Contracts Outline Consideration A.

Consideration, Absence of Consideration and Nominal Consideration pg 2-12 Simple Donative Promises Donative Promises, Form and Reliance 1. SIMPLE DONATIVE PROMISES 1. Tip: A promise to make a gift is unenforceable, unless it has been completed then it cant be rescinded 2. Hawkins v. McGee 3. Dougherty v. Salt 227 NY 200 1919 1. F: Aunt promises 3K to nephew 2. R: A promise to make a gift is not enforceable No return promise. A. law does not enforce gifts (donative promises) B. donative promises are not enforceable because the promisee suffers no detriment as a result of the breach C. Restatement 71(4) There was no return promise 4. Restatement 1 Contract Defined A contract is a promise or set of promises with legal remedy when breached, or performance of which law sees as a duty. 5. Restatement 2 What makes a promise? 6. Restatement 17 Requirement of bargain manifestation of mutual assent to exchange and a consideration. 3. Restatement 82-94 Rules (contracts w/o consideration) 7. Restatement 71 What is Consideration? Consideration Return promise or performance 8. Tip: Four common scenarios on exam for consideration (p.154): 1. Promises to make gift not enforceable; 2. Promises to pay for past services Good Samaritan not enforceable when no reasonable expectation of compensation. Dont be fooled if a. unconscious person regains consciousness immediately after regaining consciousness, b. saviors happens to be someone with experience like retired doctor, c. a relative who promises after fact to pay, d. a promise to pay is made in writing in consideration for services. None of these have consideration. Distinguished from emergency medical services by parties who would reasonably expect to be paid emergency rooms and ambulances. Dougherty v. Salt D - executor of estate (has fudiciary duty to maximize value of estate) -doesnt appear to be a real bargain here -if the actual filling out of the note was somehow construed as being a viable bargain then this case would be different

assent is the agreement (offer & acceptance) bargain: offer & acceptance and agreement if Reliance then consideration not required Executory: an unperformed obligation Consideration- a return promise, or performance (act or ommission), It must be bargained for the bargain must plausibly make sense to jury -actual bargain, not just nominal bargain doesnt have to be even, just has to go from sham to real bargain must come before agreement Rule: Consideration required Purpose: promote caution in dealings

RULE Marriage of Witten IVF embryo disposition agreement is not binding K w/o consideration is not binding K w/o consideration is not binding

PRINCIPLE family reproductive decisions require current consent (in that state) cautionary? Were they careful when they made statement -cautionary -evidentiary (court cares if they can fig out what agrmt is) Oral promised possibly more likely to not have consideration- less evidence

Dougherty v. Salt

promise by friend to take you to the airport

Schnell v. Nell

2.

ELEMENT OF FORM 9. Schnell v. Nell 17 Ind. 29 1861 4. F: Husband made promise to honor wifes will though she had nothing to leave to anyone. Consideration was love and affection for wife, help wife gave him, one cent, and abstaining from legal action. 5. R: There was no bargain - .01 for $600 D. Nominal consideration form, not substance of bargain. Amount so

small court may conclude as a factual matter there is no real bargain present at all. But if big enough to suggest a bargain, fact it is inadequate is irrelevant. If non-trivial payment not in fact made, most courts take this ad evidence no bargain present. Restatement 79 Comment D pretended exchange doesnt satisfy 71 E. Consideration is supposed to run from promisee to promisor F. To constitute consideration promise or performance must be bargained for.

Schnell v. Nell purported bargain here: 1 cent, agrmt not to sue, respect for wifes wishes, appreciation of wife -court says no consideration channelling - set up rule that says what contracts we will enforce, channels what K's people write into what works -Advantage: its easy as a lawyer -Disadvantage: case w/ no consid that are unfair(?) The Seal - deals w/ evidentiary, cautionary, channeling -satisfies these in states that allow it hypo: man desperate for 25 cents to make phone call offers $600 for 25 cents now -THIS IS PROBABLY COUNTS AS A BARGAIN B. Causa and Consideration (H 1) C. Promissory Estoppel (or Reliance): A Substitute for Consideration pg 12-25 Kirksey v. Kirksey place to raise family -promise is unclear (therefore no consideration) remember- even if he gains nothing, it can still be a bargain What damages should they get here? Reliance, or maybe expectatn Feinberg v. Pfeiffer -for it to be a promise, they must TELL her about it R. 2d - 90

Reliance - substitute for consideration ethical issues: coaching client - did she actually rely on pension? What damages should Feinberg get? -expectation (position she would have been in if K went as planned) reliance would be hard to do in this case Keep issues separate: A- Reliance- reliance dmgs measure (also means promissory estoppel as substitute for consideration B. Damage award on reliance Generally courts use reliance to see if K is valid and THEN they award expectation damamges Walters v. Marathon Oil -if breach doesnt cause you losses, then no damage award -occasional punitive damages but usually not

D. Adequacy of a Bargain pg 26-34 (also look at New Yorks version of Statute of Frauds) Hamer v. Sidway Key issue: Giving up a legal right constitutes consideration Nephew could argue: hes paying me interest, therefore could already be my $ Unilateral K - a promise for an act -only 1 promise Statute of Frauds -in writing helps for evidence in Hamer v. Sidway, note from uncle probably qualifies as writing -If you see Oral or verbal on exam, think statute of frauds Statute of Frauds Rule: writing..., Principle: prove theres a K Batsakis v. Demotsis -Duress case maybe

-taking advantage of economic duress -could claim she was forced to accept offer -is there a bargain? - yes 2000 for 500,000 DR Post v. Jones US Supreme Court (bc its admirality case) P claims oil worth more and it was forced to accept (not real consent) -this isnt a consideration case -no acceptance of deal via duress Policy Issue: if K not enforced here then next time the D wont help such a ship (Enforcement of K's critical to make commerce work 3 Points: 1. there are limits to what courts will let you get away with 2. limits to when it becomes duress 3. Courts care not only about case at hand but also settin precedent Dif b/t Batsakis and Post v. Jones: -there was dramatic duress case in Batsakis, but THEY DIDNT ARGUE DURESS -In Post v. Jones, they brought duress claim Limits on Consideration 1. Executory and Illusory Bargains pg 48-65 Scott v. Moraques Lumber Question is: how did he commit himself? Scott says he didnt have to buy boat Court says he bound himself by having only 2 alternatives: 1. Buy vessel and provide delivery OR, 2. not buy boat -He gave up right to buy boat and not provide the service If he doesnt buy the boat then no obligation -his sacrifice is not buying boat

