** REMEMBER SOF IF OVER $500

● Damages:
○ Reliance damages are intended to place an injured party in the position that the
party would have occupied had the contract never been made. See Restatement
(Second) of Contracts § 349
○ For expectation damages, court should determine the amount of money
necessary to place the plaintiff in the position she would have been in had the
contract been fully performed
○ For restitution damages, a court should determine the amount of money
necessary to compensate the plaintiff for the value of the benefit she conferred
on the defendant
● Promissory estoppel = a promise may be partially or fully enforced, even if it is not
supported by consideration
○ Elements:
■ The promisor must make a promise that he should reasonably expect to
induce the promisee’s action or forbearance, AND
■ Promisee must have relied on the promise, AND
● Reliance is considered to be equal to consideration, and therefore
binding
● Must have:
○ Substantial action induced by promise
○ Justifiable reliance (won’t be justified if action taken after
promise is withdrawn, etc.)
■ Enforcement must be necessary to avoid injustice
○ When applying the doctrine of promissory estoppel, courts usually limit the
promisee’s remedy to only what justice requires
■ This typically means that a court will only enforce the part of the promise
that the promisee has actually relied on, by placing the promisee back in
the position that she would have been in had the promise never been
made
● Defenses (that can prevent a contract from being enforced):
○ Lack of capacity at time contract was formed
■ Minority
● Minors lack capacity until the day before 18th birthday
■ Mental illness
● If party is unable to reasonably understand the nature and
consequences of the transaction, OR
● If party is unable to reasonably act in relation to the transaction
and the other party has reason to know of their condition
■ Intoxication
 ● If the other party has reason to know that, by reason of
intoxication, the party is unable to reasonably understand the
nature and consequences of the transaction or is unable to
reasonably act in relation to the transaction
○ Duress
○ Illegality
■ May be asserted by either party if a contract violates public policy
○ Unconscionability
■ May be asserted by a party that is in an unfair contract
■ Procedural and substantive unconscionability
● A contract is procedurally unconscionable when it results from a
significant inequality of bargaining power between the two parties
○ ex: standard form contracts in which the signing party does
not have the power to negotiate or modify the terms,
contracts containing buried terms that are actively hidden,
etc.
● A contract is substantively unconscionable when its terms are
overly harsh or one-sided against one of the parties
○ Misrepresentation
■ May be asserted by a party whose assent was induced by a
misrepresentation, or untrue assertion, that was fraudulent or material, as
long as the party’s reliance on the assertion was justified

Reading for 8/22/22

● Legal definition: “a contract is an exchange relationship, created by agreement between
two or more parties, containing at least one promise, and recognized as enforceable in
law” (pp. 1)
● Sometimes contracts need to be recorded, but often oral agreement is sufficient
● Historically, contracts were not defined in legal terms, but over time they became legally
regulated. Originally, the legal process for contracts only covered misfeasance, and did
not extend to nonfeasance (failure to perform altogether)
● Except federal gov. contracts, contracts are governed by state law, therefore there is no
national code of contract law
● Although contracts laws are different across states and jurisdictions, American
jurisdictions share a core of principles that allow us to generalize about contracts law
● Times when federal courts have jurisdiction over contracts disputes: "if the parties are
citizens of different states and the amount in controversy exceeds the statutory
minimum, if the federal government is a party to the contract, if the suit arises under a
federal procedure such as bankruptcy, or if it involves a federal question” (pp.4)
● In the Restatement, Second, some rules are based on the majority of courts' opinions,
but other rules are based on what the authors thought was best
● Contracts are between individuals/groups, but the state enforces them and writes the
rules for them
 ● Contracts law emerges from classicists and the belief in capitalism that meant contracts
should not interfere with individual transactions and people's words in a contract should
largely stand, and a desire to make laws clear and interlocking and systematic
○ Critics of classicists point out the law is complex and not rigid
● Critical Legal Studies movement studies inequities of contract law and how it has
disparate impacts based on power
● Restatement, Second definition of a contract: “a promise or a set of promises for the
breach of which the law gives a remedy, or the performance of which the law in some
way recognizes as a duty” (pp. 19)
● Contracts must have:
○ Element of exchange
■ i.e. an agreement that someone will give someone else a gift is not a
contract (pp. 19)
○ Created by agreement
■ Must be voluntary
○ At least one promise
■ One party must commit to do something or not do something in the future
(exchange alone is not enough; necessary, but not sufficient)
○ Recognized as enforceable in law
■ By litigation or arbitration
● Except in a narrow range of cases, remedies for breach of contract are solely economic
● Legislatures may enact statutes requiring certain provisions in contracts to protect
consumers/works, but common law rules of contract law apply to those transactions to
the extent that they are not displaced by the statutes
● UCC = Uniform Commercial Code
○ Drafted by ULC and ALI with the goal that states will enact it in statute
■ Sometimes states do this en masse, other times they don’t
● Some states will make revisions to certain parts
○ There is a years-long process for revisions to the UCC to keep up with modern
developments
Class 8/22/22
● If two people agree to a deal in which both of them exchange something of value, it’s a
contract (k)
○ K = contract
○ The failure of either one of them to deliver will entitle the other one to money (the
amount that would make the victim whole if the other party had delivered on the
contract)
■ Even if the deal was unfair
■ Even if the deal was never written down
■ Even if the non-delivery was nobody’s fault
● Sources of Contract Law
○ The Uniform Commercial Code (Article II)
■ State statutes can differ in certain places, but the UCC is a model statute,
and though it is not the law of any state, it serves as the template for the
law of all states except Louisiana
● Louisiana has adopted parts of the UCC but for sales of goods
they have kept the French civil legal tradition
■ 2003 revision failed, so the UCC latest version is from 1951
■ Applies to sales of goods (NOT land, services, intellectual property, etc.)
● “Movable” UCC § 2–105 (1)
● If a deal is “mixed” or hybrid” most courts look for “predominant
purpose” of the deal
○ Some courts look to the “gravamen” of the deal (i.e. what is
the issue at hand, if suing for negligence, not about the
sale of goods but about the service; if about someone not
reimbursing for an item then it’s about the sale of goods,
etc.)
■ UCC includes goods that are made-to-order, not just mass produced
goods (custom made goods are still goods)
■ Examples:
● You buy a camera that comes with a warranty. The camera
breaks and the seller ignores you.
○ In most courts, you look at the predominant purpose of the
transaction in the majority of places, the predominant
purpose of the purchase was the camera.
● You hire a contractor to fix your sink. She charges you $125 for
labor and $10 for pipes installed.
○ In most courts, you look at the predominant purpose of the
transaction - the contractor was hired to fix the sink, not to
buy the pipes from them. Also the price is an indication.
● You pay for a computer game, which you download.
○ UCC doesn’t say, some states go one way and some go
the other - this is what broke the UCC reform in 2003, so
depends on jurisdiction
● You pay for a computer game, which is mailed to you on a disc or
cartridge
○ In most courts, you look at the predominant purpose of the
transaction - the game is a movable good, UCC applies.
■ Why have the UCC?
● Goods are much more clear cut than services and real estate, etc.
and they’re more clear in terms of the seller being the person
holding power
○ With services, etc. the person holding power is not
necessarily the person buying the service (i.e. someone
mowing your lawn needs protection from you, not the other
way around)
 ● Regulate interstate commerce, have a similar law across the
country
○ In international commerce, there is another body of law that applies but people
can choose to use the UCC instead and most people do

Praktio Notes
● All provisions of a contract serve one of three functions
○ Introductory
■ Introduce the contract and provide relevant background information
● Who?
● When does the contract begin?
● What’s the context?
● What do the parties want to accomplish?
○ Core
■ Establish the central promises of the deal
● What does each party promise to do/not do?
● What does each party promise will be true?
● What ownership rights is each party granting to the other?
○ General (meta-contract)
■ Help explain the features of the contract and its provisions
● How can the contract be modified?
● How is a dispute between the parties to be resolved?
● What is the duration of the contract?
● If a party breaches the contract, what is their potential liability?
● What do certain words mean for the purposes of the contract?
● Can either party transfer the contract?
● How does one exit the contract?
● How does the contract end?
○ Contract structure
■ Preamble
● Who
● Effective date
■ Recitals
● Provide context for future people to understand the contract
○ Could be a future employee, judge, etc.
● Should not include obligations of either party
● May mention other documents related to the contract, including
previous contracts
● Sometimes these are “whereas” clauses
● Recitals of consideration can sometimes be helpful for courts in
determining that they are enforceable, so they are generally worth
including
■ Covenants
● Obligation to do/not do something
 ○ Affirmative = to do
○ Negative = to not do
● Failure to comply with these is a breach of the contract
● Can only create obligations for the parties to the contract, they
cannot obligate third parties to do/not do anything
○ But parties to the contract can be responsible for getting a
third party to do/not do something, but the party to the
contract is the one responsible in a breach, not the third
party
● If a contract expires before a covenant has expired, the covenant
expires at that time, unless there is a specific provision stating that
the covenant should survive even at the end of the contract
■ Representations and warranties
● Representations are statements of fact made by one person to
another
● Warranties are are contractual undertakings that something is or
will be true
● Commonly created together and treated similarly by contracts
● Warranties are creatures of contract—the action for failure is
breach of contract
● Representations are creatures of tort—the action for failure is
misrepresentation (fraud)
● Breach of contract, including warranty, is typically easier to prove
than misrepresentation (which requires proving intent)
● Punitive damages are potentially available for intentional fraud,
but not for breach of warranty
● Remedies are often specified and will state whether they are
exclusive of other remedies or not
● Limitations of liability set a cap for the amount a party can be
liable for
○ For a breach of warranty, these typically apply
○ For intentional misrepresentation, the limitation of liability is
unlikely to be enforced by a court
■ Indemnification
● Tools for allocating risk and liability between the parties
● An indemnity provision might specify the remedies for breach of
warranty or a failure of a representation
● A specific type of covenant—a promise to pay and, undertake
whatever other specified obligations (e.g., defend), for certain
specified losses or expenses
● Provides a contractual right (for the indemnified party) and
obligation (for the indemnifying party) for protection against
specified risks
● Might specify an obligation to defend against third-party claims
 ■ Conveyances
● Transfers ownership of property (e.g., real estate, intellectual
property) from one party to the other
● A conveyance provision itself performs the transfer, unlike a
covenant which is a promise to do/not do something
■ Licenses
● Use licenses to grant specific permission to use property (e.g.,
real estate, intellectual property) - not ownership
● Allows the licensee to avoid infringing the rights of the licensor
■ Conditions
● A trigger that turns "on" or "off" other contract provisions
● Use to make explicit the relationship between contract provisions
● Cannot alone be breached as it relies on another part of the
contract to turn it “on”
■ Definitions
● Make it clear what things mean for the purposes of the contract
● Helpful for future employees, judges, etc.
■ Limitation of liability
● Exclusion of Types of Damages
○ Reduces risk by removing potential damages from being
available for recovery
● Cap on Liability
○ Reduces risk by setting a ceiling on potential liability
exposure
Class Notes 8/24/22
● Sources of Law (con’t.)
○ Common law (second source, after UCC0
■ Each state has its own judicial opinions creating its distinct body of
contract law, with no authorizing statute
■ Summarized by the Restatement of Contracts (1932) and the
Restatement Second, of Contracts (1981)
● Attempts to summarize law, but not law themselves, though states
can adopt them as law in their state
■ Applies to the degree the UCC doesn’t
● Transactions without a sale of goods
● Issues for which the UCC has no answer (including sales of
goods)
■ There is common law interpreting and applying the UCC, but that is not
“the common law”
○ Area-specific laws (not something we will study in this class) - apply the laws
elsewhere but also layer on top of that law with specific provisions
■ Securities (stocks & bonds)
■ Medical services
■ Landlord/tenant
 ■ Financial services (loans)
■ Auto purchase
○ U.S. constitution has a contracts clause (not a big thing in this class)
○ The contract itself is a source of contract law for the parties to the agreement
● What do wise people do when writing contracts?
○ Contract issues to address
■ What are my goals?
■ Who is involved?
■ What specifically do I want and what will I give in return?
■ What if the world changes or is not as it appears?
■ What if one of us won’t perform?
● Parts of a contract
○ Goals and who is involved:
■ Recitals
● Provide context
● Identify other documents
● Consideration
○ Both sides are giving something of value to the other
○ “In consideration of the promises set forth…”
● Summary, not lots of legal value
■ Preamble
● Intro paragraph
● Date
● Parties
■ Assignment
● Can a contractor involve some third party, giving them some
benefits or duties of the contract?
● Who can the party assign to do something, if anyone?
○ ex: supplier may tell customer to send payment to
supplier’s bank instead of me - assigning the money to
them, etc.
○ ex: customer tells supplier that it won’t pay from now on,
but is bank will instead owe money
○ What is being agreed to?
■ Covenants
● The main obligations of many agreements
● Promises about actions to be taken
○ Directly related to the deal (other categories here are
promises, but usually related to something indirect to the
deal)
● Not self-executing
○ Not automatically going to happen, something has to
happen/someone has to do something for it to happen first
○ Could be breached/not happen
 ■ Conveyances
● Transfer of ownership or property interests
● Self-executing
○ Its very presence means that thing happens at that
moment, automatically
● Cannot be undone
■ Conditions
● A provision that activates or deactivates another part of the
contract
○ ex: if you do this thing on time, I will pay you
● Not valid unless its corresponding part happens
■ Definitions
● Establish meanings for ambiguous terms
● Improve readability
○ How long does this last?
■ Term and termination
● Stipulates the ending conditions
○ How do we address error or change?
■ Representations
● Assertions of present/past facts
● Not promises
● False representations can be criminal (fraud) and/or lead to
punitive damages
● “We assert…”/”We represent”
■ Warranties
● Not an assertion of fact
● Promises about what is true, was true, or will be true - and a
promise to pay if untrue
○ Consequences may be in the same spot, somewhere else,
or a court will decide
■ If a court needed to decide, there is no criminal
consequence, but civil damages can be awarded
■ Modification and Waiver
● Sets rules for changing the deal
○ Who gets to change things
○ What’s the evidence they’ve changed
○ How are things changed
■ Stipulated relief
● Includes remedy types
● Stipulates amount (“liquidated damages”)
■ Limitations of liability
● Exclude damages types
● Cap amount
 ● In all caps and bold because courts are often not super friendly to
this
■ Indemnification
● Covenant to address legal risks and costs
● ex: if someone is hurt or sues, we will pay
■ Dispute resolution
● Sets governing law/jurisdiction
● Sets forum
○ Could mandate arbitration
○ Integration Clause
● Stipulates that this paper is the only contract
● Appears near the end
● Contracts are the deals themselves, the written “contract” is really just evidence of the
deal

Class 8/25/22
● If something is missing from a contract, you look to the corresponding law
○ UCC for sales of goods
○ Common law for everything else
○ Implied warranties
■ Parts of the UCC that apply no matter the content of a contract (except
where these things are explicitly stated as not applicable, also if sold “as
is” these warranties are all not applicable)
● Section 2-314
○ Implied warranty: fitness for particular purpose (applies to
all sellers, not just merchants)
■ What you’re sold will work with what your purpose
is (i.e. the battery you’re sold will fit in your laptop)
■ Applies always unless the contract specifically
states fitness is not included
○ Implied warranty: merchantability (for merchants, not
individual sellers)
■ They’re fine, sellable, people wouldn’t object (i.e.
the sandwiches you are sold are edible)
■ Applies always unless the contract specifically
states merchantability is not included
● Section 2-104
○ Definitions
■ Merchant = person who deals in goods of a kind or
holds themself out as having knowledge or skill
particular to the goods involved
● Section 2-312
○ Good title
 ■ The person selling the good(s) has full ownership
and doesn’t have security interest or other lien on
the good(s)
○ This always applies unless the contract specifically says
that it is not applicable or the buyer has reason to know
that the person selling does not have full ownership
■ Most things in the UCC apply to sellers regardless of whether or not they
are merchants, but a few do, including merchantability
● UCC always applies, regardless if they are a merchant
■ Outside the UCC, implied warranties are habitability and workmanship
● Habitability = the place being sold is inhabitable
● Workmanship = the work being done is the quality of a workman
(i.e. the plumbing being done is good plumbing, etc.)
● What does contract law do?
○ Makes deals legally enforceable
○ Supplies default terms (implied warranties)
■ Terms most people would want, or society thinks most people should get
○ Provides rules to set or change contract terms (2-316)
■ Rules for how to opt out of the default terms, etc.
● Sometimes this means just saying something, other times it
means using specific words in a contract
○ Rejects some terms (100x penalty)
■ Terms most people wouldn’t want or society thinks most people shouldn’t
get

Reading for 8/29/22

● Kakaes v. GW (D.C. Court of Appeals, 2002), pp. 23
○ Facts:
■ P = Professor Kakaes, D = GW
■ P sues D for breach of contract by refusing to give him tenure
■ P had been on tenure accruing track since 1987
■ D did not provide P timely notice of decision not to give tenure
■ School’s faculty code says professors should be given notice of no tenure
by June 30 at the end of their term, or shall be given tenure
■ June 28 P received a letter stating that he would not be given tenure at
the end of his current appointment, but the matter would go to board of
trustees to consider
■ P argues he should get tenure because of the wording of the contract and
also because it is a good remedy for him, regardless of what the contract
says
● Equitable relief = damages that aren’t monetary, i.e. giving P
tenure
○ PH:
■ Superior court held non-jury trial
 ■ Court denied to force D to give tenure, instead awarded $75,000 in
damages
■ P appeals
○ Issue:
■ Is D’s failure to let P know he was not receiving tenure by the date in the
faculty code breach of contract worthy of giving P tenure?
○ Ruling:
■ Contract was breached, but financial compensation is sufficient and court
cannot order D to give P tenure.
○ Reasoning:
■ It is reasonable to find that the part of the code saying if failure to notify, P
shall acquire tenure is not a specific remedy for a breach
● Alternatively, this can be read as an agreement that D has
contractually obligated itself to do, but no remedy for breaching
this agreement is specified
■ Even if it were read as a specific remedy, result would not be different
● Previous cases have found that contracts to hire teachers cannot
be enforced by specific performance
● Previous cases have found that courts cannot interject and require
schools to hire or maintain professors it finds undesirable
■ Specific performance is a very extraordinary remedy, judges have
discretion not to enforce it even when it is in a contract
■ There is a public interest in not granting tenure by default
■ Court admits it is hard to determine exactly how much P should get here,
but court points out that burden of proof was on P to bring an expert to
testify about what P should have been able to expect, but P only testified
himself and failed to prove anything greater than the amount awarded via
expert testimony
● The emotional anguish that P suffered by almost getting tenure
but then not getting it is not calculated into damages
■ Equitable relief remedies are viewed as the court as something that
should be exceptional and not a commonplace remedy - monetary
damages should be provided when possible (only give equitable relief
when monetary damages aren’t complete and adequate)
● When determining this the court has to determine the baseline P
would have been at if the contract had been performed in whole,
and then figure out how to restore P to that baseline (i.e. “make
him whole”)
○ This baseline comes directly from what’s in the contract,
not external factors
● In this case, it is not a great idea to give tenure because forcing
the school to keep him on the job could create conflict at the
school
○ School and students might not want him there
 ■ Doesn’t matter why he was fired, just matters that
the contract doesn’t require specific performance
and the court should not force the school to keep
him or give him tenure
■ Damages
● P was awarded expectation damages
● P testified to loss of salary himself, did not bring an expert witness
○ As a trier of fact, judge was free to be skeptical of this
● No reason to believe the trial court made any reversible error in
calculating damages
○ Disposition: Affirmed
● Expectation damages
○ Damages awarded based on what P expected to happen based on the terms of
the contract
● Courts can enforce damages by including public officials
○ ex: a court’s order to give property to another person as damages can be
enforced by the local sheriff, etc.
● In determining assent to a contract, courts use an objective test and rely on observable
manifestations of intent (pp. 62)
○ Subjective evidence can be persuasive only to the extent that it is echoed by
external behavior
● Morales v. Sun Constructors, Inc. (U.S. 3rd Cir., 2008), pp. 63
○ Facts:
■ P = Morales, D = SCI
■ P sues D for wrongful termination
■ P claims he did not understand the arbitration clause because he does
not speak English
■ P passed a written exam in English to be hired, then attended a 2 hour
orientation in English
■ 5 paragraphs of employment agreement focused on arbitration (8/13
pages)
■ Sun employee who conducted orientation asked a bilingual employee to
explain to P the terms of the agreement, bilingual employee did not
explain arbitration clause
○ PH:
■ P sues D
■ D motions for stay pending arbitration
■ Court denies
○ Issue:
■ Is an arbitration clause enforceable if one party does not speak the
language the contract is written in?
○ Ruling:
■ Yes, arbitration clause is enforceable even if one party does not speak
the language the contract is written in.
 ○ Reasoning:
■ Second restatement discusses assent to contract as meeting of minds
● Court doesn’t take this literally, sees external actions as indicators
of assent
● If a contract is made, ignorance is not enough to make it
unenforceable
○ D.D.C. in Booker said failure to read or understand an
arbitration agreement does not constitute “special
circumstances” that would relieve an employee from
compliance
■ P is not claiming that D misrepresented the contents of the contract to
him, in the absence of fraud (which P is not claiming), he is bound to the
contract
■ It was P’s obligation to make sure he understood what he was signing,
and he did not ask for a word for word translation or ask for a copy
■ P’s signature manifests assent
○ Disposition:
■ Reversed and remanded

