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Case Facts Holding

O’Callaghan v. Waller & P injured by LL’s negligence under a A lease clause exculpating a LL from liability for his
Beckwith Realty Co. (IL lease which exculpated the LL from own negligence should be upheld & is not void
SC 1958) liability for negligence. against public policy. BUT most states now hold
exculpating clauses for residential leases
Graham v. Scissor-Tail. Arbitration clause apptd AFM as K of adhesion containing arbitration clause fell w/in
(1990) arbitrator. P was concert promoter. reasonable expectations of P since he was subject to
thous of same. BUT it was uncon b/c it would be
biased in favor of union member artist.
Henningsen v. Bloomfield P injured by steering failure in new At attempt by an auto dealer to disclaim an otherwise
Motors, Inc. (NJ SC 1960) car purchased form D under a K in implied warranty of merchantability is void against
which dealer disclaims all implied public policy. Disclaimer was insufficient to
warranties of merchantability. indicate to RP that he was giving up personal inury
claims if car had defect, unequal bargaining
Carnival Cruise Lines, Inc. P injured on Ds ship. Forum A forum selection clause in a commercial passage K
v. Shute (US SC 1991) selection clause on back of tix. is permissible if it’s fundamentally fair.

Williams v. Walker-Thomas P sold to D furniture w/a cross- The defense of Unconscionability to action on a K is
Furniture Co. (US Ct of App DC
collateral clause & subsequent to Ds judicially recognized. CL rule of caveat emptor
1965) default, sought to replevy all goods modified by 2-302, unequal bargaining position here
previously purchased by D where P exploited D in uncon K provision.
Jones v. Star Credit Corp. P bought freezer (worth $300) for 2-302 permits a ct to reform a K on the basis of
(NY SC 1969) $900. Ps pd $619.98 already. excessive price. Factors incl: price to value ratio,
financial resources of buyer, knowledge of seller
concerning buyer’s situation, relative bargaining
position of the parties.
Armendariz v. Foundation P signed employment app which incl An adhesive K that incl an arbitration clause
Health Psychcare Services arbitration clause compelling requiring adhering party, but not the other, to
(CA SC 2000) arbitration for wrongful termination. arbitrate all claims arising out of the same transaction
is uncon. K limiting damages of amt of backpay
compounds the uncon of agmt.
Klein v. PepsiCo, Inc. P wanted to buy D’s jet. 2-716 allows nonbreaching buyer to seek SP if goods
(US Ct of App 4th Cir 1988) are unique. BUT
No Specific Performance when money damages are
adequate. Substitute goods can be purchased to
satisfy the original K.
Laclede Gas v. Amoco Oil After D breached a long-term Specific Performance is available as a remedy for
(US Ct of App 8th Cir 1975) propane supply K, P sought specific breach of a K involving personal property (ie. long-
performance of K. term supply K where supply is unique).
Northern DE Industrial P wanted SP of a contract that would Cts unlikely to order SP where supervision of
Development v. E.W. Bliss have req’d hiring 300 wkrs to performance would be impractical. Money damages
(Del 1968) complete a second shift. for losses caused by delay could be determined.
Rare to award SP for personal services K.
Walgreen Co. v. Sara Creek Walgreen had lease that prevented Ct issued injunction instead of awarding damages to
Property Co. LL from leasing space in mall to (1) shift burden of determining true cost of Ds
another pharmacy. LL gonna lease conduct from ct to parties. Avoid costly supervision
to Phar-Mor. by ct. (2) prices/costs more accurately determined by
mkt than by gov’t.
Vitex Manufacturing P was to process wool for D. P In a claim for lost profits, overhead should be treated
v. Caribtex reopened factory but D never sent as part of the gross profits & recoverable as damages,
wool to be processed. & should not be considered as part of the seller’s
(processor’s) costs. Overhead should not be treated
as a cost saved in computing an award for breach of
K b/c it remains constant.
Laredo Hides v. H&H D refused to continue delivering When a seller wrongfully repudiates a K or fails to
Meat Products hides under its K with P, P make delivery of the goods, the buyer may “cover”
purchased them from other sources by obtaining such goods elsewhere & sue the seller
& sued to recover the price for the difference b/w the costs of cover & the K
difference price plus + incidental or consequential damages.
