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Negotiation and Formation of the Contract

Problems w/ Standard Form Contracts
UCC 2-204 – formation in general UCC 2-207 – Additional Terms in Acceptance or Confirmation (1) No acceptance if expressly made conditional on assent to additional/different terms (2) Terms of contract a. Two types of additional terms i. Materially change terms 1. Contract = binding 2. Add’l terms are proposals subject to acceptance ii. Nonmaterial change in terms 1. Contract + add’l terms = binding b. Offer expressly limits acceptance to contain no add’l terms i. Original contract = binding Common law – - additional terms to acceptance does not insight a contract (mirror image rul) o Definite and seasonable expression of acceptance o Written confirmation sent w/in reasonable time - Last communication (contract/acceptance) holds terms o Contract +provisions of 2-207(2) + UCC gap fillers GARDNER ZEMKE v. DUNHAM BUSH ( – owner hires general contract, who hires subcontractor. Contractor sends specs to sub and sub returns with different specs – exchange has been agreed upon (w/ diff specs) Issue: Was acknowledgment by Contractor an acceptance? Rule: 2-207(1) – acceptance can contain add’l language – terms are allowed unless clearly and unequivocally communicates to offeror its unwillingness to proceed unless terms are accepted Issue: What terms of contract are binding? Rule: 2-207(2) - Different = add’l terms (comment 3) o If materially alter NOT included - “different” terms in responsive document as an acceptance can never become part of contract o Plain language argument – different terms NOT included in the code/statute - Different terms cancel each other out (knockout rule – comment 6) o Terms agreed upon = IN o Gap fillers provided by UCC = IN STEP-SAVER DATA SYSTEMS, INC. V. WYSE TECHNOLOGY (185) - P bought software from D over phone, terms and conditions on each box when products arrived Issue: Whether box top licenses became part of contract Holding: No Rule: Agmt consists of only terms expressly agreed to by parties - Disclaimer not conspicuous before contract, so not effective - UCC 2-207 governs analysis, box tops materially alter agmt so don’t become part of contract - D didn’t clearly express unwillingness to proceed unless box top terms were agreed to by P - 2-206/204 – contract was formed PRIOR to box-top Clauses - Choice of law clause says agmt governed by laws of certain state o Ex- Choice of law is MN o Can bring suit in ND, but will be governed by MN law - Choice of forum clause says litigation must occur in certain forum - Arbitration clause: a contractual provision mandating arbitration/avoiding litigation of disputes about the contracting parties' rights, duties, and liabilities CARNIVAL CRUISE LINES, INC. V. SHUTE (196) – P bought ticket with choice of forum clause, P brought suit in WA, D says only can bring suit in FL Issue: Whether forum-selection clause is valid (whether claim can be heard in Washington) Holding: Yes, clause is valid (claim can only be heard in Florida) 1

Rule: Contract was routine, and terms are never bargained for in these circumstances - P admitted had notice of terms - Non-negotiated clause may still be enforceable for several reasons: o Cruise line has reason to limit forum because carries people from many areas o Clause saves resources so don’t have to determine proper forum o Passengers benefit by reduced fares from cruise saving in limiting forum Dissent - Passengers can’t see clause until after ticket is purchased - Tickets not refundable, so passengers can’t get refund if don’t agree to clause - Ability of cruise line to pass savings on to customers by reducing litigation costs not reason to enforce clause Discussion on Carnival - Prof says if terms are reasonable, fair to enforce when customer continues to hold tickets and go on cruise - Prof thinks case was close call, but ct got it right - Just because this clause is enforceable, doesn’t mean all clauses will be (still subject to fairness) - Default rule in US: freedom of contract, but with limits Comparing Carnival to Step-Saver - Step-Saver box-top license not part of agmt - Carnival clause is part of agmt - What’s the difference? o Step-Saver is between merchants, Carnival purchaser is a consumer o Applicable body of law: UCC applies to Step-Saver but doesn’t apply to Carnival o Able to negotiate in Step-Saver, but not in Carnival HILL V. GATEWAY 2000, INC. (205) – P bought phone, term for arbitration w/ company, P brought suit for defect, D wants arbitration clause enforced Issue: Whether terms shipped w/ computer are effective as contract Holding: Yes, terms are effective Rule: P had opportunity to return after reading terms. By not returned formed contract = binding terms Discussion of Hill v. Gateway - Could say contract had formed over phone o Gateway offered, Hills accepted by giving credit card number o 2-206(b) says clear offer formed on phone unless expressly stated otherwise o But judge here doesn’t even consider 2-206 o If contract formed over phone  add’l terms OUT - Troubling to prof: ct doesn’t show analysis under UCC o Ct could’ve found way to reach same conclusion by applying the law o Ct instead just followed own preferences for how contract should form o Most courts wouldn’t come to this conclusion C&J FERTILIZER, INC. V. ALLIED MUTUAL INS CO (212) – Ins company doesn’t want to cover burglary because of definition in policy – trying to protect themselves from internal theft Issue: Whether burglary clause can be upheld when P didn’t reasonably expect its meaning Holding: No, clause not enforceable Rule: Customers are not bound to unknown terms beyond range of reasonable expectation - If party is bound by other side’s standard form and form contains terms that can’t reasonably expect to be there, term isn’t binding unless first party is made aware of term - Backed by Restatement 2d § 211(3) o Very broad, not generally followed by courts o Invites parties to be ignorant of terms of policy - UNIDROIT: essentially a model code, agreed upon by scholars in diff jurisdictions, at international level o Closer to what cts follow in US o Party can’t be bound by unreasonable term unless it’s been specifically brought to attention Dissent - Burglary is clear and unambiguous in the policy - No evidence P was made to believe had more protection than he did - Size and style of type can’t be described as fine print when similar throughout policy - Ct shouldn’t meddle with contract just because doesn’t it doesn’t like the meaning 2

