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11/15/2010 3:38:00 PM CONTRACTS I.

Elements of a Breach of Contract Mutual Assent-both parties to an objective person, intended to enter into an agreement Offer Acceptance Consideration-an exchange, quid pro quo, ―something for something else‖ Breach-one party must have done something that they weren’t allowed to do Remedies or Damages-If one party didn’t do what they were supposed to do, what do you do to make them whole? What we look at: Types of Law we look at: Common Law Treatises-Restatements-are not law, not binding, just persuasive U.C.C-Not federal law, because state law governs contracts and is widely accepted. It is written by law scholars on how they believe business transactions should be done All 50 states have accepted most if not all of it, with one exception, Louisiana Governs the sale of goods, but not services A breach of contract claim cannot be in federal court unless there is diversity of citizenship Code for state will mirror U.C.C.-ex. Wis. Stat. § 402.204(1) and U.C.C.-2-204(1) Types of Contracts Explicit/Express-clearly delineated Implied Contracts-ex. Buying something from a store (Stepp v. Freeman) Implied in Fact-the parties’ ―meeting of the minds‖ is shown from the surrounding circumstances including the conduct and declaration of the parties, which makes it inferable that the contract exists as part as a ―tacit‖ understanding harder to prove than expressed contracts Implied in Law-Legal fiction used to effect an equitable result Quasi Contracts-presumption that a contract is in place MUTUAL ASSENT Objective “meeting of the minds” Does not always have to be in writing or expressed offer and acceptance Necessary for an enforceable contract To determine if there is mutual assent, courts look to see if there is offer and acceptance If the offeror has clearly manifested a willingness to enter into a contract in a way that the other party knows that assent is all that is necessary to cement the deal, the contract is created. Express Contract

Lucy v. Zehmer-sued Zehmer’s for specific performance on a contract for the purchase of Zehmer’s farm. Rule: Based on whether an outside reasonable person would believe there is a contract based on the outward expression of a person manifesting his intention. Used the waitress to determine the interaction between the two parties Mutual Assent is not Subjective: Do not care about the subjective thoughts of the parties, only care what an outside reasonable person believes that there is a contract Ex-ante-induces people not to pretend to do something if they have no intent to do so. Court: For certainty and ease of administration Implied in Fact Stepp v. Freeman-lottery case Rule: The circumstances surrounding the contract make it inferable that a contract existed as a matter of ―tacit understanding.‖ ―Meeting of the minds‖ occurred from surrounding circumstances; a series of facts will lead the court to conclude that an implied contract existed. Stepp contributed regularly. He was an intricate part of the group. He had been previously covered by Freeman in other circumstances He was never explicitly told he was out of the group Freeman never expressed to anyone else that he wanted Stepp out of the group II. The Offer PFT Roberson v. Volvo-―fleet agreement‖ Had been in negotiations, but nothing was signed Volvo sent an email with items that they agreed upon and others which they had left undecided Email was 572 words Rule: ―Usage and Custom‖-Agreements like this are usually put into writing in this industry. The deals were never closed by email By sending a 572 word email, an objective reasonable person could not construe this as an offer, only an invitation To avoid liability: Make an invitation that says, ―This is not an offer‖ Solicitations Lefkowitz Δ put an ad for fur coat in the newspaper and told customers that they could accept by being the first person at the store. Plaintiff was the first person to the store but was told by Δ that the offer was for woman only Rule: Offer must be: Clear, Definite, and Explicit Must have Quantity, Price, and Time, Location

Must have quantity or no contract ever ―Bait and Switch‖-Advertisement of an item that the person does not intend to sell to get the person in their store. The federal trade commission prohibits this kind of behavior. Written Contract to Follow Continental Laboratories v. Scott Paper Co. Plaintiff argues that they had a binding oral contract with the Δ. Δ wanted to be bound by a written contract and showed evidence thereof. When a contract involves a lot of money, usually in writing Test: Whether a Contract should be in Writing Was the contract in the class that it needed to be in writing Need it be in writing for full expression? (Something that is complex in terms and issues) Few or many details Consideration amount, large or small (large, must be in writing) Common or unusual (if unusual, needs to be in writing) All things have been agreed upon (Agreed upon, then more likely to be in writing) Negotiations show the writing was discussed or contemplated (discussed, then should be in writing) III. Acceptance ProCD-whether shrinkwrap licenses were enforceable contracts even though they are not printed on the outside of the box U.C.C §2-204(1)-―Contract for the sale of goods may be made in any manner to show agreement including conduct by both parties which recognizes the existence of the contract.‖ ―Vendor is the master of the offer..‖ Controls the offer, but has to make it clear what constitutes acceptance Zeidenberg had the opportunity to refuse the license agreement (the offer) and his bypass was the acceptance. Manifesting Assent Restatement of Contract (not law, just persuasive) of 50 Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in manner invited or required by the offer. Acceptance by performance required that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise Acceptance by a promise requires that the offeree complete every act essential to the making of the promise. Beard Implement Co. v. Krusa Because plaintiff ―dealer‖ never signed the purchase order, no contract existed. Counter check as down payment was unpersuasive.

Caton Payment for wall built Rule: If a party voluntarily accepts and avails himself of valuable services rendered for his benefit. Compare Bear and Fujimoto Krusa.C. a promise to pay for them may be inferred.C. not under U. ambiguity on how to accept because they didn’t indicate how to accept Silence as Acceptance Day v.. he accepts by silence Mode of Acceptance Davis v. Jacoby .o. when he has the option to accept or reject them.o that it wouldn’t become binding until accepted by the dealer Court: Sites U. Rio Grande Pickle Co. Two employees demanding more compensation Company orally agreed to pay more and sent contract which they didn’t tell them how to accept (or if they needed to return the contracts) They signed the documents and kept them Offer: The contracts from the company indicating the salary and their bonuses Acceptance: by their conduct Plaintiff were considering quitting but they got the offer and changed their behavior Common Law: Services. and the signature was the only acceptable mode of acceptance.‖ If the overt act clearly expresses an intention to accept there is an effective acceptance. Caton stood by silently watching Day build the wall and he knew he would end up using the wall Offer-Day offering to build the wall Acceptance-Since Caton had knowledge.C. even if there is no distinct proof that they were rendered by his authority or request.The purchase order was an invitation from Beard Offer-signed purchase order from Krusa Acceptance-Beard’s representatives signing the p.‖ Holding: Because Beard was the ―master of his offer‖ they set out the mode of acceptance in the disclaimer. Ex-Post (This case)-Beard would say from now on: ―This is an offer‖ Acceptance By Conduct Fujimoto v. which never happened Disclaimer on the p. unambiguous because they made it clear with disclaimer Fujimoto. Rule: If offeror specifies no mode of acceptance then the law requires no more than that mode that should be adopted is the mode that is in accord with the ―usage and custom of men in similar cases.C §2-206: ―Offeror I the master of his offer.

but can never be more than 90 days. they accepted by the mode of acceptance that the offeror had indicated so it was sufficient.. then the offer must remain open for that amount of time. a bilateral contract should be assumed rather than the formation of 1 or more unilateral contracts by actual performance on the part of the offeree. Dodds If a person knows that an offer has been revoked or sold to someone else. They had a longstanding close relationship with the niece before Mr. Down payment ton an apartment. City of Boston) I-Incapacity/Death (Davis v. they are not bound to do so. Acceptance: Sent a letter that they accepted They performed their part of the contract by managing their finances and caring for Blanche Δ was trying to argue that it was a unilateral contract.C. Carol would ―inherit everything‖ Mode of Acceptance: he said: ―Will you let me hear from you soon?‖ Court: Says it’s a bi-lateral contract. money on a condition of a promise Termination of the Power of Acceptance L-Lapse in Time(Loren v. Jacoby) R-Revocation R-Rejection Long Island Rail Road Revocation by Offeror Dickenson v. must give them a ―reasonable amount of time‖ to perform and you cannot revoke An Option Contract-the offeree is generally paying money as a form of accepting a promise to keep offer open for a period of time.Whitehead invites the Davises to help him with his business affairs. and offers to keep the offer open for 90 days. General Rule: If an offeror make an offer and says they will keep it open for a certain amount of time. can be in original contract or separate contract U. and that the plaintiff accepted by the letter of April 14th. Compare to Lucy v. §2-205-―Firm Offer Rule‖-Sale of Goods-If there is a written sale of goods between merchants. Zehmer-there was an offer and acceptance . Exceptions: Doctrine of partial Performance-Once one party begins to perform. Whitehead committed suicide due to stress and anxiety Rule: In cases of doubt. Ie.C. then it is too late to accept it. Offer: If the plaintiff would come and take care of his wife and take care of his finances.

an option contract is created when the offeree begin the invited performance or tenders part of it They have to allow a ―reasonable amount of time‖ to complete performance Lapse in Time Loring v. plaintiff had put effort into procuring a buyer. if the offeror can say ―I revoke‖ before the offeree accepts however brief the interval of time before the acts. and then there was acceptance. Presumably.In this case. there was an offer. a form of revocation. which is no longer valid because there was no longer an offer. Issue: If the Δ had the ―right‖ not the ―power‖ to revoke his offer (the broker’s agency). Scheck Δ offered in writing to sell real estate to a specific buyer and agreed to pay a % of the sales price as a commission to the plaintiff. Revocation Partial Performance Marchiondo v. Restatement of Contracts §45: Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance. the offer is terminated. City of Boston The city puts out an advertisement for reward for the capture of arsonists The plaintiff waited three years and eight months to act on this reward Couldn’t collect from the city Rule: The offer of the reward was considered an ―offer‖ but he didn’t accept within a ―reasonable amount of time. Later that day Δ received acceptance from the plaintiff. Petterson v. because the civic crises was over. Pattberg Paying off a mortgage Offer: The Δ wrote the plaintiff agreeing to accept cash for the mortgage if paid by a certain time Acceptance: No acceptance because he didn’t actually perform. with a 6 day time lint for acceptance. Δ revoked the offer in writing and plaintiff received it on the morning of the sixth day. constitutes an acceptance of the offer and constitutes a binding contract. The offer ceased before the plaintiff accepted and no contract existed Risk of Loss Phillips v. when the plaintiff partially performed Rule: Offeree’s partial performance before Δ received her acceptance.‖ Court: Said that the offer had to be notorious and known by the general public and in this case 3 years and 8 months was not reasonable. on a unilateral contract. Rule: Williston on Contracts 60B: The offeror may see the approach of the offeree and know that acceptance is contemplated. Moor . but the plaintiff sold to a third part.

Termination by Rejection Restatment: An offeree’s power of acceptance is terminated by his rejection of the offer. risk of loss does not pass until delivery because the goods sold cannot be identified completely until receipt. Evans . can only revoke before acceptance Bi-lateral-promise for a promise. unless the offeror has manifested a contrary intention. don’t have the right to rescind acceptance Exception: When the offeree has paid money to create an option period for acceptance the mail box rule doesn’t apply. and quality of the goods. including receipt by the vendee. The “Mail Box” Rule Morrison v. ―Power‖ theme Power is an agency term-you can give the power to it and take it away Rights are a concept under contract law. The acceptance must be received within the option period to be effective. and quantity. Termination by Death or Incapacity of the Offeror or Offeree Davis v. Jacoby Wanted it to be a bi-lateral contract. the price. don’t want to change the mail box rule Courts: Want to maintain certainty and confidence. all they needed was somebody to pick it up without any further action on the part of the seller. so they choose to continue the rule as it has always been applied. Rejection by Offeree “Mirror Image Rule” Livingstone v.Holding: They had a contract and had agreed upon the specificity. risk of loss passes to the vendee If the terms asked for delivery by the vendor. When all terms of a sale have been agreed upon. Thoelke Revocation after mailing He accepted the contract because he mailed his acceptance An acceptance is effective when it is posted even though a subsequent rejection is actually received before the acceptance ―Right‖ v. accepted it before Whitehead died. the contract had already been formed by the time he died Restatement: An offeree’s power of acceptance is terminated when the offeree or offeror does or is deprived of legal capacity to enter into the proposed contract. ―Custom and Usage‖-It has always been this way.

and was their entire agreement none withstanding anything that the other party said. But. replied that he would accept the original offer (acceptance here) Restatement: Accept with option contracts. its rejection.C. goes under the mirror image rule as a rejection Evans replied with: ―cannot reduce price‖ (which was a renewal of the offer) After this.The Δ wrote to the plaintiff offering to sell him land for 1800 and the plaintiff sent back a letter saying ―send lowest cash price‖ ―Will give 1600‖ (counteroffer). go to (3) Common Law Rule: Insisted on the "mirror image" rule: the acceptance must look exactly like the offer and must not try to change it in any way.C. Then. offer/proviso. The Original Battle of the Forms Commerce & Industry. but instead a counteroffer. go to (2) If (1) says there is NOT a contract but there is a shipment of goods and acceptance of them. if they counteroffer than it’s a rejection. Sec 2-207: Gets rids of the "mirror image rule". Insurance company of Malden Mills sues Bayer because of faulty product Arbitration Provision: Malden Mills had the arbitration provision. Bayer Co. Co. it may contain new or different terms. subsection (2) allows them to become part of the contract unless the original offeror objects to them or they would materially alter the original offer. regarding the new terms. turn to 2-207(3) HOW TO READ OLD UCC: If (1) says there IS a contract. Subsection (1) tells us that acceptance need no longer match the offer exactly. Bayer had terms of their own saying that they weren’t going to accept additional terms. They cancelled each other out. Mirror Image Rule (common law): Acceptance must look like the offer and not try to change it in any way. As long as the acceptance is meant to be an acceptance. Offer and Acceptance=Mutual Assent Original Version of U. go to 2-207(2) But if the proviso is put into the accepting document. (subdivided one way for merchants and one way for non-merchants) . Proviso: If they conflict. it was no acceptance at all. (Malden Mills) v. If the "acceptance" tried to add new terms not already implied in the offer. If the acceptance tried to change terms in any way. it’s a counter offer.

receiving and paying for goods establishes a . 6: Advocates of the knockout rule interpret Comment 6 to require the cancellation of terms in both parties' documents that conflict with one another.then (3) Sec. "Knock out" everything else if both parties have not agreed to it. The "knockout" rule under U. If the buyer says nothing and the goods are shipped. creates the contract.2-206 (3) now contains the statement that avoids the common law mirror image rule: (3) A definite and seasonable expression of acceptance in a record operates as an acceptance even if it contains terms additional to or different from the offer. COMMON LAW MALDEN MILLS Not applicable – sale of goods OLD UCC There was NO CONTRACT based on the forms (§2207(3)) NEW UCC §2202 (1) conduct by both parties– shipping. it’s binding. no contract is formed. This is the majority favorite. Sec.Subsection (1) creates a proviso "provided that if" language and use of it makes a dramatic result: -If the seller makes it clear that no acceptance is intended unless the buyer specifically agrees to the seller's terms.. What is not in here: Nothing between merchants Makes no distinction between the forms conveying offer and acceptance 122 Terms of the contract include terms that appear in the record of both parties. The seller has thus made a counteroffer. and they both accept it. 2-207 cmt. whether the terms are in confirmation notices or in the offer and acceptance themselves.C. (3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale… Battle of the Forms under the 2003 Revision of Article 2: (only half the courts have accepted this revision) -Gone is mention of the proviso as well as the rules of old subsection2. Instead Sec. -if only one form has the agreement.C. 2-207.

contract (2) offer/acceptance yes (3)any of the following: (a) terms of both parties records become contract – K.O. didn’t agree to arbitration (c) terms incorporated under this Act . arbitration clause not in both forms (b) Terms parties agree on – K.O.O! (b) both parties did .not applicable NO CONTRACT KLOCEK Not applicable – sale of goods There is a contract under §2207(1) Additional terms only ―proposals‖ and subject to acceptance §2207(2) NO CONTRACT §2202 (1) conduct – yes Gateway shipped the computer and Klocek kept it (2) offer/acceptance – yes. purchase order was offer and Gateway’s letter was acceptance (3) any of the following: (a) records of both parties – no arbitration clause in records of both parties K.

Keith Mirror Image Rule Rule: The offer must be: Clear.O.O. time of payment. Corbin on Contracts: A transaction is complete when the parties mean it to be complete. Explicit Need to look at: length of the contract and. only one term that is absolutely needed is quantity i. a number. explicit enough. They may not give verbal expression to price. i. it has always been more willing than common law to fill in blank terms. but LEASES must require a formula for price If UCC applied then would be: Requires Mutual Assent However. output requirement. or seller will sell to buyer all that the buyer needs The renewal option for a lease was written with terms that left it open for future consideration Courts want certainty in agreements. time and place for delivery.! (c) terms incorporated under this act -not applicable K.! NO CONTRACT The very last thing that has to happen before it’s a done deal is OFFER to conclude MUTUAL ASSENT The biggest difference between old and new UCC is between merchants Indefiniteness General Rule: No mutual assent exists and thus no contract is formed unless the agreement of the parties is sufficiently certain.000 a year then goes up by $50. Keith.not agree to arbitration K. the UCC explicitly has provisions. Definite. custom within any given industry Course of dealing. parties conduct and past transactions with each other Course of performance. Terms Common Law Rule: Nothing in common law says what is clear. $1. amount of goods.e. what they do while performing this one contract (practical construction in common law) Walker v. UCC 1-205 and 2-208: Look at the following matters: Usage of trade.e. . You can leave it open for future consideration as long as you put a method of determining the amount. a fixed equation. but they may have still agreed to them. definite. unlike Walker v.

but offers to give back $2. specific performance Rule: ―A contract must be reasonably definite and certain to its terms.000 General Rule: Not looking into whether it’s a fair deal or there is adequacy. Nell .‖ Security: Compare to Walker v. price was the essence of the contract. but the rent is material to the contract. this term was only a small term in the contract.The most important parts of the contract need to be explicit.00 drachmas and Demotsis gave up $2. is there a good faith quid pro quo? Quid pro quo: Batsakis gave up 500. $25 dollars in American money. Decker Compare to Lucy v. Sidway Unilateral contract-promise for an action Nephew forbeared. Specific Performance Rego v. Keith. Zehmer. Demotsis Sufficiency: Offer and consideration must have value in the eyes of the law (this is the one the court looks at) Adequacy: Quantity of the amount exchanged Adequacy presumed because the parties entered into the contract Demotsis borrows money from Batsakis. A greater degree of certainty is required for specific performance Consideration Quid Pro Quo-Something for something else Performance or returned promise Must be bargained for The performance may consist of: An act other than a promise Forebearance The creation. gave up a legal right Giving up a legal right=consideration.000 dollars at a later time so he could have the money up front (he was in financial distress) Moral Obligation for Consideration Schell v. or destruction of a legal relation Promise to act Forbearance Hamer v. Walker. so the equation needed to be in the contract. or the contract is not binding. if there was meeting of the minds Adequacy of Consideration Batsakis v. The court can fill in the gaps for small things. modification.

v. in return. United States Compare to Beard Implement v. they rejected this. Boehm 50/50 chance he is the father. since he did not. so husband felt he had a moral obligation. is illusory. The penny acts as a gift: merely nominal. Option Contracts Forbearance as Consideration Fiege v. the contract is not illusory. they agreed to pay the Δ one cent. He offered to give money to the Δ. she forfeited the right to market her own product 2 good faith interpretations. considered past consideration. The acceptance of the exclusive agency was an assumption of its duties The Δ gave exclusive privilege to the plaintiff. paternity case Bonafide question between the parties Must be in good faith When there is a good faith promise not to sue a party and an objective outside person would find the party may be liable. then the court might have regarded this as consideration. Krusa Both parties were acting in good faith The acceptance said they would accept the offer and deliver within a reasonable amount of time. the courts may have found consideration. Schnell had real liability with his ―abstain from suing my estate in the future. The Δ had cared for her but this was insufficient in the eyes of the court.There was an agreement between Shnell and the Δ on behalf of his wife. and the Δ would not sue him. If he had offered an Indian penny. there is consideration. If you presume it to be there. Lucy. Lady Duff-Gordon Cardozo Rule: Exclusive agent has an implied obligation to use best efforts to make sales. However. Takeaway: Comparison between Lady Duff and Sylvan . It had no value in the eyes of the court. The Illusory Promise Wood v. Wife had the intent to leave money. court lead towards making a valid contract (look at the parties intent to contract) Sylvan Crest Sand & Gravel Co.‖.. the promise not to sue another party where the objective person knows that the person is not liable. If Mr.

McGowin General View of Moral Consideration: See Mills . Webb v. Hayes didn’t rely on it because he had stated he was going to retire regardless.. Exclusive agency-use reasonable best efforts as an agent-part of consideration Implied obligation of good faith-will only be read to imply good faith-must be conducted in good faith and fair dealing-it would be absurd to read it otherwise McMichael v. Wyman Father promises to pay caretaker of son while he was ill and on leave from duty.Quid pro quo is not based only on expressly stated terms there certain implied terms in every contract unless the contract says otherwise. Plantations Steel Co. Price Price was an experiences sand salesman and his anticipated future requirement was realistic Mutuality of obligation. both parties must be bound or neither party is bound Corbin on Contracts §156: A promise to buy of another person or company all of some commodity or service that the promisor may thereafter need or require in his business is not an illusory promise. if there is a sufficient objective standard to enable a court to determine the amount when the time comes. so no consideration. Seasoned worker wants to retire with pension Promissory estoppel Plantations promise was a token of appreciation. there is sufficient consideration for a return promise. If he had initially told Plantations that he would retire on the condition that. but renegs Plaintiff argued that he provided services to the son based on the promise of the father to pay him. even though the amount to be delivered cannot be determined.then there would have been consideration General View: Past consideration is not consideration Mills v. but he took care of the son after the promise was made. Mutuality of obligation is only in bi-lateral contracts Past Consideration Hayes v. Moral obligation is sufficient only when there is an agreement beforehand (pre-existing obligation) Court thinks Big Wyman is morally incorrect Restatements: Promise to pay an antecedent contractual or quasi-contractual indebtedness owed by the promisor is binding if the debt is still enforceable.

his estate stopped making payments Mills: McGowen promised to pay him and he did. Watson Seaman aboard ship Had a pre-existing duty to be on the ship and do whatever it took to defend the ship and its contents Stilk v. started as a public policy then moved to consideration Lingenfelder v. in return. so he falls with the block to help avoid an injury and sustain severe injuries. National Chautauqua Bank Allegheny College gets a scholarship from Johnston. Myrick Seaman again Moved away from Harris But still had a pre-existing duty If you have a pre-existing duty to do something you can’t claim consideration. and company offered to pay 5% more to finish his job Already under contract to do this so no consideration Compare to Fujimoto. period of time between when act was done and when promise was given Past consideration + a moral duty+ promise to do something + a strong benefit=consideration Life and preservation of body have monetary value Moral obligation is sufficient consideration to support a subsequent promise when the promisor receives a material benefit Preexisting Duty Rule Harris v. Refrigerator system. They took the money . Wyman promised to pay and then didn’t.Guy drops block and sees guy underneath him. the man below offered to pay him for the rest of the injured man’s life. Wainwright brewery Co. binding settlement agreement because there was consideration Promissory Estoppel Main Consideration Substitute. Elza π and ∆ came to a settlement after being hurt π tried to renege on the settlement agreement because he went to the doctor and had worse injuries Courts will err in upholding a settlement. man got jealous that his competitor was hired. Restatement §90 Claim Promissory Estoppel as Consideration Substitute Allegheny College v. not contracted workers (at-will workers) Past Due Monetary Debts Clark v.000 (offer). When he died. Johnston says use the grant for a memorial fund (religious reasons) and paid 1.

of Pennsylvania (Blue Shield) Blue Shield solicited bids for a computer and Universal responded that they could build it but they didn’t want to send it via courier and so Wilson (Universal) asked Gebert (Blue Shield) if they would pick up the bid from the airport and Gebert agreed. EXTREME reliance can be used to establish consideration even with a promise PROMISSORY ESTOPPEL SUMMARY COMMON LAW: The 2nd element of Breach of contract has long been consideration and nothing else . (2) a charitable subscription/marriage settlement without proof that the promise induces reliance Every state either defines promissory estoppel for itself. Court is looking to establish consideration. Once she died the executor doesn’t want to pay the remaining balance. Court relies on Restatement §90 (Promissory Estoppel) There were federal regulations that governed the bidding process however. π said that because their bid was substantially lower they probably would have Gebert may have had apparent Test: A man of ordinary prudence diligence and discretion would have a right to believe and would actually believe that agent had authority he purported to exercise Holding: for π GENERAL RULE: No consideration because Gebert just made a promise which is not generally binding HOWEVER. They sent the bid overnight and then Gebert reneged and said he wouldn’t pick it up Universal tried to get a courier and it was too late so they missed a deadline ∆ was trying to say that even if they had gotten the bid in they would not have definitely won. Medical Services Assoc. or it doesn’t follow it at all Universal Computer Systems v. Universal had no indication from the original bid (invitation) that they lacked authority Reasonably relied on Gebert’s promise to pick up the bid NOT THE GENERAL RULE: Once mutual assent is met.(acceptance). Restatement 90 (First Restatement)-Promise Reasonably Inducing Definite and Substantial Reliance A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. Promise Reasonable expectation of reliance Definite and substantial on part of promise which actually induces reliance Greatly unjust to not enforce it 2 Restatement: adds any 3rd person can bring promissory estoppel. but she tried to renege before her death.

