Contracts and Sales

Tips & Topics

I. Overview of Lecture
a. Applicable Law
b. Formation
c. Terms
d. Performance
e. Excuse of nonperformance
f. Breach Remedies
g. Third-party problems
II. Vocabulary
a. Contracta legally enforceable agreement; written or oral
i. Express contractcreate by words or language of the parties.
ii. Implied contractcreated by conduct or behavior of the parties.
b. Quasi-contractdesigned to prevent or meliorate unjust enrichment
i. Elements
1. P has conferred a benefit on D, and
2. P reasonably expected to be paid, and
3. D would realize unjust enrichment if P is not compensated
ii. Measure of recovery
1. Possibly value conferred; NOT expectation damages/contract P (ceiling
c. Bilateral contractdoes NOT require a particular kind of acceptance
d. Unilateral contractRequires acceptance with performance.
e. Bilateral UNLESS
i. Bar exam says reward/contest (open to the public)
ii. Where words of offer say have to accept by performance

Contracts and Sales

Applicable Law

I. Common Law
II. Article 2 of the UCC
a. Art. 2 applies to Ks that are primarily for sale of goods. Factors that determine
whether Art. 2 applies:
i. (i) Type of transaction: SALE
ii. (ii) Subject matter of transaction : GOODS, i.e., tangible, personal property
iii. Ex. Hires Barbri lecturer (NO, service contract, CL applies); Buys WHiteacre
(No, real property, CL governs real estate deals); Car (yes).
b. When mixed sale and good contracts. Ask what is the more important/economciall
valuable part of the deal. (INwhat is the predominant thrust of the K?)
i. Ex. $400 cover paint and painting
ii. BUT if parties divided up and assigned different prices to goods and services
treat separate.

Contracts and Sales

Formation

A contract is a legally enforceable agreement. Ask (1) Did the parties agree? (2) If so, Is it legally
binding?

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I. Offers
a. General test: manifestation of intent to contract. Whether a reasonable person
in position of the offeree would believe that his assent creates a contract.
b. Specific problems to watch for
i. Content/terms
1. CLoffer must contain all material terms.
a. Ex. S offers to sell villa in Terre haute to B. Nothing about price.
Is NOT an offer.
2. Art. 2does NOT require all material terms (except quantity)
a. Ex. S offers to sell car to B. Nothing about price. IS an offer.
ii. Vague or ambiguous MATERIAL terms
1. NOT an offer under EITHER CL or ART.
a. Ex. S offers to sell car to B for fair price. [Tip: If Bar says Offer
must still check]
i. Note: If nothing RE price, K in Art. 2, now not. Treats as
still bargaining
iii. Requirements contracts/output contracts
1. A K for sale of goods can state quantity of goods in terms of buyers
requirements or sellers output
a. VALID Ex. B agrees to buy Scooby snacks from S for 5 years.
Says shall purchase all of its Scooby snacks from S.
2. Limit. No unreasonable disproportionate increase.
a. Court will reduce.
c. Context.
i. General rules
1. An advertisement will NOT be an offer
a. Unless it is (i) specific as to quantity and (ii) indicates who
can accept.
b. Ex. 1 black Lapin stole, worth $140.$1. First come, first
served.
2. Price quotation is will NOT be an offer
a. Unless in it is in response to a specific inquiry
II. Termination of Offers
a. An offer cannot be accepted if it has been terminated (dead). Five Methods.
b. (1) Lapse of timetime state or reasonable time (if none stated)
c. (2) RevocationWords or conduct of offeror
i. Methods.
1. Unambiguous statement by offeror to offeree of unwilliness or
inability to K, or
2. Unambiguous conduct by offeror indicating an unwillingness or
inability to contract that the offeree is aware of
ii. Must be unambiguous. Ex. Offered to sell car to P for $400. The next day P
leans that offered car to W but that has not yet accepted.
1. P can still accept because the revocation MUST BE unambiguous.
2. It is ok to make multiple offers
iii. Public offer. To revoke must be by same or comparable publication.
iv. Effective when received.
1. Revocation via mail effective when received. Mailbox rule only applies
to acceptances.
v. Effect of acceptance. Offer cannot be revoked once accepted.
vi. Offers that Cannot be Revoked [4 situations]

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 1. Open offer. (i) Offeror promised keep offer open AND (ii)
supported by consideration
a. Ex. S offers to sell car to B for $4000. S gives B signed letter
saying will not revoke for 2 weeks. Can S still revoke? Yes, no
consideration, S not a merchant.
2. Firm Offer Rule. (i) Merchant (person GENERALLY in business) (ii)
regarding K for sale of goods (iii) makes a signed, written (iv)
promise to keep offer open.
a. CANNOT be revoked for up to 3 months. [Note: if consideration,
no limit].
b. Ex. S promise is oral? Revocable
i. Offer to keep open for 5 months? Not revocable BUT only
for 3 months.
ii. What if no time period stated? Look for answer stating not
revocable for reasonable period not to exceed 3 months.
iii. Ex. S, used car salesman, makes offer by signed writing
to B to sell car for $400. CAN revoke because never
promised.
iv. Ex. S offers to sell B house for 100K, and written offer
promises that can be excepted for 4 months. Revocable.
3. Detrimental reliance.
a. Detrimental reliance (actual harm) by offeree that is
reasonably foreseeable.
4. Part performance in Uni. Start of performance pursuant to an
offer to enter into a unilateral K makes that offer irrevocable for
reasonable time to complete performance.
a. Unilateral. Ex. O offers states offer can be accepted only by
performance.
b. Performance, not mere preparation.
i. Ex. Ordering of paint likely mere preparation BUT will
triggers #3.
ii. TIP: need to know not only that not revocable but why.
d. (3) RejectionWords or conduct of offeree [4 Methods of indirect rejections]
i. Counterofferterminates the offer and becomes a new offer.
1. Distinguish from Bargaining.
a. Look at punctuation; question mark indicates bargaining.
b. Ex. Will you take 9k? vs. I can only pay 9k.
ii. Conditional acceptance
1. Ex. so long as; if you; provided that; on the condition that
2. Effect. Same as counteroffer: terminates the offer and becomes new
offer.
3. Art. 2. Same. But note if shipped and retained then implied
acceptance; Do not have an express contract, but do have an implied
contract.
iii. Additional Terms to a CL ContractMirror Image Rule.
1. CLacceptance that adds new terms treated like counteroffer rather
than acceptance.
2. Ex. L offers lease to T, silent re arbitration. T adds, signs; Counter offer,
Indirect rejection

