CONTRACTS I Outline Remedies Reading 299-372 Topic 1: Introduction to Contract amage Remedies T!e T!ree amage Interests 1.

Expectation: placing the non-breaching party in the position they would have been in had the contract been performed 2. Reliance: Putting the non breaching party bac in the position they would have been in if the promise had never been made !. Restitution: Putting the breaching party bac in the place they would have been if the promise had never been made

"#pectation Calculation: Plaintiff"s loss in value caused by the defendants non performance # any other loss $ any loss avoided by not having to perform

$ross %ro&it Calculation: %ontract price $ total direct cost # reliance expenditures & subtotal' subtotal $ payments made and salvage 'a()ins *+ ,c$ee $ (efendant operated on a )pretty good hand* and promised to ma e it perfect. +e made it worse, and plaintiff sued for damages. Rule: -he measure of expectation damages is the difference between the value of a perfect hand, and the value of the hand in the post operation condition. . O-.ecti*e t!eor/ o& assent: it matters what an ob/ective person would thin in a contract' )0 didn"t now* isn"t an excuse.1 -he court tried to compensate him for .11 his loss, .21 his expectancy damages. R23E: Expectancy damages should be determined by the difference between the value as promised and the value delivered. -Pain and suffering aren"t part of expectation damages, full performance would"ve included pain and suffering. Restatement 307: 4easure of (amages in 5eneral: 6ub/ect to the limitations stated in !78-!7!, the in/ured party has a right to damages based on his expectation interest as measured by 9. the loss in the value to him of the other parties performance caused by its failure or deficiency, plus :. 9ny other loss, including incidental or conse;uential loss, cause by the breach, less %. any cost of other loss that he has avoided by not having to perform Nurse *+ 1arns $ (efendant leased iron mill for six months $ but didn"t give it to him. (amages were awarded for the actual cost of the rental, and the expected profit from the iron mill during that time. R23E: (irect damages .rent1 and conse;uential losses .profit1 are both compensable, but we limit conse;uential losses. 'oo)er 2 Sons *+ Ro-erts Ca-inet Co $ Roberts was subcontractor, they had a dispute over who was to dispose of materials, +oo er breached. Roberts sought expectation damages $ 9rticle 2 didn"t apply because this was a dispute about services, not /ust goods. %ourt found that net loss on cabinets was compensable .some loss was eliminated in a salvage sale1 as well as 54 salary, and lost profit. 6torage costs were not compensable, because they would have occurred regardless of the breach. R23E: Plaintiff can only recover damages for expenses that it would not have incurred without the breach. -:arnett"s damage calculations: Reliance costs # net expectancy <R gross expectancy $ costs avoided Reliance Damages: 1

Sulli*an *+ O3Connor $ Plaintiff contracted for a nose /ob, that would re;uire two operations. 9fter three operations, the nose li ed worse that it had in the beginning, but the plaintiff had also lost money and endured additional pain and suffering. Plaintiff was awarded damages for the worsening of her condition, and the )pain and suffering that went beyond what she had agreed to.* R23E: -he plaintiff is to recover any expenditures made by him and for other detriment .bac in the spot she was in right before she made the contract. .=:: >hen the expectancy is too difficult to calculate, we often use the reliance measure1 1. 4iddle road for medical contracts: ?es, there is variability in medical cases. :ut there are also charlatans, and we should protect patients against these people. 2. 3imits emotional stress recovery because emotional damages are not foreseeable in contracts. @alentine case: woman is fired and sues for wrongful discharge' no damages awarded because emotional damages aren"t compensable. .=o love in contractsA :ut is this actually trueB Probably not.1 Essential Reliance v. 0ncidental Reliance: >hat the plaintiff does as their portion of the contract .pay rent1 v. what they do because they have the contract .buy bananas1 +?P<: :ubba leases a storefront for C1,888. .assume the value of the lease is actually 1D, and he tells the landlord he"s going to open a banana store.1 (ay 2, :ubba orders C18,888 of bananas. (ay ! $ after paying the rent, but before he occupies the property, the landlord repudiates. =ow :ubba is out 1D for the lease and 18D for the bananas. >hat can :ubba recover from thatB Expectancy: 18D, had the contract been performed he would have spent 11D, but had 1 in value. Reliance: 11D, for the bananas and rent. Restitution: 1D, the value ( got from the contract. (irect damages .rent1 v. %onse;uential 3osses .bananas1: limits are imposed on conse;uential losses. 4CC Sections: 1-153 6upplementary general principles of contract law applicable: 2nless displaced by the particular provisions of this 9ct, the principles of law and e;uity, including the law merchant and the law relative to capacity to contract, principle and agent, estoppel, fraud, misrepresentation, duress, coercion, mista e, ban ruptcy, or other validating or invalidating cause shall supplement its provisions. 2-152 6cope' certain security and other transactions excluded from this article: unless the context otherwise re;uires, the 9rticle applies to transactions in goods' it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction not does this 9rticle impair or repeals any statute regulating sales to consumers, farmers, or other specified classes of buyers. 2-156 (efinitions: transferability' )goods*E .11 goods means all things .including specially manufactured goods1 which are moveable at the times of identification to the contract doe sale other than money in which the price is to be paid, investment securities .article F1 and things in action. )5oods* also includes the unborn young of animals and growing crops and other identified things attached to realty as described in goods to be served from realty. 2-157 e&initions: )%ontract, agreement, sale contract for sale, present saleE* 0n this article, unless the context otherwise re;uires )contract* and )agreement* are limited to those relating ot the present or future sale of goods. )%ontract for sale* includes both a present sale of goods and a contract to sell goods at a later time. 9 )sale* consists in the passing of title from the seller to the buyer for a price .6ection 2-G811. 9 )present sale* means a sale which is accomplished by the ma ing of a contract. Damages in Sales Contracts: 2

-Tongis! *+ T!omas: 6unflower seed seller, made a contract to sell to middle man. 4iddle man had a contract to sell to buyer, with a fee for transport. .C7881 -ongish breached the contract when the mar et price went higher, and profited an additional 7D. 0s -homas entitled to C788 in lost profits' or 7D in mar et price, according to expectancy damagesB %oop .the middle man buyer1 only suffered C788 in damages $ should he be rewarded at this price, or the higher mar et priceB <ne way, we"re overcompensating %oop, the other we"re encouraging breaches. %ourt held mar et price is the correct measure of the expectancy $ this encourages mar et regulation. .-his is about overcompensation.1 1. >hen two statues are in conflict, follow the more specific statute 2. -he spirit of the breach matters 3. 0f we don"t compensate this way, we"ll encourage breach "&&icient 1reac! T!eor/: 0f the breach gives the defendant enough to compensate the plaintiff and still have money left over, then we should encourage the breach. 4CC 1-157: Remedies to be liberally administered .11 the remedies provided by this act shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither conse;uential or special nor penal damages may be had except as specifically provided in this 9ct or by other rule of law. 2-712: )%over* buyers procurement of substitute goods: 1+ 9fter a breach within the preceeding section the buyer may )cover* by ma ing in good faither and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller. 2+ -he buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or conse;uential damages as hereinafter defined .6ection 2-H171, but less expenses saved in conse;uence of the seller"s breach. 3+ Iailure of the buyer to effect cover within this section does not bar him from any other remedy. 2-713 :uyer"s damages for non-delivery or repudiation 1+ 6ub/ect to the provisions of this article with respect to proof of mar et price .section 2-H2!1, the measure of damages for non-delivery or repudiation by the seller is the difference between the mar et price at the time when the buyer learned of the breach and the contract price together with any incidental and conse;uential damages provided in this article .6ection 2-H171, but less expenses saved in conse;uence of the seller"s breach. 2+ 4ar et price is to be determined as of the place for tender or, in cases of re/ection after arrival or revocation of acceptance, as of the place of arrival. 2-716 :uyer"s incidental and conse;uential damages 1+ 0ncidental damages resulting from the seller"s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custod of goods rightfully re/ected, any commercially reasonable charges, expenses of commissions in connection with effecting cover and any other reasonable expense incident or delay or other breach. 2+ %onse;uential damages resulting from the seller"s breach include .a1 any loss resulting from general or particular re;uirements and needs of which the seller at the time of contracting had reason to now and which could not reasonably be prevented by cover or otherwise' and .b1 in/ury to person of property proximately resulting from any breach of warranty. 2-717 (eduction of damages from the price: -he buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract. 3

Cost o& completion *+

iminution in 8alue: "#pectation Interest Re*isited

-$ro*es *+ 9o!n :under Co - 4ineral lease involving the extraction of gravel. (efendant agrees to grade the land when they are done with it' they refuse. -he cost of performance .to grade to land1 is J8D, but the value of the land is only 12D. -he Plaintiff wants damages to be determined by the cost of performance, but the defendant only wants to pay the difference between the value of the land as-is, and the value of the land if it had been graded, which is only about 2D. 0n this case, the plaintiff won, and the defense had to pay the cost of performance. .=ote, there was no )special value* here.1 R23E: >hen a contract specifies performance that"s cost is greater than the mar et increase in the value of the land, the breaching party is still responsible for the cost of performance. -%ee*/!ouse *+ $arland Coal ,ining: 4ineral lease involving the extraction of coal. Peevyhouse leased land to mining co, with the guarantee that they would grade the land when they were finished. -he cost of performance is about 2FD, and the difference in the value of land is only about C!88 .the total value of the land is less than 7D1 (efendant wants to pay the difference in value, plaintiff wants the cost of performance. 0n -his case, (efendant won, and only had to pay the )value amount* or C!88. .-his case did have )special value* that wasn"t captured by the mar et1 R23E: >hen the cost of performance is greater than the mar et increase in value, the breaching party is only responsible for the difference in mar et value. 5roves decisionKPeevyhouse dissent: since defendant breached, more generous damages should be awarded. .starts to sound punitive $ they"re arguing the moral character of the breach matters.1 +?P<: ?ou want to pay someone 18D to build a RE933? ugly fountain on your property, which absolutely decreases the value. 0f your contractor wal s away, and you have to pay someone 17D to finish it, you are still entitled to 7D in damages. >+?B .0sn"t the economic waste an issueB1 =o, because that fountain had value to ?<2, the landowner. -he argument here seems to contradict the 5roves and Peevyhouse decisions $ if the land has sub/ective value, compensation for cost of performance is appropriate because the sub/ective value is not captured by the mar et. 0n cases with non-sub/ective value, the entire value of the property should be captured in the mar et. <vercompensation in 5roves and Peevyhouse: 1. Iull performance overcompensates plaintiff $ they"re getting more than the value of their asset. 2. 9warding mar et value overcompensates defense' they new this cost when they made the contract. LLProf says both these cases were wrong $ Peevyhouse had special value, but wasn"t compensated for it' groves didn"t have special value, but he was compensated.LL .-oday they probably would have used a li;uidated damage or alternate performance clause $ )?ou have to regrade the land <R MMM .pay me the amount it would cost to regrade the land1* >hy wouldn"t we want a rule that loo s at the characteristics of the plaintiffB -hey want to create a rule they can use moving forward $ and they can"t base an ob/ective rule on people"s individual sub/ective value of things. +?P<: ?ou"re building a house, and really want apricot fixtures. -he contractor gives you peach. ?ou want him to rip it all out. 6hould he have toB %ourts have held that it"s unfair to hold one party liable for )sub/ective value* if they aren"t aware of it. -his is why we have li;uidated damage clauses. Restatement 30; Alternati*es to <oss in 8alue o& %er&ormance 2. 0f a breach results in defective or unfinished construction and the loss in value to the in/ured party is not proved with sufficient certainty, he may recover damages based on: a. the diminution in the mar et price of the property caused by the breach, or b. the reasonable cost of completing performance or of remedying the defects if that cost is not clearly disproportionate to the probable loss of value to him. 4