Still a K? - yes -even if he waits a significant amount of time and then says hes ready to deliver, still K prob enforceable Buy Boat (The Condition) ---> Provide Boat (The Obligation) Wickham v. Burton Divisible contract long-term agreement, sellers promise illusory, but buyer places individual orders. Each offer a series of unilateral contracts and each order an acceptance seller bound to fill. 6. Illusory promise gives one party total discretion on whether to perform. G. Restatement 77: Illusory and Alternative Promises H. If agreement to purchase all I need or require it would be binding, since limits realm of realm of choice. -within reasonable standards (fight would be ovewr what reas. is here) -if you want unreasonable amount, the language must be in K 7. F: Seller (P) agreed to furnish buyer (D) with as much coal as buyer (D) would want to purchase from seller (P). Suit is over counterclaim by P in action brought by D that there was no contract. R: No mutuality in K when obligation to sell, but not obligation to purchase, vice versa. If only one party is bound to do something, the promise is illusory. WB can choose not to buy here so its illusory (doesnt limit their choice) -something outside of parties control is valid consideration -fact that FL did want lumber doesnt create consideration parties think they are profitting from open ended K but are actually invalidating it Watch UCC -2-306 -has 2nd section that works w/ exclusivity agrmts -says you must use best efforts Ask: why is there no implied promise in FL v Wickham? -b/c its too hard to pick a number and say that was the parties intentions (but in Wood v. Lucy Lady-duff - reasonable expectation to seek a profit) Unilateral K hypo: $100 to walk across bridge -walker under no obligation until act happens

Lindner v. Mid-continent Requirement K's Output K's Mattei v. Hopper leases satisfactory to purchaser Satisfactory clause (2 types) 1. Commercial value type - must be reasonable/in good faith -in defining reasonable, you must point to something you dont like 2. Fancy taste type Wood v Lucy, Lady Duff-Gordon -she clearly breached -wording 1/2 of all profits and revenues is strange -did he make explicit promise? - No (cardozo says promise is implied) 2 ways to imply terms in a K 1. All K's have obligation of reasonable efforts 2. This K does b/c of its structure -if K said no stipulation besides explicit statement than maybe court doesnt rule the same Wood has reasonable expectation to seek a profit Watch UCC -2-306 -has 2nd section that works w/ exclusivity agrmts -says you must use best efforts Grouse v. Group Health Plan promissory estoppel here Issue: what are they promising? -Elliot made promise even though he didnt have authority to make that promise, its its reasonable to assume he had authority to make promise, it sticks -at will employment - can terminate at any time -series of unilateral K's How did Grouse rely? -quit job, turned down other job offer

to get promissory estoppel, you must be worse off than before promise what makes reliance reasonable varies from state to state -you can poss. never rely on getting this What damages could he get? -reliance damages Either 1. lost wages at last job Or 2. lost oppostunity prob not both. What does this case say in Minnesota? -must give new hire (or new accepted offer) a reasonable chance to perform duties PROF says: he likes result of Grouse for Grouse in his situation but its a bad result for employers later -resonable chance to perform duties is too vague What would have constituted reliance in Wickham v. Burton? -if Farmer Lumber promised clients coal at WB price and then WB reneged on deal -but you could argue that its not reasonable reliance (maybe not reasonable to rely on your own illusory promise) to not be illusory, you must actually give up a legal right Lingenfelder v. Wainwright Brewery Co. Issue: is there consideration for the promise to pay an additional 5%? P Arguements: 1. transaction was compromise of a doubtful claim (A disputed claim could lead to a settlement) Prof says: there is no doubtful claim, if anything, Lingenfelder is wrong 1. 1st K changed, new K started 2 strains against: duress, no consideration quantum meriut- unjust enrichment If WB had paid Lingenfelder the extra 5%, id be tough to get it back Pre-existing Duties pg. 65-84, (H 2) A. Waiver of Condition (Restatement 2nd Ks 224, 84; U.C.C 2-209, (H 1 Clark) Foakes v. Beer Same q as Lingenfelder -Court says they dont like rule but preexisting principles say uphold old rule

Dif b/t Foakes and Lingenfelder? -prob no duress here Did Foakes promise here? maybe not, wording seems like if -sounds like unilateral K -therefore she cant sue for breach His Defense: you promised not to go after the interest -not valid defense b/c its a Prior Obligation -we want people to honor their obligations UCC 3-311 - You must make sure it gets to the right person, it cant just slip through the cracks Austin v. Loral -duress is an issue here R.2d.-376 - if duress, entitled to restitution for benefit conferred to prove duress: -cant obtain from another source -ordinary breach remedy doesnt work -here, navy would be unhappy Liquidated Damages Clause -If Loral fails to deliver, they owe X $ per day here -not always enforceable, we want actual damages not a penalty

Angel v. Murray Is there duress? -court says no -angel thinks getting extra for what hes contracted to do -all risk is on town -> if less than usual new units, contractor gets windfall how much detail should go into K's?

maybe: no modification rule or modification ok rule -these would be law of state K negotiation -> K Performance -> unanticipated circs + K renego. -> lawsuit if no mod. rule than lawyers would throw in every possibility -this makes negotiations more expensive if mods ok rule than renegotiations wont cost as much b/c your negotiating only the problem clause court cites restatement 89 dif than normal case b/c theres a gov't actor Schwartzreich v. Bauman like Lingenfelder -breach isnt a legal option is courts view ceremony of tearing K to make it seem like mutual and starting fresh -court not necess agree -seems iffy -court not sure who to beleive, may or may not be duress Point of case: courts becoming more willing to allow K mods. Clark v. West 1st promise is unconditional 2nd promise is conditional from mod pov, west not getting anything more to waive condition Could argue unanticipated circs - book selling even though he drank but court not using this Main Point: you can only waive immaterial condition -cant waive consideration Main Point 2: no need for consideration for waiver of condition -waiver can be revoked if reasonable time given, unless theres reliance In a waiver case, question to ask is: Is the condition material? here, look at $ amount, drinking clause is 2/3 of comp, seems material

Clark v. West could be viewed as modification of K or waiver Prof thinks: drinking here is material (but you can disagree on the exam if good point is made Summary of Legal Duty Material (past exams page has this as well) Modification: normally modifying a promise, in some cases could be modifying a condition (not normally discussed) Traditional rule: consideration required -duress needs to be examined Modern Approach: R.2d-89 (a) Application to sale of goods: UCC 2-209: no consideration req'd good faith required Waiver of Condition: -must be non material -must be clearly communicated -retractable for future if no reliance UCC 2-209 -need good faith Past Consideration pg 85-96

Mills v. Wyman Issue: is moral obligation enough for consideration? Enforceable in NY? yes, in this case its enforceable -judge says not morally right, but right for the law R.2d-86 ignoring the bargain in absence of promise, could he still get $? -maybe Whats result in future?