π received the letter the same day and bid on the main contract based on the price given. v. π won the bid and accepted the offer and ∆ refused to recognize original price GENERAL RULE: The contract was revoked prior to acceptance and so there was no mutual assent 3 WAYS OFFER CANNOT BE REVOKED: Partial Performance Option Contract Baird could have made a separate option contract ie: If you give us X amount of money we will keep the offer open for X amount of time ―Firm Offer Rule‖ (UCC) Baird could have said this is a ―firm offer‖ which is between merchants and must be signed NONE OF THESE APPLIED = NO MUTUAL ASSENT π said that even though there was no bilateral contract PROMISSORY ESTOPPEL applies Holding: for ∆ LEARNED HAND ∆ offered to deliver the linoleum to π and they never accepted the offer No mutual assent so the court stopped and said that promissory did not apply because you have to have mutual assent first No consideration either . ∆ later realized the figures were wrong and withdrew the offer after π bid. Gimbel Bros.The 2nd element is still consideration and nothing else UNLESS: In cases like Allegheny after passing of Restatement §90 Some courts adopted dicta from Allegheny and have set out a narrow range of circumstances ELEMENTS OF PROMISSORY ESTOPPEL Even if there is NO CONSIDERATION we will still recognize a promise if: Intended to induce reliance Promise actually relied upon There would be a great injustice if the promise was not enforced Contractor/Subcontractor (No Mutual Assent) Contractor/Subcontractor relationship is unique because sub’s offer is generally not accepted until contractor gets a bid HOWEVER: Contractor prepares information based on sub’s bid and it will affect profits of contractor James Baird Co. ∆ (subcontractor) sent a bid to π (contractors) likely to big on a project offering to supply all the linoleum needed. ∆ estimated wrong and the price given was underestimated by 1/2.

Branco bid on a building that was going to be renovated and Delta’s was the lowest bid. They told him to get a loan from father-in-law and he had to have it in writing that it was just a gift and he finally said no.It would be unfair to subcontractor to invoke promissory estoppel because the contractor could find another subcontractor but the subcontractor would be bound to the contractor Branco (contractor) v. Delta (sub) π sued ∆ for refusing to install a roof on a building renovated by Branco. Red Owl π wanted to expand franchise and Red Owl made him move to a new store. no acceptance just a lot of promises They didn’t have it in writing and it was a big complex transaction. Branco told Delta they were relying on their bid. Branco called Delta to confirm the bid and told Delta that they were waiting to get certification or get special roofing applied. They couldn’t get special certs or the alternative roofing and didn’t build the roof. TRADITIONAL CONTRACT LAW: No mutual assent. he sold his business and they kept giving him one more thing that he needed to do before he got his new store. Branco relied on Delta’s promise to build the roof The court treats the phone call between π/∆ as a Firm Offer (Mutual Assent) When there are blank areas of the UCC the court will fill in gaps based on custom and usage ONLY APPLIES IN MO Not changing Firm Offer Rule but just saying that the Contractor/Sub relationship is unique and requires a different view of offer and acceptance Holding: for π Delta gave them a promise with the intent of having Branco rely on it Branco reasonably relied to their detriment when Delta did not perform THERE IS PROMISSORY ESTOPPEL PROMISSORY ESTOPPEL AS A SEPARATE CLAIM FARTHEST LIMITS OF PROMISSORY ESTOPPEL Hoffman v. NO MUTUAL ASSENT They had just negotiated up until that point and Hoffman kept doing what Red Owl told him to do with the expectation that they would reach an agreement The court have discretion here and to make a promissory estoppel claim the court has to make a policy decision Court makes it clear that this is NOT A BREACH OF CONTRACT CLAIM SEPARATE CLAIM FOR PROMISSORY ESTOPPEL Holding: for π .

what you got (Hawkins) Difference between WHAT YOU EXPECTED AND WHAT YOU GOT.000 Having a perfect hand.    Having a Hairy hand.Great injustice would be done if there was not a remedy to the π π cross claim for loss of profits: DAMAGES: In promissory estoppel.000 Having a scarred hand. damages should only be enough to avoid injustice to the π It can be the promised amount or less but never more than that COMMON LAW (BREACH OF CONTRACT) No such thing as a claim based on Promissory Estoppel Consideration substitute CONTRACTOR/SUB RELATIONSHIP Can use promissory estoppel and maybe have to be more lenient with offer/acceptance (Baird) RESTATEMENT §90 Promissory Estoppel can be used as it’s own separate claim and supplant elements of traditional contract ONLY IF: There would be a great injustice if the promise was not enforced (Red Owl) DAMAGES At the end of a complaint π must put a ―prayer‖ for damages 3 TYPES OF DAMAGES: Extraordinary Relief – ie: Injunction Specific Performance – ie: Lucy v. If the ∆ fails to perform his promise the court may force the ∆ to disgorge the value received from π Want to prevent unjust enrichment Don’t want ∆ to benefit from π contribution without having to pay for it Reliance – π relied on promise and changed their position ie: Buyer under contract for land has incurred expenses in investigating title to the property or has forebeared the right to enter into other contracts Expectation – What π would have gotten if there had not been a breach v.000 .$10. Zehmer Declaratory Judgment – Declare parties’ rights (binding) The goal of contract damages is make the aggrieved party whole 3 Principle Purposes Restitution – π has reliance on the contract and the ∆ promise infers some value on the ∆.$50.$100.

 Gets $90. Worse off than he was before. ∆ did not do it because it would be more expensive to keep their promise and the land value had depreciated. Doctor made a warranty that he would have a perfect or 100% good hand and he ended up with a hairy hand. The consideration was that π would get money but ∆ agreed to perform restorative work at the end of the lease. Garland Coal π had land that they had coal deposits and leased it to ∆ to mine for 5 years. said ―there is a chance this might not work‖ he would have been ok Value Rule v. what it was worth after Work would only increase value of property by $100 and damages should be limited to that amount Provision for supplemental work by ∆ was incidental Since it was incidental damages were limited to what the lessor may recover in diminution of value resulting from default . Cost of Performance Peevyhouse v. At the end of the lease period the land was only worth $25-29k. difference between where he stood when he came out and where he stood when he left) Tort damages are generally higher and the preference because you can get punitive damages which are rare in contract cases Contract – Enforcing the promises the parties have made to each other Most frequent: Specific Performance Expectation Damages Contract Tort Perfect Hand-------------Burned Hand  Hairy Hand Holding: for π Because the doctor made a warranty he was liable for expectation damages If Dr.000 EXPECTATION DAMAGES MEASURING EXPECTATION DAMAGES Hawkins v. Value Rule ∆: Cost of Performance : Want them to pay for cost of performance π: Value Rule: total difference in market value before v. Theories you can sue on: Tort – Compensatory (to return π back to original state. McGee Hairy hand case. Cost of Performance Rule v.

∆ designed and constructed a highrise condo and π is the HOA and is suing because there are defects in sliding glass doors and concrete balconies π: Full cost of repairs – cost of construction and completion per the contract if possible and doesn’t involve economic waste ∆: Dimunition of Value – “Useful Life Theory” ie: If an element of construction had a useful life of 20 years and after 15 it was found to be defective and ∆ had to replace it. Doctor gave her a WARRANTY that he’d give her a beautiful nose.900 when the loss of value was limited to the $300 In the contract it should have said that ―If you don’t restore it you have to pay X. irrespective of value or cost this is MATERIAL to the contract and is required‖ Diminuition of Value v. Carl Freeman Assoc. GENERAL RULE: Expectation damages (Hawkins) Expectation damages couldn’t be calculated because beauty is unquantifiable and uncertain .GENERAL RULE: Cost of Performance theory is used but if the value of the property is disproportionately low as it was in this case. the court will use the Value Rule Holding: for π It would be a waste to make ∆ pay $2. Cost of Repair Sea Colony v. O’Connor π (actress) went in for a nose job and ended up with a bulbous asymmetric nose. 75% of its ―useful life‖ would have been lost and π would get a windfall Trying to prevent π from getting a windfall Used generally when there is a huge different between restorative cost and diminished value Holding: for π The π can recover full cost of repair because the components were defective from the beginning and they never had any useful life SUMMARY GENERAL VIEW: Cost of performance is what is awarded Hawkins – difference between what is promised and what is received even if it’s ridiculous EXCEPTION: Peevyhouse – Contract not fulfilled by 1 party and the value of performing is minimal and the costs are huge VALUE RULE Sea Colony – Even if the cost is more than the value some courts feel the performance theory is appropriate RELIANCE Sullivan v.

Reed π hired reed to play a lead character in a store and hired production crew and everything. what you got PUBLIC POLICY: ie: statements of optimism by a Dr. π couldn’t calculate lost profits so they couldn’t get Expectation damages because they didn’t know what their profit would have been Claimed Reliance damages for wasted expenditure GENERAL RULE: Expectation Damages At the time of the contract π reasonably believed they would get profits from the TV show If π claims wasted expenditure they can claim expenditures that they incurred before they entered into the contract with ∆ Must be reasonably contemplated by the parties that the expenditures would be wasted if the contract is breached The court found that ∆ knew that if he broke it the π would lose money Has to pay for the money the TV station is out of even before they hired him THIS IS MINORITY VIEW IN THE US AMOUNT REWARDED (REGARDLESS OF THEORY) MUST BE: (1) Certain (2) Foreseeable (3) Unavoidable .Holding: Cannot recover expectation but can recover RELIANCE (what you had v. what you were got PREFERRED (2) RELIANCE What you had v. what you got) Tort-like damages grounded in contract theory Ex Ante: Don’t want doctors to make false promises DAMAGES IN ORDER OF PREFERENCE (1) EXPECTATION What you were promised v. Then Reed was double booked and 2 days before production was to start he reneged. Don’t want doctors to make false promises When expectation can’t be calculated (3) RESTITUTION RARE Punitive Trying to punish the breaching party Anglia TV v.

Troy had already paid her $5k but refused to pay any more.ALL 3 MUST BE MET OR DAMAGES ARE LIMITED Trojan Horse Hypo H’s contracting company agreed to build a horse for Troy parade. Washington Square Press π (author/professor) sued ∆ for breach of publishing contract when they did not publish his manuscript. ∆ merged with another publisher and stopped printing in hardbound and did not exercise 60 day cancellation period. what is the loss of EXPECTATION DAMAGES (PROFIT = REVENUE – COST) PROMISED GET Revenue Costs Revenue Costs $24k $20k $5k (Troy) $15k $2k (Salvage) -----$7k TOTAL PROFIT: $(8. he just didn’t recover that much in damages DETERMINING PROFITS FOR A NEW BUSINESS .00 (promised) .$(8. IN CONSIDERATION: π agreed to a $2k advance ∆ could terminate within 60 days. Helen can sell the horse for $2k. π did not lose.000 LIMITATIONS ON RECOVERY OF DAMAGES CERTAINTY Freund v. H agreed to build the horse for $24k.000) $4.000) (received) = $12. otherwise they would publish within 18 mos in hardbound.06 (nominal) GENERAL RULE: Losing party does not pay court costs unless there’s fraud or malicious conduct UNLESS: Parties agree in the original contract that the parties pay for court costs. Refused to print it at all and π sued for specific performance. Troy told H to stop construction on the horse. and the cost to build it was $20k.000 PROFIT: $4000. After working for 3 mos and expending $15k the horse was 3/4 completed. (1) delay of academic promotion (2) making his own publishing arrangement (3) loss of royalties Holding: Royalties weren’t certain enough because the π didn’t have a pattern of sales Nominal damages ONLY Reduced damages to $.

hubcabs would be secondary . ∆ said that the lost profits was speculative and uncertain for a NEW BUSINESS Holding: If business can show reliable proof of profits there is no reason to deprive it of its profit Humetrix has actually been in business for several years Contracts were already in place that an economist could look at Compare to Freund: thought they were just making up numbers. The mill took a crank to the ∆ and asked them to fix it but did not let them know about the ―special circumstances‖ and did not deliver it to them as promised caused mill to stop working.Humetrix v. during gas crisis 3 TYPES OF LOST PROFITS (Consequential/Good Will): Primary – what he would have earned without a breach v. It was not foreseeable by the ∆ that by their failure to deliver the crank to π that their entire mill would stop working π should have notified them of the special circumstances 99. Baxendale Mill crank case. Gemplus finds another subsidiary (replaced Humetrix) and stopped negotiations with π and ignored them. in this case there is enough to get to a jury FORESEEABILITY Hadley v. Contracted with eachother to provide the smartcard to US healthcare market. Humetrix has started getting contracts and performing.9% of the time people would have a backup and the ∆ could not have foreseen it Why should damages be FORESEEABLE? PUBLIC POLICY: Economic – wouldn’t be worth it to do business if you had research all the facts and ask a ton of questions RULE: Where 2 parties have made a contract where one party has breached the damages should be limited to what can be conceived: Naturally (usual course) What was in the original contemplation of the parties at the time of the contract being made as a probable result of a breach AM/PM v. Employee at Gemplus found out that π had registered a trademark for Vaccicard but they had a French trademark. Atlantic Richfield π was given diluted gas by Atlantic causing people’s cars to breach down and lose profits. what he earned with the breach π could show they did not buy their gas in the time frame when they were getting diluted gas Secondary – ie: If you sell tires. Gemplus π (healthcare consultant) ∆ (manufactures smartcard).

If you think in the long run you’ll cost them less money you continue. in Australia. She didn’t accept and the offer lapsed Holding : for π The 2nd job was of a ―different and inferior‖ kind π was not required to accept in order to mitigate damages GENERAL RULE: Recovery by a wrongfully discharged employee is the amount of the salary v. . v. ∆ stopped production and offered her a replacement job: Western. Kept building and then wanted full amount of costs in relation to building it Duty to Mitigate – Must do everything you can to minimize costs after breach. in Cali and she has approval rights on. negotiate up front what the damages will be in the event of a breach rather than having a court decide later IF YOU HAVE A LIQUIDATED DAMAGES CLAUSE YOU DO NOT HAVE TO MITIGATE DAMAGES Lake River Corp. amount the employer proves the employee earned from other employment ∆ must prove that employment was COMPARABLE She had a larger interest in playing the first part than in playing the 2 nd part so it was unequal Liquidated Damages Clause Parties would agree to this to avoid litigation. for same amount of money. if you learn there is a breach you have to stop GENERAL RULE: you are going to cost the other side more money by continuing you’re supposed to stop.Foreseeable that there would be a drop in secondary profits (ripple effect) Good Will Damages – Customers are so disgruntled that they patronize a second business and future business is adversely affected PA has historically denied these in breach of warranty cases Overruled general PA rule and said they could recover all 3 AVOIDABILITY Duty to Mitigate Rockingham v. 20th Century Fox Actress contracts with them to appear in a musical for $750k. Luten Bridge Bridge builders started building a bridge and then ex-commissioner told them to keep building and board of commissioners told them to the stop and they didn’t. If it’s unclear Parker v. Carborundum POSNER ∆ (manufacturer) makes Ferro and has a contract with π (distributor) and tells ∆ to install a new bagging system to.

employees. Governed by UCC §2719 There’s a split between jurisdiction on whether (2) and (3) should be read together Under the UCC: When it is clear in a contract that parties generally allowed to limit remedies as long as they provide the remedy promise IF THEY DO NOT: other remedies may be allowed as well. BMW had discretion and the warranty was limited to repair or replacement.500 tons or π would bill them for the difference ∆ only shipped 1/2 of the requirement because the value of steel fell π: wanted $533k that they would have made if the requirement had been reached ∆: said the quantity clause is ―PUNITIVE‖ GENERAL RULE: Allow liquidated damages clause but if they impose a penalty Must be a reasonable estimate at the time of the contracting of the likely damages from breach and the need for estimation at that time must be shown by reference to likely difficult in measuring damages after the breach occurs IL Law is synonymous with this rule Libertarian View – 2 intelligent parties entered into the contract intending to be bound by it so maybe we should enforce the liquidated damages clause? POSNER HOLDING: Want to encourage Efficient Breach – more gain for the parties if the contract is breached than it if was full performed (ie: Peevyhouse) If we allowed punitive damages clause there would be situations where all parties would be best off financially if there was a breach gives an incentive to perform on the contract and waste resources to avoid being punished Lake River is better off with a breach because they can cut down on overhead Most of their damages were based on variable costs if Carbo breaches they won’t have to pay the variable costs (transportation costs. etc) 2 Types of Costs Variable – ie: text books Fixed – ie: annual tuition UCC DAMAGES Schurtz v.Quantity Requirement Clause – must ship minimum of 22. GENERALLY: Parties are allowed to limit recovery of incidental and consequential damages UNLESS: it is unconscionable Will be upheld in COMMERCIAL but not so much with Consumers . BMW π bought a lemon car and BMW had a limited warranty that said they could repair or replace at their discretion.

They are giving a narrow warranty and disclaiming everything else Consequential Damages – valid unless ―unconscionable‖ Cannot ask for damages if you set it up in the beginning that you won’t.Ex Ante: Want to encourage Efficient Breach – don’t want to encourage clauses that make it so terrible for 1 party to breach and create inefficiency PUNITIVE DAMAGES Intro: Carbo – punitive clause not enforced. Multiple employees told him that if he didn’t get it fixed they would jerk him around and it would never be repaired. Seller said they were different because they are a volume seller and they would lose a sale Loss can’t be mitigated by selling to someone else because they would have sold that product regardless because they sell in volume . Teladyne π wanted to sell a transistor to the ∆ and the ∆ cancelled but π had already found another buyer for the transistor. Batchelor ∆ bought a lemon and took it back over and over and told it would be repaired and it wasn’t. sometimes §2719 will be void if deemed unconscionable (contract of adhesion) Rare Case of Punitive Damages Hibschman Pontiac v. Punitive damages may be awarded in addition to Expectation damages (PREFERRED) if: “whenever the elements of malice gross negligence or oppression mingle in the controversy” NOT ALL TORTS THAT OVERLAP CONTRACTS GET PUNITIVE DAMAGES Very narrow set of circumstances where you get punitive damages in Contract law SELLER’S DAMAGE Volume Seller Teradyne v. Posner took us through IL law and why LD clause would not be enforced GENERAL RULE: There is a presumption that if there is a liquidated damages clause the clause will be upheld If a party wants to challenge a liquidated damages clause: Must show mathematically that at the beginning it was intended to be a penalty and not a fair appraisal If this is shown it will not be upheld Schurtz – UCC §2719 – allows parties in reaching an agreement to limit the damages the other party can ask for ie: cell phone and credit card records. ∆ said that if π didn’t sue then they would buy a cheaper model.

the idea that they must BENEFIT from the service/good is integral The costs to the ∆ to hire someone else to do the same job Figure out what kind of job she did .400) MINUS Variable Costs (what they would have had to spend to make it) Under §2708(2) damages are the contract price less ascertainable costs saved as a result of breach The variable costs be credited to the damages because they would have the benefit of both the original contract and the resale contract RESTITUTION Restitution isn’t really around but it reappears every once and awhile even though it’s not clear why it’s coming out of the woodwork It’s complicated because different courts apply in different ways Situations Restitution might be given: No contract – fairness Contract – can’t calculate damages Want to disgorge the wrongdoer Even when it’s the π who breached and not the ∆ Quasi-Contract Implied-in-Law/Quasi Contract . shipping. NO BREACH OF CONTRACT Trial court jury awarded $84M due to growth of business On appeal: $84M too much! measure of damages: reasonable value of services rendered. someone should get paid for beneficial goods and services he bestows on another Comes from Assumpsit action – common law action meant to provide relief for breach of contract (implied in fact and implied in law) Value of Services/Not Growth Maglica v. Where unjust enrichment would occur the court assumes restitution Quantum Meruit – as much as he deserves. Maglica Unmarried couple. provided they were of direct benefit to the ∆. Arises when one party has the benefit of money property or other services and it would be unjust to allow that party to keep the benefit without paying for it. Then she found out he was transferring stock to his kids and she sued for breach of contract. etc.Imposed on the parties regardless of their intent.Both parties agreed the loss was less than the entire revenue MUST SUBTRACT VARIABLE COSTS (workers. woman contributed to his business and the business grew while they were together.) To calculate lost profits: Revenues derived ($98.

worth of the company because of her services Feingold v. v. They had completed 28% of the work and then Coastal terminated it’s performance. COASTAL DID NOT WANT EXPECTATION DAMAGES If they had fully performed and were paid they would have LOST $37k They made a LOSER CONTRACT – they were BETTER OFF when the ∆ breached because it was a mistake to enter into it in the first place Coastal sued to recover for labor and equipment furnished. Pucello Pucello hurt in an accident and then he started working and wanted to charge a 50% contingency fee. Tried to give the affidavit to him but he wouldn’t take it Pucello’s new attorney said he could win the case without the admission COURT: Implied-in-fact technically HOWEVER: ExAnte: Ethically discourages people from hiring other attorneys when they aren’t happy with their work product Want to encourage making contingency fees clear up front and in this case it wasn’t Didn’t owe Feingold any money because he wouldn’t accept the work product Feingold was unethical by charging so much (―unclean hands) Under Contract law: without mutual assent = NO CONTRACT Could make a Promissory Estoppel (Restatement §90) Claim based on reliance Compare to Stepp v. Pucello hired someone else. Freeman: No ongoing relationship or custom TO MAKE A CLAIM FOR RESTITUTION W/O A CONTRACT: Confer a benefit to ∆ ∆ must WILLFULLY accept benefit It would be REALLY inequitable to keep the benefit without paying for it Restitution for Breach of Contract (GENERAL VIEW) U. Feingold tried to sue for Quantum Meruit Feingold secured an admission of liability and thought that he had won the case of If they found out that a business consultant would be $60k/yr she would be entitled to $60k for each year she did the work court trying to avoid unjust enrichment If she had a contract: Would have gotten EXPECTATION DAMAGES .$84M. PUBLIC POLICY: ∆ benefited by the 28% completion of work so he would be unjustly enriched (windfall) if he did not pay for their services .S. Algernon Blair Coastal (subcontractor) started performance on a naval hospital and Blair did not make payments on crane rental.

Compare to Feingold: There was no contract in Feingold Not clear if there was a breach between the parties COURT: The client has a right to discharge an attorney at any time OPPOSITE OF COASTAL: Expectation damages usually traditional damages. but here it’s limited by the contract price Can’t penalize the client for changing attorney 3 DIFFERENT RULES: CONTRACT RULE Attorney discharge without cause can recover under normal contract law (1) full contract price is best measure of damages (2) charging full fee stops client from benefitting from his own breach (3) avoids difficulty of setting value on partially performed work QUANTUM MERUIT RULE (NY RULE) Attorney discharged without cause can recover only the reasonable value of services rendered prior to discharge. Levin Levin hired Rosenberg and discharged without cause but he partially performed services and there was an actual contract between the parties. Client has to rely on good faith efforts of attorney.Don’t like that the ∆ had an obligation and they did not fulfill it so we want to take away any benefit he may have gotten WHERE THERE IS A CONTRACT AND IT IS BREACHED: Not happy one side breached and expectation damages will = loss We can still DISGORGE the breaching party Compensation for Attorney who partially performed (w/ a contract) (EXCEPTION) Rosenberg v. COASTAL IS THE GENERAL VIEW – you get your choice of remedies. whichever is more beneficial TAKE AWAY: First 2 cases: NO CONTRACT – with no contract there is no breach . If fair market value was actually higher he would have to get that amount QM RULE LIMITED BY CONTRACT PRICE (FL/CA) Whichever is less desirable is what the attorney will get THIS IS THE EXCEPTION PUBLIC POLICY: Believed necessary to allow client freedom to substitute attorneys without economic penalty Attorney client privilege is one of trust and confidence. The client therefore has a greater freedom to change legal counsel than they might in other employment relationships.

1966 McGinnis (equipment company/original π) brought suit to recover payment due under a conditional sales contract with Russell (buyer) for sale of Allis-Chalmers . they accept.When executor pays for Goods – Sale of goods over $500. McGinnis Equipment Co. so Blair must be disgorged of his benefit Rosenberg – It would be unfair to penalize a client for changing attorneys. Ct.00 (Proposed UCC: maybe increase to $5k) Suretyship – guarantor relationship History: 1677-Required that certain contracts for the sale of good be in writing to be enforceable Executor/Administrator Contracts Must be in writing ie: A dies leaving a $5k debt to B. Unless the agreement is in writing it’s invalid. Neil B. and there is great injustice if they didn’t pay for what they got they allow Quantum meruit Last 2 cases: WAS A CONTRACT Go through entire contract analysis first Instead of expectation damages there is restitution Coastal – don’t want Blair to benefit from breaching because Coastal would lose. SURETYSHIP CONTRACTS Yarbro v. if certain contracts are not in writing they are nonenforceable 6 types of contracts that fall under SOF: Acronym: MY LEGS Marriage Year Provision – if it is going to be fulfilled in longer than 1 year Land Executory.As a matter of fairness they allow some type of legal recovery and value of services require Quantum meruit Entirely separate claim If a benefit is provided to a party. Even if everything else is shown. therefore the attorney got the less desirable damage STATUTE OF FRAUDS DEFENSES STATUTE OF FRAUDS Intro: Statute of Frauds is the COMMON LAW requirement that certain types of contracts have to be in writing. C the administrator of A’s estate promises B he will pay the debt out of his own pocket. AZ Sup.

installment and company did not repossess the tractor o McGinnis is forbearing a legal right to take the tractor · Breach? o Yarbro said he’d pay and he didn’t · Damages o Yes. Called for 23 monthly installments of $574. payment. Krusa) in Aug 1957.00.tractor (Same as Beard v. Yarbro had attempted to purchase the tractor from them but couldn’t because the financing fell through and he said he could get Russell to buy the tractor § When repairs were needed he made the first installment payment and repairmen found it on Yarbro’s land § Admitted to using the tractor for jobs around his ranch and borrowing it · It may make a difference because Yarbro had an interest in the tractor o It can be inferred from surrounding circumstances whether charged party wanted to be: § Surety for another (SOF DOES NOT APPLY) § Pecuniary benefit to himself (APPLIES) CLASS NOTES: · There was an oral express contract here o there’s a presumption that there was offer/acceptance · Consideration? o Paid Sept. Yarbo agreed to make and paid the Sept. Russell failed to make the first monthly payment and he suggested that McGinnis meet with Yarbro to see if he could help. · Where do we draw the line? o When things are more expensive it might be more likely to be in writing o If it’s past a year before the contract will be completed it’s more likely to be in writing § If it’s just a quick contract . ∆ AFFIRMATIVE DEFENSE: Statute of Frauds Even though he made an agreement to pay the SOF prevents binding him to it WHY DO WE HAVE THE STATUTE OF FRAUDS? · Don’t want people to use perjury and just say that they had a contract when there wasn’t one and just lie their way through all the elements even if none of them ever happened. · McGinnis made an agreement with Yarbro after Russell didn’t make his payments · Yarbro didn’t make all the payments McGinnis brought suit to recover balanced owed o IN THIS CASE: Before McGinnis started negotiating with Russell.