Class 8/29/22
● Specific performance
○ Courts are reluctant to enforce specific performance if monetary damages can be
a complete and adequate remedy (they are viewed as extreme, in part because
they force D to do something and also because failure to follow through sends D
to jail without a jury trial)
■ Complete and adequate remedy = has the ability to get someone back to
the baseline they would have been at if the contract had been executed
as expected
● Emotional anguish damages are generally not given out in Contract Law
○ This is left to tort law
● Attorney’s fees are not generally given out as damages (this is true in both Contract and
Tort Law)
● In contract law, looking like a morally bad person doesn’t preclude you from winning lots
of monetary damages, but with equitable relief, the court must see P as a moral person
● Specific performance = an order from the court that something specific will happen or
that person goes to jail without a jury trial
○ Intrusive
● Cash remedies = ordres to pay, if payment is not made consequences can follow such
as wage garnishment, or orders to sheriff to enforce that D pay
○ Sheriffs will show up and start taking property to sell in order to pay damages
○ Cash remedies are also intrusive, but often times unenforceable if someone
doesn’t have the money
● Problem 1.1 (pp. 27)
○ Singer who canceled on festival after tickets are sold
 ○ Kakaes could be used as precedent here
○ Monetary damages are likely to be awarded but not specific performance, it is
likely quantifiable how much the festival would lose due to the cancellation
■ Specific performance could create public interest issues by forcing a
singer to perform
● Problem 1.2 (pp. 28)
○ Condo seller realized she sold condo for an undervalued price, then sells to
someone else for more $$$ just before the closing, breaching the contract
○ Kakaes could be used as precedent here
○ Court is unlikely to award specific performance
■ This would affect a third party who also bought the condo and expects to
live there
○ When equitable relief is granted, it is often with real estate because someone
claims that they have their heart set on that specific property
■ This is not true when the property has been sold to someone else already
because the remedy then would create a new party who is being harmed
○ The outcome here does not change based on how long after the agreement is
signed D reneges, and it does not change based on whether or not P knew it was
undervalued
○ P would be awarded $500,000, the difference between what they agreed to pay
and the market value (i.e. what the new buyer was going to pay)
■ This is because P could have expected to own something worth the full
market value, and could have turned around to sell it as soon as it closed
○ If the price the condo had sold for is the price P paid, recovery is $0, despite the
breach
■ Part of the reason equitable relief is awarded often in real estate cases
Reading for 8/31/22
● Offer
○ Offer and acceptance model fits some situations, but not others, as contract
communications can be fluid, but it makes some sense of contract formation
○ The offer is the first step in contract formation, and is a firm proposal to enter a
contract
■ “To accept the offer, the offeree must not only signify assent to a contract
on the terms proposed by the offer, but must do so within the time and in
accordance with the procedure prescribed by the offeror or, in the
absence of such instructions, a time and procedure that is reasonable
under the circumstances” (pp. 106)
● Assent has a substantive and procedural aspect
○ Substantive = assent to terms
○ Procedural = communication of that assent in the proper
time and manner
● If offeree does not accept the offer within the specified/reasonable
time, it is rejected
 ○ Offeror can revoke the offer before it expires at anytime
with notice
● Oferee can expressly reject, but does not need to do so
● If offeree ignores offer, that is a rejection
■ Offeree can make a counteroffer, which (legally) “constitutes a rejection of
the original offer and a substitution of a new one in its place” (pp. 106)
○ Restatement, Second Section 24
■ Offer = “the manifestation of willingness to enter into a bargain, so made
as to justify another person in understanding that his assent to that
bargain is invited and will conclude it” (pp. 106)
■ What distinguishes it from a proposal initiating or continuing negotiations
is that, “reasonably interpreted under the objected test, it must convey the
offeror’s intent to give the recipient of the offer the initiative to create the
contract by accepting the offer” (ibid)
● “Must make it clear to the reasonable offerree that their
acceptance will bind the parties immediately” (ibid)
● If the reasonable sense is that the offeror retains the right to make
the final decision, it is a proposal and not an offer (“an invitation to
negotiation or make an offer to the person making the proposal”
(ibid))
○ Offers under UCC Article 2
■ No definition of an offer or rules specifically for offers, but does define the
processes for courts to resolve offer and acceptance issues
● “Call for a realistic evaluation of the facts of the transaction that
focuses not on technical rules, but on the question of whether an
agreement was in fact made” (pp. 107)
○ Most modern courts do things this way
■ Contracts for sales of goods may be made in any manner as long as it
shows agreement by both parties and conduct that shows both parties
recognize the existence of a contract
■ Contracts do not have to have an exact moment of making, it can be
undetermined
■ If parties intended to make a contract and there is a reasonably certain
basis for giving an appropriate remedy, a contract may have one or more
terms left open
○ Interpreting intent of communication – is it an offer?
■ Plain meaning interpretation is looking within the four corners of the
document
■ If there is relevant contextual evidence outside of the document, the
words or conduct can be evaluated within that context
● If there’s no context, interpretation is a matter of law for judges to
decide
● If there’s context, a jury may handle the interpretation
● Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc. (F.3d, 2007), pp. 108
 ○ Facts:
■ P solicited bids from subcontractors for a building project, and stipulated
that bids be held open for at least 60 days and subcontractors are
accountable for prices and proposals they submit
■ D submitted a price quote for concrete, but stipulated that the quote was
for informational purposes only and was not a firm offer and should not be
relied on, and that D was not liable for any terms it submitted
■ P decided to rely on D’s bid in preparing a general bid despite the
limitations stated in the bid, but D raised the price when P wanted a
written contract, pushing its bid over the next lowest one
● P used different subcontractor and spent more than their
submitted bid
■ P sued D in district court, which grants D’s motion to dismiss the suit
because there was no contract, P appeals
○ Issue:
■ Does a bid that stipulates it is not to be relied on constitute an offer for a
contract
○ Ruling:
■ No, this did not constitute a contract.
○ Reasoning:
■ While there are practices in construction that are fairly specific and courts
generally trust industries to know their practices and implement them, this
case has a contract-law principle that is more powerful than the
commercial practice
● Courts interpret documents according to their plain language
○ When a subcontractor makes a bid, it is generally a firm
offer, but this bid states that it is not one, so the court must
follow the text and cannot allow a contractor to sue for
breach
■ P’s request for bids was not itself an offer, it was just a request for offers
■ Offer = “manifestation of willingness to enter into a bargain, so made as to
justify another person in understanding that his assent to that bargain is
invited and will conclude it” (pp. 110)
■ D’s response was not an offer based on its text, and even if it was it
would be no more than a counteroffer because its terms were different
from the solicitation letter, but because it disclaimed the intention to be
bound, it is not an offer
■ No offer and no assent mean no contract
● This isn’t always completely true - see Rest, Sec. that says “An
agreement sufficient to constitute a contract for sale may be found
even though the moment of its making is undetermined” (pp. 108)
○ Disposition:
■ Affirmed
● Babock & Wilcox Co. v. Hitachi America, LTD. (F supp. 2d, 2005), pp. 111
○ Facts:
■ P and D entered into a contract for an emissions reduction system (SCR
system)
■ After the system was installed, P had issues with it that did not conform to
warranties
■ Negotiations included several proposals set back and forth, and each
party claims that the contract arose at a different point during the
negotiations
● As a result, P and D disagree on the terms of the contract re:
performance guarantee, warranty, and remedy provisions
■ Negotiations
● P requested quote from D and another vendor
● D sent partially completed proposal and several following revised
proposals, including a one page cover letter with price quote and
attachments that set out the disputed provisions
○ D maintains this was an offer
● D expressly limited validity of the quote until December, until
which it was subject to D’s confirmation
● The following June, P issued a detailed purchase order, and says
that this was an offer rather than acceptance - points to language
that sets forth means of acceptance
○ Includes more detailed and more extensive warranties than
D’s price quote
○ D did not raise any concerns about the purchase order, but
D did not sign the form (though D does not generally sign
these forms)
○ D shipped the goods under purchase order
● D refused to provide new part for the one P had issues with, P had
to go to outside vendor, sues D for breach
○ PH:
■ P sues D for breach of contract
■ D files motion for summary judgment to resolve scope of contract
■ P filed response and cross-motion for partial summary judgment limiting
scope of contract
○ Issue:
■ Was the price quote D gave to P an offer or was the subsequent
purchase order from P the offer?
○ Ruling:
■ The purchase order was an offer, the price quote was merely a proposal.
○ Reasoning:
■ OH common law defines an order as a “manifestation of willingness to
enter into a bargain, so made as to justify another person in
understanding that his assent to that bargain is invited and will conclude
it” (pp. 113)
 ■ 6th Cir. says that a price quote is typically an invitation for an offer, not an
offer itself
■ Sometimes, courts find price quotes are sufficiently detailed to amount to
an offer if they have details such as a description of the product ,price,
quantity, and terms of payment
● This depends primarily upon the intention of the person
communicating the quote as demonstrated by the surrounding
facts and circumstances
■ Despite the detailed nature of the quote and the similarities to one case
(Mead), there are facts showing that the intentions of the parties were that
the quote was merely an invitation for further negotiation
● Labeled a “price quotation” and finishes by asking P to reach out
with comments or questions
● Certain elements are phrased as suggestions rather than firm (ex:
“we would like x, etc.”
● Parties continued to negotiate terms after this
■ Purchase order contains the actual offer, price quote was merely a quote
■ Purchase order includes a detailed description of all elements and
includes additional warranties and performance guarantees
■ Purchase order states that it is an offer and that D’s acceptance is
conditioned on the terms of that offer
■ Parties ceased negotiation after the purchase order
● Problem 4.1
○ No offer has been made, no closing date and other details have been worked
out. This is a proposal. There is also hesitant language that is not committal.
● Problem 4.2
○ a.) If you’re interested we can put together a formal offer
○ b.) needs more details including closing date, form of payment, warranties, etc.
● Lefkowitz v. Great Minneapolis Surplus Store (2d, 1957), pp. 118
○ D posted advertisements and P arrived at the store first and demanded the coat
and the store refused to sell - said offer was intended for women only
○ P sued for damages based on the advertised value of coat and stole
○ D argued P made offers that it rejected
○ Court ruled that these advertisements were offers
■ Noted that usually advertisements are viewed as invitations to the public
ot make offers, but an advertisement can be an offer if, in context, “it
would lead a reasonable prospective buyer to understand that an offer
was intended” (pp. 119)
■ Advertisement is an offer when:
● Clear, definite, and explicit
● Leave nothing up for negotiation
● Harris v. Time, Inc.
○ Court found the mass mailing to be an offer
 ○ Boy’s father sued for mailing that looked from the outside as if it offered a free
calculator
● Leonard v. PepsiCo, Inc.
○ Court concluded that a reasonable person would understand that the suggestion
in D’s TV commercial was a joke, and claim was dismissed
■ If it had not been a joke, still could not have been an offer because it was
undetailed with no terms and indicated that viewers had to obtain the
catalog to see the full range of prizes and competition rules
● Catalog itself may have been an offer

Class 8/31/22
● Why is assent important?
○ What cases will courts get involved?
■ When there as an actual agreement made
○ When two people assent to a deal, there is a good chance that it is a good deal
(both parties agreed to it and wanted it at the time) - whereas in other areas of
law people are just compelled to do/not do things and there is no voluntary
aspect
○ Morality - there is legitimacy to holding someone to an agreement that they
assented to, rather than just “because”
● Mutual consent + consideration = a contract
○ Assent is evidenced by external indications
■ State of mind is irrelevant, we take people at their word in contract law
● ex: Morales’ actual knowledge of the parts of the contract is
irrelevant (subjectively), what matters is whether, objectively, SC
had reason to believe Morales had assented
● Does not matter if you sign a contract in a language you don’t
understand, your signature indicates your assent
○ When a court is determining where assent occured, they are not qualitative, there
is an explicit moment the contract was formed and an explicit document
● There are two limiting principles that protect people in vulnerable situations
○ We will learn about unconscionable, etc. later this semester
○ If P says “I do not know what this means” at the time then there is no assent
● We are looking for objective indications of intent, NOT what people’s true state of mine
was at the time
● There is a duty to read a contract, and assent is assumed even if someone did not read
the contract
● A true, subjective “meeting of the minds” is no longer used in any modern court
○ Objective doesn’t mean the same test always results the same way, but it means
that there is no interest in what the parties thought or how they were situated at
the time
● In order to be an offer, something has to be something that can be accepted, and can’t
be something that has to go back to the offeror to make changes, etc.
 ○ If there’s no statement that you will be chosen to be in agreement with, the
amount, etc.
■ Relative completeness goes to deciding whether or not something is an
offer

Reading for 9/2/22

● Most offers are addressed to a specific person or group of people and can only be
accepted by that person or people
● Acceptance - Restatement, Second
○ An offer can specify that an acceptance can be made in words, by doing a
specific act, or by selecting certain terms to accept
○ Unless otherwise indicated by language or circumstances, an offer invites
acceptance in any manner reasonable in the circumstances
○ Unless otherwise specified, an offer to make a contract invites acceptance in any
manner and by any medium reasonable under the circumstances
○ When courts consider if an offer has been accepted, they consider:
■ Acceptance must be communicated to the offeror and does not legally
take effect until that communication has been legally completed
● When they should know it has been accepted is decided from the
POV of a reasonable offeror
● Mailbox rule is default unless specified otherwise - offer goes into
effect when acceptance is dropped in the mail
■ Acceptance must be in compliance with any mediums/manners set out in
the offer
■ Acceptance must not vary the terms in the offer
● “Mirror image/ribbon matching” rule - some courts are more
lenient on this than others if the change is not substantial, but the
changes do not become a part of the contract
○ Courts used to be more strict than there are now
■ Acceptance must be made while offer is still in effect (before it has
expired or been revoked)
■ Making a counteroffer is a rejection - you can’t suddenly decide to accept
the original offer after making a counter offer
● Roth v. Malson (CA Court of Appeals, 1998), pp. 138
○ Offeree signed attempting to accept the counteroffer but signed in the “counter-
counteroffer” space and wrote the same terms
■ Court finds that this was not an acceptance because on its face it looked
like a counter-counteroffer and required the offeror to analyze it for
changes
■ Putting the signature in this space called for a response from the offeror,
and did not mean they entered a contract
● Problem 5.1
○ Scaffolding and construction
 ■ Agreement was scratched out and changed from 2-3 months and from
20k-30k
● Contract was not formed, cannot change the terms of the offer
and accept
● If someone accepts an offer after it has expired, it may be considered a new offer
● Offer can be terminated at any time by the offeror if they revoke it, even before it expires
○ Offeree must learn from offeror or some other reliable way that the offer is no
longer on the table
○ Offeror’s promise not to revoke is generally not enforceable unless something of
value was exchanged for that promise
● Offer may be terminated before it expires if the offeror dies or becomes mentally
incapacitated before it is accepted, even if the offeree did not have reason to know about
the circumstances
● Problem 5.2
○ Offer would be valid because it was accepted via performance
● Dickinson v. Dodds (Court of Appeal, 1876, pp. 149)
○ P wanted to buy property from D
○ D made P a written offer which P added clause to that says D promised to leave
the offer open for a certain amount of time, which D signed
■ Parties agree that this was an offer and not a contract
○ P learned that D was offering the property to others and signed the offer, but
could not find D so delivered it to a family member
○ Judge finds this offer was not accepted
■ There was nothing in the offer preventing D from selling to someone else
■ P had reason to know that D was offering the property to others (from a
reliable source), meaning his offer was no longer open to acceptance
● Because of this, there was no continuing meeting of the minds
necessary for an offer to be accepted, and for a contract to be
made
■ D’s promise to not revoke the offer is not binding by law
● Nudum pactum - naked promise
○ Question 1
■ No, D never got notice of the acceptance
○ Question 2
■ The court found it didn’t make a difference whether he heard there was
another offer or another agreement, but personally I think it makes a
difference
● Problem 5.4
○ Roger did not have a contract with Anna. He was aware of other offers and was
aware another offer had been made before his acceptance. Anna also did not
agree to withhold any other offers.

Class 9/22/22
● Advertisements are not typically offers, with rare exceptions (see Lefkowitz)
 ○ Policy rationale behind this is that people would never advertise if they were held
to a contract with everyone that responded to their advertisement
○ Exception to this is if an advertisement is clear (does it include the quality of the
goods, the price, etc.), definite (how many people is this offer for?), and explicit;
and leave nothing left to negotiate
● Acceptance
○ When thinking about acceptances, we are thinking about the interest of the
offeror, and how an acceptance/nonacceptance affects them
○ Someone might add a specific (and maybe weird) condition (ex: sign on this line,
not anywhere else) to differentiate between people who are serious about the
offer and others
○ Acceptances are effective once received (with the exception of the mailbox rule,
which is effective when sent)
■ Mailbox rule only applies when something is stamped and posted, and
reasonable in the circumstances
○ Revocation of an offer is effective whenever it is communicated, whether directly
(call, email, etc.) or indirectly (gossip, etc.)
■ Saying you will leave an offer open or not revoke is not binding by law
unless something is paid for it
○ Nudum pactum = naked promise, not effective, without consideration
■ Contract law will not enforce mere promises, something has to be given in
return
Reading for 9/7/22
● Unilateral contracts = acceptance by performance; accepting the contract means
performing that party’s entire end of the contract
● Bilateral contracts = after contract is accepted, there are still things for both parties to do
to complete the agreement
● Carlill v. Carbolic Smoke Ball Co.
○ D sold smoke balls claiming if used correctly they would prevent influenza
infection
○ P used smoke balls as directed and was infected with influenza
○ Court determines that the advertisement was not just puffery but an offer
because it was specific about how the reward was to be delivered
○ Offer was binding because while it was not offered to one specific person, it was
set up so that any person could accept it and enter the contract
○ D ordered to perform their portion of the contract
● General rule is that unless an offer specifically notes it can only be accepted through
performance, it can be accepted through performance OR through promise; same goes
for unless the offer specifically notes it can only be accepted through promise…
● When a contract is accepted by performance, notice to the offeror is not generally
required, except if the offeree has reason to know that the offeror has no way to receive
reasonably prompt and reliable notice of performance, then the offeree has a duty to be
reasonably diligent in notifying the offeror
○ When required, failure to notify the offeror of performance as acceptance within a
reasonable time discharges the offeror’s obligations in the contract
● Section 45 of the Restatement, Second allows for option contracts
○ Applies only when the offeror specifies performance and is not open to a promise
as acceptance, and is used when the performance is started but cannot
immediately be completed
■ If an offeror leaves a contract open to promissory acceptance, the
beginning of performance counts as a promissory contract and the start of
fulfilling the contract obligations is equivalent to agreeing to perform the
contract in full

Class 9/7/22
● Hypo #1:
○ Ofor: 3/1 Offer sent
○ Ofree : 3/2 Offer received
○ Ofor: 3/4 revocation sent in mail
○ Ofree: 3/5 acceptance sent in mail
○ Ofor: 3/6 revocation received
○ Ofree: 3/7 acceptance received
○ Contract was formed, acceptances sent by mail are effective when postmarked,
unlike any other form of communication (like a revocation)
■ Contracts can specifically get rid of the mailbox rule, if an offeror wishes
● Hypo #2:
 ○ 11/20 buys smoke ball
○ 11/21 starts using
○ Jan 16 finishes using
○ Jan 17 gets sick
○ Jan 29 company revokes advertisement
○ Jan 30 calls to claim $$$
○ Contract is still effective, she performed the condition and therefore the offer is
accepted, too late for revocation
■ But, the court doesn’t tell us when the offer was accepted and there are
several plausible answers
● If a contract is accepted and some small changes are made to terms, meaning it doesn’t
count as a counteroffer/rejection, the contract still exists but the new terms are not a part
of it
● Asking for full performance as acceptance and asking for a specific communicative
manner of acceptance are both specifying how to accept, but one is symbolic
(communication) and one is actually fulfilling the offeree’s obligations of the contract (full
performance)
● Bilateral vs. unilateral isn’t anywhere in the UCC or the Restatement, Second, so it’s not
that important to know these terms, just what each means
● Unilateral contracts are easily abusable
○ Courts have tried to remedy this by finding ways for waivers to notice of
acceptance, and by deciding that once you start performance you’ve accepted,
or by just assuming there wasn’t a unilateral contract and just a promise

Reading for 9/9/22

● UCC 2-207
○ Only applies to sales of goods
■ For hybrid sales, it only applies to the goods in that sale
○ Used mostly to resolve differences in standard terms in forms
○ Exception to mirror image rule
○ “A definite and seasonable expression of acceptance or a written confirmation
which is sent within a reasonable time operates as an acceptance even though it
states terms additional to or different from those offered or agreed upon, unless
acceptance is expressly made conditional on assent to the additional or different
terms” (pp. 187)
■ Two situations this covers:
● Additional or different terms in the offer and the purported
acceptance of the offer
○ When this happens, two alternative solutions:
■ “The response is not an acceptance, and no
contract results from the response taken alone.
Conduct of the parties after the response is sent
may result in a contract under some circumstances”
(pp. 188)
 ● If response is not an acceptance, no
contract unless:
○ Response is a counter-offer and it is
accepted
○ Performance happens
■ If this is the case, differing
terms fall away and are
replaced by gap fillers/default
terms described by law
■ “Response does qualify as an acceptance and the
additional or different terms should be treated as
proposals for addition to the contract that may or
may not become part of the contract under UCC 2-
207(2)” (pp. ibid)
○ Response containing different terms cannot count as an
acceptance unless it is definite and timely
■ Extent of deviation matters for definite
determination, deviation from transaction-specific
terms is less likely to be an acceptance than pre-
printed differences on a form
○ If both parties are not merchants, “the general rule is that
the terms do not become part of the contract unless they
are expressly accepted by the offeror” (ibid)
○ “If the parties are both merchants, the specific rule
provides a mechanism for some of those terms to be
added to the contract without further action by the parties,
so long as the requirements of UCC 2-207(2) are met” (pp.
188)
■ “If the requirements of UCC 2-207(2) are not met,
the additional or different terms proposed by the
offeree in its acceptance do not become part of the
contract and they fall away unless the offeror
expressly agrees to their inclusion” (pp. 188)
● Additional or different terms in a written confirmation sent after an
oral contract has already been formed
○ Four restrictions on additional terms becoming a part of the contract:
■ If either party is a merchant, the second sentence falls away
■ If the offer expressly limits acceptance to its term
■ Term does not enter a contract if it materially alters the contract
● Material = important and a major reason one of the parties entered
the contract
○ If it would cause “unreasonable surprise or unreasonable
hardship” (Ridgelawn)
 ■ If the offeror gives the offeree notice of objection of the term within a
reasonable time after notice of the term
● Ridgelawn Cemetery Ass’n. v. Granite Resources Corp.(U.S. D.C. Indiana, 2017), pp.
194
○ Dispute over forum-selection clause (who has jurisdiction over disputes) that was
in the form from GRC
○ Court rules the clause was not a part of the contract
■ Unclear Ridgelawn even received this part of the form
■ Even if they did receive the form, wouldn’t be a part of the contract
● Forum-selection becomes a part of contract unless
○ Both parties are merchants (true), AND
○ Offer limits acceptance to the terms of the offer (false), OR
○ Forum-selection clause materially alters the contract (true),
OR
■ Forum-selection clause would cause Ridgelawn
unreasonable hardship
● Persuasive precedent (from UCC
comments) states these clauses are
material changes
○ Notice of objection to forum-selection clause was given
within reasonable amount of time after it was received
(false)
○ Contract was entered into, but the forum-selection clause is not a part of the
contract
○ If this were being decided under common-law, mirror image rule wouldn’t apply
so there would be no contract, but performance occurred so then there would be
a contract, and last-shot rule would apply (whoever got their word in last with the
acceptance)
● Niagara Bottling, LLC v. Rite-Hite Co.
○ Both parties had different forum-selection clauses in their pre-written forms in
their contracts
○ “When the offeree conditions its acceptance on assent to additional or different
terms,” the offeror is considered to have assented to those terms only if it makes
“a specific and unequivocal expression of assent” (pp. 199, 2-201(1))
■ To avoid “last shot rule” where person sending a form first/last has an
advantage
■ First party made it so that acceptance couldn’t happen without accepting
all the terms
■ Performance isn’t enough in this case to prove Rite-Hite accepted the
terms unequivocally
○ However, these parties acted as if they were engaged in a contract
■ Contracts incorporate the terms a party agreed on
● They did not agree on this, so neither forum-selection clause
applies
 ● Lively v. Ijam, Inc.
○ Computer was kept by repair people and never returned, P wants to sue D in
forum of his choice, and invoice contained forum-selection clause
○ Contract existed at sale over the phone, before delivery of invoice with product in
the box
■ In this case it’s unclear who was the offeror/offeree, but it’s unimportant
because we know there was a contract when they got off the phone
(sometimes, this is the case and it’s unimportant who is who)
■ Lively had already paid in full before receiving the product, you don’t
normally do that without a contract
○ Lively is not a merchant
■ Even if he was, 2-207(2) applies because the terms materially alter the
contract
○ Forum-selection clause is not a part of the contract

Class 9/9/22
● Restatement (2d) Section 45
○ When an offer specifies acceptance by performance (not promise), an option
contract is created when the offeree tenders or begins the invited performance or
tenders a beginning of it
■ Option is for offeree to continue or quit in a unilateral contract, before
performance begins
● In a bilateral contract, there is no option besides breaching, after
the promise has been made
○ Preparing to begin performance is not the same as performance for acceptance,
but the distinction between the two is blurry and litigated often
■ ex: driving to the paint store is just preparation, but tendering
performance begins more like when paint is bought, when painting
begins, etc.
● Unilateral contracts used to be dangerous for offeree, now it’s dangerous for offeror
● Vast majority of offers are bilateral
○ Deposits are still bilateral, they are not asking for payment in full as acceptance
■ When both people still have outstanding things to do to complete the
contract, it is a bilateral contract
● If acceptance by performance is allowed by a contract, no notice is necessary to make
that effective unless it is requested
○ See Section 54
● Battle of the Forms
○ Before this existed in the UCC, mirror image was required for acceptance,
everything else was a counteroffer; and last shot rule said last offer that matched
the terms on both sides was where terms came from, also common law said that
history stops when contract is formed, any further conversations don’t alter it
○ UCC changed all of this
 ■ UCC 2207 - doesn’t tell us whether contracts are formed, but what terms
exist once contract is formed
● 2207(1) - gets rid of mirror image rule
○ An acceptance is an acceptance, even if it states terms
additional to or different from the offered or agreed upon
terms, unless acceptance is expressly made conditional on
assent to the additional or different terms
● 2207(2) - gets rid of last shot rule
○ Additional terms are proposals for addition to the contract
■ Not a part of the contract
■ Can be accepted later, but in itself they are
proposals
■ Exception to this is when both parties are
merchants
● When both parties are merchants,
proposals don’t become a part of the
contract if the law has good reason to think
that they shouldn’t be added to the contract
○ If offer expressly limits acceptance
to the terms of the offer
○ Additions materially alter it
○ Notification of objection is given
within a reasonable time after notice
● 2207(3)
○ When both parties act like there’s a contract, there’s a
contract (even if there’s no explicit writing of acceptance)
■ Terms of this contract are the terms parties agree
on, along with supplementary terms from the UCC,
if needed
● Common law (mirror image rule, last shot rule, etc.) still applies to services and property,
UCC only applies to sales of goods
● Problem 6.1
○ If this was common law, this wouldn’t be an acceptance because of mirror image
rule
○ However, 2-207(1) makes an acceptance an acceptance, even if terms are
added or changed, and then 2-207(2) tells you what the terms are
■ But, it still has to be an acceptance (definite and seasonable), so there’s
an argument that this may not be an acceptance because they are
specific to that transaction (could be litigated)