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 iv. Additional Terms under UCC 2-207Seasonable expression of
acceptance.
1. Two separate questions(1) Is there a contract? (2) Is the additional
term part of the K?
2. Under UCC, response to offer with additional terms is acceptance.
a. Note subtle difference: b/t response that conditions on those
terms (no acceptance) and mere additional terms (seasonable
exp. of acceptance).
3. Whether terms part of the contract, turns on whether both parties
are merchants.
a. If BOTH parties are merchants, IS part of contract UNLESS
i. (1) Materially alters
ii. (2) Offeror/seller objects to the change
b. Ex. I accept. Deliver it on Saturday. O says I will deliver
Monday. STILL K.
i. But c.f. I accept if the car is delivered on Saturday.
c. If ONE or both party is not merchant, the additional term is
merely a proposal to be separately accepted or rejected.
e. (4) Death or Incapacity of a Party Prior to Acceptance.
i. Ex. 2/2 sends offer, 2/4 dies. B, not knowing As death, mails acceptance on
2/6. Offer died 2/4.
ii. General rule is death or incapacity terminates offer
iii. Exceptions(i) Option; (ii) Part performance of offer to enter unilateral
contract.
III. Acceptance of an Offer
a. Who can accept? Generally only (1) person who knows about the offer and (2)
who is person to whom it was made.
b. Assignability? Offers cannot, but options can.
i. Ex. I post reward lost dog. You find and return w/out knowing of posting. No
payment required.
ii. Ex. I offer to sell you my car for $400. You tell T. T cannot accept.
iii. Ex. B gives $10 for 10 day option to buy car for $400. B can transfer to T,
unless language bars.
c. Methods of Accepting Offer [5 possible fact patterns]
i. (1) Start of performance. IF bilateral K this is an acceptance; Is NOT to
offer to unilateral K.
1. Ex. O offers $100 to paint house, silent as to method of acceptance. P
starts painting. N then offers P $2,000 to paint. P has accepted Os
Offer, contractually obligated to finish.
a. Cf. Unilateral ( accepted only by performance, not by
promisisng to perform) Start is not acceptance. Completion
required to accept. P could walk away.
ii. (2) Promise to perform is acceptance of a bilateral offer.
1. Promise to perform sufficient to accept unless unilateral Krecall
either expressly require performance for acceptance or reward offers.
2. Ex. B faxes order for snacks. S responds with fax promising to send.
iii. (3) Acceptance via mail. If offeree invited to accept by mail, acceptance
effective when posted.
1. Note: mailbox rule only applies to acceptance. Revocation effective
when received and revocation only possible before acceptance.

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 2. Ex. Offer to sell car for $400. Jan. 10 mails acceptance. Jan. 11 receives
revocationK.
3. EXCEPTIONS
a. Offeror controls. Offer otherwise provides (offeror controls the
offer)
b. Rejection sent first. Send rejection, THEN acceptance, rule
becomes which ever arrives first.
c. Reliance. (When send acceptance first, then rejection )
Rejection arrives first and is relied on by the offeror.
d. Option deadline. Mailbox rule does not apply to option
deadlines, acceptance must be RECEIVED by deadline.
iv. (4) When Seller sends the wrong GOODS.
1. General rule. Is a simultaneous acceptance and breach, BUT
2. Accommodation exception. Ship non-conforming with note offered
as accommodation.
a. Effect. Acts as counteroffer, no breach.
b. Buyer may: (i) Accept shipment and pay list price or (ii) reject
shipment with no other remedy.
v. (5) Offeree silence. General rule is silence not acceptance .
1. Exception. Offeree agrees silence is acceptance.
a. Ex. If you dont hear from me before Friday, I accept.
IV. Consideration or Consideration Substitute
a. What is consideration?
i. Def. Bargained for legal detriment to promisee.
1. Ask what did the promisor bargain for?
2. Ask what detriment did promisee incur?
ii. Forms. Performance/Forebearance (legal duty/entitlement); Promise to
forebear/perform.
b. Possible issues
i. Bargained for. Asked for by promisor IN EXCHANGE for his promises.
ii. Legal detriment.
iii. Adequacy of consideration. Do not inquire into it in K law; a peppercorn is
sufficient.
iv. Past consideration. General rule is not consideration.
1. Ex. S saves Ws life. H, grateful, promises to pay S 3K. Not legally
enforceable.
2. Exception: (i) Expressly requested and (ii) expectation of payment
a. Ex. H asks S save W, knowing S would expect to be paid. After,
promises. Have K.
v. Pre-existing contractual or statutory duty rule [CL ONLY]. General rule
not consideration.
1. Ex. D K sing for 15K. Then says wants 20K. P promises to pay. Not
legally enforcement.
2. Exception: Unforeseen difficulty so severe as to excuse
performance.
a. Ex. Sound system inoperable. Offered 5K more to continue.
Extra detriment.
3. Exception: Third Party promises to pay P additional 5K to play when
already was.
4. C.f. Sale of Goods

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 a. Art. 2 does not have pre-existing legal rule: good faith is test
for changes in an existing sale of good contract.
vi. Part payment of a debt as consideration for promise to forgive balance
of debt.
1. Test. IF debt due and undisputed, the part payment is not
consideration for release.
a. Ex. Not due. 3K debt due on Jan. 15. C agrees to take 2K on Jan.
11. C CANNOT sue for remaining 1K. Adequate consideration, do
not inquire into.
b. Ex. Disputed.
vii. Illusory Promises. General rule a promise in which promisor has not
committed herself in any manner (no detriment), is not consideration.
1. Ex. C agrees to purchase car from D on Dec. 7 unless C changes his
mind.
2. BUT c.f. ex. C agrees to purchase unless C gives notice by Dec. 1.
NOW has bound self.
c. Consideration Substitutes.
i. Written Promise to Pay Debt Barred by Technical Defense Such as
SOL. Promise to satisfy obligation where is legal defense enforceable, even
w/out consideration.
1. Ex. D owes C 1K. SOL Barred. Writes, admitting debt, offering less.
Bound by that amount.
ii. Written Release of Claim. Under CL and UCC 1-107, written release of all
or part of claim for breach is enforceable without consideration.
iii. Seal. NOT substitute in majority of jurisdictions.
iv. Promissory Estoppel (Detrimental Reliance).
1. Elements
a. (i) Promise made (ii) reliance that is reasonable, detrimental,
foreseeable (iii) necessary to avoid injustice.
2. Note: Second best; do not have remedy under law, do not get
expectation damages.