· Could it cause more problems than help? o People could perpetrate more fraud if π is telling the truth and just can’t prove it BALANCING: Is this the kind of contract that you expect to be in writing v. is this the kind of contract that’s hard to prove without writing? There has been a movement not to abandon it but to reign it in Even in the 6 areas where SOF applies there are exceptions! GENERAL VIEW: Suretyship agreements must be in writing! π contends Leading Object or Primary Purpose Exception – where the leading object of a person promising to pay the debt of another is actual to protect his own interest such promise is supported by sufficient consideration and is valid even if it is oral o HOWEVER: There was substantial evidence that the “main and leading objective” of Yarbro was to serve his own interests and not serve as the guarantor for Russell § He wanted to buy the contract but couldn’t so he had Russell buy it § Wanted to use the tractor § Tractor wouldn’t be sitting on Yarbro’s property if he didn’t reach the agreement RULE: Since Yarbro got a benefit from payment of Russell’s debt, the SOF did not apply MARRIAGE This part is almost never litigated ie: A promises to support B’s child if B marries A. It’s unenforceable. LAND TRANSACTIONS 2 issues: (1) What types of ―transfers‖ are covered (2) What qualifies as ―land‖ GENERALLY: · Agreements to buy or sell land · Mortgage modifications · · Agreement affecting boundary lines EXEMPT: Leases for a short period of time (1-3 years)

ONE YEAR PROVISION Runs from the time the contract was made to the time for completion of performance. Professional Bull Riders v. Autozone Sup. Ct of CO Facts: Autozone (sponsor) sponsored PBR’s events from 2001-2002.

PBR wrote agreement providing for their sponsorship that says it starts Dec 2000 and ends Dec 2001 unless terminated earlier and that Autozone has the election to terminate by giving written notice no later than Aug 15 2001. Autozone never signed however they tacitly (implied) accepted the terms Autozone breached · Mutual assent o Not in writing but there was an oral agreement between the parties § offer – to sponsor and put their name on things § acceptance – using their name § ie: Fujimoto – there was acceptance by conduct even though the contract was never signed § Conduct of the parties = acceptance · Consideration o Money in exchange for putting the advertisement on TV · Breach · AFFIRMATIVE DEFENSE: (∆) Statute of Frauds – because they have an option to terminate within 1 year at the end of the season · π says: the contract will take more than 2 years to complete · If it COULD be completed within 1 year some courts will say that it falls under SOF o A season is less than 1 year and the option to terminate is less than 1 year PBR Sued: breach of contract (oral agreement) Speedbar (AZ’s subsidiary) counterclaimed for trademark infringement and dilution, unfair competition RULE: Col.Rev.Stat. §38-10-112 ―Except for contracts for sale of goods every following agreement is void unless in writing…all agreements not to be completed within 1 year from the creation of the contract‖ (over 1 yr = unenforceable if not in writing under SOF) PH: District Ct – General Rule: a verbal agreement to put in writing a contract that will require more than a year to be performed is unenforceable unless in writing THIS CASE: The agreement did not purport to grant Autozone an option to terminate the agreement at will or upon the occurrence of some particular event, it provided AZ with 2 alternative ways of satisfying its obligation. It expressly stated that alternative performance could be completed in less than 1 year. (by terminating) RULE: Where terms of an agreement can fairly and reasonably be interpreted to define alternative obligations one or more of which can be performed within 1 year the agreement in question can be interpreted to be performed within 1 year It was clear that they could terminate within a year therefore SOF applied

GENERAL RULE: Contract that does not specifically state a period of time more than 1 year is NOT within SOF even if it is likely that It will take more than 1 year Modification Agreements If parties of an existing contract modify it the new contract must comply with the writing requirement if the contract AS MODIFIED now falls within the SOF (UCC §2209(3)) Possible Exceptions: Waiver and Promissory Estoppel SALE OF GOODS COMMON LAW: Sale of Goods for $500.00 or more (ONLY APPLIES TO GOODS) Eastern Dental Corp. v. Isaac Masel Co. Facts: E. Dental (distributor/manufacturer of products used exclusively for orthodontics) Masel (manufacturer of dental products and instruments) From the time that EDC was incorporated Masel provided it with certain disposable products for resale to retailers. Sept 1977 Masel expressed interest in buying EDC but it never got past negotiation Aug 10 1978 Masel told EDC that they would no longer supply products to them because they were too busy to handle accounts like theirs profitably · If they couldn’t buy them then they could make them lose profits to the point where they would be forced to sell to them EDC was unable to find an alternative source for some of the products and the ones they did find were prohibitively expensive EDC sues: (1) termination was a breach of a requirement contract (2) ∆ supplied defective merchandise ∆: No enforceable contract because it wasn’t in writing under SOF = NO BREACH Writing satisfies SOF if (1) signed by the party charged (2) evidences a contract for sale of goods (3) specifies quantity (just need amount to be delivered under the contract requirements) · π is trying to say there is a requirement contract because they said they’d supply all that EDC needed Holding: SOF Burden NOT MET (1) invoices reflect only quantity of goods shipped for individual transactions and not a requirement contract · Does not meet the burden of SOF (2) Letter fails because it involves dental pliers not orthodontic supplies (requirement contract)

. salary of $20k (1st 6 mos) and then $25. · Quantity term not mentioned in the letter and it doesn’t indicate a requirements contract ExPost: Should have gotten the quantity terms in a requirement contract in writing Only have problems when you don’t have a written agreement SATISFICATION OF THE STATUTE Restatement: Unless additional requirements are prescribed by the particular statute a contract within SOF is enforceable if it is evidenced by any writing signed by or on behalf of the party to be charged with: (1) reasonably identifies subject matter of contract (2) sufficient to indicate that a contract had been made between the parties or offered by signer to the other party (3) states with reasonable certainty the essential terms of the unperformed promises What is essential DEPENDS ON THE AGREEMENT and it’s context and also subsequent conduct of parties Crabtree v. · The contract was to be completed in 2 years A few days later π accepted the offer and began working Received the first pay increase after 6 months but then did not receive subsequent increase ∆ comptroller tried to remedy the situation by signing a payroll change card but the increase was not approved and π left his employment Crabtree sued for breach of contract PH: Trial Ct – contract satisfied SOF Holding: Because the contract could not be performed within 1 year it falls under the SOF and therefore must have a sufficient memo that is signed with the intent to authenticate the terms of the contract.).· The parties viewed contract for pliers as separate from other based on depo by EDC (3) Masel was not obligated to market exclusively to EDC and there was nothing in the termination letter that indicated the parties had a requirement contract. NY Ct of App.000 (3rd 6 mos).000 (2nd 6 mos. Elizabeth Arden Sales Corp. It does not have to be 1 document but can be several documents linked together. 1953 Facts: Crabtree (entrepreneur) left a secure job and requested a 3 year employment contract with Arden (manufacturer/seller of cosmetics) for 3 yrs at $25k a year. $30. He was a new business owner and wanted the contract to be definite. π thought the offer was interesting and Arden had secretary make a memo on a telephone order that was on hand. Arden instead offered a 2 year contract with ann.

Four days later.000. 1979. April 14. . employment for a small amount of time) · For other things we’re adverse to people making up falsities · MY LEGS Marriage One year Land Exectory Goods ($500+) Suretyship Four exceptions to the SOF: Estoppel-prevent grave injustice Multiple writings. STATUTE OF FRAUDS REVIEW · Without SOF in place they could make up stories about consideration and mutual assent · Sometimes its not worth the burden of figuring out if someone is telling the truth (small amounts of money.000 in part payment. Affirms lower courts decision. with Goodrich's surplus equipment manager. Ingram Meyers. James Thomson discussed the sale terms. the president of Thomson Printing. April 10. On Tuesday. went to Goodrich's surplus machinery department in Akron. Ohio to look at some used printing machinery which was for sale. James Thomson.In this case: Memo written on the telephone order and the payroll change for initialed by Arden’s general manager and the paper signed by the comptroller all reference the same transaction. James Thomson sent to Goodrich in Akron a purchase order for the equipment and a check for $1.Thomson Printing buys and sells used printing machinery.F. These documents showed a contract was fulfill the writing requirement Merchant Exception Three Components of Partial Performance to get around SOF: (1) Taking possession (2) payment of money (3) making improvements ★Normally need 2 of the 3 ★ Merchants Exception and Partial Performance Thomson Printing Machinery Co. on Saturday. 1979. B. v. Goodrich Co. including a price of $9. Facts.

★ -STILL MUST SHOW THAT THERE WAS A CONTRACT MADE ORALLY. Also. Held. .C. for the reasons we have suggested.for confirmation A modern exception to the usual writing requirement is the "merchants" exception of the Uniform Commercial Code. The jury found for Thomson Printing.Thomson Printing sued Goodrich when Goodrich refused to perform. In holding as a matter of law that the circumstances failed to satisfy the Statute of Frauds. OHIO REV. The "Merchants" Exception. ★ The definitional section of the U. but the district court entered judgment for Goodrich on the grounds that the Statute of Frauds barred enforcement of the contract in Thomson's favor.04(B) (Page 1979) (U.C. § 1302.CODE ANN.We note that the jury verdict for Thomson Printing indicates that the jury found as a fact that the contract had in fact been made and that the Statute of Frauds had been satisfied. Goodrich acknowledges those facts about the handling of the purchase order which we regard as determinative of the "merchants" exception question.C. § 2-201(2)). We think that there is ample evidence to support the jury findings both of the existence of the contract and of the satisfaction of the Statute. Reversed and remanded. but. also sets the general standard for what mailrooms "should do": An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. which provides: Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents. Thomson Printing argued that a contract had been made and that the "merchants" and "partial performance" exceptions to th e Statute of Frauds were applicable and satisfied. Goodrich was at least equally derelict in failing to find a "home" for the well-identified documents.C. was impressed by James Thomson's dereliction in failing to specifically direct the purchase order and check to the attention of Ingram Meyers or the surplus equipment department. We agree that Thomson erred in this respect. Goodrich asserted by way of defense that no contract had been formed and that in any event the alleged oral contract was unenforceable due to the Statute of Frauds. it satisfies the [writing requirement] against such party unless written notice of objection to its contents is given within 10 days after it is received.

D fired him two and a half months later. Holding and Rule (Levinson): An oral promise which the promissor should reasonably expect to induce either action or forbearance on the part of the promisee is enforceable when injustice can be avoided only by enforcing the contract.40.Statute of Frauds case. Murphy Facts: McIntosh (P) claims Murphy (D) made a verbal agreement to hire him to work at his auto dealership for one year but Murphy claimed it was an at will contract. so that McIntosh was not bound by a contract until he came to work. Therefore. . Jury returned a verdict for the plaintiff in the sum of 12. particularly cancellation and restitution. (2) In determining whether injustice can be avoided only by enforcement of the promise. The defendants appeal. Procedural Posture: Trial court ruled that the contract did not come within the Staute of frauds. ENFORCEMENT BY VIRTUE OF ACTION IN RELIANCE (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 the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The agreement was never put into writing. McIntosh later telephoned Murphy on Saturday April 25 stating that he would arrive in Honolulu the next day from Los Angeles. See Restatement (Second) of Contracts § 139. Promissory estoppel is not being used in this case as a ―consideration substitute‖.103. it was performable within a year exactly to the day and no writing was required for it to be enforceable. Disposition: Affirmed. The court held that if a party has relied on an oral promise and rendered part performance the other party should be estopped from asserting the Statute of Frauds.One year provision McIntosh v. Dissent (Abe): This ruling usurps the power of the legislature to amend or repeal the Statute of Frauds. Notes: This case provides an example of the use of promissory estoppel to render enforceable a contract that would otherwise fall within the Statute of Frauds. P began work the following Monday on April 27. reasoning that Murphy bargained for acceptance by the actual commencement of performance by McIntosh. The remedy granted for breach is to be limited as justice requires. the following circumstances are significant:  (a) the availability and adequacy of other remedies. RESTATEMENT (SECOND) OF CONTRACTS §139. assuming that the contract was for a year’s employment.

(c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise. (2) A binding completely intergrated agreement discharges prior agreements to the extent that they are within its scope. Integration – means a written agreement that the court finds is the final agreement.   Class Wrap upIn times courts have found that despite all the advantages of the SOF. II. you will be held accountable for it. If a confirmation letter is sent. One party offering money is not enough to show partial performance. Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule) (1) A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them. and all the element of a breach of contract are met. (e) the extent to which the action or forbearance was foreseeable by the promisor. Holes have been put in certain areas in the SOF to prevent greater frauds from occurring. MAY NOT ADD CONTRADICTORY EVIDENCE. Parol Evidenc Rule Meaning of ―Parol Evidence‖.Bars the introduction of all negotiations or agreements occurring prior to the signing of the writing. the merchant may not take the benefit of the SOF. sometimes it has lead to more fraud than if it didn’t exist. B.  (b) the definite and substantial character of the action or forbearance in relation to the remedy sought. (d) the reasonableness of the action or forbearance. triggers the parol evidence rule. If you come to court and admit there is a contract. if it is not challenged in ten days. Exceptions to the Rule Restatement (Second) of Contracts §213. Partial Integration –written and final but not complete Merger/Integration Clause – ―this is the complete and final agreement‖ Parol Evidence – words of the party or parties written or oral before integration If there is a final written version is more reliable than anything said or written earlier   Words of one of two people making the deal Words can be oral or written . whether written or oral. or the making and terms are otherwise established by clear and convincing evidence.

★ Seminal common law rule on parol evidence and collateral matter exception ★ Brief Fact Summary: The Mitchells (Plaintiffs) brought an action against the Laths (Defendants) to enforce an oral agreement to remove an icehouse from property purchased from the Defendants.e. the agreement to remove the icehouse was such that it would have naturally been included in the written contract for the sale of the farm. Therefore.something that is not entirely different but that does not overlap. the PER prevents a court from considering earlier agreements as a source of terms that are inconsistent with the terms in the written contract. the writing was concluded as being a complete integration and cannot be modified. the oral . Mitchill v. An oral agreement is not collateral to the written agreement if its subject is closely related to the subject of the written agreement. It applies to and attempts to modify a contract by parol. The oral agreement contradicts the written agreement. The parol evidence rule defines the limits of the contract to be construed. A court may. Judgment of the Appellate Division is reversed. Dissent: The removal of the icehouse could not be expected to be included in the writing. For an oral agreement to vary the written contract at least three conditions must be met: (1) the agreement must in form be a collateral one (not entirely different but (related) (2) it must not contradict express or implied provisions of the written contract. a mistake in reducing the agreement to writing. ★Test one to get other terms into a contract:★WHEN UNDER COMMON LAW Collateral Matter Exception Collateral Contract. Here. Lath. Defendants appealed from judgment granted in favor of Plaintiffs Issue: Whether the parties’ oral agreement may be enforced? Held: No. If one agreement is oral and the other is written a problem arises. and therefore the writing is not a complete integration. consider evidence of such terms for the limited purpose of determine whether there was a mistake in integration. whether the bond is sufficiently close to prevent proof of the oral agreement. Therefore. Words spoken or written BEFORE the execution of the integrated agreement Triggered when written contract that the court finds is the final agreement AND oral statement made at the time the contract was signed OR earlier oral or written statements by the parties to the contract Regardless of whether the writing is a complete or partial integration. as is here. i. (3) it must be one that parties would not ordinarily be expected to embody in the writing. however.

sometimes there are other circumstances beyond the contract. Inc. Synopsis of Rule of Law: In assessing the intent of the parties in making a document a complete and exclusive statement of the terms of their agreement. Contained and integration or merger clause meaning ―this is the complete and final agreement A jury agreed that Appellant had made and breached its external warranty and the district court ordered the return of its deposit. Let the jury figure out what matters. which looks at available evidence to determine the actual intention of the parties. which states that if a term is not found in the writing.  Side Note: ★ Williston believes that if it was not in the written contract. then it should not be included.agreement is parol evidence and may be admitted to prove the contents of the written agreement. The dissent adopts this view. (Appellee) brought this suit requesting Appellant return its $150. v.00 deposit on a Citation Jet worth $2.000. Cessna Aircraft Co. Brief Fact Summary: Betaco. the majority adopts this approach. The second view is the Corbin view.. Appellant appeals. Discussion: There are two conflicting views on parol evidence:  The first is the Williston or Restatement view. Issue: Whether the purchase order the parties signed was not fully integrated and therefore proof of an extrinsic term was therefore permissible . the following factors should be considered:      (1) the inclusion of merger or integration clauses in the document under consideration (2) the disclaimer of warranties. (4) the sophistication of the parties. and (5) the nature and scope of both prior negotiations between the parties and any purported extrinsic terms. then it cannot be offered into evidence by one of the parties if the court concludes that it would have been natural of the parties to have included it in the writing.495 million. Betaco. ★Corbin doesn’t agree with Williston. Here. Its sometimes important to look beyond the contract. Inc. also known as the four corner rule. (3) whether the extrinsic term is one that the parties would certainly have included in the document had it been part of their agreement.

Not appropriate for jury to have heard the parol evidence. nor was it written so as to be opaque. whereas the specifications in the purchase agreement were much more specific. the parol evidence should not be allowed in for the jury to hear. . the clause is strong evidence that the parties intended and agreed for the signed k to be the complete embodiment of their agreement. ★2nd test to get other terms in a contract: ★ UCC first looks to see if the contract was intended to be fully integrated. if the signed k is deemed fully integrated. the court does not find it significant that the P did not consult a lawyer before signing the k because he is a knowledgeable businessman. The purchase agreement was fully integrated and the proof of the extrinsic term was not permissible. The ―warranty‖ was more like an ad. Therefore. mutual mistake. Reversed and remanded. 4. Finally. 5. the P is precluded from attempting to establish any express warranty outside the signed k. partially integrated or not integrated.‖ The clause is simple and straightforward and was not likely to be overlooked in an agreement that only covered two pages. The disclaimer is subject to the provisions of 2-202. or any other circumstance that would call into question the binding nature of the agreement. Side note: judge should have made a determination on whether this was a fully integrated contract or not.  Held: No.Discussion: Appellee is an experienced sophisticated purchaser with a professed concern about range and a staff available to crunch the numbers. ANALYSIS: 1. there is no evidence that the k was tainted by fraud. 6. P relied on D’s cover letter as evidence of a consistent additional term of the agreement (2-202(b) bars that evidence if the parties intended the signed k to be the complete and exclusive statement of their agreement. he verified that he had read it understood it and had the full authority to bind the company with his signature. Appellee acknowledged that in signing the contract. If it was found to be fully integrated. Is the term contained in the purported warranty outside the k one that the parties would have included in the k itself had they intended it to be part of the agreement?  We are not persuaded that the range of the aircraft was not something that certainly would be included in the agreement. thus. The clause was not buried in fine print. Warranty limitation and integration clauses of the purchase agreement (these speak directly to the completeness and exclusivity of the k): 3. 2. Furthermore. It is difficult too believe that it would spend almost $2.5 million on a plane on a mere assurance that the plane had ―more range.

Pielet Bros. The parties entered into a written . ★UCC §2-202 ★ Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented by: (a) course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208). However it does not absolutely mean it was a fully integrated contract. Scrap Iron FACTS: Pielet’s representative Bloom discussed an opportunity to deliver scrap metal to Luria Bros with their representative Fechheimer. the nature and scope of prior negotiations and any alleged extrinsic terms. THEN THE PER RULE DOESN’T APPLY. history of interaction and whether introducing those clauses would create injustice b/c the parties don’t have equally bargaining power. & Co. Under UCC every contract is either fully integrated. In that discussion Bloom testified that he was doing business with fly-by-night people and he was worried whether or not he would get a shipment of scrap intended for Luria. If there are disclaimers. disclaimer clauses. Luria Bros. ★IF IT IS NOT FULY INTEGRATED. v. YOU MAY NOT ADD CONTRADICTORY PAROL EVIDENCE BUT MAY ADD TERMS THAT SUPPLEMENT OR EXPLAIN. partially or not integrated. LOOK TO SEE: o o o o NATURE AND SCOPE OF PRIOR NEGOTIATIONS SOPHISTICATION OF PARTIES MERGER/INTEGRATION CLAUSES DISCRETION CLAUSES Then looks for integration or merger clauses. The presence of a merger or integration clause is highly probabtive that the contract was meant to be fully integrated. doesn’t contradict original contract and would not expect to find it in writing gets around the parol evidence rule. and (b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement . Class Wrap upCollateral matter. ★  LOOK TO THESE FOUR FACTORS TO SEE IF A CONTRACT IS FULLY INTEGRATED.

Lees owned 50% interest in a wholesale liquor distributorship. parol evidence that the seller’s obligations are conditioned upon receiving the goods from a particular supplier is inconsistent and must be excluded. Joseph E. (SOMETHING BEING CONTRDICTORY TO NOTHING). The Lees carried numerous Seagram brands and a large portion of sales were generated by Seagram lines. Seagram is a distiller of alcoholic beverages. Lee and Yogman. Lee offered to sell but conditioned the offer on Seagram’s agreement to relocate Mr. RULE: The court in Snyder used 2-202(b) to define inconsistency as ―the absence of reasonable harmony in terms of the language and respective obligations of the parties. The Lees and other owners wanted to sell their interests. would not ordinarily be integrated into an instrument for the sale of corporate assets. Lath) Relevant Facts: The Pl/lee. The written agreement does not contain the customary integration . in which the Pls only have a 50% interest.‖ ANALYSIS/CONCLUSION: Where writings intended by the parties to be a final expression of their agreement call for unconditional sale of goods.agreement.. not parties to the contract. Lee discussed this with Yogman VP of Seagram. survive the closing of a corporate deal. Mr. ★Sophistication of a party may be used in determining the integration of a contract. they are allowed to be proved by parol. Legal Issue(s): Whether the oral promise to provide another distributorship would be an expectable term of the contract for the sale of assets by Capital. oral agreements can be treated as separate and independent of the written agreement. Court Rationale: In customary business practices. independent. A mo. ISSUE: Since 2-202 (parol evidence rule) applies. later another representative began negotiations. considering the history of their relationship with Seagram? Law or Rule(s): Certain oral collateral agreements are not w/i the prohibition of the parol evidence rule ―b/c if they are separate. The promise to relocate was not reduced to writing. b/c they were made parol. the next question is whether the excluded evidence contradicts or is inconsistent with the terms of the writings. Collateral agreements such as shareholder employment. and no part thereof committed to writing. The scrap was not delivered to Luria. although relating to the same subject. ★ Lee v. An agreement to obtain a new distributorship for certain persons. whose authority to bind Seagram has not been questioned. Lee and sons in a new distributorship of their own in a different city. There was a close relationship of confidence and friendship between Mr. Trial court excluded evidence that the sales contract was expressly conditional upon Pielet obtaining the scrap at issue from a particular supplier. and complete contracts. are often set forth in separate agreements. Seagram & SonsUses the Collateral Exception Rule (Mitchell v. the purchase of the assets was consummated pursuant to a written agreement. Evidence supports this as having been done. -DETERMINED TO BE A CONFLICTING TERM BC THE CONTRACT WAS SILENT ON THE ISSUE.

★ Williston View: believes that if it was not in the written contract. then it should not be included. Under common law. CONCLUSION: There was no agreement.C. the second engineer’s approval. Sometimes in the absence of silence is conflicting and not conflicting (if there’s an additional term).. and not otherwise. Pym v.C. ★ Class Wrap upGenerally. Inc. The writing dealt w/ the sale of corporate assets. ISSUE: Whether a condition precedent to the agreement. The two contracts did not contain the exact same individuals. Defined differently under the U. the oral w/ the relocation of the Lees. The signed paper was never intended to be the record of the terms of the agreement. parol evidence is not admissible. and approved. There are no contradictions of the terms of the sales agreement. The jury’s finding that the writing was signed on the terms that it was to be an agreement if Abernethie approved of the invention. Campbell FACTS: The PL claims the DEF breached a contract to invest in a machine he made. The oral does not vary or contradict the money consideration recited in the contract as flowing to the selling corp. Before the paper was signed it was explained to the P that the D did not intend the paper to be an agreement until Abernethie had been consulted. collateral matter applies where you can get parol evidence in. ANALYSIS: Evidence has shown that the written agreement was conditional. making it different enough. III. . -The use of the boilerplate forms show that they did not spend much time on the contract because they trusted/knew/were friends. CERTAIN FACTORS MAKE IT MORE OR LESS LIKELY THAT SOMETHING FALLS UNDER THE COLLATERAL MATTER EXCEPTION. Admissibility of Evidence of Surrounding Circumstances and Evidence of Intent  Eichengreen v. invalidated a written agreement? RULE: Evidence to vary the terms of an agreement in writing is not admissible. The DEF claims that the contract he signed wasn’t final unless both Engineers approved the invention. ★Parol Evidence is always admissible if it shows that there was never an agreement. but evidence to show that there is not an agreement at all is admissible. Rollins. they didn’t and thus said that what the DEF signed was invalidated. Interpreatation A.clause. Exceptions are the collateral matter exception. The Pl assented to this and received the writing on those terms.