Reading for 9/11/22

● ProCD, Inc. v. Zeidenberg (7th Cir., 1996), pp. 207
○ License printed on inside of software box preventing personal users from using
the business part of the software
 ■ Lower court ruled it was not a contract because it was not visible on the
outside of the box when the consumer purchases it
■ This court disagrees, says that reading the license inside is a part of the
agreement at purchase and printing the entirety of a contract on the
outside of a box would mean using microscopic print
● Compares it to other purchases like a plane ticket that have
additional terms not always disclosed right when someone buys
an item
● Though contracts are often formed by walking into a store and
buying something at the counter, there are other ways to form
contracts
● Seller could return the item if they do not like the terms of the
license
○ Judge in this case says he isn’t really sure which law should apply, but he thinks
since the CD is movable it’s a sale of goods and the UCC should apply, but he
doesn’t think he should have to use UCC 2-207 to resolve this case
■ He doesn’t see this as a case where the contract was formed in the store,
but that the only contract was formed at home
■ Also claims the UCC doesn’t apply because it’s not meant to apply to
ordinary consumer transactions, BUT other courts do not use this, and
seems the judge here sort of made this up
○ Two ways to read this in terms of the time the contract was formed:
■ Contract was formed at purchase in the store, but D saw the word
restricted on the CD when he bought it and therefore he had more notice
than Lively did
● If the judge did this, it would be risky because it’s hard to argue
that D in this case knew so much more than Lively, and that the
word “restriction” was not specific
■ The actual way the judge sees it is that the contract wasn’t formed in the
store, the contract was formed when D used the software, after seeing all
these terms
● If D didn’t like the terms, he could have returned it, so the payment
at the store is more like a refundable deposit
● Rolling contract approach - contract rolls home with you, not
formed at the store
● Uses policy arguments and analogies to other areas of life like
plane tickets, etc. to try to persuade people to ProCD’s side
■ Courts do this both ways and neither of them is “the way” to do this

Class 9/12/22
● 2-207 (con’t.)
○ 2-207 (2) only applies to contracts that are formed, does not tell you anything
about whether or not a contract is formed
 ■ Exceptions to acceptance being an acceptance can be hand-written
terms in blanks and other transaction-specific terms or terms that are
specific to that deal, specifically (sometimes, not always, but can be
argued in court)
○ Problem 6.2
■ Under common law, this would not pass the mirror image rule, it is a
counteroffer
● Though some progressive/modern courts aren’t as strict about
mirror image as long as material terms match, but judge would
then have to decide what is a material terms
■ Under UCC, this would be a contract, next part of 2-207 would be used to
determine contract terms
○ Problem 6.3
■ Under common law, this would not pass mirror image rule
■ Under UCC, this would be a contract, 2-207(2) would decide the terms
● Mirror image rule means identical commitments, but identical language, etc.
● 2-207(2) (only applies to merchants)
○ Additional terms are only proposals and fall away, UNLESS both parties are
merchants, and they then apply, UNLESS
■ Offer expressly limits acceptance to the terms of the offer
■ Terms materially alter the offer
● Terms are material if they cause “unreasonable surprise or
unreasonable hardship” (Ridgelawn)
○ Comes from UCC 2-207 Comment 4
● Comment 5 in UCC gives examples of no unreasonable surprise
○ Clause expanding exemption for supervening causes
beyond their control (i.e. war, natural disaster, etc.) beyond
existing law
○ Clause expanding exemption for unforseen circumstances
beyond existing law
● Forum-selection clauses could be material or immaterial
depending on the circumstances and the jurisdiction
■ New terms are objected to within a reasonable amount of time after notice
○ Common misconception to know:
■ Not everything that is a surprise or hardship is an unreasonable surprise
or unreasonable hardship, but some students tend to assume any
surprise is null and void
○ Problem 6.4
■ Both parties are not merchants, clause would not be implemented and
would be a proposal for a new term
● 2-207(3)
○ When there is no writings that establish a contract for sale but there is conduct by
both parties which recognizes the existence of a contract, that conduct is enough
to establish a contract
 ■ What the terms of the contract are become terms that the writing of the
parties agreed on and other supplementary terms from the UCC/the court
● Under the UCC, it is possible for the court to come out to an outcome that neither party
wanted (ex: forum-selection clauses are nullified and court chooses a third forum entirely
to litigate in)
● Problem 6.5
○ Because they move in order, and if an earlier part takes care of it they don’t get
to (3)
○ The same thing, the clause would drop off as a non-matching term
● Breakdown of UCC 2-207:
i. Subsection (1) - abandons mirror image rule (OK if something small that’s changed)
1. Response with additional/different terms is not to be treated as an acceptance if
"acceptance is expressly made conditional on assent to additional/different
terms"
a. Thus, no contract is created by exchange of two forms if response is
conditional on assent of new terms
b. Purpose - enables offeree to use specific language to make sure response
is not treated as an acceptance
c. Problem - applies even when "expressly conditional" language is
boilerplate language
2. As long as response is treated as an acceptance, even though it does not match
the offer exactly, the exchange of forms does create a contract
3. Clumsily combines acceptance and confirmation - if we know contract has been
formed, second question is whether the terms put forward by one of the parties
should be included - generally no
ii. Subsection (2) – kills last shot rule
1. Assume that different and additional terms are treated the same
2. Significant additional or different terms contained in an acceptance seldom
become part of the contract
3. For a proposed term in an acceptance to become part of the contract - 4
requirements must be satisfied:
a. Offer and acceptance must be between merchants
b. Must not materially alter the contract as set out in the offer
c. Offer has not stated that acceptance is limited to terms of the offer
d. Offeror must not give notification of objection within a reasonable time
after notice of term is received
2. General effect - excludes many new terms in acceptance - offeree's attempt to
alter terms proposed by offeror in any material way is futile = most material
aspects of contracts are on the offeror's terms
ii. Subsection (3) – attacks mirror image & own type of knockout rule
1. Applies where no contract was formed through communication, but the parties
went ahead and performed anyway
a. Happens if offeror does not realize that response is not an acceptance, so
he performs and offeree accepts performance - makes no sense to say
that the parties did not intend a contract
 2. If a dispute should arise as to whether a term in one of the party's
communications became part of the contract - court needs to resolve conflicting
communication
3. Common law - last shot rule would apply - terms in the last communication
would end up being the terms of the contract, DOES NOT apply here
4. UCC - if writings do not establish a contract but conduct demonstrates contract
formation, contract is based only on those terms on which the communications
agree
a. Knockout Rule: Conflicting terms are discarded, and gaps are filled by
statutory gap fillers supplied by Article 2

Reading for 9/14/22

● Preliminary agreements; when parties have reached some kind of agreement, but it is
unclear if it is yet a binding contract; three possibilities:
○ Could be that parties intended their understanding to be preliminary and non-
binding until they have resolved all issues and then enter into a formal, binding
contract
■ In this case, this is a preliminary understanding that imposes no legal
obligations on the parties
○ Could be that parties did intend their understanding to be a binding contract,
even if the nature of it was apparently preliminary
■ In this case, the court will treat the agreement as a contract, provided it
includes the crucial terms of the relationship and the parties have
manifested intent to be bound by the agreement
○ Could be that parties have not yet made a binding agreement about their ultimate
objective, but they have made a binding agreement to continue in good faith to
create such a contract
■ Courts are wary of this because parties do not often intend to commit to
this
■ However, if the parties expressly undertook to keep negotiating in good
faith to try to reach an agreement or if the nature of the transaction and
the relationship between the parties indicate that they did intend to
assume that duty, a court might find an agreement was made to do so
● This does not mean that parties will ultimately reach agreement,
but that they are both committed to make an honest and
reasonable effort to try (pp. 222)
● Agreement to agree
○ Parties have agreed on most terms but leave a few unsettled
■ If unsettled terms are material, parties have not made a contract
● Courts call this “agreement to agree”
○ ex: if a landlord and tenant have a renewal option in the least, but rent is not
specified in the renewal, this is material to the contract and the renewal part of
the lease is not a part of the contract
● Alaska Fur Gallery, Inc. v. Tok Hwang (AK SC, 2017), pp. 231
 ○ D subleases commercial lot near Denali National park, and subleased property to
P
○ Contract included option to purchase the rest of the lease after 3 year lease with
rent paid going towards purchase price (option)
■ P claims they agreed to the contract because they anticipated using the
option to purchase, even though rent was high
■ D refused to negotiate purchase price and therefore no agreement on
sale was reached
○ P sues D alleging breach of lease by refusing to negotiate purchase price and
not applying rental payments to purchase price, which totaled more than the
market value of the lot
■ D moves for summary judgment, arguing any agreement to negotiate the
purchase price was unenforceable
● Superior court agreed, as price was an essential contract term,
and nothing in the agreement said they intended to use fair market
price or said anything about how a purchase price would be
determined
● Though they have the power to fill gaps in contracts, they will not
impose performance on the parties that they did not or would not
agree to
○ They only fill gaps when they can determine with
reasonable certainty what the parties intended (pp. 232)
■ In this case, reasonable expectations of the parties
are not clear enough to order specific performance
● Court will only enforce an agreement to negotiate if it contains a
specific mode of resolving differences and a manner of
determining breach and an appropriate remedy
○ If court cannot discern when the agreement has been
reached, then they won’t enforce it
○ Even when an agreement meets this standard, each party
can still refuse the proposed terms, as an agreement to
negotiate is not an agreement to agree
○ Recovery for breach of an agreement to negotiate is
limited to costs associated with the negotiations
themselves
● “Merely mentioning negotiation does not create an enforceable
agreement to negotiate” (pp. 233)
○ Affirmed
● Problem 7.2
○ No, there is no unenforceable “agreement to agree” because the owner will just
name the price, there is no agreement to be reached, it has already been
reached - naming the price is the method of determining the price here, so
there’s nothing left to agree to
■ Lessee would maintain the right to not sign the new lease agreement
 ● Unclear/vague terms
○ Courts are reluctant to find an agreement too indefinite to enforce as a contract
○ Sometimes, courts can clarify and give meaning to indefinite terms by
interpreting and gap filling, but in some cases the court can only decide that
indefiniteness of terms means there is a failure of agreement
● Baer v. Chase (3rd Cir., 2004), pp. 236
○ P sues D for breach, seeking compensation for his role in creation and
development of The Sopranos
■ District court enters summary judgment for D because terms were too
vague to enforce, and P appeals
○ D is creator, producer, writer, and director of the show
○ Baer mostly helped by introducing Chase to people and showing him around NJ,
and Baer does not dispute that his contributions existed in the public record
○ Baer made comments on the initial script and they spoke several times the
following year
○ Chase agreed three times to “take care of” Baer and “remunerate [Baer] in a
manner commensurate to the true value of [his services]” if the show were to
become a success (pp. 237)
■ First two over the phone, third in person
■ “You help me; I pay you” (ibid)
■ Baer always rejected Chase’s offer saying that Chase would be unable to
pay him for the true value of his services, and counter-offered that if the
show failed Chase would owe him nothing but that if it succeeded he
would remunerate…
● This was the final agreement, was always oral, and did not include
a duration or price
○ Chase did not pay Baer
○ NJ contract law focuses on performance promised when determining if an
agreement is too vague to be enforced
■ It’s too vague if the court can’t determine what each party promised to do
■ Price term or method of determining a price is essential to a contract
■ Duration is an essential term
○ Court cannot find a contract distinct and definitive enough to be enforceable
■ No definition of “success” or “profits”
○ Affirmed

Class 9/14/22
● Problem 6.6
○ a. No contract under 2-207(1) because acceptance was expressly conditioned on
the additional terms
○ b. Under common law, no mirror image acceptance so last shot rule applies and
the email terms would be the agreement, under the UCC, there is a contract
under 2-207(3) because they acted like there was one by sending goods and
 paying for them, and the additional part will fall away because there was no
meeting of the minds on that term
● Generally, non-communication can’t be interpreted as acceptance of an offer
○ ex: keeping a product when invoice that comes with it includes additional terms,
those terms are not a part of the contract
Class 9/16/22
● Term sheet = document with main terms to later go in a deal, but usually not seen as the
actual contract
● Option contract to buy or renew on a rental that is unspecified in price to
purchase/renew, or specifies that the price will be subject to parties’ agreement, will
never be enforceable (rest of the contract stays, but the option contract falls away)
● Courts do not order negotiations, except in rare cases where it is very explicit that
parties agreed to negotiate
○ Even if a court ordered this, they wouldn’t really enforce it
○ Agreements to negotiate in good faith
■ ex: “we agree to negotiate on ____ day and ____ day…”
■ Courts won’t find this themselves in a contract that doesn’t state it, but if
put in writing court will enforce
● Even if enforced, hard to decide someone hasn’t negotiated in
good faith and if they didn’t, damages are likely small
○ Agreements to agree
■ ex: “we agree to agree on rent for next year”
● Just means there was no agreement yet, which means there’s
nothing to enforce
■ Unenforceable
● Implied duty of good faith and fair dealing in every contract
○ Courts will sometimes resolve cases based no this concept
○ This is a fairly vague concept, unclear what exactly is “good faith” and “fair
dealing”
● Def+Mutual assent+C=K

Reading for 9/19/22

● Hamer v. Sidway (N.Y. Court of Appeals, 1891), pp. 272
○ Nephew refrained from tobacco, gambling, etc. in exchange for $5,000 on his
21st birthday
○ Uncle dies and D argues that P’s actions were actually to P’s benefit, so there
was no consideration
○ Court disagrees, says P could have participated in vices but refrained from doing
so (which qualifies as a legal detriment that is sufficient for consideration)and is
entitled to the $5,000
● Contemporary courts hold that consideration must be bargained for
○ Some courts require language or circumstances to show that both parties
intended an exchange
○ Courts do not require that parties actually haggle over terms
● If someone promises to make a gift with no strings attached but doesn’t follow through,
the intended recipient can’t sue in contract
○ No consideration to support the promise for the gift
○ There is no detriment to the promise and parties have not agreed to an exchange
● Congregation Kadimah Toras-Moshe v. DeLeo (SC of MA, 1989), pp. 279
 ○ Decedent made oral promise to give congregation $25,000 as he was dying
○ Congregation promised to name library after him
○ His family doesn’t want to pay after he dies
○ Court says no consideration
■ Gift was given with no indication as to how to use the money or what the
congregation was to do (if anything) in return
■ No evidence that plans to name library after the decedent motivated him
to make or renew his promise
○ Congregations hope or expectation is not equivalent to legal detriment or reliance
(pp. 279)
○ If gift had been given before he died, there would be no way to get it back
○ If the gift had been written down it wouldn’t make a difference as a matter of
contract law, oral promises are just as good as written promises in most cases,
though it might have become a part of his will
○ Case wouldn’t have come out differently if man wasn’t elderly, no undue
influence claim in this case
○ Wouldn’t matter how long man had considered it, that’s consideration in the
linguistic sense, not in the sense of contract law
○ If man and rabbi had bartered on the amount, would not have made a difference
■ “Bargained for” doesn’t mean negotiation, means if something was
“sought and given in exchange”
○ If congregation had already put down payment on something with the money, it
would not make a difference for consideration purposes, but would for reasons of
reliance
○ If the deal had been sought on/hinged on the fact of a library being named, and
exchange of naming rights were exchanged for the money, then consideration
would exist
● Kessler v. National Presto Industries (Not reported, 1995), pp. 294
○ Court rules that the release of claims P signed for insurance company also
applies to manufacturer
○ Court will not judge whether $750 is adequate consideration
■ Not so low it “shocks the conscience” so the court will not weigh in
● Mere inadequacy of consideration does not void a contract (pp. 296)
● Pre-existing legal duty can not serve as consideration for a contract
● White v. Village of Homewood (Ill. App., 1993), pp. 298
○ P was injured during fitness test to become a firefighter
■ P signed release of liability before taking the test, but sues D for damages
● P claims she only signed the agreement to obtain employment,
and argues the agreement is unenforceable because it lacks
consideration and violates public policy
○ D was required by law to administer the physical agility test, and P had a legal
right to participate
■ Consideration can not flow from a pre-existing legal duty to P (as
opposed to the state, the general public, etc.)
 ● Can’t sell something you already have a legal duty to do
● Therefore, “exculpatory agreement is unenforceable as a matter of
law” (pp. 299)

Class 9/19/22
● Consideration not required in civil law systems, but required in the American system
● Contracts in the U.S. require an exchange of something of value
● Consideration does not have the same meaning it does in layman’s terms in contract law
● Policy reasons behind consideration are a bit more fuzzy than other areas of contract
law
● Consideration has changed a lot over time, Hamer is the most famous but lots has
changed since then
● Completed gifts cannot be taken back through contract law
● Some states have statutes that ignore consideration doctrine in cases where gifts are
promised to nonprofits, but contract law generally still requires consideration in these
cases
● Legal detriment = consideration
● Since Hamer, law has grown more demanding, meaning that merely conferring a benefit
on someone doesn’t equal consideration, it must be bargained for (something sought
and given in exchange)
○ Promises have to hinge on each other, one induces the other
○ Strings attached almost always = bargained for
■ Exception is “I will gift you x if you do y”
● Sham consideration (no consideration) = when one party doesn’t care what they’re
actually bargaining for (exchanging a peppercorn example)
○ Value of peppercorn is unimportant here, what is important is whether the party
really wanted the thing they made a contract for (Presto, where medical
expenses were much more than $750 but consideration still existed)
■ Courts will not consider the adequacy of consideration
● Consideration is not a fairness doctrine to make sure deals are fair
between both parties, the court is not concerned with this
● Legal benefit/detriment = very wide categories, encompass more than layman’s “benefit”
or “detriment”
● Page 279, Question1
○ Yes this is legal detriment, but no consideration because it wasn’t bargained for

Reading for 9/21/22

● Conrad v. Fields (Not reported MN Court of Appeals., 2007), pp. 336
○ P promised to pay for D’s law school, lower court found against P, P appeals
○ Would not qualify as an enforceable contract under consideration alone
■ This is a conditional gift
○ Promissory estoppel requires (pp. 337):
■ A clear and definite promise,
 ● This language isn’t in the restatement, test in MN is harder in this
sense
■ Promiser intended to induce reliance by the promisee, and promisee
relied to their detriment, ND
■ Promise must be enforced in order to prevent injustice
○ P argues D did not plead or prove promissory estoppel
■ Court finds that, because D testified to negligence and breach of contract
as claims at pretrial deposition, promissory estoppel can be interpreted as
included
● Promissory estoppel is a contract implied at law
○ In promissory estoppel, “relief may be limited to the party’s out-of-pocket
expenses made in reliance on the promise” (pp. 338)

Class 9/21/22
● Strings attached/conditions = consideration, EXCEPT for a promise to make a gift
○ A completed gift is fine, but a promise to make a gift will not hold up under
contract law
● Things that might seem like consideration but aren’t:
○ Sham consideration
○ If someone decides to promise something after the other party has already given
their part or their promise (a gift)
■ Past consideration is no consideration
● Citing something given as a reason for promising something else
is not consideration if it was not induced at the time of the giving of
the first part
○ Pre-existing duty
■ Buying/selling the same thing a second time means it wasn’t bought/sold
the second time
● If they already bought that, they can’t buy it again, etc.
■
● Problem 10.1
○ Court likely read this as a conditional gift (in order to live in the house, she has to
move)
■ Loses on consideration
○ Case for promissory estoppel
● Promissory estoppel, according to Restatement, Second (Section 90) - differs from MN
law from Conrad, different states may or may not follow the restatement
○ “(1) A promise which the promisor should reasonably expect to induce action or
forbearance on the part of the promisee or a third person and which does induce
such action or forbearance is binding if injustice can be avoided only by
enforcement of the promise. The remedy granted for breach may be limited as
justice requires.
○ (2) A charitable subscription or a marriage settlement is binding under
Subsection (1) without proof”
 ■ Charitable subscription = written commitment to give something to a
charity in the future
■ These work without induced action or forbearance
○ Making decisions about what is an isn’t a “just” result is unique to promissory
estoppel in that it is different from most of contract law that is amoral
■ Here, courts should be thinking about something beyond the other
elements, something beyond just a detriment
● Works to make sure that people are made whole, but if their
detriment was somehow solved another way they don’t win a
windfall anyway
● Promissory estoppel vs. consideration
○ Promissory estoppel = damages are limited by what justice requires (according to
restatement), not true in consideration
● Is promissory estoppel?
○ Depends on the state. When it’s a part of contract law, not necessary to plead it,
but when it’s a part of tort law or something else, it must be plead to take
advantage of it

Reading for 9/23/22

● Option contracts
○ Makes an offer firm, cannot be withdrawn within the time stated by the option
contract, even if the offeror dies
■ Any attempt at revocation will be ineffective
■ According to the UCC, period of time can’t be longer than three months
○ Classical doctrine requires consideration before the offer is made firm
■ What would normally be considered “sham” consideration is actually
usually accepted for an option contract
○ If consideration is mentioned in the contract but not actually completed, the
option contract is unlikely to be enforceable
○ Restatement, Second Section 45
■ An option contract is created when an offeree begins (“tenders”)
performance, even if performance is not completed
● At this point, offeree has no obligation to complete performance,
but offeror can no longer withdraw the offer
○ Baird and Drennan approach the revocability of contracts differently
■ Baird finds no enforceable contract
■ Drennan finds enforceable contract under promissory estoppel
● Lahr Construction Corp. v. J. Kozel & Son, Inc. (SC of NY, 1996), pp. 382
○ Contractor got bid from subcontractor and won bid for project, then tried to call
subcontractor and negotiate a new deal
■ Court rules this is not an agreement under traditional principles of
contract law
■ Court rules this is not covered by promissory estoppel
 ● While there was a clear promise and clear reliance on the bid to
make the bid for the project, P stopped relying on the bid when
they decided to try to negotiate
● Contractor can’t delay acceptance in hope of a better offer
● Contractor can’t bargain for a better deal and at the same time
rely on the original deal to hold, and then sue for breach
○ P wasn’t relying on original deal as a “fall-back” because
he attempted to negotiate terms he knew from experience
would not be accepted

Class 9/28/22
● Ways a contract can be irrevocable
○ Option contracts
○ Restatement 45 - starting to perform starts to show consideration
○ Restatement 87 - submits an offer should assume that it’s a good enough offer
and should induce the action
○ Promissory estoppel
○ UCC 2-205 - firm offers for sales of goods between merchants
○ Restatement 87-1(a)
■ If an option contract has purported consideration (what otherwise might
be considered sham consideration), it is a binding option contract
● “is in writing and signed by the offeror, recites a purported
consideration for the making of the offer, and proposes an
exchange on fair terms within a reasonable time.” (pp. 378)
○ Accept the offer
● Problem 11.1
○ a) Do they have a binding contract for lawn mowing services
■ No acceptance of the offer and its the last communication
■ Don’t have a contract yet at this time.
■ Sally can revoke the offer still at any time there is none of the ways to
invoke irrevocability has occurred yet.
○ b) Would be an option contract, he is keeping the option open to make a contract
with her.
■ She wouldn't be able to revoke the contract
■ They have a deal on irrevocability, but they still don’t have a deal on lawn
mowing
○ c) promise not to revoke the contract, depends on the jurisdiction
■ She can revoke the contract.
■ Restatement 87(1)(a) just says lets be nicer to sham consideration when
they deal with option contracts
● In writing and signed by the offeror
● Proposes an exchange
● People want to make option contracts and it is good for the offeror
don’t be formulistic.
 ○ d) not playing the option contract, just accept the offer, Louie has accepted the
offer sort of in one superficial reading
■ This would be rendering it irrevocable just by accepting the offer and
making a contract
■ This forms a conditional contract
● Whether this busts it up as an acceptance?
● Was this an unconditional contract, non-mirror image acceptance,
○ We have a deal but I request that we have a way for me to
back out
● Doesn’t draw on any concepts from today.
■ Can think of it as Louie making a counteroffer with Sally accepting that
counteroffer
● Problem 11.2
○ Giant Co. cannot revoke
■ UCC supplies a test for firm offers (irrevocable)
● Must be sale of goods
● Must be an offer
● Offeror must be merchant
● Must be written offer
● Forms supplied by offeree must be signed by the offeror
● Provides assurance for no more than 3 months
● Problem 11.3
○ UCC 2-205 would apply here, but she may not want to use it to get firm offers
because she’s planning far out in advance, but if her customers can buy within 3
months then she would be fine to use firm offers
○ Could argue existing offers are firm under Drennan because she’s basically
acting as a “wedding general contractor” - but this isn’t a good business plan she
doesn’t want to have to be litigating all the time on something that’s a bit muddy
■ Other side might argue UCC makes it easy to use firm offers, and could
have just done this from the start, whereas in common law it’s hard to
make an irrevocable offer
● Contractor Cases
○ Lot of opportunities for them to breach or for others to breach their contracts
■ Give rise to interesting legal questions and ponder whether those
principles are applicable to outside their domain
○ Example on how it works
■ Works in that we are interesting to have a project done.
■ People submit a project plan with estimates
■ General Contractor contacts subcontractors to get lists and items to find
what is the best offer to find a cost estimate
● Submit the number to the school district if they are the low bidding
they get the contract
■ If everything goes fine the contractor gets the deal with the
subcontractors performing
 ■ Common issues
● Subcontractor does not want to perform.
○ General contractor is obliged to perform at the cost that
they submitted at the beginning of the plan
■ Mistake contracts
● If a subcontractor made a mistake in submitting the bid and should
not be binding
○ Formulation of mistake cases I did not understand the
situation,
○ Solving this problem = bids are irrevocable unless contractor begins to chisel/is a
jerk
● Lahr Construction Case
○ Functional way see
■ Rule that comes out looks that the offer and bid is irrevocable unless the
general contractor begins to attempt to open bargaining (chisel) .
● Solves the issue from above
○ In giving the assurance that they won’t be chiseled at
○ Matter of Law
■ Drennan invents a way of thinking (Restatement 87-2)
● Drennan Doctrine
○ If someone submits a bid and the other party relies on it,
the bid becomes irrevocable.
● Restatement 87(2) inspired by Drennan
○ An offer which the offeror should reasonably expect to
induce action or forbearance
○ Elements for Promissory Estoppel
■ 1. Action or forbearance
■ 2. Injustice (if promise not enforceable)
■ 3. Promisor Reasonably expects action or forbearance
■ 4. Promise
○ Is it present in this case?
■ 4th element (Promise) the bid was a promise to perform at that price.
● TRAP:
○ Page 381 Learned Hand
■ This offer could not become only when the
equivalence is received
■ Offer for an exchange is not meant to become a
promise until a consideration has been received
● Offers are not promises
■ Offers are not promises
■ Hand = looking at three different cases with similar
facts but different outcomes, he thinks promissory
estoppel has elements, one of which is promises,
but he doesn’t see promises, just offers
 ● Some states still use Hand’s approach,
others don’t
○ Restatement 2nd, definition of a promise
■ A promise is a manifestation of intention to act or
refrain from acting in a specified way, so made as
to justify a promisee in understanding that a
commitment has been made.
● Offer itself is not a commitment.
○ There are no promises in general contractors to say this would be to ignore the
practicalities of this area of work.
■ This is an understanding of commitment,
● Manifestation of intent with a call for bids and a response to it