R.E. Davis Chemical v. D claimed it lost a “volume sale” An aggrieved seller may recover, after resale, lost
Diasonics. when P breached a K of sale. profits from the original sale if he can show that the
(US Ct of App 7th Cir 1987) subsequent sale would have occurred absent the
breach and would have been profitable.
US v. Algernon Blair P sues to recover in quantum meruit A promise is allowed to recover in quantum meruit
(US Ct of App 4th Cir 1973) the value of the labor/materials it the value of services he gave to a D who breached
furnished up to the pt at which it their K irrespective of whether he would have lost
justifiably ceased work. money had the K been fully performed and would
thus be precluded from recovering in a suit on the K.
Rockingham County v. P was to build a bridge. D After an absolute repudiation or refusal to perform
Luten Bridge unjustifiably told P to stop wk under by one party to a K, the other party can’t continue to
(US Cir Ct of App 1929) K, but P refused and spent more $ to perform and recover damages based on full
complete bridge. performance. The nonbreaching party is not
permitted to recover damages which he could have
avoided by reasonable efforts.
Tongish v. Thomas After P lost money on resale K due to When a seller breaches, mkt damages should be
(KS SC 1992) Ds breach, it contended that the mkt awarded even though in excess of the buyer’s actual
price measure of damages should be loss. Proper remedy for breach of K to deliver
used instead of its actual loss. goods is diff b/w K price & mkt price.
Parker v. 20th Century Fox P, an actress, was to have the lead The general measure of recovery by a wrongfully
Film role in a movie but D decided not to discharged employee is the amt of salary agreed
(CA SC 1970) make that movie and offered her upon for the period of service, less the amt which the
another leading role in a different employer affirmatively proves the employee has
film. earned or w/reasonable effort might have earned
from other employment.
Jacob & Youngs v. Kent P built house for D with wrong type A trivial & innocent omission will be excused &
(NY Ct of App 1921) of pipe. damages for the minor breach of condition will be
allowed rather than holding that there’s a breach of
condition forfeiting entire K. Damages should be
measured by diminution of value rather than cost of
repair, replacement or completion.
Groves v. John Wunder When D surrendered land it leased When willful breach, breaching party may not sue on
(MN SC 1939) from P, D had deliberately breached the K nor invoke benefit of substantial performance
K by removing best/richest gravel to limit damages to the diminution in value. Cost to
w/o restoring land to existing grade. complete (not diminution in value) is proper remedy.
Value of land was $12k if restored, - anomolous
cost of restoring was $60k.
Peevyhouse v. Where the K provision breached was merely
Garland Coal & Mining Co. incidental to the main purpose, & where the economic
(OK 1962) benefit of full performance of work is grossly disproportionate
to the cost of performance, the
damages are limited to the diminution in value
b/c of the non-performance.

Hadley v. Baxendale P stopped mill b/c of broken Normally, damages are those which arise naturally
(Ct of Exchequer 1854) crankshaft. D was late in delivering. from breach. Damages b/c of special circumstances
awarded when P informs D of special circumstances
or where these damages are reasonably foreseeable
by D at time K is formed.
Delchi Carrier SpA v. D sold P nonconforming Buyer who accepts order from customers based on
Rotorex Corp. (1995) components. P unable to obtain quantity of components purchased may recover lost
substitute components from other profits on those orders when components are
vendors & lost sales as result. defective and buyer can’t purchase replacement
Kenford Co. v. P gave land to D to build sports Developer not entitled to recover loss of anticipated
Cty of Erie stadium. D didn’t. P sued for loss of appreciation in value of real estate surrounding sports
(NY Ct of App 1989) appreciation in surrounding land. stadium when gov’t decides not to build. No
indication that D reasonably contemplated that it
would assume liability for Ps unrealized
appreciation in land values. No tacit agmt that
breacher would be liable.
Fera v. Village Plaza Lessor leased to another tenant b/c Although prospective profits for a new biz are
(MI SC 1976) he misplaced lease. usually too speculative, when proof of prospective
profits is available, they may be recovered even
by a new biz.