RULE: A party may not introduce parol or extrinsic evidence to show additional consistent terms of a k unless the writing is incomplete or ambiguous. This may be used in cases where the k is facially unambiguous and contains an express integration clause. There is no reference at all to the provision of protection of P‟s entire premises. you can always introduce evidence HOWEVER. This court will not add another term about which an agreement is silent. the key question is “What is ambiguous”? Air Safety Test. P claims that D was to have the entire home protected. CONCLUSION: This k was a final and complete integration of the parties‟ agreement. P asked the court to consider extrinsic evidence of the parties‟ prior negotiations and to look outside the 4 corners to determine the parties intent. Asks the judge if all the information shown shows ambiguity in the contract. G. ISSUE: May extrinsic evidence be introduced here. then no other evidence is admissible.FACTS: P brought an action alleging breach of k and negligence against D after a fire at his residence. D complied with the written k terms by providing P what was outlined in the letter.  The k here does not contain an integration clause. believes juries are competent) . Four Corners Test (Adopted by Williston and used by Illinois)-The way to determine whether a contract is ambiguous is by looking at the document itself. Thomas Drayage & Rigging Co. Summary judgment of P‟s complaint is affirmed. He argues that the intent of the parties was for the installation of a new security system that would provide protection for P‟s entire premises. looks beyond the clear language of the k to determine ambiguity. the letter is the only and entire agreement between the parties. contrasted with 4 corners and PER.(Cobin View on contracts. Pacific Gas & Electric Co. v. If there‟s nothing ambiguous about the contact. however it was a complete integration of the parties‟ agreement. The letter makes no mention of any outside proposal nor does it contain any references to any additional discussions. ANALYSIS: The court discusses the provisional admission approach which.allows parties to go to a judge with not just the contract but with evidence of previous discussions. When there‟s ambiguity in a contract.W.

Brief Fact Summary. only the contract goes to the judge and jury. Course of Dealing. but it may be used to interpret the terms of the contract. Synopsis of Rule of Law. We trust judge and juries. detract from. for breach of a supply contract when Defendant failed to provide price protection on a delivery of asphalt as it had done in . and Defendant sought to offer evidence that the indemnity clause was only to cover damages to third parties. Nanakuli Paving & Rock Co. Extrinsic evidence may not add to. E. when can we introduce extrinsic evidence beyond what’s in the contract? WIllistonian believers say look at the four corners of the contract. Shell Oil Co... and Court of Performance Nanakuli Paving & Rock Co. the evidence offered by Defendant is admissible. but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. excluding parol evidence merely because the words do not appear ambiguous may lead to an interpretation of a written contract that was never intended. If there is no ambiguity. After the cover fell and injured Plaintiff‟s turbine. sued Defendant.Extrinsic evidence is admissible to explain the meaning of a written agreement if the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.Fact Summary: Defendant contracted with Plaintiff to remove and replace the upper metal cover of Plaintiff‟s steam turbine. Defendant agreed to indemnify Plaintiff against all loss resulting from injury to property. we want to know how they explain.Plaintiff. Plaintiff sued to recover damages. since the contract clause was reasonably susceptible of the meaning Defendant attaches to it.‖ o Further. Class Wrap up: When there is a term in the contract.Yes. Issue-Is extrinsic evidence admissible to aid in the interpretation of an unambiguous contract term? Held. or vary the terms of a written contract. Corbin argues that when there are terms that explain. v. Lets put everything out there and figure it out. In the present case. ―The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face. Admissibility of Evidence of Usage and Trade. Shell Oil Co.

a commercial contract is broader in scope than its express provisions. There was sufficient evidence for the jury to find that a usage of the asphaltic trade in Hawaii required Defendant to provide price protection to Plaintiff.Under the Uniform Commercial Code. and the Court of Appeals reversed. If the jury finds that an act is unambiguous. courses of dealing. a trade usage or course of dealing may be used to explain or supplement the express terms of a written contract.. A person will be bound by a trade usage if he/she is a member of the trade at issue or is a person who knows or should know of the trade usage. A person should know of a trade usage if he/she has regular dealings with members of the specific trade. Defendant previously raised its prices under the contract with the Plaintiff only twice. Under the UCC. Whether an act is ambiguous is a question for the jury. In this case. The jury could find that those two instances constituted a course of performance. it may also decide whether an act is a course of performance or a waiver. Synopsis of Rule of Law. and will also include trade usages. The jury returned a verdict in favor of the Plaintiff. and actual performance of the contract:   . and offered price protection both times. Although Defendant did not deal in all asphaltic materials. In commercial contracts. or to protect the flexible nature of the contract. “farmers should know something of seed selling). who was a major asphaltic paving contractor. which was set aside by the trial judge. One instance of conduct will not constitute a course of conduct.g.Yes. if acts are ambiguous. Held. but how many more occurrences are required will depend on the circumstances. Plaintiff appealed.  The trial court did not err in defining the relevant trade as the entire asphaltic paving industry.the past. A trade usage will be binding on a person who is either a member of the trade or is a person who knows or should know of the trade usage. A person should also know of a trade usage if he/she is a member of another trade that has some dealings with the relevant trade (e. Defendant should have known of the practice of price protection in Plaintiff‟s industry. Therefore. there is a preference to interpret them as a waiver of a contract term rather than as a course of performance if it is necessary to prevent surprise or hardship. it regularly dealt with Plaintiff.

or some other objective standard. American Seating Co. D said that they wouldn’t include it because of the possible stigma which might result from having a contingent fee contract. a reasonable jury could find that Defendant breached its duty of fair dealing to Plaintiff when it provided only one day‟s notice. usage Zell v. and the jury could reasonably find that this exception was consistent with the posted price provision of the agreement. this duty requires following commercially reasonable standards of fair dealing within that trade.  Contracts governed by the UCC carry a duty of good faith in performance and enforcement. Therefore.o Whenever it is reasonable. Then D refused to pay P the 3-8% when he got them a k.Juries should be allowed to add a specific term to commercial contracts on a good faith theory only when it is based on evidence of a wellestablished usage or custom.-Suppose should know Judge Frank-hates parole evidence rule FACTS: P offered to D to procure contracts for manufacturing products for national defense products for 1k/month if he was unsuccessful. Finally they got a k in writing but excluded that part. Useage-practices of similar businesses in similar areas Course of dealing-behavior of the same companies in past contracts Course of performance-conduct of the same companies in this specific contract. In this case. Express terms 2. course of performance -- Fav besides express terms 3. . and 3-8% of the k price if he were successful would be a bonus. there was evidence that advance notice of price increases for asphalt was a well-established practice in the paving industry. price protection was a prevalent trade usage in the asphaltic paving industry. otherwise. an express term will control. In this case. For merchants. course of dealing 4. Concurrence. Order of importance under the UCC     1. express terms will be read as consistent with courses of dealing and trade usages. o There must be evidence of a definite trade usage in order for it to be allowed to modify an agreement.

a writing does not acquire that dominating position if it has been proved by extrinsic evidence that the parties did not intend for it to be an exclusive memorial of their agreement. filed notice and proof of loss w/ FCIC.S. they must be performed. ―so that‖. ―on condition‖. ANALYSIS: The judge here tries to argue that because they previously agreed that the writing would not bind them that it doesn’t. but prior to inspection they .RULE: Under the PER. breach of which leads to liability for damages or equitable relief Condition Precedent-an event occurring after the making of a valid contract which must occur before a right to immediate performance arises. ―when‖.contractual undertaking. Pl harvested and sold the depleted crop. insuring their tobacco crops. He says that a mechanical device like the PER cannot satisfy the longing for a rational method because the injustice of applying the rule has been riddled with exceptions. he says that although the PER’s quest is for objectivity – objectivity is beyond even the powers of Satan. Howard v. CONCLUSION: Reversed and remanded – PER sucks and the oral agreement should be abided CHP 7. a rule so leaky cannot fairly be described as a stout container of legal certainty. on six farms. Basic Concepts  Bulk of the provisions of an agreement are designed to state positive obligations of the parties and when. Howards. Relevant Facts: Df. Conditions and Promises: Performance and Breach I. an agency of the U. more things are done on the fly and orally. FCIC. In sum. ―while‖  Until the condition happens there is no obligation. Business has changed. Federal Crop Insurance Corp. Pl‟s alleged that their 1973 crop was damaged by heavy rains. The recognized exceptions to the rule demonstrate strikingly that business can endure even when oral testimony competes with written instruments. this shouldn’t apply anymore. Promise. against weather damage and other hazards. (Would get Barry after the summer ends-get after performance)  Intent to create a condition uses such words as:  ―provided that‖. o ―If Prof Edelman does not teach in Ny over the summer then he gets to own Barry Law school. if at all. issued 3 policies to the pl.

Legal Issue(s): Whether the provision specifying a requirement for approval is a promise or a condition precedent? Court’s Holding: Approval was intended to be Jones‟ duty. Issue: Promise or Condition Precedent? Holding: Promise. surveys.plowed or disked under the fields in question. master plan. Eastside Properties Relevant Facts: Pl Jones. D may recover from P for whatever damage it sustained because of the elimination of the stalks but it would not forfeit the policy  There is a general legal policy opposed to forfeitures. When it is doubtful whether words create a promise or a condition precedent. A portion of the policy provides that the stalks shall not be destroyed until FCIC makes an inspection. The provisions of a contract will not be construed as conditions precedent in the absence of language plainly requiring such construction -Could use the price of hiring someone to determine the damage as the cost of the damage of pulling the stalks. an engineering. Second. . Insurance policies are generally construed most strongly against the insurer. The parties amended the original K. we hold that the district court erroneously held. on the motion for summary judgment. Jones Associates v. and surveying firm. consulting. and County final plat approval was not obtained. and short plats for Eastside‟s 180 acre parcel. they will be construed as creating a promise. and Eastside two conditions to payment were not met: both studies were not approved by Eastside. entered into a professional services agreement. Pl was to provide updated study. Jones claims it performed all required services as agreed. a real estate developer. its violation caused a forfeiture of plaintiffs’ coverage. Jones was to provide a feasibility study. and Eastside. but incorporated the original K‟s terms. that subparagraph 5(f) established a condition precedent to plaintiffs’ recovery which forfeited the coverage Judgment: Remanded Rationale:  If subparagraph 5f creates a condition precedent. if it creates an obligation upon P not to plow under the tobacco stalks. Eastside unsuccessfully appeal the conditions. a Promise. The plat application was submitted to the County which gave a preliminary approval with numerous conditions attached. and revisions for recordation.

Don’t want to make bad facts bad law. Reversed and remand for trial. dismissed action against Df and awarded Df atty fees. P to payment. Then another provides evidence of Df‟s ability clearly and unambiguously to express a C. and the reasonableness of respective interpretations advocated by the parties. circumstances surrounding the K‟s formation. and surveying related to df‟s plat application.” not obtain county approval of the short plats. of obtaining approval encompassed any additional services to secure approval. the subject matter and objective of the K. Don’t like conditions cause they lead to forfeiture. If something is ambiguous. it’s deemed a promise. Df‟s conduct subsequent to K formation supports the fact that the parties did not intend the provision to be a C. P.    Plaintiff’s Argument: The K provision is not a condition precedent but merely states that Pl was to perform all necessary engineering. Defendant’s Argument: The K provision created a condition precedent to payment by expressly stating Pl was responsible for obtaining approval by the county for all platting. P to payment. but not a C. Df entered into a K amendment to comply w/ the county‟s conditions rather than insisting that the C. Ganas . inserted by Eastside. the subsequent acts and conduct of the parties to the K . The change order was to revise and “file for recordation. consulting. Law or Rule(s): Determination of the intent of the contracting parties is to be accomplished by viewing the K as a whole. Approval was not obtained and Jones may be liable for breach of its promise to obtain approval.  W/i the K. and the reasonableness of the parties‟ respective interpretations indicates that the parties intended Jones‟ assumption of responsibility for obtaining the County‟s approval to be a duty under the K. Ambiguous K language is strictly construed against the drafter. Don’t like precedents that are out of someone’s control Bright v. Court Rationale: An examination of the whole contract. “scope” there is no mention that Eastside would not be responsible for any costs if approval of the county wasn‟t obtained.Procedure: Trial Ct. the parties‟ subsequent conduct. all the circumstances surrounding the making of the K. Df tendered $15 K that was due. Rather than refuse to pay. P.

if by it he earned his discharge. Legal Issue(s): Whether faithfully and continuously was a condition precedent or a promise for the payment of $20. especially when it is accompanied by other conduct which would of itself justify a rescission of the contract.master and servant which should exist between them that they can be decided by the court as matters of law.  . and. Df appealed. This is one entire contract and the pl was entitled to the full consideration of his contract or none of it. then it is available to the executor as a defense. who then engaged Pl as a servant or man of all work. it is for the court to say whether the discharge was justified. A breach of this stipulation is unquestionably a valid reason for dismissing the servant. if he served Darden “faithfully and continuously” until his death. so flagrant and so manifestly contrary to the implied conditions arising from . . He became acquainted w/ Darden.. It stated that the pl had designs on his employer‟s wife.  If unfaithfulness and disloyalty was sufficient to warrant his immediate discharge by his employer. . preceded his father then engaged in the restaurant business worked principally as a waiter. then he cannot recover. if his employer had known. Reversed w/o trial. then Pl‟s right to compensation has been forfeited. Law or Rule(s): Every servant impliedly stipulates that both his words and his behavior in regard to his master and his master‟s family shall be respected and free from insolence.000? Procedure: Jury judgment for the Pl. Ganas continued until Darden‟s death for approx. There are cases .  What constitutes good and sufficient cause for the discharge of a servant is a question of law. and inexcusable as to justify his discharge. D found a letter on her bed addressed to her issued by the pl. Contained in the record is a specific agreement for the payment of $20. The violation of the agreement by the Pl was so flagrant. Pl had written on the envelope “If I lose my job by this note–at least I would gain my peace of mind. to Ganas. . Court Rationale: If the act of writing and delivering the letter soliciting Darden‟s wife was such that it would have caused his discharge. Mrs. unjustified. 27 yrs.Relevant Facts: Pl.” The record does not provide any excuse or justification for the pl‟s behavior. had it been known to him.000 out of the estate. 2 hrs after the funeral she showed the executor the letter and told him the pl must get out of the house. and where the facts are undisputed. Ganas.

West Publishing Co. Both parties put themselves upon a nice point in this contract: it was a kind of wager as to the quantity of oil which should arrive at the ports mentioned. Gardner Facts: D promised to pay P on the condition that if a greater quantity of sperm oil should arrive in whaling vessels at Nantucket and New Bedford.” West admits that the manuscript was of high quality and that its decision was not due to any literary shortcomings in Chodos‟s work. Washington Square Press) Facts: Chodos and Bancroft-Whitney's entered in to a standard Author Agreement. It is plain that the burden of proof is upon them. it doesn‟t arrive until it drops anchor. informed Chodos that they would no longer publish his book because of concerns about its market potential. Judgment: Judgment on the verdict for P Rationale: It is like a bond with a condition. The defendants in this case promise to pay a certain sum of money. Defendant’s Argument: The Pl‟s breach of a promise to remain faithful and loyal voids his recovery. the promise remains good. before a certain period.Plaintiff’s Argument: It is for the jury to decide whether the letter constituted unfaithfulness and disloyalty. Gray v. in whaling vessels. West Publishing Co. he must shew performance of the condition. both inclusive. Bancroft-Whitney's successor. on condition that the promise shall be void on the happening of an event. .. than arrived at said places. They must be held strictly to their contract. (Similar to Freund v. Chodos v. and if they fail to shew that the event has happened. His performance was induced by an agreement that permitted rejection of the completed manuscript only for deficiencies in “form and content. if the obligor would avoid the bond. there being no equity to interfere with the terms of it. then this obligation to be void Issue: did the ship arrive in time to discharge the obligation? Holding: No. on or between the first day of April and the first day of October of the present year. on or within the same term of time the last year.

West breached its agreement with Chodos. The argument that the k is illusory fails. West did breach the agreement. and filed liens to that effect. Legal Issue(s): Whether the subcontract provision stating. it is not because of the good faith and fair dealing the company had. Gulf then entered into 3 subcontracts w/ Def’s. Gulf Construction Co. When Gulf refused and failed to pay the subs filed suit. Issue: Whether a publisher retains the right to reject an author‟s manuscript written pursuant to a standard industry agreement. bc federal judges are quicker to overturn large judgments. Good Hope. Damages: Chodos‟s entitlement to 15% of the revenues from his book is not liquidated because it was not a certain or readily ascertainable figure.  Chodos cannot “cure” the economic downturn or the fact that the  book may not sell because it is not a desirable topic. its deemed illusory b/c there is no consideration. it would have been unfair to deem the „Form an Content” clause as including issues out of Chodos‟ control. Entitled to restitution. "Under no circumstances shall the general contractor be obligated or required to advance or make payments to the subcontractor until the funds have been advanced or paid by the owner or his . encountered financial problems and directed that the work stop. (No). (Lady Duff Gordon case) However. Self Relevant Facts: PL Gulf. even though the manuscript is of the quality contemplated by the parties. Shaw Plumbing and Calvin Self. During the construction. Because West concedes that it is high quality and that it declined to publish it solely for commercial reasons rather than because of any defect in its form or content. a gen contractor entered into two K with owner Good Hope to build several building at its plant site. Afterward the subs demanded payment from Gulf for the work performed. the owner.  The “cure” clause doesn‟t coexist with the idea that the “form and content” clause includes marketing and economic deficiencies. West (Def) removed to federal court because generally large companies tend to prefer federal courts. West did not act within the discretion afforded it by the author agreement when it decided not to publish Chodos‟s manuscript. v. Even though this was a condition. Analysis/Conclusion: Chodos argues the K is illusory because courts have held that if one of the promises leaves a party free to perform or to withdraw from the agreement at his own unrestricted pleasure.

must be gathered from the contract as a whole and from the intent of the parties. the K should be interpreted as creating a covenant. does not set forth a condition precedent to Gulf’s obligation to make payment but sets forth only a covenant regarding the terms of payment or manner of payment. the balance owed because the owner is unable to pay. pursuant to the 9 th paragraph of the subcontract.representative to the general contractor. Law or Rule(s): While no particular words are necessary for the existence of a condition. whether a certain contractual provision is a condition." was established as a condition precedent to payment or a covenant dealing w/ the terms of payment or manner of payment? Court’s Holding: Covenant dealing with the terms of payment or manner of payment. ----“Pay if Paid” clauses in California are considered unenforceable because it prevents the subs right to a mechanic’s lien Plaintiff’s Argument: The provision is a covenant and not a condition. The provision requiring the subcontractor to wait to be paid for an indefinite period of time until the general contractor has been paid by the owner is to give the K provision an unreasonable construction which the parties did not intend at the time the subcontract was entered into. by itself." "on condition that. When deciding if something is a condition or a covenant look at:   Overall intent." or some other phrase that conditions performance. recognize as a general principle disfavoring forfeiture. usually connote an intent for a condition rather than a promise. It would be absurd to believe that a subcontractor would enter a K believing it would not be paid by the general k. Affirmed. and the risk does not shift to the subcontractor unless there is a clear. rather than a promise. Procedure: Bench trial ruled in favor of Self and against Gulf. such terms as "if. Insolvency of the owner does not defeat the claim of the subcontractor against the general. unequivocal and expressed agreement between the parties to do so. . ---Risk of nonpayment by an owner on a construction contract rests on the contractor who contracts with such owner rather than on a subcontractor who has no privity of contract with the owner. Court Rationale: Where the intent of the parties is doubtful or where a condition would impose an absurd or impossible result. in the absence of such a limiting clause. It is basic in the construction business for the General to expect to be paid in full by the owner for the labor and material he puts into the project. The first sentence of the 9th paragraph. The Second sentence of the 9th paragraph is in the nature of a modification of the time provision which immediately proceeds it in the 1st sentence. Defendant’s Argument: Gulf is under no obligation to pay." "provide that. There is no privity between the sub and the owner.

Plaintiff alleged that Defendant’s obligation to convey the business was independent of the Plaintiff’s obligation to post a security bond and the Defendant’s remedy was a breach of contract not to refuse to sell. There are three types of covenants:  (1) those that are mutual and independent where either party may recover damages from the other for the injury he received as a result of the party’s breach and it is no excuse for the Defendant to alleged breach of a covenant on behalf of Plaintiff. Preston Synopsis of Rule of Law-The presentation of a good security by one party is a condition precedent to the other party’s obligation to perform. and (3) those that are mutual conditions to be performed at the same time and if one party readily performs and the other refused to perform and the party who was ready to perform may maintain an action for the default of the other. Facts. Plaintiff promised to post a security bond.An action of debt for non-performance of covenants contained in articles of an agreement between the Plaintiff and the Defendant.Whether the covenant that the Defendant had an obligation to convey the business and the covenant that the Plaintiff had an obligation to post a security bond were independent? Held. which guaranteed payment of the installments if the business did not generate enough proceeds before the sale. Plaintiff did not post such a bond and as a result Defendant refused to consummate the sale.   . Plaintiff brought suit against Defendant for breach of contract.No. Issue. disfavoring things outside of ones control. (2) covenants which are conditions and dependent in which performance of one depends on the performance of another. Thus. Kingston v. till the prior condition is performed the other party is not liable to an action on his covenant. Another covenant stated that payment was to be made in installments out of the proceeds of the business by Plaintiff. The articles stated that the Plaintiff covenanted with the Defendant to serve him for one year and a quarter in his trade of a silk mercer at 200 a year and in consideration of the premises the Defendant covenanted that at the end of the year and a quarter he would give up his business to the Plaintiff and give up his stock and the deeds would be executed for fourteen years.

but Mobil delivered only 25.000 gal per year. The dealer undertook his obligation to pay a minimum rental in reliance on Mobil’s fulfillment of its obligation to deliver the quantity of gasoline ordered by the dealer.‖ The schedule specified $470/mo. It would be a great injustice to compel the Defendant to turn over his business to the Plaintiff without the security for which he bargained for and to have the only remedy an action for breach. Dealer ordered 34. Df appealed. Procedure: Pl brought declaratory judgment proceedings. In order for the rent per gal to equal the minimum rental per month.000 gal of gas per year. A party has no obligation to perform a promise that is conditioned upon the other party’s performance when the other party failed to perform even though the other party’s failure is excused and is not a breach of K. but ―no less than the minimum amt specified in said schedule. Law or Rule(s): If one of the promises becomes impossible of performance. Presenting good consideration is condition precedent to Defendant’s obligation to convey the business. His failure to perform is not a breach of K.000.4 cents per gal of gas delivered. Mobil Oil Corp.The promises were not independent and the giving of a security by the Plaintiff was a condition to the Defendant’s duty to convey the business. Relevant Facts: The parties entered into a service station lease and a retail dealer K. The lease required 1. trial ct ruled for Pl (interpreted the clause to mean that Mobil has a duty to deliver to the dealer as much as the dealer ordered. Reversed. b/c of Federal request. Ct. Court Rationale: Covenants are dependent or independent based on the intention of the parties as deduced from the terms of the K. the covenants are mutually dependent. The K required the dealer to purchase not less than 200. But the fact that the law excuses him from performance does not justify him in demanding performance by the other party.678.572 gal per mo. Shaw v. and Mobil to sell not more than 500. If the parties intended that performance by each of them is in no way conditioned upon performance by the other. The dealer’s promise to pay the minimum rental was conditioned or dependent upon Mobil’s delivery of the amount ordered by the dealer. If they intend performance by one to be conditioned upon performance by the other. The dealer is not obligated to pay . the party who made it may be excused from legal duty. Legal Issue(s): Whether the dealer's promise to pay minimum rental was condition dependent upon oil company's delivery of the amount of gasoline ordered by dealer even though oil company's failure to perform might be excused? Court’s Holding: Yes it was a conditioned or dependent. The K had an excuse clause. S. Mobil was required to deliver 33. This duty is partially subject to an excuse clause). the covenants are independent.

The measure of allowances is not the cost of reconstruction”. Energy office to allocate its gasoline supply among its dealers. One of the specifications for the plumbing work was that “all wrought iron pipe must be well galvanized. RULES: In circumstances of this case the measure of allowance is the difference in value of the pipes. Contract would require the tear down of the old pipes plus reconstruction of the new ones so the plaintiff would end up losing money. Defendant’s Argument: Under a provision of the K Df was excused from delivering the quantity ordered b/c of a request by the Fed. The court also made an analogy by stating “Specifications call. Furthermore. lap welded pipe of the grade known as “standard pipe” of Reading manufacturer. when the defect is insignificant. On the completion of the building. v. but the difference in value. Kent-May use for exam last year FACTS: Plaintiff built a country residence for defendant and now sues to recover unpaid balance. Plaintiff’s Argument: The Pl’s promise to pay the minimum rent is a dependent promise. the owner learns that though the blunder of a subcontractor part of the foundation has been built of granite of the same quality quarried in New Hampshire. the court will find that there was substantial performance and excuse the breach of using the same type and quality of pipe which parties had agreed were the same except for the brand name. Plaintiff used the wrong pipes. when it comes to not following the exact terms of the contract. Jacob & Young. The court held in this case that the measure of the allowance is not the cost of replacement. conditioned upon Df’s performing its obligation to deliver the quantities of gas ordered. Dissent: Disagreed with majority‟s decision by stating that the defendant specified in the contract exactly what he wanted and that he was entitled to . The measure of damages is not the cost to rip out the old pipe and install a new one.the minimum rental although Mobil might be excused from delivering the quantity ordered. but the difference in value. Rational: The court reasoned about what is important and trivial. HOLDING/RULING: Ruling in favor of the plaintiff – the builders of the home. Inc. which would be great. not the cost of replacement. for a foundation built of granite quarried in Vermont. which would be either nominal or nothing. which in this case is zero. let us say.

00 suffered by Plaintiff as a result of the alleged failure of Defendant to perform a contract calling for the installation of a new roof on Plaintiff‟s home.A contractor who tenders performance so deficient that it can only be remedied by completely redoing the work for which the contract was established has not substantially performed his duties. Judgment affirmed. Substantial Performance-This principle is relevant when a contractor's performance is in some way deficient. yet is so nearly equivalent that it would be unreasonable for the owner to deny the agreed upon payment. The question of what amounts to substantial performance is a question of fact. The failure to perform was either intentional or due to gross negligence. If there is a diminution in value. A promisor. Defendant appealed from a judgment for the Plaintiff. the court will require a replacement. Cope (Plaintiff) sued O. through no willful act by the contractor. one must weigh the purpose to be served. the contractor must have in good faith intended to comply with the contract and shall have substantially done so in the sense that the defects are not pervasive. the excuse of deviating from the letter of the contract and the cruelty of enforcing strict adherence or of compelling the promisee to receive something less than for which he bargained. Fred M.that.W. Grun Roofing & Construction Co. In order to determine if there has been substantial performance. Cope-May use for last years exam Brief Fact Summary-Mrs. O.500. Synopsis of Rule of Law. v.W. Grun Roofing and Construction Co. To constitute substantial performance. do not constitute a deviation for the plan . CLASS NOTES: A contract damages provision must provide some benefit in the relation of cost… Courts are not going to enforce damages clauses that are unreasonable. This is known as the doctrine of substantial performance. who has substantially performed is entitled to recover although he has failed in some particular to comply with his agreement. Held-No. Conditional promise goes first. then the dependent promise. the desire to be gratified. (Defendant) to set aside a mechanic‟s lien filed by Defendant and for damages in the sum of $1. This is the first case in which a court disregards the written words of the contract.