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written confirmation given 10 days after oral agreement Issue: Whether parties formed an enforceable oral agmt Holding: Yes. INC. V. KLEWIN. below) o Certina memo discussing sale: shows agmt reached. for price over $500.Common law doesn’t require contracts to be in writing. INC.Contract must be written for sale of goods.This is transaction in goods. is signed o Certina memo about promo codes. under subsec (1) (parties don’t have to be merchants to show this exception)  Have some writing  Must have signature of party against whom enforcement is sought  Needs to have quantity . will be in if don’t materially alter agmt  Sender sent w/in 10 days. parties formed an enforceable oral agmt Rule: Written confirmation of oral agmt meets exception under 2-201(2) . some written memos re: deal.Look for oral agmt described in fact pattern . expressly state it WILL take > 1 year MIGEROBE. so UCC 2 applies o 2-201(1) . means agmt is not enforceable C. continue analysis .contract is for $400. clear and unequivocal for this section to apply o Note.R.If say agmt is w/in the statute of frauds. Amount in excess of $500.Statute of Frauds Overview . NIERENBERG (237) – oral agreement for sale. D unhappy w/ P’s work and contracted w/ another co for rest of project Issue: Whether oral contract is unenforceable when unlikely performance would be complete w/in a year Holding: No. when recipient admits to contract’s existence at trial  Nierenberg’s testimony was ambiguous. this argument doesn’t win  Admission must be deliberate.Article 2 of UCC incorporates the statute of frauds o We’re dealing w/ unamended UCC because states haven’t yet adopted amended version o Unamended version is in red supplement Analysis for Statute of Frauds . signed standard form w/o filling in blanks. (233) . also signed o Unsigned Certina writing w/ quantity. (224) . Certina then said wouldn’t sell. INC. writings together constitute writing to satisfy statute Rule: Writing for statute of frauds may consist of separate writings connected together . the merchants exception o Applies only to transactions between two merchants o Writing must meet requirements of (1) as against the sender o Sender provides written confirmation of understanding of agmt. so not within statute of frauds (must be $500 per UCC) o If is over $500. so ct doesn’t get to it) 4 . or not enforceable o 2-201(2) UNLESS. Written confirmation sent by Conagra to Nierenbergs  Contained add’l terms not discussed on phone  2-207(2) discusses add’l terms in acceptance. farmers aren’t merchants as a matter of law in MT (not raised on appeal.If sale of goods. CERTINA USA.Ct finds (see statutory exceptions. prices: connects other memos together CONAGRA. gives recipient 10 days to object . BUT some agmts m/b in writing t/b enforceable . V. contract is enforceable because doesn’t state how long completion of performance will actually take Rule: Oral contract must expressly say performance won’t be completed w/in one yr to be void . INC. styles.Outside scope of SoF – actual duration is irregardless.Certina orally agreed to sell watches to Migerobe. INC. V. ct finds sufficient time since recipient gets 10 days to object o 2-201(3).Must be in writing: o Sale of land o Long term leases o Sale of goods above certain price o When taking on debt of another (suretyship) .Oral agmt for bldg project. below) o 2-201(2).Ct finds agmt s/b enforced under 2-201(2). then apply analysis under UCC 2-201 o Ex. FLAGSHIP PROPERTIES.Court finds combined writings sufficient to satisfy statute of frauds (see statutory exceptions.00 Issue: Whether writings are sufficient to satisfy statute of frauds Holding: Yes.

letterhead could be enough under subsection 1. applies to everyone. if one party performs and other accepts  Neither side can assert statute of frauds defense when above has occurred - - - 5 . applies to merchants only o Use above example o P1 sends writing to P2. statute of frauds no longer available as defense if meet a subsection below o (a)  Exception for specially manufactured goods. above What constitutes signature o Entire signature not required. UCC is broad/doesn’t require much for sig o Initials may be enough. some jurisdictions email signatures are sufficient 2-201(3).UCC 2-201: Statutory Exceptions to Statute of Frauds 2-201(1). even when P2 hasn’t signed o What’s used in Conagra. don’t have to be merchants o P1 and P2 have oral contract o P1 puts in writing  Identifies parties  Specifies quantity  P1 signs o P1 later wants to get out of deal o If P2 knows about P1’s writing and can get copy. above 2-201(2). when buyer works w/ seller for customized good  May apply if seller proceeds w/ production and buyer wants to get out of deal o (b)  Exception when party against whom enforcement is sought admits in trial to existence of contract  Applies only to quantity of goods admitted o (c)  Performance exception. and P2 doesn’t object o P2 wants to get out of deal o P1 can use writing against P2. P2 can use writing against P1 o What’s used in Migerobe.

When parties have agreed contract is an integration. used in Bailey o Courts more understanding of something be left out of a deed than a contract .When only part of agmt is integrated. would show agmt was complete and exclusive o Was used in Baker v. it’s probably not—stop and fix it! . no language specific to assignability of option . not necessarily in non-commercial contracts 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 6 . understandings.Clause like this is strong evidence that writing is integrated. less flexibility w/ wording. Threat of creditors taking option when Bro files bankruptcy.Ct looks to see if contract is integrated and includes integration clause like. Bailey .Majority lessens reliance which may be placed on written instruments . but parol evidence may be used to prove elements of agmt not in writing . BUT not dispositive . Sis trying to prove option incites property stay w/in familymily Issue: Whether parol evidence regarding personal nature of option s/b allowed at trial Holding: Yes. rule applies so no add’l evid allowed Rule: When language of written contract is clear and unambiguous.Look to instrument to see if parties intended writing to be exclusive. same rule applies to part. used in Masterson o Contracts more flexible. could have used any wording wanted. there is nothing for ct to construe . superseding any and all prior and contemporaneous agmts. evidence s/b heard at trial Rule: No integration clause here.Example of clause: “This agmt is the entire agmt between the parties. determining terms of agmt o Have a writing. BAILEY (255) – agreement that ONLY Bailey’s could use water line. deed o Deed is a form. whether oral or written.“there are no previous understandings or agmts not contained in the writing” Dissent .” .Majority undermines parol evidence rule .Contract v. “This is final agmt between parties. Sine. how to understand words .3 categories of agmts to consider o Oral agmts. Baileys wanted to sell but Bakers would not give permission for anyone else to access water – reduces property value to nothing Issue: Whether parol evidence rule applies to water use agmt Holding: Yes. on the subject matter of this agmt.Contents of the Contract Parol Evidence Rule Overview .Allows new technique for defrauding creditors Discussion on Masterson v. representations and warranties.Says agmt is final agmt between parties.Language o Water use agmt said was for sole use of Baileys o Here.Merger clause: not dispositive. so parol evid m/b used to prove elements of agmt not reduced to writing . no violation of covenant of good faith and fair dealing MASTERSON V.Will focus on third category above for parol evidence rule o Determine if words can have multiple interpretations and decide what third party would decide meaning is o If wording doesn’t seem quite right.No terms in contract state Bakers will provide water to subsequent reasonable purchasers . reconciling with Baker v.Common in commercial contracts. but has very little to it.” . ex.Bakers didn’t breach terms of agmt. will be supplemented by other terms/what they will be o Lengthy written agmt. but very persuasive o Clause not used in Masterson. a complete and final embodiment of terms. SINE (259) – Bro conveyed land to sis w/ option to repurchase w/in 10 years. excludes other docs and conversations . parol evidence can’t be used to add or vary the terms . Bailey Merger/Integration Clauses . but words are unclear/inconsistent/ambiguous.Prevents parties from introducing any evidence at trial that would contradict or add to terms of written contract BAKER V.

