Restatement § 160 – When an action is equivalent to an assertion (concealment) 1. Restatement § 162. it is not precluded by the fact that the contract is within the Statute of Frauds. Mistake As To Contract Within The Statute Of Frauds .If reformation of a writing is otherwise appropriate. When Misrepresentation makes a K Voidable – not necessary that misrepresentation was intentional.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. Df makes a mistake in transmission. iii. Restatement § 155. iv. ii. A misrepresentation is an assertion not in accord with the facts.when it induces a party to assent and: 1. When A Misrepresentation Makes A Contract Voidable . 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. Ayer v. Now What? i. Restatement § 159 – Misrepresentation Defined 1. V. unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. on which other party justifiably relies 2. ii. 2. When A Misrepresentation Is Fraudulent Or Material – when it 7 . the court may at the request of a party reform the writing to express the agreement. Theres a Mistake. The person who chose the means of communication bears the risk. on which a party justifiably relies.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. then sues Df for diff in value. Pl still sold to buyer. i. Restatement § 157. iii. When one party makes a fraudulent or material misrep. When a 3rd party makes a fraudulent or material misrep. Plaintiff sends offer for sale to buyer via telegraph (Df). g. and offer sent to buyer for less than Pl wanted. 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. except to the extent that rights of third parties such as good faith purchasers for value will be unfairly affected.

Defendant had no duty to disclose. ii. Jury would need to decide if silence made in bad faith. Plaintiff to sell tobacco to Defendant. 1. and: 1. promisee may interpret a promise as an assertion that promisor intends to perform (§ 171(2)) 3. (a) Where he knows that it is necessary to correct a previous statement or false impression 2. However. If reasonable. & if non-disclosure made in bad faith. purchase made. He knows or believes that the assertion is no in accord with the facts. Restatement § 161. Not justified when it’s an assertion of Intention only. (§ 171(1)) 2. However. 3.induces a party to assent. He knows that he does not have the basis that he states or implies for the assertion. b. as long as intention is consistent with reasonable standards of fair dealing. News was in public domain & both parties had access to info. i. (b) Where he knows that disclosure would correct a mistake made by other party as to a basic assumption on which K made. may not need to show reliance is justifiable. (d) If there is a special relationship of trust& confidence btwn the parties. Restatement § 171 1. Non-disclosure does not necessarily amount to fraud. Organ a. and that it was justifiable. 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. Laidlaw v.Must show that you in fact relied. if misrep is intentional. News spread that War of 1812 is over. Failure to Correct a Mistake (§161(b)) – If one party knows that the other is making a mistake as to a basic assumption. If the information is in the public domain where one party could have obtained it with due diligence. 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. and price of tobacco expected to go up once war was over. (c) Where he knows the disclosure would correct a mistake made by other party as to a writing 4. Non-Disclosure as a Misrepresentation and the Duty to Disclose i. but one cannot falsely impose information on the other party (or if there is silence in bad faith). b. but asked buyer if there was any news. failure to correct that misunderstanding will constitute a misrepresentation if the non-disclosure 8 . When Non-Disclosure Is Equivalent To An Assertion 1. (§ 172) c. Buyer calls seller next day and wants to buy the tobacco. or 2. 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. or 3. Seller didn’t know war is over. Buyer silent. a. When Reliance is Justified . the law is if he undertakes to do so he must disclose the whole truth. then there is no duty to disclose. He does not have the confidence that he states or implies in the truth of the assertion.

and Pl takes it at face value (& they’re not dealing on equal terms). Df believed the opposite of what they actually told her (he lied). – Reliance on an opinion is not justified unless: 1. He knew they were making a mistake (§161(b)). and didn’t correct that mistake. Restatement § 168. once he decides to disclose. Reliance On Assertions Of Opinion – An opinion is one of belief. b. causing $5k in damages. judgment or objectivity with respect to the subject matter 3. iii. a. Recipient is for some other reason particularly susceptible to a misrep of the type involved. Then Pl finds out there had been termite infestation in the past. When there is a special relationship of trust & confidence.– when you act in a way that is intended or you know it’s likely to prevent the other from learning a fact. this may constitute misrepresentation. so their opinion mattered. w/o certainty as to the existence of a fact or expresses a judgment on something. and sellers knew and never told anyone. when in fact this was not true. even though it’s not verbal. 1. and that he 9 . But court still has to decide if the misrepresentation was material or not. and Pl buys the house. he must tell the truth. ii. Hill v. iv. 4. rather than opinion (which is usually merely “puffing”). and encouraging her that she should keep progressing. Pl sees something that looks like termite damages & asks Df if it is. there are special circumstances that make an assertion of opinion actionable. Df answered that its water damage. 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. Inc. Looking at house. However. so as to create an overall misleading impression. Pl wants to buy house from Df. as compared with himself. 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. but he probably knows that he is misleading them into believing that there are no termite problems by that statement. Recipient reasonably believes that. Misrepresentation must be of fact. Restatement § 169. Positive Concealment § 160. Although Df had no duty to disclose. Saying it is water damage may be factual. d. Misrepresentation of Fact vs. Jones 1. but another portion is not.” iii. If Hill hadn't asked about the ripple. (Ex: Maybe in Hill they put boxes on termite holes specifically so that inspector wouldn’t have seen it). 2. Vokes v. that recipient reasonably relies 2. A recipient may interpret that the assertion is not incompatible with his actual opinion. Half-Truths (§ 159 comment b) – Of part of the truth is told. the person whose giving the opinion has a special skill. But they asked. then probably no duty to disclose. Dfs were experts in the field (they had superior knowledge). House passes a termite inspection. Opinion i. Arthur Murray.amounts to a “failure to act in good faith” or to act “in accordance with reasonable standards of fair dealing.

4. i. Restatement § 176 . a. Defense of duress is available if Df can show that he was unfairly coerced into entering into the contract. Pl conveyed to her property. Threat is improper if what is threatened or the threat itself is a crime or tort. Subjective standard: Look at the subjective to determine if someone’s free will has been overcome. Restatement § 175 When Duress by Threat Makes a Contract Voidable . Under duress by his wife. and the threat is made in “breach of the duty of good faith and fair dealing. and gives value or relies materially on the transaction. if carried out. The essential rule is that duress consists of “any wrongful act or threat with overcomes the free will of a party.knows enough facts to justify in him forming the opinion. Rubenstein v. Austin Instrument. 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. To find economic duress in a business K: 10 .” 1. a. Loral Corp. and contracted with Austin for some goods it needed for the govt K. VI. Loral got a govt K. 1. She threatened to poison him w/ arsenic etc. Duress Generally i. v. if you threaten to sue. There will be duress if the threatened breach would. or into modifying it. doesn’t know of duress. result in irreparable injury that could not be avoided by a lawsuit or other means. Then Austin threatened to breach unless Loral agrees to some new K’s and a raise in the price of the existing K. the conduct is not effective as manifestation of assent 2. 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. b.When a threat is improper a. unless the other party enters in good faith. but no basis so in bad faith. Duress and undue influence a. or the threat is a breach of the duty of good faith and fair dealing under a K with the recipient. Restatement § 174 When duress by physical compulsion prevents contract formation a. Also you would take into account if a person of ordinary firmness would have also been coerced in the situation.Where assent is induced by an improper threat by other party that leaves victim with no reasonable alternative. Economic Duress i. so this shows he really believed she would do it. if criminal prosecution is threatened. Rubenstein i. 3. ii. Also if it’s a 3rd party who threatens. 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).. plus her dad in jail for murdering ppl w/arsenic. a.

The threat to not do business in the future is not economic duress. a court may refuse to enforce the contract or may enforce the remainder of the contract without the unconscionable term. Unconscionability a. Inc. Restatement § 177 . If a contract or term thereof is unconscionable at the time the contract is made. or may so limit the application of any unconscionable term as to avoid any unconscionable result.When Undue Influence Makes a contract Voidable 1. i. Buyer enters into installment Ks for sale of furniture. and store wants to get all her stuff. v. 3rd party rejected the steel b/c it was defective. the contract is voidable by the victim 3. 1. Pl contracted to buy steel from Df. K had a provision where debt incurred at time of purchase would be added onto outstanding debts.no legal duty to do business w/Pl. Df has no obligation to Pl . Steel of West Virginia 1. c. There is a wrongful threat to breach 2. and no K exists for future business.1. Policy: to prevent oppression and unfair surprise c. so until everything paid off. UCC § 2-302. it extended a security interest to everything she bought (even though she might have paid that balance already). If a partys manifestation of assent is induced by one who is not a party to the transaction. 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. Df told Pl that if it did not pay $31k. it would cease doing business with Pl (this potential loss was over $1mm/year). Ordinary remedies doesn’t cover the loss ii. 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. The defense of unconscionability is mainly used by consumers ii. Undue Influence i. There are no alternative sources of goods. or may limit the application of it to avoid an unconscionable result. If a partys manifestation of assent is induced by undue influence by the other party. 4. Consumer Transactions i. Unconscionable contract or Term. and have it delivered to a 3rd party. 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. the court may refuse to enforce the K. and told Pl to return remaining undelivered loads. No duty of good faith in negotiations. ii. b. She defaults. or may only enforce part of it w/o unconscionable terms. No definition of unconscionability – this gives courts discretion 1. 11 . Walker-Thomas Furniture Co. price of undelivered loads. Williams v. 2. Restatement § 208 – Unconscionable Contract or Term i. Machinery Hauling. It overcomes free will 3.