Relevant Facts: Contractor brought action against owner to recover for labor and materials furnished under written construction contracts and for further amounts on quantum meruit basis for labor and materials furnished without express agreement as to price.When determining if a breach is material. The Ks were terminated in June. which she reasonably expected from the contract. an important factor is the extent to which the non-breaching party is deprived of the benefit. serves the same purpose as a roof of uniform color. The evidence does not establish that the roof. and that where parties had entered into an express. the court cannot say that a contractor who tenders performance so deficient that it can be remedied only by completely redoing the work for which the contract called has established that he has substantially performed his contractual obligation. Df notified Pl in April that no more progress payments would be made on the gondola K. contractor could recover in quantum meruit for the additional . Discussion. Pl continued work but did not finish. there is evidence that supports the conclusion that Plaintiff can secure a roof of uniform coloring by installing a new roof. Df kept shifting Pl‟s activities from 1 k to another and delaying payments to Pl. contract for good consideration for work in addition to that covered by contracts. the principle reason for which the parties entered into the contract must be considered. which lacks uniformity in color. The Ks called for weekly progress payments based upon work completed w/ a provision for retaining 10 % until ten days after final acceptance. Pl a contractor. When determining the extent to which the non-breaching party has been injured. Sherburne Corp.and are not so essential to the object of the parties in making the contract and its purpose cannot be accomplished by remedying them. Here. Material breach : a breach of contract that is so substantial that it defeats the purpose of the parties in making the contract and gives the nonbreaching party the right to cancel the contract and sue for damages Carter v. although unformalized. The parties executed four contracts between them. Legal Issue(s): Whether time was of the essence of the contracts and contractor's failure to perform within time specified precluded recovery. Therefore. Df‟s representatives promised the Pl extensive additional Ks in return for certain work building a gondola lift line w/o compensation. Df was a developer builder.

or the reasonable value of the performance rendered. At that time Pl had completed a substantial portion of the work. rendered judgment in favor of the contractor and the owner appealed. None of the four Ks included express language making time of the essence. Yes QM. and was not a termination of the K. Procedure: Tr. 2 Ks called for completion dates and forfeitures for noncompliance but this does not make time of the essence. performance on time is a constructive condition of the other party's duty.Some types of promises are treated as condition and dependent promises. Defendant’s Argument: The Pl is not entitled to recover for work done after notice. Ct. Court Rationale: Time was not of the essence in any of these Ks. Dfs notice concerned only the progress payments. Where time is not of the essence a failure to complete work on time w/i a specified time will not terminate a K. . Plaintiff’s Argument: The delays were a result of the‟s Holding: No not of essence. determination as to whether time is of the essence depends on intention of parties. circumstances surrounding transaction and subject matter of the contract. making the dependent promise having to be met. Here the Dfs actions in shifting the Pls activities and withholding payment caused the delays. Ct Affirmed. If there is substantial performance-not perfect performance but close enough so that we treat the conditional promise as being met. Df informed Pl in April that no more progress payments would be made on the gondola K. Generally time is not of the essence in a building or construction K in the absence of an express provision. Where time is of the essence of contract. and Pl was not in substantial compliance w/ the Ks. and there is nothing in the circumstance surrounding these Ks. S. Class Wrap-up. Law or Rule(s): Where parties have not expressly declared their intention as to whether time is of the essence of a contract. and Contractor‟s failure did not preclude recovery. Failure of payment does not require cessation of performance. but had not invoiced it yet. QM. Termination w/o legal justification entitles the Pl to recover the K price for work done before termination. usually the duty to pay for the performance rendered. but will subject the contractor to damages for the delay. and the work was performed.

plus atty fees.  There is no room in commercial contracts for partial performance. the buyer has a right to reject them. the evidence must be reviewed to see if the right goods were tendered at the right time and place. o UCC has adopted a perfect tender rule Relevant Facts: Appellee/Pl. Perfect Tender Rule. that condition is met unless the condition says time is of the essence. The written K covers only .  Conformity does not mean substantial performance. Ct of App Affirmed. ANT appealed. Printing for the refund of a deposit under a written K to print 5000 books. Law or Rule(s): If the goods or tender of delivery fail in any respect to conform to the contract. and whether the goods tendered were in conformity with the requirements under the K? Court‟s Holding: No. Def rejected the books b/c of off center art. If the goods fail to conform to either the express or implied terms of the K.-Trial court used UCC. Procedure: Jury awarded EE refund. wrinkled pages. so the UCC is still used. Court Rationale: If it was determined that the books failed in any respect to conform to the contract. Always look to the express terms of the contract first. inadequate perforation on a pullout page. the purchaser would not have a right to reject and to recover a refund of the purchase price. higher court thinks that they should use other law yet no one challenged it. but would have a right to damages for breach of contract. v.DOES NOT APPLY TO THE UCC Time is of the essence clauses. Inc. Printing Center of Texas. Legal Issue(s): Whether substantial performance applies in transactions involving K for the sale of goods. Once the K has been determined. A showing of only a minor defect would constitute bad faith. the buyer may reject the whole. and the use of gray paper when white was contracted. Supermind sued Appellant/Df.if a contract as a conditional promise requires performance by a certain date.    There is no room in commercial contracts or sales law for the doctrine of substantial performance. and the books did not conform. crooked pages. Supermind Publishing Co.

essential terms such as quantity, trim size, and type of paper and cover. The type of paper specified was 30# white newsprint.  The pages of the books were gray while the sample was white. A sample which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample. Appellant knew that the books were to be sold to the public. Therefor it is implied in the K that the books be commercially acceptable and appealing to the public. They must pass w/o objection in the trade and be fit for ordinary purposes to be merchantable.

ANT failed to carry its burden of proof that EE rejected the books in bad faith. The non conformities were not minor, and there is no evidence that the primary motivation was to escape a bad bargain. Plaintiff’s Argument:(EE) The books were of a quality that they could not be sold to the public, the ANT did not conform the books to the agreement. Defendant’s Argument:(ANT) The finding that the books failed to conform to the K is so against the great weight and preponderance of evidence that it is manifestly unjust. EE acted in bad faith by rejecting the books. Capitol Dodge Sales v. Northern Concrete Pipe, Inc. Relevant Facts: An officer of Df, William, called at Pl‟s business to solicit the sale of a truck w/ a snowplow attached. Fuller took him for a test drive, but when they returned the engine overheated. Fuller stated the snowplow‟s position was the cause. William was willing to buy it if this were true, Fuller affirmed. William gave Fuller a check for the full payment w/ instructions that his employees would pick it up the next day. When the employees arrived Fuller personally showed them how to position the blade. When they arrived back w/ the truck it overheated. Fuller‟s service tech advised rechecking the position, refilling the radiator, and test driving again. It overheated, Df was told to bring the truck in for service. He did so and it again overheated. The Pl replaced the radiator cap, and after the Df picked up the truck it again overheated. Payment was stopped on the check, and instructions that the Pl should have the truck. A wrecker picked it up for the Pl. Legal Issue(s): Whether the Df‟s actions can be construed, under the UCC, as signifying, after a reasonable opportunity to inspect, that the truck

conformed or that the Df would retain the truck in spite of its nonconformity.? Court’s Holding: No and No. Procedure: Tr Ct ruled in favor of seller and manufacturer(3rd); Circuit Ct Affirmed. Ct of App Reversed and remanded. Law or Rule(s):

UCC 2-606 o Acceptance of goods occurs when:
o the buyer after reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non conformity; OR o fails to make an effective rejection but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them. o Acceptance under the UCC has nothing to do with the definition of acceptance under mutual ascent!!!!!! Court Rationale: The language of the UCC clearly contemplates an act of the buyer beyond taking delivery or possession of the goods.  Possession during the time necessary for the “reasonable opportunity” to inspect is contemplated prior to acceptance. The code allows rejection of good for non conformance “w/i a reasonable time after delivery.” Thus while transfer of possession or title may be acts bearing on acceptance, they are not in themselves determinative thereof. The buyer is dependent on the seller‟s expertise that something more than a mere visual inspection is appropriate before the buyer can be held to have accepted the machine. A “reasonable time to inspect” under the UCC must allow an opportunity to put the product to its intended use, or for testing to verify its capability to perform as intended. Under the code the buyer may reject goods which “fail in any respect to conform to the K,” which creates a “Perfect Tender Rule.” In this case there was no acceptance. Df had the absolute right to reject the truck for non conformity w/i a reasonable time, and notify the seller. Df did so. Plaintiff’s Argument: Df by physcial possession accepted delivery of the goods. Defendant’s Argument: After repeated inspections by Pl, the goods were nonconforming.

 

Before you accept the goods you can require perfect tender After acceptance you may revoke your acceptace, if there is a substantial impairment to you. (subjective).

Colonial Dodge, Inc. v. Miller Relevant Facts: Df ordered a Dodge station wagon from Pl which included a heavy-duty package w/ extra tires. Df picked up the wagon, met his wife, and exchanged cars. When she got home she noticed the spare tire was missing. The following morn Df notified Pl and insisted on having the spare tire. He was told there was no tire available, he informed the salesman that his two checks would be stopped for payment, and the wagon would be in the front of his houses for them to pick it up. He parked the car and ten days later it was towed. Pl applied for license plates, registration, and title in df‟s name, Df refused the license plates. The tire was not included b/c of a nationwide shortage. Legal Issue(s): Whether failure to include spare tire with new automobile constituted a substantial impairment in value of automobile entitling buyer to revoke his acceptance of the vehicle? Court’s Holding: Yes Procedure: Circuit ct judgment for seller, and buyer appealed. Ct App reversed and remanded. On rehearing affirmed the Circuit Court. Buyer appealed; S. Ct. Reversed. Law or Rule(s):  The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it on the reasonable assumption that its nonconformity would be cured and it has not been seasonably  cured. Revocation must occur w/i a reasonable time after discovery of the grounds for it and before alteration.

Court Rationale:  Failure to include spare tire with new automobile constituted a substantial impairment in value of that automobile entitling buyer to revoke his acceptance of the vehicle, where defendant had ordered special package which included special tires and defendant's occupation demanded that he travel extensively.

The written contract set out the major aspects but lacked . DISSENT : The requisite impairment of the value of the goods to the buyer must be substantial. Df’s concern w/ safety is evidenced by the fact that he ordered the special package which included the special tires. Defendant’s Argument: The value of the car was substantially decreased to Df as a result of the nonconformity. It is not sufficient that the nonconformance be worrisome. The spare was under a fastened panel. Not the mere possibility of a flat in the early hours. The dangers to attendant motorist are common knowledge and Df‟s fears are not unreasonable. concealed from view. aggravating. Df had no duty to hold the goods other than w/ reasonable care for a time sufficient to permit the seller to remove them. SUBJECTIVE TEST Class Wrap up  Under the UCC when goods arrive they have to be perfect tender due the basis of the contract. The Df did not discover the nonconformity before he accepted the vehicle. bathroom and sewing room. but if the buyer wants to revoke it is no longer the perfect tender rule but a substantial impairment rule. A buyer might not be allowed to cure when they exercise bad faith or when they had an opportunity to cure but failed to do so continuously or in bad faith. W/o a spare Df would be helpless on the freeway until the morning hours. utility room. IF acceptance takes place then the buyer can still revoke.  Excuse -Prevention Sullivan v Bullock Relevant Facts: Sullivan hired Bullock to remodel her kitchen. hallway. which does not preclude his revocation.  Plaintiff’s Argument: The missing spare tire did not constitute a substantial impairment in the value of the automobile and is only a trivial defect. or even potentially dangerous. It must be a nonconformity which diminishes the value of the goods to the buyer to a substantial degree. Def notified Pl of his revocation the morning after the car was delivered to him.

Defendant’s Argument: The work was satisfactory. Procedure: Jury returned Special verdict. Family Dining. Df is immediately liable although Df’s only express promise is to pay money at a future day. Court Rationale: There is generally in a K subject to either an express or implied condition an implied promise not to prevent or hinder performance of the condition. The work performed was sometimes below the industry standard. One workman entered through a window anyway. the Df. but excused. Law or Rule(s): Where the Pl’s performance requires the cooperation of the Df. any unsatisfactory work could have been fixed. The work was not begun. The act of prevention must have been unreasonable and outside the contemplation of the parties as expressed in the K. Plaintiff’s Argument: Non performance of the contract is a breach and damages should be awarded to the Pl as a matter of law. that no workmen be present w/i the home.detail. Pl assented to the delays. Pl filed JNOV-Denied. promises to give this cooperation and if Df fails to do so. Such prevention of the condition could otherwise have been performed. To excuse a party’s nonperformance the conduct of the party preventing performance must be wrongful and in excess of their legal rights. When Pl denied access she acted in a manner that was outside the contemplation of the K or the parties when they executed the K. damages reversed and remanded. Non-performance under the contract is excused if the other party prevented the performance. Pl told the Df to remove his crew from the premises. Df incurred off K costs for bringing the electrical and plumbing to code. is an immediate breach of K. Inc. In a construction K. Pl moved back in while the remodeling continued. by necessary implication. Legal Issue(s): Whether it was the homeowner or the contractor who breached a written contract to remodel several rooms in a home? Court’s Holding: Contractor. the duty to cooperate encompasses allowing access to the premises to enable the contractor to perform the work. but Pl prohibited Df from finishing the project or fixing the defects. Always a duty to cooperate in a contract- always a duty of good faith and fair dealing… Forfeiture as an Excuse Burger King Corp. v. not as Pl requested. No design sketches were agreed upon. She stated on a certain day. . Denial affirmed. Pl appealed. and was not performed to her satisfaction. or completed on time. in her absence. communications were less that adequate concerning the final product.

or penalty. Failure to comply w/ the development rate operates to defeat liability on BK’s promise of exclusivity. A condition may be excused w/o other reason if its requirement . The parties entered into a franchise agreement whereby BK licensed Df to operate under BK’s name. The first three went ahead on schedule. who was a college friend of Carl Ferris. Then the opening of the 6th was given a one month extension.a) will involve extreme forfeiture. would amount to a forfeiture? Court’s Holding: No. Yes. by its own terms. If the 4th and 5th were nearly in compliance BK agreed to overlook the year in default. Law or Rule(s): Where the words of a K raise no duty in and of themselves. .Relevant Facts: PL. BK. The 7th opened. The termination of the Territorial Agreement would result in an extreme forfeiture to Df. but rather modify or limit the promisees’ right to enforce the promise. Court Rationale: A careful reading of the K indicates that it raises no duties in Family Dining. The period of 90 years and territorial exclusivity was conditioned upon Df opening. Pl and Df corresponded several times in an attempt to negotiate. Procedure: BK filed suit seeking declaration that a territorial exclusivity agreement between it and a franchisee. Family Dining. building 10 franchises in as many years. The parties entered into a Modification. on the Df's motion for involuntary dismissal. Granted. BK is not entitled to have the condition protecting its promise strictly enforced. AND b) its existence or occurrence forms no essential part of the exchange for the promisor’s performance. was no longer of any force and effect. but BK wouldn’t budge on the exclusivity and BK then terminated their agreement. the significant risks assumed and the fact that there remains 76 years of exclusivity. and maintaining all ten for the 90 year period. a Fl corp was founded by McLamore. TRO was granted to BK. but the 9th and 10th had not been opened or were under construction. and after BK’s exercise in discretion related to site location the 8th went ahead. IF Family Dining were forced to forfeit the right of exclusivity it would lose something of incalculable value based on its investment of time and money developing the area. Bench trial. but the fourth did not. If the right of exclusivity were to be extinguished by termination it would constitute a forfeiture. After realizing the territory could support more than 10 franchises BK’s attitude changed. The hiatus in development is not fully chargeable to Df. There was no evidence it considered literal performance to be critical. Whether giving strict effect to the termination provision which would involve divesting the Family Dining of territorial exclusivity. Legal Issue(s): Whether BK was entitled to have the condition protecting its promise strictly enforced. where BK waived Df’s failure to comply w/ the development rate. Early on BK was concerned w/ development of a territory than exact compliance. such words are considered a condition. owner of Df PA corp.

Pl has not asserted any relief other than termination. The BK was not entitled to have the condition protecting its promise strictly enforced. DF did not earn exclusivity past the 9th year and should forfeit anything in which it has an interest. throughout early duration of contract. Didn’t seem too concerned with a strict reading of the contract. or to divest Family Dining of its right to enforce promise. Development rate imposed by agreement was not promise by Family but was. Defendant’s Argument: The Territorial Agreement should not be terminated because it would result in a forfeiture to Family Dining. The contract was intended to be entire rather than severable. Issues as presented to the court: The requirement that the Family open ten new restaurants during the first ten years of the agreement was a condition subsequent rather than a promise on the part of the Family Dining.Plaintiff’s Argument: Since Family Dining failed to perform its promises to construct and open 10 franchises w/i 10 years the contract should be legally terminated. would amount to a forfeiture. considerations of fairness and equitable principles would not permit termination of agreement which would result in extreme forfeiture to franchisee. where there was no evidence that failure to fulfill time feature of provision was result of intentional or negligent conduct on part of franchisee and where if franchisee were forced to forfeit right of exclusivity it would lose something of incalculable value in that it had developed area to point where ten restaurants were in operation. franchisor was more concerned with general development of territory than with exact compliance with terms of development rate. rather. The DEF had not met the time requirements before and it did not seem like a big deal to Burger King. Agreement entered May 1963 1st — Aug 1963 2nd — July 1965 3rd ----Oct 1966 4th ----July 1968 5th ----Oct 1968 6th ----Oct 1969 7th ----Feb 1970 8th ----Oct 1970 . Provision terminating agreement which granted restaurant franchisee 90 years' territorial exclusivity upon failure of condition subsequent that franchisee develop and operate ten new restaurants in first ten years of agreement would not be given strict effect where. failure of which operated to defeat liability on BK's promise of exclusivity. condition subsequent. Giving strict effect to the termination provision which would involve divesting the Family Dining of territorial exclusivity.

that the terms were imposed w/o any real freedom of choice. Early 1960 Inman was fired by Clyde. Commencement of an action and service of the complaint was not an effective substitute for the kind of notice called for by the agreement. Court Rationale: There is nothing in the notice provision to suggest it was designed from an unfair motive to bilk employees out of wages or other compensation. is contrary to public policy? Court’s Holding: NO Procedure: Df filed for summary. and had discussed it w/ a Co rep. Non-compliance w/ the notice requirement is an affirmative . that there was any substantial inequality in bargaining positions. There is nothing to suggest that Inman did not have knowledge. If one party has taken advantage of the economic necessities of the other. or opportunity to read the agreement and understand it. Law or Rule(s): The ct must look at the relative bargaining positions of the parties in the framework of contemporary business practices and commercial life. Affirmed. failure to give advance notice of a claim where notice is required would be a defense set forth in the answer. If the danger is increased whereby workmen are disadvantaged by employers the Leg will act. A portion of the contract stated notice of any claim against Clyde was required w/i 30 days and no longer than 1 yr. Relevant Facts: Pl.9th —Sept 1974 10th ---. Pl‟s failure to provide notice was not the fault of the Co. granted. but here the parties agreed that the notice was a condition precedent to any recovery. Inman worked for Df Clyde as a derrickman under a written contract of employment. Normally. Legal Issue(s): Whether the notice provision in the contract. signed by both parties in late 1959. Plaintiff’s Argument: Since the complaint set forth the basis of the claim which was served w/i 30 days Pl substantially complied w/ the notice requirement. The Df cannot be charged w/ waiving a defense which it was not obliged to present in its answer. as a condition precedent to recovery. as a matter of public policy. Inman attached a copy of the K to his complaint. he read it. Clyde Hall Drilling Co. there is no evidence that the Co induced Pl not to give notice. capacity. Pl appealed. the ct should refuse to enforce the transaction.Proposed Feb 1975 opened March 1975 Inman v. Pl‟s only notice was the complaint under this action for wrongful termination. and he admitted that at the time he signed it.

No due date was indicated. Moe failed to make the payment. Moe failed to pay so Deere sent a letter extending the due date. The acts which induce reliance are repeated acceptance of late payments. Reversed.4). The creditor would be . The Co breached the contract by terminating employment which canceled all obligation under the contract. who has accepted late payments as a matter of course. Deere sent a rep. Deere agreed to pay a second amt March 1. who agreed w/ Moe to pay the balance when he started his harvest. After the agreement was executed it was assigned to Deere. Pl did not provide notice prior to commencement of this action. give notice to the debtor that strict compliance with the terms will be demanded henceforth if repossession is to be avoided. Moe made a partial 3 mos late. then summary on (1. The debtor is protected from surprise and from damaging repossession by being forewarned. John Deere Co. Relevant Facts: Pl. and Deere waived full payment and extended the time to make the payment. Legal Issue(s): Whether acceptance of late payments by Deere waives their right to repossess without notice? Court’s Holding: Yes Procedure: Trial ct partial Summary for Deere (3. Moe bought a farm tractor from Day Equipment.defense that must be raised in the answer. Moe was untimely in his second. Court Rationale: The basis for imposing a duty on the secured party is that they are estopped from asserting his contract rights because his conduct has induced the debtor‟s reliance in believing that late payments were acceptable. In financing Moe traded two tractors for $77K and agreed to pay the difference in 5 equal installments each due Oct 1st. Defendant’s Argument: The provision required Pl provide notice of any claim prior to the commencement of an action in order to recover. before he may validly rely upon a clause to declare a default and effect repossession. must. Implement sold the tractor. Moe v. It then sent another letter which was received.2). The reliance is evidenced by continual pattern of irregular and late payments. Adopting the rule that a creditor must give pre-possession notice upon modification of a contract results in both the debtor and the creditor being protected. Moe was two months late with his first payment until Dec. Deere repossessed the tractor sent Moe a certified letter which was returned. Law or Rule(s): A secured party who has not insisted upon strict compliance in the past.

This court does not agree.Defendant and Plaintiff entered into a contract for Plaintiff to accompany Defendant on a tour starting on June 1. repossession could be pursued as provided w/o further notice. and refused to compensate.Being stopped from enforcing a condition in the contract. De la Tour Hochster v. a currier. entered into a contract with Defendant to accompany Defendant on a trip that would begin June 1. That party need not wait until the time for performance has passed Facts. Issue. Instead of making the . injured by the repudiation of a contract to be able to sue for damages immediately upon repudiation. Would we ask that Plaintiff still make plans to accompany Defendant and turn down other employment opportunities that would interfere with performance? It is much more rational for a person.first time mentioned in Hochster v. Plaintiff found a new job that would begin on July 1. Discussion. thus modified the contract.protected by preserving its remedies so that if the account continues in default. -If it is impossible a court will excuse a condition.If two parties enter into a contract to be performed at a designated time in the future. and one party refuses to perform the contract before the designated time the parties agreed to perform. Anticipatory Repudiation. being ready and willing to perform the contract until the time that the contract was to be performed.  Estoppel. -Waiver and estoppel are two grounds that a court will excuse a condition. Was the lower court correct to find for the Plaintiff even thought the time that the contract was to be performed had not come? Held. Yes.Plaintiff. Defendant changed his mind before June 1. He refused to compensate Plaintiff. Plaintiff’s Argument: Df continued to accept late payments. Defendant contacted Plaintiff on May 11. then Plaintiff should have waited. Defendant argues that if Plaintiff is not willing to accept Defendant’s cancellation of the contract. waived certain charges. Plaintiff brought suit against Defendant on May 22. The court laid down a rule about suing for damages on a breach of contract where the performance was to be at a future date. De La Tour Brief Fact Summary. the other party may sue before the contract was to be performed. Defendant has made it clear that he will not perform the contact. Synopsis of Rule of Law. Defendant’s Argument: Acceptance of late payments does not waive or otherwise affect the right of a creditor to repossess w/o notice after subsequent late payment defaults when a non waiver clause exists in the contract. stating that he had changed his mind. extended the periods for payments.

 In certain situations where it is reasonable to think that the 2nd party to perform is not going to perform. the 2 nd party may ask for an assurance to make sure the contract is still upheld. Legal Issue(s): Whether Pl's delay in delivering windows and Pl's excessive demands entitled Df to treat Pl as in breach of contract. Procedure: Pl filed action to recover damages = KP. Law or Rule(s): When reasonable grounds for insecurity arise w/ respect to the performance of either party. 93 windows for the project @ $55. Court Rationale: Hope’s claim that the delay in delivery was immaterial and did not excuse Lundy’s duties are off point. and No. the other party may in writing demand adequate assurances of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. Pl issued a letter suspending and demanded assurances that Df would not back charge as a condition to delivery. The K included a term pertaining to the time for delivery. 24. but Df was unwilling. Hope’s Architectural Products v Lundy’s Construction Relevant Facts: Df Lundy entered into a K for the construction of an addition to an Elementary School.000. Delivery was due no later than Oct. Lundy’s did not pay. To suspend performance Df/Pl must have had reasonable grounds for insecurity regarding the other’s performance. the 1st party may sure for damages before the breach actually takes place.injured party prepare to perform when that party knows it is useless to do so. Pl also demanded KP before delivery. Hope’s is a manufacturer of custom built windows which contracted w/ Lundy to manuf. The windows were shipped from NY to Kansas City Oct 28 th. The court does this so the 1st party may mitigate damages. and whether the Pl was entitled to demand assurances?Court’s Holding: Yes. between 12 and 14 weeks after Hope’s received the shop drawings from Df on July 18. and Pl did not deliver the windows. Even if an immaterial delay did not excuse   . Pl did not make any response. the court’s ruling allows injured parties to mitigate their damages and still sue for the damages they sustained because of the breach. Pl. and not received such assurance. o If a party makes an off the cuff comment about not performing. In Sept Df wrote Pl requesting that installation of the windows begin Oct 19 and finish by the 26 th. Df provided the statutory public works bond secured through Df Bank. Df Bank would not pay on the bond. and have demanded in writing adequate assurance of future performance. denied. UCC 2609 and American common law have adopted a middle ground view.