If not. INC. Issue: Whether unambiguous provision should be read in light of extrinsic evidence Holding: No. V. Evidence of consistent additional terms. whether oral or even in writing. BUT if there is writing that is a “final expression” of the parties’ agreement. Course of dealing. evid of intent not to grant publisher the broadest rights in work . and they can be oral or written (7) If the writing is complete and exclusive. If there is no contract. if the alleged contemporaneous agreement was oral and contradicts the writing that constitutes a final expression (5) However. Course of dealing. V. would include new use not yet known o Still language. then the parol evidence rule is not applicable. then parol evidence rule is applicable and must be used if either party seeks to prove terms agreed upon outside that writing (3) The parol evidence rule keeps out any and all evidence of any prior agreement. 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.Another argument to make o If parties couldn’t have contemplated new medium at time of agmt o Then new medium wouldn’t be included in agmt o Counter: if grant was broad. with two provisions: reciprocal cancellation and merger clause. But what extrinsic evidence is admissible depends on further determination (6) Is writing that amounts to a final expression of the agreement “complete and exclusive”? If not complete and exclusive then PER will allow the writing that constitutes a final expression to be explained and/or supplemented by two things: a. language of contracts not broad enough to include rights to ebooks Rule: Most reasonable interpretation of grant in contracts doesn’t include right to publish work as ebook . complete doc. course of performance. even evidence of consistent and additional terms is excluded when the agreement is complete and exclusive Interpreting the Terms of the Contract RANDOM HOUSE. IF the prior agreement contradicts the writing that constitutes a final expression (4) Parol evidence rule keeps out any and all evidence of agreements allegedly reached contemporaneously w/ writing that constitutes a final expression.Authors struck out certain phrases. Note that these items can be prior or contemporaneous. and usage of trade Thus.be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented • • (a) by course of dealing or usage of trade (Section 1-105) or by course of performance (Section 2-208). of “book form” is specific and limiting WWW ASSOCIATES INC. Contract didn’t close by date specified and D chose to cancel. clear and unambig contract s/b enforced according to its terms Rule: When parties set down agmt in clear. the next task is to determine whether there is some writing that amounts to a “final expression” of the parties’ agreement. Points for understanding and applying UCC parol evidence rule: (1) Application of parol evidence rule is appropriate only when there is a contract. and usage of grade AND b. ROSETTA BOOKS LLC (272) – Rosetta published several authors in digial format – Random House had license agreement for right to “print. course of performance. GIANCONTIERI (282) – D contract to sell to P.Reasonable person aware of industry would find lang doesn’t include ebooks Discussion on Random House . Some evidence may be considered to explain the final expression of agreement (if terms are unclear) and even to supplement the agreement (if agreement is silent on a particular matter).Separate grant for book clubs/diff editions not necessary if “book form” covered all types of books . PER does not keep out all extrinsic evidence. then there is no need to apply parol evidence rule (2) After determining there is a contract. then the PER will allow the writing that constitutes a final expression to be explained and/or supplemented by only one thing: a. publish and sell the work in book form” Issue: Whether Random House is owner of right to publish works as ebooks Holding: No. writing should be enforced according to its terms 7 .

Evidence shows suppliers routinely price protected contractors at this time. relevant evid allowed to prove meaning here Rule: If ct decides lang is susceptible two interpretations. and relation of properties and rights in regard to which they negotiated o Where public interest is affected. or vary terms of contract Discussion on PG&E v. an interpretation given by parties themselves will be favored PACIFIC GAS & ELECTRIC CO. I know you’re liable but I’ll bear the cost . so made big diff why only looked at lang of contract By ignoring plain lang of contract. publishing company is sued. GW THOMAS DRAYAGE & RIGGING CO (288) – D agreed to furnish labor/equipment at own risk and expense and to indemnify P – cover fell and damaged P’s turbine Issue: Whether extrinsic evidence is relevant to prove a meaning which lang of instrument is reasonably susceptible Holding: Yes.author plagiarizes. comm’l agmt goes beyond written words on paper. so cts can’t stand in way of comm’l practices and usages by insisting on narrow/inflexible rules of interpretation . necessities for which they naturally provided.Extrinsic evid not admissible to add to. extrinsic evid relevant to prove meaning is admissible . so follows that term would also cover charge of racial discrim . advantages each probably sought to secure. P is effectively rewriting the bargain struck 5 standard principles cts use in interpreting docs o Entire contract s/b read as a whole and every part interpreted w/ ref to the whole. detract from.UCC 2-208(2): “Pecking order” for contract interpretation. damage.Prof thinks trade practice shouldn’t be used to trump the lang of the contract ZRL CORP V. Restaurant says claim covered under insurance policy since it covers wrongful eviction – Insurance won’t pay Issue: Whether wrongful eviction includes racial discrim suit when asking patron to leave Holding: Yes. .Shell did price protect at other times .Here. expense and liability resulting from injury to property . GREAT CENTRAL INS CO (293) – Restaurant ejected 3 black men now suing for racial discrim. necessary to consider the situation of parties at that time.- Four corners rule: Extrinsic and parol evid not admissible to create an ambiguity in written agmt which is complete and clear and unambiguous upon its face Ct said dealing w/ sophisticated business people.Enough evidence for jury to find that price protection in trade existed in HI at time. agmt to indemnify “against all loss. extrinsic evid justified only if feasible to determine the meaning the parties gave to the words from the instrument alone . small market led to trust among suppliers and pavers .Exclusion of relevant.Term “wrongful eviction” included in group of torts involving patrons . includes course of dealing. P claims D breached by failing to price protect (routine of suppliers in trade) and reinforced by D’s prior course of performance Issue: Whether course of performance and usage of trade can be considered in contract interpretation Holding: Yes Rule: UCC allows for liberal interpretation of comm’l usages. regular enough to bind seller . words or phrases s/b defined in context of associated words or phrases . interpretation is preferred which favors the public o Specific provisions usually regarded as qualifying the meaning of broad general words in relation to particular subject o Unless contrary to plain meaning of contract. if below conflict w/ each other o Express terms o Course of performance – Revised §1-303(a) 8 . course of performance Discussion on Nanakuli . . context shows wrongful eviction meant to include action here Rule: Noscitur a sociis. author will indemnify publishing company . GW Thomas . usage of trade.Indemnification: Like one party saying.” .Insurance co concedes that “wrongful eviction” would include situation in which insured removed rowdy patron from premises. so as to give effect to its true purpose o Contract itself must be read in light of circumstances under which it was made.Reason party may agree to indemnify other o Party may be in better position to bear risk o Ex. V.construed against the drafter NANAKULI PAVING V.Arguments for ins co o Co never intended to defend against claims of racial discrim o P knows doctrine of contra proferentem. SHELL (297) – P bought asphalt from D. .Under UCC.