Reading for 9/28/22

● Unjust enrichment = “a cause of action that arises where the claimant has conferred a
benefit on the recipient under circumstances that make it unjust for the recipient to keep
the benefit without paying for it” (pp. 391)
○ Sometimes related to contract, sometimes not
■ Distinct from contract and a separate cause of action
○ Goal is to get people back to the state they would be in if they hadn’t unjustly
enriched another/hadn’t been unjustly enriched by another
○ Cases where there’s not quite a contract (maybe they almost did or should have),
but someone still owes the other
■ Not a promissory theory of liability, no contract necessary to recover
○ Usually loses, hard to win
○ Two elements:
■ One party must have been enriched by obtaining property, services, or
some other economic benefit from the other, AND (pp. 392)
■ Circumstances must be such that it would be unjust for the beneficiary to
keep that enrichment without paying the other party
● Enrichment is not unjust if payment was intended to be gratuitous
or the benefit was unjustifiably imposed
○ Gift/gratuity standard = objective standard; what the donor
reasonably must have intended based on the
circumstances
■ Without lots of context, business transactions are
not assumed to be gratuitous, but actions for family
or friends are assumed to be gratuitous
○ Unjustifiably imposed = if a benefit was conferred by
someone that had no justification for providing it without
being asked and it cannot be given back
■ Someone who does this = “officious intermeddler”
(pp. 394)
 ■ If it can be returned, restitution may be granted if
the party refuses to return it even if the economic
gain was originally imposed
■ If someone is justified for conferring the benefit
without asking first, they are not in this category
(ex: to avoid harm in an emergency)
○ In early common law, unjust enrichment was referred to as a “quasi-contract” or
“contract implied in law” (pp. 395)
■ These terms are still sometimes used
■ This is as opposed to a contract implied in fact, which is an actual
contract created by conduct rather than words
● Some cases can fit both, and the difference is the remedy
(expectation damages vs. restitution, which may be less than the
contracted rate)
● Restitutionary claim = claim to recover what was given (ex: a down payment)
○ Can be used when a contract is breached, when a contract is unenforceable but
something has already been provided, etc.
○ Quantum meruit = market value for services
○ Quantum valebant = market value of goods
● Martin v. Little, Brown & Co. (PA Superior Court, 1981), pp. 397
○ Person lets publisher know about copyright infringement on one of their books
○ No contract implied in fact because there was no implication of a promise to pay,
neither party seemed to expect money to change hands, and there was no
reasonable expectation that P would be paid
○ No unjust enrichment
■ Test:
● Facts must show that a person wrongly secured or passively
received a benefit that it would be unconscionable to retain
■ Volunteers have no right to restitution
● Not an officious intermeddler, even if his personality seems like it,
the benefit was invited when the publisher said he could send the
information, but it was still volunteered
○ Affirms dismissal of claim
● Problem 12.1
○ No, volunteer unless maybe if they’re a driver for a living
● Problem 12.2
○ Might be seen as an officious intermeddler, but if relief was granted, it would be
the going rate for a consultant on a TV show in a similar position
● Moral obligation doctrine
○ Very limited in scope
○ Only used where a person makes a promise that is in effect a ratification of an
existing but unenforceable or voidable legal obligation
■ ex: creditor never brings claim against debtor before statute of limitations
runs, but after it runs the debtor makes a new promise to repay
 ● Moral obligation doctrine creates an exception to the fact that
there was no consideration on this deal and only on a previous
deal, and permits enforcement of the new promise
○ Elements:
■ A person acting without gratuitous intent confers a benefit on another,
AND
■ The recipient should have paid for the benefit and may have a legal
obligation to pay for it, but did not, AND
■ Therefore, recipient has been unjustly enriched, AND
■ For some reason the person who conferred the benefit did not or could
not sue to enforce the original obligation to pay, AND
■ At some later time, the recipient makes a new promise to pay for the
benefit that could not otherwise be compelled by legal action (pp. 410)
○ Restatement, Second Section 86 has sought to widen the application of this
doctrine to cover a wider range of promises in recognition of a prior benefit
■ Does not use “moral obligation” and instead describes its doctrine as
“promise for benefit received”
■ Called the “material benefit” rule (ibid)
■ Few courts willing to use this to expand the doctrine
■ Largely inspired by Webb (lumberyard worker saved another’s life,
promised to pay him $15 every two weeks for the rest of his life)
● Promise was not for services, but was ratification of the value of
prior services
● Problem 12.4
○ No, not unjust for him to keep the benefit without paying him - he was doing this
voluntarily
■ If it was, recovery would be restitution i.e. going rate for his services
○ Yes, would recognize a promise based on past services
■ Market value only has an impact for restitution, so if tried as unjust
enrichment and the claim succeeded somehow, remedy would be less
than $50,000, likely reduced in accordance with the degree to which the
agreement was disproportionate
■ Original agreement was not specific enough to be a contract

Class 9/30/22
● Just to keep something (not unjust enrichment) if:
○ Someone volunteers to give something/ it’s a gift
○ Officious intermeddler - they’re out to benefit themselves
■ ex: someone comes up to clean your windshield at a light and you didn’t
really want them to, and it’s a bit bothersome
Reading for 10/3/22
● Assignment and delegation
○ Transfer of contract rights/duties
○ Transfer of rights = assignment
■ Person who transferred right = obligee (person who is owed the right),
and then becomes assignor upon assignment
■ Person who acquires right = assignee
■ Person who owed right under original contract and now owes the
assignee = obligor
■ Often transferred in exchange for payment or some other agreed
consideration
■ Possible for right to be taken from transferor involuntarily
● ex: garnishment, etc.
■ Not done through original contract (as would be a contract provision
benefitting third party), but through a later transaction with one of the
original parties
■ Can be not fully given but used as collateral (ex: used to secure a loan
and if the party defaults, rights transfer to settle the debt)
■ Fully transfers the right, only one party has the rights at a time
■ Restatement, Second Section 317
● A contractual right can be assigned unless:
○ The substitution of a right of assignee for the right of the
assignor would materially change the duty of the obligor,
materially increase the burden/risk imposed on them,
materially impair their chance of obtaining return
performance, or materially reduce its value to them, OR
○ The assignment is forbidden by statute or is otherwise
inoperative by public policy, OR
○ Assignment is validly precluded by contract
■ Anti-assignment clauses under this section must
clearly and unequivocally express the parties’
intention to overturn the presumption that rights are
assignable, with no doubt or ambiguity
● ex: saying contract cannot be assigned is
not enough, as that seems to include duties
and not just rights
● Restatement Second Section 322(2)(b)
says that a contract terms that prohibits
assignment of rights, unless it says any
assignment is void, can lead to damages
under suit for breach, but doesn’t make
assignment ineffective
○ This is because it removes the right
to assign, but not the power to do so
 ■ UCC 2-210(2)
● Largely similar to Section 317, but a few differences in nuance
(pp. 924)
■ Does not have to be done by contract, can be done by unilateral act (ex:
gifted)
● Promise of assignment is unenforceable because it lacks
consideration, but becomes effective and irrevocable once
executed
■ Usually, other party to contract doesn’t care if right has been assigned as
long as performance occurs, but if the obligor objects on basis that
assignment diminishes or defeats its own rights in the contract, a court
balances policy of free assignability with protecting reasonable contract
expectations of obligor (pp. 925)
○ Transfer of duty = delegation
■ Person who transferred duty = obligor/delegator
■ Person to whom the duty has been transferred = delegate
■ Party to the original contract who whom the delegated duty is owed =
obligee
■ Restatement, Second Section 318 and UCC 2-210(1)&(6)
● Obligor can delegate performance of duty unless delegation is
contrary to public policy or the terms of the promise (pp. 934)
● Unless otherwise agreed, promise requires performance by a
particular person only to the extent that the obligee has substantial
interest in having that person perform/control the acts promised
● Unless obligee agrees otherwise, neither delegation or
performance or of a contract to assume duty made with obligor by
the person delegated discharges any duty or liability of the
delegating obligor
○ Transfer of both rights and duties = assignment of the contract/assignment of
both rights and duties
○ Possible to have contract assignment other than by contract law (i.e. tort, etc.)
■ Under contract law, rights can also be assigned by gift with no
consideration
● Problem 22.5
○ No, does not materially change the burden or risk imposed on him, impair his
chance of being paid, it’s not inoperative under public policy, and assignment
wasn’t precluded by the contract
● Problem 22.6
○ Can recover damages for breach, but not void the assignment
○ Bakke v. Magi-Touch Carpet One Floor & Home, Inc. (SC of ND, 2018), pp. 935
■ Novation = obligee agrees to accept the delegate as a complete
substitute for obligor and releases obligor from its duties under the
contract
 ● Not inferred merely from the fact that obligee accepts performance
by delegate (pp. 936)
● This wasn’t done here, so D isn’t relieved of duties under contract
even though it delegated them to a subcontractor
■ Usual rule is that if delegate fails to perform or performs improperly,
obligee’s cause of action is against obligor, not delegate
● However, exception is if the duty is delegated under a contract
between obligor and delegate, and delegate’s promise to obligor
to perform qualifies as a contract for the benefit of obligee
○ In this case, obligee can enforce duty directly against
delegate
● Problem 22.8
○ Yes, was a reason for Ellie to want one person to perform the service over
another
○ Yes, Ellie accepted the delegate as a replacement so she can bring cause of
action directly against delegate

Class 10/3/22
● No need to force bargain to prevent unjust enrichment penalization when:
○ Mistake
○ When negotiating would be at a great social cost (i.e. someone is unconscious)
● When contract law and unjust enrichment don’t quite touch something, there is a push to
make contract law cover that area
○ See Webb above
■ Unjust enrichment doesn’t apply here because the benefit received wasn’t
solicited
■ Not going to get a big recovery under promissory estoppel because Webb
is likely only using the money he was relying on to do things he would
have done anyway (eat, rent shelter, etc.)
■ Restatement 86 widens this to say to treat this as if there was
consideration as long as the promise wasn’t consideration
● Not widely used in most places
● Some courts allow parties to plead unjust enrichment, promissory estoppel, and other
claims at the same time, and other courts will say if you’re bringing a bunch of claims
you’re conceding there’s no contract, so you have to pick one cause of action
● Assignment and delegation
○ Typically not sales of goods transactions
○ Pretty much no reluctance to assign in contract law, but lots of reluctance to
delegate
○ In order to restrict assignment, it must be very clear in the contract, contract law
is reluctant to prevent assignment
Reading for 10/5/22
● Statute of frauds
○ Exceptions to the rule that a contract doesn’t need to be in writing to be
enforceable
■ Asymmetric (one party can get out of a contract and another can’t
depending on who signed it)
■ Modern versions cover mostly the same areas at the original act enacted
in England
■ Some states have variations and additions and statues also enact other
statutes that require writing for additional types of transactions
■ Relatively small list of types of transactions that have to be in writing to be
enforceable
■ Original statute of frauds, and most American statutes, cover (CA has
more) - MYLEGS (Marriage, Year, Land, Executorship, Goods, Surety):
● Contracts for the sale/transfer of an interest in land
○ Usually leases don’t qualify here, and only fall under SoF if
they’re over a year
● Contracts that cannot be performed within a year from time of
execution
○ Unlikely to be performed within a year doesn’t count in
many courts
● Contracts for sale of goods (now also in UCC Article 2)
● Contracts to answer for debt/obligation for another
○ Surety (agreeing to answer for the debts for
another/guarantor)
● Contracts of executors/administrators to answer for duty of their
descendants
○ Surety for someone who is deceased
■ Only if someone agrees to pay for debt for
someone who dies
● Contracts made on consideration of marriage
○ ex: Prenups, dowrys, etc. (not marriage agreements
themselves)
○ Purpose is to ensure that a person can’t falsely claim in perjured oral evidence
that there was a contract covered by this act
○ Courts work hard to make sure this isn’t used to get rid of genuine oral contracts
○ Defenses based on statute of frauds is often brought at the beginning of a case
via motion to dismiss or through summary judgment
■ If a party passes through this stage, only proves contract was formed,
breach still has to be proven
○ In order to be enforceable under this statute, applicable contracts must:
■ Have a writing/record
■ A signature, AND
 ● Signature doesn’t have to be act of assenting, but just proof that
you’re the party to the deal/authentication, but required in addition
to assent whether it be verbal or written
■ Sufficient content to evidence the contract (pp. 244)
○ If you successfully plead SoF, contract is unenforceable as to you
○ Restatement, Second Section 131 words it a bit differently (pp. 244):
■ Writing signed by/on behalf of party has to:
● Reasonably identify the contract’s subject matter
● Indicates a contract has been made between the parties or offered
by signer to the other party
● State with reasonable certainty the essential terms of unperformed
promises
○ Writing/Record
■ Modern law accepts non-written forms of recording such as electronic
according
● Writing and record are interchangeable
■ Doesn’t have to be in a single document
■ Writing doesn’t have to have been made to record the contract
■ Internal notes or memos could qualify, according to UCC’s official
comment
○ Signature
■ Must be signed by party who contract is enforced against (or their agent)
● Doesn’t have to be signed by both parties, only the person
denying the contract
● Covers any symbol that authenticates the writing as that of the
signed, not just a formal signature (pp. 246)
○ Includes mark/writing already on the document before
contract was recorded on it, if the party making the record
intended it to authenticate the record
■ ex: letterhead/logo/e-authentication could qualify as
signature
● e-signatures can still be challenged for
authenticity, etc. like a regular signature, but
not merely for being electronic
○ Content
■ Record doesn’t have to be full and complete as long as it has enough to
show a contract was made and identifies the terms
● If quantity of goods is not included, it is not enforceable beyond
the quantity of goods in writing
○ Consequences
■ If there’s no signed record, neither party can enforce it against the other
■ If only one party signed it, it can only be enforced against that party
 ■ Noncompliance with the statute is an affirmative defense so party
challenging the contract must plead lack of signed record as their
defense, otherwise it is waived
■ If a party renders some performance and then the contract is declared
unenforceable, party can obtain restitution of that performance or its value
because the other party would now be unjust in keeping it
○ Methodology
■ Questions to ask, in order:
● Is the contract subject to SoF?, if YES:
● Is there a signed record sufficient to satisfy SoF?, if YES→ enforceable;
if NO→not enforceable unless third question is true:
● Is there a recognized exception to the SoF that will allow
enforcement anyway?
○ Usually no, exceptions are rare.
○ Exceptions:
■ Part performance
■ UCC 2-201(2)&(3)
■ Promissory estoppel
○ Restatement, Second Section 130
■ Includes contracts where performance can’t happen within a year in SoF
● Not length of performance but period between making contract
and end of performance, even if performance is short
● Applies to any contract that fits this term, regardless of subject
matter
● If contract is long-term but doesn’t specify performance will end
more than-one year after execution, SoF does not apply
○ ex: at-will employment contract
○ If the nature of the contract means it would likely be
impossible to complete performance within a year, some
courts apply SoF and others don’t
○ If SoF is not satisfied on a covered area, then the contract is not enforceable
○ Policy reasons for SoF are not super clear, there’s no legislation so no legislative
purpose, and we’re basically left to fell in the gap ourselves
■ In this class, we’ve talked about it as a way to stop predictable abuses
○ Parol evidence = spoken, non-textual evidence; can include text but not the main
text (outside the four corners of a contract)
● Problem 8.1
○ a. No, he signed it, terms were clear, and it was in writing - doesn’t mean Lucy
gets the farm, but doesn’t die due to SoF
■ Is it under SoF/Does SoF apply? Yes, sale of land
■ Is SoF satisfied? Yes (see above)
■ Step 3, which didn’t have to be done here because it was satisfied, is if
there is an exception to SoF
● ex: if people perform in part (most common exception)
 ○ b. Yes, Lucy did not sign the agreement
○ c. No, the second writing was evidence of her first agreement and included a new
offer, which did not have to be accepted for her first promise to stand
● St. John’s Holdings, LLC v. Two Electronics, LLC (Not reported MA Court, 2016), pp.
250
○ Court rules email and text message are sufficient to indicate signing of contract
○ Parties (through brokers) exchanged binding (but unsigned) letters of intent via
email ending with the seller’s broker confirming by email that the seller was
“ready to do this.”
○ The seller’s broker then sent the buyer’s agent a text message asking that the
buyer sign the final letter of intent and submit a deposit check, which the buyer
later did.
○ When the seller received a more favorable offer from a third party, the seller
refused to sign

Class 10/5/22
● With breach after delegation, sometimes the delegate is directly liable (if the contract is
set up that way), but usually the original person is responsible to the other party but can
still also sue the delegate for failing to do their part
○ Original party is still responsible, but if the contract says that the delegate is
performing for the benefit of the original other party in the contract, then the other
party can sue the delegate as well
■ Exception to this is novation, which other party has to agree to to begin
with
● Obligee can restrict delegation in original contract much easier than they can restrict
assignment
● No legal duty to notify the other party that you’ve delegated, but might be helpful
communication to prevent a misunderstanding
● SoF is about enforceability but not about mutual assent (even though mutual assent is
often a separate issue in the same cases)
○ Contract could be not written down and satisfies mutual assent, but not SoF
● Reasons for SoF
○ Easier evidence to have things written down
■ Also takes less court resources when evidence is easily provable
■ Some things are difficult to litigate, and having a record helps
■ To prevent fraud

Reading for 10/10/22

● Void vs. voidable (for improper contracts)
○ Void = legally null, no party can enforce it
○ Voidable/avoidable = aggrieved party can elect either to keep it in force or to
exercise the right to rescind (avoid) it (pp. 415)
■ Only the victim can do this
■ Can sue affirmatively for avoidance or use it as a defense
 ■ If avoided, parties are entitled to restitution under unjust enrichment
○ Also possible for contracts to be enforced minus the avoidable term or for
enforcement plus claims for damages to be brought, though less common
● Fraudulent misrepresentation
○ Restatement, Second Section 159
■ FM = assertion not in line with the facts
○ Made on purpose to induce other party to enter contract, either with knowledge
that it was not true or without confidence in the truth/with knowledge that there is
no factual basis for that assertion
■ If made my mistake, may be negligent (made carelessly) or innocent
■ Consequences for fraud are higher than negligence
● i.e. emotional distress and punitive damages are available with
fraud, some terms in a contract may shield negligence but not
fraud, fraud can be claimed as an intentional tort, fraud can have
criminal penalties, etc.
○ Common law:
■ Must prove that the other party made a material misrepresentation of fact,
AND
● Express statement of untrue facts or conduct intended to conceal
the true facts from the other party
● Can also be made passively by failing to reveal relevant
information
● Must relate to a fact, opinions and predictions do not qualify,
unless there is no factual basis for it
● Can’t be a third party unless party to the contract was complicit
and had reason to know about it
● Material = relates to a fact that is objectively crucial to the basis of
the bargain and would induce a reasonable person to enter the
contract
● Restatement, Second Section 162 definition on pp. 418
○ If party knows it’s not true or doesn’t have confidence in
their assertion, or knows there is no basis for the assertion
■ Assertion was made knowing it was false, AND
● If a party deliberately and dishonestly misrepresents future
intention when entering the contract, a court might treat the party’s
current state of mind as a fact so that misrepresenting it could
qualify as fraud (pp. 417)
■ Misrepresentation was made to induce the contract, AND
● Victim wouldn’t have entered the contract if they knew the truth
● Victim must show they were justified on relying on the
misrepresentation
■ The misrepresentation actually and justifiably induced victim to enter the
contract
 ○ “Scienter” = shorthand for knowledge of falsity and intent to mislead (first two
elements), bad mental state
○ Remedy
■ Restatement, Second Section 164
● Contract is voidable by victim
○ Allows victim to rescind contract and obtain restitution for
any performance already rendered
● Victim can keep contract in force and sue for any loss in value of
performance as a result of the fraud
○ Comes from tort law, but is available to victim of
contractual fraud because fraud is a tort and a violation of
victim’s rights under contract law
○ UCC Article 2 doesn’t deal with fraud, so common law and UCC 1-103(b) apply
● Hodge v. Craig (SC of TN, 2012), pp. 420
○ Although P had sex with D and another man during the period when her son was
conceived, she told Craig that he was the father and no one else could be
■ Based on these assurances, he proposed marriage
● The parties later divorced but Craig paid child support for years
■ D filed suit after DNA tests confirmed his suspicion that the child was not
his, seeking $150,000 in compensatory damages and $150,000 in
punitive damages, alleging intentional and or negligent misrepresentation
by P
○ Based on the factual findings, the trial court concluded that Hodge purposely
defrauded Craig into believing the child was his, knowing she had sexual
relations with Joey Hay at the time the child was conceived. The trial court
awarded D $23,030.24, representing the total child support and $2,214.20,
representing medical expenses and insurance premiums
■ The intermediate appellate court agreed that Hodge intentionally
misrepresented her son’s paternity, but reversed the damage award
based on post-divorce child support payments, finding this amounted to
an improper retroactive modification of a child support order
● P appealed
○ Court held that a former husband could bring a common-law intentional
misrepresentation claim against his former spouse based on her intentional
misrepresentations that he was the child's father
■ P proved the elements of such a claim
● D made representation, AND
● Representation was false when it was made, AND
● Representation involved a material fact, AND
● D knew it was false or did not believe it to be true, or made
representation recklessly without knowing whether or not it was
true, AND
● P did not know it was false and was justified in relying on it as
true, AND
 ● P sustained damages as a result
○ Damages:
■ Victim of intentional misrepresentation can recover the difference
between value for what they received and purchase price or other value
given for it and damages for costs otherwise suffered as a consequence
for reliance on the misrepresentation
● Silence as fraud
○ Party has duty to disclose facts material to the transaction when:
■ They know the facts, AND
■ They know that the other party is ignorant of the facts and can’t
reasonably find them out themself, AND
■ They know it would be a breach of good faith and fair dealing to not
inform the other party
● Kaloti Enterprises, Inc. v. Kellogg Sales Co. (SC of WI, 2005), pp. 427
○ Did a food wholesaler state a cause of action for intentional misrepresentation
against a food manufacturer, which failed to disclose material facts to the
wholesaler after having had an established practice of doing business together?
■ Yes
● The fact that D would have been selling directly to large stores in
P’s area of distribution was material, as P, as a secondary
supplier, bought products from D in order to resell them to the
same large stores and he would not have placed the disputed
order if P had known that D was going to sell directly
○ Reversed and remanded

Class 10/10/22
● Misrepresentation
○ Intentional
■ Tort, contract, and criminal law
○ Negligent
■ Tort, contract law
○ Not included in mutual assent because:
■ It doesn’t fit as cleanly in the objective reasoning for mutual assent
■ Would also make the contract merely unenforceable, and not offer any
remedy (misrepresentation remedies can include nullifying a contract, but
also includes additional remedies)
○ Can plead both intentional and negligent in the same complaint
■ Facts are pretty similar for both and might want to make sure you can get
negligent if you can’t get intentional
○ Elements:
■ Representation, AND
■ Representation of fact (not a value judgment/opinion or a prediction about
the future), AND
 ■ Representation was material (would be important to a reasonable
person), AND
● Whenever a court determines this, they are inherently making a
value judgment (ex: “a person would never do x”)
● Some states don’t require this for intentional, but only for negligent