Contracts and Sales

Defenses

I. Capacity
a. Who lacks capacity?
i. Minors under 18
ii. Mental incompetents: lacking ability to understand agreement
iii. Intoxicated persons if other party has reason to know
b. Consequence of incapacity
i. Voidable. Person without capacity has right to disaffirm
1. Absolute defense not turning on belief of parties.
ii. Unless affirms upon reaching capacity.
1. Implied affirmation. Look for : (i) Agreement made before person
had capacity; (ii) Person reaches capacity; (iii) Person continues to
retain benefit of the agreement.

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 iii. Exception. Liability for necessities. Person w/out capacity legally
obligated for necessities such as food, clothing, medical, shelter but liability
based on quasi-contract, not contract law.
1. Limit. Because not through K law, would not get K price but value
received.
II. Statute of Frauds
a. Purpose. Evidentiary; to provide proof of alleged agreement.
b. Is The Contract Within the Statute of Frauds? [Tip: MY LEGS]
i. 5 under CL
1. Promise in Consideration of Marriage. Not merely promise to
marry but promise to do or refrain from something if marry.
a. Ex. H claims W agreed to renounce any claim to property he
owned prior to marriage if he would marry her.
2. Promise by Executor of Administrator to Pay Obligation of
Estate from His Own funds. Not merely a promise to pay estate
expenses.
a. Ex. F claims Executor promises Ds estate would pay Ds funeral.
NOT w/in SOF.
3. Promises to Answer for [Guarantee] the Debts of Another. Not
merely promise to pay but rather promises to pay if someone else
does not
a. Tip: Look for deadbeat.
b. Exception: If main purpose(leading object) was for benefit of
promisor then NO.
c. Ex. S claims O promised would pay for pay for paint if P did not
pay.
d. Ex. Not within SOF
i. S claims O said would pay for paint he delivered to P.
ii. Os main purpose in promising to pay was P going to use
it on Os home.
4. Service contract not capable of being performed within a year
from time of contract.
a. Specific time period.
i. Tip: Ignore what actually happens, key is what might
happened. If performance within year is/was possible, not
within SOF.
ii. Ignore cancellation/termination provisions. Ex. P
claims O agreed to employ her for three years and deal
was she could terminate on thirty day notice. WITHIN
SOF. If performed, cannot be within one year.
b. Specific time. Even if done in a day, look to date.
i. Ex. Orally agreed to perform on Dec. 24, 2013. Within
SOF.
c. Task. TIP: In BAR world, any task can be performed within a
year.
i. Ex. P claims D orally K to cut all trees on land. There are 2
billion trees.
1. What if doesnt finish until 5 years later? Still not
within SOF.

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 5. Transfer of Interest in Real Estate of a Term of More Than a
Year.
a. Must be K for transfer. Ex. P claims D orally agreed to build
loft. NOT w/in SOF.
i. Cf. D orally agreed to sell left to P. YES. This is a transfer.
ii. Cf. D orally agreed to lease apartment for 2 years. YES.
This is a transfer.
b. Make sure MORE than one year.
i. Ex. Claim D orally agreed to easement for one year.
ii. 1 more under UCC
1. Sale of goods for $500 or more.
a. Ex. C claims D agreed to sell car for $500. YES, within SOF, or
more.
c. If so, Is the Statute of Frauds Satisfied?
i. By Performance [Rules vary depending on if K for service , sale of goods, or
real estate transfer]
1. Service Contracts
a. Full performance by either party satisfies the SOF.
i. Ex. D orally agrees to write the outlines if C promises to
market for 5 years. D completes the outlines. W/in SOF.
1. SOF is Satisfied though! No defense
b. Part performance of service K does NOT satisfy the SOF.
i. Ex. P orally agrees to work for D for 5 years. P works for
13 months then D fires without cause. SOF? Yes.
Satisfied? NO. SOF defense? Yes.
1. Remedyno contract law recovery but can in
quasi-contract.
2. Sale of goods contracts [UCC]
a. Ordinary goods. General rule is part performance of K for
sale of goods satisfies SOF but only to extent of part
performance.
i. Delivered goods. S orally agrees to sell 2K snacks to B
for $500. Delivers 600. S sues B for payment. W/in SOF.
SOF satisfied for 600 only though!
1. Even if spoiled still satisfy the part performance
and SOF.
ii. Undelivered goods. If sue for the 1400K undelivered,
SOF defense.
b. Specifically Manufactured Good. SOF satisfied as soon as
seller makes a substantial beginning of making or obtaining the
goods.
3. Real Estate Transfer Contracts
a. Full payment does NOT satisfy the SOF.
b. Part performance by buyer of real estate generally requires
two of following: (i) part payment, (ii) possession, (iii)
improvements.
ii. Writing
1. Common Law SOF
a. Look at (i) contents of the writing (or writings)all material
terms test and (ii) who signed the writingsigned by person
charged/defendant.
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 b. Ex. Your offer January 15tn is hereby accepted. /s/ Davis. Does
NOT meet (i).
2. UCC SOF
a. Writing must contain (i) quantity term and (ii) must either
i. (a) be signed by person to be charged/defendant
ii. (b) Both parties are merchants and
1. Signed copy with quantity term sent claiming there
was K
2. No response within 10 days of receipt.
iii. Judicial Admission of Sale of Goods Agreement [SOF]
1. If during litigation proceedings (pleadings, discovery documents,
testimony) admitted was contract, meets SOF as to quantity admitted.
d. Is there a SOF Defense? (If the SOF isnt satisfied).
III. Related Writing Requirement Issues
a. Authorization to enter into K for someone else.
i. Authorization to enter K for someone must be IN WRITING if underlying K to
be signed w/in SOF.
b. Contract Modification.
i. Modification agreement must be IN WRITING if the contract, with the
modification, is w/in SOF.
ii. Ex. T leases building from L for one year. Later modification to three years.
Must be in writing.
iii. Ex. T leases building from L for 3 years. L claims modification to rent. Still
w/in SOF.
iv. UCC apply same rules
1. Ex. C contracts to buy 600 bottles for $600. Later modify to $499. No
writing required.
v. Effect of Contract provisions
1. CLprovisions requiring all modifications be in writing are IGNORED.
2. UCCprovisions CONTROL unless waived.
3. Ex. R employs D for 11 months. Sign contract providing all
modifications must be in writing. CAN orally recue employment term to
2 months, ignore provision, not w/in SOF.
4. Ex. Same facts. Orally modify to 3 yrs. MUST be in writing, not b/c of
provision though.
5. Ex. D contracts to sell car for $400. Sign K providing all modifications
must be in writing. CANNOT orally increase price to $499. Provisions
control unless waived.
IV. Illegality
a. If subject matter illegal, agreement is void.
i. Ex. D contracts with P to hurt T. Neither can enforce contract.
b. If sub. matter legal, but purpose is illegal, enforceable only by person who didnt
know of illegal purpose
i. Ex. K w/ limo driver, taking to injure T. Limo driver thinks going to Sox game.
Voidable, not void.
V. Misrepresentation
a. Def. False assertion or concealment of fact that is (i) fraudulent OR material (tip)
and (ii) reliance (tip).
b. Effect.
i. Misrepresentation as to terms of contract (no termiets): Voidable.