Wasserman’s v. Lease b/w P and D contained a If liquidated damages are far in excess of actual
Township of Middletown stipulated damages provision based losses, the clause may be an unenforceable penalty.
(NYSC 1994) on Ps gross receipts

Dave Gustafson v. P performed highway construction Liquidated damages clauses should be enforced
State (SD 1968) wk for state. K had liquidated when they’re fair & reasonable attempts to fix just
damages clause, P delayed. compensation for anticipated loss caused by breach
of K. Useful when damages are uncertain in
nature/amt or are unmeasurable.
Gianni v. R. Russell P rented space to sell fruit, candy, All preliminary negotiations, conversations, & verbal
(PA SC 1924) soda. D allowed another to sell agmts are merged in & superseded by the subsequent
soda. P claimed D agreed to give P written K, and unless fraud, accident, or mistake is
sole right sell soda in building at alleged, the writing constitutes the agmt and its terms
time of lease negotiations though not can’t be added to or subtracted from by parol
in written lease. evidence.
Masterson v. Sine P transferred prop to relatives Evidence of oral collateral agmts should be excluded
(CA SC 1968) reserving option to repurchase for only when the fact finder (ct) is likely to be mislead.
10 yrs. Relatives went bankrupt, P The parol testimony as to the limitation of
sought to exercise the option. assignment should have been admitted since that
term would not necessarily have been included.
Parol evidence can be shown to prove elements of
part of agmt that’s not reduced to writing.
MCC- Marble Ceramic D sells tiles to P. Terms on Ds form CISG permits an inquiry into a party’s subjective
Cntr v. Ceramica Nuova Ks were in Italian. intent so long as the other party was aware of that
D’Agostino intent. Appears to be a rejection of the PER by
(11th Cir 1998) CISG.
Bollinger v. Cent. PA P contracted to permit D to deposit A ct of equity has the pwr to reform a writing and
Quarry Strip & Const its construction waste on Ps prop if it make it correspond to the understanding of the
(PA SC 1967) removed topsoil & covered the waste parties on the ground of mistake as long as that
w/it. This oral condition was not incl mistake is mutual.
in the written agmt and was omitted
by mistake. D didn’t remove topsoil.
Frigaliment Importing v. D K’d to sell “chicken” to P. D The party who seeks to interpret the terms of the K in
B.N.S. International Sales shipped stewing chicken instead of a sense narrower than their everyday use bears
(US Dist Ct 1960) broiling & frying chicken. burden of persuasion to so show.
Raffles v. Wichelhaus D agreed to buy cotton to be shipped When a term used to express an agmt is ambivalent
(Ct of Exchequer 1864) by P aboard “Peerless.” 2 ships & the parties understand it differently, & neither of
w/that name. them is aware of the other’s understanding, there can
be no K.
Oswald v. Allen Swiss Coin Collection & Rarity Agmt not enforceable under Raffles b/c no sensible
(2d Cir 1969) coins. Rarity collection incl some basis for choosing b/w conflicting understandings of
Swiss coins the parties.
WWW Associates v. K contained a reciprocal Extrinsic evidence can’t be considered in order to
Giancontieri cancellation provision. create an ambiguity in written agmt. Before such
(NY Ct of App 1990) evidence be considered, ct must find an ambiguity in
the written K.
PG&E v. G.W. Thomas D obtained insurance policy Evidence as to the meaning of a K term must be
Drayage & Rigging covering only 3rd party liability. P admitted if K language is reasonably susceptible to
(CA SC 1968) argues that intention was to cover the meaning argued for by the evidence. Extrinsic
property as well. D offers prior Ks evidence may only be excluded when it’s feasible to
indicating only 3rd party property determine meaning of wds from the instrument itself.
Delta Dynamics v. Arioto A separate K provision allowed Ct allowed extrinsic evidence to show whether a
(CA 1968) recovery of attys’ fees in any action termination provision was an exclusive remedy.
for damages.
Hurst v. WJ Lake & Co Horse scrap meat. Different prices In dealings b/w tradesmen, meanings of the terms of
(OR 1932) for meat that were above or below the trade should take precedence. PE admissible in
50%. 140 tons were 49.53-49.5%. order to explain the trade meanings.