At common law these Ks have been "presumptively enforceable" . Contracts that have a standardized form and are presented on a take it or leave it basis 1. i. Basically. 2. that term won’t be part of the K. a K can be held unenforceable if there's something in the bargain. Standardized K is enforceable unless it’s unconscionable – pattern of one-sided terms 1. Restatement § 211. a. There was substantive unconscionability – terms so onesided it shocks the conscious a. Agreements Unenforceable on Grounds of Public Policy . a. Inc. “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. no negotiations 2. But when a party of little bargaining power (no real choice) signs a commercially unreasonable contract with little or no knowledge of its terms. 12 . In such a case. they are enforceable. 2.2.excuse only when P able to show that the drafter actively caused the misrepresentation. Arbitration fees may be unconscionable if costs more than normal litigation c. There was procedural unconscionability – oppression. 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). Unenforceable on Grounds of Public Policy i. Ordinarily one who signs a K w/o full knowledge of its terms might be held to assume that risk. Ferguson v. the court should consider whether the terms of the contract are so unfair that enforcement should be withheld (is it unconscionable?). Procedural and Substantive Unconscionability i. 3. K can be procedurally (manner in which K was enacted) unconscionable if there is oppression or surprise (unequal bargaining power. Pl brings tort claims against employer. Contracts of Adhesion i. unless unconscionable e. Countrywide Credit Industries. wouldn’t have a choice if you want the job. One-sided discovery provision – Df had certain advantages VIII. Df says K has an arbitration clause.if a party has reason to know that the other party wouldn't assent to a particular term.Although all the conditions of a K are satisfied. 1. it is hardly likely that consent was really given to those terms. Illegality a. lacks meaningful choice). ii. those that employer would bring not covered) b.” d. 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). One-sided coverage of claim (those that employee would bring covered.

and c. In weighing a public policy against enforcement of a term. 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. Parties lived together for 13 years. but not deny restitution. Watts 1. and which. and d. any forfeiture that would result if enforcement were denied. iii. the seriousness of any misconduct involved and the extent to which it was deliberate. 2. Sinnar v. account is taken of a.ii. sometimes a guilty party ends up being rewarded for engaging in the illegal transaction. 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. This may be unfair because one party will benefit at the loss of another. When relationship ends. Any special public interest in the enforcement of a particular term. performance or objectives that are "illegal" or against "public policy. Watts v. vi. Hard to define public policy. 1." Court may decide that there is a public policy strong enough to deny enforcement of the K. we want to discourage people from entering into illegal agreements. but never married. vii. When none available. to get him a beer license for $450. the courts may allow restitution. Factors in weighing this interest: a. b. the parties' justified expectations. Store owner denied beer license. the directness of the connection between that misconduct and the term. through a 3rd party. no one can recover. Le Roy a. account is taken of a. Pl cannot recover. Couldn’t get license. and c. v. b. b. In weighing the interest in the enforcement of a term. the strength of that policy as manifested by legislation or judicial decisions. She files suit to get a portion of property accumulated 13 . iv." Where both Parties are guilty of Illegality – the court will do nothing. 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. if relied upon today. However. Any forfeiture that would result if enforcement were denied. she’s left with nothing. may be utterly repudiated tomorrow. 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. Restatement § 178 – When a term is unenforceable on grounds of public policy 1. c." 1. In this type of situation. The parties' justified expectations b. any special public interest in the enforcement of the particular term. 3. the likelihood that a refusal to enforce the term will further that policy. He agrees with his friend that. Court will look at a legislative mandate to direct. However. Clearly illegal b/c only state can give you this type of license. Pl (owner) wants money back (3rd party has it).

4) If one party repudiates before the commission of the illegality. Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement. Suit for breach of non-compete. Rule of Reasonableness – If found to have been written in good faith. 2. Court uses this method. then it’s unconscionable & won’t be enforced 2. Data Management. court may choose to enforce or get involved via its equitable powers. employee will not perform any other similar services for any person or firm in the state of Alaska. Non-Compete Agreements Unenforceable on grounds of public policy because overbroad 1. 3. A lot will depend on whether the P knew or should have known about the illegality. Greene i. Court proposes three methods with approaching overbroad covenants: 1. 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. Df argues that relationship was immoral & illegal. 2) If the offense is not sufficiently serious. may be able to get restitution. the courts may enforce it anyway (watering a lawn on a no-water day). Blue Pencil method – Just strike out certain words that make it unconscionable 3. However. so recognition would be against public policy. the illicitness was not what was bargained for. Clause says that for 5 years after termination. it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a 14 . then yes. Whether it protects some legitimate interest of the promisee. 3) the courts may sever the contract and enforce the non-illegal parts. courts focus upon 2 aspects of the covenant: 2. it would not be enforceable. Where both parties are equally guilty. ix. Parol Evidence Rule a. 2. iii. ii. Remedies 1. viii. a. Exceptions: 1) If parties are not equally at fault. Whether it is reasonable in scope a.during their relationship. even if illegality is not raised at trial. the typical remedy is for courts to leave the parties as it finds them. Contracts are void when illegal. reasonably alter the covenants to make I enforceable. In general. IX. An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. The claim here would be unjust enrichment where Pl did a lot of work to help build the couple’s wealth. Restatement § 209 – Integrated Agreements i. Court points out that where the sole consideration was the illicit relationship. Strict Method – if overbroad. reduces the incentive to enter into illegal contracts. ii. 3. v. Inc.

what would parties naturally do c. NO→ PRE does not apply b.to decide whether the K is complete the UCC looks at 15 . Four corners. Challenge the contract d. Approaches to decide whether a K is complete a. evidence whether parol or otherwise of prior understandings or negotiations will not be admitted for the purpose of varying or contradicting the writing. YES→ go to b ii. NO → go to d d. Four Ways to Get Parol Evidence In: (Must be collateral to K.look at the document in writing itself and see the intent of parties b. Questions to Ask when dealing with Parol Evidence a. 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. Is the K writteni. NO→ parol does not apply c. YES → evidence out ii. 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. YES→ go to c ii. The person who is trying to exclude the evidence that is not in the writing will raise the parol evidence rule. UCC 2-202-requires that the K be in writing. Traditional-MAJORITY—looks at the parties objective intent.more likely to allow evidence in d. may have a cause of action for fraud or other K action that may make the writing worthless ii. i. Differing interpretation of Contract 2. NO → evidence in 3. (b) By evidence of consistent additional terms unless the K is complete. Does the outside agreement contradict the writing i. Modification of the written agreement c. YES → evidence out ii. b. he then must prove that the writing was created with mutual intention to be final and complete iii. Consistent with K. and not expected to be included in the K) a.MINORITY— subjective intent. Is the K finali. 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.final expression. Modern.see approaches i. (a) by course of dealing /or usage of trade /or by course of performance ii. Is the K complete. Even if PER excludes evidence. Enforcement of an oral agreement b.

a. Those determinations are made in accordance with all relevant evidence. However. A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope. The existence of the prior 16 . 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. Where writings relating to the same subject matter are assented to as parts of one transaction. Comments: i. Where an agreement is partly oral and partly written. it supersedes inconsistent terms of prior agreements. The fact that the written or oral term is not in the final agreement weighs heavily against allowing its use. A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them. b/c we must be CERTAIN that they people would have put it on writing c. and require interpretation both of the integrated agreement and of the prior agreement. ii. This Section states what is commonly known as the parol evidence rule. the court must make preliminary determinations that there is an integrated agreement and that it is inconsistent with the term in question. Restatement §213. See §209. both form part of the integrated agreement.. but only terms agreed to orally at the time of the contract (no bar 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). consistent but not contradictory parol evidence may be admitted to supplement or explain those parts of it which have not been finally expressed. (b) Inconsistent terms. Parol Evidence Rule does not cover terms agreed to after the execution of the written agreement – these are dealt with as modifications. It renders inoperative prior written agreements as well as prior oral agreements. ii. Whether a binding agreement is completely integrated or partially integrated. See §209. This lets a lot of stuff in. The rule deals with both written and oral terms allegedly agreed to prior to the execution of the final agreement. the writing is at most a partially integrated agreement. (a) Parol evidence rule. or contradict it. Exception is when the subsequent agreement occurred during the same “process of formation” like a subsequent oral agreement during a closing that happened “contemporaneously. Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule) 1. if the parties wanted it they would have included it. 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. iv.” 1. i.. 2. to the extent that the writing is not a final and complete expression of agreement.whether the parties would certainly put it on writing. explain. no parol evidence may be admitted to supplement.. Contemporaneous oral agreements are NEVER allowed in. iii.