then CISG would control Implied Terms and Implied Covenant of Good Faith Overview . Korea. Canada. but not UK or Ireland o China.If parties expressly choose laws of certain state o Choice of law clauses almost universally can’t exclude use of CISG o CISG still part of the law of those states o Even when parties want state laws to govern. but must provide expressly.Led to list of “default terms” or “gap fillers” o For sale of goods. revised 1-304 o Then generalized for all contracts by Rstmt 205 o no requirement to negotiate in good faith 9 .Rstmt 204. express language . but not contradict. say  This is sale for goods  Between parties w/ places of busi in diff countries  Parties have adopted CISG  If unsure about whether country has adopted.An international treaty . just say if has.Cts often called upon to supplement express contracts w/ other terms . terms of agmt o Course of performance o Course of dealing o Usage of trade CISG Overview .Won’t be asked for detailed analysis under CISG for this class o Just be able to recognize when CISG applies instead of UCC article 2 o For analysis. a term which is reasonable in circumstances is supplied by the ct even though one party or other may not wish that term to be present . Japan Questions .What happens to UCC and common law when CISG applies? o CISG trumps UCC and common law (US Const makes treaties higher than state law) o CISG will be first place courts will look to answer questions of parties o If answer not in CISG.If parties say want to exclude law of CISG o Then CISG won’t apply to relationship o Keep in mind when drafting o This will hold up. many of these terms are codified in statute o Parties may depart from them.- o Course of dealing – Revised §1-303(b) o Usage of trade – Revised §1-303© Note.Like a contract among countries . then can be supplemented by UCC 2 and common law .Implied obligation of good faith and fair dealing adopted in UCC o UCC 1-203. if not. unless contract has merger/integration clause o More flexible for interpretation o Parties can argue intent v.When is it applicable? o Contracts for sale of goods o Between parties whose places of business are in different countries o When countries are parties to CISG . then UCC terms apply . Mexico o Most of EU.No parol evidence or statute of frauds. courts find CISG will be used instead . court didn’t follow above order in this case 2-202 (parol evidence) allows following to explain or supplement.When countries adopt. but choice of law clauses won’t . it becomes part of their law o US.

parties’ intent to be bound raises implied obligation of good faith to observe reasonable limits in exercising discretion . party will suffer loss) o (2) recapture by first party of economic benefit . continuing performance does not imply perpetual duration Rule: When parties have not clearly expressed duration of contract. City of New York .Duty of good faith arises when one party has discretion given to it by contract .HAINES V. that discretion is not absolute o Party w/ right to exercise discretion has to do so in good faith .Three categories w/ implied duty of good faith o In contract formation. GENICOM CORP (320). ct not willing to rewrite agmt Discussion on Centronics .No discretion given here.Foreseeability – determines intent of parties o Building a new plant in 1924 was NOT foreseeable  could not have been itnent CENTRONICS CORP V. but for a reasonable time  Duration will last until city no longer needs water supply .Omission of duration in contract o How long contract will last o P arguing that city is perpetually bound to operate/expand facility o Ct finds  Duration not perpetual. D putts funds in escrow while P negotiation of price takes place.Unilateral movement – constrained by duty of good faith o Absence of discretion (unilateral right) o (1) deny other party economic benefit (alt.Under circumstances. P wants distribution for undisputed amounts Issue: Whether contract missing term about escrow distribution implied duty to release funds not in dispute Holding: No.Discretion o Sometimes contract confers decision-making authority to one of parties o Law then implies an obligation of good faith in contract performance . NYC wouldn’t allow because of excess/overflow to system Issue: Whether contract missing duration term implies perpetual duration Holding: No. developer wanted to hook new lines. reasonable to infer that parties intended city to maintain facility until time city no longer needed or desired water.Omission of scope in contract o What’s included in city’s duties o D arguing that contract is terminable at will o Ct finds  City’s duty not broad enough to include growing needs of municipalities  City doesn’t have to expand or build add’l facilities  Ct says city’s duty just to maintain facility at its original max capacity . can’t fire emp out of malice/bad faith in retaliation for action taken or refused by employee in consonance w/ public policy (very narrow) o Limits on discretion in contractual performance. implied terms – NYC ran sewage for towns. purity of which plant designed to insure Discussion on Haines v.City is obligated to maintain existing plant but not required to expand or build new one . CITY OF NEW YORK (316). courts will imply they intend performance to continue for a reasonable time .Requirements Contract – required to supply 100% of all production to buyer o If they do not meet 100% of demand = BREACH o UNELSS there is a term that limits this obligation . refrain from misrepresentation (very narrow) o In at-will emp.CISG o No clause requiring good faith in inat’l sale of goods by merchants o But most European codes have clauses similar to Rstmt. implied covenant – P selling business asses to D. at issue here . excluding conduct of “bad faith” 10 . distribution not implied Rule: When agmt gives one party a degree of discretion sufficient to deprive other party of portion of value.Ct identifies common rule o When one party is given some sort of discretion.