-might not effect decision making b/c its promises afterwards What if Webb didnt get hurt? Still a K? -under R2d - 86 - NO -In this case- judge prob says yes is it unjust enrichment? -not really, but thats a q for the court Hypo: brother promises sister to pay her $10 per month b/c he told dead parents he would. She finds out its not true that he promised the parents. She promises to repay. Enforceable? Rules for unjust enrichment: -if its forced on you, you need not pay (Ex: squeegy people) R.2d. - 86 - if unjust enriched, than past consideration is enforceable Dif b/t Wyman case and Webb v. Mcgowin: A. -2 dif states. B. Webb is self enrichment. Wyman is not self enrichment C. time period difference past consideration rule is illustration of consideration rule except loosened through R.2d. - 86 Difference b/t Harrington v. Taylor and Webb v. Mcgowin? Nothing. Only the outcome. -You could aply R.2d. 86 to Harrington but court didnt. Consideration Oral Arguments Remedies I. Intro to Damages pg 114-134 3 Basic Measures 1. Expectation Puts promisee in position he would have been in if contract was performed -This is the normal measure. Courts want to give this. 2. Reliance Puts promisee in position he would have been in if contract not entered -Generally, only given if theres a problem with expectation approach 3. Restitution Restore to promisee what unjust benefit conferred on promisor -Generally, only given if theres a problem with expectation approach Hawkins v. McGee

* It must be a promise to bring contract law into play, prediction doesnt count. Lower court gives reliance damages Appeals (court here) gives expectation Would there have been consideration w/o payment to dr.? -Yes, opportunity to do operation Sullivan v. OConnor -Takes middle ground -says gets reliance Naval Institute v. Charter (Berkley) *Copyright could give you disgorgement, BREACH WONT Court says: expectation damages = lost hardcover sales in Sept. Court awards expectation damages no disgorgement Coppola v. Alfone benefit of bargain expectation damage language Trial Court says bad faith Appeals Court says no bad faith, disgorgement Supreme Court of Florida says paying her profits when they sold for her property trustee relationship (?) Coppola sold for $170,000 -She should get difference between $170,000 and what she would have had to pay (This is expectation measure) -(as long as $170,000 didnt misrepresent MP) Laurin v. Decarolis Property w/ gravel: $26,900 Property w/o gravel: $26,900 Worth of gravel: $6,480 -NOT POSSIBLE -property w/ gravel must be undervalued (and worth $26,900 + $6,480) (unless building house on top of gravel could obstruct extraction) POINT OF CASE***

Willful breach leads here to disgorgement - very unsual, rare exception Efficient Breach -shouldnt really discuss this on final at all -Only points to remember: -Pareto-efficient transaction- makes at least one person better off and no one worse off -Kalder-Hicks efficient transaction (efficient breach) makes atleast one person better off and those better off could recompensate others to make no one worse off -Courts routinely ignore efficient breach -bad argument, not a part of contract law -courts indifferent to whether contracts are efficient J. Expectation Damages 1. Service Contracts pg. 135-152 Louise Caroline Nursing Home Inc v. Dix Construction Co. -auditor wants to give expectation damages -remember this case is commercial property not personal 2 possible formulas to use: 1. diminution in value 2. cost of completion POINT OF CASE -illustrates problems that arise when choosing between dim. In val and cost of completion. -Court says diminution in value would be too much (windfall) here -COST OF COMPLETION works better Peevyhouse v. Garland Coal & Mining Co. Cost of Completion ($29K) or Diminution in Value ($300) -BOTH DO EXPECTATION DAMAGE -Court says Cost of Completion is grossly disproportionate to increase in property value here Which measure to choose? Qs to ask: Was the clean up a material element of the bargain? --They gave up $3000 for it -sounds nonincidental If court gives $29,000 then -$300 + $29k = $28700

-Wouldnt giving them this much be economic waste? How would we hypothetically fix this for next time if we were Plantiff? -Break it into 2 contracts -1. For use of land 2. contract for clean up If 1st K completed THEN must do second -Prof says: outrageous not to pay $29K if they will actually fix it Cost of Completion is the normal damage # to give but sometimes courts will give diminution in value -if CoC is grossly disproportionate -Courts probably gives CoC here if they actually think $ here goes to fix it. -Specific Performance not usually given for Ks like these -hypo: Court could put $ in escrow? And give back if not used to fix.-then they surely use for the purpose. -would we be happier than? Restatement, 2nd Ks -348(2) Alternative to Loss in Value of Performance (2) If a breach results in defective or unfinished construction and the loss in value to the injured party is not proved with sufficient certainty, he may recover damages based on: (a) the diminution in the market 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 in value to him

Eastern Steamship Lines v. U.S. -Court saying: Of course parties would have contracted this w/p unexpected circumstance -Difference b/t Eastern Steamship and Peevyhouse? -Eastern isnt attached to boat City of Elmira v. McLane -good faith issue -court treats Defendant as having bad faith -aestetics were material, NOT INCIDENTAL Advanced, Inc v. Wilks -if property has significance to owner then maybe cost of repairs -if simply an investment probably give dimunition in value

-3rd approach: diminution in value + personal attachment/feelings -issue: will they repair it? NOTES FOR FINAL: Even periferal issues should be mentioned. Err towards inclusion rather than omission Aiello v. Nationwide Tractor -what damage does the owner want? -owner is unhappy w/ formula but if formulas done correctly, they should all come out the same. Aiello Court says: $21500 (Costs Incurred) + $3000 (Profits) - $10500 (Payments made) Restatement 2nd of Ks -347 Measure of Damages in General Subject to the limitations stated in Restat 2nd Ks 350-53, the injured party has a right to damages based on his expectation interest as measured by: (a) the loss in the value to him of the other partys performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less any cost or other loss that he has avoided by not having to perform Aiello ISSUE: Was trail court using the right formula? -As general matter, can normally ask for restitution -looked at as windfall sometimes (BLACK LETTER) Restatement 2nd Ks 346 Availability of Damages (1) The Injured party 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)If the breach caused no loss or if the amount of the loss is not proved under the rules stated in this Chapter, a small sum fixed without regard to the amount of loss will be awarded as nominal damages $33k (KP) - $10500 (PM) - $8500 (Cost Remaining) = $14000 -even of you would lose money on a contract, suing can sometimes lower losses

SELLER BREACH PROVISIONS (of UCC) UCC 2-711: Buyers Remedies in General; Buyers Security Interest in Rejected Goods. (1) Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract (Section 2-612), the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid (a) cover and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or (b) recover damages for non-delivery as provided in this Article (Section 2-713) (2) Where the seller fails to deliver or repudiates the buyer may also (a) if the goods have been identified recover them as provided in this Article(Section 2-502) (b) in a proper case obtain specific performance or replevy the goods as provided in this Article (Section 2-716) (3) On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller (Section 2706) MY NOTES: UCC 2-711- lists options UCC 2-712: Cover; Buyers Procurement of Substitute Goods. (1) After a breach within the preceding section the buyer may cover by making in good faith and without unreasonable delay any reasonable purchase of of or contract to purchase goods in substitution for those due from the seller. (2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (Section 20715), but less expenses saved in consequence of the sellers breach (3) Failure of the buyer to effect cover within this section does not bar him from any other remedy. MY NOTES: UCC 2-712: CP (Cover Price) KP (Contract Price) UCC 2-713: Buyers Damages for Non-delivery or Repudiation (1) Subject to the provisions of this Article with respect to proof of market price