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 ii. Misrepresentation as to nature of contract (lease agreement instead of
sale): void.
VI. Duress
a. Elements: (i) D makes improper threat and (ii) P has no reasonable alternative
VII. Unconscionability
a. Originally applicable only to sales of goods, now part of contract law generally
b. Empowers court to refuse to enforce all or part of agreement
c. Two basic tests: unfair surprise and oppressive terms
d. Tested by court as of time of the agreement was made.
VIII. Ambiguity
a. No contract if:
i. Parties use a material term that is open to at least two reasonable
interpretations, and
ii. Each party attaches a different meaning to the term, and
iii. Neither party knows or has reasonable to know meaning attached by
other.
b. Ex. B and S contract for cotton to be delivered on ship Peerless. B intends Oct.
Peerless. S intends the Dec. Peerless. Neither knows there are two ships named
such.
i. BUT if one party knows of the ambiguity, K under the terms of the party
that did not know.
IX. Mistake of Fact
a. Mutual Mistake of Material Fact
i. No contract if (i) both parties mistaken (ii) to basic assumption of fact (iii)
materially affecting the agreed exchange.
1. Key: Mistakes as to Subject matter (what it is) are NOT legally
enforceable.
2. But mistake merely as to worth still legally enforceable.
ii. Ex. Both mistaken that painting was Warhold. No K. Both knew but worth a lot
more. Is a K.
b. Unilateral Mistake of Material Fact
i. General rule no relief.
ii. Exceptions
1. Palpable mistakes (other party knows or should have known that
mistake made), or
2. Mistakes discovered before significant reliance by other party.

Contracts and Sales Terms of

the Contract

I. Parol Evidence
a. Rule of contract law, not evidence.
b. Terms
i. Integrationwritten agreement that court finds is final agreement; triggers
parole vid. Rule.
ii. Partial integrationwritten and final, but not complete.
1. Not going to add anything but may be more to the agreement.
iii. Complete integrationwritten and final and complete
1. Merger clauseclause in K indicating complete and final agreement
a. Tip: this means on the BAR it is a complete integration.
c. Triggers for Parol Evidence Rule
i. (i) Written K that court finds is the final agreement; AND
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 ii. (ii) Oral statement made at time K was signed OR earlier oral or written
statement by the parties to the contract.
d. Parol Evidence Arguments
i. Ambiguity. Notwithstanding PER, earlier agreements CAN BE considered to
resolve ambiguity.
1. Ex. Term chicken in K. Court can consider evid. of earlier oral, written
agreements.
ii. Consistent, additional terms. PER prevents court from considering
earlier agreements as a source of consistent, additional terms UNLESS court
finds only partial integration.
iii. Collateral agreements. Even if complete integration, Court can still
consider evid. of earlier agreements for terms that would naturally and
normally be in separate document.
1. Ex. K to sell chickens. S claims earlier oral agreement regarding
advertising.
iv. Inconsistent terms. Regardless of whether partial or complete integration,
PER prevents court from considering earlier agreements as source of terms
inconsistent with those in written K.
1. BUT court may consider evidence of such terms for limited purpose
of determining mistake in integration.
e. Compared to SOF (Tip: Bar will try to confuse the two).
i. See exam question on p. 44.
II. Other Sources of Terms (besides the words of the parties)
a. Course of performance: same people, same contract. Most weight.
i. Ex. S contracts with B to sell 1,000 chickens. First three shipments are blue
hens, no complaints.
b. Course of dealing: same people, different contract.
c. Custom and usage (industry standard) : different people, different deal. Less
weight.
III. UCC Terms
a. Delivery Obligations of Seller of Goods
i. When no place of delivery has been agreed upon. Sellers place of
business is delivery place, unless both parties know goods are someplace
else, then that place is place of delivery.
ii. When place of delivery has been agreed upon ask what seller has to do
to complete delivery
1. Shipment contracts. Seller completes delivery when it (i) gets goods
to common carrier, (ii) makes reasonable arrangements for
delivery, and (iii) notifies the seller.
2. Destination contracts. Seller does not complete delivery obligation
until goods arrive where buyer is.
3. Determining shipment or destination contract (Tip: most Ks with
delivery obligations are shipping Ks). Common delivery terms
a. CIF (cost, insurance, and freight) and C&F (cost and freight)
i. Always shipping contracts .
ii. ROL passes as soon as good turned over to carrier.
b. FAS
i. Free alongside. Usually only when shipped by boat.
ii. ROL passes once delivered to dock.
c. FOB Free on board (city).
i. If city is where seller is means shipment contract.
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 ii. If city where buyer is means destination contract.
iii. Risk of lose passes to buyer at name location.
iv. Seller bears expense of getting to that location.
b. Risk of Loss (when (i) goods damaged after contract formed and (ii) neither party to
blame).
i. First look to see
1. Agreement of parties controls
2. Breaching party liable for any uninsured loss even though breach
unrelated problem!!
a. Ex. Two weeks late delivery coffee that turned out to be rat
infested.
ii. If no agreement, no breach, look to see if delivery by common
carrier other than seller
1. ROL shifts from seller to buyer when seller completes delivery
obligations (see above).
a. Ex. Seller in St. Louis. Term of FOB St. Louis. Delivery term
means shipping contract. Delivery obligation in shipping
contract satisfied when delivers to common carrier, with
arrangements, and notified buyer. Here did, ROL shifts.
b. Ex. FOB Indianapolis. Destination contract. Delivery obligation
not satisfied until goods arrive at buyers place.
iii. If no agreement, no breach, no common carrier, then look to see
whether seller is a merchant.
1. Tip: Whether buyer is merchant is irrelevant.
2. When merchant-seller, ROL shifts to buyer on buyers receipt of the
goods.
3. When non-merchant-seller, ROL shifts when tenders the goods.
iv. Ex. B buys refrigerator from S Appliances. Tells pick up at loading dock.
Lightning hits.
1. ROL is on seller.
v. Ex. B, used car dealer, buys van from friend S. S says pick-up at your
convenience. Vandalized.
1. ROL is on Buyer!
c. Warranties of Quality
i. Express
1. Wordslook for something more than mere puffery.
a. machine is steelwarranty
b. machine is well-madeno warranty
c. Tip: WATCH FOR parol evidence issues to arise here.
2. Sample or model
a. Creates express warrant that goods buyer receives will be like
sample/model.
ii. Implied warranty of merchantability
1. When merchant seller of goods of that kind, a term automatically
added to K by operation that goods are fit for the ordinary purpose
for which such goods are used.
2. *Trigger: merchant seller of GOODS OF THAT KIND.
3. Warranty: goods fit for ordinary purposes.
iii. Implied warranty of fitness