Topic 2: T!e =oreseea-ilit/ %rinciple as a <imit on "#pectation

amages

Remoteness or =oreseea-ilit/ o& 'arm: 'adle/ *+ 1a#endale >R",",1"R NA,"?: 9 cran shaft bro e at a mill, and when it was ta en to the repair shop, the repairman was told that they needed it bac ;uic ly, and he said it would be bac the next day. 0t ended up getting lost in transit, and the mill was idle for G additional days. Plaintiff sought damages for lost wages and profit during that time. %ourt said no, these damages were not foreseeable, because the repairman didn"t now the entire mill was idle, /ust that the shaft was bro en. R23E: 9 debtor is only liable for damages that are foreseen, or would have been reasonably foreseen, as long as the contract wasn"t breached through fraud. -hese profits are too speculative. T!e damages !a*e to arise naturall/@ or t!e -reac!ing part/ (ould !a*e to )no( t!e damages t!e/ c!ose to cause+ >contemplated at t!e time o& contract? -oday: the exact cause of the delay doesn"t matter, they only have to foresee that the delay would result in lost profits. 'ector ,artineA and Co+ *+ Sout!ern %aci&ic Transportation: 4artineN gave the railroad company a large piece of machinery to deliver, it arrived a month late and was damaged. -he RR compensated him for repair costs and storage charges from the RR' he is also see ing damages from the loss of use during the delay and the repair. (efendant argues this loss of use is too speculative. %ourt remanded for trial to determine damges during these times. R23E: (etermining liability doesn"t re;uire the in/ured party to prove that their loss resulted from the 4<6- foreseeable use of the item, only that the loss was foreseeable. .(iffers from +adley $ this was a complete machine, not a component part.1 Restatement 361 4n&oreseea-ilit/ and Related <imitations on amages 1+ (amages are not recoverable for a loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made. 2+ 3oss may be foreseeable as a probable result of a breach because it follows from the breach .a1 in the ordinary course of events, or .b1 as a result of special circumstances, beyond the ordinary course of events, that the party in breach ahd reason to now. 3+ 9 court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances /ustice so re;uires in order to avoid disproportionate compensation. ,orro( *+ =irst National 1an) o& 'ot Springs: .3argely discredited today.1 4orrow was a coin collector, ept them at home. =otified the ban he wanted a safe deposit box, but while he was waiting to get it, his coins were stolen. 3ater, he found out that the box was available, but no one had notified him. +e sought damages against the ban for the stolen coins. 3ower court held that by placing items in the box, he accepted the rental contract, waiving his right to claim breach of the initial contract. %ourt said this didn"t waive their right to claim a breach, but used -acit 9greement test to uphold lower court"s summary /udgment. R23E: Tacit Agreement Test: -he plaintiff must prove more than the defendant"s nowledge that a breach would entail special damages, but also that the defendant tacitly agreed to assume responsibility. -acit 9greement -est re;uires that the defendant actually infers the that they are going to be responsible for the hypothetical breach the plaintiff is tal ing about. .restricts liability in the name of fairness.1 +?P<: 0f you go to 2P6 to deliver a pac age, the contract is going to be a receipt, and your interaction is going to be with a low-level employee, they"re not going to learn any specific info that would ma e specific damages foreseeable. Even if you wanted them to assume responsibility for a special circumstance, the employee wouldn"t have the authority to ma e that guarantee. .-his ma es it hard to support the second prong of +adley' you can"t get to the people that have the authority to accept the contingencies.1 9nother case C!ain o& <ia-ilit/ .@ictoria 3aundry1 they hired someone to provide a boiler, and they didn"t meet the deadline. -he court was willing to use a )chain of liability* to establish that as a laundry service, they would obviously need a boiler to do their /obs, and ma e money $ they held that because of the chain of liability, the lost profits were foreseeable. 5

Reasoning against +adley: it"s highly dependant on facts, and difficult to create a clear rule. -his means cases either have to involve experts .CC1 or /udges end up ma ing their own opinion about topics they really have no expertise in $ )armchair experts.* -his lac of nowledge may explain why the outcomes are highly unpredictable. Posner li es +adley because it provides incentives for disclosing unusual losses that would result from a breach. -his allows for cheapest loss prevention .the party will ta e measures to avoid a breach1 Topic 3: T!e ReBuirement o& %roo& to a Reasona-le egree o& Certaint/

C!icago Coliseum Clu- *+ empse/: (empsey entered into a contract to have a fight at the %%%. +e was paid C18, with an agreement for more. -he club entered into a contract with >illis .the other boxer1 for C78D .but didn"t pay him1 -hey also hired a promoter, who incurred expenses in publiciNing the fight. %%% sought damages for breach' they wanted the money paid to (empsey, >illis, the promoters expenses, money spent to force (empsey to follow the contract and lost profits. %ourt said expenses before the contract, >illis" money, and expenses forcing (empsey to comply with contract were not compensable. .Either not made in reliance on the contract, or because they undertoo the efforts on their own accord.1-hey also said that the promoter"s expenses and lost profits weren"t compensable because they were too speculati*e+ -hey argued that when the expectancy is too speculative, we can use reliance damages, but in this case the only compensable reliance damages were those that they incurred on the contract $ ie, secretary salaries, cost of physical examinations, ect. R4<": <nly damages that are foreseeable are compensable. Ex: 6towe v. 9merican Railroad Express: 0nventor wanted to ta e his new gas burner to the >orld"s Iair' he rented space, set up a booth, employed people, ect. +e had to ship the burner in a few separate pieces, 9I-ER he already incurred expenses. =ot all the pieces arrived and he was unable to display his invention. %an he recoverB -here weren"t going to be any sales made $ /ust publicity, so expectancy damages are too speculative. 0n this case, the expenses he made before the contract we"re recoverable $ even though he made them before the contract. It3s rational to rel/ on a contract /ou don3t !a*e /et (!en t!e ot!er part/ !as a dut/ to ma)e t!e contractC it3s a contract /ou )no( /ou can get+ :inston Cigarette ,ac!+ Co+ *+ :ells-:!ite!ead To-acco Co+: %ourt relied on precedent that allowing damages on speculative profits is inadmissible when there is no standard to guide the /ury. -hey stated that they disagreed with letting a breaching party )off the hoo * /ust because damages were difficult to determine, but that they shouldn"t change law, /ust administer it. Restatement 307 A*aila-ilit/ o& amages: 1. -he in/ured person has a right to damages for any breach by a party against whom the contract is enforceable unless the claim for damages has been suspended or discharged. 2. 0f the breach caused no loss or if the amount of the loss is not proved under the rules stated in this chapter, 9 small sum fixed without regard to the amount of loss will be awarded as nominal damages. Restatement 309 amages 1ased on Reliance Interest: 9n alternative to the measure of damages in !GH, the in/ured party has a right to damages based on his reliance interest, including expenditures made in preparation forKin performance, less any loss that the party in breach can prove with reasonable certainty the in/ured party would have suffered had the contract been performed. Restatement 362 4ncertaint/ as a <imitation on amages: (amages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty. Anglia Tele*ision <td+ 8+ Reed: -@ %o contracted with actor to be in a play, and immediately started incurring expenses for the production. Reed breached, and they tried hard to find a substitute, but couldn"t so they sued. Reed argued that he wasn"t liable for the expenses incurred before he signed the contract, only those incurred after. -he court held that Reed was liable for expenses made before he signed the contract, because t!ose e#penditures incurred -e&ore t!e contract are compensa-le (!en it (ould -e in 6

reasona-le contemplation o& t!e parties are li)el/ to -e (asted i& t!e contract (as -reac!ed+ R23E: 0f pre-contract expenditures were foreseeable .the parties new they would be lost if they breached1 they are compensable. .+inges on 4istletoe1 +?P<: <ld house needs a paint /ob, and it"s hard to tell how many coats of paint it needs. -he crew nows each coat will cost C2D, and they"ll have to do !-7 coats. -hey have a contract to do it for 17D. 9fter two coats, you fire him. 2nder reliance, he could get GD. Expectancy is speculative $ however, because of the structure of the building, he had to build scaffolding to paint the house. >as it foreseeable that he would build this structureB 0t would depend on if he told the homeowner. >hat if the first contractor applied 2, ad another contractor too J more coats. (o you still get your GDB -hat ta es the speculation out $ you would have lost 1D, so now your recovery is only !D. ,istletoe "#press *+ <oc)e: 4istletoe was a new business suing for lost profits. 6he had a contract for a year, and the defendant breached the contract in that time, but after she had incurred all her start up expenses. -he court held that if she had the full year to build her business, she might not have suffered a loss. -he defendant tried to argue that she was losing money each month, but the court said he didn"t prove that she had lost money each month, and it was her burden to do so. Topic 0: T!e A*oida-ilit/ %rinciple as a <imit on "#pectation amages ?ou can"t recover for a loss that you could have avoided with reasonable effort. .)(uty to 4itigate*1 Roc)ing!am Count/ *+ <uten 1ridge Co+: %ompany was given contract for bridge, but before they started construction, the county told them that they would no longer honor the contract. .-here was an election happening, under uncertain circumstances, it seems reasonable that the company would have doubted the veracity of the stop order.1 -hey continued wor , and sued the county for the cost of completion. -he county said the contract was invalid at this point and they couldn"t recover. %ourt held that after the company received notice of the breach, it was his duty to do nothing to increase the damages stemming from the breach. .+ere, the contract was for 18D, they spent GD pre-repudiation, and GD on additional performance. 2nder these facts, they would have gotten JD $ the GD pre-repudiation and 2D in lost profit.1 R4<": I& damages are a*oida-le@ t!e part/ !as a dut/ to a*oidDlimit t!em+ Ex: 0f 0 contract to sell my one car to you for 17D, you repudiate, and then 0 sell the car to another guy for 17D. 0n this case, selling to him gives me full performance $ 0 couldn"t have earned both profits, because 0 only had one car. <ne other context in which the idea of the avoidability principle applies $ /ust about any employment contract .you can always go and loo for another salary through other employment $ whatever salary you end up with should be deducted from your recovery. S!irle/ ,ac<aine %ar)er *+ T(entiet! Centur/-=o#: 4ac3aine had a contract for the lead role in a movie that was to be filmed in 39. Iox breached the contract, and offered her another role in a different movie $ in a different location and of a different prestige level. 6he refused, and sued for damages under the original contract. -ypically, she would have had a duty to mitigate damages, but the court determined here that because the other offer was )different an inferior* she was not re;uired to accept it, and therefore Iox was still liable for damages. R4<": ut/ to mitigate doesn3t reBuire /ou to accept an o&&er t!at is di&&erent or in&erior+ Restatement 365 A*oida-ilit/ as a <imitation on amages 1. Except as stated in 6ubsection .21, damages are not recoverable for loss that the in/ured party could have avoided without undue ris , burden or humiliation 2. -he in/ured party is not precluded from recovery by the rule stated in 6ubsection .11 to the extent that he has made reasonable but unsuccessful efforts to avoid loss. Neri *+ Retail ,arine Corp: Plaintiff entered contract to buy boat, made deposit. -hen got sic , said he wouldn"t be able to buy boat. =eri refused to refund deposit, plaintiff sued for deposit, =eri sued for lost 7

profits. .=eri was able to sell the boat to another buyer, plaintiff argued that this mitigated the loss.1 -he court held that the lost profits were compensable, because =eri had an unlimited number of boats $ if not for the breach they would have been able to sell two boats, not /ust one. R23E: Ior sales contracts with unlimited volume, you can be compensated for lost profits as the result of a breach. .%ontract price $ variable costs & damages1 9pplied 2-H8O.21 Page 177 4CC 2-757 Seller3s Resale Including Contract &or Resale: .11 -he seller may resell the goods' if made in good faith, seller may recover the difference between the contract price and the resale price, along with any incidental damages, less expenses saved because of the buyer"s breach .21 6ale can be private or public, and can be in parcels or as a whole as long as everything about the sale .time, place, price1 is reasonable. .!1 0f the sale is to be private, seller must give buyer reasonable advance notice of the seller"s intent to resell. .G1 0f a public sale, only identified goods can be sold, must be at the usual place of sale for public goods, goods must be available for inspectionKnotice provided on where to inspect goods, and the seller may buy. .71 9 purchaser who buys goods at a resale ta es the goods free of any rights of the original buyer even though the seller fails to comply with one or more portions of this section. .J1 6eller is not accountable to the buyer for any profit made on any resale 4CC 2-75; Seller3s amages &or Non-Acceptance or Repudiation .11 -he measure of damages for nonacceptance or repudiation by the buyer is the difference between the mar et price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this article, but less expenses saved in conse;uence of the buyer"s breach. .21 0f the measure of damages provided in .11 is inade;uate to put the seller in as good a position as performance would have done then the measure of damages is the profit .including reasonable overhead1 which the seller would have made from full performance by the buyer, together with any incidental damages, due allowance for costs reasonably incurred and due credit for payments or proceeds of resale. 4CC 2-715 Seller3s Incidental amages: 0ncidental damages to an aggrieved seller include any commercially reasonable charges, expense or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer"s breach, in connection with return or resale of the goods or otherwise resulting from the breach. 4CC 2-71; <iBuidation or <imitation o& amagesC eposits .11 (amages for the breach can be li;uidated in the agreement, but only in an amount that is reasonable in light of the anticipated harm of the breach, the difficulty of proof of loss, and the inconvenienceK nonfeasibility of otherwise obtaining an ade;uate remedy' unreasonably large li;uidated damages are void as a penalty. .21 >here the seller /ustifiably withholds delivery of goods because of the buyer"s breach, the buyer is entitled to restitution of any amount by which the sum of his payments exceeds: the amount to which the seller is entitled by virtue of terms li;uidating the seller"s damages, or without those terms, 28P of the value of the total performance for which the buyer is obligated under the contract or C788, whichever is smaller. .!1 -he buyer"s right to restitution under .21 is sub/ect to offset to the extent that the seller establishes a right to recover damages under section 1, and the amount or value of any benefits received by the buyer directly or indirectly because of the contract. .G1 >here a seller has received payment in goods their reasonable calue or the proceeds of their resale shall be treated as payments for the purposes of .21, but if the seller has notice of the buyer"s breach before reselling goods received in part performance, his resale is sub/ect to the conditions laid down in this article. amage Clauses and Ot!er Contractual Re*isions o& Remedial Rules 8