(section 2-723), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article (Section 2-715), but less expenses saved in consequence of the sellers breach. (2) Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival. UCC 2-714 MY NOTES: UCC2-713: MP KP UCC 2-714: Buyers Damages for breach in Regard to Accepted Goods (1) Where the buyer has accepted goods and given notification (Subsection (3) of Section 2-607) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the sellers breach as determined in any manner which is reasonable (2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had of they had been as warranted, unless special circumstances show proximate damages of a different amount. (3) In a proper case any incidental and consequential damages under the next section may also be recovered MY NOTES UCC 2-714: value as promised value as accepted [When buyer is unsatisfied w/ quality of goods. What is a different quality? UCC 2-601 SAYS: ANYTHING) This differs from CISG. In CISG it must be a FUNDAMENTAL difference. UCC 2-715: Buyers Incidental and Consequential Damages. (1) Incidental damages resulting from the sellers breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach. (2) Consequential damages resulting from the sellers breach include: (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) injury to person or property proximately resulting from any breach of warranty MY NOTES on UCC 2-715: ID and CD UCC 2-723 Proof of Market Price: Time and Place (1) If an action based on anticipatory repudiation comes to trail before the time for performance with respect to some or all of the goods, any damages based on market price (section 2-708 or Section 2-713) shall be determined according to the price of such goods prevailing at the time when the aggrieved party learned of the repudiation

(2) If evidence of a price prevailing at the times or places described in this Article is not readily available the price prevailing within any reasonable time before or after the time described or at any other place which in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making any proper allowance for the cost of transporting the goods to or from such other place. (3)Evidence of a relevant price prevailing at a time or place other than the one described in this Article offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise. MY NOTES ON UCC 2-723: its about market prices UCC 2-724 Admissibility of Market Quotations. Whenever the prevailing price or value of any goods regularly bought and sold in any established commodity market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of such market shall be admissible in evidence. The circumstances of the preparation of such a report may be shown to affect its weight but not its admissibility. MY NOTES ON UCC 2-724: Its about market prices 2. Sales of Goods pg. 152-167 Continental Sand and Gravel v. K & K Sand and Gravel Section of damages applied: U.C.C. 2-714 : Value promised value as accepted Ask yourself is there a claim if no express warrantees? Answer: -could be an implied promise? In Common law (restatement) maybe but we are dealing w/ U.C.C. Implied warrantees in UCC: 2-314, 2-315: say if you dont explicitly get rid of warranty (as is sale) then its still there. Egerer v. CSR -Did he cover? -could argue: hes waiting for shoulder gravel to be available -didnt cover at the time -can a few years be a reasonable time to cover? -maybe yes -still brings up question of unreasonable delay

-could argue it just needs to be a reasonable time, doesnt need to be the MOST reasonable time -Not having the resources at the time to cover could poss. Make covering unreasonable -could damages have been prevented by cover? (Refer to UCC 2-715 (?)) -Yes -even if you covered you can still ask for 2-713 damages -if getting better quality reduces expenses, this comes out of damages award. BUYER CHOSE: U.C.C. 2-713 damages (b/c MP is $8.25) -gave $8.25 b/c best substitute at time of breach -UCC > common law -gives him UCC 2-713 POINT TO TAKE AWAY: If you offer someone a good deal on something valuable to them, you better follow through or you could get sued and be held liable. Delchi v. Roto Rex -voided contract -how can they do that under CISG? -fundamental breach -what is fundamental breach? -Court here says: It doesnt conform and therefore its fundamental breach -PROF doesnt like courts reasoning -not enough of a measure. They could be right but they need a better measure -PROF is not disputing its fundamental, but did the court do enough here? -Courts treatment here of fundamental breach makes it a perfect tender rule -this is not great -BE LEARY OF ALL CASES OF THIS BEING FUNDAMENTAL BREACH -Is a sample a direct measure of what to expect?

-maybe not -mechanical devices vary. There will be fluctuation in quality -This could matter. Expect some deviation -In this case, quality still is iffy. Very large percentage -the sample seems to not have been asked for in this case -sample should have had a plus/minus range -PROF SAYS: ROTO IS WRONG HERE (CULPABLE) --Buyer covered, so they can get consequential damages -CISG 74 A. Profits -Sales price B. Variable Costs costs that are avoidable C. Fixed costs - -fixed costs: not related to sales. Management, property taxes, etc etc. -not related to breach -RED HERRING -Still have to add in costs later, relates to fixed costs Should get compensated b/c cant avoid them. -Labor costs the 4 days are FIXED, and unavoidable -Should be subtracted -Must award lost profits but also ID and CD to make them whole #5 modifications for Sanyo issue of fact -Is the price to convert to roto the same thing as set up for sanyo? -Unclear is unsetting up from roto or set up from sanyo #6 4000 additional lost sales -its speculative POINT TO REMEMBER: If costs are fixed then they were incurred and due compensation for them if related to breach BUYER BREACH 2-501 * Concept of identification exists 2-712 buyer cover 2-710 incidental 2-709 action for price = 2-706 seller cover

-in seller breach = specific performance UCC 2-716 Consequential damages for seller when buyer breaches? -No Neri v. Retail Marine Deposits have NO legal significance -contracts are binding without a deposit -Maybe it could be a statutes of fraud issue? -(evidence) 2-708 If Contract says: You breach, we keep deposit, that is a liquid damage clause -If the amount is more than what damage should have actually been then you cant keep it. If deal falls apart, party doesnt necess. Keep the deposit. UCC 2-718 says: Buyer gets back all of deposit besides $500 (Liquid damage clause) UCC 2-718 rules for getting deposit back 2-718 (3) says substitute to seller right to recover -(2-708) (1) MP KP 12587.40 12587.40 = GET $0 -go to UCC 2-708(2) if measure inadequate -why is 0 inadequate here? -UCC 2-710 give incidental -lost volume sale could have sold 2 instead of 1 -why does court give $4250 in restitution? They should have started at $3750 (4250 didnt subtract the $500) -2-718 (2) says should get $500 OR 20% (w/ deposits) -2-718 (3) says you still get all damages you can show in other Sections why not use UCC 2-706 here? -it would give nothing -It wont get you to 7-708 (2) why not use 2-709?

You must give the goods 3. Limitations on Expectation Damages pg. 167-187 Rockingham County v. Luten Bridge Co. -is the K price the measure if breach? -Yes, generally Proper Damages for Luten Bridge: profits + costs incurred

Is the Feb 21st order a breach? -Luten must be sure they really breached or else in stopping they would be in breach themselves Steps for Luten to take to decide: 1. Call for clarification 2. Sue rd March 3 resolution a breach? - Luten needs clarification -Luten cant rely on this -County is trying to get them to stop w/o committing to officially breaching Is a bridge governed by the U.C.C.? -not not generally Luten has duty to make reasonable effort to mitigate damages Ex: materials for bridge probably need to resell Can injured party get compensated for costs of mitigating? -Yes Is there a duty not to raise damages or to actually mitigate? Covering helps eliminate consequential damages Shirley Maclaine Parker v. 20th Cent. Fox Is Foxs letter a breach -Yes, very clearly If she took the 2nd offer could she sue on the 1st offer for damages? -No This K says our obligation is to pay you regardless - pay or play