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 1. Trigger: buyer has particular purpose; buyer is relying on seller
to select suitable goods; seller has reason to know of purpose and
reliance. [note: any seller]
a. Tip: look for BAR telling you why someone is buying something.
2. Warranty: goods fit for particular purpose.
d. Contractual limitation on Warranty Liability
i. Disclaimer (e.g., there are no warranties)
1. Effect. Eliminates IMPLIED warranties; Express warranties cannot be
disclaimed
2. Disclaiming Implied Warranties of Merchantability and Fitness
a. As is or with all faults or
b. CONSPICIOUS language of disclaimer, mentioning
merchantability or
i. HAVE to mention for implied warranty of merchantability
c. Inspection or
d. Course of dealing, course of performance, usage of trade
ii. Limitation of remedies (e.g., warranty liability shall be limited to)
1. Effect. Does not eliminate warrant, simply limits or sets recovery
EVEN for express.
2. Test. Generally is unconscionability
a. Prima facie unconscionable if consumer good and personal
injury.
3. Ex. Warranty liability shall be limited to replacement parts. Injures
buyer.

Contracts and Sales Performance

/Conditions

I. Conditions of Performance
a. A performance condition.
i. Distinguished from conditional acceptance.
1. A condition is a part of the K, agreed to by both parties.
2. A conditional acceptance is part of response to offer, agreed only by
offeree.
3. Ex. C offers buy Car for $400. I respond will sell if PU beats IU.
Conditional acceptance.
4. Ex. C and D both agree D will seel C car for $400 if PU beats IU.
Performance condition.
ii. Vocabulary
1. True conditionevent beyond influence of either parties that affects
duty to perform.
a. Ex. B contracts with to Buy Hs house, sale conditioned on
obtaining mortgage.
b. Condition coupled with a covenantevent that is to some
extent w/in the influence of one of the parties to the K that
affects the duty to perform.
i. Ex. sale conditioned on B getting job in and moving to LA.
ii. What is the effect of this?
2. Precedentmust occur before
a. subsequentmust not occur duringlook for both performing
and then stopping when condition occurs.

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 b. Ex. D contracts that C can use car for $10 a month until PU
beats IU.
i. Is performance condition b/c both parties agreed;
condition sub.
3. Expressif provided that so long as subject to in the event
that until
4. Constructive conditionscreated by operation of law, are keyed to
order of performance.
a. Context. Likely to see in fact pattern where K silent on time of
payment. (Completing the work is a constructive condition
precedent to payment performance).
b. Standard for satisfying a Condition.
i. Express condition. General rule is strict compliance with express
conditions.
1. Ex. this sale is conditioned on the house being appraised at 77K.
Appraised at 76K. NO.
2. Ex. work is expressly conditioned on using reading pipe.
a. C.f. shall use reading pipe. Must pay for the house. Not
express condition.
3. Exception. When condition base on approval of one of the
contracting parties satisfied if reasonable person would approve,
unless subject is art or otherwise inherently discretionary
ii. Constructive condition. Standard of substantial performance.
1. Ex. Y contracts to build X house. K says All pipe must be reading
pipe. The constructive condition precedent of Ys building the house
satisfied that X has to pay.
2. Ex. O contracts with T to paint 20 apartments. Paints 4. The
constructive condition of painting 20 apartments has NOT been
satisfied so under contract law does not have to pay. Under QUASI-
CONTRACT, however, will have to pay value conferred if court finds will
be injustice.
iii. Divisible contracts and substantive performance. If the K itself divide
performance of each party into same number of parts with each part
performance by one party serving as consideration for the corresponding part
performance by the other, then K is divisible K and substantial test is
applied to each divisible part of the K.
1. Ex. In example above, would have to pay under K law for four
apartments completed.
c. How Can Express Condition Be Excused?
i. Identify the person benefiting or being protected by the condition and ask if
have Estoppel given up before the conditioning event (Estoppel) or given
up after the conditioning event (Waiver).
1. Estoppel
a. Based on statement by person protected by condition BEFORE
conditioning event was to occur.
2. Waiver
a. Based on statement by person protected by condition AFTER
conditioning even was to occur AND does not require a change
in position.
ii. Failure to cooperate under a condition coupled with a covenant.
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 1. Ex. above but makes no effort to find job and move. H can sue B for
breach of contract.

Contracts and Sales Performance /Sale of GOODS

performance concepts

I. Perfect tender
a. Art. 2 general standard is perfect tender; subject to limited exceptions, seller must
deliver perfect.
i. Ex. Even when arguably a better good!
II. Cure
a. In some situations seller, after failure to make perfect tender, will still be given an
option of curing.
i. Note: Not ever seller has opportunity, and buyer cannot compel the seller to
cure.
b. Time of performance has not yet expired. Seller gets chance to cure.
c. Time of performance has expired. Only narrow ground, when seller has
reasonable grounds for believing improper tender would be acceptable, perhaps
with money allowance.
i. Look for information in question about prior deal b/t B and S with such
allowance.
III. Rejection of Goods: General Rules
a. There is a difference b/t rejection of offer and rejection of goods.
i. Rejection of offer, there is no contract.
ii. Rejection of goods, there has already been acceptance, so there is a contract,
and rejecting party can now sue for breach of contract.
b. When
i. Rejection of goods must occur before the acceptance of the goods.
ii. If the goods are less than perfect, buyer has option to reject the goods
unless it is an installment sales contract.
IV. Installment Sales Contract
a. Def. A contract that requires or authorizes (i) delivery in separate lots (ii) to be
separately accepted.
b. Note: Making separate deliveries is not sufficient, the contract itself has to provide
for sep. lots and acceptance.
c. Effect.
i. Buyer has right to reject installment only where there is a (i)
substantial impairment in that installment (ii) that cannot be cured.
ii. Whole contract is breached only if nonconformity substantially impairs the
entire contract.
V. Acceptance of the Goods
a. Express acceptance
b. Implied acceptance when retention after inspection without objection.
i. Look for buyer keeping goods without objection.
ii. Payment of the goods without inspection is not acceptance.
1. Merely taking possession and even paying for order is not legal
acceptance.
c. Effect.
i. If accepts, cannot later reject.
VI. Revocation of Acceptance of Goods (Note: Difference b/t rejection and revocation
of acceptance).