Those determinations are made in accordance with all relevant evidence. specific performance. whether or not integrated d. See §§212. An agreement is not completely integrated if the writing omits a consistant additional agreed term which is a. is completely or partly integrated c. Restatement § 214 – Evidence to prior or contemporaneous agreements and negotiations 1. Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated. by course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208). Where the parties have adopted a writing as a complete and exclusive statement of the terms of the agreement. Illegality. See §216. or other remedy vi. But there may still be a separate agreement between the same parties which is not affected. (c) Scope of a completely integrated agreement. Just as Review: Additional Terms (Battle of the Forms) i.agreement may be a circumstance which sheds light on the meaning of the integrated agreement. duress. Such a term as in the circumstances might naturally be omitted from the writing vii. even consistent additional terms are superseded. e.. v. That the integrated agreement. To apply the rule of Subsection (2) the court in addition to determining that there is an integrated agreement and that it is completely integrated. 2. or other invalidating cause. 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. UCC § 2-202. and 2. At common law the mirror image rule was followed . iii. Agreements and negotiations prior or contemporaneous with the adoption of a writing are admissible evidence to establish a. if any. mistake.acceptance must be a mirror image 17 ..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. The meaning of the writing. Restatement § 216: Consistent Additional Terms 1. 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 . Final Written Expression: Parol or Extrinsic Evidence . 214. d. That the writing is or is not an integrated agreement b. fraud.. Ground for granting or denying rescission. must determine that the asserted prior agreement is within the scope of the integrated agreement. reformation. Agreed to for separate consideration b. lack of consideration.

Latent ambiguity→ cannot determine if the contract is ambiguous until parties begin performing iii. Johnson X. Read K→ No ambiguity→ apply the plain meaning rule ii. This context includes discussions between the parties in forming the contract. their previous course of dealings in prior contracts of the same kind. Patent ambiguity→ apparent on the face of the contract 2. No i. The Plain Meaning. and their post-formation course of perfomance.Williams v. If the plain meaning is of the contract is ambiguous then evidence can be admitted i. but by reading the words in the entire context of the transaction. Approaches to Interpretation 1. No – No K under 2-207 (1) but maybe an implied in fact contract based on new terms and the UCC gap fillers b. Additional Terms – In the contract unless they materially alter the contract e. but if the meaning is clear they will not even let the evidence in 18 . 1. other wise they are considered counter offers ii. 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.or totally integrated. Ambiguous→ admit extrinsic evidence to determine parties intent in order to interpret the K 1.a clause stating that the writing constitutes the sole and final agreement b/en the parties i. Yes – contract 2. iv. Although merger clause may make the court more likely to say the K is final. iii.if the court finds that there is a disparity of bargaining power or the clause was hidden. Yes i. Unless there is no evidence of context available. Merger Clauses . the meaning of the language used in the contract is not determined purely by reference to the dictionary meaning of the words. Interpretation a. Was the additional term a condition of the acceptance? a. Did the offeror assent to new terms? 1. b. or if there was a condition* to the entire K the merger clause may not preclude the evidence from being admitted. trade usage. The clearer and more comprehensive the writing the higher the barrier to admitting extrinsic evidence. Restatement §217. UCC 2-207 1.where parties agreed orally that the performance of the agreement is subject to a condition. the agreement is not final/integrated with respect to that condition UNLESS the oral evidence SPECIFICALLY contradicts the writing.of offer. ii. The relationship between parol evidence and interpretation i. Conflicting Terms – Use the knockout rule ii.(majority)— follow the plain meaning approach in which they only let the evidence in if the document is ambiguous.

Course of performance.2.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. Restatement § 202. 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. UCC § 2-206.Whose meaning Prevails a. must follow ALWAYS b. unless a different intention is manifested i.then the K is interpreted as is-Plain meaning b.explain or supplement. 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. Restatement §211(3). Express terms.normal way of doing business b/en those two partiesassuming that they have deal w/ each other before. Interpreting Deceptive/Hidden/Surprise Terms in standardized agreements i.on previous K it always meant the 5 middle days of the month d. Course dealing. interpretation should favor specific over general terms c. the even must have happen more than once.we are only agreeing to the expectable term ii. b/c the drafter has more advantage g. If A knew. technical words or words of art are given their technical meaning f. The intent of the parties is giving great weight b. 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 19 .) c.what ever is the usage of that word in the trade 4. If the evidence shows that the K is reasonably susceptible to that interpretation the court will admit the evidence 3. Both parties understand the terms k.surprise terms. interpretation is usually against the drafter. Restatement § 201(2). 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. Words and conduct are to be interpreted in light of all the circumstances(course dealings and course performance.what have we done on this K. the K should be interpreted w/ PP in mind d. The court in interpreting the K will consider: ( in order of importance) a. UCC §2-202—the code encourages the use of extrinsic evidence by allowing trade usage. words are interpreted w/in their prevailing meaning ii. or had reason to know both meanings and B only knew one then B’s interpretation will prevail.you have received merchandise for 6 mth on the 20th c. trade usage.Rules in Aid for Interpretation a. Trade usage. a writing interpreted as a whole and all writing are interpreted together e. 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.if a consumer manifest assent to a standard form.

" The phrase "good faith" is used in a variety of contexts." "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 standards of fair dealing in the trade.." Good faith is defined in Uniform Commercial Code § 1-201(19) as "honesty in fact in the conduct or transaction concerned.203. Must act in good faith when rejecting goods and satisfying conditions a. 3. The clarity of the parties as to subjectivity will also come in to show intent. Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement. The appropriate remedy for a breach of the duty of good faith also varies with the circumstances.. Must also make a good faith effort to secure a loan when this is a condition precedent to a party's performance. i. Bad faith in negotiation. Prevention. Courts use an objective test to decide whether a reasonable person would have been satisfied with the goods. This Section. when the parties explicitly make it a subjective test if both parties agree to it b. does not deal with good faith in the formation of a contract. There must be a K in order for there to be a duty of good faith 2. i. The court requires expressions of dissatisfaction to be made in good faith ii. just a showing that the other party would not have reasonably anticipated such conduct. 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. Meanings of "good faith. and there is ma more utilitarian approach. Obligation of good faith. and its meaning varies somewhat with the context. Duty of Good Faith and Fair Dealing . Nuemiller Farms was rejecting potatoes in bad faith b/c he found them at a better price from another dealer. Billman v Hensel i. like Uniform Commercial Code §1. whatever its motivation. this does not require a showing of bad faith or malice. a. Restatement §205. may be subject to sanctions. Wrongfulness: the prevention or hindrance must be wrongful. although not within the scope of this Section.. Good faith in negotiation. Duty of Good Faith a. however. 1. and the Duty of Good Faith 1. This applies to all conditions proceedings the party must make a reasonable and good 20 . Cooperation. Comment: 1. UCC § 1-203. it excludes a variety of types of conduct characterized as involving "bad faith" because they violate community standards of decency. 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.Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement. They do this because there are set standard. ii.XI. iii. fairness or reasonableness.

it is an objective test using "reasonable commercial standards" (UCC 2-103). In all contracts there is an implicit agreement by each party to not interfere with the other party's ability to perform the contract. 5. Satisfying 3rd parties i. 7. So it is a subjective test. one parties makes performance more difficult by making other purchases that decreased the supplied of those goods available b. Seubert i. There is a duty to perform in good faith. UCC: under the UCC. The purpose of having a 3rd party decide is to get their subjective view on the decision.good faith of a merchant is honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade Employment at will: in at will employment contracts a person could get fired for no reason at all. Although he did not meet the quotas it was the employee who prevented him from performing thus his non-performance is excused ii. but. This happens often in construction k. that also means that one will exercise best efforts to sell or try to perform. Implicit agreement not to interfere with other party a. or by other K theories such as promissory estoppel.service stations across the street b. 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. 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. he must at least look at the portrait and in good faith say he doesn't like it. c.engineers or architects ii. and he then may not recover damages for the breach d. then we will bring in others. so they were not acting in good faith Conduct that makes the other party's performance more difficult a. to see if it meets an objective standard. 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. Although these contracts look like illusory the parties both have an obligation under the K. 6. a. but the legislature has limited at will discharges by protecting employers form discrimination firings. Many states say that the resumption of at will contracts can be altered by stmt in employee handbooks or manuals. the other party must know it is a subjective decision based on personal taste. 8.4. self portraits are an example. when the party causing the difficulty does so in good faith and does not intend to 21 . or implied covenant of good faith or policies established by the employer a. faith effort to satisfy the condition Some instances require subjective test: matters of personal taste or fancy. A party can not intentionally and purposefully do any thing to prevent the other party from performing. if there is evidence of bad faith.