HYPO: She didnt have to take an inferior job but if she DOES TAKE IT, it does subtract from damages on first K -If second offer was on the same level, shed probably have to accept or get nothing -2nd K would be mitigation of damages on 1st Does Mclaine have to go out and look for a 2nd job if studio didnt offer 2nd K? -probably not WHY IS THIS CASE DIF FROM LUTEN BRIDGE? -If second job came up for Luten Bridge, theyd have to take it. SAME? Neither Luten bridge or Mclaine have a duty to Mitigate INSTEAD: PARTIES HAVE A DUTY NOT TO AGRAVIATE DAMAGES, NO DUTY TO MITIGATE - (Most likely, it is state by state though) -what of Fox breached and then said we will make bloomer girl after all, must she accept it? -No but she wont get damages b/c its a comparable offer Hadley v. Baxendale RULE OF HADLEY: DAMAGES MUST BE FORESEEABLE What could they sue for besides lost profits? -possibly workers wages (not if its in profit estimate) Here: 2 kinds of expectation damages: 1. damages from natural course of things (maybe there was a second crank) 2. Special Circumstances Reliance would be the cost of shipping Damages must be reasonably expected Did carrier have this knowledge? -Maybe Yes

-seems maybe clerk knew but not higher ups Shippers effort should be based on worth of effort to other party BUT shipper needs to know the worth! UCC says in these situations: KP MP (you know what your on the hook for. -Different than Hadley Rule nise (?)- unless something else happens in the meantime (?) UCC 715 reason to know CISG probable BOTH ARE LOWER STANDARDS THAN GEN. COMMON LAW & UNIDROIT Restatement 351 (3) if really out of control, you wont get it HYPO If in Hadley, carrier called and said our wagon broke. Are they still liable? (no?) Rickcloth idea pg 176-177 -court says no, wont get damages -PROF says if your buying a rickcloth, that might show its predictable How does Fed Ex deal with these situations? -Liability waiver and insurance Koufos v. C. Czarnikow (The Heron II) -Under Restatement do they get damages? -Probable result? -50/50, not exactly Reason for shipper to hurry boat? -No, they dont know if the price will go up or down Ruling in this case is troubling but it still is law. -Theres a strong counter argument for this ruling Card analogy shows court is unformfortable with probabilities 25% ok 2% not ok (IN THIS CASE) Kenford Co v. Erie County Contract provisions:

K 1st part -We agree to negotiate -could you breach this? -yes, if you dont negotiate (you agree to try to agree) 2nd part -if you fail to reach agreement then a 20 year management contract becomes effective Preliminary negotiations Q -At some point they become a binding K If $ amount given in return for 20 year K, then they get damages -not full $ amount though (subtract expenses saved) Lower court here says: we are not taking expert opinions Appeals court says: we will but its not good enough Should standard of info be higher for business people than courts? -No, lower. Business is voluntary (your own risk), court decisions are not Kenford v. Eric Liquid damages stipulation -Liquid damages stipulations force disclosure -makes parties aware of possible damages liquid damages prove it or get nothing. Fair? Default rule if you cant prove damages, you get $0 *** You could write a liquid damages clause in this case and it could be valid -But still, you need some measure for determining damages Why is this contractvalid? -Why do they deserve any damages? -courts will imply a duty -but efforts at negotiation might excuse obligations to build -PROF SAYS: probably not here. Its not the fault of the negotiations failing, instead its the fault of the county Rombola v. Cosindas Uncertainty? -court says: no, we have data to figure it out. -still strange b/c not exactly putting them in expectation but rather compromise

-Goes against restatement of probability UNIDROIT 7.4.3. (2) would give it to them Contemporary Mission Inc. v. Famous Music Corp Chaplin v. Hicks -Do damages match loss? Expectation Damages Question on EXAM -On Exam make points AND counterpoints -Def hit important stuff -mention unimportant stuff if theres time 1.mitigation 2. Foreseeability 3. Certainty (can we calculate after the breach?) -is Peavyhouse a Forseeability Q? Peavyhouse is not a certainty issue -no, it doesnt come up Book and Bottleshop

Liquidated latin term means specified -Must it be a number? -not necessarily -can be a formula -Its just a way of determining damages Liquidated damages clause -cuts litigation costs -If its there to give incentive to perform then its a penalty (and thus not enforceable) -They are viewed objectively. Not what parties say it is but rather what it looks like. -If the clause isnt enforceable then what do they get? -Expectation damages

4. Liquidated Damages pg. 188-202 Wassermans Inc v. Middletown

-problem w/ gross receipt measure? -Should they have gotten expected revenue for the rest of the lease? -no, they can mitigate and open a store somewhere else -Revenue Reciepts are easier to show court than profits profits = revenue cost revenue = $ taking in Court says 2 alternatives here: 1. Anticipated damages 2. Actual damages Court says trail court didnt scrutinize on the right basis and tells them how to do so. Standard for reasonable test based on expected damages WASSERMAN APPROACH: LIQ. DAMAGES CLAUSE- IF REASONABLE AMOUNT THEN ITS OK -DIFFERENT THEN HUTCHINSON OR OLDSMOBILE Lee Oldsmobile Inc v. Kaiden Inconsistent w/ Wasserman reasoning Comparision: Wasserman said: reasonable in light of expected or actual amount Olds Mobile Says:Ease of Calculating Approach - if its easy to calculate damages at the end, then we wont enforce liquidated damages clause, they say Liq. Damages only good when there is uncertainty -this is not good b/c it makes negotiations uncertain, Oldsmobile ignores this Hutchinson says: Difficulty of Calculating Approach - Clause stands if damages are not readily ascertainable -LACK OF CONSISTENCY -NO SET RULE FOR LIQ DAMAGES, you can only divide by different factors in different courts UCC 2-718 liq. Damages clause says (?) Hutchinson v. Tompkins -says liquidated damages clauses are okbut must be reasonable EXAM: Liquidated Damages material

-If question is based in New York or an imaginary jurisdiction -you should say: here are the factors courts examine -if exam states its in New Jersey -Use waserman -if states Maryland -use oldsmobile U.C.C. and the Restatement say: liquidated damages clauses are ok if reasonable at CONTRACT TIME or AT TIME OF BREACH (either) Pembroke -Oldsmobile Approach Kenford -Uncertainty at end Argument for liquidated damages clauses it forces completion of promise Late fees material -Late fees are a penalty -forces performance? -damages for breach?

