Contracts Notes (2/17)

Under Duress:
 §176(2) only used if you see terms that are unfair
 pg. 468 – 2(a) Think vindictive threats (totality of the circumstances)
 Duress: improper threat and no reasonable alternative

§ 175 lays out the overall rule, § 176 for improper and reasonable alternative ->
use circumstances and reasonableness

Germantown Manufacturing Co. v. Rawlinson

 Threat of criminal prosecution § 176 (1)(b)
 No alternative
 If threat is well founded, it increases the likelihood of finding duress
 Mental state here might have relaxed her duty to read

When thinking about materiality, also think about what duty is required

Austin v. Loral
 Austin has leverage because Loral’s customer is the navy
 There was no good remedy for Austin (inadequate remedy)
 Context here matters (time of war)
 Economic duress

Changed circumstances
 Facts occurring after the contract formation that affect basic contract
assumption
o Impracticability – supervening fact makes performance impractical
o Frustration of purpose – supervening fact that makes performance
moot
o Force majeure – act of G-d/event outside of parties’ reasonable
control
 If force majeure affects basic contract assumption and makes
performance impracticable/moot, performance will be excused
unless the contract specifies otherwise
 I cannot do it Vs. It cannot be done
Subjective Objective impracticability
Clark Case Phoenix case

- Still all about the remedies

Rest. § 261
 Where, after a 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, his duty to render
that performance is discharged, unless the language of the circumstances
indicate the contrary.

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Contracts Notes (2/17)

Unconscionability
 Absence of choice and unreasonable terms
o Frontal assault on private ordering
o Free will, implicit on private ordering, has suffered a defect, it is so
profound the law will override
 Contract formed, but voidable
o We like for people to form contracts (see private ordering) but we
need channeling and want to protect people
o Unconscionability is a very difficult standard to meet because we do
like private ordering
 Procedural unconscionability
o Defects in the bargaining process
 “Contracts of Adhesion” = non-negotiable forms/standardized
contracts
 not every contract of adhesion is going to be
unconscionable, think about going into the Apple Store to
buy an IPhone, there is no negotiation, but not
unreasonable
  Substantive unconscionability
o Unfair terms
 Judges determine unconscionability – juries are typically not involved in
equity disputes

Duress Unconscionability
Unfair bargaining power Oppression and unfair surprise

Interpretation
 Interpretation: determining meanings of contract terms as intended by
parties’
 Construction – looks at laws and implies terms (gap filler terms)

Intrinsic Evidence Extrinsic Evidence

 Contract  Ads/marketing
 Industry practice
 Past dealings
 Post-signing dealings
 Technical lexicon
 Common parlance
 Negotiations


 The goal of interpretation is to determine parties’ intent

o Data available:
 Intrinsic evidence (the contract)
 Extrinsic evidence (evidence outside the contract; also, parol
evidence)
o Data Priority
 1) Contract (“four corners”)
 2) course of performance
 3) course of dealings
 4) trade usage
 (2 through 4 are often merged)
Interpretive Tools
 give words their generally prevailing meaning unless the term is technical
 interpret agreement as a whole
 interpret agreement in a reasonable, lawful, effective way
 custom-negotiated provisions are given more weight than standardized form
provisions

Frigaliment Notes
 court considers:
o contract
o negotiations
o trade usage
 expert testimony
 government regulation as a dictionary
o prevailing industry pricing
o parties’ conduct
 seller acted objectively reasonable; ruled for seller and dismissed the
complaint
 plaintiff (buyer) had burden of proof to show breach – the burden was not
met
 the court did not suggest that one side was more reasonable, the evidence
was inconclusive, but the plaintiff just did not carry their burden
 misunderstanding could have maybe been argued, but it likely would not
have changed the outcome