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 a. Although it is true once the B has accepted the goods it can no longer reject them,
B may be able to revoke its acceptance of goods in limited circumstances.
b. Requirements for revocation of acceptance:
i. (1) Nonconformity which substantially impairs the value of the goods,
AND
ii. (2) Excusable ignorance of grounds for revocation OR reasonable
reliance on sellers assurance of satisfaction.
iii. (3) Revocation within a reasonable time after discovery of nonconformity.

Comparison of Rejection of Goods & Revocation of Acceptance

Rejection Revocation
Timing Before acceptance After Acceptance; b/t w/in a
reasonable time after
discovery of nonconformity
Standard Generally, perfect tender Substantial impairs the value
Other requirements 1. Seasonably notify the seller
2. hold goods for seller (store)
3. follow reasonable seller instructions (reship/resell on Ss
account)
Consequences 1. Goods back to seller
2. No buyer payment obligation
VII. Buyers Payment Obligation
a. Three Rules
i. Cash unless otherwise agreed
ii. By check unless otherwise agreed
1. But seller does not have to take check; however, gives buyer additional
reasonable time

Contracts and Sales Excuse of

Nonperformance [Discharge]

I. Excuse by Reason of Failed Condition. If Partys duty to perform is conditional,

failure of cond. excuses.
a. Ex. B contracts to buy house on condition that is appraised at 77K. Appraised at
76K.
II. Excuse by Reason of Other Partys Breach.
a. Sale of Goods: Perfect tender. Recall, in sale of goods K, if tender less than
perfect, seller has breached, buyer can reject goods and is excused from payment.
b. Common Law Contract: Material Breach. CL generally only requires substantial
performance; if one party does, other party is required to perform. A minor breach
will not excuse performance.
i. Material breach.
1. Is the converse of substantial performance.
2. Question of fact considering (i) amount of benefit received by
nonbreaching party; (ii) adequacy of compensation for damages to the
injured party; (iii) extent of part performance by breaching party; (iv)
harship to breaching party; (v) negligent or willful behavior of
breaching party; and (vi) likelihood breaching party will perform the
remainder of the contract.
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III. Excuse of performance by reason of other partys Anticipatory Repudiation or
Inability to Perform.
a. Anticipatory repudiation is a statement (or conduct) (i) that repudiating party
will not perform (ii) made prior to the time that performance was due.
i. Effect. (i) excuses other parties duty to perform; (ii) generally gives rise to
an immediate claim for damages for breach.
ii. Ex. O contract with T to paint house for 1K with payment to be made on April
1. Before O finished, T tells him not going to pay. O stops painting. T cannot
sue O for breach of K.
iii. Can be reversed or retracted so long as there has not been a material
change in position by other party.
1. Effect. If timely, duty to perform re-imposed but performance can be
delayed until adequate assurance provided.
iv. Conduct can be enough to constitute repudiation.
IV. Excuse by reason of later contract
a. Rescission
i. Key. Whether performance is still remaining from each of the contract
parties.
ii. Effect. Cancels/kills the deal. Cannot sue on something that does not exist.
(Quasi maybe).
iii. Ex. After O completes the cork, O and T agree to cancel the contract. O can
later sue T on the contract! To have a valid rescission, both parties must have
performance remaining.
b. Accord and Satisfaction
i. Accord is an agreement by the parties to an existing K that same parties
will do something different that will extinguish or satisfy that existing
obligationsatisfaction of the accord.
ii. Effect of accord alone. Accord suspends legal enforcement of the original
obligation so as to provide time to perform the accord.
iii. Effect you can get no satisfaction. Can sue on EITHER the original K or
the accord, but not both.
c. Novation
i. Novation is an agreement between BOTH parties to an existing K to
substitution new parties (same performance, different parties). Requires
assent of all parties.
ii. Effect on liability. Novation excuses the contract for performance of party
who is replaced.
iii. C.f. Delegation
1. Delegation does not require agreement of both parties and does not
excuse person replaced.
V. Excuse by Reason of a Later, Unforeseen Event
a. Performance of contractual duties (other than a contractual duty to pay money) can
be excused WHEN:
i. (1) something happens after K formation but before completion of
contract performance; and
ii. (2) that was unforeseen;
iii. (3) that makes performance impossible or commercially impracticable or
frustrates the purpose of performance.
1. Possible differences b/t impossibility and impracticability include
a. Impossibility is objective/impracticability is subjection

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 b. Cant be done/can only be done with extreme or unreasonable
difficulty
b. CL Death of a Party
i. Turns on whether the contract, after the death, is impossible to now
complete.
1. Ex. K to have famous architect design and build homes. Dies mid-
project. Cannot sue estate, it is excused.
ii. Be aware of situation where contracted because of cost. There can
sue. Ask what the deal was for.
1. Ex. K with O to paint house because bid was lowest at 3K. O dies. Can
sue estate for difference in acquiring new painter.
c. CL Damage or destruction of subject matter of contract.
i. Ex. K to paint house. House burns down. Impossible, therefore excused.
ii. Ex2. K to build house. House burns down. Not impossible, not excused.
d. Article 2
i. Key is whether or not can get another one.
ii. Tip: watch for mix of excuse and risk of loss in questions.
1. Ex. D K with C to buy 1968 car for $300. After K but before ROL passed
to C, flood. C cannot sue D.
a. If Buyer had risk of loss have to pay.
e. Subsequent law or regulation
i. If later law makes performance illegal, excused.
ii. Excused if either the subject matter made illegal OR if the purpose of the K is
frustrated by change in law.