C. Specific Performance pg. 203-212 Europe: -In Europe its the default rule Provision in Euro K Law: Art 9.102 -Euro approach comes back around and ends up in line with our law here -Specific performance when goods are unique U.C.C. Action for Price antipragmatic -Courts typically dont force specific performance in employment contracts -They will slack, etc etc -Courts dont want to supervise performance -In sale of goods & real Estate Specific Performance happens more often London Bucket Co. v. Stewart -often you can use multiple remedies -here court says: Pick 1 Without prejudice can revive remedy in case of appeal, etc etc why do they want the contractor that just screwed up to come back? -Bucket could be broke -its better than nothing

Restatement 2nd Ks 360 (c) - likelihood that damages can be collected -court says no to performance -they might get nothing now if they cant collect Penn Railroad (pg 206) -why give specific performance here? -joint profit here -ask self do they require supervision? -in railroad and aircraft case probably not Stokes v. Moore -even if specific performance agreed, court doesnt need to follow it but they can if they wish KENFORD COURT wouldnt make them Laclede Gas v. Amoco Structure of Contract: -Master Contract that governs smaller Ks -each note is its own smaller K -Sometimes you breach and cant just cut a check. Here they could still be doing business for maybe 15 years -Why not worry about supervision here? -Amoco is not going to mess with gas lines Weathersby v. Gore -Court says: more willing then used to be to give specific performance BUT NOT HERE Specific performance on sale of goods ONLY WHEN UNIQUE Sale of Land -Yes, will usually give spec. perf. b/c property normally unique Employment? -no Sample Consideration Exam Question

D. Reliance Damages pg. 213-218 Reliance (2 meanings) : #1 SUBSTANTIVE promissory Estopple en lieu of consideration #2 REMEDIAL put injured party in position as if no K made Restitution (2 meanings): #1 SUBSTANTIVE right to recover for unjust enrichment #2 REMEDIAL allow injured party to recover for unjust enrichment (could be either party), (Not just a damage measure for breach but also simple unjust enrichment) Security Stove v. American RYS Express -Why not ask for expectation damages here? -too vague, hard to prove -Gets back to new business idea in Kenford v. Erie -This case awards reliance -If expectation damages are too hard to show, a court can award reliance damages unless you can prove its a losing contract -b/c then breach didnt cause your problems HYPO: if the convention was canceled, can you still recover? -No, b/c you cant claim failure to exhibit due to missing part, instead its the conventions fault -its like showing it was a losing contract -means there is no loss here then -Causation issues What about preexisting expenses (renting the convention space before the contract was made, etc etc)? -Answer: Carrier has a common law obligation to ship (pg 216 bottom) -P relied on this common law obligation -D is expected to realize that P will suffer preexisting expense loss if D breaches Reliance sometimes awardable because we think its the floor on expectation damages (that cant be proven due to vagueness) -in this case, they couldnt show expectation damages b/c they were too speculative Are we worried about overly large expenses being sued over after breach? -No b/c the party that is sending stuff expects that most of the time there wont be a breach and they will have to pay

REASON COURTS EVEN GIVING RELIANCE? -Answer: We think you are gonna make money in the end -trying to vindicate expectation even when too vague If D proved Dougherty was not interested then the case for reliance wont work either L. Albert & Son v. Armstrong GENERAL RULE: Expectation damages burden is on the P to prove profits Reliance damages burden on D to show profits would be nothing (K no good or a losing K) Exp damages = Cost incurred + lost profits if you scratch lost profits THEN: damages = COST INCURRED ONLY this is reliance damage

WHAT ALBERT TELLS US ABOUT SECURITY STOVEif Dougherty came in and said hes not interested in the stove, then profits are negative, whole thing is a loss and courts are not going to award reliance Is there a duty on Stoves behalf to try to cover? -If they could have reasonably covered and did not, they cant get damages HYPO: If stove Co covered and found the part, theyd only get cost of finding the part, not any other reliance

E. Restitution Damages pg. 218-231 Osteen v. Johnson Unenforceable b/c of statute of frauds? (B/c its oral agreement) -NO, its under 1 year contract ISSUE is Breach substantial enough to warrant restitution? Promoting 2nd abum is conditional on success of 1st album Why not ask for reliance? -Maybe shed get $2500 back but D could try to prove its a losing K Why court ask for Substantial breach? -When you have substantial breach by party A, party B can stop performing totally When substantial breach happens, afterwards its like we are

ignoring rest of K and then just putting people back where they were before K happened Restatement 2nd Ks 371 - two possible measures -In this case either what reasonable hourly rate would be to breacher OR how much benefit Osteen received -courts give least favorable option to party that breached -courts often look to the contract for advice on whats reasonable value but it doesnt have to look at K POINT OF CASE: You need substantial breach to get restitution -but remember: any breach entitled you to expectation damages!!! (even a smaller breach) Oliver v. Campbell Substantial breach here? Sometimes (not often), even with minor breach, if willful, courts can give restitution -If K is over, you dont get restitution, only could get expectation Rule Contemplates: before K is completed, amount could be less. -In this case it is not though -there could be additional benefits to P (publicity for winning the case, etc) Restatement 2nd ks 373 shows when you could get restitution -in this case why is reasonable value so much higher than K price? -its just a bad K for P -why go to restitution here and not expectation? -its a substantial breach -you can still ask for expectation but substantial breach opens restitution route U.S. v. Algeron Blair -losing K here Coastals position Blair should pay for crane Blairs psotions Coastal should pay for crane

-Coastal walks off, if court finds Coastal responsible for crane then COASTAL breached <- this is very risky for Coastal -You better be sure other party breaches before you walk off -Blair materially breached -K was bad for Coastal, its happy if it recovers nothing and doesnt lose on K POINT OF CASE: With restitution, we dont subtract possible losses on K Quantum meriut what you deserve basically synonym for restitution Synonyms: Restitution, Quantum Meriut, Unjust Enrichment -all mean the same thing -restitution going in both directions here -Blair gets what it paid already -Coastal gets costs -Same deal with Osteen, but Algernon tells us you dont need to offset restitution by potential losses on K Expectation-Reliance (its a subcategory of Expectation, for when expectation is too vague) Restitution Completely different theory, its not at all related to expectation Kutzin v. Pirnie -not clear that there was a breach -was rider ever signed by the P? -it appears they didnt sign, if not then no breach -court says theres a breach (valid K) Why deny interest recovery here? -Prof thinks they should get it Why not give capital gains tax? -You could argue its not due to breach -But prof thinks they should have gotten it Treat carpet, utilities, insurance, and real estate as Incidental Damages

ON EXAM explain both ideas -Court Cites Restatement 2nd Ks -374 and updates a different approach then common law -Some states may still allow seller to keep deposit (apply common law) -had there been a liquidated damages clause, we would determine if damage is reasonable -if K is unclear if there is a liquidated damages clause, you should just call it one to sway the court to award deposit Lucy v. Zehmer -significance of the offer of $5 up front? -no legal significance in K law Courts issue with the manner of the K being taken -P took possession and D didnt object -Does this matter? -Yes, b/c its an acceptance issue, once Lucy takes it, that is an acceptance RULE FOR THE CASE: ONLY EXTERNAL ACTIONS MATTER HYPO: if K said Buy it tonight, then Zehmer would win ruling -We want people to rely on words and actions -not internal Although: If both parties mental states are different then the words of the K (Reasonable view of the K), then internal governs instead -Fact that he keeps it a secret & Wife knows -This doesnt help him Reliance -If Zehmer says its a joke right away and Lucy acts on it, is that still reliance? -Yes, expressing a willingness to agree to a price is still reliance b/c you gave valuable bargaining information (Revealing you will enter contract) Prof says: Reliance begins when you give up info to the other party (letting your willing price be known)