Topic 6: <iBuidated

Contracting around t!e de&ault rules o& damages: 4ost contract rules are default rules, meaning they can be contracted around by including an express clause to the contrary. Express 3imitations on %onse;uential and 0ncidental (amages o o Parties might see to limit their damages by including a warranty clause that is intended to be the exclusive remedy for the breach of contract.

2%% 2-H1F: 6ub/ect to the other sections of this section, an agreement can provide remedies in addition to, or in substitution of those provided in the article, and may limit or alter the damages that are recoverable, by limiting the buyer"s remedies to return of the goods and repayment of the price to repair or replace the non-conforming goods or parts, and resort to a remedy as provided is optional, unless the remedy is expressed as exclusive $ then it is the sole remedy. 0f circumstances prevent an exclusive remedy, then the remedy shall be those provided in the act. %onse;uential damages may be limited or excluded unless the limitation or exclusion is unconscionable .li e physical in/ury, damages for commercial losses are not.1 3i;uidated (amages v. Penalty %lauses o %ontracts used to be enforced by bond debt, but the courts stopped enforcing those. =ow, penalty clauses are unenforceable, but li;uidated damages are allowable, even though it can be hard to distinguish the difference.

Eem-le *+ =arren: -heater owner sued an actor for violating a G year contract. Plaintiff was awarded partial compensation under the penalty clause that was included in the contract for C1888, in the case of even a smallest breach, but appealed see ing the whole compensation. %ourt said that because any breach would result in these damages it was an unenforceable penalty clause. 0nstead, the court prorated damages to match the portion of the contract that was not actually performed. R23E: >hen a very large sum is immediately payable based on even a small breach, it is an unenforceable penalty. :assenaar *+ To(ne 'otel: Plaintiff was fired from his /ob at the hotel 21 months before the contract was supposed to be up. %ontract contained stipulated damages clause that guaranteed fulfillment of the full financial obligations of the contract, even if it wasn"t fully performed. <nce a stipulated damages clause is found reasonable, the li;uidated damages should not be reduced at trial by an amount the employee did earn or could have earned. Restatement 366 %uniti*e amages: =ot recoverable for breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable. Restatement 367 <iBuidated amages and %enalties o 1. (amages for breach by either party may be li;uidated in the agreement but only at the an amount that is reasonable in light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. 9 term fixing unreasonably large li;uidated damages is unenforceable on grounds of public policy as a penalty. o 2. 9 term in a bond providing for an amount of money as a penalty for non-occurence of the condition of the bond if unenforceable on ground of public policy to the extent that the amount exceeds the loss caused by such nonoccurrence. <a)e Ri*er Corp *+ Car-orundum: -he willingness to agree to a penalty clause is a way of ma ing the promisor and his promise credible and may therefore be essential to inducing some valuemaximiNing contracts to be made. Posner discussed the danger that penalty clauses could lead to 9

inefficient contracts. >e want compensatory damages to be sufficient to deter inefficient breaches $ going beyond that would discourage efficient breaches. Topic 7: "Buita-le Relie&: Speci&ic %er&ormance and In.unctions "Buita-le Remedies >speci&ic per&ormance and in.unctions? o E;uitable relief is proper when the remedy at law is inade;uate Contracts &or <and: 3and is presumed to be uni;ue, so often land sales contracts shift to specific performance o <o*eless *+ ie!l: 4ar et price had increased above contract price .in part because of buyerKrenter"s improvements1, so seller didn"t want to sell. 9 little li e -ongish. %ourt originally awarded financial damages but changed to specific performance because the buyer was going to re-sell for a profit .a sort of idiosyncratic value1 RecogniNed that specific performance should be default in land cases. %reates a uni;ue post-breach advantage for similar buyers. -hey can wait until closer to the statute of limitations to see what happens to the price of the land, then decide whether or not to sue .li e a defensive penalty in football1 Contracts &or $oods o Cum-est *+ 'arris .unusual1: %umbest loaned his custom, uni;ue stereo to someone in exchange for a loan. >hen he tried to repay the loan, the person wouldn"t accept his money and tried to eep the stereo. -he court determined that because it was such a uni;ue good, legal remedies were insufficient. T!ings t!at ma/ not -e uniBue indi*iduall/ ma/ rise to t!e le*el o& uniBueness as a (!ole+ o Sc!oll *+ 'artAell: Plaintiff was see ing specific performance on the sale of a car' he had put down a deposit after seeing an ad in the newspaper. -he %ourt held that this did not re;uire specific performance, because the good was not sufficiently uni;ue. R23E: 9 good can be a collector"s item, but still not rise to the level of )uni;ueness* in 2-H1J. Sedma) *+ C!arlie3s C!e*rolet: 9nother collector"s item, plaintiff wanted the exact type of car used as the pacer car for the 0ndy788, and cars were scarce at this time, ma ing scarcity an issue. 9fter agreeing to sell the car to them, the dealer breached $ there were other cars out there, but buying one would have been very difficult and would have cost more. R23E: scarcity can amount to inade;uacy of remedy at law.

4CC 2-717 1u/er3s Rig!t to Speci&ic %er&ormance or Reple*in 6pecific Performance may be ordered where the goods are uni;ue or in other proper circumstances -he /udgment .decree1 for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem /ust. -he buyer has a right of replevin for goods identified to the contract if after reasonable effort his is unable to effect cover for such goods or the circumstances reasonably indicate such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. Contracts &or %ersonal Ser*ice: o 1. 0s legal remedy ade;uateB 9lways an issue. o 2. 0s there another reason not to allow personal serviceB :05 issue in personal service o ,ar/ Clar)@ a :oman o& Colour: >oman had entered into an indentured servant contract, and wished to get out of it. Plaintiff was see ing specific performance. R23E: specific performance for service contracts will )produce a state of servitude.* <umle/ *+ :agner: (efendant entered a contract to sing at one theater for a season $ and no others. 6he tried to sing at other theaters, and plaintiff sued, see ing an in/unction. %ourt held that they could order the 10

defendant to =<- do something they"ve agreed =<- to do .:ut not to do something they"ve agreed to do.1 R23E: 0n/unctive relief can be used to enforce a promise not to render personal services. o =ord *+ 9ermon: +ere, the actor made an agreement to perform in one theater, and no others during a season. -he court here refused to order in/unctive relief $ even for )non-performance,* saying that forcing someone to not do something is the same idea as forcing them to do something. u&& *+ Russell: 6inger entered contract to sing at opera house, one night she refused to perform and instead tried to perform at a competitors theater. +ere, the court enforced the negative in/unction. R23E: 6ome courts are prepared to say that the s ills of a particular individual rise to the level of uni;ueness, and therefore remedy at law is inade;uate. allas Co(-o/s *+ 'arris: Iootball player had been transferred and was trying to get out of contract. 0t was clear that while he was talented, he did have particularly uni;ue s ills $ but the court said that because it would be difficult to replace him, specific performance was /ustified here, although the court first loo ed to see Speci&ic %er&ormance can -e allo(ed (!en damages are !ard to calculate Topic 7: Restitution Restitution is appropriate (!en: <ne party has obtained a benefit at the expense of another under circumstances that ma e it unfair for the recipient to eep the benefit without paying for it. -here is a valid contract, plaintiff is the aggrieved party, see ing monetary damages for the breach from the other party .:ush1 Parties appear to have made an effort to contract, but there is something fatally defective about the contract' it"s unenforceable, but one of the parties confers a benefit on the other $ we permit the party conferring the benefit to recover it"s value to prevent un/ust enrichment. .:oone1 -here is a valid contract, but the party who"s suing is the one who breached , for partial performance. >e allow the breaching party to recover the value of their partial performance. .:ritton1 Restatement 166 :!en ,ista)e o& 1ot! %arties as to :ritten "#pression 9usti&ies Re&ormation: >here a writing that evidences or embodies an agreement in whole or in part fails to express the agreement because of a mista e of both parties as to the contents or effect of the writing, the court may at the re;uest of a party reform the writing to express the agreement, except to the extent that rights of third parties such as good faith purchasers for value will be unfairly affected. Statute o& =rauds o 4nderen&orcement: the failure of the legal system to enforce a legitimate exercise of assent o O*eren&orcement: erroneous enforcement of alleged exercise of assent that never occurred 6ome contracts have to be formaliNed .in writing1 to be enforced >hat are theyB o 3and contracts o %ontracts that can"t be performed within a year o %ontracts for the sale of goods 0I over C788 .2.2811 o %ontracts that answer for the debt or obligation of another o %ontracts for executors to answer for the duty of their decedents o 4arriage contracts Restatement 115: 6tatute of Irauds re;uires the following inds of contracts to be in writing: contract of an executor to answer for the duty of his decedent, marriage contracts, land contracts, a contract that will be performed within one year of ma ing it. -hese contracts used to be governed by the 6tatute of Irauds are now governed by the 2%%: contract for the sale of goods for QC788, a contract for the sale of securities, contracts for the sale of personal property. 11