must be done in good faith o Look to official comment 3 for more guidance.To defeat at-will presumption o Emp can show he gave employer add’l consideration other than services for which he was hired o Donahue claiming add’l consideration was substantial. INC (330) . but sold stating it was a reliable car Issue: Whether salesman’s statements regarding car was express warranty Holding: Yes.Ct ultimately looks back to language of contract for setting price DONAHUE V. claiming breach of duty of good faith Issue: Whether the price fixed by a refiner for the sale of its gasoline was in good faith as required by code Holding: Yes.Man bought car asking for reliable car. emp can  Require employee to commit crime  Prevent emp from complying w/ a statutorily imposed duty  Discharge employee when specially prohibited from doing so by statute o Public policy is to be ascertained by ref to laws and legal precedents and not from general considerations of supposed public interest . but can’t misrepresent a fact . comm’l standards in trade if party is merchant . Inc . posted price automatically satisfies good faith requirement o BUT. appealed term under co’s fair treatment procedure. adopted statute is law so must look to lang of statute . official comment isn’t law.UCC says express warranty created by affirmation of fact or promise made by seller to buyer which relates to goods and becomes part of basis of bargain . but co upheld term Issue: Whether employer violated implied covenant of good faith and fair dealing in terminating an at-will emp Holding: No. car had many problems dealer knew about.Good faith has general definition o Here. HR. HR. eventually terminated. FEDERAL EXPRESS CORP (340) Employee accused supervisor of improprieties. superior job performance o Ct finds this insufficient Express and Implied Warranties CARPENTER V.P’s think D is intending to drive dealers out of business w/ high gas prices. must prove following o D’s sale of goods to P o D’s representation to P that goods were of certain kind or quality o D’s representation induced P’s purchase or was material factor in P’s decision to purchase o Nonconformity of goods to the representations made o P’s notice to D.For P to make case of breach of express warranty. price was fixed in good faith Rule: Comm’ly reasonable price is good faith price under 2-305 absent some evidence that refiner used pricing to discriminate among its purchasers Shell Oil v. focus on objective standard o One way to understand. CHRYSLER CORP (348) . Chrysler Corp 11 . other company’s policies may become part of emp contract. but didn’t become part of employment contract o FedEx doesn’t have to follow grievance procedure since not part of contract o Note.Public policy claim o To violate public policy. means price to be fixed in good faith o Good faith includes observance of reasonable. in this case employer didn’t violate implied covenant Rule: Private emp hasn’t violated public policy when fires whistle blower who didn’t have public or legal duty to report .UCC 2-305(2) in dispute here o Price to be fixed by seller or buyer. have seller setting price in contract.SHELL OIL CO V. salesman provided express warranty Rule: Seller may exaggerate w/o becoming liable for breach of express warranty. of failure to conform o P’s damages Discussion on Carpenter v.Posted price satisfies good faith requirement o 2-103(1)(b) – good faith – honesty in fact and reasonable terms of trade . but not here . w/in reasonable time of discovery of nonconformity.Ct says o Emp was at-will o Grievance procedure existed.

affirmation of fact or promise  b. so UCC governs transaction. promotional literature. Chickens died after delivery – MW says they didn’t know disease was present when shipped Issue: Whether seller is liable for breach of implied warranty when unable to detect the defects in its product Holding: Yes. not a warranty Prof thinks lang alone doesn’t look like warranty o But looking in context looks more like express warranty o And knowing customer’s needs. also looks more like express warranty UCC Implied Warranties . seller is liable Rule: Seller is liable for quality of goods/breach of warranty (like strict products liability) . can be in warranty section or any other place o Statement of salespeople.Promise a seller makes about a good being sold . just said good and reliable car  Ex of specific.Two implied warranties at issue.this car gets 30 mi/gal.Implied warranty arises only “if the seller is a merchant w/ respect to goods of that kind” 12 . documentation on product o Sample presented to potential buyer o Industry standard: course of dealing and usage of trade o UCC VLASES V. description of conforming goods  c. so puffery used and is allowed o Not salesman’s fault vehicle didn’t work. MONTGOMERY WARD & CO (354) – Man bought chickens from MW. sample or model made for which goods shall conform to o Above 3 create express warranty when relate to goods and form part of basis of bargain o Subsection 2  Seller doesn’t have to use specific wording of warranty  Seller doesn’t need specific intention to make a warranty Arguments why salesman gave warranty as opposed to using puffery o Look at salesman’s precise language under 2-313 subsection 1  Looks like affirmation of fact or promise. both to protect buyer from loss when no express promise but goods not good o Merchantability o Fitness for a particular purpose .Purpose behind implied warranty sections of code is to o Hold seller responsible when inferior goods are passed to unsuspecting buyer o Don’t need evidence that defects should/could have been discovered by seller o Just need evidence that goods not of merchantable quality or fit for their particular purpose . usage of trade .- - - - Not in LA.Where can find warranties o In contract. 1a  Could be a description too  Not a sample or model though o Customer said needed X  Salesman pointed to X  Customer relying on salesman’s judgment in making purchasing decision  Looks like affirmation of fact Arguments against warranty o Most reasonable consumers are expecting that salesman will engage in puffery o Salesman’s job to move vehicles.2-316 – exclusion or modification of warranties Warranties .2-314 – implied warranty: merchantability. is a warranty  Not ex.this car gets good mileage. since mechanic signed off on work o Wasn’t specific. car is a good.2-315 – implied warranty: fitness for particular purpose . either oral or written o Advertisements. doesn’t matter that buyer isn’t a merchant UCC 2-313 discusses express warranties o Three categories that can give rise to express warranties under subsection 1  a.