Class 10/12/22
● If reliance is unreasonable, then misrepresentation isn’t actionable
● Problem 13.1
○ Could say unreasonable reliance, should have checked his references
○ Could say they were defrauded into good lecturing, so there was no harm done
■ Could still fire him but no damages
● When there’s material misrepresentation that benefits someone,
the item can still be returned, just no damages awarded
Elements of misrepresentation
● 1. Statement
○ You are the father
○ No one else could be the father
○ I am sure X
○ I am sure Y
■ All these statements may or may not have been said.
■ “I am sure” may be considered a fact. Is a mental state a fact? Some
courts will say yes, some will say no.
■ You can think of something else as all containing another silent claim:
● I have a reasonable basis to think this…
○ Is this not a silent representation in making this statement
● Here, she probably did not have a reasonable basis to believe this
○ Omissions of truth?
■ 4 factor test
● 2. Of fact
● 3. Material
○ In a case of negligent misrepresentation, this is an element.
○ If this is a case of fraudulent misrepresentation, this may or may not be an
element, depending on the jurisdiction.
● 4. Falsity
○ If I tell you something, and it's a statement of fact, but its true, there is no cause
of action for misrepresentation. It must be false!
● 5. Speaker needs to know this is false (or is reckless in not knowing [ignoring the
evidence])
● 6. Victim relied on this
● 7. Victim suffered some injury at a result
○ Money and/or getting out of the contract
■ Even if there is not a real injury, you can always annul the contract if you
can establish all the other elements.
 ● 8. Reliance must have been reasonable
○ Ways in which reliance would be unreasonable
■ Extent of reliance may have been unreasonable
■ The person must have done due diligence on the claim
● Ex. If I say I relied on car salesman’s claim that the car is very fast
despite it not having any wheels
○ Unreasonable reliance is not actionable
○ If you’re a gullible person
● 9. The person wants the falsity to be relied upon. They want the lie to be believed. (in a
case with fraudulent misrepresentation).
○ “Scienter”
■ P needs to establish the bad mental state of the speaker
● 13.1
○ Man is hired for a job on the basis of forged credentials. Is fired by the employer
when they find out. Employer defends the firing on basis that they were
intentionally defrauded
■ It's possible that the college didn’t suffer a real injury since he was a good
lecturer. It’s possible that it wasn’t reasonable for the college to rely on
this fact since they didn’t do their due diligence of checking his
references.
Omission / passive misrepresentation
● Sometimes omission is as good as lying in certain circumstances
○ I. If I have told you something that is now false
■ Ex. If I am selling you my car and say “it works great” and it’s
transmission explodes behind me, I need to update and tell you
○ II. If you know the other person has a big error and you should tell them the truth
○ III. The party who is ignorant of the fact is entitled to know the fact because of a
relationship of trust and confidence between the parties.
■ Ex. If your lawyer convinces you to buy a plot of land but then it turns out
that they benefited from the sale
○ IV. Where everyone else in a particular industry would behave in a certain way.
● We want some amount of liability for omission so we can rest easy and trust others in
our commercial transactions
● Kaloti Enterprises, Inc. v. Kellogg Sales Co.
○ Facts
■ Kellogg decides to sell directly to retailers rather than going through
middle men, Kaloti. Kaloti attempts to sell Kellogg’s products and now
they find that the retailers won’t buy from them because the prices are
cheaper directly from Kellogg
○ P has a very bad fraud case if this were based on affirmative statements. But
here, D omitted to warn him of the change in circumstances
○ How could this backfire on Kaloti?
■ Now producers might not want to work with middle men at all since they
have to be extremely candid and ensure that the contacts are
 ■ The business of middle men is probably to make it very easy for
producers to focus on producing.
● Now that producers have to disclose private business
transactions, they might not want to work with middle men
○ Reasoning here:
■ The court decides that there is an actionable misrepresentation here
because of a failure to disclose
● Test for fraudulent omission:
○ 1. Whether the knowledge is material
○ 2. Whether the seller has knowledge of the defect
○ 3. Whether the fact was in Kellogg’s exclusive knowledge
■ If Kellogg’s business dealings were in the open, P
would probably fail the test.
■ Related to P’s duty of due diligence
■ Maybe we don’t mean “exclusive” so much as
“relatively exclusive”
● We don’t require for P to conduct corporate
espionage and call every since store in the
country in order to determine whether
someone would buy products from P
○ 4. The buyer would expect the disclosure of the material
fact
■ Kaloti has long-standing business with Kellogg.
Kellogg destroyed the market for Kaloti before their
purchase
■ Here, the court essentially says that if you do
business with another, you should take care of
them
● Some states say that buyers/sellers don’t owe each other a
fiduciary duty to disclose things like this.
○ They could have said that this was a “basic fact” that Kaloti
should have known that Kellogg could back out and
become a distributor at any time

Reading for 10/14/22

● Mistake
○ To get relief:
■ Mistake must relate to a fact that was in existence at the time of the
contract
● Can’t be a mistaken judgment or mistaken prediction of future
events (pp. 656)
■ Mistake must relate to something central to the contract
● Must have significant effect on the burdens imposed of benefits
received
 ■ Must be unfair or otherwise inappropriate to allocate the risk of the
mistake to the aggrieved party (ibid)
○ Mutual mistake = both parties have a mistaken belief of fact
■ See SCI as failed case, and requirements for rescission with mutual
mistake
○ Unilateral mistake:
■ Only gives rise to relief when enforcement of the contract would lead to
palpable injustice
■ Some courts deny relief for unilateral mistakes as a matter of course,
others allow for relief but only with a strong showing of inequity (pp. 673)
■ Something can qualify as a unilateral mistake if both parties were
unaware but the mistake really only affects one party
○ Elements for mutual and unilateral mistake are functionally very similar
■ Under both doctrines courts are likely to balance the noncomplaining
party’s expectations under the contract against the inequity of enforcing
the contract against the other party (pp. 674)
○ If this had been a unilateral mistake (and Washburn had known about the added
value of the plots of land), this wouldn’t be fraud because P had the ability to find
out the information
● SCI Minnesota Funeral Services, Inc. v. Washburn-McReavy Funeral Corp. (SC of MN,
2011), pp. 657
○ P asked for rescission or reformation because stocks sold mistakenly did not
factor in the value of some land included
■ P wasn’t aware of the plots of land that they owned worth $2 million
● P was probably doing this to hold money in land to not pay taxes
● P argues this is a basic assumption because the transaction was
for cemetery, not the plots of land
○ Rule:
■ Rescission or reformation is not warranted due to a mistake that relates
only to the value of the subject of a sale
● Party seeking reformation must prove:
○ A valid agreement expressing the two parties’ true intents
exists, AND
○ The written contract failed to express that true intent, AND
■ Couldn’t prove in this case
○ Failure resulted from mutual mistake or the other party’s
fraud/bad faith
■ Couldn’t prove in this case
● Under the terms of the contract, P could
have excluded the land but did not do so, so
this was a unilateral mistake
● According to MN law, recission isn’t appropriate in this case
because it was a sale of stock, meaning all assets and property
presumptively transferred with the sale of the stock
 ○ Basic assumption is about the stock, not what the stock
included (analogy: they get what’s in the box, even if
something mistakenly falls in
■ They didn’t just sell what was in the stock, but the
stock itself
● Selling a company comes with upside and
downside risk
○ Court would normally read this as a
risk-bearing assumption, but P
doesn’t want them to because they
didn’t have the option to just sell the
property because it would have been
illegal, but court doesn’t like the
pseudo-illegal argument being able
to win, so they don’t do their regular
assumption of risk assessment here
■ When you buy stock from a company and the value
ends up being different than you thought, that’s just
a problem of value
○ There’s also something fishy going on here re: selling a
cemetery through a cemetery company because selling the
cemetery alone is not legal in MN
■ This isn’t really relevant here because they didn’t
break the law, but worth noting
■ Contract law doesn’t care if they are trying to
undermine the law as long as they didn’t break the
law itself
● Didn’t matter that members of P negotiating the contract didn’t
know about the lots, the had constructive notice because SCI
employees had previously purchased the lots and continued to
pay the property taxes
○ Affirms summary judgment for D
● Bert Allen Toyota, Inc. v. Crasz (Miss. Ct. App., 2005), pp. 674
○ D signed a contract to buy a car from P with miscalculated price
■ P later discovered miscalculation and refused to deliver the car
● D sues for breach
■ Not a mutual mistake because D was ignorant and indifferent to what the
computer was calculating, and therefore didn’t make any assumptions
about it, so he wasn’t mistaken
○ A contract may be rescinded on the basis of a unilateral mistake if:
■ The mistake was so fundamental in character that there was no meeting
of the minds, AND
● This element was met, they didn’t agree on the same terms of the
deal (price)
 ■ There was no gross negligence on the part of the party seeking
rescission, AND
● This wasn’t met, Toyota is culpable here because they were
negligent in not checking the price
■ No intervening rights have accrued, AND
■ The parties may still be placed in status quo, AND
● Still possible to give a remedy
■ The party seeking rescission did not induce the mistake through
negligence
○ Court rules for D, affirms judgment of trial court
○ Reasoning:
■ In this case, P was negligent in failing to check the calculations of the
computer
● P BAT was aware of previous mistakes by the computer and failed
to confirm the overall math of the transaction
● Additionally, P was aware of the cost of the vehicle and of the
profit margin typically included in the sales price
● Because P negligently induced the mistake. P cannot rescind the
contract on the ground of unilateral mistake

Class 10/14/22
● Mutual mistake test:
○ Mistake
○ Mutual
○ Material
■ Basic assumption
● About a present fact
○ No risk bearing agreement (by party seeking relief)
● Wood v. Boynton (contrast to Sherwood)
○ Sell what they think is a topaz for $1, it’s a diamond worth $750
■ Seller wants to rescind because of the mistaken value
○ Both parties were mistaken about the value
○ Court says no, this isn’t enough to rescind
● Sherwood v. Walker
○ Cow is sold for less because they think it’s barren, then it’s discovered it can
reproduce
■ Seller wants to rescind
● Court allow sit, even though the identity of the cow was known,
the mistake went to the whole of the substance of the agreement
● Ways to distinguish between Wood and Sherwood
○ Basic assumption was met in Sherwood but not Walker because Walker was
only about value
○ Another is that the gem seller takes on a risk of being wrong about the stone’s
value, that isn’t taken on by a cow seller
 ○ There’s an argument to be made that the difference in Wood isn’t just value but
also function, but this isn’t how the court saw it
■ This is an ongoing debate in legal scholarship
● Can’t nullify/rescind when:
○ Mistake is as to the value (doesn’t qualify as a basic assumption)
■ Reason for this is seller always thinks they could have sold it for more
● Mistake doctrine isn’t meant to act as some kind of insurance, but to correct wild
mistakes that make no sense not to correct
● Sometimes it’s more helpful to look at risk bearing instead of basic assumption to decide
if an agreement is rescindable
○ Basic assumption is pretty much always debatable in either direction
● Unilateral mistake doctrine cares if you did due diligence, mutual mistake doctrine does
not care if you tried
● Good faith and fair dealing doesn’t mean you have to be nice in business, but you can’t
seek to undermine someone in an agreement, etc.
○ You could stay silent about the other party’s mistake knowing it works better for
you and not violate good faith and fair dealing
● Negligence is an element for unilateral mistake, but not mutual mistake; risk bearing is
an element for mutual mistake, but not unilateral mistake

Class 10/16/22
● Fraud in inducement vs. fraud in factum
○ Inducement = fraudulent misrepresentation relates to a fact that forms the basis
of the agreement and falsely induces the other party to enter into the contract
(pp. 453-454)
■ Most common type of fraud
○ Factum = fraud is not a fact underlying the contract, but the very nature of the
contract (character or the essential terms)
■ ex: signing a contract after being told it’s for something else entirely
■ False representation is weighed against the other party’s possible lack of
diligence in discovering the truth
● Restatement, Second Section 163 = person who was induced by
misrepresentation “neither knows or has reasonable opportunity to
know of the character or essential terms of the proposed contract”
(pp. 454)
■ Courts dislike this much more than inducement, and it’s hard to defend
yourself against this
● Duress
○ Coercion
■ Actual force or a threat of adverse consequences
● Threat can be of physical violence to the party or someone they
care about, or economic harm or loss
■ Restatement, Second Section 175(1)
● Test for duress:
 ○ Party’s assent is induced by an improper threat by the
other party that leaves the victim no reasonable alternative
■ Improper threat = party making the threat has no
right to take the threatened action (having no right
to do something is per se improper, but having a
right to something can still be improper under
certain circumstances)
● Exception = if the party has the right to take
the action but the motivation for taking it is
improper under the circumstance
● If threatened action would be a crime or tort
it is improper
● ex:
○ Criminal prosecution (even in good
faith if there are grounds for the
prosecution (this is actually more
improper if there is grounds because
there’s a more real threat that
prosecution will succeed)
○ Bad faith threat to use civil process
(meaning there’s no merits to their
case), etc.
○ If a contract already exists between
the parties, an improper threat can
include one that breaches the duties
of good faith & fair dealing under the
contract
■ ex: if a party threatens to
breach unless the other
agrees to a modification, etc.
○ Threat is improper if it is an abuse of
power and a violation of principles of
fair dealing
○ Likelihood of duress in this category
increases if the contract is on terms
that are unfair to the victim
■ Usual consequence = contract is avoidable
● Victim may elect to avoid the contract and claim restitution of the
benefit of any performance rendered under the contract
■ Modern duress doctrine has moved closer to unconscionability, and the
facts of a case can be treated under either doctrine (pp. 456)
■ Even if a threat is wrongful, the victim can not successfully claim duress
unless the threat induced the victim to enter the contract
● Inducement test:
 ○ Threat left the victim non reasonable alternative but to
assent
■ Objective standard, but evaluated under the
circumstances at the time of contracting, and
without hindsight
○ Hard bargaining vs. external pressures from duress
■ Unfair pressure doesn’t always rise to the level of duress
● Improper threat must be present for duress
○ Market pressure or hard bargaining does not constitute
duress
■ Oppression or moral wrongfulness alone does not
mean duress occurred
● Duress from a third party (Restatement, Second Section 175(2)
○ Victim may avoid a contract induced by duress of a nonparty unless the other
contracting party gave value, and relied materially on the transaction in good
faith, or doesn’t have reason to know of the duress (pp. 461-462)
■ This only protects the victim if the other party knows about the duress
● Germantown Manufacturing Co. v. Rawlinson (PA Superior Court, 1985), pp. 456
○ D embezzled money from P, his former employer
■ D visited the Rawlinsons’ home and had them sign two judgment notes,
consenting to the entry of judgments against them
● The first note was for $160,000
● The second note was for an amount established by an affidavit
from the president of P, but the affidavit was not presented to D
● P told the Rawlinsons that Germantown had no interest in
pursuing criminal prosecution if D cooperated, D signs both notes
● P later completed the affidavit, showing a total amount owed on
the second note of $212,113.21, which included over $45,000 in
interest
○ The lower court allowed D’s judgment on the second note
to be reopened on the grounds of fraud, misrepresentation,
duress, and lack of accountability for the amount included
in the second note
■ P appealed
○ Contract is voidable
■ A contract is voidable as unconscionable if:
● Parties’ bargaining power is significantly unequal, AND
● The weaker party has no choice but to agree to the contract terms
dictated by the stronger party
■ A misrepresentation is sufficient grounds for voiding a contract if it is
fraudulent or material
● P’s misrepresentation was both
 ■ Even if a party fully comprehends and agrees to the terms of an adhesion
contract, actual assent is missing if the signing party has little or no
choice but to accept the terms as stated
○ Affirmed
● Zuckerman v. Metropolitan Museum of Art (S.D.N.Y., 2019), pp. 462
○ P sold painting to a third party who then sold to D as they were fleeing Europe as
Jews in the 1940s
■ P sues D claiming they only sold due to economic distress and not their
own free will
○ To void a contract due to duress, the other contracting party must be the one that
caused the duress
■ Some form of economic duress is present during the formation of many
contracts
● Just because a party accepted the bad end of the bargain due to
the party’s stressful financial conditions is not enough to later void
the contract
■ Economic duress will void a contract only if the wrongful threat was
caused by the other contracting party itself, and the threat was so severe
that it prevented the distressed party from exercising their own free will
● There was an improper threat here, but it was from the
government and not the other party
■ This contract is not voidable
● In addition to the duress being from a third party, P had been
negotiating the sale of the painting with private parties for two
years, the painting was in a safe place, and they may have had
other options for raising the needed funds
○ These facts indicate that P was examining their options
and freely chose to enter this particular sale contract to
raise funds (vs. being forced to sell the painting by a
government or the other party)
Class 10/17/22

● Mutual mistake vs. negligent misrepresentation (which one it is depends on who caused
the error)
○ Negligent misrep.:
■ Error has to have a certain source
● One party took advantage of the other’s mistake
○ Mutual mist,:
■ Both parties are mistaken
● Duress and unconscionability are related in the same way mutual mistake: negligent
misrepresentation (which one it is depends on who caused the error)
● Duress
○ Germantown
■ If D had tried to sue for lack of consideration, it would depend on what the
document said
● If it said “in consideration for the $$, we won’t sue you” that would
count as consideration
■ If D had tried to sue for fraud, could have said that they misrepresented
the documents as her only agreeing to $160,000
● This is a plausible case, could win or lose
■ Main action here is duress, which is what claim was actually brought
■ Test:
● Improper threat
○ Implicit threat to criminally prosecute husband if they didn’t
sign
 ● No reasonable alternative
○ Restatement, Second Section 175(1) test (see above for full test):
■ Improper threat, AND
■ No reasonable alternative
● In Zuckerman, P (Leifman) might have been able to recover under unconscionability, but
it’s a hard action to win
○ Might also be able to recover under duress by a third party (Section 175(2)), but
would have to prove the other party knew about their situation at the time, and
the other party materially relied on the transaction even if they did know
■ Also, Restatement is not a statute and it may not have been a part of NY
law, and the judge could choose to look at this or not look at this if not
● Much harder to bring an unconscionability claim than a duress claim

Reading for 10/20/22

● Unconscionability
○ UCC 2-302
■ If the court as a matter of law finds the contract or any clause of the
contract to have been unconscionable at the time it was made the court
may refuse to enforce the contract, or it may enforce the remainder of the
contract without the unconscionable clause, or limit any unconscionable
clause to prevent any unconscionable result (pp. 482)
● Restatement, Second Section 208 says basically the same thing
■ When it is claimed or appears to the court that the contract or any clause
thereof may be unconscionable the parties shall be afforded a reasonable
opportunity to present evidence as to its commercial setting, purpose and
effect to aid the court in making the determination (ibid)
○ Court decides, not a jury
○ Elements:
■ Official comment to UCC:
● Whether, in the light of the general commercial background and
the commercial needs of the particular trade or case, the clauses
involved are so one-sided as to be unconscionable under the
circumstances existing at the time of the making of the contract
● Purpose is prevention of oppression and unfair surprise . . . and
not disturbance of allocation of risks because of superior
bargaining power (pp. 483)
○ Procedural vs. substantive unconscionability
○ Contracts of adhesion
■ Pre-printed contract that can’t be negotiated
■ Some courts use this term and some don’t
■ Most states don’t make this sufficient to prove procedural
unconscionability
● Lhotka v. Geographic Expeditions, Inc. (Cal App., 2010), pp. 491
○ P purchased a Mount Kilimanjaro hiking expedition from D and one P dies on
trip, surviving P sues for wrongful death
○ D required all purchasers to sign a form for limitation of liability and release
■ The agreement mandated mediation and arbitration and limited any
recovery to the amount paid for the trip
■ The agreement also provided that the purchaser would be responsible for
D’s attorneys’ fees if any action or claim was brought against D and that
the purchaser was obligated to pay for half of the mediator’s costs
■ D included a letter with the agreement, stating that a signed, unmodified
agreement was mandatory and that all other travel companies required
basically the same terms
■ D filed a motion to compel arbitration in accordance with the agreement
● Trial court denied motion
○ D appeals
○ The defense of unconscionability to a contract applies if a party does not have a
meaningful choice and the terms of the contract are unreasonably favorable to
the other party
■ The procedural component is satisfied where a party lacks the ability to
negotiate and a meaningful choice
■ The substantive component is satisfied where the contract allocates risks
in an objectively unreasonable or unexpected manner
■ GeoEx did not give Lhotka any meaningful choice or ability to negotiate
and required that the agreement be signed without modification and
represented that all other travel companies would require similar terms.
Certainly, Lhotka was not required to purchase the recreational activity of
hiking on Mount Kilimanjaro
● However, based on the actions of GeoEx, Lhotka has shown at
least a minimal level of procedural unconscionability
● The agreement is also substantively unconscionable
● The terms of the agreement are unreasonably one-sided
● No purchaser who suffered a serious injury could obtain close to
full compensation for the injury based on the limitation of liability to
the cost of the trip
● D also required P to travel far from home to pursue mediation or
arbitration and to pay for half of the mediator’s costs. Additionally,
the agreement required P to pay for D’s attorneys’ fees if an action
was brought on any claims covered by the agreement
● These terms were not mutual, because D was not limited in its
recovery of damages and was not liable for any attorneys’ fees. In
sum, several provisions of the agreement are unconscionable.
● Therefore, refusing to enforce the entire contract rather than
striking each unconscionable provision is appropriate.
Accordingly, the judgment of the trial court is affirmed.
● Zuver v. Airtouch Communications, Inc. (SC of WA, 2004), pp. 496
○ P worked for D and had arbitration agreement
■ The arbitration agreement contained a confidentiality provision, an
attorneys’ fees provision, and a limitation of Airtouch’s liability
■ The arbitration agreement also required Zuver to split the cost of the
arbitrator and contained a clause requiring that any unenforceable
provisions be severed from the agreement and the remaining terms
enforced
■ Zuver had a medical condition that worsened over time and eventually
caused her to take medical leave, D partially accommodates but not fully
■ After Zuver was on medical leave for approximately nine months, Airtouch
terminated her employment
■ Zuver sued Airtouch for disability discrimination
■ Airtouch moved to compel arbitration, and the trial court granted the
motion. Zuver appealed to the Washington Supreme Court.
○ The defense of unconscionability to a contract applies if a term of the contract is
overly harsh or one-sided
■ Arbitration agreements must generally be enforced
● However, standard contract defenses, such as unconscionability,
apply to arbitration agreements as well
■ Procedural unconscionability depends on:
● The manner in which the contract was entered, AND
● Whether there was an opportunity to review and understand the
terms of the contract, AND,
● Whether the important terms of the contract were hidden in fine
print
○ In this case, the arbitration agreement is an adhesion contract, because Zuver
was forced to sign the agreement as a condition of employment
■ However, Zuver was given several days to review the contract, and the
terms of the arbitration agreement were presented plainly in a separate
attachment
■ Therefore, Zuver had a meaningful choice in signing the arbitration
agreement and there is no procedural unconscionability
○ Next, the splitting of the costs of the arbitrator and the possibility of attorneys’
fees are not substantively unreasonable
○ Zuver has not presented evidence that the shared costs of the arbitrator would
have prohibited her from bringing any claims
○ Attorneys’ fees provision is permissive and allows the arbitrator to award
attorneys’ fees to either party where appropriate
■ However, the confidentiality of arbitration proceedings is substantively
unconscionable, because the confidentiality provision only benefits D
while preventing employees from discovering patterns of discrimination
○ The limitation of D’s liability is likewise substantively unconscionable, because
this limitation heavily favors Airtouch
 ○ Under the severability clause, these two provisions are struck from the
agreement, and the remaining provisions will be enforced
○ Trial court’s order compelling arbitration is affirmed