Contracts and Sales Breach Remedies for An Unexcused

Nonperformance

I. Punitive Damages
a. Generally not awarded in contract cases.
II. Liquidated Damages
a. Two general tests for determining whether a contract provision is a valid
liquidated damages clause or an invalid penalty provision (note: a K cannot provide
for a penalty)
i. at time of contact, amount of possible damages from later breach of K is
difficult to determine
ii. at time of contract, contract provision is a reasonable forecast of
possible damages.
b. Tip: assume invalid wen hard number set to cover every breach situation; sliding
scale may be ok.
c. Ex. only look at time of contract.
III. Common Law Contracts Damages Rules
a. General rule for ordinary contract is entitled to recover amount that would put
in as good of a position as if contract performed (expectation damages).
i. Ask: (i) What would P have gotten if K performed; (ii) what did P actually get;
(iii) How much does it take to get from (i) to (ii).
ii. Ex. O contracts with T to paint house for 1K. O breaches. T entitled to 400.
1. What if T breaches?
a. Terms
i. Contract pricewhat T was to pay to perform his part of
the bargain.
ii. Costswhat O was to pay to perform part of the bargain.
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 iii. Costs plus lost profitswhat O would get if T breaches.
b. Additions and Limitation
i. PLUS Foreseeable Consequential Damages (Special damages;
indirect) that were in reasonable contemplation of both parties at time of K.
1. Basically, an expense or cost from breach that arises b/c of Ps special
circumstances.
2. Rule. Must have been reasonably foreseeable at time of K.
3. Ex. Because house wasnt painted above, not able to lease. Whether
can recover lost rents will turn on whether reasonably foreseeable
when K was entered into.
ii. PLUS Incidental Damages
1. Basically, costs of finding a replacement K, dealing with the breach.
2. Rule. Always recoverable as long as reasonable.
iii. MINUS Avoidable Damages
1. Rule. No recovery for loss that could have been avoided by
appropriate steps.
2. Burden of proof of avoidability is on D.
a. BUT has to be comparable in kind, place, etc.
IV. Sales of Goods Damages Rules
a. Part 7 of Art. 2 reflects the general contract damages policy of putting the innocent
party where it would have been if the K been performed. Two relevant facts: (i)
who breached, and (ii) who has the goods.
b. Four basic Art. 2 damages fact patters and four sets of rules.
i. Seller breaches, buyer keeps the goods [fair market value if perfect fair
market as delivered]
1. Ex. Contracted for rare car for 30K. Defective. As delivered 20K. Would
have been worth for 34K. Gets 14K.
a. Could either do CL route (what expected, what got, what need)
or Art. 2 way.
ii. Seller breaches, seller keeps the goods [market price at time of
discovery of breach K price] OR [replacement price contract price] (cover)
1. Ex. Contract to buy carpet for 5K. B rejects b/c not a perfect tender. At
time worth 6,600. So would get 1,600. OR if pays 7000 then gets 2K.
iii. Buyer breaches, buyer has the goods. [Contract price]
1. Ex. B contracts with S to buy carpet for $800. Receives but does not
pay. B owes contract price. Market price does not matter.
iv. Buyer breaches, seller has the goods. [contract price market price at
time and place of delivery] OR [contract price resale price] and, in some
situations, provable lost profits.
1. Ex. D contracts to sell car to C for 1K. C breaches. D sells to E for 800.
Gets $200 from C.
2. Action for K price only if cannot resell.
3. Lost profit rule.
a. Ex. D selling snacks to C for 1K (assume C is buying goods that
are part of Ds regular inventory). C breaches. D sells snacks to
E for 1K. D can still recover damages from C if can show
provable lost profits. Profit margin of 20%, $200.
b. Triggers. (i) Part of Sellers regular inventory (ii) Breach, resale
(iii) same price.
V. Quasi Contract
a. Equitable remedy, alternative to true K. Relief is value conferred, not K price.
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 VI. Nonmonetary Remedies
a. Specific Performance/Injunction
i. Equitable remedy. So need make sure clean hands, no adequacy of remedy
at law, etc.
ii. Contracts for sale of real estate. Presume specific performance.
iii. Contracts for sale of goods. SP rarely available, typically only when in
short supply, personally valued, unique.
1. Tip: BAR has very narrow definition of unique.
iv. Contract for services. No SP. But possible to get injunctive relief (sort of
negative SP)
1. Ex. Prevent from working for a competitor.
b. Adequate Assurance of Future Performance
i. Triggers. (i) one party to K learning something after the K that gives him
reasonable grounds for insecurity about the partys performance, and (ii)
written demand for adequate assurance.
ii. Ex. After making K, learns other party has history of not making payments.
Can suspend performance while waiting for assurance.
c. Reclamation (right of seller to get back its goods)
i. Triggers. (i) Buyer was insolvent at time received the goods; and (ii)
that seller demands return of goods within 10 days of receipt (or
reasonable time if b/f delivery there was an express representation of
solvency by buyer); (iii) buyer still has goods at time of demand.
1. Ex. No reclamation remedy if buyer does not have the goods!
2. Ex. No reclamation if B later went out of business. Must be insolvent
when received!
d. Stopping goods in transit or recovering goods in storage if B is insolvent.
e. Rights of Good Faith Purchaser in Entrustment
i. If owner leaves goods with person who sells goods of that kind and person
wrongfully sells, then such a good faith purchaser cuts off right of original
owner/entruster as against the BFP.

Contracts and Sales Third

Party Problems

Three third-party prolems: Third-party beneficiaries, assignments of K rights, and delegation of K

duties.

I. Third-Party beneficiaries.
a. Identifying Third-party Beneficiary Problems
i. Look for two parties contracting with intent of benefiting third party.
1. Ex. A takes out insurance policy with Allstate. A will pay 3k a year.
Allstate will pay B 250K on As death.
2. Ex. M contracts with Cooks to deliver 20 pounds of BBQ to H. H can
sue.
b. Vocabulary of Third-party Beneficiary Problems
i. Third-party beneficiary Not a party to the K, but able to enforce K other
made for her benefit.
ii. Promisorperson making promise that benefits third party.