To be enforceable Must objectively look like a K -Atleast one party must believe its a K If sale was for $500 would the court enforce it? -No, seems unreasonable, a court probably wont give it the same force Keller v. Holderman Use Restatement 2nd Ks 20 & Restatement 2nd Ks 21 Courts rely on this: As long as both parties agree its not a K then its not valid Issue with price: helps court be ok with annulling the K b/c it looks like a joke Raffles v. Wichelhaus Why isnt D mad about empty 1st ship? -strange -maybe price went down later -Prof is suspicious of Ds actions Objective view here? -There is Cotton on the Peerless -Which view does this support? -Neither What could help D? -argue you had plans for an Oct. shipment HYPO: Suppose trade rule where first Peerless that comes in is one meant always -If so there is no case. D wins. Restatement 2nd Ks 20 *** Restatement 2nd Ks 201 (? Means 21 maybe?) Keller v. Holderman watch case Fits which? -Fits Restatement 2nd Ks - 201 (?) -Doesnt fit Restatement 2nd Ks 20 Which does Raffles fit? -Restatement 203 (b) express terms stating Peerless -authorizes use of trade usage Lucy v. Zehmer uses Restatement 2nd Ks 20 (b) Can you go outside K language? 1st ask parties

2nd Course of Dealing Course of Performance -look to past parts of this K 3rd Look to past OTHER Ks between the parties 4th usage of trade standards -industry conventions Oswald V. Allen If collections were Coin Collection A & COIN COLLECTION B, what happens? -Oswald more likely to win OBJECTIVE VIEW -Objective, like reasonable in parties position -Or Objective, like an outside observers view? -Courts can use EITHER Damages Oral Arguments

12/2 - outline additions: IV. Contract Interpretation Objective and Subjective Interpretation 234-245 Embry v. Hargadine court thinks convo implied a new 1 year K Is Embry's belief enough? -If he actually believes it and it is objectively reasonable. Both parties need not intend K Only 1 party believes and reasonably assumes its a K -This case doesnt reach duress V. Formation of Contracts Offer and Acceptance Offers and Termination of Offers pg 268-290 Restatment 2nd K's - 24 -Whats an offer? Test: If someone says something to you and you can reasonably say yes and form a deal then its an offer CISG Art 14 - Gives good ex of whats needed for an offer generally -One or more specific persons -CISG looks for SUBJECTIVE here - indicate the intention -Include first come, first served? Euro K law 2.201: more focus on determining actual intent (Very dif from Restatment)

Lonergan v. Scolnick 3/x - ad by seller inquiry by buyer 3/26 - letter to buyer 4/7 - letter from buyer, asking for more info 4/8 - letter from seller act quick - offer? 4/12 - seller sells to 3rd party 4/14 - buyer says opening escrow 4/17 - buyer opens escrow Where would offer be? -act quickly is not an offer How do we interpret the letter? Restatement says what would reasonable person assume from letters? -In this case, its not an offer b/c intends to sell to 1st comer but reserves the right not to -If promises to sell to first come than its an offer To revoke an offer - often need to communicate it in same way as you sent offer (but not always) Regent Lighting v. CMT -Seller still has to do something, so its not an offer -Sellers that include such provisions make it so that a response from buyer is a mere offer but not a K Lefkowitz V. Great Minn. 1st offer not specific therefore not enforceable 2nd offer is definate -Generally ads in newspapers arent offers Offer under CISG Art. 14? Ford Motor Credit Co. v. Russell -Could you go and buy for cash? -maybe (or maybe not b/c they make $ on financing) Q: is it reasonable for a person to read an ad and think they can def walk in and accept offer?

-no, not every potential buyer qualifies for financing -car is prob unique (W/ VIN #), fact that no VIN in ad means they prob should have multiple Fisher v. Bell ad in window not offer, just invitation for offers UCC 2-204 - Offer and Acceptance Rule -not very specific -UCC relies on Common Law here except for Battle of the Forms Pepsi/Jet Hypo: -problems w/ offer? -limited supply but unlimited offers -bound w/ jacket but not with jet. Why? -Pepsi argued reasonable person knows its a joke -Courts are usually willing to say these offers are jokes -Statute of Frauds issue w/ pepsi deal? -court would prob look at points book as a writing Akers v. J.B. Sedberry -Did offer go away b/c of rejections? Or lapse of time? -We might say by not accepting immediately -if not this then def. by end of day -If she accepted offer then deal is: employee released from obligations after 90 days & vice verse for employer -essentially it would be a new K Why does rejection terminate power of acceptance? -if your offer is rejected, you want to go about your business w/o worrying about it this case: maybe wouldnt have discussed stuff w/o job security Questions to Ask: 1. When does offer expire? 2. If she doesnt say anything on that morning, does it constitute a rejection of offer to resign? - talking about the job w/ them afterwards looks like a rejection Guaranteed employer's performance - even if company goes bankrupt,

an individual promises to pay employees K's Ardente v. Horan Timeline: -Seller offers for sale Prob offer-->-Buyer bids $250K Prob acceptance-->-Seller says bid acceptable, prepares p&s (if attorney says I and if so, have to look into things, that could be a rejection Then, reqst for gift-->-Buyer signs P & S, returns w/ check for $20000 and letter saying Id like stuff, please confirm I can have it -Seller says deals off But courts dont take it as req for gift after an acceptance Court says: offer was Seller says ok, prepares P&S -Buyer signs/returns is a conditional acceptance (Re: a counter offer) -Seller response is rejection -If buyer had said Ill take it under consideration, by the way is stuff included? - then offer still valid although seller can still revoke Rhode Island Dept. of Transportation v. P & W Railroad. -K change doesnt add terms but rather its gift in not making them remove tracks, so K is still valid -You can take terms away, just cant add them R.2d. - 39 pg 286: examples: Ex1 - its counter offer Ex 2 - request, not rejection (court could say its counter offer but prob not, Restatement says its a request) Price v. Oklahoma College -Court says: signing under protest has no legal significance Euro K law Art. 2.208 Unidroit 2.1.11 (dif than Euro K 2.208) CISG Art. 19 is same as Unidroit 2.1.11 except it has spec. rules about whats material US Common law is different from the European rules here -has Mirror Image Rule -you cant make any changes, change = counteroffer UCC 2-207 w/ sale of goods, material change can SOMETIMES be ok. IGNORE LIVINGSTONE v. EVANS for exam

REVOCATION - pg 291-306 Dickinson v. Dodds possible 2 things w/ memo p.s. statement 1. lapse - if nothing happens, offer over Fri at 9am 2. Revocability - offer over fri at 9am and it cant be revoked R.2d - 87 (1) - Option K's -Buyer has purchased right to enter into the contemplated K R.2d-87 Very similar to UCC 2-205 -in Dickinson, its gratuitious option K -no consideration so not binding was offer irrevocable? -no did he revoke it? -not directly but P had reliable info of circumstances that show revocation CISG Art 16 Gen speaking, offers are revocable in US but not in Europe Ragosta v. Wilder -unilateral K here -showing up at bank and giving the $88K -performance is only way to accept -P just showing up at bank is not enough, D must be there also Offer revoked on Oct 8th -If hypothetically, P won, would damages include stuff after Oct 8? -no, must mitigate damages (like Luten bridge case) What would be start of performance? -nothing before actually walking into bank Why not equitable estoppel? -it was revoked and both parties knew all the facts -Courts uncomfortable w/ estoppel in offer context -Unless otherwise noted, theres always implicit understanding of revocability Is an offer a promise? - if its accepted, but conditional upon acceptance