Class 10/19/22
● Test for unconscionability:
○ Procedural
■ When a party lacks the ability to negotiate or make another choice/take it
or leave it), or oppression and surprise
● Lhotka court thinks that having the “choice” to not participate in
the activity isn’t a defense here because then nobody can win
these suits ahd the economy collapses
● There’s an argument to be made here that “take it or leave it”
could be required by an insurer, and then the business can’t exist
■ Some courts will consider bargaining power
● Restatement finds this relevant, but UCC official comment says
it’s not relevant
○ Substantive
■ If a contract re-allocates risk in an objectively unreasonable/irrational
manner (Lhotka)
■ Lack of mutuality, one-sided nature
● No rule that something has to be two-sided and some things have
to be one-sided because only one side can provide something,
must be fair not parallel - but this can be a troubling sign
○ ex: someone buying a mountain climbing trip doesn’t have
to provide mountain climbing services in return
● Leff thought procedural and substantive unconscionability both should be present, and
even if one is weaker and one is strong you can still win, as long as they’re both present
○ Some courts think you only have to have one, and not both
● Remedies for unconscionability (equitable remedies):
○ Void whole/part of contract
○ Edit part of contract
● Unconscionability nests between negligent misrepresentation and duress
● When there is unconscionability, some courts will surgically remove those parts from the
contract, and others will do more cutting and remove other terms that aren’t directly the
disputed unconscionable terms
○ People can request what they want changed, but courts ultimately make the
decision
● Federal statute prevents courts from striking arbitration clauses simply because they are
arbitration clauses, they have to have some other issue such as unconscionability,
duress, etc.
● Zuver court allows for P to win with just substantive unconscionability and not procedural
● Other examples of procedural unconscionability:
 ○ Turning up the heat, locking the door, not offering water, this offer has to be
accepted now or it goes to someone else (when that’s a lie)
○ Doing things to trick/confuse/etc. the other party
● Williams v. Walker Thomas Furniture
○ Woman with little education and little money goes to a furniture store that caters
to her community, and store offers a monthly payment plan for a bed with $0
down
○ She then buys something else, and later another item
■ Has been paying on each item each month, but then fails to make
payment on one item and the store takes everything from her house and
loses her property
○ Contract has cross-collateralization clause, meaning each item acted as
collateral, and everything could be taken for missing one payment, even if she
almost owned other items in full
○ P wins unconscionability case, most famous case
● Germantown for unconscionability
○ Procedural is fulfilled because of threat of jail time
○ Substantive is weaker and could go either way because it is one-sided, but her
husband did steal the money

Reading for 10/21/22

● Illegality
○ A contract is illegal if it violates a statute or common law
○ In pari delicto rule = “where the parties are in equal guilt, the position of the
defendant is the stronger” (pp. 512)
■ Treated as an equitable defense
■ P might argue D was more culpable
● Danzig v. Danzig (Wash Ct. App., 1995), pp. 514
○ P was approached by D, an attorney, to solicit legal clients in exchange for one-
third of the client’s fee
■ Washington law prohibited attorneys from entering this type of agreement
○ Generally, a contract that is illegal or against public policy will not be enforced by
courts
■ However, this general rule is subject to an exception where
● The public cannot be protected because the transaction is already
complete, AND
● No serious moral turpitude is involved, AND
● The defendant is guilty of the greatest moral fault, AND
● Failing to enforce the contract would unjustly enrich the defendant.
This exception is known as the in pari delicto rule
● In this case, Jeffrey was prohibited from entering into the
agreement by state law and by the rules of professional conduct
that apply to attorneys
 ○ These prohibitions do not apply to Steven’s conduct as a
non-attorney
○ While Steven did submit false billing statements, Steven’s
moral fault is not as great as Jeffrey’,
○ The transaction has already occurred, and refusing to
enforce the contract will not further protect the public
■ Also, their relationship has broken down so now
they won’t continue to do this
○ Therefore, the contract should be enforced
○ Affirmed
● Public policy
○ Tries to prevent enforcement of contracts that are bad for public policy, but might
not have any other reason to avoid a contract
■ Judges are reluctant to use this often because of the separation of
powers (courts aren’t supposed to make the laws)
○ Non-competition clauses are evaluated using the “rule of reason,” which
examines:
■ If the clause is reasonable as to its duration
■ The geographic area that it covers
■ The scope and extent of the activity that it restrains
■ In examining this question, the court examines the totality of the
circumstances, including if the provision is needed to protect the
legitimate interests of the party in whose favor it operates, any undue
hardship that it will impose on the restrained party, and the general public
interest (pp. 524)
○ Syncom Industries, Inc. v. Wood (SC of NH, 2007), pp. 525
■ D worked for P as VP of sales
● Contract had non-solicitation and non-compete clauses of 3 years
● D left P and started a competing business with several of P’s
previous customers
● P sues D for breach of employment contract
■ Contract provisions that restrain competition are valid and enforceable
only if the restraint is reasonable
● Test for if a restraint is reasonable:
○ The restriction must be no greater than necessary to
protect the legitimate interests of the employer, AND
○ The restriction must not impose an undue hardship on the
employee, AND
○ The restriction must not be injurious to the public interest
● A restraint that prohibits former employees from soliciting
business from a company’s entire customer base is generally too
broad to be enforceable
 ○ However, a business is entitled to protect information
gathered by employees about customers during the course
of employment
■ An employee must have gained significant
knowledge or understanding of a customer during
employment in order to be prohibited from soliciting
business from the customer
● D argued that P was provided with inside
information about all of Syncom’s customers
○ However, a legitimate interest of an
employer must be direct and
concrete, rather than attenuated and
speculative
○ The restrictive covenants in the
employment agreements were too
broad, because the covenants
applied to every customer
regardless of whether P had
interacted with the customer or
gained knowledge of the customer
through employment
○ The trial court may be permitted to reform the overly broad covenants on remand
if Syncom acted in good faith regarding the employment agreement
○ Reversed in-party and remanded
● Minority
○ I.B. v. Facebook, Inc. (N.D.Ca., 2012), pp. 532
■ Parents bring class action when kids used their credit card information to
buy things on Facebook, D stored their credit card information, and
continued to charge it as kids used it without the parents’ permission (D
refused to refund)
■ Facebook moved to dismiss for failure to state a cognizable claim,
arguing that the minors could not disaffirm the transactions after
accepting the benefits
■ Contracts with minors are generally voidable, meaning a minor may
disaffirm the entire contract and recover amounts the minor paid without
returning any benefits received
● The California Family Code specifies that “a minor may make a
contract in the same manner as an adult, subject to the power of
disaffirmance”
○ Minors may disaffirm contracts either during minority or
within a reasonable time after turning 18
■ Reflects a well-recognized policy of shielding
minors from their own lack of judgment and
 inexperience and prevents people from taking
advantage of them
● Those who contract to sell minors goods or services do so at their
own risk
● Facebook counters that the minors cannot disaffirm the contracts
because they already received the Facebook Credits purchased
and used them online, so recovering the money spent would result
in a windfall
○ The key principle is that minors must disaffirm the entire
contract, not just undesirable parts
■ Minors cannot continue to take the benefits of a
contract and avoid only certain clauses
■ Under California law, minors may disaffirm all
contractual obligations, even for services already
rendered, without returning the value of those
services or other consideration the minor received
● Disaffirmance entitles a minor to recover
everything the minor paid, without returning
anything
■ Here, the minors seek to disaffirm their entire
contracts, not just one undesirable clause.
Facebook could have avoided the situation by
declining to contract with minors
○ Denies motion to dismiss
● Problem 14.1
○ Yes, if it wasn’t in the statute then it would be equal fault, which goes to D
● Problem 14.5
○ Yes, it’s time-limited and limited to people the employee had “direct or indirect
contact” with
■ Could argue there is not enough geographical narrowing and it poses an
undue hardship on the ex-employee
● Problem 14.6
○ Yes, within a “reasonable time” of turning 18

Class 10/21/22
● Minority
○ In contracts with minors, minor can disaffirm and get out of enforcement, but the
other party cannot
■ Policy reason is to protect minors who are immature, may lack
knowledge, are vulnerable, etc.
■ In California, minors don’t have to give back/pay for the value of the
benefits conferred on them already (if they can’t give it back, if it’s easy to
give back then they should)
● ex: video game credits vs. car
 ○ If you use a fake ID or try to trick someone into thinking you’re not a minor, you
can still disaffirm as a minor
○ Unlikely for a party to be able to use a fraud argument to get value back from a
minor after they disaffirm the contract because it’s probably not really material to
the reason the party went through with the contract
○ If a minor doesn’t disaffirm as a minor or within a reasonable amount of time after
turning 18, the contract then becomes binding
○ Exceptions to minority doctrine is if a contract for a necessities, which we want
minors to be able to contract for
● Illegality
○ Does not prevent the thing from happening if they are illegal, they just mean the
court won’t step in to enforce
○ If both people are equally culpable, that cuts against enforcement
● Public Policy
○ Contract provisions that restrain competition are valid and enforceable only if the
restraint is reasonable
■ Test for if a restraint is reasonable:
● The restriction must be no greater than necessary to protect the
legitimate interests of the employer, AND
● The restriction must not impose an undue hardship on the
employee, AND
● The restriction must not be injurious to the public interest

Reading for 10/24/22

● Excuse due to changed circumstances
○ Impracticability/purpose frustration (have become the same in modern law but
common law still differentiates them)
■ Evaluates:
● Materiality
● Risk allocation
■ Relief is only available if the change in circumstances imposes a severe
and unwarranted burden on the party seeking relief and it is not
appropriate to place the risk of change on that party
○ Impracticability/impossibility
○ Frustration of purpose
■ Defense
■ UCC doesn’t have an express provision like the common law on this
■ Usually the seller, not the buyer invoking, but if it’s the buyer, UCC 2-
615(a) will not apply (only benefits sellers)
● CNA International Reinsurance Co. v. Phoenix (FL Dis. Ct. App., 1996), pp. 681
○ Actor died in the middle of filming two projects
■ Insurance company included provision requiring actor wouldn’t use drugs
as part of contract
 ■ Ps sued D for breach of the actor-loanout agreements as a part of
insurance agreement (argues the actor knowingly took enough drugs to
kill him and by dying, breached)
○ Under contract law, a personal-services contract is rendered impossible to
perform by the death of the party obligated to perform the services
■ Generally, under the Second Restatement of Contracts § 261, a party’s
obligation to perform a contract is discharged if the performance becomes
impracticable, without fault of the party, due to an event that changes a
basic assumption upon which the contract was made
● Under § 262, one of these events is the death of a person who is
necessary for the performance of a duty
● CNA and American argue that Phoenix contributed to his own
death by consuming an excessive amount of illegal drugs
○ However, a rule that takes into account whether a person
contributed to his or her own death would be vague and
complex
■ This would cause confusion in cases that involve
drug and tobacco use, etc.
● Policy rationale
○ The better approach is to maintain the default rule that
death renders a personal-services contract impossible to
perform
■ Court cites Am. Jur. 2d “Contracts” §688 (1991). In
such contracts, “there is an implied condition that
death shall dissolve the contract” (pp. 683)
● Legal rationale (Restatement isn’t a statute,
and it hasn’t been established as the law in
this state, so they can go with something
else if they want)
○ Parties may choose to enter into contracts that address
specific behaviors such as illegal drug use, but Scala and
Geffen did not do so here
■ Therefore, the general rule applies in this case, and
Phoenix’s obligation to perform the actor-loanout
agreements was discharged by his death
○ Affirmed
● UCC 2-615 (a) - excuse by failure of presupposed conditions
○ “Except so far as a seller may have assumed a greater obligation . . . (a) Delay in
delivery or non-delivery in whole or in part by a seller . . . is not a breach of his
duty under a contract for sale if performance as agreed has been made
impracticable by the occurrence of a contingency the non-occurrence of which
was a basic assumption on which the contract was made or by compliance in
good faith with any applicable foreign or domestic governmental regulation or
order whether or not it later proves to be invalid” (pp. 684)
 ○ Blum, Brian A.; Bushaw, Amy C.. Contracts: Cases, Discussion and Problems
(Aspen Casebook Series) (p. 684). Wolters Kluwer. Kindle Edition.
○ ” (pp. 684)
● Clark v. Wallace County Cooperative Equity Exchange (KS Ct. App., 1999), pp. 684
○ P contracted to sell corn to D
■ Freeze damaged corn crop
● P claimed he was excused due to weather
● D disagreed and reduced payment
● P sues for reduced payment
○ If a seller contracts to provide goods that are not identified at the time of
contracting and the seller’s performance is then impaired by a foreseeable event
that damages the goods, the seller is not excused from delivering the goods as
promised
■ As a commercial sale, the transaction in this case is governed by the
Uniform Commercial Code (UCC), as adopted by Kansas
● UCC § 2-613 provides that a partial loss of goods that occurs prior
to delivery and not by the fault of either party will not render the
seller liable for the goods lost so long as the goods were identified
when the contract was made
○ This court ruled that the identification of crops must be to
the particular land on which they were to be grown
■ The Court of Appeals of Washington held that UCC
§ 2-613 did not excuse a farmer from delivering
wheat that fell short on account of hot, dry weather
because the farmer’s contract did not require the
farmer to grow the wheat himself or in any
particular location
● This court agrees
● Clark contracted to deliver 4,000 bushels,
and the contract did not require such
bushels to be grown by Clark on any
particular piece of land
● Impracticability doesn’t apply
○ The impracticability excuse may not be relied upon where
the seller could foresee the contingency that caused the
loss
○ Foreseeable here and could have gotten crops elsewhere
and provided those instead
○ If the court were to determine otherwise, farmers could
enter into forward commodity agreements without
specifying the land to be harvested, risk a crop failure, then
suffer no liability for a shortage
■ The whole point of these contracts with exchanges
are for farmers to allocate their risks, and if this had
 been a great year the farmer wouldn’t say it was
impossible for the exchange to purchase all his
grain, etc.
● This transaction/contract doesn’t make any
sense except for the risk allocation
○ P not excused from performance here
● Problem 17.5
○ The other party could turn it down, would have to advise client of the risks
● Linder v. Meadow Gold Dairies, Inc. (U.S. Dis. HI, 2007), pp. 687
○ P leased property to D
■ The lease agreement contained a liquidated-damages clause that
required D to pay up to five years’ worth of the present value of future rent
if D terminated prior to the expiration of the lease
■ A few months prior to the renewal, a new neighbor complained of raw
sewage and contamination of his land and water downstream from the
dairy farm. Guber threatened a lawsuit under the Clean Water Act
○ A party to a contract may be excused from performance under the doctrine of
frustration of purpose if:
■ A principal purpose of the contracting party was frustrated, AND
■ The frustration was substantial or severe, AND
■ The event causing the frustration was not foreseeable to the parties when
they entered the contract
○ Under this doctrine, the frustration of purpose must be so severe that the
frustration is not fairly regarded as within the risks assumed under the contract
○ Inconvenience, unprofitability, and reduction in profits are not sufficient to
establish severe frustration
○ In this case, Meadow Gold relies on the litigiousness of the nearby property
owner and the changes in environmental laws and regulations as unforeseen
events that have caused the operation of the dairy farm to become commercially
impracticable
■ However, compliance with previously enacted federal law is not a severe
frustration of purpose and was not unforeseen (if this was a new
regulation, there might be other remedies available)
● The likelihood of an owner of a nearby property alleging violations
of environmental laws does not change the underlying obligation,
which is compliance with the law
● Additionally, the downstream parcel was purchased by Mandalay
Properties prior to Meadow Gold’s renewal of the lease
■ Being a business-owner means you take on risks of having government
regulation, etc.
○ Performance is not excused
● 1600 Walnut Corp v. Cole Haan Company Store (E.D. PA, 2021), pp. 693
○ Dispute over lease during COVID-19 when store couldn’t operate due to gov’t.
Orders
 ■ P wants to recover rent, late fees, and attorney’s fees
■ Refuses D’s counterclaims
● In Pennsylvania, parties have broad discretion to allocate risks
between them in a contract
○ Only where there has been no contractual allocation of a
risk should a court determine the allocation based on
common law theories, such as impossibility and frustration
of purpose
■ Under the lease, D remains obligated to pay rent,
even in the face of a force majeure event
● The parties agreed in the lease that, if
“strikes, lockouts, labor troubles, the inability
to procure materials, power failure,
restrictive governmental laws or regulations,
riots, insurrection, war or another reason not
the fault of or beyond the reasonable control
of the party” cause “delayed, hindered or
prevented performance,” Cole Haan is not
relieved of its obligation to pay rent (pp.
694)
○ COVID-19 falls under this
agreement
Class 10/24/22
● Taylor is the case that created modern impracticability approach
○ Theater burned down, court ruled it would be impracticable to require a party to
still provide that theater
● Restatement’s (Section 261) approach to impracticability only applies if the change isn’t
the party who was affected’s fault
○ Section 262 says death means it’s impracticable, but Section 261 says it has to
be:
■ Impracticable, AND
■ Faultless
● A contract law system that doesn’t take fault into account allows people to enter into
agreements with people they might not ordinarily trust
○ A contract law system that takes fault into account does the opposite
● “Fault” portion of the doctrine could be read more as “cause” than moral fault
● In many cases, lots of this litigation could be avoided (and some courts do avoid it by
looking to this) by looking at provisions in the contract or left out that both parties agreed
to about this set of circumstances
○ The parties can allocate these risks between each other implicitly in the nature of
the deal or in a force majeure clause (a clause in a contract relieving a party of its
responsibility for events beyond its control (pp. 686)
● Impracticability is a doctrine that courts can really go either way on based on how they
see foreseeability, fault, etc.
 ○ For this reason, it’s hard to predict who will win a certain case
○ Always look to risk allocation to try to predict how a case will come out
● Krell v. Henry extended doctrine established by Taylor by holding that performance
would also be excused where a change in circumstances following the contract defeated
the mutually understood purpose of the contract, but the assumption must be
fundamental to the contract, and it must be shared
● For both frustration and impracticability, there must be a new occurrence and surprise
present (new occurrence couldn’t have been foreseeable)

Reading for 10/26/22

● Interpretation
○ If a contract’s terms or the parties’ intentions when they entered the agreement
are unclear, a court may look to contextual evidence to fill in gaps, or may
decline to enforce the contract entirely if there is not enough information or
evidence (ex: the parties did not know the terms or that they were entering a
contract at all)
○ Interpretation = process of discerning the meaning reasonably intended
(objective standard) by the parties
Construction = process of determining the legal consequences of an agreement
○ In unusual situations when a court cannot resolve a dispute over the meaning of
a contract through interpretation and construction, it may invoke the doctrine of
misunderstanding
■ Applies when parties manifested apparent assent to the same language
but have materially different understandings of the meaning, and the court
can’t use objective criteria to find for one party’s understanding over the
other (pp. 557)
■ In these cases, courts may find there is no contract to enforce
○ Restatement, Second and the UCC take a highly contextual view of contract
interpretation
■ Restatement = words and actions are interpreted in light of all the
circumstances
■ UCC = defines agreement as bargain of the parties as found in their
language or inferred from other circumstances; defines contract as total
legal obligation that results from the agreement (ibid)
○ When interpreting, courts look to:
■ Patterns of practice in trades or places can influence what courts infer
should be understood as a part of an agreement
● Commercial custom = “usage of trade”
○ Can be informal and established through evidence or
expert testimony, or can be formal and embedded in trade
codes or industry practices
■ Course of dealing = pattern of behavior between the parties
 ● If parties engage in a series of transactions, the way they behaved
in earlier transactions may create a common understanding of
what to expect in future transactions
○ Restatement, Second Section 203
■ Prefers an interpretation which gives a reasonable, lawful, and effective
meaning to all terms rather than one that leaves a part that is
unreasonable, unlawful, or of no effect (pp. 558)
● If context clues are in conflict, courts prefer to look to express
terms over course of performance, course of dealing, or usage of
trade
○ Courts generally give course of performance more weight
than course of dealing or usage of trade, and course of
dealing more weight than conflicting sage of trade
■ Order of weight given:
● Course of performance
● Course of dealing
● Usage of trade
● Problem 15.1
○ Would need facts that establish the course of performance and course of dealing
(and industry standards) with focus on past transactions, including past
communications, documentation of delivery and previous invoices, and other
evidence that shows the informal/unwritten agreement existed
■ Some of this could be recovered through the client, some might need to
be acquired through discovery
■ Would want to prove the delay wasn’t acquiescence
● Problem 15.2
○ Would have to establish that there was a prior understanding that the other party
wouldn’t sell to other distributors, same process for finding evidence as 15.1
■ Might want to argue the industry standard is to not use another distributor
and undercut their current distributor
● Terry Barr Sales Agency, Inc. v. All-Lock Co. (6th Cir., 1996), pp. 560
○ D manufactured car locks and latches
■ Parties entered oral agreement where P sold D’s products to car
manufacturers for a commission
■ P serviced some pre-existing sales that were previously serviced directly
by D for a lower rate commission
■ Fairly common for these type of agreements to pay sales agent for the life
of the part because of the resources required to procure an initial contract
● Once the contract was obtained, buyers could continue ordering
the same parts for many years
■ D terminated the oral agreement with Barr and refused to pay post-
termination commissions after 90 days
● D argued that the course of performance established that the
parties did not intend for the agreement to provide for post-
 termination commissions, as P did not do so for a few
commissions
■ P sues D for breach of contract
○ Under contract law, a court must consider the contract of employment and the
intention of the parties in order to determine whether an agent is entitled to
commissions on sales made by someone other than the agent
■ Under the common law, an agent is entitled to commissions for any sales
where the agent was the cause of procurement
● In this case, Barr and All-Lock did not expressly agree as to
whether Barr would be entitled to post-termination commissions
○ The facts do not clearly establish whether Barr and All-
Lock intended for Barr to receive post-termination
commissions
■ The fact that P received commissions for inherited
accounts does not establish the intent of the
parties, because those sales were generated
directly by D rather than by another sales agent
● Additionally, Barr agreed to a lower
commission rate for those accounts
■ Similarly, the fact that Barr did not demand post-
termination commissions on a few specific
accounts was explained by D and does not
establish the intent of the parties
● These commissions were low value or
involved P’s former employees
○ Thus, material facts are in dispute that cannot be
determined on a motion for summary judgment
○ Reversed summary judgment
■ Serious issues of material fact here
● If a contract is in writing, courts will generally look to the writing first, but if it is
ambiguous the court may then look to contextual evidence
○ Court first decides if writing is ambiguous
■ If so, then moves to contextual evidence
● Not voidable through vagueness because price isn’t really unclear (material term), but
just the length of time of the commission
● Not covered by statute of frauds because it’s not sure to be over a year, because part
could last much shorter than a year
● Not covered by unjust enrichment because if someone claims breach of contract courts
are weary of claims like unjust enrichment that claim there is no contract at all, when the
claim of breach acknowledges there is a contract
● Evidence offered in the case in each category:
○ Course of performance
■ P stopped getting paid twice when they stopped getting account
● This looks a bit like acquiescence
 ■ P inherited past accounts
● But commission was reduced
○ Course of dealing
○ Usage of trade
■ Life of the part is a trade practice
■ Letter confirming trade practice
● D did not accept this term and instead objected, so it did not
become a part of the course of performance

Class 10/26/22
● Interpretation = interpretation and construction
○ Interpretation = using what is there to determine what it means or was supposed
to mean
○ Construction = creating a meaning when it’s unclear what the parties meant,
imposing a meaning where there isn’t one, and imposing the interests of the legal
system rather than that of the parties when they entered the contract
● Restatement, Second Section 203 and UCC 1-303 cover interpretation
○ Interpretation should result in something lawful (probably construction because
this is the court’s interest, maybe also interpretation if the parties had that
intention), reasonable (probably interpretation because most people make deals
that make sense), and effective (probably more interpretation as parties want
contracts to be effective and support their goal, but could also be some
construction) is better than an interpretation that does the opposite
■ Ties get broken in favor of the former
● When court is looking at how interpretation should come out,
they’re trying to look for an outcome that is lawful, reasonable, and
effective
● Interpretation cares about the environment (in order of weight - in theory, though courts
may use discretion on giving one more weight than another if evidence in one area is
stronger):
○ Course of performance
■ Context of this deal between the parties
○ Course of dealing
■ Context of prior agreements between the parties
○ Usage of trade
■ Context of the industry/custom
● Can introduce terms that the contract was otherwise silent on, so
long as they are custom to the industry/field/trade
● Interpretation sometimes means contradicting the text
○ Burden to do this is high, but if the course of performance, course of dealing,
and/or usage of trade contradict the language of a contract, interpretation might
contradict the text
 ■ Courts will examine if the other party accepted or acquiesced to
something in this contract or a past contract, which means the
interpretation of the court might differ from the text of an agreement
● If someone is “nice” often and accepts or does not object to
objectionable behavior, they might later lose the ability to claim
that was really a part of the contract