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 iii. Promiseelook for person who obtains the promise that benefits the third
party.
iv. Intended/incidentalOnly intended beneficiaries have K rights. If not
intended, incidental, with no K rights.
v. Creditor/doneeIntended beneficiaries are either creditor or donee. Usually
Donee, but look at whether beneficiary was a creditor of the promisee.
c. Efforts to Cancel/Modify Third-Party Beneficiary Contracts
i. Test. Once third-party knows of and assented to K, her rights have vested;
and K cannot be canceled or modified w/out her consent unless the K
provides otherwise
d. Suing on a Third-Party Contract.
i. Beneficiary can sue promisor
1. Intended beneficiary can sue promisor
ii. Promisse can sue promisor
1. Third party beneficiary does not take promisees place, they retain
their rights.
iii. Donee beneficiary cannot sue promisee BUT creditor beneficiary can.
1. Ex. H cannot sue W if doesnt get his barbeque. BUT could if owed H
$100 before and made contract to satisfy that debt. Now a creditor
beneficiary.
e. Defenses on a Third-Party Contract
i. Promisor can assert any defenses against third-party beneficiary that could
against promisee.
II. Assignment of Rights
a. Identifying an Assignment of Rights
i. Look for (i) a contract b/t only two parties and (ii) one of the partys
later transfer of rights under that contract to a third party.
1. Ex. B contracts with G to defend city for 300K. B later transfers rights
under K to R.
2. C.f. ex. B contracts with G to defend city for 300K. K provides will pay R
300K.
a. This is a third-party beneficiary.
b. Tip: look at the number of steps. It takes two separate steps
in Assignment. If T there from beginning then Beneficiary K.
b. Vocabulary of Assignment of Rights
i. Assignorparty to K who later transfers rights under the contract to another.
(B)
ii. Assigneenot a party to K. Able to enforce K because of assignment. (R)
iii. Obligorother party to the K. (G)
c. Limitations on Assignment of Rights
i. Contract Provisions
1. Determine whether contract (a) prohibits assignments or (b)
invalidates assignments.
2. Prohibition
a. Effect. Takes away the right to assign, but not the power to
assign.
i. So assignor is liable for breach of K, but innocent assignee
can still enforce.
b. Ex. B and G contract provides rights hereunder are not
assignable. G could sue B, but R can still collect from G IF didnt
know of the prohibition.
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 3. Invalidation.
a. Effect. Takes away the right to assign and the power to assign.
i. So assignor liable for breach and assignee has no rights.
b. Ex. all assignments of rights under this K are void. G can sue
B; R cant collect.
ii. Common Law limitations
1. Even absent K provision, CL bars assignment that substantially
changes duties of obligor
2. Assignment of right to payment is valid.
a. Ask is it any hard for obligor to perform. No.
3. Assignment of other performance rights are prohibited.
a. Ask if doing something different. Yes. (Ex. defending M instead
of G).
d. Requirements for Assignments
i. (i) Look for language of present assignment
1. Assignment has to be in present tenseI will assign is insufficient.
ii. (ii)Generally consideration is NOT requirethough as will see, may be
important.
e. Right of Assignee.
i. Assignee can sue the obligor.
1. Tip: Label the parties.
2. Ex. B contracts with G for 300K. Then assigen rights under K to R. B is
assignor. R assignee. G obligor. R can sue G.
ii. Obligor has same defenses against assignee as it would have against
assignor.
1. Ex. If B fails to perform, R cannot still collect from G.
iii. Payment by obligor to assignor is effective until obligor knows of
assignment.
1. Ex. Rent apartment from A. In March, assigns rental contracts to B. You
do not know of assignment and pay April rent to A. B cannot make you
pay again.
iv. Modification agreement b/t obligor and assignor is effective if obligor
did not know of assignment.
1. Ex. A and you agree to lower rent if vacate earlier. You can enforce this
modification against B.
f. MULTIPLE assignment
i. IF gratuitous assignment, general rule is last assignee wins.
1. Gratuitous assignmentpossible but generally a gift assignment is
freely revocable.
a. Revocation can occur directly or indirectly by bankruptcy,
death, assignor taking performance directly from obligor, or
making of another assignment.
2. Effect. Since later gift revokes earlier assignment without
consideration, last in time wins.
3. Ex. B gives right to 300K payment form G to R o January 15. On April 5
makes gift of same payment right to C. C wins.
4. EXCEPTION. Gratuitous assignment is not revocable if is (A) the
subject matter of a writing signed by the assignor and either (B)
the assignee has received some sort of inidicia of ownership, or (B)
the assignee has relied on the assignment in a way that is
reasonable, foreseeable, and detrimental.
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 a. Effect. Not revocable, will take priority over later assignments.
ii. IF Assignment for Consideration, general rule is first assignee for
consideration wins.
1. *Ex. Jan 10, B promises to assign rights under K with G to BG for $100.
On Fed. 2, B assigns rights to R for $1. On March 3, B assigns rights to
C for $250,000. R prevails. Note: assignment to BG is not valid as it is
in future tense.
2. Limited EXCEPTION. A subsequent assignee takes priority over
earlier assignee for value ONLY IF he both (1) does not know of earlier
assignment and (ii) is first to obtain payment, a judgment, a novation,
or indicia of ownership.
iii. Construction contract. Assignment of construction contract or money due
thereunder is not valid until filed. Thus, subsequent assignee in good faith
who filed first prevails over party who files later.
iv. Multiple assignments for consideration as breach of warranty.
1. In assignment for consideration, assignor makes warranty that rights
assigned are assignable and enforceable.
a. Ex. C could sue B for breach of warranty.
III. Delegation of Duties
a. Identifying a delegation
i. Look for a party to a contract transferring work under that K to third party.
ii. Ex. O contracts to paint Ts house for 1K. O and P agree that will paint Ts
house.
b. Comparing assignments and delegations
i. K creates duties and rights.
ii. Assignment is transfer by party to a K his rights/benefits under K to third
party not a party to the K.
iii. Delegation is transfer by party to a K his duties/burdens under K to third
party not a party to the K.
iv. Often contracting party makes both an assignment and delegation of his
rights to third party.
1. Ex. D contracts with C to deliver bar review lecture for $20 an hour. D
and T agree that T will do the lectures and collect the $20.
c. Limits on which duties are delegable.
i. Generally contractual duties are delegable, unless either (i) the K prohibits
delegations or prohibits assignments (Tip: BAR uses words interchangeably)
or (ii) contract calls for VERY SPECIAL skills or (iii) person to perform has
VERY SPECIAL reputation.
d. Requirements.
i. Essentially, no requirements.
1. Consideration not required, but no legal obligation on delegate unless
there is.
2. Consent of other party (obligee) to original K not required.
a. Note: If had consented, then could be a novation.
e. Effect of delegation
i. Delegating party remains liable (unlike novation)
ii. Delegatee liable to obligee of he receives consideration from delegation
party.
1. (Note: this happens b/c third-party beneficiary contract)
2. Ex. O contracts to paint Ts house for 1K. P then agress with O will do
painting for O because he is a good friend. P does not do the work.
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 a. T can sue O.
b. Neither O or T can sue P. (Because no consideration).
3. Ex. O contracts to paint Ts house for 1K. O and P then agree will do for
900. P doesnt.
a. T can sue O.
b. O can sue P.
c. T can sue P. (Because gave consideration, created a third party
contract that could sue on).

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