Agreeing to do something already agreed to do. MURRAY (363) . must be in writing and conspicuous Magnuson-Moss Act (361) . additional 400 houses led to higher collection costs – asked for more money (5 year contract) Issue: Whether modifications (add’l payments) were illegal because they lacked consideration Holding: No.Modification is a contract itself.How is this different from implied warranty of merchantability (in 2-314)? o Doesn’t just apply to merchants.Restatement §89 – Modification of Executory Contract .Don’t spend time studying Modifications Pre-Existing Duty Rule – Restatement 73 . buyer can assert breach of implied warranties and bring defense against P in this case Rule: Exclusionary lang disclaiming warranty not conspicuous.Implicates o Statute of frauds o Parole evidence rule o Reliance 13 .Subsection 2 o Language must mention merchantability o If in writing.Common law rule. UTLEY (357) – Dealer sold combine attachment to farmer.Just know it exists . Assigns contract to manufacturer – farmer defaults on payment claiming manufacturer breached implied warranty Issue: Whether breach of implied warranties can be asserted against assignee when buyer agreed in contract not to assert defenses against assigned that might have asserted against the seller Holding: Yes.Subsection 1 o Cts will take words of express warranty and look at limitations and construe in way for both to be enforced as much as possible o Express warranties trump limiting language .MASSEY-FERGUSON. V. just enforces if parties voluntarily agree and if: o Promise modifying original contract was made before contract was fully performed on either side o Underlying circumstances prompting modification were unanticipated by parties o Modification is fair and equitable .Promise modifying duty under contract not fully performed on either side is binding o Modification is unfair and equitable in view of circumstances not anticipated by parties when contract was made: or o To extent provided by statute: or o To extent that justice requires enforcement in view of material change of position in reliance on promise Discussion on Pre-Existing Duty Rule . must be conspicuous o To exclude or modify any implied warranty of fitness. and UCC 2-209 deals w/ issue—mod needs no consideration to be binding ANGEL V. so can’t get add’l compensation . modifications were legal Rule: Modification of a contract is itself a contract. unenforceable unless supported by consideration . could be completely out of the ordinary .Still in use.Subsequent agmt for add’l pay is unenforceable if contractor is only doing work which would’ve been required of him under original contract . applies to any seller o Seller has reason to know of merchantability for buyer’s purpose o Particular purpose this buyer has in mind for this good. but in decline. so requires consideration to be enforceable .BUT cts reluctant to apply pre-existing duty rule when one party encounters unanticipated difficulties and other voluntarily agrees to pay add’l compensation for work already required under contract . applied when not dealing w/ goods . INC.Fed law that regulates how warranties can be made when seller selling consumer good to consumer . so not properly disclaimed UCC 2-316 .city had contract for garbage removal.Rule doesn’t compel a modification of unprofitable/unfair contract.

PB has policy giving job security to managers. ct follows third o Employer could terminate w/o notice at any time before completion of contract o Impose bilateral concepts to require mutual assent and add’l consideration to support termination o Employers must have mechanism which allows them to alter the employee handbook to meet the changing needs of both busi and employees .Employer made unilateral promise to employees o No return promise made by employee o Consideration is continuing to work in response to unilateral promise . PACIFIC BELL (385) .Must show respect for terms of contract. (2) on reasonable notice. gave notice of would be policy change Issue: Whether employer may terminate or modify unilateral contract that’s been accepted by employees’ performance Holding: Yes Rule: Employer may terminate after a (1) reasonable time. forbids oral modifications. favors employer  Fair and reasonable policy. not enforceable by SoF if oral o IS enforceable under (3) – goods for which payment has been made and accepted or which has been received and accepted . D would write change on purchase order ssue: Whether oral agmt to change contract and put modification in writing is enough to modify contract when contains clause forbidding oral modifications of terms Holding: Yes. Customer paid $1500 with “payment for full” noted on check – this crossed out then deposited Issue: Whether have enough evidence for instruction of accord and satisfaction Holding: Yes 14 .Employees will be skeptical of promises of employer.But problem is contract forbid oral modifications . except between merchants such requirement form must be signed by each party o Requirements of SoF must be satisfied IF contract is modified w/in provisions .Unilateral has only one promisor . INC.Court found modification was enforceable though – promissory estoppel o D promised to write in modification on their contract o Parties performing as if both agreed to modification Unilateral v.Employers will make promises . and (3) w/o interfering w/ the employees’ vested benefits Discussion on Asmus v. less likely to be loyal to employer WONG V.2-207 – oral changed not materially altered obligations are not barred .BROOKSIDE FARMS V.But won’t be obligated to keep promises . allows for time and notice to change agmt  Would be crazy for employer to be stuck w/ many policies. bilateral contracts . D asked P for add’l performance in consideration for increased price.Different approaches could adopt. allows employees to rely on promises of employers In prof’s view.Pacific Bell would only be stuck w/ policy for length of employment of people w/ policy in their employment contract .Consideration given: one party has increased performance. Mama Rizzo’s . Sidway (Uncle Willy) ASMUS V.Arguments for majority and dissent o Majority. (376) – requirements contract between P and D.Classic ex of unilateral contract.2-209 – o Agreement to modify needs no consideration o Signed agreement exclusion modifications (except in signed writing) cannot be modified. PAISNER (401) – P sent bill for $5400.Statute of Frauds – contract. more than quoted price of $1500. oral agmt enough when one party relies to its detriment on promise of other party Rule: Promissory estoppel can be used when one party promises but fails to create writing changing contract Discussion on Brookside Farms v. other party paying more for this service o Pre-existing duty rule – consideration made . inefficient and chaotic  If no right to change unilateral policy. Hamer v. co will be stuck w/ it forever Dissent . this was bad decision . MAMA RIZZO’S. Pacific Bell .Other party hasn’t contractually obligated itself .

 Good example in above case w/ amount for services of architect o Possibility to accept lower pymt (that says in full) if accepted in protest  Must be very careful in doing so  Check law in jurisdiction  Can be risky. but might be option if party really needs partial payment 15 . etc. time entries.How to establish amount is in dispute o Question of fact.parties dispute about amount due  One party wants $5400  Other party thinks should only pay $1000  When party pays $1000. no consideration to change amount o Another ex. oral agmts.Rule: Dispute about method of calculating amount owed is enough for jury to consider accord and satisfaction Doctrine of accord and satisfaction .  Then there’s accord and satisfaction . marked payment in full and other party cashes.Amount of underlying obligation must be in dispute for accord and satisfaction o Ex. fact-finder must determine o Usually dispute about method of calculating amount owed  Can have evid like receipts.Offer by someone who has obligation to another party to substitute performance in satisfaction of existing obligation .promissory note for $1000  One party owes. but can only pay $750  Party pays $750 marked payment in full  Other party cashes check but sends bill for remaining $250  No accord and satisfaction since $1000 amount not in dispute  Neither party’s rights or duties have changed.