Statute and it3s "#ceptions: 1oone *+ Coe: Plaintiff agreed to lease a farm, moved his entire family .and livestoc 1 to texas $ when they got there, the promised wor on the property wasn"t done, and the defendant refused to lease them the land. %ourt held that because it was a verbal contract, that couldn"t be fulfilled within a year, they couldn"t recover on the contract under reliance. -herefore restitution was the only valid remedy $ and the defendant hadn"t received any benefit, so there were no restitution damages. R23E: 0f the 6tatute of Irauds re;uires the contract to be in writing, and it"s not, it"s not a valid contract, and therefore you can"t recover on the contract. 'F%O: >hat if 0 ta e my tie to my dry cleanerB 0 point out a stain and as them to remove it. -hey say sure, then charge me CG.78, even though you never agreed to pay anything. -his would still be recoverable, because there is an implied contract $ it"s a regular course of business. Even if it was a brand new dry cleaner, it would still be recoverable $ general custom. Implied in <a( *+ Implied in =act .:oth will permit recovery1 o =act: 9 real contract, where it"s not necessary to put all the agreements in words o <a(: 3i e %otnam $ when one party is unconscious' not a real contract, an implication of an obligation. Restitution: >here one person has conferred a benefit on the other un/ustly 1us! *+ Can&ield: 6eller entered a contract with the buyer to sell wheat for 1GD, plaintiff made 7D deposit. <n date of delivery, seller had no wheat, and the price of the wheat had dropped, and was only worth 11D at the date of delivery. Plaintiff sought 7D in restitution. (efendant argued that this was un/ust enrichment, as the plaintiff would have incurred a loss, so giving him the full amount bac was un/ust. %ourt held that 7D in restitution was proper $ by not giving bac the full 7D, we"re rewarding the defendant for the breach. 'F%O: 3arge construction contract, prime contractor subcontracts part of the wor for 188D. 9fter wor begins, there"s a dispute over who has to supply e;uipment. 6% was actually correct, but P% though he was, and repudiated. -he sub had completed 18P of the wor , and sues as ing for the value of his partial performance. +e argues that the mar et price of completing the wor he /ust did was 28D, and says that the total cost of doing the wor would have actually been 118D. 0n some cases, the cub would recover 28D. .=ote that the expectancy was actually a loss of 18D $ in 4istletoe these losses would have been ta en into account.1 >hy 28D thenB $ )no man should profit from his own wrong.* .>e don"t want the defendant to profit from his breach.1 0n both cases, plaintiff is able to recover )off the contract* $ even though there was a contract. +osmer .dissent1 argues that when there is valid contract, we should use it .and only it1 to determine damages. Restatement 371 ,easure o& Restitution Interest: 0f a sum of money is awarded to protect a party"s restitution interest, it may as /ustice re;uires be measured by either o A+ the reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant"s position, or o 1+ the extent to which the other party"s property has been increased in value or his other interests advanced. Restatement 373 Restitution :!en Ot!er %art/ is in 1reac! o 1+ 6ub/ect to the rule in .21, on a breach by non-performance that gives rise to the claim for damages for total breach or on a repudiation, the in/ured party is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance. o 2+ -he in/ured party has no right to restitution if he has performed all of his duties under the contract and no performance by the other party remains due other than payment of a definite sum of money for that performance. 12

1ritton *+ Turner: %ontract was for C128 for a year of service $ plaintiff left after F months. 6ued to recover payment for the portion he did provide. -he court held that while he was not entitled to recover on the contract, he was entitled to the restitution damages, or the benefit that the plaintiff had received from his labor. R23E: >here a party had received value, he is liable to pay bac the reasonable worth of what he has received. .Points out that we use the mar et to determine the value of employee services1 'F%O: -wo employees, both underpaid. <ne sues for restitution, one eeps wor ing. 0f you award the breaching employee, while the other eeps wor ing, you"re treating the breaching employee better than the one who eeps wor ing. .=ote that if we don"t ma e the employer pay, they now have an incentive to breach employment contracts right before payment is due.1 8ines *+ Orc!ard 'ills@ Inc: Plaintiffs made a down payment on a condo, but didn"t end up purchasing the condo. -he wanted to recover damages as a result of their own breach. -he court held that the plaintiff is entitled to restitution damages if they can show that the defendant would be un/ustly enriched, 9=( they can show li;uidated damage clause shouldn"t be allowed. +ere, the breach was non-willful, and would have un/ustly enriched defendant. .+owever, damages should be calculated at the time of the breach $ and if li;uidated damages were valid, no restitution.1 6hifts the burden to the plaintiff to show that there was no damage resulting from the breach. 'F%O: ?ou contract with a guy to build you a house $ it"s perfect, except for the windows, which are too small. ?ou refuse to pay, alleging that he breached the contract. Su-stantial %er&ormance: +e performed a substantial portion of the contract, and you"re occupying the house, meaning you"ve received a benefit' restitution is recoverable. Restatement 370 Restitution in &a*or o& t!e part/ in -reac! o 1+ 6ub/ect to .21, if a party /ustifiably refuses to perform on the grounds that his remaining duties of performance have been discharged by the other party"s breach, the party in breach is entitled to restitution for any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach. o 2+ -o the extent that, under the manifested assent of the parties, a party"s performance is to be retained in the case of breach, that part is not entitled to restitution if the value of the performance as li;uidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and difficulties of proof of loss. Restitution and GHuasi ContractI >hen a benefit was conferred on a recipient under circumstances where it is unfair to allow him to eep it without payment' the remedy is not based on the contract $ but instead ;uasi contract. Cotnam *+ :isdom: (r. operated on man who was in/ured in accident, without the man ever being conscious of the services rendered. (r. suing estate to recover fees for services rendered. %ourt held that surgeons can recover fees for emergency services, even if someone never consented. R23E: 9lthough implied contracts aren"t contracts, recovery can still occur in order to prevent un/ust enrichment. ,artin *+ <ittle@ 1ro(n and Co: Plaintiff discovered that a boo had been plagiariNed, and offered to send a copy of the boo , with plagerism mar ed, to the original author. 9uthor agreed, then 4artin sued to be paid for his services. %ourt held that there was no contract here $ implied or otherwise, so he could not recover damages for information he voluntarily provided. R23E: @olunteers have no right to restitution. 0n 4artin, there was no expressed contract, nor was there a course of dealing to establish an implied contract. ->< -+0=56 E6-9:306+ ERPE%-9-0<= <I P9?4E=-: long course of dealing, custom 13

+?P<: >e ma e a verbal contract to buy a house, and you give me a down payment $ recoverable. 0f you spend money on a title search $ not recoverable. .(efendant didn"t benefit1 Santoro *+ ,ac): @erbal contract for land, plaintiff sought recovery for reliance costs .architect, electrician1. %ourt said these weren"t recoverable, because there was no re;uest for these services. Remember $ implied contract cases re;uire a re;uest for services to determine if there was a contract. R23E: 6uggests that is the services are re;uested .in reliance1 then they might be recoverable.1 Eearns *+ Andree: 9 re;uest is made to improve property, but the court says the contract is unenforceable, but he still gets reliance damages, even though the leasee never too possession. I& t!e ser*ices (ere per&ormed at t!e reBuest o& t!e de&ense >on an oral agreement?@ t!e/ are reco*era-le+

Outline Reading: %age 6-;0 Topic ;: ,utual Assent I: T!e O-.ecti*e T!eor/ o& Assent %ontracting re;uires a meeting of the minds' you must sub/ectively assent to the same things at the same time' but sometimes manifested assent matters. O-.ecti*e T!eor/ o& Assent: "m-r/ *+ 'argadine@ ,cEittric) r/ $oods: 6alessmen goes into his boss .they"ve had this convo before1 and says 0 really need to now if 0 have a contract for next year. :oss says, )5et your men out, you"ll be alright.* Embry ta es this as an offer, but 2 months later, he"s let go. -rial court said that both parties had to intend the contract for it to be valid $ appellate court says no, it"s an <b/ective -heory of 9ssent $ could these wordsKactions have reasonably been interpreted as a contractB .?es.1 Te#aco *+ %enAoil >see -elo(? <uc/ *+ Je!mer: +ere, the ob/ective theory helps us see what we"ve agreed to. -wo men drun enly agreed at a bar to the sale of a farm for 78D $ they even wrote out the contract twice on a piece of paper. -he defendant argues that it was all a /o e, but the court finds that this was a valid contract for sale of real estate $ they wrote it twice, it was signed by a witness, ect. -he court says sub/ective assent matters $ to be used in impeachment. Restatement 17 ReBuirement o& a 1argain: .11 Except as in .21, the formation of a contract re;uires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration. .21 >hether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in O2-FG. Restatement 1; ,ani&estation o& ,utual Assent: 4anifestation of mutual assent to an exchange re;uires that each party either ma e a promise or begin or render a performance.

Restatement 19 Conduct as a ,ani&estation o& Assent: .11 4anifestation of assent can be made wholly or partly by written or spo en words or by other acts or failure to act. .21 -he conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and nows or has reason to now that the other party may infer assent from his conduct. .!1 -he conduct of a party may manifest assent even though he does not in fact assent. 0n such cases a resulting contract may be voidable because of fraud, duress, mista e, or other invalidating clause. An o&&er ,ust: J :e manifestedKcommunicated to the offeree J 4ust indicate a desire to enter into a contract' specify performances to be exchanged, can prescribe manner and time for acceptance J 4ust be directed at one personKgroup of people' if group, it can be interpreted if it contemplates multiple acceptances 14

J 4ust invite acceptance $ can set out specific terms J 4ust ma e clear that acceptance will create a contract Am-iguous Terms: Ior a contract to fail for indefiniteness, there must be an incurable certainty about what the parties agreed to, so that there is a doubt about their intent to enter into a contract. .-he uncertainty must relate to a material term in the contract.1 9lso, courts want to find contract where people have indicated that they want to ma e them >hen terms are ambiguous, we can loo to the other terms in the contract for context, or business customs 9 court should: try to interpret the agreement in a way that gives effect to all it"s terms' unless context indicates otherwise, words in a contract should ta e their general meaning, if one def. would validate the contract and another would defeat it, the court should use the interpretation that validates it. Ra&&les *+ :ic!el!aus: Iorward contract for cotton $ seller says he meant (ecember Peerless, buyer says he was tal ing about the <ctober Peerless. :uyer refused delivery, because he said this shipment wasn"t what he agreed to. >hen there"s no basis to determine who had the correct interpretation of the other"s menaning, there there"s no reason to loo at the sub/ective theory. Os(ald *+ Allen: :uyer thought he was getting all the 6wiss coins, seller thought he was getting the )6wiss* collection. -he ambiguity is over the specific terms of the contract, and there"s no basis for preferring one term over another. o 8agueness: >e don"t now the meaning of a term .in this sense1 o Am-iguit/: 6ame term, two meanings. Restatement 255 Interpretation o& a %romise or Agreement: 0nterpretation of a promise or agreement or a term thereof is the ascertainment of its meaning. Restatement 251 :!ose ,eaning %re*ails o 1+ >here the parties have attached the same meaning to a promiseKagreementKterm thereof, it is interpreted according to that meaning o 2+ >here the parties have attached different meanings to a promiseKagreementKterm thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made .11 that party didn"t now of any different meaning attached by the other 9=( the other new the first party"s interpretationKmeaning or .21 the party had no reason to now of any different meaning attached by the other, 9=( the other had reason to now the meaning of the first party o 3+ Except as stated in this section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent. (In cases of blatent ambiguity, if one party should know the meaning of the other but not vise versa, then you have a contract formed on the basis of the understanding of the less culpable party. When the party has reason to know the meaning of the other, or if they both know the meaning of the other, the subjective test fails.) Restatement 252 Rules in Aid o& Interpretation 1. >ords and other conduct are interpreted in the light of all the circumstances, and if the principle purpose of the parties is ascertainable it is given great weight. 2. 9 writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together. !. 2nless a different intention is manifested .a1 language is interpreted according to its generally prevailing meaning, .b1 technical terms are given the same meaning they would normally have in their field. 15

G. >here an agreement involves repeated performance by either party with nowledge of the nature of performance and opportunity for ob/ection to it by the other, any course of performance accepted without ob/ection is given great weight in interpreting the agreement. 7. >herever reasonable, the manifestations of intent of the parties to a promise are interpreted as consistent with each other and with any relevant course of performanceKdealingKuse of trade. +?P<: ?ou order bales of cotton to be delivered from the 6mith >arehouse $ it comes from the >ood >arehouse. (oesn"t matter, it"s the same cotton. +?P<: ?ou order a case of wine from one winery, but they send you wine from the other winery. +ere, the ambiguity is over an important term. Raffles tells us that it only matters when the ambiguity is over an important material term. 4CC 1-256 Course o& ealing and 4se o& Trade: o 9 course of dealing is a se;uence of previous conduct between the parties to a particulr transaction which establishes a common basis of understanding for interpreting their expressions and conduct. o 9 usage of trade is any regular practiceKmethod of dealing that /ustifies an expection that it will be observed in the transaction in ;uestion. -he existenceKscope of such usage are to be proved as facts. o 9 course of dealing between two parties and any usage of trade in their industry which they areKshould be aware give meaning toKsupplement the ;uality of the agreement. o -he express terms of an agreement and termsKcourse of dealing should be construed as consistent whenever reasonable, but when it is unreasonable, the express terms overrule the custom in the trade. o 9n applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting as to that part of the performance. o Evidence of a relevant use of trade offered by one party is not admissible unless and until he has given the other party sch notice as the court finds sufficient to prevent unfair surprise. 4CC 2-25; Course o& %er&ormance: o >here the contract involes repeat performance by either party with full nowledge of the other, any course of performance .rendered andKor accepted without ob/ection1 shall be relevant to determine the meaning of the agreement. o Express terms and customs should be construed as consistent whenever possible, but when that is unreasonable, the express terms trump customs. o 6ub/ect to provisions in the section on modification and waiver, course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance. :ein-erg *+ "delstein: Plaintiff and defendant are both in garment trade, lease space in building. (efendant"s lease has limits on what he is not allowed to do $ he can"t sell dresses. +owever, he is selling separates, which the plaintiff sees as dresses and see s an in/unction. -he court loo ed to )customs of the trade" to define what a dress is $ determined separates are not dresses and denied in/unction. =rigaliment Importing Co *+ 1+N+S+ International Sales: %hic en v. Iowl. Plaintiff said he bought high grade chic ens, defendant says he /ust ordered fowl. %ourt examines the industry to determine what a reasonable person would have understood the agreement to be $ if they"re both members of a trade, we should hold them accountable to the customs of that trade. 9lso, here the defendant would have been agreeing to a losing contract if he had actually agreed to sell the higher grade chic ens at this price. 16