Burden on the Δ-condition not fulfilled. which must occur.to prove that the condition was fulfilled Most conditions are of this kind iii.is the real agreement of the parties.interfere then no release. he is not held to pay for the roof b/c the tenant did not meet the condition of giving the landlord notice. before performance under a contract becomes due. which was a condition of the duty of landlord to pay for the repairs. Therefore. Burden of proof. 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. then this would amount to a breach due to interference XII. He did not meet the condition. 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. on its face and without reference to extrinsic evidence. that is the condition precedent. The law will construe a condition. Express Conditions a. Condition Subsequent.on the Π. The court will generally apply the condition strictly. He had to work ten weeks everyday and could not miss any day for any reason.condition that must be satisfied before a duty comes into existence. that is the condition subsequent iv. Negative Conditions. i. Condition implied in Law/Constructive . articulates the intent to make performance contingent on that event. Condition Defined A condition is an event. If in bad faith. but there must also be a time frame.000 b/c he missed 2 days. Definitions i. Condition Precedent. even if results of this are sometimes harsh (see below case) 1. vi. unless its non-occurrence is excused. 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. Warranties. a condition is an express condition if the language of the contract.things that must not occurred for the other party to perform. We know this b/c no one would have written the contract without the notice. If it has not happen by the 10th then… v. a.event that terminates a duty. they are not very 22 . Express condition. He did not get the 5.e.clearly explicit and stated in the K and are always strictly enforced. (notice was implied in fact condition) 2. so there was not contract. Condition implied in fact. Such as the notice that we know the parties intended to be given in the Wal-noon Case. 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. b/c it would not have made sense. ii.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).is not on the K and is not necessarily what the parties agreed on. not certain to occur.-insurance requires damage and notice before they pay. Implied Conditions – can be of two kinds 1. Wal-Noon Case: If notice of the damaged roof was found to be an implied condition then the contract would not make sense. this conditions are treated like express conditions . Restatement § 224.

RULE.Standards of Preference with regard to conditions . 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. a promise. a duty is imposed on an obligee that an event occur. the promisor has a defense and may be discharged from the contract without ANY obligation to compensate the promisee for part-performance iii.. or both.to exclude or modify the implied warranty of merchantability the language must mention merchantability by using specific language 2.where two parties have freely fairly and voluntarily bargained for certain benefits in exchange for undertaking certain obligations.if k gives both disclaimer and warranty. Notes 1. ii. Distinguishing: To determine whether a particular act is a condition.strictly enforced . and it doesn’t occur. i. the event is made a condition of the obligor's duty. vii.helps decide whether a promise or a condition i. Implied warranties. If the act is a promise. 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. Warranties 1. The first interpretation is preferred if the event is within the obligee's control. the event is made a condition of the obligor's duty. 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. the main factor is the intent of the parties. the other party can sue for damages. and a duty is imposed on the obligee that the event can occur. then the disclaimer is invalid. and the act fails to occur. Words like “upon condition that” indicate an intent that the act be a condition. 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. but usually does not relieve them from their duty to perform if the other party performs their duty (they 23 . a condition not met = no contract at all 3.) ii. and as to the nature of such an event. or 3. a promise not met = other party can sue for breach. when it is doubtful whether 1. Warranties v Disclaimers.the right to control over repairs as they see fit c. Distinction between conditions and promises: If the act is a condition on the other party’s duty. In resolving doubts as to whether an event is made a condition of an obligor's duty. the other party won’t have to perform. unless the event is within the obligee's control or the circumstances indicate that he has assumed the risk. iii. if the event is in the person's control then we can presume that it is a promise 2. 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. or 2.this is a condition that the court will find was implied in the contract b/c it will reach a favorable and just outcome. Unless the contract is of a type under which only one party generally undertakes duties. Restatement § 227. an interpretation is preferred that will reduce the obligee's risk of forfeiture.

conduct. If it is a promise then he will get pay but the other can sue for damages for not being finished XIII. This is in his control so it is likely a promise. Hypo-If you mow the lawn by 5pm on Friday I’ll pay you. BUT. but you can sue for the damages caused by his starting one day late. unless the event is within the obligee’s control or the circumstances indicate that he has assumed the risk ii. He does not start until Tuesday. foreiture. a. just not when the agreement said they would) iv. by the party that is benefiting from the condition. To the extent that the non-occurrence of a condition would cause disproportionate forfeiture. a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange. Reasons for Excusing Conditions: 1. changed circumstances that make compliance by the promisee with the condition impracticable 4. Restatement § 229 – Excuse of Condition to Avoid forfeiture 1. condition can be discharged by the court 5. an interpretation is preferred that will reduce the obligee’s risk of forfeiture. A duty is imposed on an obligee that an event occur or. Standards of performance with regard to conditions i.when a particular event is under the control of the obligor. see restatement § 84 & Aetna Casualty Insurance case b. and as to the nature of such an event. that waives the condition (Clark v West: he represented waiver of drinking condition) 3. Summary. Reasons for Excusing a Condition i. when it is doubtful whether 1. In any even the court will seek and interpretation that will not cause forfeiture f. a. SO. The event is made a condition of the obligor’s duty or. Example: 1. The event is made a condition of the obligor’s duty and a duty is imposed on the obligee that the event occurs. Excuse of Express Conditions a. A painter agrees to start painting your house on Monday. However when the even is not in the control of either party the court will interpret as a condition. If he does not finish mowing by 5pm and 5pm was a condition then no pay ii. an agreement by both parties modifying the contract to discharge the condition 2. the court tends to interpret it to be a promise. A party can excuse a condition in several different ways i. In resolving doubts as to whether an event is made a condition of an obligor’s duty. Unless the contract is of a type under which only one party generally undertakes duties. i. e. IF EVENT IS IN PERSON'S CONTROL = USUALLY A PROMISE b. which are likely to be none.performed. The courts look at ways to waiver provision of K because the court deems 24 . 3. 2. He still has a contract to paint your house. The first interpretation is preferred if the event is within the obligee’s control i. IF EVENT IS NOT IN THEIR CONTROL = USUALLY A CONDITION d.

Promise. iv. The court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange ii. Estoppel waiver Whenever a party indicates that she is waiving a condition before it is to happen. iii. Sample.clause in the K to prevent waiver’s but can still be waived if the waiver happens very often.A waiver evidenced by a party’s decisive. “immediate buyer” means a buyer that enters into a contract with the seller. Anti waiver clause. or some performance before it is to be rendered. This election waiver requires neither consideration nor estoppel. (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 courts will hold this to be an binding (estoppel) waiver. d. 2. 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. (2) Goods to be merchantable must be at least such as: 1.a voluntary and intentional waives a known right 1. or (2) continue under the contract.When a condition or a duty of performance is broken. If she chooses to continue she will be deemed to have waived the condition or duty. Implied Warranty: Merchantability.316). i. (2) Express warranties by the seller to the immediate buyer are created as follows: 1. 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. (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. 25 . 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. (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. and party does not cancel the K then the he has probably waived the right to cancel. i. (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. Express waiver. (1) In this section. Implied waiver. Description. 3. (1) terminate her liability. and the person addressed detrimentally relies upon such an indication. UCC § 2-313. ii. the beneficiary of the condition or duty has an election she may. UCC § 2-314. iii. Election waiver. Remedial Promise. unequivocal conduct reasonably inferring the intent to waive v. If the court finds circumstances that makes compliance with the condition impractical c. (a) pass without objection in the trade under the contract description. Express Warranties by Affirmation. ii. b/c gave false sense of reliance vi. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale. Usage of Trade. (1) Unless excluded or modified (Section 2.that the provision is too harsh. iv. (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.

(3) Notwithstanding subsection (2): 1. Definitions: "Merchant”. UCC § 2-104. UCC § 2-316. negation or limitation is inoperative to the extent that such construction is unreasonable. (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. to exclude or modify the implied warranty of fitness. in a consumer contract 26 . makes plain that there is no implied warranty. quality and quantity within each unit and among all units involved.” and in any other contract the language is sufficient if it states. Implied Warranty: Fitness for Particular Purpose.” 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. iii. 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.202. 3. and state “The seller undertakes no responsibility for the quality of the goods except as otherwise provided in this contract. be conspicuous. (2) Subject to subsection (3). i. (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. and 6. UCC § 2-315.2. are of fair average quality within the description. but subject to Section 2. e. ii. iii. (UCC 2-314 Only Applies to Merchants) i. (b) in the case of fungible goods. g. “with all faults” or other language that in common understanding calls the buyer's attention to the exclusion of warranties. that “There are no warranties that extend beyond the description on the face hereof. 5. 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. except as otherwise provided in the contract. 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. and labeled as the agreement may require. (3) Unless excluded or modified (Section 2. Exclusion or Modification of Warranties. (c) are fit for the ordinary purposes for which goods of that description are used. (f) conform to the promise or affirmations of fact made on the container or label if any. there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose. Subject to subsection (3).” and in any other contract the language must mention merchantability and in case of a record must be conspicuous. packaged. (e) are adequately contained. 4. f. i. within the variations permitted by the agreement. (d) run. for example. of even kind. (a) unless the circumstances indicate otherwise. and.316) other implied warranties may arise from course of dealing or usage of trade. all implied warranties are excluded by expressions like “as is”. the exclusion must be in a record and be conspicuous.