Reading for 10/28/22

● Legal history of interpreting legal agreements
○ Classical → contextual → neoformal
● Right Field Rooftops LLC v. Chicago Baseball Holdings, LLC (U.S.D.C, 2015), pp. 570
○ Dispute over “any expansion” clause that allows expansion with government
approval in settlement agreement between rooftops nearby and Cubs
○ Courts interpret contracts to effectuate the parties’ intent, using the plain and
ordinary meaning of the words used, without extrinsic evidence absent ambiguity,
and as a whole without making any part meaningless or unnecessary
■ Court finds that the section this part of the contract was in makes it so
that “any expansion” means anything adding mass/volume to the stadium,
including windscreens and additional seating
● Court won’t read ambiguity into a clause that has none, as P has
asked them to do by considering extrinsic context (outside of the
contract)
○ “any” means “any or all” so all barriers are included here
○ Since there’s no ambiguity, no additional evidence will be
considered
● Even if the court considered extrinsic evidence (which they’re not),
the result would be the same, but doesn’t really consider extrinsic
evidence because they are formalist, so they pick and choose one
fact that leans their direction
○ This court uses plain meaning for interpretation of the contract, some other
courts do not
● Problem 15.3
○ Would define “expansion” to be more narrow in the contract, and would separate
sections about windscreens and additional seating
○ Could change language to say that the only government approved actions that
are allowed under the contract would be something specific, like growing the
perimeter of the stadium, etc.
● Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co. (SC of CA, 1968), pp.
576
○ P sues for damages for injury to property under and indemnity clause of a
contract to replace part of a steam turbine - conflict over whether or not the
insurance was meant to cover injuries to P’s property
■ D appeals previous judgment for P
 ○ Lower court declined to hear extrinsic evidence that prior agreements had been
treated differently because they said the plain language of the contract was clear
■ This court takes issue with that, claiming that reflects a mistaken belief
that words have an inherent meaning
● Under this view, contractual obligations flow from the words used,
not the intention of the parties
● Exclusion of extrinsic evidence (“parol evidence”) would only be
appropriate only if it were feasible to determine the meaning of the
parties from the words alone
● Parol evidence can’t change the meaning of a contract, but should
be used to interpret what the parties intended the meaning to be
○ If a judge thinks the words are clear there is still a
possibility that the parties wanted the language to have a
different meaning
● If the court decides that the wording could be fairly read as either
interpretation offered, parol evidence is relevant to prove either of
● Atwater Creamery Co. v. Western National Mutual Insurance Co. (SC of MN, 1985), pp.
583
○ Dispute over coverage for robbery where insurance in an agreement required
evidence of “forcible entry”
○ The reasonable expectation of an insured as to coverage under an insurance
policy will defeat the literal language of the policy
■ The requirement that a burglary include visible forcible entry is intended
to protect an insurance company from fraud and inside jobs
● However, even if there is no evidence of fraud or an inside job,
this definition can act as an exclusion
● Thus, in situations where the burglary definition would prevent the
insured from collecting under an insurance policy following a
burglary, courts have analyzed the policy according to the
reasonable expectations of the parties
● The analysis of a policy in light of the reasonable expectations of
the parties gives credence to the disparity in bargaining power
between the insurance company and the insured, the insured’s
inability to understand the policy, and the insured’s reliance on the
insurance company to provide a suitable policy that meets the
insured’s needs
● Exclusion would penalize an insured who was the victim of a
skilled burglar who did not leave evidence of forcible entry
● When Atwater obtained the policy, Atwater’s expectation was that
burglaries would be covered regardless of whether there were
signs of visible forcible entry
○ Because the policy’s literal definition of burglary defeated
the reasonable expectations of Atwater when Atwater
obtained the policy, coverage under the policy is proper
 ○ Reasonable expectations doctrine
● Hahn v. Geico Choice Insurance Co. (SC of AK, 2018), pp. 588
○ Dispute over whether P could get uninsured motorist coverage for landing “upon”
an insured’s vehicle as the result of an accident
○ Court looks to:
■ (1) the language of the disputed provisions in the policy
■ (2) other provisions in the policy
■ (3) extrinsic evidence, and
■ (4) Case law interpreting similar provisions
○ No coverage
■ Any ambiguous terms are to be construed in favor of the insured
● However, ambiguities only exist when there are two or more
reasonable interpretations of particular policy language
○ “The mere fact that two parties to an insurance contract
have differing subjective interpretations of that contract
does not make it ambiguous” (pp. 592)
■ It would be an error to “consider a single term in isolation” (pp. 590)
● An interpretation of an insurance policy must also account for the
language of other policy provisions, relevant extrinsic evidence,
and case law interpreting similar provisions in order to determine
what the reasonable expectations of an insured would be (ibid)
● Courts may use “gap fillers” that would be reasonable in the circumstances to fill out a
contract with missing terms
● UCC 2-311 - Options and Cooperation Respecting Performance
○ An agreement that otherwise meets requirements to be a contract isn’t made
invalud if it leaves particulars of performance to be specified by one of the parties
■ Such specification must be made in good faith and reasonable
○ Unless otherwise specified, shipment specifications or arrangements are the
seller’s choice
● Family Snacks of North Carolina, Inc. v. Prepared Products Co. (8th Cir., 2002), pp. 595
○ Dispute over contract that did not specify if one party had to provide pricing
before the other could provide an order, or vice versa
○ When an agreement is sufficiently detailed to be a binding contract, a court will
supply a reasonable term necessary to determine the parties’ duties and rights
that is missing from the contract
■ Although the price term was not directly specified in the agreement, the
price could be determined using the detailed formula contained in the
agreement
■ In this type of case, the contract may still be enforceable
● Under UCC 2-204, the single missing term does not cause the
contract to be unenforceable for indefiniteness, due to the fact that
the parties intended to make a contract and that there is a
reasonably certain basis for giving a remedy
 ○ Therefore, this court must supply a reasonable term under
the circumstances
■ D was responsible for first identifying the products that Prepco wished to
purchase
● D did not do so and thus breached the contract
○ Court uses UCC to fill gap in the contract

Class 10/28/22
● Reasons people use written contracts:
○ Avoid statute of frauds
○ Symbolic of when negotiation is finished
○ Creates a record of what the deal is
● Every jurisdiction privileges what’s written, though some do it more than others
● Two step process for interpretation:
○ 1) Is the contract clear or are there ambiguities (related to what the litigation is
about)?
■ If not, 2) court will state the meaning as a matter of law (no jury)
■ If yes, 2) factfinder needs to determine the meaning using lots of
evidence (parol evidence/extrinsic evidence) (might be judge or jury)
● Formalist vs. contextualist courts differ when deciding what is ambiguous (step 1))
○ Formalism:
■ Old way, but still used in some jurisdictions
■ Contract itself will offer clarity about whether it’s ambiguous or not
○ Contextualism:
■ Inclined to use parol evidence to determine if the contract is ambiguous in
step 1)
■ Similar evidence used in step 1) and step 2), and unclear why the steps
are separated besides juries sometimes being used in step 2 so judges
have a chance to contextually make a decision without a jury
● Contra proferentem
○ If you draft a contract, it should be interpreted against you
■ If it’s unclear, it will not benefit the one party that drafted the contract
○ Goes against the purpose of interpretation which is to identify the intentions of
the parties (and doing this means you’re definitely getting a parties’ interpretation
wrong)
● With construction, some courts will find ambiguity if public policy justifies it (basically to
justify their pre-determined outcome)

Reading for 10/31/22

● Parol evidence rule
○ Relevant when one of the parties argues that the real expectations of the parties
contradict or supplement the written terms
○ Bars extrinsic evidence, including prior or contemporaneous oral agreements and
prior or contemporaneous written agreements that contradict, modify, or vary the
 contractual terms of a written contract in writing that the parties intended to be
completely integrated (when the written contract is intended to be a complete and
final expression of the parties’ agreement)
● Myskina v. Condé Nast Publications, Inc. (S.D.N.Y., 2005), pp. 630
○ Model’s photos used in publication she was promised they would not be used in
○ The parol-evidence rule bars the admission of any prior or contemporaneous
negotiations or agreements offered to contradict or modify the terms of a written
agreement
■ If an agreement is not fully integrated, parol evidence may only be
admitted to complete the agreement or resolve ambiguity in the
agreement
● An agreement is fully integrated if the parties intended the
agreement to be a final and complete expression of all the terms
of the agreement
○ Parties to an agreement may express this intent through a
clause in the contract, which is commonly referred to as a
merger clause
■ If the agreement does not contain a merger clause,
the parties’ intent is determined by reading the
writing in light of the surrounding circumstances
and by determining whether the agreement was
one that the parties would ordinarily be expected to
embody in the writing
■ The oral agreement is inadmissible under the parol-evidence rule
● The release mentions no other agreements and plainly sets forth a
simple release consenting to the use of the photos
○ Agreement said D could use the photos for any editorial
purpose
● The oral agreement to restrict the publication of the photographs
was fundamental to the entire transaction and would be expected
to be included in the written agreement
○ However, it was not
■ Therefore, the release is a fully integrated
agreement
■ Additionally, the alleged oral agreement would
contradict the express terms of the written release
■ The oral agreement does not qualify for the
exception to the parol-evidence rule for collateral
agreements, because the alleged oral agreement
was not collateral
● The oral agreement was central to
Myskina’s understanding of the release
○ No mutual assent argument because not speaking the language is not an excuse
 ○ No consideration argument because they agreed to consider to put her in the
magazine (if the agreement says this, which it likely did)
○ No interpretation argument because the release gave D the right to use the
photos for editorial purposes, which was defined and meant anything besides an
advertisement

Class 10/31/22
● **Parol evidence rule vs. interpretation
○ Parol evidence rule never stops interpretation
■ When it’s unclear which one is happening in a case, sometimes lawyers
can argue that what’s happening is interpretation and not to
contradict/supplement, so parol evidence rule doesn’t apply
○ Parol evidence rule arises when someone questions the contract’s sole authority
over the deal
○ Interpretation arises when someone agrees the contract rules the deal, but they
think a term is being misunderstood/misconstrued, etc., and used when part of a
contract is ambiguous
● Parol evidence rule (common law)
■ 1) Is there a contract with some degree of integration?
● Is it fully integrated (final and complete)?
○ Parol evidence gives maximal protection
○ Fully integrated contracts, typically (factors, not elements):
■ Don’t refer to an outside deal
■ Have a merger/integration clause (no outstanding
agreements have any weight and they are all
merged here)
● Courts give these lots of weight and will
respect them unless there’s something like
fraud
■ Terms are straightforward/clear/unequivocal
■ Contract text may be long and in formal document
● Is it partially integrated (final)?
○ Parol evidence rule gives partial protection
● Is it neither (fragments of communication that are incomplete; ex:
drafts, private correspondence, emails, etc.)?
● It can be hard to tell if something is fully or partially integrated, but
might be the same result either way
■ 2) Is there evidence here that qualifies as extrinsic or parol evidence?
○ Oral agreements = parol evidence
■ Parol evidence is suspicious of these because they
don’t want fraud or misremembering of agreement,
but less suspicious of oral agreements made after
the contract
 ● Parol evidence is especially suspicious of
oral agreement before contract
○ More likely to be misremembered or
otherwise problematic
● Parol evidence is also especially suspicious
of contemporaneous oral agreements (at
the time of the contract/as a part of the
same transaction even if separated by a few
hours)
○ Court figures people would write
these down if they really wanted
them in the contract
● Parol evidence allows for oral agreement
after agreement is made
○ Written agreements = can be parol evidence if not the
main agreement in question
■ Subsequent and contemporaneous written
agreements are allowed, but not pre-dated
agreements (precluded by parol evidence rule)
■ 3) Purpose of bringing in the evidence
● Contracting main agreement
○ Never allowed to contradict main contract with parol
evidence (check above criteria to see if it counts as parol
evidence)
● Supplement main agreement
○ If it’s allowed depends on step 1) - how integrated the
contract is
■ If it’s fully integrated, not allowed to supplement
● Neither (other)
○ Clarify = always allowed to use parol evidence for this
(sometimes called interpretation as well, parol evidence
rule will never stop interpretation, though other things
might)
○ Collateral = agreement separate from/to the side of the
main agreement (even if they’re related, they’re separate
in nature)
■ When this is the case, there should be no surprise
that the other agreement might be in a separate
writing/oral agreement, and that doesn’t bar it from
being admissible
■ Courts don’t have to decide if something is fully or partially integrated if
they decide it’s integrated with respect to the part in dispute, and courts
don’t have to decide if evidence is contradicting or supplementing (and
these two uncertainties can move together)
 ● Logic of parol evidence rule
○ Prevents misunderstandings and/or lies about what made it into an agreement
(but isn’t in the final agreement in writing) from being introduced to a jury
○ Prevents expensive mistaken-ness and abuse and strengthens the case of those
parties that did put any final changes to the agreement in writing

Reading for 11/2/22

● Segal Wholesale, Inc. v. United Drug Service (D.C. Ct. App., 2007), pp. 640
○ Tobacco and convenience store dispute over sale price of tobacco
○ Agreement was partially integrated, so evidence of some former oral agreement
about a sale price should not be allowed and lower court was correct in their
judgment

Class 11/2/22
● Shortened three-step test for parol evidence
○ Must be writing, must be at least partially integrated
■ If fully integrated (might have merger clause, final and complete),
armored against contemporaneous or past parol evidence for
contradicting/supplementing
● Find a flowchart for parol evidence rule
● UCC parol evidence rule
○ Terms may not be contradicted by prior oral or written agreements, but they can
be supplemented unless the parties made clear the agreement was complete
and final
○ Interpretation is always allowed
○ Course of performance, course of dealing, and use of trade are also allowed to
be used to supplement and interpret no matter if the contract is fully integrated
(this is what differs from the common law)
■ Merger clauses don’t have power over course of performance, course of
dealing, and use of trade
● Problem 16.2 (on an exam would want to run a statute of frauds analysis and 2-207)
○ Common law
■ a)
● i) YES, allowed
○ Partial integration - parties think there is a final agreement,
but there might be some disagreement about which one it
is and how they’ve been blended; it’s a past or
contemporaneous (unclear) oral agreement being offered
as evidence; this is a supplementation because neither of
the pre-filled forms says anything about this so it’s not
contradicting anything
● ii) YES, allowed
○ Partial integration - parties think there is a final agreement,
but there might be some disagreement about which one it
is and how they’ve been blended; prior written agreement
as evidence; supplementation
● iii) YES, course of dealings argument so clarifying or interpreting
○ Interpretation is always allowed, even though you're using
a kind of extrinsic evidence (even if you consider this a
prior oral agreement, which it might be)
● iv) YES, usage of trade argument so clarifying or interpreting
○ Interpretation is always allowed, even though you're using
a kind of extrinsic evidence
■ b) YES, course of performance, so clarifying or interpreting
■ c) iii, iv, and b are all the same (YES), still interpretation; i and ii are NO
because the merger clause makes this contract fully integrated
○ UCC
■ a)
● i) YES, UCC allows use of consistent additional terms if it’s not a
complete and exclusive agreement (UCC doesn’t use the jargon
of integration, though you can)
● ii) YES, UCC allows use of consistent additional terms to
supplement if it’s not a complete and exclusive agreement
 ● iii) YES, course of dealing is explicitly allowed
● iv) YES, usage of trade is explicitly allowed
■ b) YES, course of performance is explicitly allowed
■ c) i and ii are NO, iii iv and b are NO (same as common law)
● If parol evidence is allowed, it doesn’t mean that it’s true or that the party wins the suit,
but just that the factfinder is allowed to consider it
● Parol evidence rule is just one way that evidence could be excluded, other places might
be interpretation, etc.
● Way to get out of parol evidence rule is to argue you’re really doing interpretation (a bit
stronger with the UCC because you’re allowed to supplement with course of
dealing/performance and usage of trade, not just explain)
● The difference between the UCC and the common law on parol evidence is the degree
of certainty when using usage of trade or course of dealing/performance and the
strength of the arguments a lawyer can make

Reading for 11/4/22

● Breach:
○ If a condition is not fulfilled without excuse, the performance contingent on it does
not need to be rendered
■ If a promise is broken, the promisee has a claim for breach
● If the term is a promissory condition (a promise and a condition),
breach entitles the other party to both decline its own performance
and claim breach
○ What makes a breach material:
■ Importance
■ Extent to which the breaching party will suffer undue forfeiture
■ Whether the breach violated standards of good faith and fair dealing
○ Partial breach = material breach capable of cure
■ If cure does not completely eliminate the breach, the aggrieved party can
still claim damages for remaining performance, but cannot terminate the
contract as a whole (pp. 743)
■ If breaching party cannot effect a cure or refuses to, material breach
becomes total and aggrieved party can terminate the contract AND claim
damages for breach (ibid)
● Al Hirschfeld Foundation v. Margo Feiden Galleries Ltd. (S.D.N.Y.), pp. 744
○ Gallery lost some of cartoonist art and made and sold some high quality
reproductions, in breach of contract
■ Contract allowed for termination for cause with 90 days notice
● Defines “for cause” as material breach that goes uncured for 30
days
○ Gallery breached licensing agreement by producing and selling giclee prints of
artworks
○ Gallery breached licensing agreement by failing to maintain custody of artworks
consigned to it by foundation
 ○ Gallery's breaches of licensing agreement were material
■ Court reasons this breach was material because this defeated the
purpose of the contract for P (NOT because there was some large $$
loss)
■ Doesn’t matter if P planned to license the images sold without their
permission, it’s about the conduct violating the purpose of the agreement
○ P entitled to unilaterally terminate licensing agreement based on provisions in the
contract allowing for a cure that were not met
■ P could also recover financial losses if they can show them
■ P could also bring an action for unjust enrichment (separate from unjust
enrichment in contract law) if they wanted to, as D was making an
unauthorized profit using their property
● Raymond Weil, S.A. v. Theron (S.D.N.Y., 2008), pp. 748
○ Charlize Theron watch deal
■ P wants termination, all of their money back, and damages
○ Contracts may contain provisions that permit a party to cure a breach of contract
before the non-breaching party is entitled to sue over the breach
■ The primary goal of contract damages should be protecting expectations
while avoiding waste
● The concept of cure aligns with this goal
■ Additionally, the remedial system is designed to compensate for losses
related to the benefit of the bargain rather than punish breaches of
contracts
● Thus, the concept of cure is also consistent with this design
■ Here, D breached the endorsement contract twice
● The first time was by permitting D’s photograph with the
Montblanc jewelry to be displayed at the trade show
○ The breach was the display of the poster, because D was
not permitted to participate in Montblanc’s advertising
○ This breach was cured within the contractual period of five
days by the removal of the photograph within 36 hours
● The second breach occurred when D wore a competitor’s watch to
the SXSW press conference
○ This breach resulted in photographs of D wearing the
competing product being available on the Internet and
ultimately being used by the competitor
■ This result should have been foreseeable for a
famous actress
● Therefore, this breach could not be cured
■ Accordingly, P’s motion for summary judgment is granted as to the
second breach, and D’s motion for summary judgment is granted as to
the first breach
● Problem 19.1
○ Breach is likely still material but cure is fairly easy here (just take off the watch)
● Problem 19.2
○ Breach is total, and there is therefore no cure right, if:
■ The material terms of the contract can’t be cured
● In this case, it’s impossible for the issue to be fixed by 5pm as per
the agreement, which was a material term, so she can terminate
○ Usually, timing of an agreement is just a term but not
material but in this case it was a material term because the
restaurant needed to open after it was fixed
■ Time is of the essence clause can signal this
● If they discussed the urgency or the agreed
upon rate reflected the urgency, that might
also be evidence that this was material
outside of a clause like this
● UCC 2-601 - Buyer’s Rights on Improper Delivery
○ Unless otherwise agreed, if the goods or tender of delivery fail in any respect to
conform to the contract, the buyer may:
■ Reject the whole, OR
■ Accept the whole, OR
■ Accept any commercial unit or units and reject the rest
○ Perfect tender rule (not in common law, more pro-buyer) = very low threshold for
materiality, almost everything is material (but still considers materiality when you
get to considering cure)
○ Different from common law because of perfect tender rule and ability for buyer to
accept some and reject other units
○ Not as powerful as it sounds because it tends to also find a very liberal cure right
to remedy material breaches
● Problem 19.5 & 19.6
○ In common law, the question of if the paper was a material contract, and likely
would be because the contract governed the printing of the contract, not just
delivery, etc.
■ Could be cured within a “reasonable time” - if it was after the date it would
likely be immaterial unless there are facts we’re missing, but could still
recover for the breach
○ In UCC, yes right to reject them all, and cure provision would allow for seller to
reprint
● Anticipatory repudiation
○ When a party makes it clear they will not perform, other party can proceed with
breach claim without having to wait until due date for performance
● UCC 2-610 - Anticipatory Repudiation
○ When either party repudiates the contract with respect to a performance not yet
due and the loss of which will substantially impair the value of the contract to the
other, the aggrieved party may:
■ For a commercially reasonable time, await performance by the
repudiating party, OR
 ■ Resort to any remedy for breach even though they have notified the
repudiating party that they would await performance and urged retraction,
AND
■ In either case suspend their own performance
● Princes Point LLC v. Muss Development (NY Ct. App., 2017), pp. 775
○ Dispute over contract that was amended due to changes in ability to get
government approval post-Hurricane Katrina
■ D claims that P suing them to get out of the contract in itself is repudiation
○ Commencement of a rescission action is not in itself an anticipatory breach, and
thus D could not bring a breach suit at this time
■ This is because the party suing says they will do what the courts orders
them to do, even if the court decides against them
● Problem 19.7
○ a. This is repudiation, changes the contract materially and buyer may be unable
to perform with the term Serena is trying to add, and Serena is saying I won’t
perform if you don’t agree to change the contract
○ b. Maybe, he breached the contract by not showing up on time, and in response
she is either terminating because of a material term, or if it wasn’t material,
repudiates
■ Probably, he materially breached and then cured, and then she
repudiated
○ c. No, she hasn’t said to him that she can’t perform; there are lots of things in life
that make performance unlikely, but that doesn’t equal repudiation - someone
has to voluntarily and affirmative say they will be unable to perform
■ Contract law wants to try to give people a chance to come through and
perform, even if it seems unlikely that they can’t
■ He should ask for assurance instead
● UCC 2-609 - Right to Adequate Assurance of Performance
○ When reasonable grounds for insecurity of the other’s performance arise, the
other party may in writing demand adequate assurance of due performance and
until they receive that performance may suspend any performance for which they
have not already received the agreed upon return (pp. 779)
○ After receipt of a justified demand failure to provide assurance within a
reasonable time not more than 30 days is a repudiation
● Problem 19.8
○ a. No
○ b. Yes, in common law you can ask for assurance (and in UCC you can ask for
assurance if there is reasonable insecurity in the other party’s performance)
● Problem 19.9
○ He’s entitled to ask for this assurance, and there’s pretty good grounds here to
think she did not give assurance and he has pretty secure grounds for
termination
● Mitigation principle
 ○ Contract law places a burden on the aggrieved party to reduce the negative
consequences of a breach (pp. 840)
○ Aggrieved party may choose to do nothing in response to a breach (no duty), but
the ability to collect damages from the breach depends on the aggrieved pary’s
reasonable efforts
■ Will not be able to recover damages for consequences that could have
been avoided through appropriate action
○ Typically raised as an affirmative defense by the breaching party
■ Breaching party has burden to prove the other party failed to mitigate
damages (with reasonable efforts)

Class 11/4/22
● Breaches are breaches no matter how bad (and damages may or may not be paid
depending on if they are necessary to make the other party as well off as they would
have been if performance was completed), but really bad breaches (material breaches)
give the other party the option to terminate as well
● Just because someone has a right to cure, and cures, doesn’t mean they don’t still owe
money (depending on how good their cure was), but means they get out of termination
● Material breach = frustrates the purpose of the contract (not necessarily a large $$ loss,
but more about the reason for the contract’s existence)
● Policy = reason material breach allows for termination is because it allows one party to
stop the bleeding once a contract is breached to that extent (ex: gallery has shown they
are irresponsible in keeping paintings safe, so the other party shouldn’t have to keep
relying on them - and we don’t want to just order injunctions against them for the same
reason we don’t want to order specific performance often, we want the party to be able
to choose their relationship; party doesn’t want money they want their art back)
● The reason only material breaches lead to termination is because otherwise parties are
watching super closely for any breach and any small technical violation because they
want out of the contract for some other reason (ex: market has changed and there are
new deals available, etc.)
○ This wouldn’t build trusting relationships, which is a goal of contract law
● Common law has a rule that material breaches allow for termination, regardless of what
the contract provisions say
○ Parties include provisions like this anyway because common law default is vague
and parties want specificity about what the contract’s material terms are
● Cure:
○ Exists by default, even if a contract doesn’t specify a cure right
○ Curing means doing enough so that the breach is no longer material
○ Exists because we want parties to be able to amicably resolve a dispute on their
own
■ Furthers the ability for parties to trust one another, and allows for another
party to remedy an issue they may not see as material before the other
party moves to terminate
● Breach
 ○ Non-material
■ Remedy is damages
○ Material (but non-total)
■ Remedy is damages, potential cure, and termination if the other party
wants
○ Material and total
■ No cure right as cure is impossible
○ Breach is a breach even if it’s cured, question is what the cure does to lessen
damages/ability to terminate
■ If someone is able to cure super well, they may owe no damages, but
they still breached
● If someone just cures and can’t make up for the entire breach,
they likely still owe damages
● Repudiation
○ Allows a party to move on if the other party tells them they are going to breach
materially and find a new party to do a deal with
■ Aggrieved party may choose to do nothing in response to a breach (no
duty), but the ability to collect damages from the breach depends on the
aggrieved party’s reasonable efforts
■ Aggrieved party can sue for breach, pause their performance, or
terminate the contract completely
■ Will not be able to recover damages for consequences that could have
been avoided through appropriate action
○ Unlawful termination of a contract = repudiation
○ You can repudiate a contract even after the other party has breached, you are
entitled to recover for the breach but if it was not material you cannot terminate
and therefore you have repudiated
● UCC generally says “buyer” or “seller” instead of party, if the UCC is silent about one
party or another on an issue, the common law fills the gap
● Downside of right to cure is P can’t move on and do the deal with someone else without
giving reasonable time for other party to cure
● If you ask for an unreasonable assurance, that can count as repudiation (unlawful
termination)