Today, we probably would have loo ed to the 2%%

Agreement to Agree K Completeness >hat do we do when the parties haven"t expressed themselves all the wayB o 0mplied in fact terms: terms that the parties have actually .implicitly1 agreed to o 0mplied in law terms: terms imposed on parties without their consent o (efault rules: legal rules that the party can avoid with an express clause o 0mmutable rules: will overrule any express clause 0f the parties are trying to reach a final agreement to a material term, but haven"t yet gotten there, it"s not an enforceable contract. Sun %rinting *+ Remington %aper and %o(er: Parties agreed on a 1J month contract, but didn"t specify the price agreement for the last half of the contract. :efore they can agree to a price, the defendant says they"re not going to sell the paper anymore. -hey hint that when you have a )to be agreed* pricing clause, the defendant could be liable for failing to agreeKnegotiate the terms. %ardoNo tries to find a reasonable term that they"ve agreed to, but fails. R23E: >hen the vital terms of a contract are not defined, it"s not a contract. 4a/ority says contract fails, but the dissent says they would try and define the term to validate the contract. (issent argues that the parties did choose reasonable terms $ they were trying to contract. Restatement 30 Certaint/ and C!oice o& TermsC "&&ect o& %er&ormance or Reliance: o 1. -he terms of a contract may be reasonably certain event though it empowers one or both parties to ma e a selection of terms in the course of performance. o 2. Part performance under and agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed. o !. 9ction in reliance on an agreement may ma e a contractual remedy appropriate even though uncertainty is not removed. Restatement 250 Suppl/ing an Omitted "ssential Term: >hen the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term that is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court. Te#aco *+ %enAoil >See -elo(? 4CC 2-250 =ormation in $eneral o 1. 9 contract for the sale of goods may be made in any matter sufficient to show agreement, including conduct by both parties which recogniNes the existence of a contract. o 2. 9n agreement sufficient to be a contract for sale may be found even though the moment of its ma ing is undetermined. o !. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to ma e a contract and there is a reasonably certain basis for giving an appropriate remedy. 4CC 2-257 O&&er and Acceptance in =ormation o& Contract: 2nless otherwise unambiguously indicated by the language or circumstances: o 9n offer to ma e a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances o 9n order or other offer to buy goods for prompt of current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of 17

conforming or nonconforming goods, but such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation of the buyer. >here the beginning of a re;uested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance. 4CC 2-356 Open %rice Term: -he parties if they so intend can conclude a contract for sale ever though the price is not settled. 0n such case the price is a reasonable price at the time of delivery if: o =othing is said as to price, or o -he price is left to be agreed by the parties and they fail to agree, or o -he price is to be fixed by in terms of some agreed mar et or other standard or third agency. 9 price to be fixed by the seller of buyer means a price for him to fix in good faith >hen a price left to be fixed otherwise than by agreement of the parties fails to be fixed through the fault of one party the other may treat the contact as cancelled or himself fix a reasonable price. >here, however, the parties intend not to be bound unless the price is fixed or agreed and it is not fixed or agreed, there is no contract. 0n such a case the buyer must return any goods already received or if unable to do so must pay their reasonable value at the time of delivery and the seller must return and portion of the price paid on the account. 4CC 2-35; A-sence o& Speci&ied %lace &or eli*er/: 2nless otherwise agreed, .a1 the place for delivery of goods is the seller"s place of business, but .b1 in a contract for the sale of identified goods, which the parties now are in another place, then that place is the place for delivery, and .c1 title documents may be delivered though ban ing channels. 4CC 2-359 A-sence o& Speci&ic Time %ro*isionsC Notice o& Termination o -he time of shipment or delivery agreed on must be a reasonable time o 0f the contract provides for successive performances, but doesn"t state for how long, either party may end the contract at any time o -ermination of a contract by one party, unless it was an agreed event, re;uires notification to the other party and an agreement dispensing with notification is invalid if it"s operation would be unconscionable. 4CC 2-315 Open Time &or %a/ment or Running o& CreditC Aut!orit/ to S!ip 4nder Reser*ation: unless otherwise agreed: o Payment is due at the timeKplace buyer is to receive goods .even if place of shipment is place of delivery1 and o 0f seller is authoriNed to send the goods he may ship them under reservation but the buyer may inspect the goods before payment is due o 0f delivery is authoriNed and made by way of documents of title other than .b1 the payment is due at the time and place where the buyer receives the documents, regardless of where the shipment is to be received. o >here the seller is re;uired to ship goods on credit the credit period runs from the time of shipment by post-dating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.

Topic 9: ,utual Assent II: T!e Traditional O&&er and Acceptance ,odel o& Contract =ormation Ne-ras)a Seed Co+ *+ 'ars!: (efendant sent letter to plaintiff saying that he had a certain amount of seed to sell at a certain price. Plaintiff responded immediately, twice, stating that he wanted to by the seed. (efendant had already sold to someone else, and plaintiff sued for breach. R23E: an invitation to contract is different than an offer, and cannot be considered a contract. 18

<eonard *+ %epsi Co: %ourt granted summary /udgment for defense when plaintiff sued Pepso because they refused to give him a fighter /et for H88D. +e had seen the ad in a Pepsi commercial. %ourt held that .at least such general1 advertisements are not offers, and it matters what a reasonable person would have thought about the )offer.* 9dvertisements can be offers .sometimes1 if they include specific terms .%oat store selling coats for C1 to first ! people who come into the store.1 Restatement: o 22 ,ode o& Assent: O&&er and Acceptance: .11 manifestation of mutual assent to an exchange ordinarily ta es the form of an offer or proposal by one party followed-up by an acceptance by the other party or parties. .21 9 manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined. o 20 O&&er enied: 9n offer is the manifestation of willingness to enter into a bargain, so made as to /ustify another person in understanding that his assent to that bargain is invited and will conclude it. 27 %reliminar/ Negotiations: 9 manifestation of willingness to enter into a bargain isn"t an offer unless the person to whom it is addressed nowsKhas reason to now that the person ma ing it doesnt intend to conclude a bargain until he"s made a further manifestation of assent. 29 To :!om an O&&er is Addressed: -he manifested intention of the offeror determines the person.s1 in whom is created a power of acceptance. 9n offer may create a power of acceptance un a specified person or in one or more of a specified group or class of persons, acting separately or together, or anyoneKeveryone who ma es a specified promise. 33 Certaint/: Even though manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain. -he terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy -he fact that one of more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

o o o o

:ritten ,emorial Contemplated "mpro ,anu&acturing *+ 1all Co+ ,anu&acturing: Empro wrote a letter of intent about purchasing :all-%o, and :all co responded with a letter of intent to sell. :oth letters left some terms undefined, and as they were negotiating, it became clear they were not going ot be able to agree on the terms. :all %o loo ed for other buyers, Empro sued see ing a restrinaing order.(istrict court granted 12.b1.J1 motion in favor of :all %o. -he court loo ed at the )sub/ect to* )some clarification needed* language in the letters, implying that the contract was not complete. 3etter of intent was only an agreement to agree, not a contract, based on the expressed intent of the parties. Restatement 27 "#istence o& a Contract :!ere :ritten ,emorial is Contemplated: 4anifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof' but also the circumstances may show that the agreements are preliminary negotiations. .Easterbroo $ contracts are often reached in stages1

19

Te#aco *+ %ennAoil: -exaco encouraged 5etty <il to )brea * from PennNoil contract negotiations. -he case went to a /ury, who awarded 18 million $ note that Easterbroo probably would have seen this as a contract. -he court loo ed a four factors to determine if this letter of intent could be a binding contract: did the parties reserve the right to be bound only by a written agreement, was there partial performance, was there an agreement on all essential terms, did a transaction of this complexity re;uire a more formal agreement before it was binding. PennNoil was able to establish that the )handle massive contracts casually li e this all the time, the language in the press release was indicative $ the only things that hadn"t finaliNed were house eeping matters. %ourt says a reasonable /ury could have seen this as a contract. Re*o)ing t!e O&&er O&&eror: master of the offer, decides the method of acceptance .matters for bilateral v. unilateral and rolling v. layered contracts1 O&&eree: has the power of acceptance, if they exercise this power, there is acceptance ic)inson *+ odds: <fferor can revo e even if he"s given an indication that he"ll leave the offer open, this is /ust an offer, not a contract $ no meeting of the minds. .there was no consideration here to eep the offer open $ if there had been any consideration, ie a C7 deposit, he would have been re;uired to eep the offer open.1 <ffers are revocable at will without consideration' unless you put the option in writing, then you have to eep the option open .2%% tried to codify consideration for option contract.1 9lso satisfies the mutual assent re;uirement, since (ic inson new that (odds changed his mind. Option Contracts: -o be valid, an option must have its own separate consideration' the offeree must basically purchase the option to an exchange to eep the option open Contract O&&ers 'istoricall/: they were signed and sealed $ this made it intentional. =ow, consideration does this: o 4a es the agreement purposeful .not accidental1 signals intend that legal conse;uences o Prevents fraudKper/ury .evidentiary function1 o Ritual .signet rings1 shows that you"ve considered results, cautionary function Restatement: o 17 ReBuirement o& a 1argain: Iormation of a contract re;uires a bargain in which there is a manifestation of mutual assent to the exchange and consideration. >hether or not there is a bargain a contract may be formed under special rules applicable to formal contract or under the rules stated. o 1; ,ani&estation o& ,utual Assent: 4anifestation of mutual assent to an exchange re;uires that each party either ma e a promise or begin or render a performance. o 26 Option Contracts: 9n option contract is a promise which meets the re;uirements for the formation of a contract and limits the promisor"s power to revo e an offer. o 36 T!e O&&eree3s %o(er o& Acceptance: .11 9n offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer. .21 9 contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the ways listed in !J. o 37 ,et!ods o& Terminating t!e %o(er o& Acceptance: Power of acceptance can be terminated by re/ection or counteroffer by the offeree, or lapse of time, or revocation by the offeror or deathKincapacity of either party, or the non-occurrence of any condition of acceptance under the terms of the offer. o 37 Termination o& %o(er o& Acceptance 4nder Option Contract: -he power of acceptance is not terminated by re/ection or counteroffer, by revocation ot by death or incapacity of the offeror, unless the re;uirements are met for the discharge of contractual duty. o 02Re*ocation -/ Communication &rom O&&eror Recei*ed -/ O&&eree: Power of acceptance is terminated when offeree receives a manifestation of intent not to contract from the offeror. 20

03 Indirect Communication o& Re*ocation: Power of acceptance is also terminated if the offeror ta es action inconsistent with the intent to contract.

4CC 2-256 =irm O&&ers: 9n offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lac of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed ! months, but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror. >,erc!ants !a*e di&&erent rules &or option contracts?