Disproportionate Forfeiture i. Differs from a modification – bilateral. a. It is enforceable without consideration if: 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. the court asks the question of whether or not the notice requirement was a "material part of the agreed exchange". he does not meet his burden of proof though.a waiver is enforceable if it is given in exchange for separate consideration. is set forth conspicuously in the record. Clark v.evidenced by a record. even if its material you can waive it. his conduct is likely to be found to operate as a waiver of the condition i. Continuation of performance: If a promisor continues his own performance after learning that a condition of duty has failed to occur.719. 2. A party can waive a non-material part of a K any time during the executory portion of the K w/out consideration. So. 27 . 4.718 and 2. (c) an implied warranty may also be excluded or modified by course of dealing or course of performance or usage of trade. h. and 3. so murphy had a chance to show that his failing to meet the condition did not prejudice the insurance company. 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). West 1. Write books for $2 and will pay $6 if abstained from drinking during k 2. iv. the waived condition was not a material part of the agreed exchange & 2. He would have suffered great loss by not being able to get his claim and this was considered disproportionate forfeiture.A waiver is a voluntary relinquishment of a known right. No waiver clauses can be waived ii. Aetna Casualty Insurance Case (murphy & chubb) 1. (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. It was not found to be a "material part". both parties agree to a change in the contract – doesn’t need consideration i.in this case party waive condition and refuses to pay party is bound to waiver b/c of reliance c. Waivers – a relinquishment of a known right by one of the parties. (4) Remedies for breach of warranty may be limited in accordance with Sections 2. if the part waived is a material part of the K there must be consideration and that is really a modification. RULE. If he could prove this then he would get his claim and not suffer the disproportionate forfeiture. A waiver given w/o consideration can be can reestablish as long as he gives fair notice to the other party b. uncertainty of the occurrence of the condition was not an element of the risk assumed by the party who gave the waiver 3. because there is not consideration for waivers they can be receded until the other party relies on the waiver to their detriment then. the party making the waiver will be estopped from rescission of the waiver. Restatement § 84(1) . Equitable Estoppel.

there was no prejudice to the insurance co. but which is supplied by the court for fairness.000 (you get bad pipe + $1. Restatement § 234 1.000) 28 . (difference in value) b. (ie wrong plumbing pipe) a.so usually performance is due b/f pay. if the K is divisible b. The principal use of constructive conditions is in bilateral contracts. Restatement § 229 ii.one party had little choice as to the terms of the K. the worker gets $ for the substantial performance. REMEMBER: Substantial performance is not perfect performance though.Under appropriate circumstances a party. performance must be fully or substantially completed but there are some exemptions a.000 (pipe you wanted) ii. if the parties have agreed upon installment payments c. Considerationsi. Damages worth = $1. So. trade usage is to the contrary 3. minus any amount assessed for damages caused to the other party. Bad pipe worth = $4. it is not a material part of the K XIV.there was no bargaining process ii. Notice is a condition. Contract of adhesion.000 (pipe you got) iii. b/c of the late notice d. RULE.forfeiture is the denial of compensation. But for this rule to apply the moving party must prove: 1) unfairness if performance of the condition is executed 2) that the condition is not material so that it would not prejudice the other party b. 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.2. whenever performances may be rendered simultaneously they re to be performed simultaneously unless the language or the circumstances indicate otherwise 2. Constructive conditions -A constructive condition is a condition which is not agreed upon by the parties. Π will lose insurance money even though he pays his premiums iii. Material Breaches i. RULE: Damages are measured by the difference in what you were supposed to get and what you actually got. 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. Good pipe worth = $5. of a claim a. the court also looks at the importance of the condition c. Disproportionate forfeiture. despite his owns default may be entitled to relief from the rigorous enforcement of K provisions that would otherwise deny him recovery. Π failed to timely notify issuance co. Constructive conditions are normally satisfied by substantial performance while express conditions must be fully performed a. Example: Jacob &Young v Kent case: (wrong plumbing pipe) i. 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.

b. e. taking account of all the circumstances including any reasonable assurances. The likelihood that the party failing to perform or to offer to perform will cure his failure. b/c the other party did not make the agreed upon improvements. a. Circumstances Significant In Determining Whether A Failure Is Material 1. (must at least tender performance to bring a suit for breach of contract against other party) iv. 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.iii. the following circumstances are significant: a. The extent to which the party failing to perform or to offer to perform will suffer forfeiture. Restatement § 237 . this was the case where the parties contract for the buy/sell of land and there was a 21lb. Palmer v Fox 1. The extent to which the injured party will be deprived of the benefit which he reasonably expected. d. 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. (so in the note case above. 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. In determining whether a failure to render or to offer performance is material. Except as stated in section 240. Δ refused to pay the rest of the payments. When there is a K that requires mutual concurrent conditional performance and one of them has breached a material part of then the 29 . 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. This basically means that if one party does not render his performance then the other party is discharged of his duties. vi. Penalty for backing out. this is why the other party was able to quit paying for the land. Part Performances As Agreed Equivalents .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. Δ Bought property Π promise to put gravel on the street Π did not. v. at least temporarily.) 2. a. Restatement § 240. Goodison v Nunn a. Restatement § 241.Effect on other party's duties of a failure to render performance 1. it is a condition of each party's remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time. The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived. c.

A delay in performance is not a total breached unless time was of the essence b. the only condition was that the house be build 2. The court said that there is a material breached.the contractor must have in good faith intended to comply with the K and should have substantially done so . OW Grun Roofing v Cope 1. then he has to pay damages either by paying the cost of replacement OR the difference in values b/en the 2 pipes. because the way the house looks is very important.the Δ did not receive a benefit. Substantial performance does not apply to the sale of goods. the party must performed but just a small mistake 4. Δ realized and he refused to pay. Π Promise to build a house with pipes of a certain kind. normally the courts go with the difference in value b/c the other option is economically disproportionate where there is no gain from replacing.hired to pay one room or to pain building b. c. because she is going to have 30 .if the party has breached a material part of the K then they have not substantially perform. How do we determine if the work is substantial? a. look at the k in comparison to the breach. 2. Substantial Performance and Material Breach i. Since the Π breach his promises by not putting reading pipes. Restitution argument.A promissory who has substantially performed is entitle to recover although he has failed in some particular way to comply with his agreement 5. 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. the UCC uses the perfect tender rule iii. he did but the roof was not uniform in color. TEST. but a promise b/c the payment was not conditioned on the using the reading pipes. and had to pay the house owner extra money so that she could replace her ugly roof. so the Π did not recover. a. Δ Promise to install a roof. In the K there was a express condition that said that if Π did not get the certificate from the architect then no money.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. 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.Ask Whether the K purpose has essentially been fulfilled ii. RULE. Substantial performance.condition is not met and the other may get out of the k and sue for total breach c. Π did not use the special pipe. The requirement of using reading pipes is not a condition. Jacob v Kent 1. Substantial Performance i. RULE. Doctrine of Substantial Performance.

valve tester that needs to be 95% accurate. contract to build 50 houses @ $100. accept the whole.719).oven example 5. The difference b/en the tendered performance and the performance of the promisee e.consideration for each part c. 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 doctrine of substantial performance can be applied to a portion of it. The cruelty of enforcing strict adherence or compelling the promisee to receive less than what he bargained for d. they are: a. reject the whole. Problem p 685. machine not good only 93% is this substantial performance? iii. and the intent of the parties on whether they intended the k to be divisiblekitchen remodeling.sale of goods 1. the seller generally has the right to “cure” the defect e. the number of parts due from each party is the same. builder only 31 . 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. Perfect tendered rule §2-601. A K is divisible where by its terms a. What purpose does the performance serves b. ii.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. 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. but you cant take back a performance 3. The good must not be perfect. a lot of things for remodeling but you only wanted one job 2. Definition of Divisibility 1.to get a new roof 6. if the goods or the tender of delivery fail in any respect to conform to the contract. Restatement § 241(e)-whether the party performed in good faith and in accordance with fair dealings d.does not mean parts. it must be the whole unit. it must only adhere to what you agreed to sell other wise the buyer has the right to reject 4. Material Breach and Substantial Performance UCC i.If a contract is severable. The excuse for deviating from the K c. i.000 for each house built. Compare the following two examples: a. or 3. Divisibility and Restitution . Commercial unit. 2. There are some factors that helps decide whether a parties performance amounts to substantial performance. the buyer may 1. performance of each party is divided into two or more parts b. This is controlled by the UCC. or 2.

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. Restatement §240. Worker builds 35 and then stops work. If the K is entire.000. Whether a k is divisible depends on the intent of the parties. BUT in general construction K are not divisible Britton 1. 2) was to make improvement to the streets. iv. if the person seeking restitution has breach a fiduciary duty. 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. v.meaning not divisible then the party who breached the k is not entitled to recovery unless he has substantially performed 3. lawyers…etc. b/c the Δ has received a benefit a. The court will not find a K divisible if it would be unfair to the non breaching party 4. A hired laborer is entitled to compensation for his services though he does not continued to work for the entire duration of the K.doctors. contract to build 50 houses for a total of $5. (benefit) – (damages caused by the breached) = RESTITUTION b. and therefore. and the intent can be inferred by the ease with which the agreed consideration can be apportioned to separate performances a. Under both theories of restitution and divisibility the Πs award is always reduced by the damages caused to the non-breaching party Lowy 1.ii. 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 . (look at the intent of the parties) Definition of Restitution 1. builds 35 houses and then stops work = this is divisible and he will likely be paid for the 35 houses b. iii.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. This was a divisible K that had to parts 1)grade. RULE: employment k are normally divisible 2. Divisible? Probably not due to the fact that the building of each house may not be worth the same amount. UCC § 2-307.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. the contract is not as easily divisible. b/c the other party is 32 . 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. the prize if it can be apportioned may be demanded for each lot 2. then they have breach their right to fees Rule 1.000.