contract is voidable .Mistake m/b something big. Reverse and remand.Both elements for rescission met. bldg condemned Issue: Whether buyers can avoid contract on basis of mutual mistake and lack of consideration Holding: Parties did have mutual mistake. came at night and full of roaches Issue: Whether seller has duty to disclose defects in property when buyer doesn’t address those defects Holding: Possibly.Warranty: where mistake is fostered by honest and good faith assurances of another . buyers will appeal Rule: Minor conditions parties would reasonably find immaterial don’t call for judicial intervention (but this isn’t minor) Discussion .  AND which materially affects agreed performance of parties .Or could have express as is clause. Krobatsch (408) Facts: Home for sale. a mistake of fact . then seller has breached rep and warranty of contract .Mistake and misunderstanding o Usually lead to finding of no binding contract o No damage recovery .How to analyze now that establish there’s a mistake o Ct says will use case-by-case analysis o Rescission appropriate when  Mistake is about essential assumption of parties upon which agmt made.Claim is destroyed if risk of mistake was allocated to one party or another . case should go to full trial. found raw sewage seeping out.Rstmt 164(1): If agmt to contract induced by fraud misrep.Representations and Warranties o Section of contract o Will include promises of seller made about condition of thing being sold o If seller makes rep about no roaches. so seller not liable for later conditions found out Lenawee County Board of Health v.Rstmt 161 o Material misrep can include failure to disclose info o But Comment A says party not required to disclose all info knows about situation . but ct finds can’t rescind here o Because of as is clause o One party assumed risk of loss 16 . always saw during day.Legal Regulation of Contracts Misrepresentation and Mistake of Fact Overview . but turns out there are and misrep’ed. no bright-line rules .Murky standard.What is a mistake? A belief not in accord w/ the facts.Fraudulent misrep: when one’s mistaken belief was intentionally fostered by another .Misrep and breach of warranty usually result in damage recovery Weintraub v.Person asserting mistake is almost always D trying to get out of contract . Messerly (415) Facts: P agreed to buy property in present condition.Misunderstanding: when offeror means one thing and offeree understands another. but no rescission warranted because risk of loss assigned to buyers Rule: Rescission not available to party who assumed risk of loss in connection w/ mistake (as is clause) Discussion . . or vice versa .Mistake pleas are rarely successful today Definitions .

but ct narrows scope Rule: Traditional disfavor of restraints. Myers (426). ability to earn a living o Could burden society at large. so non-compete covenants are construed against party seeking to enforce .AND if o Enforcement would be unconscionable. public policy Facts: Vet working and later signed non-compete covenant.Won’t enforce when contract or performance of obligation is illegal Clouse v.Why are courts hesitant to enforce restrictive covenants? o May create undue burden/hardship on one party.Analysis o Should look at amount paid for partnership  If a great compensation. All Pet Animal Clinic. (430). same outcome? . illegality Facts: Liquor license in D’s name. be a restraint on trade. . P can’t recover Rule: Ct can’t redress a wrong that has resulted from the injured party’s own wrongful and illegal conduct Restatement and Unilateral Mistake (424) . made mistake about basic assumption w/ material effect on performances that is adverse to him. still practice some med). became partners w/ P but called contract something else to avoid new liquor license Issue: Whether P gets money back when knowingly entered into illegal contract Holding: No. stifle innovation .Covenant: No small animal practice in 5 mi radius of city for 3 yrs . signed non-competed.Where one party made contract. ct found unreasonable restraint on trade  Ct said one year more reasonable.Contract is voidable by party if he doesn’t bear risk of the mistake .Restmt § 153 says contract is voidable due to unilateral mistake under certain circumstances .Ct found restrictive covenant enforceable here.Ct’s willingness to enforce contract is not w/o limits . Inc. left and started own competing practice Issue: Whether covenant not to compete is enforceable Holding: Yes. OR o Other party had reason to know of mistake or his fault caused the mistake Hopper v. less likely to be found reasonable and enforced  Also consider whether public is being denied an important service 17 .Approaches to covenant w/ unreasonable terms o Throw out whole thing and don’t enforce any o Throw out unreasonable term and enforce rest o Blue pencil rule: rewrite bad term and then enforce entire covenant Note 3 (441) . sold out to other partners. less likely to enforce o Also look at covenant not to compete  If narrow (short amount of time. more likely to enforce  If not that much. sufficient to moderate risk of injury from unfair competition  Ct narrows this term and then enforces covenant . more likely to be enforced  If broad (can’t practice at all or for a long time). Hopper could’ve gone elsewhere in county and practiced o Duration  Three years here.Duration unreasonable: One yr limit is sufficient to moderate risk of injury from unfair competition Discussion .If Hopper was partner instead of employee. considered three elements o Nature of activity being prohibited  Here was small animal vet practice  Hopper could still practice large animal med o Geographic scope  Five-mile radius of city here  Ct found okay.Public Policy and Illegality Overview .

term that if default store can repo all items.Note: cts will usually enforce anyway. need both below o Procedural unconscionability.But not often used. customer defaulted Issue: Whether pro rata (all debts pooled/all items collateral) clause is enforceable Holding: Possibly.Ways cts look at now.Two separate issues o Contract formation o Contract enforcement . Walker-Thomas Furniture (450) Facts: Series of purchases from furniture store. public policy Facts: Couple to IVF clinic.Strongest legal argument. can’t enforce form.Husband signed before wife added terms. wants trial ct to decide) . H signed donor form then W added terms. hidden terms o Substantive unconscionability.Public policy reason to not enforce o Court won’t order husband or wife to do what’s necessary to prevent or do what’s necessary to conceive o Prof thinks above is strongest public policy argument .AZ v. like consumers .Throw out unreasonable term and enforce rest . wife loses appeal/husband wins Rule: As matter of public policy. BZ (441). this case is an exception . won’t force one donor to become parent against his/her will Discussion . couple separated and embryos left Issue: Whether old consent form can be enforced when relationship between signing parties has fundamentally changed Holding: No.Cts use unconscionability sometimes to protect categories of people.Blue pencil rule: rewrite bad term and then enforce entire covenant Notes on Unconscionability . so no intent to agree to terms added . in prof’s opinion o Could strictly construe language o Say parties only addressed event of separation o Since divorce happened here. remanding for trial Rule: Ct options w/ unconscionable clauses (note: ct didn’t say clause was unconscionable. and almost never used in comm’l transactions 18 . what’s in the agreement . then can’t enforce contract Unconscionability Williams v.Throw out whole thing and don’t enforce any . affirm. how was this contract entered into?  Unfair leverage  Unclear.