Plaintiff sued both insurers. Demanding payment in full before it was due was unreasonable and amounts to anticipatory breach. depending on the intent of the parties. the other party refuses to accede to the demands. "In [a] unilateral contract for the payment [of money] in installments after default of one or more. the ct may find the demanding party was in breach or a repudiator." Plaintiff was insured by Mutual of Omaha for accidents and United Benefit Life. Giving notice of its intention to avail itself of a legal right did not indicate that Lundy’s was unwilling or unable to perform under the K. Plaintiff consulted an orthopedic surgeon. Plaintiff’s Argument: Lundy’s failure to provide assurances as demanded and termination of the K amounted to a total breach. Defendants made payments to plaintiff under the policies until they notified him that his ailment would be considered an "illness without confinement" and ceased payments. Rule of Law and Holding Restatement of Contracts. Section 318. *Delivery the act by which the res or substance thereof is placed w/i the actual or constructive possession or control of another. Hope’s demand for blanket assurances that it would not be held responsible for any extra costs was overly broad and unreasonable.future performance by Lundy’s no performance was due from Lundy’s until the windows were delivered to the job site. who concluded that plaintiff had a preexisting back condition known as "spondylolisthesis. Defendant’s Argument: Hope’s breached the K by withholding the delivery of the windows therefor Df was entitled to cancel the K. ―Reasonable grounds. which never occurred. contending that the accidental fall activated a latent condition and produced a total and permanent disability witihn the terms of the policies. states. There was no evidence that the delay was a matter beyond Pl’s control. resulting in injury. If the assurances demanded are (excessive) more than adequate. When Hope’s first demanded assurances it was already in breach. a scaffold fell from beneath him.‖ and ―adequate assurances‖ are fact based determinations." . no repudiation can amount to an anticipatory breach of the rest of the installments not yet due. The assurances demanded were excessive. Hope’s delay and excessive demands entitled Lundy’s to treat Hope’s as in breach and cancel the K. Brief Fact Summary While plaintiff was working as a brick mason.

Public policy should keep the plaintiff from having to come back and relitigate future breaches. not an anticipatory repudiation of the entire thing. The lump sum for future installments is inappropriate for a contract with installments based solely on repudiation. If the defendant fails to pay in the future. Dissent This is not just a delay in payment but a complete repudiation of the contract.   Assurance must be reasonable May not ask for assurances after you are in breach yourself. the 1st party may sure for damages before the breach actually takes place. Majority view is that the breach of a single installment payment is a beach of only that payment.Majority view is that the breach of a single installment payment is a beach of only that payment. Chapter 9 Third Party Beneficiaries Four contracts where NY has recognized 3rd party beneficiaries: 1. This is a suit of damages (and therefore expectancy). Contracts where at the request of a party to the contract. which should allow the plaintiff to recover for the whole contract.UCC 2609 and American common law have adopted a middle ground view. the 2 nd party may ask for an assurance to make sure the contract is still upheld. The plaintiff also might recover or die. and awarded the plaintiff a lump sum for future payments based upon his life expectancy. Class Wrap up. Lawrence v. The Plaintiff sued to recover for a promise made by the Defendant to one Holly.Held. If a party makes an off the cuff comment about not performing. that the Defendant would pay the Plaintiff $300. There is no need to prove continued disability. . Contracts made for the benefit for a wife or child 3. Fox-First case to mention 3rd party beneficiaries-Seminal Brief Fact Summary. not a suit for specific performance.In certain situations where it is reasonable to think that the 2 nd party to perform is not going to perform. . as plaintiff's disability is total and permanent.Creditor & Debtor 2. the promise runs directly to the beneficiary although he does not furnish the consideration.The jury found that the defendant had repudiated the contract. Where there is a public contract with a municipality to protect its inhabitants 4. . not an anticipatory repudiation of the entire thing. plaintiff can bring another action and the court can create whatever remedy is appropriate. Preexisting obligation.

Hence. quid qo pro. the Plaintiff can maintain this action against the Defendant. Facts. Seaver v. In exchange for the loan. Holly acted as the agent of the Plaintiff. Concurrence. the promise was made by the Defendant to the Plaintiff through his agent. If you are the intended beneficiary of the original contract. and Holly assented. Dissent. Discussion. Issue.Synopsis of Rule of Law. Ransom. In certain circumstances those who aren’t a party in the contract may se for breach of contract. Holly owed money to the Plaintiff and entered into a contract with the Defendant whereby Holly would loan the Defendant money if the Defendant agreed to pay the Plaintiff what Holly owed him. A third party beneficiary may sue to enforce a promise made for his benefit. A promise made for the benefit of another may be enforced by the person for the benefit of whom the promise was made. and no consideration was given by him. Fox . This agreement was not lacking in consideration. Formalistic reasoning in a narrow situation. The Defendant asked to borrow $300 from Holly.     The consideration. Therefore. There simply has to be consideration between the parties to the contract. the Defendant promised to pay $300 to the Plaintiff the next day to satisfy Holly’s debt to the Plaintiff. does not have to lead to the two people making the transaction the beneficiaries. he for whose benefit it is made may bring an action for its breach. you should be able to recover. The law is clear ―that a promise made to one for the benefit of another. Hence. Holly owed the Plaintiff $300. because the consideration does not have to be between the Plaintiff and the Defendant. Fox isn’t getting anything from Lawrence Held. no privity. Yes.Instrumental Reasoning-Expanded Lawrence v. The Plaintiff did not have anything to do with the promise. The Defendant did not pay the Plaintiff and the Plaintiff sued to recover the benefit promised to him under the contract between Holly and the Defendant. Fox and Holly had consideration.‖ Here. Can a third party maintain an action to enforce a benefit promised to him in a contract not entered into by him directly?  Fox argues there is no consideration between himself and Lawrence. the Plaintiff has no right to enforce the agreement for his benefit.

Plaintiff’s Argument: The promise was made for the benefit of the Pl. Rensselaer Water Co. Dfs are the executors. After he died there was no provision to this effect. She alone was substantially damaged by its breach. contended that defendant failed to provide enough water during a city fire. Because the testatrix bequeathed the promise to the Pl. Df appealed. Defendant’s Argument: Pl was not in privity of contract. and from an interlocutory judgment overruling demurrer to the complaint. v. Brief Fact Summary. and stated that he would leave enough in his will to make up the difference. but no property was bound by it. A member of the public may not maintain an action against one contracting with the city to furnish water at the hydrants. She owned a house and a lot. (Plaintiff) in a negligence action. Beman for the value of the house. Her husband drew up a will according to her instructions. but it was identified as going to her husband. Plaintiff appealed. Legal Issue(s): Whether the Pl can recover against an agreement whereby Mr. B/c she was failing fast her husband asked her to sign the will. but cannot impress a trust except on property obtained by the promise. a trust arises. The Appellate Division of the Supreme Court in the Third Judicial Department (New York) ruled in favor of Rensselaer Water Co. The desire of the childless aunt to make provision for a beloved and favorite niece differs imperceptibly in law or in equity from the moral duty of the parent to make testamentary provision for a child. Beman was about to die. R. When the will was read Mrs. Beman was bound by his promise. Beman which was breached. for PL.Relevant Facts: Mrs. Beman induced his wife to execute the will by his promise to give Pl $6000? Court’s Holding: Yes Procedure: Judgment. she had wanted the house to go to the Pl. Beman isolated an err. Moch Co. Affirmed. H. Synopsis of Rule of Law.. Pl was her niece who sometimes lived with the Bemans. the Pl could have recovered in law against Mr. Equity compels the application of property obtained. unless there is an intention . The contract was made for the Pl’s benefit. (Defendant) when H. and the property being held was a trust where the Pl was not a part of. No trust in Pl’s favor can be spelled out. The right of the beneficiary to sue on a contract made expressly for his benefit has been fully recognized. Moch Co. for consideration of the property retained by Mr.R. and not b/c close relationship or moral obligation sustained the contract. Court Rationale: Where a legatee promises the testator that he will use property given to him by the will for a particular purpose. after trial.. A general rule sustaining recovery at the suit of the 3rd party would include few classes of cases. Law or Rule(s): Privity between a Pl and Df is necessary to the maintenance of an action arising out of a breach of duty on the contract.

or a party’s legally recognized interest. owned by Plaintiff.3rd partys cannot bring suit bc there is no privity. This is often referred to as privity. 3rd party creditor may bring suit Seaver v. The trial court denied Defendant’s Motion to Dismiss.R. seeking negligence damages. As the court explained with respect to the rights of individual citizens affected by public contracts. Plaintiff brought suit. The benefit must be one that is not merely incidental and secondary. including for fire hydrants. contending that Defendant breached its duty of care within the city. The Court of Appeals of New York affirmed the lower court’s ruling. It must be primary and immediate in such a sense and to such a degree as to bespeak the assumption of a duty to make reparation directly to the individual members of the public if the benefit is lost. Defendant had entered into a long-term contract with the city to supply water for various purposes. The appellate court reversed.that the defendant is to be answerable to individual members of the public as well as to the city for any loss ensuing from the failure to fulfill the promise. destroying the warehouse and all it contained. Did Defendant’s duty to the city extend to Plaintiff as an individual member of the public? Held. stating that while a duty existed between Defendant and the city. Facts. During the course of the contract. Ransom. stating that pursuant to the local statute. a building caught fire.‖ Class Wrap upCardozo view is becoming a majority view. Defendant was never intended to be held liable for incidental damages from performing its services. the contract must be shown to give a right of action to a member of the public not formally a party. Moch hinges on the degree of duty owed to a third party pursuant to a public contract. fox. The flames spread to a nearby warehouse. Old law. Discussion. The issue addressed in H.Lets more individuals bring suit Cardozo-you can take all these cases together and lump them in a broad category:   Intended benefitters may bring suit Incidental benefitters may NOT The need for Restatement 2nd Changes . ―[f]or a member of the public to maintain a suit against one contracting with the city. Issue. Lawrence v. Plaintiff had no legally recognized interest.some times 3rd parties may bring suit. No.

Logical Extreme Blair v. that was breached o RELEVANT CONTRACT LANGUAGE: Responsibility for Prisoner’s Custody – It is the responsibility of the sheriff. including the State of DE. for assault. Anderson Supreme Ct of DE 1974 Relevant Facts: The Pl was formerly a Federal prisoner who alleged that while incarcerated he was the victim of an assault Prisoner sues Dfs. jailer or other official responsible . · DE · He‟s a federal prisoner that was put in a state prison in We know he was housed in a state owned prison because there is a contract between the US government and the state of DE where DE allows some federal prisoners to be placed in a state owned prison · The tort claim was denied because sovereign immunity (for certain tortious conduct you cannot sue the state) was a defense · Some states have sovereign immunity because they want to limit the docket on tort lawsuits against the state and because the tax payers would end up paying the settlement · Also sued claiming he was a beneficiary of the contract between State of DE and the US Govt.

By K DE agreed to perform that duty. The Pl is the very subject of the agreement. S. owed a duty of care and subsistence to a person it caused to be committed and it owed a statutory duty of “safekeeping.‟ and protection. He has not only a direct interest in the K but a right to enforce it as against the State if it fails to provide the requisite minimums. he was able to recover but there would have been no contract for a state prisoner to base their claim on o A state prisoner and a federal would lose under tort theory because of sovereign immunity o . the last paragraph of the opinion Duffy points out a “basic unfairness” that a STATE prisoner would not have had the same remedy as the FEDERAL prisoner had in this case. Because his claim was based on a contract between the State and the US Govt. The U. could he have still recovered? · Because the contract said keep the inmate in “safe custody” it could be construed that they intended the π to be an INTENDED beneficiary of the contract · Even though he rules in favor of the inmate.for the administration of the institution to keep the prisoners in safe custody and to maintain proper discipline in control Holding: The PL is a creditor beneficiary. IN FAVOR OF THE INMATE This is the FARTHEST any court has ever expanded 3rd party beneficiary THIS IS THE ABSOLUTE FURTHEST NOT THE MAINSTREAM LAW UNDER THE RESTATEMENT: To recover you have to be an intended beneficiary Under the Restatement.

Gillispie Ct of App Iowa 1984 π – referee.He knows there’s no good faith way to get around sovereign immunity but because he thinks theres a “problem” of the officials not protecting inmates he pushed this theory about 3rd party beneficiary so that there would be a larger burden on the state to protect the inmates o INSTRUMENTAL REASONING o Court Limits It Bain v. he sued the Gillipsies Gillipsies filed a COUNTERCLAIM and denied liability on Bain’s lawsuit · Counterclaimed based on referee malpractice (TORT) o referee malpractice doesn’t exist so this didn’t pan out for them o It might have been less ridiculous to breach a duty of care rather than calling it malpractice o The problem with claiming tort is that he didn’t breach a duty of care to the Gillipsies o Even if he breached a duty of care. the Gillipsies were not a harmed plaintiff and they were not foreseeable o No claim that he was negligent or wrongful in making the call at the game . · When Bain saw the shirts. · A few days after the game. Some fans blamed Pl for the loss.couple that operates a store in IA. Gillipsie Relevant Facts: During a game Bain made a call that resulted in the opposition winning by a free throw. Dfs operated a novelty store for profit not associated with the University. Bain ∆ . Dfs began marketing a shirt referencing PL by a figure w/ a rope around his neck and the words Jim Bain Fan Club.

Referees are in the business of applying rules. must make his call at all times perceiving that a wrong call will injure Df’s business or other similarly situated. THEY ARE MERELY INCIDENTAL There are no genuine issue for trial which could result in Dfs obtaining a judgment under a K theory of recovery. they were not direct beneficiaries.· Claimed they were 3rd party beneficiaries of the employment contract between Bain and Big 10 Conference (CONTRACT THEORY) Court thinks this claim is ridiculous = “beyond credulity” NOT CREDIBLE o If Bain is under the contract with Big 10 to enforce the rules o They argue they need to see the contract o Might help Gillipsies: If there are any 3rd party beneficiaries. The Dfs were not privity to any K. not in the work of creating a marketplace for others. are they always a 3rd party beneficiary or can they just be removed? GROWING VIEW (NOT EVERY STATE) BUT THE MAJORITY OF STATES THAT ADOPT THE RESTATEMENT Restatement §311 . Court Rationale: It is beyond credulity that Bain. the party would have to be either privity to the K. The Gillipsies really wanted to get the contract because this was really about just finding something in the contract to cling onto and harass Bain Contract Written In a Way that it creates a 3rd Party beneficiary but parties change their mind ISSUE: Merely because at one point someone appeared in the contract. or a direct beneficiary. while refereeing a game. not merely incidental. merchants or fans they still probably don’t have a claim but that would help o The court thinks its so ridiculous that they won’t let them look at the contract o Law or Rule(s): To maintain an action for breach of K as a third party beneficiary.

The parties would attempt to annex the land into District 15 and thereafter the funds would be released to that district. the agreement was modified and the time extended to 9 years where if again unsuccessful the funds would be paid to D220. 220 · Building a village that was part of Dist 220 which was known as a bad school district . 220 v Village of Hoffman Estates
 App Ct Illinois [1984] Relevant Facts: Two owners (Pee) entered into agreements w/ Df Village providing that owners would pay Df $135 per residential unit developed.Variation of a Duty to a Beneficiary GENERALLY: The parties to a contract can change their agreement to cut out a 3rd party beneficiary If a 3rd party beneficiary is NOT A PARTY to the contract-they don‟t have any rights so the parties can get together and remove them 2 EXCEPTIONS: (1) If the contract when written explicitly says that you cannot remove the 3rd party beneficiary then you cannot remove them (2) If the 3rd party beneficiary JUSTIFIABLY RELIES on the promise they cannot be removed Board of Ed District No. · Owners and the builders had an agreement where Village would pay them money · Owners said they would take $135/mo and set it aside for education of people who used that · Village was going to put the $ in an escrow account for Dist. After 5 yrs the annex was unsuccessful. but if unsuccessful after 5 years the funds would go to Pl D220. 15 and Dist. Pl started this action at the end of the 5 yr period. to be held in escrow for the benefit of education.

220 had no reason to change their position because even if it didn‟t go to 220-could‟ve gone to 15 Holding: A TPB K may exist even if the beneficiary is identifiable or in existence when the time for performance arrives. There could only be one beneficiary of the funds held in escrow. and the ultimate beneficiary is unidentified until certain events occur. Such beneficiaries have no vested rights UNTIL they are identified. 54- so they could either move the kids within Dist. Therefore neither District had a vested . the Df and owners were free to amend the agreement b/c no TPB rights were vested at that time.· The money was going to trust because the parties were trying to get kids out of 220 and to 15 and after 5 years if they were unable to get the kids to 15 · Shortly before the 5 year period is up they add Dist. whichever occurred first. FOR THE RESTATEMENT: It matters that it is vested or unvested because if Dist.e. 54 to get them away from Dist. D220 was merely a potential beneficiary and the actual beneficiary had not yet been identified at the time Df and the owners modified their agreement. i. 220 Plaintiff’s Argument (SCHOOL): The beneficiary‟s rights vested when the owners and Df executed the agreements and therefor no amendments were possible. and that beneficiary could not be identified until the time for performance arose. 220 was expecting to get the money at the end of the period-it would not be JUSTIFIABLE RELIANCE because if it was unvested it could have gone to the other contingent interest. until the land was included w/i the boundaries of D15 or 5 years had elapsed. Defendant’s Argument (BUILDERS): Where there are two possible beneficiaries of the promise. and Ks made for their benefit may therefore be rescinded or modified by the parties thereto until such time as the beneficiaries are identified. 15 or Dist.

w/o notice of the modification/discharge. and the parties were free to modify their agreement. Assignment: When someone grants their rights or benefits to you. Assignment and Delegation Different from 3rd party beneficiaries bc there is never mutual assent with 3rd party beneficiaries. No I/D of TPB.the person to whom the assignment is made to. modification is allowed b/c there is no detriment. They aren’t a signatory to a contract yet they are mentioned expressly or implicitly in the contract as intended beneficiaries.the person to whom the assignment is made to. o Obligee. Restatement : In the absence of language in the K making the rights of a TPB irrevocable. Assignee (who will be a stranger to the original contract).right as a TPB recipient under the K.and each owes or will owe a performance obligation-a contract duty  There rights are transferable to others. Delegation: When someone grants their duties to y ou. materially changes his position in reliance on the promise or brings suit on it or manifests assent to it at the request of the promisor or the promisee. the PR and PEE retain the power to discharge or modify until such time as the Beneficiary . . Obligor – The original contracting party to whose obligation is assigned.    Assignor (will be one of the original contracting paties)-person making the assignment. Contract rights are assigned and contract duties are delegated. o Delegate.The original contracting party to whose obligation is assigned.  Same parties are known as the: o Delegator-(will be one of the original contracting paties)-person making the assignment.  In a bilateral executory contract each party is owed a performance obligationa contract right.(who will be a stranger to the original contract). the Pr and Pee are free to modify or discharge. [So long as there is no detriment to a third party ( who provided no consideration).

Inc. o Delegation-Chiger gives the duty to drive Fields to Zohar  Generally when a contract does not have a no assignment clause or a no delegation cause. o Exceptions:  A personal service contract with a unique/special skill. Mr. Zohar $100  All three parties must sign the new contract and come to an agreement. Fields Drive to school ------ $100 <-------- Ms. Fields Drive to school Ms.HYPO: Chiger --- Fields Tutor --$100 HYPO: Mr. Chiger -- Zohar The party receiving the benefit may sue the original party with the rights or duties and also the party they are assigned too. Pizza of Gaithersburg. a party is allowed to assign its rights and duties. o Assignment-Chiger gives the rights to the $100 to Zohar. v. Chiger --------- -------Ms. Performance Obligations Macke Co. A novation is when all parties agree to substitute a party. . A. the original party still has liability if the assignee and delegate does not fulfill their responsibilities. when its silent on those issues.

Validity of Assignment/Delegation-Performance Obligations Relevant Facts: Df/ees. The difference btwn VA’s service and Pl’s service did not mount up to such a material change in the performance of obligations under the agreements as would justify the appellee’s refusal to recognize the assignment. Plaintiff’s Argument: Installation and maintenance of machines do not require extraordinary skill or knowledge and is not personal. operated at 6 locations. the performance delegated varies or would vary materially from performance by person named AND there has been no assent to the delegation. They arranged to have installed at each location cold drink vending machines owned by Virginia. Pizza 4 corporations under common ownership. renewable absent 30 day written notice. and assignable by Virginia UNLESS they imposed on VA duties of a personal or unique character which could not be delegated. Restatement : Performance or offer of performance by a person delegated has the same effect as performance or offer of by the person named in the K. Pizza attempted to terminate the Ks. Court Rationale: The six machines were placed on the appellee‟s premises under K which identified the customer. Ct App reversed and remanded for a new trial on damages. We cannot regard the agreements as Ks for personal services. Law or Rule(s): In the absence of contrary provision. . described the vending machines. Pl appealed. Defendant’s Argument: Pizza had dealt w/ Macke previously and had chosen VA b/c the service provided was personal. The delegation of duty by VA to Macke was entirely permissible under the terms of the agreements. nor rights be assigned under a K where the choice of the person was an ingredient of the bargain. Virginia‟s assets were purchased by Macke and the 6 Ks were assigned to Macke. They were either a license or concession or a lease of a portion of the premises. This arrangement was formalized at 5 by K for 1yr terms. and provided that the Co will install and maintain the equipment on the customer‟s premises. Later a similar K was entered into for the 6th location. rights and duties under an executory bilateral K may be assigned and delegated. Macke brought suit for damages on breach of K. UNLESS. subject to the exception that duties under a K to provide personal services may never be delegated. Legal Issue(s): Whether the rights and duties under a service contract may be assigned and delegated was permissible under the terms of the agreement between Pizza and Virginia? Court’s Holding: Yes Procedure: Tr ct ruled judgment favor of Df. gave its place of business.

The court also examined the Maine Bar rules and found no ethical rule barring a lawyer from assigning his client‟s proceeds from a pending lawsuit to a third party. Jones sent a check to Plaintiff. Discussion.Herzog v. Can future proceeds from pending litigation be validly assigned to a third-party? Held.” Plaintiff informed Defendant about this assignment and performed the surgery. Proceeds to be received from pending litigation may be validly assigned. a party is allowed to assign . Also. Jones then injured his shoulder and went to see the Plaintiff. The court also held that enforcing the assignment did not interfere with Defendants‟ ethical obligations as attorneys. However. Plaintiff sued to enforce the assignment. Thereafter. Gary Jones (Jones) was injured in a motorcycle accident and retained the Defendant. Defendant had notice of the assignment and therefore was obligated to enforce it. It found that Jones did not retain any such control when he requested that the payment be made to Plaintiff. when its silent on those issues. Facts. who determined that Jones needed surgery on his shoulder. the check was returned for insufficient funds. to represent him. Herzog (Plaintiff). Irace Brief Fact Summary. This case involves an assignment of proceeds from a personal injury claim to a physician to pay for medical expenses. Judgment affirmed. Herzog. Dr. Yes. Irace (Defendant). The court held that this assignment was valid because Jones‟ letter gave no indication that he wished to retain control over the funds. Jones wrote a letter stating that he “request[ed] payment to be made directly from settlement of a claim currently pending for an unrelated incident to John. Issue. Synopsis of Rule of Law. Class Wrap-up:  Generally when a contract does not have a no assignment clause or a no delegation cause. D. Jones instructed Defendant not to disburse the proceeds to Plaintiff. The court noted that an assignor must not retain any control over the right of the assigned funds.O.

Limitations on the Assignment Two most common ways the words assignment is used: o assignment o assignment & delegation. after speaking with atty. Also sometimes used interchangeably when speaking of delegations. but could be overridden by written consent of Pl. you have to respect the assignment. entered into a real estate K w/ Dfs Jemmett. drafted a separate and independent agreement. Dfs wanted to sell the property and their broker requested Pls‟ consent which was refused. which avoided an assignment. the original party still has liability if the assignee and delegate does not fulfill their responsibilities. Legal Issue(s): Whether the Pls can unreasonably and arbitrarily withhold consent for Dfs to assign the real estate contract which has a non-assignment clause subject to written consent? o The court only looks at one of the two issues presented to the court. The balance plus interest to be paid per annum to bank. Pls agreed to sell certain property for $32. . A non-assignment clause was added to the K. where the payments from the new owners would automatically be tendered to the escrow account of Pl/Df until paid in full. the PL‟s would naturally think that the Def‟s found a loophole and are  taking advantage of the situation. Jemmett  Relevant Facts: Pls Cheney.its rights and duties. During the final transaction w/ Dfs and new owners an encumbrance was found where Pls had assigned their interest to obtain a loan. Pl delivered a satisfaction of encumbrance and sued the Def‟s for defaulting. Dfs. Cheney v. (Same with rights as well) If you are a party that knows of an assignment.500 w/ $5K paid by 1st of the next mo.  Exceptions: o A personal service contract with a unique/special skill or substantially changes performance.

that party‟s determination is conclusive if he acts in good faith. Plaintiff’s Argument: The Dfs assigned their rights and interests in the property without consent of the Pl which was required per the agreement for sale. without having to discuss whether the contract was an assignment. Pet Rehearing denied but atty fee award reversed. the case could go away based on this determination alone. The second issues was whether consent was unreasonably withheld  This was only looked at bc. Court Rationale: A lessor may not unreasonably withhold his consent. to a prospective sub-leasee or such result would nullify the right of a lessee to sublet. conditioned upon obtaining the consent of the seller. When a K grants the purchaser the right to assign his interest in the K.     . Ct ID Affirmed with atty fees (concurrence opted to refused atty fees). Defendant’s Argument: The Dfs and new owners entered into a separate and independent agreement and did not constitute an assignment of the rights and interests under the agreement between the Pl and Dfs.    Court’s Holding: Cheney‟s were unreasonable. This applies only to those cases where the K specifically conditions the proposed assignment on obtaining the seller‟s consent. or in the property in issue. he must “act fairly and in good faith in exercising that right. Law or Rule(s): Where a K provides that the matter of approval of performance is reserved to a party. S. the seller must act reasonably and in good faith in withholding his consent to a proposed assignment. He has no right to withhold arbitrarily his approval. Procedure: @ trial Dfs moved for involuntary dismissal. The first issue that wasn‟t looked at was whether the contract between the Jemmetts and Honn‟s was an assignment.” When a matter in a K is left to the determination of one party alone. judge granted. under a sublease agreement. there must be a reasonable justification for doing so.