(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. others say yes. How do we compensate builder under a restitution theory? 1. the contractor cannot refuse to receive what he has already received vi. 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. increase in value to his property due to adding the pool = 5.Applies to both impracticalities and frustration. This was considered a material breach.000. 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. where at the time a K is made. (b) The buyer then has an option to receive the goods or not but they have no claim 3. event is the basic assumption of K 33 .000 b.excuse for the seller 1. The Π will recover the lowest amount because they have breached 2.000. unless the conditions are really minor or just technical ii. 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. Others would compensate as follows: a. Restatement § 266 – Existing Impracticability or Frustration 1. Elements of existing impracticability 1. so no substantial performance doctrine applies here. Existing Impracticability i. UCC 2-615.continuously receiving a benefit and the worker is working under the expectation that he will get pay. 700: A was to build a pool for B for 15. The court applies to different theories a. at time K is made performance is impracticable 2. without the fault of the party seeking to be excused 3. He may also allocate in any manner which is fair and reasonable iv. This doctrine as well as frustration of purpose excuses performance but does not excuses a condition. cost to obtain the pool he got from another builder = 10. A intentionally built used an inferior product in the construction of the pool so he would make more money. The extend to which the other party’s property has been increased in value or his other interest advanced c.000 XV. iii. Some courts say nothing b/c he breached in bad faith. Problem p. not foreseeable by the party seeking to be excuse 4.

Mineral v Howard 1. which was impracticable at the time of contracting. UNLESS the language or the circumstances indicate to the contrary.(1) a party has no duty to render a performance. a parties performance is made impracticable. Supervening Impracticability (after the parties have entered into the K) i. unless the language of the circumstances indicate contrary.the performance must be that exactly what is specified in the K. then they should be subject to the penalties 2. – cows being pasture 3.5. Restatement § 263 Destruction Deterioration or Failure to come into existence of a thing necessary for Performance.if the existence of an specific thing is necessary for the 34 . Restatement § 261 Discharge by Supervening Impracticability– where. 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. (2) if the parties did not know at the time that it was impracticable (3) Unless there was an assumption of the risk b. iii. The best test for whether services are “personal” is whether they could be validly delegated to a third person. 1.if the existence of a particular person is necessary for the performance of a duty his death or such incapacity as makes performance impractical. The services involved must be personal. The Δ try to used the UCC. 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. Is the person necessary for the duty? 2. Wegematic . 1.Assumption of the risk ii. which party should have foreseen the event and thus protect himself against it v. his duty to render that performance is discharged. Follows restatement. is an event the non occurrence of which was a basic assumption on which the K was made. UNLESS the party assumed the risk v. 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. after the contract is made. 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. W/o the Δs fault iii. by the occurrence of an event iv. and it must be absolutely impossible to perform. the non occurrence of which was a basic assumption on which the k was made-this goes to “foreseeability.. Restatement § 262 Death or Incapacity of Person Necessary for Performance. Must Meet all 5 Requirements a. if no source specific then seller can go to another source ii.Assumption of the Risk 1. Where after a K is made: i. 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.

performance of a duty. 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.music hall burns down 1. The Δ must show that there were circumstances outside of their control that did not allowed them to perform. Suspends (rather than discharges) the promisor’ s duty while the impossibility continues. the seller has suffered a casualty w/o fault then he is excuse from performance. A party may not by its own conduct create the event causing the impracticability of performance. Taylor v Caldwell . UCC 2-6131. then we will examine how difficult it is to get them. 2. but in general the court will not find impracticability b/c can get the goods from any where 2. the duty reattaches. d. 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. that is temporary merely. Δ must show that he intended to comply but was unable c. Canadian Alcohol v Dumbar Molasses 1.then if impracticable to get from them you do not have to go find other sellers vi. Definition 35 . Frustration of Purpose a. UCC—Two possibilities 1. destruction or deterioration that makes performance impracticable will discharge performance iv. 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. Impracticability v. 1. Restatement § 269-Temporary Impossibility or Frustration .Impossibility. Impracticability v. 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. its failure to come into existence. if you have a specific source named in the K. Mistake: Impracticability under Restatement 266 sounds like Mistake under Restatement 152. vii. XVI. After the impossibility ceases. Whether the risk has pass is a factor. Applies only when the goods are identifiable when the K is made. It appears that performance thereafter would be materially more burdensome had there been no impracticability or frustration. UNLESS 3. Impossibility: You may often here the doctrine of impracticability referred to as impossibility.meaning who has possession and control of the goods id buyer then the risk has passed. 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. If there is a reasonable alternative performance is then not impractical. K does not identified source.it does not said where he is going to get the goods from.

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

When a Statement or an Act is a Repudiation a. and we do not penalize the seller 1. Restatement § 251 . Foreseeability of the event is a factor in determining if a party should be excused.the transaction has become less profitable for the affected party or that he will sustain a lost. Restatement § 250 . use restitution to compensate the party XVII. BUT where the value of the performance is totally or nearly totally destroy by superseding events the court may find frustration if other circumstances beside the money exist. and then the contract purpose has been found to have been frustrated. Essentially a statement that the party will not perform (may not perform is not good enough) 2. 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 37 .in this case there was no reason to purchase the goods any more b/c they were outdated so useless iii. but the mere fact that even was foreseeable does NOT compel the conclusion of frustration. a voluntary affirmative act which makes performance impossible or apparently impossible b. how do we compensate the party for their part performance? 2. Definitions 1. 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. The frustration must be severe that it is not fair to be regarded as w/in the risk parties assumed under the contract. Anticipatory Repudiation a. Some courts do this but it is not the norm g. if not. she has appendicitis and can go to the awards. the buyer has assumed a risk.when a failure to give assurance may be treated as repudiation a. if the contract is divisible. 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. Lloyd 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. She is going to design for model to wear to the Grammies awards. Designer Case i. b. Repudiation i. use Doctrine of Divisibility b. iv. There must be substantial frustration – purpose frustrated and loss of total commercial value ii. A repudiation is: i. 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. Question: If a party has partially performed. f. Answer: There are 2 possible ways to compensate the party for the performance: a.

Effect of repudiation 1. Rule . without justification or excuse that which she was under an absolute duty to perform 4. in either case suspend his own performance or proceed 38 . suspend or withhold performance. making it impossible for the breacher to retract the repudiation. (b/c he will be compensated at new job) b.the repudiation must occurred before performance is due under the K. and see what the breacher does(remember: the breaching party can retract his repudiation during this time). Efficient breach . (breacher cannot retract) i. his taking the job will be reliance on the repudiation and this will be his acceptance of the repudiation. the damages awarded to him will be mitigated due to his taking another job.every one wins.Anticipatory Repudiation 1. UCC and repudiation i. or b.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. refusal to perform b. but. for a commercially reasonable time await performance by the repudiating party OR b. the injured party may a. act in reliance on the repudiation. unequivocal. the person breaches and pays damages for the breach. 2. b. UCC 2-610. continue performance. c.i. change position or cancel the contract.is a clear. If a party repudiates or appears unwilling or unable to perform. 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. c. Breach of Contract .is the legal conclusion that a party has failed to perform. NOTE-under common law can demand assurance orally and no time limitations for reply 3. After Repudiation. cancel the contract and bring suit for breach of contract against the party that gave the repudiation. person who breach must make more money 5. They may be express or implied a. but it must be efficient. wait it out and try to convince the breaching party to perform at the due date. Plaintiff has three options of what he can do: a. positive. the other party may possibly a. Implied. 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. once cancelled. Express. the breaching party cannot retract the repudiation. which is basically an acceptance of the repudiation. If takes another job or something of this nature.

AND c. A contract for sale creates an obligation of each party to maintain the other party's expectations of due performance. Has materially change position or 3. the K has reached performance time 5. Standards: reasonable grounds for insecurity and the adequacy of assurance will both be determined by commercial standards. 4. 3. UCC 2-611: Retraction of Anticipatory Repudiation 1.Buyers Remedies in General 1. Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or revokes acceptance the buyer may cancel the K c. cancelled the contract. A repudiation may be retracted and a prospective unwilling or inability to perform can be cured unless the injured party: 1. clearly indicate to the aggrieved party that the repudiating party intends to perform. AND b. Has canceled the K 2. a. a. 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. UCC 2-609. the party did not receive payment (or other return) for the obligations it plans to suspend. the party had reasonable grounds for insecurity as to whether the other party will perform according to the contract. otherwise indicated that it considers the repudiation final. AND b. AND e. include any adequate assurance justifiably demanded (2-609) 3. the party sends a written notice to the other party demanding adequate assurance of due performance. or ii. his next performance is not yet due. AND b. the aggrieved party has not: i. 2. Request for Retraction: a valid retraction of a repudiation must.ii. Retraction of Repudiation i.by getting another job 4. the other party did not yet respond to the demand. UCC 2-711. Time for Retraction: repudiating party can retract if. otherwise indicate the K is canceled. iii. 2. it is commercially reasonable to suspend such performance. A party will be excused from performing any contractual obligation if: a. Effect of Retraction: 39 .Right to Adequate Assurance of Performance 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. 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. materially changed its position. 5. or iii. UCC 2-611. AND d.