Dalton v. Educations ETS allowed to cancel test score if it P is entitled to SP of Ds promise to consider Ps
Testing Service found reason to question validity of evidence in good faith. Implied good faith
(NY Ct of App 1995) the score after offering test-taker 5 requirement.
options to respond to Ds concerns.
Burger King Corp v. D purchased 2 franchises from BK. Implied covenant of good faith & fair dealing does
Weaver (1999) BK authorized another franchise & not support an independent CoA where alleged
D stopped paying. P sues, D breaching party has performed the express K’l
counterclaims breach of Ps duty of provision & the implied covenant would vary the
good faith and fair dealing. express terms of the K.
Eastern Airlines v. Gulf Oil D claims Ps practice of fuel An established course of performance & dealing b/w
freighting is a breach of K. Evidence parties, which is also an established usage of trade,
indicates practice is established in becomes part of the terms of the K when not objected
the industry. to.
Market Street Assoc v. P allegedly deliberately failed to Diff b/w superior mkt info & taking advantage of K
Frey notify D of an obscure clause that partner. Duty of good faith doesn’t require complete
could result in forfeiture of Ds candor; party may take advantage of another based
property. on superior knowledge of mkt. BUT a party may
not intentionally exploit the other party’s
oversight of an important fact.
Dickey v. Philadelphia Lease based on percentage of D’s General rule: lease provision specifying certain use
Minit-Man Corp gross sales, w/a minimum rent. D of premises is a covenant against a noncomplying
discontinued certain biz, P sued for use, not a covenant to use. No implied obligation for
ejectment. a lesee to cont to conduct a biz specified in lease if
its failure to do so result in less rent to lessor. In
other cases where rent based on gross receipts but
no minim, cts have imposed an implied covenant to
cont biz.
Bloor v. Falstaff Brewing P alleged D breached its K’l A K’l provision obligating one to use its “best
Corp. obligation to use its “best efforts to efforts” to promote & maintain a high vol of sales of
promote & maintain a high vol of a certain product is breached by a policy which
sales.” emphasizes profit w/o fair consideration of the effect
on sales vol.
Zilg v. Prentice-Hall Prentice-Hall cut original printing & A K’l agmt to publish a bk, reserving right to
(US Ct of App 1983) reduced ad budget. publisher to exercise its discretion, does not incl an
implied obligation to aggressively promote the bk.
Bak-A-Lum v. Alcoa D canceled an exclusive Exclusivity agmts that don’t specify duration are
Building Products distributorship agmt w/P after it terminable at will of either party. Limition: when
(NJ SC 1976) knew that a new warehouse lease agent has in good faith incurred expense/time/effort
had been entered into by P. in developing biz, allowed to recoup investment. D
could terminate K or just the exclusivity feature w/o
paying compensation to P since P had 8/9 yrs of
exclusivity but needed notice.
Sheets v. Teddy’s Frosted P fired for complaining about Generally Ks of permanent employment are
Foods noncompliance w/state regulations. terminable at will but one may maintain action for
(CT SC 1980) wrongful discharge if he can prove that the discharge
violates public policy.
Balla v. Gamgro (IL 1991) P was in house counsel for D. P In-house counsel normally can’t claim tort of
reported illegal activity to FDA, was retaliatory discharge. P had duty as atty to report,
fired. thus no fork b/w losing job or reporting. Client may
discharge atty any time.
Nanakuli Paving & Rock v. D contended it was not obligated to Trade usage & course of performance will be read
Shell Oil price protect P, and its conduct in into Ks where such are so prevalent the parties would
(US Ct of App 1981) the past didn’t constitute a course of have to have meant to incorporate them in the terms
conduct governing the K. of the K.
Columbia Nitrogen v. P D wanted to introduce evidence on 2-202 authorizes evidence of usage of trade & course
Royster Co (4th Cir 1971) usage of trade & course of dealing to of dealing b/w parties to explain or supplement a K.
show that specific K prix was not to
be binding on parties.