,irror Image Rule: 9 counter-offer is not an acceptance because it changes the terms of the original offer Ardente *+ 'oran: Real estate contract, they had initial negotiations, then seller wrote up a contract $ official offer. :uyer said yes, and please leave the furnishings. 6eller said bo, buyer sued for specific performance. %ourt said this additional term was a re/ection and counter offer, therefore not a contract. Restatement 71 Acceptance :!ic! ReBuests C!ange o& Terms: 9n acceptance which re;uests a change in terms is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms. <le(ell/n3s Additions: 4irror image rule and forms $ tried to clarify in the restatement, then tried against with 2-28H. +owever, under 2-28H.11 the warranty terms are now inconsisten, and you have to decide who"s term governs.

,ail-o# Rule: an offer is effective when it"s received by the offeree, re/ections are effective upon receipt, and acceptances are effective upon dispatch. Case 1: Offeree makes an acceptance, then changes his mind and sends rejecti n! Origina" ffer r gets acceptance, then rejecti n! #n this case, the fferee $ %"d &e in &reach! Case 2: 'he fferee sends acceptance, then sends rejecti n! ()' sends the rejecti n &* faster means f c mm%nicati n! 'he ffer r gets the rejecti n first! )nder the mai"& + r%"e, there $ %"d sti"" &e a c ntract, &eca%se the c ntract $as f rmed %p n dispatch f the acceptance! 'his is pr &"ematic, &eca%se the rigina" ffer r $as mis"ed &* the rejecti n , $hich he g t first! 'his means that he $ %"d pr &a&"* take acti n &ased n that rejecti n! C %rts ha-e car-ed %t a r%"e that $hen the rejecti n -ertakes the acceptance, there is n c ntract! Case 3: .ejecti n is sent, then acceptance sent! .ejecti n is recei-ed, then acceptance is recei-ed! .es%"t/ )nder 0ai"& +, acceptance &eing dispatched $ %"d make a c ntract #1 the rejecti n hadn2t &een recei-ed *et! 3gain, seri %s risk that the fferr r is mis"ed4 technica""* he c %"d &e in &reach! .estatement sa*s there2s an e+cepti n here! Case 4: .ejecti n is sent, acceptance is sent, acceptance is recei-ed, rejecti n is recei-ed! 0ai"& + r%"e sa*s this is a c ntract! 5 &jecti n here, n ne is mis"ed! 6ere, m st sch "ars agree $ith 0ai"& + .%"e! Restatement 73 Time :!en Acceptance Ta)es "&&ect: 2nless the offer says otherwise, .a1 an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree"s possession, without regard to whether is reaches the offeror' but .b1 an acceptance under an option contract is not operative until received by the offeror. 21

Restatement 70 Acceptance -/ %!one or Telet/pe: 9cceptance given by telephone or other instantaneous two-way communication is governed by the principles applicable to acceptances where the parties are in the presence of each other. Restatement 76 Reasona-leness o& ,edium o& Acceptance: 2nless circumstances nown to the offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similar transactions.

Restatement 77 Acceptance ,ust -e %roperl/ ispatc!ed: 9n acceptance sent by mail from a distance is not operative when dispatched, unless it is properly addressed and such other precautions ta es as are normally observed. Acceptance -/ %er&ormance: 4nilateral Contracts -ypical unilateral contract: )0 will give C78 to whoeverE.* .>al s across :roo lyn :ridge, climb flagpole at ?an ee 6tadium1 -he issue is that if you start either of those actions and the prof says )0 revo e* that eliminates the contract. -he traditional rule is that until the act is complete, there is no contact. ?ou can accept a contract by means other than written acceptance $ whatever the contract specifies as acceptance will wor if you in fact do it. 2nilateral %ontracts means that only one side has furnished a promise for consideration, the other side has rendered a performance. Car!ill *+ Car-olic Smo)e 1all: Restatement 60 Acceptance -/ %er&ormanceC Necessit/ o& Noti&ication to O&&eror: o 1. >here are offer invites an offeree to accept by rendering a performance, no notification is necessary to ma e such an acceptance effective unless the offer re;uests such a notification o 2. 0f an offeree who accepts by rendering a performance has reason to now that the offeror has no ade;uate means of learning of the performance with reasonable promptness, the contractual duty of the offeror is discharged unless .a1 the offeree exercises reasonable diligence to notify the offeror of acceptance, or .b1 the offeror learns of the performance within a reasonable time, or .c1 the offer indicates the notification of acceptance is not re;uired. <eonard *+ %epsi Co+: .see previous1 :!ite *+ Corlies 2 Ti&&t Restatement 35 =orm o& Acceptance In*ited: .11 an offer may invite or re;uire acceptance to be made by an affirmative answer in words, or in performing or refraining from performing a specified act, or may empower the offeree to ma e a selection in terms of his acceptance. .21 2nless otherwise indicated by the language or the circumstances an offer invites acceptance in any manner and by any medium reasonable in the circumstances. Restatement 32 In*itation o& %romise or %er&ormance: 0n any case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer re;uests or by rendering the performance as the offeree chooses. %etterson *+ %att-erg: 3oan holder says 0"ll discount the mortgage if you pay it in full, Petterson scrambles to get the money, tries to pay in full $ )6orry, 0 already sold it.* %ourt holds that this was a revocation before the re;uested act had been performed. Restatement 06 Option Contract Created -/ %art %er&ormance or Tender: .11 >here an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a 22

beginning of it. .21 -he offeror"s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer. Restatement 72 "&&ect o& %er&ormance -/ O&&eree :!ere O&&er In*ites "it!er %er&ormance or %romise: .11 >here and offer invites and offeree to chose between acceptance by promise or performance, the tender or beginning of the invited performance is an acceptance by performance. .21 6uch an acceptance operates as a promise to render complete performance.

Acceptance -/ Silence: -he offeror cannot impose a duty to act to re/ect the offer, ma ing failure to act and acceptance' unless the offeree intends her silence to be ta en as acceptance $ if the offeror allows that to be a way to accept the offer. 'o--s *+ ,assasoit :!ip: 9 trapper sometimes sold s ins to 4assasoit, one time he delivered some, and 4assasoit never paid for them. (efendant argued that silence shouldn"t have been considered acceptance $ the court held that the previous course of dealing established a custom that allowed silence to serve as acceptance. .=ote that these were no unsolicited goods1 Restatement 79 Acceptance -/ Silence o& "#ercise o& ominion: 6ilence only operates as an acceptance when 1+ 9n offeree ta es the benefit of offered services with reasonable opportunity to re/ect them and reason to now that they were offered with the expectation of compensation 2+ >here the offeror has stated or given the offeree reason to understand that assent may be manifested by silence and inaction and the offeree in remaining silent and inactive intends to accept the offer. 3+ >here, because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept. 9n offeree who does any act inconsistent with the offeror"s ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. :ut if the act is wrongful as against the offeror it is an acceptance only if ratified by him. Topic 15: T!e Contemporar/ =ace and t!e =uture o& ,utual Assent 4CC 2-357 Output@ ReBuirement and "#clusi*e ealings: .11 9 term which measures the ;uantity by the output of the seller or the re;uirements of the buyer means such actual output or re;uirements as may occur in good faith, except that no ;uantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or re;uirements may be tendered or demanded. .21 9 lawful agreement by either the seller of the buyer for exclusive dealing in the ind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale. Carni*al Cruise <ines *+ S!ute: >oman was in/ured on cruise and wanted to sue company. -he bac of her tic et had a forum selection clause, she said she didn"t now about it, so it wasn"t enforceable. %ourt held that is was enforceable, because they had the opportunity now about the clause, and their participation in the contract implied consent' also with respect to particular terms you might scruteniNe them to see if they were reasonable $ here they"re reasonable because %arnival has a legitimate interest in ma ing sure they don"t have lawsuits everywhere. (066E=-: -hey didn"t really now about the clause until after they purchased the tic et, and tehn they didn"t really have an option to not participate .no refund1. Caspi *+ ,icroso&t Net(or): Iorum selection clause in subscriber agreement, here the agreement was visible before you made agreement $ by clic ing to proceed with the software, you agree to the terms. %ourt says that because they had the opportunity to be aware, and the clause wans"t hidden, 23

they"re bound. %aspi also says a contract doesn"t have to call attention to a term even if it"s troublesome. .high water mar for assent1 Restatement 211 StandardiAed Agreements: o 1. Except in .!1, where a part to an agreement signsKmanifests assent to a writing and has reason to belive that li e writings are regulary used to embody terms of agreements of the same type, he adopts the writing as an integrated agreement with respect to the terms included n the writing. o 2. 6uch writing is interpreted wherever reasonable as treating ali e all those standards similarly situated, without regard to their nowledge or understanding of the standard terms of the writing. o !. >here the other party has reason to believe that the party manifesting such assent wouldn"t do so if he new that the writing contained a particular term, the term is not part of the agreement.

"-Commerce and ,utual Assent 6ome examples: -?ou go to a store a buy a camera. -he return policy is on the order form, which you have to sign. ?ou"ve agreed to the terms of the contract -?ou buy the camera at the store, but no invoice. -his time, there"s a bright orange stic er across the top of the box that lays out the return policy. ?ou too the box to the register and bought it $ you"ve assented to the terms. .:ox -op1 ->hen you get the camera home, the terms are inside. -he term was not communicated to you when you bought it $ so was the contract complete when you bought it, or when you decided to eep itB .6hrin >rap1 -?ou bought the camera online, and had to clic a button that said you agreed to the terms before you bought it. 0f it was available to you at the time of sale, then you"ve assented. .%lic >rap1 -?ou bought it online, but never had to clic a button that said you assented to the term. =ot assent. .:rowsewrap1 Spec!t *+ Netscape Communications: (eals with the enforceability of an arbitration clause $ it was embedded in the middle of a contract' in this case the court says there wasn"t ade;uate assent because the users weren"t re;uired to view the agreement, not did it really indicate that there was a license agreement .you had to clic through !-G pages of text, which only said )please read,* a condition, not an invitation. ):rowse >rap* license not good enough $ but )%lic >rap licenses* are. Register+com@ Inc *+ 8erio@ Inc: )-a es notion of assent and stretches it /ust about as thin as can be.* 0%9== re;uired Register.com to ma e certain info available $ verio would ma e multiple re;uests a day, and each re;uest had a notice that said you can"t use this info for telemar eting, mail or email spam. @erio was doing all three. %ourt said that because they had been doing this behavior over and over, they were aware of restricted use, and assented to the notice. @erio then argued that they never agreed ot the terms $ the court said by continuing to submit in;uiries you were agreeing. :e3re -e/ond Caspi K 8erio )ne(@ and t!e &ailure to o-.ect implies consent+ Step-Sa*er ata S/stems *+ :/se Tec!nolog/: ( sold computer programs to plaintiff that had box top license agreements that said opening the pac age was an acceptance of certain terms. Plaintiff then resold software, and got sued because of problems wit the software, and was see ing to enforce breach of warranties against defendant. -he purchases were made over the phone $ calls never discussed disclaimer of warranties. R23E: -he box-top license was not a conditional acceptance, because the software producer didn"t express an unwillingness to proceed unless the additional terms were incorporated into the agreement. 2nder 2-28H, an additional term detailed in a box top license will not become incorporated into the parties agreement if the terms would materially alter the agreement. -hree approaches 24

o o o

.largely discredited1 0f the additional terms only benefit the initial offeree, the acceptance has to be expressly conditional. 0f the responsive form only helps the sender, the acceptance is conditional and becomes a counteroffer. )Deywords 9pproach* -he deviant acceptance has to ma e it unambiguously clear that it is a conditional acceptance. 9cceptance is only conditional not only if the language is unambiguous, but the parties also have to ma e it clear they"re not going to proceed unless there is assent to the additional material. .most courts use the third approach1

4CC 2-257 Additional Terms in Acceptance or Con&irmation >%A$" 001? o %hanges the common law mirror image rule, the presence of additional or different terms is not a re/ectionKcounteroffer is it purports to be an acceptance. 3ayered %ontractingKRolling %ontractingK-erms in the :ox: o >hat do you do with terms that arrive with the productB 9ccording to >isdom in step-saverE :uyer will say contract is formed when you pay for it, or at shipment >isdom says the terms are proposals for additions to the contract Easterbro says it"s formed when the buyer decides to eep the product o =ote the commercial necessity of layered contracting $ you"re not going to go over all the terms on the phone $ deal now, terms later is /ust how we do business .airlines, movie tic ets, ect1 4CC 2-317 "#clusion or ,odi&ication o& :arranties 4nion Car-ide *+ Oscar ,a/er =oods: <scar 4ayer bought all their casings from 2nion, who thought they didn"t need to charge sales tax. >hen the found out they had to pay sales tax retroactively, they tries to pass the cost on to <scar. %arbide"s contract had a provision that <scar had to pay all taxes $ but it was added in a battle of the forms. -he court held that this provision was a modification of the terms, and did not become part of the contract. .6o <scar didn"t have to pay.1 %roC *+ Jeiden-erg: :uyer bought a %( with a license restriction in the shrin wrap, preventing him from using product commercially, which he did. %ourt held that because he accepted and used to goods, after being aware of the terms, he accepted them. .Easterbroo argued that this wasn"t a battle of the forms, only one form.1 'ill *+ $ate(a/: +ill brought a computer from the defendant, an in the box was an arbitration clause. %ourt held that additional terms included in a box shipped by the seller do become part of the contract between the parties, even if the purchaser is unaware of the additional terms and the purchaser"s acceptance of the terms is by not returning the item purchased. Eloce) *+ $ate(a/: +ere, the plaintiff was a merchant, and the court held that because he did not expressly agree to the terms in the box, they did not apply. -erms received with a product do not become part of the contract unless the non-merchant buyer expressly agrees to them.