The effect of events other than a statement (ie. De La Tour 1. 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. and b. 2.Sellers Remedy on Discovery of Buyer’s Insolvency 1. if the duty that he repudiated has been discharged by impracticability or frustration before any breach by non-performance a. Restatement § 254. Voluntary. Restatement § 252. 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. UCC 2-702 . 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. affirmative act) that constitutes a repudiation under § 250 or the basis for a repudiation under §251 is nullified if. this applies to the UCC as well iii. When the seller discovers the buyer’s insolvency he may refuse delivery except for cash only. 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.a.Effect on Subsequent Events on duty to pay Damages 1. 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.should he wait or should he try to get another K v. the aggrieved party is excused for any delay due to the repudiation. to the knowledge of the injured party. a person is insolvent who either has ceased to pay his debt as they become due or is bankrupt ii. 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. Effects of Apparent Insolvency i. if any invocable at the time of performance 40 . The seller may reclaim goods already delivered on credit within 10 days after receipt. the repudiating party's rights under the contract are reinstated. d. Restatement § 256: Nullification of Repudiation or Basis for Repudiation 1. 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. Taylor 1. iii. iv.Effects of Insolvency 1.

vi. Plotnick . Judicial remedies under the rules stated in this Restatement serve to protect one or more 41 . the buyer may refuse any installment which is non conforming. 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. if the non-conformity or default impairs the value of the whole K there is a breach of K.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. 1. 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. look at whether the shipments are interrelated – brick wall b. UCC 2-612. has he waived? If depends whether the Δ could had cure if had known XVIII. to determine if breach to the BUYER is substantial to impaired the whole K. if that non conformity substantially impairs (so no perfect tender rule) the value of that installment AND the installment can not be cure.Installments K 1. UCC written demand.if the other party makes an offer to cure then the buyer must accept the installment c. 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. An installment K is one which requires the delivery of goods in separate lots to be separately accepted b. 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. is it impossible or unreasonably burdensome from a financial point of view to make the seller supply the future installments b. Remedies – Basics a. McDonald’s Corp.if you are insecure then ask for assurance 4. Restatement § 344 – Purpose of Remedies i. Person sues for breach on a K for a non-material there was also a material but he did not raised till later. 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.look at the size of the breach. Circumstances to consider for the SELLER to find a breach of the whole K a.Breach of Installment K a.

Definition. Remedies – Compensatory Damages Illustrations a. Restatement § 346 – Availability of Damages i. If the breach caused no loss or if the amount of the loss is not proved under the rules stated in the chapter. and 6. 2." 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. including incidental or consequential loss (foreseeable. Restatement § 345 . use if losing k → You only have to prove what you spend and the other side will 42 . (a) his "expectation interest. K damages usually have limitations an a party hardly ever gets all its true damages paid ii. (d) awarding a sum of money to prevent unjust enrichment. (a) the lost in valued or expectations caused by the other party breach PLUS 2. Restatement 352 – Uncertainty as a Limitation on Damages i. calculable) caused by the breach LESS 3. d. Expectation damages are measured by 1.damages. (e) declaring the rights of the parties." 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. certain. 4. Damages are not recoverable for loss beyond an amound that the evidence permits to be established with reasonable certainty. 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. (c) any cost that he has avoided b/c of the breach ii. (b) any other lost. (f) enforcing an arbitration award. (b) requiring specific performance of a contract or enjoining its non-performance. Reliance Damages = (money spend in performing the breached K) – money would had spend or lost had the K not been breached 1." which is his interest in having restored to him any benefit that he has conferred on the other party. (a) awarding a sum of money due under the contract or as damages. Common Law – restatement i. or 3. b. (c) his "restitution interest. The judicial remedies available for the protection of the interests stated in §344 include a judgment or order 1. 3.Measure of Damages in General i. 5.of the following interests of a promisee: 1. b.Judicial Remedies Available i. 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. (b) his "reliance interest. c. (c) requiring restoration of a specific thing to prevent unjust enrichment. a small sum fixed without regard to the amount of loss will be awarded as nominal damages. 2. Restatement § 347. Usually there are not attorney fees XIX. Restatement § 349 – Damages based on reliance interest i. Expectation Damages = (LOST VALUE(K price) + OTHER LOSS) – COST AVOIDED c.

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

extent of D's disregard of the rights of others 44 . did he plan or have a scheme to do the act. the breached caused the bodily harm b. (takes more $ to deter big corp. 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. The independent tort is fraud. Punitive damages must be "reasonably related" to the actual damages suffered by the 3. Punitive damages→ To punish and deter 1. but applies more when insurance Co. (as in the Dodge case) 3. XX. 2. Restatement § 355. not building good to save money…etc.like in the nose case b. there is no need to show physical consequences of the mental distress 3. must look to see if the amount will be enough to deter the from doing the act again. not recoverable for the breach of K unless the conduct constituting the breach is also a tort for which punitive damages are recoverable ii. Restatement § 353.500 the court said this was reasonable) iii.when a party refuses to pay or negotiate in bad faith you can get punitive. 2. look to deter so that it is not profitable to do it again.emotional disturbance1. punitive=$12. Duty of good faith.suffering for all three operations. look at the motives behind the D's conduct 4. but you can get them when they are the direct result of the breach. Punitive Damages i. refuses to pay or when the K involves fiduciary duties iv. Remedies – Mental Anguish and Punitive Damages a. Four things to look to when considering Punitive Damages: 1.foreseeable result of the breached 2. you may get damages for mental distress if a. Clark: 1. Allan v Jones 1. Usually expectancy is best result though. Damages for Mental Distress i. and they look to punish so it will hurt particular Δ (actual damages=$350. The court said these were ok b/c of policy of consumer protection. the harm was especially foreseeable from the breach of the K ii. It was done in bad faith with the intent to defraud the consumer. Boise Dodge v. punitive damages must bear a “reasonable relation to the amount of actual damages” – the court will examine how malicious was the conduct. v. In this case the punitives were 12.punitive damages 1.500 and the actual damage was 350. look to see if D's conduct was calculated. If you can prove that the other party engaged in intentional wrongful actsindependent tortuous act. like McDonald's) 2.fraud→ rolling back the odometer. usually you don’t get damages for mental anguish or pain and suffering for a breach of K b/c there is usually none. this case the dealership rolled back the mileage on the vehicle.

Specific Performance i. but this is a discretionary rule that is frequently ignored specially when there a re public interest involved 4. When the legal damages for the breach are inadequate 2. The duty is one to act and specific performance would be denied only for reasons that are inapplicable to an injunction b. The R2K. viii. 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. contract cases involving an independent tort (see above) vii. This is discretionary by the trial judge. there is no jury. (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. Restatement § 357 – Availability of Specific Performance and Injunction i. Subject to the rules stated in §§ 359-69. Burden to prove that deserve equitable damages is on the party seeking it ii. meaning that if the court ask on party to perform the other must also must be willing to perform too 3. When can a party get specific performance? 1. 3. Some areas where punitive damages are awarded in contract cases: 1. trouble or loss. 2. (3) Supervision: the court may refuse to grant SP if that would require constant court supervision.vi. There are 2 ways to bifurcate a trial: 1. Remedies – Equitable Relief a. Subject to the rules stated in §§ 359-69. which cannot be estimated in advance. 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. allow the worth of in at beginning stage of punitive damage question 2.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. Hard ship: SP will be refused if the relief is too burdensome and unfair b/c the 45 . but there must be mutuality of performance. Defenses to Specific Performance: 1. breach of fiduciary duty 2. Factors used in determining if specific performance should be granted 1. Damages must be estimated with certainty and if the court cannot do that then they will grant SP. only allow the worth of D after the jury has decided if punitive damages are proper in the case XXI. Trials are usually bifurcated to separate the punitive damages from liability. (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. The duty is one of forbearance 2. iii. (1) THRESHOLD Adequate: Specific Performance can only be obtained if the another remedy cannot be obtained except at considerable expense. bad faith failure to pay by an insurance company 3.