Case wrap up.056 then defaulted and Ford sued to recover $2. v.Every contract has an implied duty of good faith and fair dealing. to make that determination. affirmative recovery. you cannot be held liable for them. it was for the parties . which the court rejected. Jemmett o Express clauses to a contract trump implied clauses. you can use partial assignments and partial delegations. A party cannot sue on unrelated claims unless the assignee has agreed to those assignments and delegations. not this court. Otherwise. The Morgans made 15 payments totaling $2. the resolution thereof did not hinge on an interpretation of the agreement.    Rule of Law and Holding  An assignee will not be liable for the assignor's wrongdoing.counter-claimed in three counts most predicated on the theory that.  Dissent: A contract should be carried out as the parties negotiated it. which was financed by Ford Motor Credit Co. When there is a clause that asks for the consent of a party.628 due on the installment contract and attorneys fees. Concurrence: Agrees with majority as to reasonableness and good faith. While a dispute did arise. The Morgans submitted a counterclaim. If a good faith or reasonability requirement was desired. The vehicle had mechanical problems. Ford Credit stands fully in the same position as the assignor-dealer and thus any wrong doing by the dealership are attributable to the credit company and may provide the basis of affirmative recovery from ford credit. As long as there isn’t a burden on the outside party. that as an assignee of the contract. . The language of the agreement called for an award of atty fees if the a dispute arises and the agreement must be interpreted. which tried to hold Ford Motor Credit liable for the dealer's actions. Ford Motor Credit Co. and not as the majority of this ct thinks they should have negotiated it. there is an implied duty of reasonableness when denying consent.the Federal Trade Commission issued its rule preserving consumers‟ claims and defenses. Morgan  Brief Fact Summary  The Morgan‟s purchased a vehicle. the party can sue for a set-off Class Wrap-upCheney v. Unless you agree to be responsible for the duties. Morgan’s argument.

o However. If permission is needed it must be reasonable and not unreasonably upheld. asked for permission. Morgan  True assignment is just the rights  True delegation is just the duties  True assignment and delegation is both   Ford never agreed to be delegated the duties of any law suit that may arise. Setoff reduced liability for Ford and Morgan had to come after the dealership. Ford v. IF THERE WAS NO ASSIGNMENT: · · Flanders sues for her failure to pay Lisa has a defense of breach of contract and can ask for a setoff (because she paid $3 to fix is she only owes Flanders $2) IF THERE WAS AN ASSIGNMENT: · Lovejoy sues for Lisa‟s failure to pay . if an express clause can be read next to the those implied clauses. Flanders assigns the contract to Rev. Avoidance of the K : Misunderstanding Flanders makes a contract with Lisa for the sale of a trumpet for $5/mo over a year. Lovejoy Flanders had represented to Lisa that the trumpet was in working order but one of the keys broke and she had to pay $3 to get it fixed. o Idaho and many other jurisdictions has taken the view that you are allowed to deny permission but reasonably. o Clause did not say may not assign to an outside party. She does not make her first month‟s payment. they will be.

Morgan and the Flanders/Lisa/Lovejoy hypo.assigned invoice from OPI à Seattle Bank The bank gave notice to Centralia that the assignment had occurred. They are arguing that the plywood they DID NOT receive is not part of the contract Not a setoff for something from the SAME CONTRACT They want to setoff money that was owed to them by the assignor from a different contract. THE OBLIGOR CAN USE AS SETOFF AGAINST THE ASSIGNEE. Flanders did. She is not in a position to protect herself from wrongdoing (similar to the bailor/bailee situation from property) IF IT ARISES OUT OF THE SAME CONTRACT. ORS 79. ANY CLAIM THAT THE OBLIGOR WOULD HAVE AGAINST THE ASSIGNOR.3180(1) The rights of an assignee are subject to (limited by): . Setoff and Recoupment Seattle-First National Bank v. Oregon Pacific Industries Sup Ct of Oregon 1972 Relevant Facts: Centralia – plywood in exchange for $$ à OPI Centralia was insolvent at the time of the contract and needed money immediately so they went to SFN to get a loan Centralia .· Lisa still has the same defense against Lovejoy of a breach of contract and can ask for a setoff · Lovejoy could then sue Flanders for the difference PUBLIC POLICY: It‟s not fair to make Lisa the injured party under the contract because she didn‟t choose to assign the contract to Lovejoy. THIS IS NOT IN DISPUTE Oregon Pacific argued they did not have to make payment to Seattle Bank because the plywood in the contracts were never delivered This argument for setoff is a little bit different from Ford v.

but more specifically that is ONLY TRUE when it is OUT OF THE SAME CONTRACT .(a) All the terms of the contract between the account debtor and assignor and any defense or claim arising therefrom (b) Any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives notification of the assignment The rights of the assignee are SUBJECT TO (limited by) certain types of other rights YOU CANNOT SETOFF PURSUANT TO A CLAIM FROM A DIFFERENT CONTRACT IF THE ASSIGNEE (a) ONE WAY TO ALWAYS HAVE SETOFF: Can set off claims that you would have under the same contract (b) EVEN IF IT’S A DIFFERENT CONTRACT: The setoff must accrue before notice is given of the assignment SEATTLE BANK WINS The courts assumed there were 3 separate contracts The rights under one of the contracts were assigned OPI wanted to set off against the bank for the other 2 contracts and the court said: NO under (a) Under (b) you can only do it if the claims against the original parties accrued before the assignment OPI’s claim did not accrue prior to their notification of the assignment under (b) so they can’t get a setoff for a separate contract TAKE AWAY: In continuation of the principles we‟ve seen before: Setoff of claims arising out of the same contract can ALWAYS be used as a defense a gainst assignee just as it can be used as a claim against the original party Seattle First – not trying to set of original contract but a different one Claims coming from a DIFFERENT CONTRACT must have accrued prior to the point of notification of assignment GENERALLY: obligor can set off any claims they have against the assignee‟s claims.

The vendees assigned to Benedict who then assigned to Betz (∆) L (vendor/π) – original contractà Hurwitz and Hollander (vendee) Hurwitz/Hollander (assignor) – assignment à Betz (∆/assignee) COMMON LAW: Assignment means ONLY the assignment of rights · There may be that they are trying to flip the property over and over to make a profit The assignment contains no delegation to Betz of performance of the duties of Hurwitz and Hollander · The date of performance was originally Oct 2.person who Hurwitz and Hollander assigned their rights to under the original K with Langel Facts: Aug 1 1925 – Langel made a contract with Hurwitz and Hollander for the sale of real property. Betz Ct of App NY 1928 π – Langel/selling some property ∆ . · On Oct 25. 1925 and was extended to Oct 2.IF THEY DO NOT: Then you got to (b) The claim has to accrue before they received notice of the assignment Delegation of Duties Langel v. but Langel was ready willing and able to perform and was present ready to tender the property Betz who did not show up . 1925 at Betz’s request because the title company had not completed the title search on the property. 1925 Betz refused to perform.

HOWEVER: Vendee may expressly or implicitly bind himself to perform the assignor‟s duties. either with a contract with the assignor or the other party of the original contract It has been held that where an assignee of the vendee invokes the aid of a court in equity for specific performance he implicitly binds himself to perform in an action for specific performance A judgment requiring the assignee of the vendee to perform at the suit of the vendor would operate as the imposition of a new liability on the assignee which would be “an act of oppression and injustice” GENERALLY: probable intention of the assignee is to assume duties as well as rights and the contract would be interpreted as so unless there is another intention indicated PROPOSED: Restatement § 164 Interpretation of Words Purporting to Assign a Bilateral Contract (1) Where a party to a bilateral contract which is at the time wholly or partially executory on both sides purports to assign the whole contract. no express assumption of the obligations by assignor in the assignment. so as to have the effect of creating a new liability The assignee of the vendee is under no personal engagement to the vendor as there is no privity between them.Langel brought this action asking for specific performance of the contract Betz claimed that he had only been assigned the rights and not been delegated the duties and did not sign any contract with the plaintiff Holding: There has been no novation (parties did not agree to substitute Betz for H/H). and no demand for performance by the assignee. Mere assignment of a bilateral executory contract may not be interpreted as a promise by the assignee to the assignor to assume the performance of the assignor’s duties. in the absence of circumstances showing a contrary intent his action is interpreted as an assignment of the rights under the contract and a delegation of duties .

(2) Acceptance by the assignee of such an assignment is interpreted in the absence of circumstances showing a contrary intent as both as assent to become an assignee of rights and a promise to the assignor to assume performance of duties · COMMON LAW DEFAULT: Assignment is only an assignment of rights · This Restatement wants the default to be assignment and delegation This promise would then be available to the other party to the contract. COURT APPLIES COMMON LAW: The law remains that no promise of the assignee to assume the assignor’s duties is to be inferred from the acceptance of an assignment of a bilateral contract in absence of circumstances surrounding the assignment itself which would indicate a contract intention DISMISSED. (in favor of Betz) TAKE AWAY While COMMON LAW was Assignment = ONLY RIGHTS This is a move by the Restatement to say sometimes we have to look at circumstances Assignment should not be just rights. but the default should be Assignment and Delegation RESTATEMENT: If it makes more sense within context assignment can be interpreted not just as assignment but assignment and delegation ßTHIS IS THE MOVEMENT OF THE LAW UCC §2210(5) The default is that it is an assignment and delegation. If you want to only assign your rights and not delegate your duties you have to be more clear in the contract: ie: “I‟m only assigning my rights” . unless language or circumstances indicate the contrary.

Contractors did not install it satisfactorily PH: Dist Ct – struck these defenses and granted summary judgment in favor of π Holding: Since Rouse did not sign the note he is not liable under it.Rouse v. IF ROUSE WAS SUED BY ASSOC. warranties or representations. US (SKIPPED) US Ct of App DC Circuit 1954 Facts: Winston gave Assoc.) Winston sold the house to Rouse and in the contract Rouse agreed to assume debts secured by deeds of trust and also “to assume payment of $850 for heating plant payable $28 per mo.” Nothing was said about the note. The US paid the bank and took assignment of the note and demanded payment from Rouse.37 payable in monthly installments of $28 for a heated plant in her house. Rouse‟s promise to pay “$850 for heating plant” made him liable to Assoc Contractors only as far as he was liable to Winston. oral or written” not contained in it.008. a promissory note for $1. Contractors Inc. CONTRACTORS: Would be entitled to show fraud on Winston‟s part and is equally entitled to make this defense against an assignee of the corporations‟ claim. DOES NOT MEAN that graud cannot be a defense to a suit on the contract. one who makes promises to make payment to the promisee’s creditor can assert against the creditor any defense that the promisor could assert against the promise. Winston defaulted on the note. COURT ERRED IN STRIKING FRAUDULENT MISREPRESENTATION DEFENSE . FHA guaranteed the note and the payee endorsed it to the lending bank (Union Trust Co. But this means only that the written contract contains the entire agreement. Rouse’s defenses (1) Winston fraudulently misrepresented the condition of the heating plant (TORT) (2) Assoc. Not liable to the US unless his contract with Winston makes him so. statements. The contract says the parties to it are “not bound by any terms conditions.

Defendant’s Argument: A material term of the K was ambiguous and therefor the Dfs‟ failure is excused. Mellish and Cohen were attorneys not judges
 Pollock is the bench judge  This is an 1864 version of an oral argument. DF however was waiting on a ship due to arrive two months later. Pollock says that it . and the PL arrived but DF did not. JUDGMENT REVERSED AND REMANDED AVOIDANCE OF CONTRACT MISTAKE Misunderstanding Raffles v. We’ll get into defenses  This is a different type of opinion – Milward. the promisor must be allowed to show that the promisee is under no liability ON THE OTHER HAND: If the promise means that the promisor agrees to pay a sum of money to A whom the promisee says he is indebted (3rd party beneficiary) it is IMMATERIAL if promise is actually indebted or not. The first Peerless arrived. Wichelhaus Court of Exchequer 1864  This isn’t a defense – it’s something different. it‟s not really an opinion The judge questioned Milward over and over and Mellish got off easy Relevant Facts: The Pl and Df entered into a K for the sale of certain number of bales of cotton arriving by ship from India. The ship was called “Peerless. Holding: This contract was for the delivery of cotton not for the delivery by the specific ship. Plaintiff’s sued for breach of contract: The Dfs refused to accept the cotton or pay the Pl for the bales when they arrived.COURT WAS CORRECT IN STRIKING THE 2nd DEFENSE If the promisor‟s agreement is to be interpreted as a promise to discharge whatever liability the promise is under.” however two ships of that name sailed from Bombay.

would be a question for the jury as to whether the parties knew of the same Peerless ship. If neither party knew of the other party’s Peerless: There was a misunderstanding and therefore the contract was not breached but the contract is void because there was NO MUTUAL ASSENT


If both parties only knew about the other Peerless

then there was a misunderstanding and therefore there was NO MUTUAL ASSENT = NO CONTRACT
THIS IS NOT AN AFFIRMATIVE DEFENSE Compare to Lucy v. Zehmer – Zehmer thought it was a joke and Lucy thought it was serious (Misunderstanding?)


An objective reasonable person would have looked

at the circumstances thought there was a binding contract · The reasonable objective person in this case

would have thought it was either Peerless – it objectively could have been either Peerless · There isn‟t a side that a reasonable objective person

could take so this mutual mistake negated the contract
 GENERALLY: Lucy v. Zehmer is the rule  THIS IS AN EXCEPTION: This type of situation where both parties would not have the opportunity to find out that there was a difference of opinion (like in Lucy) and they would not know of the same Peerless  THIS IS NOT BROAD, THIS IS ONLY FOR BIZARRE CIRCUMSTANCES  Grant Gilmore doesn‟t like this case- thinks they should have asked Mellish what a reasonable prudent cotton

merchant would know. Would they know that there were 2 ships called the Peerless?  Not only is this missing mutual assent –its not clear and definite enough so they would know which ship it was arriving on THIS IS A MUTUAL ASSENT CASE MODERN/RESTATEMENT:  Effect of Misunderstanding  (1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and  (a) neither party knows or has reason to know the meaning attached by the other OR  (b) each party knows or each party has reason to know the meaning attached by the other  (2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties  (a) that party does not know of any different meaning attached by the other and the other knows the meaning attached by the first party  (b) OR that party has no reason to know of any different meaning attached by the other and the other had reason to know the meaning attached by the first party

Sherwood v. Walker Relevant Facts: Pl is a banker and a farmer, Dfs are farmers with property and cattle in Ontario, Canada and outside of Detroit. Dfs act as importers and breeders of Angus cattle. Pl called upon the Dfs for the purchase of a cow. After examining the cows that the Dfs stated were barren Pl selected one Rose 2d. They agreed on the price which was conditioned upon the weight of the cow. Dfs wrote a letter to Pl confirming the sale and instructed their vendor of the same in writing. When Pl attempted to pick up the cow and attempted to tender payment of $80, he was informed neither was acceptable as the cow was with calf. After securing via Writ Pl had the cow weighed =1420.    There was mutual ascent, cow for money There was consideration, money for the promise to deliver the cow. There was a breach, PL never got the cow

 

Damages, start with expectation damages Value it can breed + Value it cant 2 -Statute of Frauds defense is going to FAIL bc the agreed upon price was $80.

Legal Issue(s): Whether a contract for sale of certain specified property, may be rescinded by the Df prior to passing of title after discovering a material part of acceptance was erroneous? Court’s Holding: Depends on the intentions of the parties and therefor must be submitted to the jury. Procedure: Replevin for a cow which Pl secured via Writ. Suit commenced in justice's court; judgment for Pl; Dfs appealed to circuit court of Wayne county, and verdict and judgment for Pl in that court. Dfs moved to strike, Denied and they appealed, S. Ct MI Reversed and new trial granted Law or Rule(s): A party who has given an apparent consent to a K of sale may refuse to execute it, or he may avoid if after it has been completed, IF the assent was founded, or the K made, upon the mistake of a material fact -such as the subject matter of the sale, the price, or some collateral fact materially inducing the agreement; and this can be done when the mistake is mutual. Court Rationale: If there is a difference or misapprehension as to the substance of the thing bargained for; if the thing actually delivered or received is different in substance from the thing bargained for, and intended to be sold, then there is no K. The K maybe rescinded UNLESS there is some warranty. If the only difference is in some quality or accident, even though the mistake may have been the actuating motive to the purchaser or seller, or both, the K remains binding. A barren cow is substantially a different creature than a breeding cow. She was not the animal, or the kind of animal, the Dfs intended to sell or the Pl intended to buy. If the cow was a breeder she was worth $750 - $1000; if she was barren she was not worth over $80. The Ct should have instructed the jury that if they found that the cow was sold upon the understanding of the parties that she was barren, and she was in fact not barren, the Dfs had a right to rescind, and refuse to deliver, and the verdict should be in their favor.   Biggest identifier of the fact that the party thought they were selling a barron cow was based on the very low price of the cow. Both parties sold/paid for the cow based on the only idea that it was a barron cow.

the typical remedy is to permit either party to elect for recission of the contract. there was also the possibility it wasn‟t.  If a mistake is unilateral. and that is precisely this case.Plaintiff’s Argument: Pl and Df entered into a K memorialized by a memorandum.if both parties enter into a contract thinking that something is A and it turns out to be B. Boynton Avoidance of the K : Mutual Mistake Relevant Facts: Dfs are partners in the jewelry business. .  If a mistake is mutual. Pl sold the stone to the Dfs for $1. DISSENT: There is no pretense that the plaintiff bought the cow for beef. neither party knew of it. either party can try to get out of the contract. Where there is no warranty. Defendant’s Argument: The material fact that the cow was not barren. and the plaintiff bought her as he believed she was. Dfs refused.10 interest to the Dfs demanding the return. there can be no mistake of fact when no such fact exists. Afterward Pl learned that the stone was worth about $700 and attempted to tender the $1 plus $. Df thought her barren. which was a material condition in determining the price and for the sale of the cow should allow the Df the right to rescind. The defendants thought she would not. or. but must have been known to one or both of the parties.  Both parties need to be making a mistake. In this case neither party knew the actual quality and condition of this cow at the time of the sale. Mutual Mistake. Pl was the owner of a small stone of the nature and value of which she was ignorant. When a mistaken fact is relied upon as ground for rescinding. Pl thought she wasn’t. and there is nothing in the record indicating that he would have bought her at all only that he thought she might be made to breed. but the plaintiff says that he thought she could be made to breed. majority believed both parties thought it was a barron cow. the courts are less sympathetic and typically deny relief to the erroneous party. but believed she was not with calf. such fact must not only exist at the time the contract is made.  Biggest difference between majority and dissent. if in existence. Wood v. for the sale of a cow at 5 ½ cents per pound. or could know of it. The defendants sold the cow for what they believed her to be.  Dissent thought that the parties thought that more probably than not the cow was barron.

Df did no know that the stone. Ct WI Affirmed. Both were entirely ignorant at the time of the character and nature of the stone and its intrinsic value. motion for new trial . was an uncut diamond. In the absence of fraud or warranty. judge directed jury to find for Df. . when sold. Willaims v. she put NO. There was no warranty made and unless Pl could show that Pl had been told it was a diamond or that the Df knew the stone was a diamond. she cannot repudiate the sale afterwards b/c she ascertained that she made a bad bargain. Williams were involved in a car accident w/ no immediate injuries. Plaintiff’s Argument: B/c the stone was immensely more valuable than the parties at the time of the sale supposed it was is ground for rescission b/c that fact was evidence of fraud on the part of the Df.a mistake in fact as to the identity of the thing sold with the thing delivered.   The ignorance of the parties is not an excuse for mutual mistake. Law or Rule(s): The only reasons for rescinding a sale and revesting title for the recovery of possession against the vendee are 1) that the vendee was guilty of some fraud in procuring the sale to be made to him. but the reverse of the check contained language purporting to release P I claims which was never explained or discussed. Court Rationale: The Pl’s own evidence shows that she was not induced to make the sale she did by any fraud or unfair dealings on the part of the Dfs.BUYER BEWARE AND SELLER BEWARE o TO GET OUT OF THOSE RULES. PL appealed. S. Glash Relevant Facts: Pls. There was no negot or bargaining for release. is no ground for a recission of a sale. the value of the property sold. Both parties weren’t 100% sure what the stone was. as compared with the price paid. GET THE ITEM SOLD IN WRITING WITH A WARRANTY. there could be no rescission based on fraud. Pl excepted. Pl completed claim form which asked if an injury existed. Caveat Empton and Caveat emptor. The Df Ins co estimated the repair costs and provided a check in that amt. On its . If she chose to sell it w/o further investigation as to its intrinsic value to a person who was guilty of no fraud or unfairness which induced her to sell it for a small sum.Denied. 2) that there was a mistake made by the vendor in delivering an article which was not the article sold. Defendant’s Argument: Df had no knowledge in the sale or identification of uncut diamonds and informed the Pl of that fact.Legal Issue(s): Whether the Pl could rescind the sale of the uncut diamond upon discovery that the stone was valued at nearly $1000? Court’s Holding: No Procedure: Circuit ct jury trial.

then consider their conduct and the information available at the time of signing. Once a release has been plead and proven. If it can be established that release sets out a bargain that was never made. PER does not bar extrinsic proof of mutual mistake. Legal Issue(s): Whether execution of the RELEASE for P Injuries bars a subsequent suit for an injury unknown at the time of signing? Court’s Holding: Release may be set aside under mutual mistake doctrine.  Company paid to the penny the prop damages. therefore they could not say they were settling any possible PI claim Plaintiff’s Argument: The Dfs and Pl never entered into an agreement to settle or release Dfs from liability related to an injury b/c the injury was unknown at the time they signed the release. not mutual. but not to alter the unambiguous language of the K. if they settle promptly they are not protected from later assertions of unknown injuries. When the parties have Ked under a misconception or ignorance of a material fact. Any mistake as to the nature of injuries at the time of settlement is strictly a unilateral one. the agreement will be avoided. and subject to avoidance on grounds such as fraud. it will be invalidated. We do not release an injured tort victim from an unfair bargain. but the law of mutual mistake applies to P I releases the same as other Ks. Mutual mistake is determined by circumstances surrounding execution of the release. Procedure: Tr Ct Summary for Dfs.face was a property damage code “200-1" not a P I code. Pl was later diagnosed w/ and injury attributed to the accident. Cts cannot legitimately cast themselves in the role of saving people from bad bargains. Ct Tx Reverse and remand. amt of consideration paid. the B o’ P is on the party seeking to avoid to establish mutual mistake. If the ins co refuses to settle they are subject to bad faith claims. such as knowledge of the parties. S. Ct of App Affirmed (both tr and app cts found suit was barred by execution of release). extent of negotiations/discussion as to P I. CLASS WRAP UPI determining mutual mistake courts look at: . and mutual mistake does not preclude a person from intentionally assuming the risk of unknown injuries in a valid release. Defendant’s Argument: Texas law mandates that the parties intent may be looked at for the purpose of interpreting and applying the release. Court Rationale: If the parties intent to cover an unknown injury from the language of the release can’t be determined. haste or lack in obtaining release. DISSENT : The law favor peaceful settlement and orderly resolution of claims and also favors just compensation of accident victims. Law or Rule(s): A release is a K. mistake.

Ewing Relevant Facts: A representative for Mary Ellen Erhardt conducted an auction sale of decedent’s property. The assumption of fact must be the same. but decided it would sell more quickly if broken into two pieces. Df Ewing bought lot five but no satisfactory bid was received for lot 6 that day. Legal Issue(s): Whether the tr ct erred in ruling that any mistake concerning the location of the boundary line was unilateral mistake? Court’s Holding: Yes. Law or Rule(s): A mistake is an unintentional act or omission arising from ignorance. Neither intended that the property sold as lot 5 would fail to include the . would result. One was i/d as lot 5 the other 6. Cant get out when you pay $1 for a 1/1000 chance that it is more valuable Bailey v. The representative had indicated that the boundary was near the lilac bushes. mutual mistake. five had the house thereupon. If the essence of why you entered into a contract is false.    Both parties both have to believe what is the mutual mistake Parol evidence is used to exclude evidence with respect to breach Evidence is allowed to show lack of contract or an affirmative defense to being a contract. at the time of signing. A unilateral mistake is not normally grounds for the mistaken party. you may try and rescind the contract. Parol evidence can be used to show that there was a mutual mistake bc the parties did not have an integrated contract. Ct of App Reversed and remanded. The mistake must be material or so substantial and fundamental as to defeat the object of the parties. A week after the auction Pl bought the remaining lot. Procedure: Tr ct found for Pl to quiet title. or misplaced confidence. 2 yrs later Df began constructing a fence alongside the house. Some cts require the parties to have the same misconception about the same vital fact or assumption. Court Rationale: A mutual mistake occurs when both parties. otherwise two unilateral mistakes. Pl had a survey completed and learned the property line was located w/i a foot of the house’s foundation. Both Erhardt and Ewing mistakenly believed the boundary line was further east than it was. but in fact was unknown and that nobody knew exactly where the boundary was. share a misconception about a basic assumption or vital fact upon which they based their bargain. instead of one. MM also includes situations in which the parties labor under differing misconceptions as to the same basic assumption or vital fact. 6 had a 20' strip of land adjoining it on the east side. Df appealed. the eaves were on the Pl’s property. surprise.