Luttinger v. Rosen Obtaining mortgage w/interest rate A condition precedent is a fact or event which the
(CT SC 1972) was condition precedent to K. D parties intend must exist or take place b/4 there is a
unable to obtain mortgage. P right to performance, & if the condition precedent is
offered to compensate for failure of not fulfilled, K is not enforceable. P not req’d to
the condition precedent. accept Ds compensation for failure of condition.
Internatio-Rotterdam v. P was to provide shipping A condition, which is an act or event, other than a
River Brand Rice Mills instructions at least 2 wks prior to lapse of time, must be literally complied with.
(2d Cir 1958) delivery of rice. P didn’t, D Notification was a condition precedent to D’s duty to
canceled K. ship.
Peacock Constr. v. D failed to pay sub (P) claiming Ambiguous provisions in subKs which don’t
Modern Air Conditioning Owner paying was a condition expressly shift the risk of pmt failure by owner to
(FL SC 1977) precedent. subcontractor will be interpreted as constituting
absolute promises to pay and not as setting pmt by
the owner as a condition precedent to pmt.
Gibson v. Cranage P contracted to make a portrait for D. Where parties deliberately entire into an agmt which
(MI SC 1878) If portrait failed to satisfy D, D need violates no rule of public policy & is free of fraud or
not accept/pay. D not satisfied w/ mistake, no hardship in holding them bound by it.
portrait, & P sued for the K price. Contractual liability may be conditioned on subjective
personal satisfaction.
Doubleday v. Curtis Curtis (D) wrote manuscript P Law requires party who terminates K to act in good
(2d Cir 1985) deemed worthless. P offered faith. Where K contains satisfaction clause, it may
editorial assistance that D refused. be terminated only as a result of honest
dissatisfaction. Ps duty of good faith incl providing
editorial assistance.
McKenna v. Vernon D asserted P needed certificate only Constant/repeated disregard on owner to exact
(PA 1917) at last progress pmt. compliance w/provision. Now too late for him to
insist that failure on the part of the P to secure
certification before suit defeats his right of action.
Owner waived it repeatedly.
Hicks v. Bush (NY 1962) Written K made no mention of the PER says oral agmt can’t be used as evidence to
condition (orally agreed to) that sum contradict written agmt. However, if oral agmt is for
of money had to be raised in order a condition precedent to the effectiveness of K, then
for written doc to take effect. such evidence may be introduced.
Kingston v. Preston P to take over D’s biz. P had to make Covenant was cond’l & dependent. Performance of
(King’s Bench 1773) pmts & show security, which he didn’t one party depends on prior performance of other.
do. P sued saying D still had to Until prior condition performed, other party not held
deliver biz, arguing that covenants to performance of his covenant. Performance of 1st
were mutual & independent. D argues covenant is implied condition precedent to the duty
dependent covenant. to perform the 2nd covenant.
Stewart v. Newbury P alleged he was to be pd in “usual Where a K is made to perform wk and no agmt is
(NY App 1917) manner” even though not written made as to pmt, the work must be substantially
into K. When D failed to pay, P performed b/4 pmt can be demanded.
stopped wk.
Plante v. Jacobs P built D house w/misplaced wall. D P rendered substantial performance and is due K
refused to finish paying. P refused to price. D should receive damages for Ps failure in
complete job and sued for breach of finishing home. Unjust to let owner retain value of
entire K. building w/o pmt b/c of small mistakes.
Gill v. Johnstown Lumber P K’d to drive & deliver 4 mill ft of When consideration for work done is
logs but had delivered only a part of apportioned/apportionable in K, that K will be
that amt when flood swept away rest interpreted as divisible/severable in case of part
of logs. performance.
Britton v. Turner P wkd for D for 9 ½ mo when K Restitution – Employee may recover reasonable
specified 1 yr. value of services (benefit to employer) less damages
employer suffers by reason of early termination, w/K
providing limit on amt of recovery.
Kirkland v. Archbold P to repair/improve Ds prop but Restitution – negligent breach shouldn’t be treatede
defaulted after partial performance. same as willful breach where forfeiture of value of
wk completed is punishment. Award reasonable
value of wk done less damages suffered by D thru
incomplete wk.
Walker v. Harrison D rented electric sign which was hit A party attempting to repudiate a K must convince
w/tomato. D refused to make further the ct that the other party has materially breached the
pmts until P cleaned sign. K.