Topic 11: "n&orcea-ilit/ I: T!e 1argain T!eor/ o& Consideration octrine o& Consideration: =ot all promises are enforceable $ they have to be supported by consideration. .0f a promise is without consideration, it may be enforceable under an alternate theory such as promissory estoppel, restitution or moral obligation.1 (etriment: -he important element is not harm, but a legal right' can ta e to form of an act, a forbearance .not doing something1 of the partial or complete abandonment of an intangible right -he act of payment, or a promise to perform payment is consideration. 25

:enefit to the Promisor: -he Restatement says consideration doesn"t re;uire a gain or advantage to the promisor. .:ut things li e ma ing someone promise to stop smo ing can benefit you1 :argained for Exchange: -he performancesKpromises must induce each other :argained for v. 0ncidental (etriment: wal across the lot and 0"ll give you m s is $ there is no bargain. %onditional 5ifts: 6ome courts will find consideration, others won"t' it depends on if they find consideration for the person who accepted the gift .naming a stadium, publiciNing a scholarship, ect1 1argain T!eor/ o& Consideration 1. 9 contract is an enforceable promise 2. >ith some exceptions, a contract must be supported by consideration to be enforceable !. 9 promise is supported by consideration if it is bargained for G. 9 promise is bargained for if it is )sought by the promisor in exchange for his promise, and is given by the promisee in exchange for that promise.* octrine o& Consideration is NOT a single doctrine@ -ut a set o& rules: 1. :argains, prima facie at least, are enforceable. .%an be invalidated for other reasons $ fraud, duress, ect1 2. =o re;uirement of ade;uacy for a bargain $ value flowing in each direction doesn"t have to be e;ual. !. <nly bargain promises are enforceable' consideration is re;uired. 5ift Promises are without consideration: 9o!nson *+ Otten-ein 4ni*ersit/: 0"ll pay you C188 if you use it to relieve university debt. Restricts 2niversity"s action, but still a gift promise because Sohnson doesn"t benefit. .a note ma ing a promise is not enforceable here, although if she had already made the donation the gift would be completed and not revocable.1 'amer *+ Sid(a/: 5uy promised his newphew he"d give him C7D if he didn"t drin , smo e or gamble until he was 21. Executor says no bargain, because the uncle didn"t get anything, nephew says it restricted his freedom of action. -he court said that because there was a detriment to the promisee and the uncle got something that he wanted that was enough consideration to enforce the promise. 'F%O: Iisherman goes fishing all the time, happens to catch a fish that the radio station has mar ed for a contest. 0f they refused to give him the reward, he would argue that his time was consideration, they would say this was incidental, you were there already. -hey"d argue that each side would have to do what they were doing to induce performance on the other side. Eir)se/ *+ Eir)se/: 4an told his sister in law to move to D6 and he"d give her property and a house. 6he left her land, moved there, he eventually ic ed her out. %ourt held no consideration .even though she movedB 3ost her former landB1 +ere, the fact that they"re family may have turned the court. a!l *+ 'em %!arma: Participants in a pharma study agreed to be in study so they would get a year of the meds for free. -his was enough consideration to be a binding contract. Restatement 20: O&&er enied K proposal o& a contingent gi&t: 9 proposal of a gift is not an offer, there must be an element of exchange Restatement 71 ReBuirementDT/pes o& "#c!ange: o -o constitute consideration, a performance must be bargained for 26

o o o

0t"s bargained for if sought by the promisor in exchange for his promise and is given in exchange for that promise Performance may consist of: act, a forebearance or the creationKmodification of a legal relation PerformanceKreturn promise may be given to or by a third person.

Restatement ;1: -he fact that what was bargained for didn"t induce the promiseKperformance doesn"t prevent it from being consideration for the promiseKperformance ,oore *+ "lmer: 4an agreed to buy a house for a clairvoyant if her predictions were correct. %ourt said this wasn"t consideration because it was a gamble.

,oral Consideration: ,ills *+ :/man: 6on returns from voyage really sic , inn eeper houses and ta es care of him. 6on and father promise to pay for care after it is given $ 4ill can"t recover because past consideration is not consideration' the promise wasn"t bargained for. 'F%O: 0 owe you money, you don"t do anything for ten years, statute of limitations passes. -hen 0 come to you and say 0"m so sorry $ 0"ll pay you tomorrow. -his is enforceable' subse;uent promises to pay a debt are enforceable $ the former loan is acceptable past consideration because you revived it. :e-- *+ ,c$o(in: 5uy brea s his legs trying to save man"s life in factory. 4an says 0"ll pay you every two wee s, because you saved my life. >hen he dies, his estate stops paying. %learly not bargained for, yet the court allows recovery $ 4c5owin had a substantial benefit, and he made a subse;uent promise that was e;ual to a re;uest $ li e an implied contract case. .3egal fiction $ the court tried to say the benefit was contemporaneous with the promise.1 'F%O: 2ncle %odger as s his niece to ta e care of him, she does, then demands payment. 0f a stranger, this would be a strong implied contracts case, however here it is a gift. .2nless he had promised to pay her previously1. >hat if he writes a 7D promissory note 7 years into the arrangement $ then it becomes a possible implied contract' the note shows compensation was expected all along. Restatement ;7 %romise &or 1ene&it Recei*ed: 9 promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent in/ustice+ 9 promise is not binding if the promisee conferred the benefit as a gift or for other reasons the promisor has not been uenriched or to the extent that its value is disproportionate to the benefit.

%re-e#isting ut/ Rule: Promising to do something that you were already legally obligated to do is not consideration' doing part of what you Tre legally obligated to do it not consideration for a discharge of the remainder of your legal duties .Eg, you owe me C78. 0 say give me C!8, we"ll be even. 9fter you give me C!8, 0 say nevermind, you still owe me C28 more $ this is o , because you had the full legal duty.1 I& a detriment is a relinBuis!ment o& rig!t@ t!en /ou don3t su&&er a detriment -/ doing somet!ing t!at /ou (ere alread/ going to do+ %oerced 4odifications: ?ou can"t coerce a modification unless there has been a new detriment to support the modification. =ominalK6ham %onsideration: >hen the consideration is only for consideration"s sa e, and not an actual exchange. .6ome courts have upheld it anyway, either by not investigating the consideration, or holding that recitation of a promise to give consideration is as good as consideration.1

27

Stil) *+ ,/ric): -wo sailors on a ship ;uit' the remainder were offered extra pay to remain and accepted.U -he court held that there was no bargain because the sailors did what they were already obligated to do, and thus there was no consideration and there can be no enforcement. Alas)a %ac)ers3 Assn *+ omenico: -here was a threat that the fishermen would not fish, allegedly because the nets were not serviceable, meaning that there percentage of the cut would be less than theyVd anticipated. -he employer offered extra money for them to fish, and they did.U -he court felt that the fisherman were /ust trying to get more money for what they were already obligated to do under the original contract and would thus not enforce the new promise for lac of consideration. -his result would have been different if the nets were found to be substandard. 1rian Construction and e*elopment *+ 1rig!enti: %ontract to do )all excavation wor ,* subcontract finds a factor underground. -he court found this to be )additional wor * not contemplated under original contract, and thus there was consideration, and so the modified contract was enforced. Restatement ;9 ,odi&ication o& Contract: 9 promise modifying a duty mid-way thorugh a contract is binding if the modification is fair and e;uitable in view of circumstances not anticipated when the contract was made' to the extend provided by statute' if /ustice re;uires enforcement in view of material change of position in reliance on the promise. 4CC 2-259: 9n agreement modifying a contract within this 9rticle needs no consideration to be binding

AdeBuac/ o& Consideration Ne(man and Snells *+ 'unter: 4an died, ban was holding a promissory note, and his stoc , both of which were worthless. +is widow wrote a promissory note, in return for the stoc and promissory note. -he court said that the consideration was nothing but a worthless piece of paper, so we"re not going to enforce the contract. 0f the consideration is demonstrati*el/ worthless, the court won"t enforce it. Restatement 79 AdeBuac/ o& Consideration: 0f consideration is met, there is not additional re;uirement of advantage or benefit to the promisor, or a loss to the promisee' or e;uivalence in the values exchanged or )mutuality of obligation.* Restatement 370: 6pecific performance will refused if the exchange is grossly inade;uate or the terms are unfair. /er *+ National 1/-%roducts: (yer was in/ured at wor , and in return for a promise of lifetime employment, he doesn"t assert his personal in/ury claim against employer' the claim was invalid, because of a >or er"s %omp 6tatute in 0owa that prevented claims beyond wor er"s compensation. +is claim was demonstrati*el/ invalid, so the court had to determine if surrendering a legally invalid claim was sufficient consideration. 6ome courts said since it is worthless, it is not consideration. -he other line of authority argues that forbearance is consideration if it"s proponent honestly believes in. -hey reversed and remanded to determine if the man really thought he had a valid claim.

Illusor/ %romises: 9 promise is a statement that appears to be promising something, but doesn"t actually commit the promisor to anything $ not actual consideration. NF Iron :or)s *+ 4S Radiator: -he manufacturer can only manufacture so many radiators, and thus there is a natural limit to his iron ore needs. .-he manufacturer cannot turn into a reseller if the cost of iron ore goes up.1 -he buyer"s needs for iron must be made in good faith' they must be the re;uirements reasonably anticipated for the purposes contracted for. 28

-hese promises used to be considered illusory, because they weren"t specific as to an exact term, but now courts see them as actual promises, even though the exact amount is unspecified. "astern Airlines Inc *+ $ul& Oil Corp: -he 2%% did more than /ust say that the parties could not become resellers' it said that demand must stay within a reasonable range to be considered )good faith.* :ood *+ <uc/@ <ad/ u&&-$ordon: %ardoNo imputes a duty of reasonable efforts Wgood faithU to save the contract from being one where >ood has not obligated himself to anything. 0s this necessary, thoughB 9rguably not, as the explicit terms of the contract provide >ood an incentive to expend efforts, as this is the only way he can profit from the arrangement. R23E: >ood"s implied promise was enough to constitute consideration, because there was sufficient detriment.

T(o %ro-lems: 1. %onsideration: >ood wasn"t actually obligated to anything, but he was still performing. 6he cheats, and argues there was no consideration. 2. 0nterpretation: 6uppose =? 0ron doubled their order from the previous year, 26 Rad. 6ays no $ they both agree contract is enforceable, but each party accuses the other of breach. Courts sa/ limits s!ould -e set -/ good &ait! and -usiness customs K i& !e3s increasing order to compete (it! seller@ it3s no o)+ 4CC 2-357 Output@ ReBuirements and "#clusi*e ealings: 9 term which measures ;uantity by output must be in good faith, no unreasonable amount may be givenKdemanded. .21 9 lawful agreement to exclusive dealing re;uires the buyer to use their best efforts to supply the goods and the buyer to promote their sale. Nominal Consideration Sc!nell *+ Nell: 5uy"s wife dies, he promises to pay people C288 in exchange for 1 cent. %ourt says this was a gratituous promise, past consideration and moral consideration are both insufficient. -his was her consideration not his, and she didn"t have assets to deliver the promise. =omical consideration can be enough in option contracts, but not in 6chnell. Smit! *+ :!eeler: +ere the court says that even though there was no consideration for the option, you recited consideration which is enough for an option contract $ there was an implied promise to pay to eep the option open.