3. Clean hands: if a party seeks equitable relief then they must come in with clean hands (act in good faith). Real property. Damages are not collectable. RULE-an injunction may be granted if a. b. Injunctive Relief 1. 46 . Temporary Injunctions: only granted if a. They look at the appropriateness of the consideration… etc.there is a presumption real property is unique. (1) Where any tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired. antiques v. Examples-Hope diamond. Replacement. 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. the seller has a hard time proving but the law is nice and it allows either party to get SP. Disadvantages: Supervision by the court . UCC—Goods 1. When are damages inadequate? 1. 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. jewelry. UCC . 2. (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. the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery. Advantages: Outcome will protect the parties reliance interests b/c they will receive the benefit of the bargain. When damages are unascertainable.must make sure they do it 3. 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.tough to calculate w/ certainty 2. When the subject of the contract is unique 3. personalized property such as art. This can be on the defendant or on 3rd parties 2. Marilyn Monroe dress. 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.§ 2-508.if it is going to be very hard for the plaintiff to collect damages iv. though in most jurisdictions this requirement has been defeated a. this is for buyers mostly. then the court will evaluate whether b/c of the delay the plaintiff has waived his right to specific performance 4. a. irreparable harm AND b. Laches: If there was a delay in making the claim and whether such a delay caused prejudice to the other party.exchange is grossly inadequate. this is the mutuality argument. Cure by Seller of Improper Tender or Delivery.

(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.§ 2-711. Seller's Damages for Non-acceptance or Repudiation. due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.§ 2-708. and ii. Incidental damages to an aggrieved seller include any commercially reasonable charges. (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). together with any incidental damages under the next section. a. (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. (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. expenses or commissions incurred in stopping delivery. 3. (1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (Section 2-723). Buyer's Remedies in General.2. a. (1) Where the seller fails to make delivery or repudiates or the buyer 47 . together with any incidental damages provided in this Article (Section 2710). UCC . 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.§ 2-709. UCC . 5. the price i. 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. care and custody of goods after the buyer's breach. 4. in connection with return or resale of the goods or otherwise resulting from the breach. c. Buyer's Security Interest in Rejected Goods. (1) When the buyer fails to pay the price as it becomes due the seller may recover. a. b. 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). Seller's Incidental Damages.§ 2-710. (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. UCC . in the transportation. but less expenses saved in consequence of the buyer's breach. b. UCC . a. Action for the Price.

b. (3) Failure of the buyer to effect cover within this section does not bar him from any other remedy. (b) in a proper case obtain specific performance or replevy the goods as provided in this Article (Section 2-716). 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) recover damages for non-delivery as provided in this Article (Section 2-713).§ 2-712. (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). but less expenses saved in consequence of the seller's breach. (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. c. 7. Buyer's Procurement of Substitute Goods. in cases of rejection after arrival or revocation of acceptance. (1) Subject to the provisions of this Article with respect to proof of market price (Section 2-723). care and custody and may hold such goods and resell them in like manner as an aggrieved seller (Section 2706). a. (2) Where the seller fails to deliver or repudiates the buyer may also i.rightfully rejects or justifiably revokes acceptance then with respect to any goods involved. as of the place of arrival. (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. Buyer's Incidental and Consequential Damages. transportation and care and 48 . b. or ii. receipt. "Cover". c.§ 2-713. but less expenses saved in consequence of the seller's breach. and with respect to the whole if the breach goes to the whole contract (Section 2-612). 6. UCC . UCC . UCC . (a) if the goods have been identified recover them as provided in this Article (Section 2-502). transportation. b. (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) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection. a. 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). (2) Market price is to be determined as of the place for tender or.§ 2-715. receipt. 8. or ii. Buyer's Damages for Non-delivery or Repudiation.

if we allow buyers to have this remedy. the court granted SP b/c damages hard to estimate. any commercially reasonable charges. the court also reviews the economic advantages and disadvantages in deciding on whether to grant the SP iv. (2) Consequential damages resulting from the seller's breach include i. damages were adequate ii. court will do this sometimes if negotiation is feasible. and not too expensive e. 9. on deciding whether or not to grant SP iii. then we must also allow the seller to have this remedy. unjust enrichment…or over recovering d. We do not grant SP if the result is not right. 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. the court refused. and ii. The mine wants the defendant to keep buying from them. b. 3rd party beneficiaries-are not allowed to claim SP b/c they are not parties of the K. c. the impact on others. Plaintiff wants injunction to force defendant not to lease to another pharmacy ii. but this may be a factor that can be weight. expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach. 10. Personal Services and Employment contracts: 49 .Buyer's Right to Specific Performance or Replevin. Seller— may get specific performance also if dealing with real estate b/c of the concept of mutuality. and no much court supervision needed from the court to enforce iii. (b) injury to person or property proximately resulting from any breach of warranty. (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. (2) The decree for specific performance may include such terms and conditions as to payment of the price. 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. Northern Indiana v Coal Mine i. c. or other relief as the court may deem just. Output contracts are usually given Specific Performance when the K requires a particular available source 11. b. Walgreens i. (1) Specific performance may be decreed where the goods are unique or in other proper circumstances. a. UCC – 2-716 . ideal. a. (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.custody of goods rightfully rejected. damages.

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

c. i.§ 2-719. Contractual Modification or Limitation of Remedy. 1. UCC . Liquidated damages. Deposits. and 2. You don’t have to relocate iv. (1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages. The amount of liquidated damages must bear a reasonable proportion to the probable loss ii. i. 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. (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive. and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. Restatement § 356 – Liquidated Damages and Penalties i. Remedies – Liquidated Damages a. 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. remedy may be had as provided in this Act. Intent.the amount of actual could not or was very difficult to be determine by the parties at the time of the K was made.only some jurisdictions will focus on the intent of the parties 51 . (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.clauses that specified the amount to be paid in case of a breach . 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. in which case it is the sole remedy. There is no deduction from collateral sources such as unemployment benefits. iii. A term fixing unreasonably large liquidated damages is void as a penalty. (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. (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. the difficulties of proof of loss. The damages have to be difficult to determine. 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. employee is usually not allow to recover punitive damages XXII. A term fixing an unreasonably large liquidated damage is unenforceable on the grounds of public policy as a penalty ii.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 – § 2-718(1) Liquidation or Limitation of Damages.she does not have to take another job. iii. welfare.deprived. d. moonlighting. ii. but if could of taken the jobthen they will not get damages for something to which they could have mitigated for iii. (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.

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

Novation.in some jurisdictions assignment of wages to pay debts is against PP c. 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. there is a presumption for assignability and there are two limitations that will make an assignment invalid: a. 2. Govt. unless a different intention is manifested. 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. Restatement § 322: Contractual Prohibition of Assignment 1.when the assignor retains liability after delegating his duties to someone else.when an assignor assigns a right the is only warranting that he has a right not that it is collectable. 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. Standby Liability. 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.Allhusen 53 .Only way the delegator can be relieved is through a novation. b. b. DEFENSES. the assignment cannot change the K in any way→duties or rights or increase the risks or burdens on the other party b. Original parties can not modify the K 6. rights can be assigned. 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. c. A contract term prohibiting assignment of rights under the contract. Is for the benefit of the obligor. you are also warranty that you don’t do anything to interfere 9. Contracting Around the Right to Assign i. ii. then the delegator retains liability for breach. Definitions and Rules 1. 1.both the obligor and the assignee can bring any defense that was available to the original parties under the K 7. 1. Gives the obligor a right to damages for breach of the terms forbidding assignment but does not render the assignment ineffective. 5. Unless the circumstances indicate otherwise. 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. RULE: As a matter of law. a. contracts can NEVER be assigned 4. when ever there is an assignment all duties and rights are given up completely 3. If no novation. WARRANTIES OF ASSIGMENTS . a term prohibiting assignment of the contract only bars the delegation of the performance or condition to an assignee. If a debtor wants a discharge from his debt he must get the discharge from the assignee.iii. He can only get rid of this liability by a novation. the assignment cannot violate a statute or public policy.

The UCC also requires a notice. vi. which is the buying and selling of legal actions. After notice he is liable for paying to the assignor what is due to the assignee. This is different b/c you are NOT making an assignment. Π Took over the 's debt for some creditors in Ireland. 4..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. Assignment gives ownership. 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. But. 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. rather you are making a contract. became the assignee. contract does not. This was not really a COA but a debt. inventories. UCC. Once notice is given. Fitzroy v Cave a. iv. 5. 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 . 6. The Ireland creditors assigned the right to collect the debt.. Once the notice has been given. 3. (Any instrument that shows the assignee has the right to collect).Delegation of Performance and Assignments of Rights 1. But the person can always take the assignment back if not in writing Assignment of Future Rights 1. Argues this is maintenance. you don’t have any thing to assign. v. A debtor is not affected by an assignment until he has CLEAR notice. So. b. UCC § 2-210. and it is a better right. If you have no job or not contract you have nothing to assign 2. A party can set off. the rights vest in the assignee Gratuitous Assignments 1.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. Continental Purchasing a. 10.iii. etc. 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. You don’t have any thing. The rights vest at the time the notice is given 2. the obligor is liable for any damages caused by him paying the wrong person. you could contract with the bank to give you money and then the first job you get you will pay them back. 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. 3. the motive of the Π are irrelevant b/c it has nothing to do with whether the assignment is valid or not Notice 1. this is against PP (professional litigators that take on other peoples suits) AND that Π’s motive of was to drive Δ into bankruptcy.

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

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

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