K&G Construction v. D breached his covenant to perform Whenever possible, according to the intentions of the
Harris in a wkmanlike manner, P declined parties and the good sense of the case, mutual
to pay b/c of bulldozer damage. D promises in a K will be regarded as dependent
refused to perform further, causing covenants. Modern rule – mutual promises in K are
damage to P. presumed dependent.
Iron Trade v. Wilkoff D to deliver rails to P but refused to A party who prevents the other party from
do so after P reduced available performing may excuse other party’s performance.
supply and made Ds performance BUT mere difficulty of performance will not excuse
more difficult. a breach of K even though that difficulty was created
by other party.
New England Structure v. D was to construct gypsum roof on When notification of a ground for termination is sent
Loranger school, terminated deal contending to a party deemed to be in breach, the notifier is NOT
that D failed to provide enough limited to that ground in defending his action.
skilled wkmen as req’d by K.
Hochester v. De La Tour P contracted to be a courier for D When promisor repudiates K b/4 date set for
(Queen’s Bench 1853) for 3 months. D changed mind b/4 P performance, P may either wait until date set for
was to start. P sues and is in ct b/4 performance or sue immediately.
the K was to arise.

Kanavos v. Hancock Bank D sold stock to which P had earlier To recover for breach of K, owner of a right of first
& Trust Co (MA SC 1985) been given a K’s right of first refusal must prove that, had he been notified of the
refusal. impending sale, he would have been ready, willing,
and able to exercise his right. Ability to perform is a
constructive condition.
McCloskey & Co. v. P requested assurance that the work To show an anticipatory breach, the party breaching
Minweld Steel Co. would be completed w/in 30 days. D must express an absolute & unequivocal refusal to
(US App 1955) asked for help in obtaining steel. P perform.
sued D for anticipatory breach.
C.L. Maddox, Inc. v. P to do wk for D. D began wking, P One party may cease performance under an oral K
Coalfield Services, Inc failed to sign D’s proposal. P tried where other party refused to sign a written K.
(7th Cir 1995) to insert a liquidated damages clause
unlikely to be accepted.
Cosden v. Helm When a seller anticipatorily repudiates a K, buyer’s
damages should be based on the mkt price at a
commercially reasonable point after the seller
notifies the buyer of the repudiation.
Pittsburgh-Des Moins Steel P contended that D repudiated K by 2-609 allows a party to cease performance due to the
v. Brookhaven Manor failing to meet a demand for a repudiation of the other only where the repudiating
Water (US App 1976) personal guarantee of pmt prior to party fails, upon demand, to give assurance of pmt.
performance of the K. Here no cause for assurance was shown.
Norcon Pwr v. Niagara Party has right to demand adequate assurance of
Hohawk Pwr future performance when reasonable grounds arise to
lead that party to believe that the other party will
commit a breach of nonperformance where K not
governed by UCC.
Stees v. Leonard D tried to build on quicksand 2x. If one binds himself by a positive, express K to do an
act in itself possible, he must perform unless
prevented by act of God, the law or the other party to
K & will not be excused by hardship, unforeseen
hindrance or difficulty short of absolute
Taylor v. Caldwell P to use D’s music hall for concert. Both parties to K are excused. In a K where the
Hall destroyed by fire, neither party performance depends on cont’d existence of a
at fault. person/thing, a condition is implied that the
impossibility of performance arising from the
perishing of the person/thing shall excuse the
performance of the K.
Transatlantic Financing D chartered P’s vessel to carry When impossibility alleged, ct must construct a
Corp cargo from US to Iran. B/c of condition of performance based on changed
closing of Suez, P made extended circumstances involving: (1) a contingency,
voyage and sued D for increased something unexpected, must have occurred, (2) risk
expenses. of unexpected occurrence must not have been
allocated by agmt or custom and (3) occurrence of
contingency must have rendered performance
commercially impracticable.
Krell v. Henry Man rents room to watch coronation Where purpose of K is frustrated by an unforeseeable
which was cancelled. supervening event, and the purpose was w/in the
contemplation of both parties when K was made,
then performance is excused.