IF a party is aware that he has limited knowledge in respect to the facts related to the mistake. Ewying can reform the contact. There was an unintentional act arising from ignorance. Bailey was a third party in the contract.    In this case.‖ The contracting company submitted the lowest bid. The church then entered into a contract with the second lowest bidder. The bids were to be accompanied by a bid bond. Neither party consciously assumed a risk that the line would run beneath the eaves of the house. The extent of conscious ignorance depends upon the scope of the risk assumed. The mere presence of a MM does not always afford relief. If Bailey is found to be a bona fide purchaser. unlike the previous cases we have seen. Defendant’s Argument: Df and representative Ked under MM that the boundary was located other than where it was. If Bailey is not a bona fide purchaser and was put on notice. Ewing and Erhardt made a MM regarding the location of the boundary line. PER may be admitted to show by reason of MM the parties’ intent was not expressed in K. . and it demanded that the construction company and insurer compensate it under the bid bond. and recreation building.whole house. and after Pl had a survey Df had encroached upon Pl’s property. FACTS: The church invited bids for the construction of a music. but treats his limited knowledge as sufficient. Barber Contracting Co. then the contract can only be reformed to his liking. ★ First Baptist Church of Moultrie v. but later informed the church that there was an error. o Bailey gets less land but can sue the seller. ~MM. but conscious ignorance and this bars relief. The contracting company submitted a bid and an insurer issued a bid bond. PER can be used to show true intent. The bidding instructions said: ―negligence on the part of the bidder in preparing the bid confers no right for the withdrawal of the bid after it has been opened. education. The contracting company disclaimed such liability. Plaintiff’s Argument: Df had knowledge at the time of sale that the boundary was unknown. Mutual Mistake is an affirmative defense that courts find regularlyReasonable defense ★Unilateral mistake is an extreme rarity-next to never works in court.

but reversed as to the contracting company. RULE: Barber was entitled to rescind its bid. ANALYSIS: The trial court held that neither party was entitled to summary judgment.  Two parties are making the same mistake about a material fact to the contract. and it was material to the contract. The church had actual knowledge of the mistake before it forwarded a contract to the contracting company. o Less concerned about nominal consideration in option contracts. CONCLUSION: As for the provision in the bidding instructions: Provisions such as these have been considered many times in similar cases and have never been held effective when equitable considerations dictate otherwise. Mistake must have occurred regardless of the exercise of ordinary care o want to encourage due diligence  5. couldn’t simply revoke the offer/bid. The mistake must relate the substance of the consideration 3. and they both appealed. It must be possible to put the party back to where they were. The mistake did not amount to negligence preventing equitable relief. The court affirmed the finding that the church was not entitled to summary judgment. It must be unconscionable to uphold the contract 2.ISSUE: Whether Barber was entitled to rescind its bid upon discovering that it was based upon a miscalculation or whether Barber should forfeit its bond because it refused to execute the k following the acceptance of its bid by the church. can allow the parties to void the contract-Sherwood v. P’s motion for summary judgment properly denied. Thus. Walker . That is why there was mutual ascent. Class wrap-up MM-type of defense from time to time works in a contract matter. the church should not have been permitted to take advantage of the mistake. To get out of a unilateral contract:     1. The other party must be aware of the mistake 4. D’s motion for summary judgment should be allowed  The contract was an option contract-for $1 they would leave it open for a period of time for acceptance. That company had promptly notified the church of the mistake in calculating the amount of the bid.

. the corporation filed a complaint for release from the mortgage. it sent the company a check with an accompanying letter requesting a release of the mortgage. which is on the party seeking reformation. Reformation  The court is asked to rewrite the contract so that it represents the “true” agreement of the parties o Most often used to correct “scrivener’s error”: the writing incorrectly reflects the parties’ agreement. The mortgage and note was then assigned to National. Bona fide good faith purchaser-MM in itself cannot allow change of prop locations visa v a non party of the contract unless the other party had notice Unilateral Mistake-Very very rare. FACTS: The corporation executed a mortgage and note with Rockford. D. v. After the corporation made the monthly payments required under the agreement. and the mistake mutual and common to both parties to the instrument. National Guardian Life Insurance Co. is higher than that in an ordinary civil lawsuit. A written agreement is presumed to express the intention of the parties and will not be reformed unless the evidence of mutual mistake or other ground for reformation is strong. When further attempts to obtain a release from the mortgage failed. The court entered its judgment denying the corporation’s complaint for release of mortgage and granting the company’s request for reformation of the mortgage and note. ISSUE: Did National meet its burden of proving that a mistake was in fact made on the mortgage and note? RULE/ANALYSIS: As the P points out. Benyon Building Corp. and convincing. On appeal. clear. The court invoked the doctrine of estoppel because the corporation obtained an amortization schedule which clearly indicated that the loan would not be amortized according to the terms shown on the note and mortgage. the burden of proving a reformation suit. The company refused to accept the check as the final payment. The mistake must be one of fact rather than law. the court determined that a mutual mistake was made on the mortgage document as to the correct amount of the monthly payments. if a party makes a mistake you should have been more careful is the typical attitude by the courts. the proof clear and convincing that a mistake was made. The court also held that the company claim was not barred by the statute of limitations.

  Probably asked for a declaratory judgment since she knows she breached. and even had difficulty hearing the musical beat. Pl soon discovered that she did not develop in her dancing ability. Ct of App Reversed Law or Rule(s): A statement made by a party having superior knowledge may be regarded as a statement of fact. Arthur Murray. he must disclose the whole truth. she was capable of dancing w/ the most accomplished dancers. Relevant Facts: Pl. this justifies the reformation of the instruments to reflect the correct monthly payment of 694. Court Rationale: It can be reasonably inferred that Dfs had ―superior knowledge‖ as to whether Pl had ―dance potential‖ and as to whether she was noticeably improving. Both parties knew that 85k with 5 ½ interest for 15 years was due.CONCLUSION: In the present case. the law is if he undertakes to do so. Vokes. Judgment Affirmed. . she had no dance aptitude. Avoidance of the K : Fraud Vokes v. 51 yof. The undenied averments in Pl’s complaint that the flowering eulogiums heaped upon her by Dfs proceeded more to hear the ring of the cash drawer than from any honest or realistic appraisal of her dancing prowess or a factual representation. Over a period of 16 months she was sold 14 additional dance courses under separate Ks. Inc. rapidly improving and developing her dance skill. Ct dismissed w/ prejudice Pl’s 4th Amended Complaint for failure to state a claim. there is no question that the terms on the written doc were inconsistent and the mistake was mutual. wanted to become an accomplished dancer. Df Davenport sold Pl 8 ½ hr lessons to be used w/i 1 month. although it would be considered as opinion if the parties were dealing on equal terms. Even in a K’ual situation where a party owes no duty to disclose facts w/i his knowledge or to answer inquiries respecting such facts. and she sought the services of Df Murray and Davenport. During that interim Df encouraged Pl to sign the subsequent Ks by assuring her that she had grace and poise. she wanted to be the first one to court. She’s arguing an affirmative defense of fraud.60. Initially. Murray authorizes franchise operators under its name to instruct client on dance techniques. Legal Issue(s): Whether misrepresentations made by one party to induce the other party to enter into subsequent dance contracts are actionable when offered as an opinion rather than fact? Court’s Holding: Yes Procedure: D.

brought suit to rescind a contract to buy a house after he discovered the house was purported to be haunted. nondisclosure constitutes a basis for rescission as a matter of equity. or the suppression of truth. The dissent focused on the majority’s discard of the traditional doctrine of caveat emptor. the suggestion of falsehood. or mistake. Whether an undisclosed condition that impairs the value of the property is a basis for rescission of the contract. Ackley Brief Fact Summary. Synopsis of Rule of Law. Plaintiff’s Argument: The representations made to Pl by Df were in fact false and known by Df to be false and contrary to the Pl’s true ability also known by the Df. prediction. The Defendants. Held. rather than an opinion. known to the seller and left undisclosed to the buyer can constitute a basis for rescission of the contract. Issue. undue influence. The dissent believed that to discard this doctrine for the reasons cited in . Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the sale. Even an express disclaimer e. Reversed. and an improvident agreement may be avoided b/c of surprise. which impairs the value of the property and is left undisclosed to the buyer can constitute a basis for rescission of the purchase agreement. The Plaintiff. he sued for rescission. w/h by Df from Pl so as to deceive and defraud the Pl into purchasing additional hours of dance lessons. A condition that impairs the value of property. Ackley and a real estate agency (Defendants). want of freedom. After Plaintiff discovered this. A house purported to be haunted. ―as is‖ will not be given effect where the facts are peculiarly within the knowledge of the party invoking it. knew the house they had just sold to the Plaintiff was haunted. The trial court dismissed his complaint.What is plainly injurious to G F ought to be considered as a fraud sufficient to impeach a K. Facts. Stambovsky v. or expectation. Defendant’s Argument: Ks can only be rescinded for fraud or misrepresentations when the alleged misrepresentation is as to a material fact. The Plaintiff moved to a new neighborhood where he contracted to buy a house. Dissent.g. thus lowering its value. This was a widely known fact in the area and the house had even received national press attention. Stambovsky (Plaintiff).

then listed it w/ a realtor stating that ―Engineer Report says over 1 million in Gravel on Prop.1 acres for $140 K.6 acres had been zoned for commercial use. A sale under that listing failed. Discussion. The reason the court noted that the doctrine of caveat emptor was being discarded was that in most cases applying caveat emptor. Df’s agent testified that the statements were placed b/c gravel was this property’s best points and a selling point. Legal Issue(s): Whether Buyers of property under a land sales K are entitled to rescission b/c of false statements made by the Seller? Court’s Holding: Yes Procedure: Sup Ct C: buyers did not rely on misrep.the majority opinion (haunted house) was a ridiculous reason to discard the doctrine. which did not vest a duty of disclosure on the seller for patent defects. the condition was created by the seller and was a condition that could not be discovered even under the most rigorous examination of the house. which was fraudulent or material. and the hwy frontage was also omitted. A R P would likely consider the existence of gravel an important piece in developing property. Ct AK Reversed and remanded to determine damages. and 2. Deed of trust foreclosure sale granted property back to Df.‖ and requested $245K. The price was increased to $470K. the defect was physical and thus a prudent buyer would most likely discover it. misreps were not material. Pl notified Df of their intent to rescind. Only 6K cubic yds were unearthed and no more was available on the property. and which induced the recipient to make the K. Walker Relevant Facts: Df Walker purchased 9. After zoning was approved extraction began.‖ Pl purchased equipment and entered into K for the removal of the gravel. Cousineau a contractor also engaged in gravel extraction discussed w/ Df the possibility of extracting gravel from the property(Df denies) the determined that $385K was the sale price. the recipient must have been justified in relying on the misrepresentation Court Rationale: 1st the Pl must have relied on the misrep. Pl. S.‖ 580 ft of Hwy frontage. Law or Rule(s): A K may be rescinded if there was a misrepresentation. In the case at bar. That price was contingent upon zoning. The court discussed that New York courts had traditionally followed the rule of caveat emptor. Pl is in the gravel business and came across the property by its listing ―1 million in gravel. Cousineau v.‖ and the following listing ―80K cubic yds. and reliance by Buyers was not justified. 2nd the statements must be material to the transaction such that it would cause a R P to enter into K. Df specifically requested that the appraiser not mention the gravel in assessing the value of the property. The subsequent listing stated ―minimum 80K cubic yds of gravel. .

Not entirely different from promissory estoppel Elements of fraud False misrepresentation knowing it was false for inducement. In waiting for assurances and an amendment to the K. Legal Issue(s): Whether any genuine issues of material fact relating to whether there had been economic duress which would permit avoidance of the release precluded summary judgment for defendants exist ? Court’s Holding: Yes Procedure: Sup Ct granted Summary DF. Pl’s second tug was delayed getting through Panama Canal. A buyer is entitled to rely on an express warranty when factual statements are provided as to specific attributes. Pl failed to obtain or review the engineer’s report. A purchaser of Land may rely on material misreps made by the Seller and is not obligated to ascertain whether such reps are truthful. Class Wrap upAffirmative to get out of a contract based on Fraud. S. entered into a K w/ Df. Pl may have exhibited poor judgment. Alyeska. Pl failed to make calculations. Pl is an experienced business person who frequently bought and sold real estate. Totem received a settlement and signed a release for $97. Pl chartered a barge and a tug to accomplish this. he was not so unreasonable in view of Df’s description of the prop that recovery should be denied. Avoidance of the K : Duress Relevant Facts: Pl. Pl appealed. Ct of AK Reversed and remanded Law or Rule(s): Duress under old common law: . the transport dealt w/ a hurricane.3rd the Pl must have been justified in relying upon the material misrep. to transport pipeline construction materials from TX to AK. Upon arrival Pl discovered that Df had mislead Pl about the volume of material. Df terminated the K w/o providing a reason and stated payment would be in either 1 day or w/i 6-8 mos. the survey or examine the plat. or measure the frontage. Alyeska Pipeline Service Co. and then Df unloaded the materials at Long Beach w/o Pl’s consent which nullified Pl’s insurance.500 when the debt amt was btwn $260K and $300K. Totem. Plaintiff’s Argument: Df’s description which Pl relied upon was a material misrep of facts known by the Df which caused the Pl to enter into a K. Totem Marine Tug & Barge v. recipient relied. Defendant’s Argument: Pl’s reliance on Df’s and Df’s real estate agent’s was imprudent and unreasonable.

 Economic D does not exist merely b/c a person has been the victim of a wrongful act.  An available alternative or remedy may not be adequate where the delay involved in pursuing the remedy would cause immediate and irreparable loss to one’s economic or business interest. by wrongful acts or threats. Plaintiff’s Argument: Df deliberately w/h payment knowing that Pl had no choice but to accept an inadequate sum in settlement of that debt. executed a release when Pl was represented by counsel at the negotiating settlement conference. Case Wrap up Duress is used to get out of a contract. Stair. or that he had no adequate remedy if the threat were to be carried out. fully aware of the legal consequences. . 3) such circumstances were the result of coercive acts of the other party. in addition the victim must have no reasonable alternative choice but to agree to the other party’s terms. Party entered a contract in fear of loss of life or limb. 2) circumstances permitted no other alternative. Economic Duress uses a RP standard to determine if Freewill was overcome. Some cts require bad faith accompany the wrongful act.  Under common law the use of duress was very narrow and you normally couldn’t use it to get out of a contract. and upon exam of the materials presented in opposition to Df’ M 4 Summary. mayhem or imprisonment. Pl has made a sufficient showing as to each of the elements of economic D to w/stand that motion. Court Rationale:  One essential element of economic duress is that: the Pl show the other party. or w/h payment of debt = wrongful act. intentionally caused him to involuntarily enter into a particular transaction.  In many cases a threat to breach K.P. As a matter of law. Defendant’s Argument: Totem. Duress under common law in Alaska (wider definition): 1) one party involuntarily accepted the terms of another. via V. thus b/c of necessity Pl involuntarily accepted an inadequate settlement and executed a release.

Ct S D Affirmed. and result clearly showing effect of undue influence. S. The Dfs had duty to go forward w/ evidence and in fact went forward w/ evidence showing that the transaction was free from undue influence. Legal Issue(s): Whether undue influence was shown in securing K for R Prop through deed by purchasers despite existence of confidential relation btwn the K’ing parties? Court’s Holding: NO Procedure: Tr Ct upheld the validity of the deed. Kase v.  This requires that the Dominant party exercise good faith and to refrain from obtaining any advantage at the expense of the confiding party. in her 80's had a 4th grade edu and no business experience. Mrs . Dfs bought a small grocery store and made deliveries. opportunity to exert undue influence and effect wrongful purpose. and recognizes that under some circumstances there may be economic duress and are in immediate need. Pl appealed. but mentally competent lived on her own and was assisted by her nephew. A mo later Dfs agreed to take care of her until she died. French Avoidance of the K : Undue Influence Relevant Facts: Adm of Mrs McWilliams estate brought action against Df French. The indica of undue influence are : person susceptible to undue influence. they are expanding the use of duress. Upon consultation w/ her atty the deed was executed and she lived in an apartment w/i the house rent free for over two yrs. Court Rationale: The B o’ P never shifts from the one claiming undue influence. In states like Alaska. McWilliams later agreed to sell her house and property to Dfs for $35K. McWilliams. disposition to do so for improper purpose. Law or Rule(s):  A confidential relationship exists btwn two people when one has gained the confidence of the other AND purports to act or advise w/ the other’s interests in mind. but the B o’ P does transfer to the other side when evidence shows a relationship of trust and confidence.  Is not a claim that works very often but it is broadening in many jurisdictions. Df in delivering to Williams found that she had been injured in a fall.

‖ Legal Issue(s): Whether Pl teacher's complaint alleging that school officials came to his apartment just after he had been underwent arrest. Court’s Holding: YES Procedure: Sup Ct sustained Df’s demurrer. police questioning. booking and release on bail and had gone 40 hours without sleep and told him that he should resign immediately. and in good health. there was no time to consult an atty. Bloomfield School District Avoidance of the K : Undue Influence Relevant Facts: Pl. Pl Appealed. Odorizzi v. DISSENT: Shortly after establishing a relationship w/ the deceased. The K shows the absence of undue influence. Odorizzi was employed as an elementary teacher by Df under K to teach the following yr as a permanent employee. and cause him ―to suffer extreme embarrassment and humiliation. The presence of independent legal advice is an important factor. Plaintiff’s Argument: Mrs Williams received independent legal advice before entering into contract and that contract permitted her to live rent free in apartment w/i house for two years. and if he did not resign immediately the District would suspend and dismiss him and publish the proceedings. The Dfs did not act in G. Mrs McWilliams engaged her atty of some yrs to draft the Deed.McWilliams was at all times mentally alert. Upon her entering a nursing home Df signed a financial responsibility agreement for her care. F. and that if he did not resign immediately he would be suspended and dismissed and that resultant publicity would cause him extreme embarrassment and humiliation stated cause of action for rescission on ground of undue influence. Defendant’s Argument: The Dfs placed themselves in a fiduciary relationship w/ McWilliam and then abused that relationship by securing her property thereafter. the Dfs retained her confidence. They stated he should immediately resign. his arrest. McWilliams lived in the home w/ Dfs rent free for over two yrs. Pl was arrested for homosexual activity. Ct of App Reversed . that there was no time to consult an attorney. A transaction w/o which is fraudulent and voidable which said presumption was not overcome by the Dfs. The principal and superintendent came to his apartment after his release from jail. For the benefit of McWilliams. able to care for herself.

o Exceptions:     Bail bonds Military service Bank accounts Life’s necessities-- food. and which overcomes the will w/o convincing the judgment. Undue Influence is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature. Defendant’s Argument: Pl freely signed the resignation w/o duress. or a combination. The garage filed a counterclaim alleging that the minor owed him money for . physical condition. clothing Valencia v. Incapacity A. shelter. menace. mistake.Law or Rule(s): Undue influence includes taking an unfair advantage of another’s weakness of mind. fraud. U I may consist of total weakness of mind. pressure applied by a dominant subject to a servient subject. exhaustion. The application of excessive strength by a dominant over a servient subject is the second element. but not his consent to his resignation through high pressure carrot and stick technique. emotional anguish/turmoil. or mistake. or taking a grossly oppressive and unfair advantage of another’s necessities or distress. White FACTS: The minor sought an injunction to prohibit the sale of his truck. upon which the garage claimed an artisan’s lien. Plaintiff’s Argument: The Pl’s free will was overcome by the tactics used by the Dfs at a time when Pl was under severe mental and emotional strain. but they do set out sufficient elements to justify rescission b/c of undue influence. In essence it involves excessive pressure to persuade one vulnerable to such pressure. Court Rationale: The Facts in the amended complaint are insufficient to state a COA for duress. Minors  Are allowed to disaffirm most of the contract they make. The representatives of the Dist undertook to achieve their objective by overpersuasion and imposition to secure Pl’s signature. Thus weaknesses determine that a lessened capacity of the object to make a free K exists. and for return of the truck. menance or fraud.

clothing. Mental Infirmity  May also disaffirm most contract they enter into. room. Adhesion contracts. and was required to return the engine and parts to the minor. that have no bargaining power for one of the parties. Unconscionability  Some contracts are too unfair to enforce. The court reversed the judgment awarded in favor of the minor. ANALYSIS: The court agreed that the minor was entitled to disaffirm the contract for garage services. The court held that the minor was liable for benefits received even though they were not necessities and could not be returned in kind because there was no evidence that the garage took advantage of his minority or that the contract was disadvantageous to the minor. B. medical needs. VII. what are the rights between the parties? RULE: The court here follows the Worman rule that the minor must account only for property that he still has in his possession and notwithstanding that he has wasted. if any. which were not necessities because the minor did not need to engage in business where his mother provided board.“take it or leave it” contracts. finding that the trial court erroneously determined the rights between the parties. . or it may enforce the remainder of the contract without the unconscionable clause or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. UCC 2-302  Court may refuse to enforce the contract. consumed or destroyed it. he can recover what he has paid – but this rule must be applied after determining what benefits. and education.repairs to his truck and seeking a lien on the truck. ISSUE: (1) Whether a minor who owns and successfully operates a business may disaffirm contracts for necessary expenses of that business and (2) if may so disaffirm. the minor actually received from the entire transaction. CONCLUSION: The garage was entitled to judgment in the amount of the benefit to the minor less the amount of payment made by the minor.

Lower court found for P. found for P. illegality is an affirmative defense to breach that contract.  Don’t worry about surety for exam!!  Facts:  D purchased a number of household items form D. Can a contract we invalidated due to unconscionability? If unconscionability is present at the time a contract is formed. UCC 2-302 provides that the court may refuse to enforce a contract which it finds to be unconscionable at the time it was made. and effect to aid the court in making the determination. DC COA affirmed. contract enforceable. Illegality  If a contract has illegal activities in it. Upon default. US COA DC found for D. for which payment was to be made in installments. D bought items from P. The titles for the purchased items would remain with D until the total of all of the monthly payments equaled the stated value of the items. There was a provision in the contract which gave P the right to repossess all items bought by their customers if the customer defaulted on a payment. purpose.    Procedural History:       Issues:  Holding/Rule:  Reasoning:   . Congress has enacted the UCC. contract enforceable. it has been held as a matter of common law that unconscionable contracts are not enforceable. 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. In other jurisdictions. In 1962. remanded to trial court. P sought to repossess all items the D had bought and paid for since 1958. the court can choose not to enforce the contract.

it is hardly likely that consent was ever given to all the terms. Corbin suggests that the test should be whether the terms are so extreme as to appear unconscionable according to the mores and business practices of the time and place. ANALYSIS: Public Policy: An agreement that violates public policy may be void and unenforceable when consumer‟s claims are small and numerous a class-based remedy may be the only way to vindicate the public‟s rights and can also deter future similar wrongful conduct which benefits the community as a whole.  . Cingular had an arbitration clause that contained a provision prohibiting class action litigation or arbitration. Unconscionability involves the evaluation of four factors… The relative harshness of the term in question. including the importance of the legal right that is affected The manner of presentation of the term in the agreement The relative bargaining power of the party against whom the term is asserted The commercial justification for the term   Dissent:    Notes:      Scott v. Cingular Wireless    FACTS: Ps filed a class action suit against Cingular Wireless alleging that they had overcharged customers. The law has always granted parties latitude in making their own contracts. When a party of little bargaining power. signs a commercially unreasonable contract with little or no knowledge of its terms. Ps contend that the class action waiver is unconscionable and unenforceable. Thus. without class actions consumers would have far less ability to vindicate the CPA. CPA: The CPA is designed to protect consumers from unfair and deceptive acts and practices in commerce. and hence little real choice. Class actions are vital where the damage to any individual consumer is nominal and that vital piece is exactly what the Ps claim the class action waiver before us seeks to eviscerate. This decision will affect a great number of seemingly valid installment plan contracts.

Zimmer) Consideration doesn’t have to be adequate. Exculpation: Is this class action waiver unconscionable for effectively exculpating its drafter from liability for a large class of wrongful conduct? o Yes. (Batakis case) Conditions and promises and conditional promises Parole Evidence and extrinsic evidence Damages: Expectation Reliance Restitution Defenses: SOF Mutual Mistake Unilateral mistake Fraud Duress Undue influence Illegality . It is therefore unenforceable and thus the entire clause is void and there is no basis to compel arbitration. If a reasonable person thinks it’s a contract. (Lucy v. the court may uphold it. It is often the only meaningful type of redress available for small but widespread injuries. the ability to proceed as a class transforms a merely theoretical possibility for recovery into a real one. just sufficient.  CONCLUSION: It is unconscionable because it denies large numbers of consumers protection under Washington‟s CPA and because it effectively exculpates Cingular from liability for a whole class of wrongful conduct. Plus it substantially limits the remedies of only one side.

. assignment and delegation: UCC: Been adopted in part by all 50 states Restatement: Not binding. 12.oliver olden priced 350 for typing notes. but greatly probative Formal Reasoning.$10. application of current cases Instrumental reasoning Last Semester Exam Hypo: Alpha university prof-teach seminar course again Adjunct at Baylor. 500 books Must do all the work at Copy O’s. Contains Merger clause 500 bucks to make website.15 from handwritten notes Launch website to sell the book. 2008.. Typed handwritten notes Promised to complete the book within three months and it would be industry standards Would do everything.000 for seminar Could create own text book and sell to students and online 100 pges. if they are the intended beneficiary. . Copy O’s-publishes the book. allow prof foote to review..350 total all work by oct. 25..Unconscionability Incapacity Mental Infirmity 3rd party beneficiaries: may bring suit sometimes.

Time is of the essence in the contract..Delegated duties of typing notes to typographics. Tom and anne instead of tim and ann-insignificent Marriage misspelled Statute of frauds misspelled-Not industry standard Wife’s name misspelled Wants to reject the goods .by phone or email Got second payment Accepted the fact that they delegated the duties to typographics. Couldn’t get ahold of foote..

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