Class 11/7/22
● Damages
○ General rule = making someone as well off as if the contract had been performed
○ Types:
■ Expectation
■ Reliance
■ Restitution
○ Expectation damages (all kinds are available to all plaintiffs, though some parties
will attempt to limit damages in contracts - courts are hostile to limits on direct
damages, but open to limits on others)
 ■ General/direct
● Three computational methods (courts will only award one):
○ Market/contract differential
■ If market price goes up and original contract is
breached, damages is the difference in cost
between the original contract and the new deal the
non-breaching party had to seek out
● Market price is supposed to be frozen at the
moment of breach
■ Most courts use this most of the time unless there
is some reason to depart from it
○ Substitute transaction
■ Difference between contract price and the
substitute contract’s price
■ Often the same number as market/contract, but the
number can be higher or zero if the market price is
higher or lower than the substitute contract
○ Lost profits
■ If a consumer breaches a contract the seller can
recover lost profits
■ There is a sense in which anyone who had a good
deal has lost profits (difference between the deal
and what it was really worth) through a breach,
some courts will see this and some courts will not
consider this a profit
■ Special
● Consequential
○ Something that went wrong because of the breach but isn’t
local to the transaction itself
● Incidental (usually smaller)
○ Extra paperwork/hassle/expense necessary for someone
to move on from the deal
○ Typically does not include attorney’s fees
○ Reliance interests
■ Damage suffered for trusting the other party
■ Minimum = out of pocket costs
● Can be more
■ ex: for an employment contract, cost of training and supplies
■ Reliance damages are intended to place an injured party in the position
that the party would have occupied had the contract never been made.
See Restatement (Second) of Contracts § 349
○ Restitution
○ Law tends to allow people to recover for breach whether or not they decided to
pursue a new contract
 ■ Can still use market/k dif. even though substitute transaction doesn’t exist
● Handicapped Children’s Education Board v. Lukaszewski (SC of WI, 1983), pp. 798
○ Teacher D accepts position far from home, then accepts better job closer to
home
○ D from first position and school declines
○ D shows up to new job but it affects her physically/emotionally and she quits
○ School hires someone new for more money
○ Court awards P difference between her contract and new contract
■ D breached employment contract
■ Uses substitute transaction computation
■ Also a few hundred dollars of incidental damages for having to hire
recruiter, etc.
■ Court finds that the extra experience the new teacher has was a benefit
that wasn’t bargained for, so not something P has to pay fo
○ Direct damages = difference in salaries
○ Consequential damages would be if the school lost students → tuition, etc.
■ Would not be lost profits because it’s not directly resulting from her
breach
○ Probable that market/k differential would have been zero because school likely
pays standard market rate wage, P would have to argue they were paying D less
than market rate in order to claim this which does not make them look good
● Courts generally have a goal that they are trying to achieve and use whichever
computation best fits that outcome
● Efficient breach = D pays amount to make P whole and still has some left over
○ People like this because it allows people to walk away from contracts when there
is a better outcome for all involved

Reading for 11/9/22

● Landis v. William Fannin Builders Inc. (Ohio Ct. App., 2011), pp. 757
○ Mismatched house siding
○ A court may award damages based on cost of restoration in a construction
contract claim even if it exceeds the diminution in market value
■ The purpose of damages in breach of contract cases is to place the
injured party in the position it would have been in had the contract been
performed as agreed
● However, some Ohio courts have limited this principle by applying
the economic-waste rule
○ Under this rule, where awarding damages to repair a
construction defect would result in unreasonable economic
waste, damages are measured according to the difference
between the market value of the property as contracted for
and the market value of the defective property
○ Similarly, Ohio courts have also ruled in cases of
temporary injury to real property that damages should be
 measured by diminution in market value if it is exceeded by
the cost of restoring the defective property
○ These two approaches have since been superseded by a
reasonableness test set forth by the Ohio Supreme Court
■ his test asks whether it is more reasonable to
award damages based on cost of restoration rather
than diminution in market value
● Whether the cost of restoration grossly
exceeds the diminution in market value is
relevant, but is not the sole consideration
■ Here, the cost of restoration is approximately $66,906.24
● The diminution in market value was $8,500.00
● Although the cost of restoration greatly exceeds the diminution in
market value, measuring damages according to the diminution in
market value would not fully compensate P
● P contracted for a custom home with a rustic appearance. In
furtherance of that goal, P required that certain materials be used
in the construction of their home
○ GIven the emphasis placed on the aesthetics of the home,
P should be awarded damages that would allow them to
achieve what they contracted for
● A party who has partially performed before its material breach may be allowed to recover
the value of their performance through unjust enrichment restitution
○ Damages usually based on the actual value of the performance that enriched the
other party, so if it was not of value to the other party, damages would be zero
■ Exception is if a contract is divisible (if it is easily separated into parts
based on the intention of the parties in entering the agreement), and in
this case, breaching party could recover the market value of its labor

Class 11/9/22
● Plaintiffs tend to ask for expectation damages more often than reliance or restitution
because the amounts tend to be larger, but P can ask for reliance and restitution
alongside expectation damages
● Reliance
○ Many people argue this type of damages is more appropriate because it
measures how much P actually relied on the contract rather than just its value
○ Out of pocket
○ Promissory estoppel - losses caused by reliance
■ Might have stopped seeking other deals, etc.
● Restitution
○ Return of property
○ Quantum meruit (market value)
○ Unjust enrichment
○ Disgorgement - requires party who profited from breach to return profits
 ■ Rarely applied
■ Allows P to strip all profits from breaching party
● Replacement or repair cost = a kind of expectation damages that someone might ask for
if they think usual market/k isn’t good enough
○ Default rule is you should get recovery to correct the outcome to get what you
originally contracted for (cost to repair or replace)
■ Damages come down if this wasn’t a wilful and material breach
● If breach is immaterial, economic waste doctrine brings down
damages
■ If cost of rectifying is wildly high, court may decrease damages to avoid
forfeiture and windfall
■ Different states have different rules
● i.e. Ohio only cares if damages sought are reasonable (doesn’t
care if breach is reasonable to decide if large amount of damages
should be awarded)
○ This means P could get a windfall (as long as it’s
“reasonable”) in Ohio, but not in NY
○ Economic waste doctrine = court won’t give you money if you’re going to use it
wastefully
○ Replacement is often warranted in dream home cases because P built the house
to their desires and not market desires, and if they tried to sell they would likely
not get what they paid for it back

Reading for 11/14/22

● UCC Damages
○ Focus on expectation damages
■ Usually calculated by comparing price of K and substitute transaction or
market value, similar to common law
● When this is inadequate, UCC sometimes allows recovery of
profits the aggrieved party would have earned under the contract
○ If UCC performs deficiently, the UCC (like common law)
compares value of performance rendered and
performance promised
○ Buyer’s damages
■ Specific performance is exception, not the norm
■ If seller repudiates or fails to deliver, or buyer rightfully rejects or revokes
acceptance, buyer does not have to pay for nonperformance of seller,
and is entitled to reimbursement if they have already paid
■ If seller’s performance is there but deficient, damages are difference in
value from what was promised and what was provided
■ If seller fails to perform, buyer can make substitute purchase and recover
difference from seller (UCC 2-712)
● “Cover” remedy
 ○ Buyer can choose between cover and a market measure
of damages (UCC 2-713)
■ UCC 2-713 - Buyer’s damages for non-delivery or repudiation
● Difference between market price at the time buyer learned of the
breach and the contract price along with any incidental and
consequential damages, but less expenses saved in consequence
of seller’s breach
■ Buyer’s damages upon acceptance of deficient performance (UCC 2-714)
● Damages = difference at the time and place of acceptance
between value of goods accepted and value they would have had
if they were as promised, unless special circumstances show
proximate damages of a different amount
○ Incidental and consequential damages can also be
recovered

Class 11/14/22
● UCC might force the court’s hand on damages even if a court disagrees with the
outcome in a case
● UCC 2-714 - Buyer’s damages upon acceptance of deficient performance
○ If you’ve accepted the goods, damages are for any nonconforming product
○ If there’s a breach of warranty claim, that can be layered on here
○ Incidental and consequential damages are allowed here; not off limits
● UCC 2-713 - Buyer’s damages for non-delivery or repudiation
○ If seller fails to perform, damages are market contract differential (difference in
market price and contract price so they can go find another seller)
● UCC 2-712 - “Cover” rule
○ If a buyer goes ahead and buys from a new seller, the difference between the
contract price and the new price (substitute transaction)
● Difference between UCC and common law on damages:
○ Statute makes it clear that if someone covers, cover is the measure of recovery
(can’t cover and sue for market/k anyway)
■ Might be upsetting to a buyer who covers well and doesn’t recover
damages
○ Mostly follows common law, but here the statute forces the outcome rather than
the judge
○ UCC uses words like “reasonable” and “reasonable delay” rather than allowing
broad judicial discretion on how damages are calculated
○ Cover and market/k differential are usually similar, but may not be if someone is
rushing or not great at finding a good price
■ UCC says you get the cover, no matter what (whether it’s more or less
than contracted amount)
■ Common law leaves this up to the judge’s discretion (might get cover,
might get market price)
 ■ If you cover badly, UCC is more generous; if you cover well, UCC is less
generous
■ Argument for UCC here:
● Statute is easier and more efficient, court has an automatic
answer
● Distribution of error
○ Buyers are more likely to cover badly and overpay, and in
this system the “little guy” (consumer) is the one getting
overcompensated here in that case
● Encourages prompt mitigation
○ Allows buyers to move on quickly once seller breaches,
even if they can’t find a great cover - court will allow them
to recover the cover no matter what (vs. common law
where there’s judicial discretion)
■ Argument against UCC here:
● UCC might incentivize people badly
○ However, “reasonable” language mitigates this to some
extent
● Seller’s damages under UCC
● Problem 20.10
○ Buyer can sue and win for breach of contract because seller could have bought
product from someone else and this wasn’t impracticable, and they also bore the
risk in this deal
○ Damages here would be cover (2-712), because buyer covered and UCC
dictates the outcome here
○ Shipping cost would be compensable either as direct or consequential damages
(here the law doesn’t distinguish between them so calling it either one is fine)
● Problem 20.11
○ No impracticability defense here for the same reasons as 20.10
○ Buyer did not receive and did not cover (UCC 2-713), so damages are market/k
differential, plus consequential damages for lost ticket sales
■ Seller will likely argue this isn’t the real market price, as UCC requires
market/k differential but they can argue the amount
● Might call expert witnesses, etc.
● Problem 20.12
○ Breach of contract here as the product doesn’t meet merchantability or fit for
purpose
○ Goods were accepted (UCC 2-714)
■ Damages would be reimbursement for medical expenses, inspection, and
direct damages of market/k differential (difference in what they paid for it
and what the inspector said it’s worth)
● If the product was worth more and they decided to repair rather
than sell, there could be an argument that market/k differential
 shouldn’t apply to damages because they could have sold instead
of fixing to recover more of the loss
■ Medical expenses and inspection are consequential damages
● 2-712 mentions reasonable purchase, but 2-713 doesn’t mention “reasonable”
○ But court might argue that isn’t really the market price if it’s unreasonably high
○ UCC 2-712
■ If someone overpays in bad faith and pays an unreasonable cover price,
the statute will not allow for cover to be recovered
■ “Reasonable delay” in UCC incentivizes people to wait a reasonable
amount of time to cover because if the price goes down, they save
money, and if the price goes up, the other party pays the difference
● “Reasonable delay” is up to judicial discretion and they might use
industry standard to determine this
● This has a protective feature for buyers because sellers often
breach when prices are going up, and this allows the buyer to
recover for the increased prices
■ Incentivizes delay
■ If a court finds a cover was unreasonable or unreasonably delayed, they
will use a different measure for damages, likely market/k
● “Cover” is language of UCC, “substitute transaction” is common law language

Reading for 11/16/22

● Seller’s remedies in UCC allow for incidental damages but not consequential, but some
courts have allowed for them anyway, even if they don’t arise
● Hollywood Fantasy Corp. v. Gabor (5th Cir., 1998)
○ Court assumedly did interpretation to establish that D breached and this acting
opportunity was not “significant”
○ Under Texas law, damages for breach of contract may not be based on
unsupported claims of lost future profits, but the injured party may be
compensated for actual expenditures made in reliance on the contract
■ Damages for breach of contract are usually calculated to place the injured
party in a position similar to the one he would have been in if there had
been no breach
● Thus, damages may be awarded for lost profits if they can be
shown with “reasonable certainty”
● A party’s opinion regarding the likely lost profits may provide the
necessary proof so long as the opinion is “based on objective
facts, figures or data from which the amount of lost profits may be
ascertained”
● A lost profit award may not be speculative
■ Further, Texas law allows an injured party to recover actual damages that
were the foreseeable result of the breach
● The injured party may elect instead to have damages based on
actual expenses incurred in reliance on the contract
 ■ The $100,000 damage award for lost profits in this case cannot be
sustained
● Hollywood lost money on the one package it had put together
● While a new business may be able to recover projected lost profits
if there are “firm reasons” to expect those profits, Hollywood has
not provided sufficient evidence to support the claim that its
untested business was likely to yield $250,000 in future profits
○ Hollywood had not made a deal for a television series and
could give no real estimation of the series’ potential profits
● Hollywood may not recover damages for lost investments in the
company because there is no proof that Hollywood would not
have shut down if Gabor had not breached
● Hollywood may recover the $57,500 in expenditures made in
preparation for the Texas event
○ The district court’s finding of liability is affirmed, but the
award amount is reduced to $57,500

Class 11/16/22
● UCC 2-706 - Seller’s Resale
○ Seller’s equivalent to cover but missing reasonable price, instead has
“commercially reasonable manner” (sellers know what commercially reasonable
manner is more than seller, who might only be able to determine a reasonable
price)
■ Seller can resell
● UCC 2-708 - Seller’s Damages for Non-acceptance or Repudiation
○ 1) Market/K differential
■ Can also get incidental but not consequential damages according to UCC
Article 2, though some courts will allow them
● Article 1 allows for common law to fill gaps, but 1-305(a) says
remedies are strictly what is named in the UCC or other rule of law
○ Courts are split on consequential damages for sellers
○ 2) If 1) is inadequate, damages are lost profits
■ Volume sellers are awarded lost profit measure rather than market/k
differential because they have endless supply and only limiting factor is
number of customers, so this compensates them so they are not always
behind on their selling ability due to breach
● UCC 2-709 - Action for Price
○ If you ship buyer and buyer keeps them without paying, you can sue them for the
price of goods (not market price, but contract price; prevents seller from
undercharging for ease/currying good favor/etc. and then recovering full amount
from breaching buyer) - no delay provision because we assume sellers want to
sell as quickly as possible
● Seller’s vs. Buyer’s Remedies
○ No use of word “cover” - but concept is still there as resale
 ○ No consequential in the statute
○ If you ship buyer and buyer keeps them without paying, you can sue them for the
price of goods (not market price, but contract price)
○ No delay provision because we assume sellers want to sell as quickly as
possible
Class 11/18/22
● Lost volume seller problem = paradox about what happens when lost volume sellers
resell for full price vs just under full price
● Problem 20.13
○ No recovery because not a lost volume seller, they didn’t give up the cello, and
value at time of breach was what mattered (if the appraisal happened after
breach), and this would actually enrich the seller, not make them poorer because
they can now sell for more
● Problem 20.14
○ No recovery under UCC 2-706, seller is allowed to resell and recover difference
between k and resale, which here was $0
● Problem 20.15
○ Lost volume seller because she can always buy more wholesale to sell retail, so
recovery is lost profits (50k-30k=20k)
■ Contract law doesn’t care about out-of-pocket cost, just lost
profits/reliance/expectation and therefore doesn’t care that she doesn’t
have the instruments yet
● She wouldn’t ask for another measure of damages that would give
her $0 recovery
● Certainty and foreseeability are limits on damages because of context/facts
● Certainty
○ Reasons:
■ Courts worry they might get something wrong
■ Courts worry they might do something illegitimate or overstep their power
○ Courts will not award damages unless plaintiff can prove breach with reasonable
certainty
■ Contract law holds damage burden of proof to higher standard than
preponderance of the evidence, instead uses “substantially certain”
● Substantially = not speculative or chancey
○ When you’re asking for lost profits or a new business,
courts will be particularly skeptical of certainty (though
UCC calculates this for the court, while common law
means they have to decide what’s appropriate themselves
based on the parties’ arguments)

Class 11/21/22
● Foreseeability
○ Parties must have had knowledge to know what went wrong and the resulting
damages were a possibility at the time of contract formation
 ● Hadley
○ Mill with crank shaft broken, shipping new one
○ When one party breaches a contract, the other party may recover all damages
that are reasonably foreseeable to both parties at the time of making the
contract, as well as damages stemming from any special circumstances,
provided those circumstances were communicated to and known by all parties at
contract formation
○ Damages can be awarded (direct, consequential, incidental), but no recovery in
full unless they are natural results of the breach or special circumstances the
parties had discussed
■ Limiting principles
■ Direct and incidental damages are usually straightforward and expected
● No damages (but usually consequential) can’t be recovered if
they’re not foreseeable
● SCOTUS later said you don’t just need notice, but tacit agreement for foreseeability, but
now the minority rule, most use just notice
● McNaugton
○ Teacher who needed year of training was terminated mid-year
○ Consequential or special damages are recoverable for breach of contract if the
breaching party had reason to know about the unusual circumstances that
caused them

Reading for 11/23/22

● Liquidated damages amounts will only be enforced if they’re “reasonable”
○ Older tests looked at anticipated harm from breach (forward-looking)
○ Over time, courts have begun to look at actual damages suffered as factor under
anticipated harm test
■ Depending on the size of actual damages, this can be a good measure
for determining anticipated harm, or it can inadvertently create penal
damages even though that was not the parties’ intent
○ UCC 2-718 allows liquidated damages to be measured either by the anticipated
harm or by the actual harm caused by the breach (pp. 864)
■ Restatement, Second does the same
○ Although many courts enforce liquidated damages clauses even when the
liquidated damages substantially exceed the actual damages in the case, some
courts refuse to do so when the actual damages appear to be nonexistent (ibid)
● Kent State University v. Ford (Ohio Ct. App., 2015), pp. 865
○ Basketball coach resigned with liquidated damages agreement in contract equal
to salary for remainder of contract
■ D argued P suffered no damages as a result of his departure
■ Lower court awarded liquidated damages, D appealed
○ Courts generally enforce liquidated-damages clauses that reasonably
approximate difficult-to-prove anticipated actual losses, unless functionally a
penalty or unconscionable
 ■ Liquidated damages represent an amount of money that parties agree to
pay instead of actual damages for breach of contract
■ Under OH precedent, liquidated damages must relate to an estimate of
anticipated actual damages when the parties entered the contract
● Test:
○ The amount of actual damages must be uncertain and
difficult to prove, AND
○ The contract as a whole must not be so manifestly
unconscionable or unreasonable, or the amount of
liquidated damages so disproportionate, that it could not
possibly reflect the parties’ intent, AND
○ The contract must show the parties intended to set an
amount of liquidated damages payable for a breach
■ Liquidated-damages clauses that function solely to penalize the
breaching party instead of compensating the nonbreaching party are
unenforceable
● Here, the parties agreed to the liquidated-damages amount based
on Ds investment in P’s continued employment
● Damages from his departure were clearly difficult or impossible to
calculate
■ D presented evidence of costs not only from finding a replacement, but
other staff transitions, adverse effects on the program, and lost ticket
sales
● University officials estimated that a head coach’s departure cost
the program about the same as the coach’s salary
■ D showed Ford understood, negotiated, and tried to avoid the liquidated-
damages provision, and remained concerned about it when he resigned
● The amount was not so unconscionable or unreasonable that Ford
could not understand or bargain over it
■ The $400,000 D earned at new job shows the market value of Ford’s
services that D lost, making $300,000 damages yearly reasonable
■ The liquidated-damages clause was clear, unambiguous, and consistent
with intent to make those damages payable for breach
■ The damages served to compensate P for losing a head coach, not solely
as a penalty against D
○ Dissent:
■ Here the liquidated-damages formula does not reasonably approximate
anticipated actual damages
■ The formula means D would have to pay more if he resigned early in the
contract than later
● That disparity bears no relation to the actual damages P
sustained, which arguably would remain about the same
regardless of when D left
 ■ The formula makes sense if used to determine what D should pay if it
breached the contract, as it represents P’s salary for the remaining period
● But using the same formula if Ford breached the contract instead
is absurd
○ The respective potential damages for both parties would
not be even remotely the same
■ That fact suggests the provision was intended to
penalize D, not compensate P
■ It was difficult to assess actual damages for D’s departure, but questions
of fact remain whether the parties meant the clause to reasonably
estimate actual damages
● P presented minimal evidence substantiating damages and did
not conduct a financial analysis
■ The court should not have used D’s value at his new job to assess
whether the liquidated-damages clause was reasonable
■ Therefore, genuine issues of fact precluded finding the liquidated-
damages clause reasonable and proportionate on summary judgment
● Problem 21.3
○ Model, Inc. should not win but they probably would
■ This liquidated damages scheme is irrational because it is periodical with
each quarter and the amount the model owes goes up later in the quarter
and drop to zero at the start of each quarter
■ Damages are also calcuable
● By contrast, if the liquidated damages specified by the contract are low in comparison to
the actual damages suffered, the aggrieved party can ask the court to ignore the parties’
agreement (pp. 873)
● Wedner v. Fidelity Security Systems, Inc. (PA Sup. Ct., 1973), pp. 873
○ Fur seller and security system
■ Contract limited liability to low amount of yearly service fee
■ Due to negligence, P lost thousands of dollars in property but lower court
awarded low amount of damages
○ A contract provision between commercial businesses that limits a party’s
recovery for liability is enforceable unless there is evidence of unconscionability
■ Governed by UCC as sale of goods
● Although the provision at issue uses the term “liquidated
damages,” the substance of the provision is really a limitation of
damages, which is different
○ If it were a true liquidated damages clause, Wedner would
be entitled to $312 even if his losses amounted only to
$150. This is not how the clause works, however
■ Thus, the better interpretation is that it is a limitation
of damages
 ● The UCC addresses limitation of damages
clauses differently than liquidated damages
clauses
○ To be valid, liquidated damages
require a reasonable relationship
between the damages stipulated and
the foreseeable harm
○ By contrast, UCC § 2-719(3)
provides that a limitation of
consequential damages is
enforceable unless unconscionable
○ A limitation applied to commercial
losses is not prima facie
unconscionable
■ The contract was entered
into by private commercial
parties with ample business
experience
■ Prior to retaining Fidelity,
Wedner used a competing
service provider under a
contract with a similar
limitation provision

Class 11/23/22
● Liquidated damages
○ Purpose = to give the judge a party-approved amount of damages
■ In normal proceedings, a judge has discretion and is not bound to decide
based on what is in the contract, liquidated damages attempts to give the
judge an answer
● In recent years, judges are amenable to these, especially with
sophisticated parties, because it makes their jobs easier
○ Shifts risks from one party to another
■ Shifting too far becomes unconscionable, but this is usually allowed
○ Courts will not enforce liquidated damages if they serve as a penalty clause
(unreasonably high, serve to penalize/deter rather than compensate)
○ In order to attack a liquidated damages amount, D has to prove it was not
related/reasonabla as to actual damages and also to anticipated damages
○ To prove liquidated damages:
■ Have to prove it makes sense for actual or anticipated damages
■ Have to prove it is difficult or impossible to calculate
● It’s a lot easier to limit damages than to liquidate damages
○ UCC allows limiting damages to exclude consequential damages
○ Getting rid of limiting damages requires using another doctrine such as
unconscionability, whereas liquidated damages has its own doctrine that it is
required to meet
○ This is because we have a historical fear of penalty clauses and a moral principle
that contract law shouldn’t be penal or detterence
■ Limitations aren’t trying to penalize or deter, so they are easier to enforce;
liquidated damages can serve to penalize or deter