Topic 12: "n&orcea-ilit/ II: %romissor/ "stoppel %romissor/ "stoppel as a Su-stitute &or Consideration .as we move through cases, estoppel expands1 11 a promise reasonably expected by the promissor to induce action or forbearance, 21 action or forbearance by the promisee in /ustifiable reliance on the promise .i.e. )detrimental reliance*1, !1 in/ustice can be avoided only through enforcement of the promise. -9 promise, with detrimental reliance on that promise 0f all these elements are met, a promisor may be held accountable for a promise made without consideration, and the court may enforce it either to the same extent as if it was a contract, or to the extent to remedy the unfair reliance on it. <nly an ancillary recovery $ if there are no problems with the contract, and there"s consideration don"t use Sust li e with contracts, the promise must be specific and ob/ectively made 2 @iews: Restatement says PE is an alternative basis for finding contractual liability. <ther view says that PE is an alternative basis for enforcing promises that induce reliance. (amages: :ecause it aims to restore the person who relied on the promise, it"s almost li e tort damages $ reliance damages will compensate the person for costs they incurred in reliance on the contract. >hen is PE applicable to commercial promiseB 29

1. 0f there was a valid contract, with consideration, but didn"t comply with legal formality li e the statute of frauds. 2. PE may be used to hold a party accountable for promises made during negotiations if those intermediate promises were intended as binding commitments. !. PE can be relief for a contract that falls short of an enforceable contract because of some defect or omission by the parties. =amil/ %romises: >hen families ma e gift promises, it can be hard to enforce them as contracts, yet sometimes people incur consts in reliance on the contract $ in these cases, PE may be appropriate. Ric)etts *+ Scot!orn: Iamily promise $ grandpa says )0 fixed it so you don"t have to wor any more." 6he ;uits, then goes bac later .with his help1 6he didn"t wor for 1J months, and gave up C18 a wee . +e never revo ed promise, but he dies before he"s able to pay it, so she goes to the executor, and is met with a plea of lac of consideration. %lassic unenforceable gift promise $ granddaughter says no, it was a bargain. .0f you ;uit wor , 0"ll pay you 2D1 >as that the contract hereB =o, he said 0"ve fixed something so that you don"t have to wor $ he left it open to her to decide what to do. -he court still enforces it $ saying you can"t plead lac of consideration for a promise. 6he wants the 2D $ expectation damages. Reliance would be the lost pay she suffered during the 1J mo period when she was out of wor . %romises to Con*e/ <and $reiner *+ $reiner: 4other as ed son to move to land she was planning on giving him.+e moved there, lived on land, but was never given a deed. %ourt held that the relocation of a party in reliance on a promise by the other party is sufficient consideration to ma e the promise enforceable. Promissory Estopel here ends up forming an exception to the consideration re;uirement as well as the statute of frauds. %romises o& a %ension =ein-erg *+ %&ei&&er: -he board agreed to give their secretary a pension, she wor ed two more years then retired. 9 few years later, the new owners tried to stop pension. %ourt held that a promise that induces action is binding if in/ustice can be avoided only by enforcing the promise. .+ere, she relied on the pension to live, couldn"t have easily found another /ob and the company new that.1 Construction 1ids 9ames 1aird *+ $im-el 1ros: 6ubcontractor underestimated his bid by X, but before he retracted it, the general contractor submitted his own bid using the subVs ;uote. -he court found the doctrine of promissory estoppel does not apply in this case' the ;uote cannot be considered an )option,* because there is no reason to believe that the defendant meant to sub/ect himself to such a one-sided obligation. -he offeror is generally allowed to rescind an offer before acceptance. .6ubmitting the bid was not acceptance.1 Probably would have been accepted today. rennan *+ Star %a*ing: Plaintiff received a bid from defendant for a construction /ob, and then the defendant said there was an error $ after plaintiff had already been given the contract. Plaintiff sued to enforce the bid. R23E: 5eneral %ontractors can enforce 6%"s bids when there is a reasonable detrimental reliance under a theory of promissory estoppel .not on contract1. -+06 06 -+E %2RRE=-3? 9%%EP-E( P<60-0<=. C!arita-le Su-scriptions Alleg!en/ College *+ National C!autauBua Count/ 1an): (efendant promised to pay the college 7D for a scholarship in return for having it named after her. 6he paid 1D, which the plaintiff mar ed for the scholarship, but refused to pay the remaining half. %ourt held that when the college accepted the money for this purpose there was consideration because they agreed to memoraliNe her name, and it was a contract $ and therefore they didn"t have to resort to promissory estoppel. .0n dicta, %ardoNo said that PE could have been used if they hadn"t found consideration.1 %romisor/ "stoppel as an Alternati*e to 1reac! o& Contract 30

$oodman *+ ic)er: Radio distributors told franchise applicants that their application was being approved and could expect an initial delivery. 9pplicants spent C118 in reliance on that promise. Plaintiffs could recover because the representation .while not a promise per se1 was in the nature of a (arrant/Dguarantee that they"d get the franchiseEand they relied on that warranty. -he authority of the distributors contributed to the court"s sense of /ustice and appropriateness "n&orcing %romises made during negotiations: Promises made in negotiations are not usually enforceable, but when the plaintiff suffers damages in reliance on the promises, the damages can be compensable. 'o&&man *+ Red O(l Stores Plaintiff owned a ba ery and wanted to open a franchise with the defendant. -he defendant told him they could do so, told him how to go about raising money, told him to sell his store to prepare for the franchise $ they said never mind, no franchise. -he promises didn"t amount to a contract, but the court held damages were still recoverable under promissory estoppel. R23E: Promissory estoppel allows you to recover without crossing the )contract* threshold. =ote here $ this is almost torts, punishing them for )naughty negotiations.* Restatement: >page 703? 95 %romise Reasona-l/ Inducing Action or =or-earance 627 Conditions 4nder :!ic! ,isrepresentation is =raudulent 635 ,isrepresentation o& Intention 5eneral 2%% Provisions: 2.187: 5oods are moveable things other than money 2.18J: 6ale consists of passing the title from seller to buyer for a price 2.!8G: -he price you pay for goods can be payable in money or otherwise 2.28G: <nce it"s clear the parties were trying to contract, the court should try and uphold that contract. 6ome arguments for subcontractorKcontractor breaches: 9 contractor puts out a re;uest for bids on a large /ob. 6ubcontractor wins the bid with the lowest amount, wins subcontract $ then realiNes he made a mista e. >hat can contractor doB 1. 9rgue this is a breach of contract $ the bid was an offer, which the contractor accepted by using the sub"s bid in his own $ the problem here is communication of acceptance. 2nless there"s a waiver of communication, use of the bid isn"t acceptance. 2. 9rgue it"s an actual option $ %ontractor could try and argue that there was an implied promise to eep the offer open until the contracto had enough time to accept it after the award of the large contract. Problems here are- the facts don"t really support that, and there isn"t consideration to support the option contract. !. PE: there was no contract or option, but it should still be enforceable. -he 6ub made a promise, which he new the contractor would rely on, and the contractor must have been reasonable in his reliance on the promise.

31

$eneral Contracts In&o: <ffer: the manifestation of willingness to enter into a bargain 9cceptance: 9 manifestation of assent to the terms made by the offeree in a manner re;uired by the offer <ffers made in /est aren"t genuine offers 6olicitations and 9dvertisements aren"t .usually1 offers' unless specific terms Y words of commitment 9cceptance must be by person to whom offer was made 4ethods of 9cceptance: <fferor is )master* and can specify how to accept o -hey can suspend mailbox rule o 0f not specified, can be any reasonable method o 9cceptance of unilateral contract is performance o %an"t be accepted by silence, 2=3E66 reason to understand, course of dealing, implied in fact o >hat if the terms of acceptance differ from the offerB 4irror 0mage Rule: 9t common law, the offer and acceptance had to be the same 2%% re/ects mirror image rule o 2nder 2-28H, written terms that differ don"t invalidate the contract .but aren"t necessairily included in the contract1 6ee 2-28H outline. +ow long do you eep the power of acceptanceB %an be terminated by re/ection, counteroffer, lapse of time, revocation, or deathKincapacity 9n offer is irrevocable if there is an option contract .supported by consideration $ recitation is enough1 =ot revocable if there has been partial performance on a unilateral contract 4ailbox Rule: acceptance is effective upon dispatch .unless offeror says otherwise1 >hat if the terms are unclearKincompleteB 0f it"s clear they tried to contract, the court should find a contract and try and define the terms' whatever is reasonable, business custom, or implied in good faith %onsideration: 9 promise is supported by consideration if the promisee suffers a detriment, and the promise is part of a bargain or exchange (etriment: act, forbearance, a return promise 5ift Promises are unenforceable unless there is consideration 6ham and =ominal consideration: if it"s clear that there wasn"t actually consideration, the court can decide there was no consideration, and the promise is not enforceable. Past %onsideration is no consideration' 4oral %onsideration is no consideration -he exchangeKbargain doesn"t have to be e;ualKade;uate Pre-existing duty rule: if you promise to do what you already had to do, this isn"t consideration >aiving a valid legal claim can be consideration, if the claim was actually valid .can depend on plaintiff"s sub/ective intent1 0llusory promises are not supported by consideration- they"re statements that seem to promise something, but don"t actually 0mplied promises can be used to determine that there was consideration Promissory Estoppel: Promises that induce reliance on the promise can be enforceable under PE .without consideration1 o -he promisee must have actuall relied on the promise, and the reliance must be foreseeable %ontract 0nterpretation 0f the terms in the contract are ambiguous, then the court will try and find them by loo ing at the context of the contract, reasonableness, or business customs 6tatute of Irauds: 6ome contracts have to be in writing to be enforceable 3and, goods over C788, marriage .others, see in outline1 Recovering on Zuasi-%ontracts: 32

2nder the 6tatute of Irauds, a plaintiff who has rendered partial performance can recover for the value of the benefit conferred on the defendant Promissory Estoppel: 0f you relied on a contract that is unenforceable due to 6tature of Irauds, you can recover the reliance interest

Remedies <n the contract $ when there was a valid contract and one party breached Zuasi-%ontract $ contract was unenforceably vague, illegal, or the plaintiff was the one who breached E;uitable Remedies: specific performance and in/unctions' granted when legal remedies aren"t enough o 3and-sale %ontracts: land is a uni;ue good, so often enforced here o Personal service contracts are almost never enforced $ it would be li e slavery' courts may grant an in/unction if the person had a uni;ue talent, and the in/unction won"t leave the person without a way to ma e a living o 6ometimes in sale of goods, when good isn"t readily available Expectancy: putting the plaintiff in the position they would have been in if full performance Reliance: Putting the plaintiff in the place they were before the contract was made .reliance on contract1 Restitution: -he defendant has to pay the plaintiff the amount of benefit they"ve received from plaintiff"s performance $ to prevent un/ust enrichment %onstruction %ontracts: o :uilder :reaches: 0f an owner has to have wor completed by second wor er: @alue of building if completed as agreed $ value of building as completed by 2 nd builder # the extra amount the owner had to pay over the contract price # conse;uential damages from delay o <wner breaches: the money the builder has spent $ salvage valueKloss avoided # profit builder would have made $ any payments made by owner >hen one party substantially performs and other breaches, the performing party is entitled to damages Ioreseeability: .+adley v. :axendale1 limits damages to those that either arise naturally, or the defendant had actual notice of the unusual circumstances. (uty to 4itigate: 0f you can, and it"s e;ual, you have to 3i;uidated (amage %lauses: Enforceable if the court is satisfied they"re not a penalty 6ales %ontracts: o 0f seller breaches, buyers have a right to cover .2-H121, if they don"t they can recover the contract difference o 0f buyer breaches the seller can resell the goods, or recover based on the difference in the mar et price, or recover lost profits .2-H8O1

33