Look to contract first. Buyer’s damages for non-delivery or repudiation o Buyer’s remedy o RBPP + MP – KP + ID + CD – ES = D o Letters  Return buyer’s purchase price 19 .How to make an injured party whole . Buyer’s remedies in general o Buyer may cancel o Buyer gets back down payment if cancels .buy nice new car  Go to pick it up. etc o Loss avoided: any savings injured may make after breach Other Damages (quickly went over.Contractor was hired for job to be paid $100k.If contract addresses.Farnsworth formula o General measure = loss in value + other loss – cost avoided – loss avoided o Loss in value: diff in value between what injured would’ve rec’d and what did rec  Ex. is that sole and exclusive remedy.2-713(1). and has big dent in it  Diff between new car and car w/ dent in it (worth less) o Other loss: injured’s costs from breach  Ex. or is it just one of many? .caring for lost pet until owner is found.Example o Lawyer had contract to work for one year for $100k o Fired w/o cause and gets job for $60k o Expectation damage is then $40k .2-711(1).Transactional costs.Restitution damages o More rare o Part of P’s outlay that benefitted D o Don’t include P’s profit o Ex.author paints house lavender.Putting harmed party in same position economically as if contract had been performed .Remedies Overview . hiring party breached  But contractor would’ve paid subcontractor $50k  Should subtract $50k didn’t have to pay subcontractor  Also subtract materials didn’t purchase. labor costs. may list specific remedy for breach . decreases value but he likes it .Specific performance or an injunction o Equally rare o Not given if damages are adequate to protect expectation interest of injured party UCC Damage Formulas . common . need to negotiate w/ new supplier when old one breaches  Damage to reputation o Cost avoided: what injured doesn’t pay as result of reach  Ex. owner benefits .Reliance damages o Rare. just know definitions) .Remedy that’s most appropriate.If contract says remedy w/in is sole and exclusive remedy. usually upheld as only remedy Expectation Damages . but given when P can’t show what expectation damages would be o Return to P of his outlay in performing the contract o Don’t include P’s profit .Must respect idiosyncratic tastes o Even if contract would decrease value o Need to respect subjective happiness o Ex.

bank guarantee for money . WASHINGTON SQUARE PRESS. INC.Could’ve had clause for specific performance o Parties’ intent that specific performance be granted o Note: ct won’t be bound by this. would’ve been able to get money to complete job o But tough to get company to agree to it since expensive 20 . but value loss only $300) Discussion: What more could P have done.FACTORS: o Difficulty in proving damages w/ reasonable certainty o Difficulty in procuring suitable substitute performance by means of money award o Likelihood award of damages could not be collected **professor thinks this is a good case for determining damages  specific performance may have been more fair PEEVYHOUSE V. then can hire other company o First company will pay bill for other company doing work o Problem: getting first company to pay the bill .Could’ve gotten a deposit.Self-publishing.-  Market price  Contract price  Incidental damages.Could only get nominal damages . 2-715(2)  Expenses saved  Damages 2-708(1). Seller’s damages for non-acceptance or repudiation o Seller’s remedy o KP – MP + ID – ES = D o Letters  Contract price  Market price  Incidental damages  Expenses saved FREUND V.Could’ve had clause for liquidated damages of cost of performing if company didn’t perform o Courts will enforce unless the amount looks like a penalty o Courts won’t enforce penalties on contracts . would put author in better position than if contract performed . which would cost $10k.Best way: Could’ve gotten a surety bond for amount of performing remedial work o Would’ve protected P here. did not exercise 60-day right to terminate and never printed. when they put the outcome they wanted in the contract? . – D agreed to publish book in hardcover w/in said amount.Could’ve had clause for completion of work o Want company to do job.Could’ve emphasized importance of restoration of land in recitals o Still not binding on court o But more difficult for ct to say restoring land was ancillary issue to contract . 2-715(1)  Consequential damages.00 advance Issue: Whether P can recover damages in excess of value of contract being fully performed Holding: No. but if company not done by certain time. damages are limited to diminution in value resulting to premises because of non-performance (perform cost $29k. kept money in escrow account or letter of credit. not the same thing as publishing through pub co . – D specifically agreed to perform certain restorative and remedial work at end of lease – not done Issue: Whether damages for performance can exceed value of property after work performed? Holding: No.P wasn’t able to show amount of damages from lost royalties §359/360 – determines whether remedy in damages would be adequate . P had payed nonreturnable $2000. but will consider it .Thus ct finds $10k damages not appropriate award. damages s/b limited to diminution in value of premises because of non-performance Rule: When provision breached is incidental to main purpose of contract. GARLAND COAL MINING CO. P can only get nominal damages Rule: Damages not recoverable for loss beyond amount that evid permits to be established w/ reasonable certainty Discussion .

§351 Unforeseeability and Related limitations on Damages . Delivery did not occur for multiple days – P lost add’l week of work Issue: Whether damages for delay/lost profits was foreseeable Holding: Possibly. Parol Evidence.500) – SD (33.MP exists wherein aggrieved seller can market its goods . MURRY & SONS – agreement for D to make pool table and P to furnish w/ special rails (use for a pinball/pool table).P paid $42. BAXENDALE – P hired D to transport broken mill shaft – d promised tP to deliver next day.No need to talk about case law .500 advance . w/ no right to do so CLARK v.§2-715 Buyer’s Incidental and Consequential Damages o (1)(a) – loss from genera or particular requirements/needs which seller had reason to know and which could not reasonably be prevent by cover (obligation to mitigate damages) MITIGATION Repudiation . remanding for jury to determine (ct hints damages were foreseeable) Rule: Damages should be limited to those foreseeable when contract was made DISCUSSION . which increases cost MADSEN v. MARSIGLIA – painter refused repudiation and continued to finish painting Issue: Did painter had duty to mitigate damages when P repudiated Holding: YES Rule: one party does not have right to insist on performance.BD (42.APAC o Applicable law – UCC or Common Law o Principles – likely to be relevant for analysis  Statute of Frauds. P did not finish rails – D salvaged tables – for significantly less than pool table value Issue: is there a duty to mitigate damages? Rule: Mitigation of Damages Rule – no party suffering a loss as a result of breach is entitled to any damages which could have been avoided if aggrieved party had acted in a reasonably diligent manner in attempting to lessen losses Discussion: .750)  $8750 to Buyer o Buyer not entitled to further credit for expenses saved by seller o Only gets difference between what he lost and what he could have had BD – KP EXAM .HADLEY V.one party purports to terminate K.MP = 21250 and KP =33750 . etc  Description of and citation to principle  Further analysis of other principles implicated o Analysis – argue BOTH sides o Conclusion – not as important as analysis  Play TENNIS and come to reasonable solution 21 .