Option K's have implicit promise to keep offer open R.2d - 87 R.2d - 90 -Prof thinks dif between the two is vague POINT TO REMEMBER: Courts are not as likely to apply R.2d - 90 to just offers as they are to apply it to offer AND acceptance *** If in Ragosta the buyer had negotiated to make it an option K, then it would have been binding Rules from Ragosta: 1. In unilateral K context, you must start performing (Actual performance, not just preparing to perform - see R.2d -45). Then offer is irrevocable. 2. Offeree never bound in a unilateral K Drennan v. Star Paving Hypo: if contractor had reason to think bid was a mistake, it might not be enforceable - If it looks like a mistake, court may choose not to enforce it (must be a reasonable number) -In contractor/subcontractor context, we have this rule about reliance on bids (ONLY HERE), its a widely adopted rule *** -Suppose contractor made extra profit based on lowest bid by subcontractor, then subcontractor can argue that should be subtracted from damages Preload Tech v. A.B. & J Construction

REVOCATION ALLOWED In U.S. most offers are revocable Bid shopping/chiseling makes these revocable again--------------------> ---------------------------------------->

REVOCATION NOT ALLOWED UCC - 2-205 R.2d. -87(1) Drennan type case part performance under R.2d - 45

The Mailbox Rule HYPO TIMELINE: 9/2: offer sent 9/4: offer recieved

9/5 acceptance sent -> under restatement we have a K here 9/7 acceptance expected 9/8: goods sold/revocation sent 9/9 revocation recieved 9/10 acceptance recieved -Under CISG we still have a K (CISG Art 18 (2) & CISG Art 16 (1) -If acceptance sent properly, than under Restatement, even if not recieved then still a K -protects offeree, not offeror -if offeror, its better to find out before acting inconsistantly -To deal w/ restatement rule, you can structure offer to state: I must recieve acceptance by such and such a date (there is a default rule but you can change it explicitly) ACCEPTANCE Sequence examples: 1. -Rejection sent -Acceptance sent -Acceptance recieved -Rejection recieved R.2d - 40 (Covers Rejections and Counteroffers) says: its a K 2. -Rejection sent -Acceptance sent -Rejection recieved -Acceptance recieved -Normal rule is when acceptance is sent before rejection rec'd..., but here its too messy - rejection sent first so prob not a K -R.2d-40 3. -Acceptance sent -Retraction sent -Acceptance rec'd -Retraction rec'd Not in restat (?) -Its a valid K since acceptance sent first but offeror could call step 4 (retract rec'd) a recission

4. -Acceptance sent -Retraction sent (retraction of acceptance) -retraction rec'd (retraction of acceptance) -acceptance rec'd Not in restat (?) -K formed when acceptence sent BUT, cases have gone both ways on this one -Concerns about making this not a K: -suppose acceptance sent by slowboat -retraction sent by telephone -retraction rec'd by telephone -acceptence rec'd by mail on slowboat -Offeree can send acceptance slowly and use time in between to see what price does (problematic) CISG Art. 22 Klockner v. Green -part performance or full performance gets you out of statute of frauds in most states Issue of: Klockner would have performed regardless of agreement Court says they have to not intend not to accept in order for it to be a K In this case: theyd have to think it immoral to take $ from relatives to show they intended not to accept dif b/t this and unilateral K? -w/ unilateral K, option K formed at start, obligation fully bound at end of performance In this case: if unilateral K: -option K formed in 65 -K binding at her death -R.2d-45 -think brooklyn bridge hypo does he have additional obligation to care for her? -no, he must only agree to agree to continue ISSUE OF CASE: ambigous act & if it can constitute acceptance

R.2d - 45 - always unilateral K vs. R.2d - 87 (2) - know it exists but ignore it - courts dont generally buy reliance on offer outside of contractor context Could tell client to try R.2d-90 - usually for bilateral K's but could poss. be unilateral but its more problematic Decicco v. Schweizer Simmons v. United States how dif from Klockner? Court says - must have knowledge of offer Stephens v. Memphis Court said - no need have knowledge of offer in both it has to seem plausible that your conduct meant to accept offer (or atleast meant not to not accept) Bishop v. Eaton -unilateral K Timeline: -Harry Eaton signs note acceptance -->-B garantees it notice of acceptance -->-B writes to other Eaton lets Harry off the hook--> -term of note extended why not reinstate K?--> -8/89 Other Eaton says to B - try to get H eaton to pay. If not, I will. <--consideration, but maybe he never tried to get him to pay (doing so would recreate obligation) w/o notice, 2nd K not formed if B didnt know K extended, hes off the hook RULE OF THE CASE: in unilateral K, if offeror has no way to know of acceptance, you must provide notice to him of acceptance Carbolic Smoke Ball $L1000 in bank makes this look like a real offer -equity here Acceptance By Conduct - not part of performance but from which we infer acceptance (think restaurant) Polaroid Corp v. Rollins Envir.

hypo: last shot rule- first person to do anything binds <-- we dont like this. Timeline: 1-agrmt to supply gen. conds. 2-polaroid sends descrip of waste to Rollins 3-Rollins analyzes & sends proposal 4-Polaroid executes purchase order (refered to supp. agrmt) 5-Rollins picks up waste -Prob an offer at 3 -4 changed terms/ was a counteroffer -5 was acceptance by conduct -bilateral K here, not unilateral (Pola pays $, Rollins takes waste) -so act/conduct distinction not important -conduct is substitute for signing purchase (for saying I agree) Occidental -Hooker sends Purc Ord w/ indemnity clause -Rollins picks up waste UCC section on last shot - UCC 2-207 battle of the forms Vogt v. Madden Issue: can silence be inferred as acceptance here? R.2d-69 -benefit stipulation -did Madden recieve benefit? -could argue he got option to take Vogt up on later PROF sympathizes with trail court, jury, but damages are way too high -Prof says: previous dealings in past show a reasonable jury could find in favor of using previous dealings exception to bind K -courts weary of letting silence dictate acceptance Cole-McIntyre-Norfleet v. Holloway -P got offer from buyer

-why does K say salesman cant accept offer on own? -they dont want agent to do something they shouldnt do -form lists agents powers -for agent to avoid it and accept, they could use a dif. form this case like Vogt v. Madden: stringing them along and seeing which way price goes (treating it as an option) -could cite R.2d-69 -ask did they take benefit of offer? Hobbs v. Massasoit is similar to this case Louisville Tin & Stove Co v. Lay Implied Contracts pgs 331-350 Nursing Care services v. Dobos quasi-contract & emergency aid exception -unjust enrichment theories efficious intermeddler doctrine here what is T3 K? -an implied in law K -voluntarily accpeting could be implied in fact also -if medicare wasnt paying ofor 2nd period, why assume they are paying for 3rd? Prof thinks medical providers should have the burden to ask whos paying. -Restitution would cover unjust enrichment on ACTION 2 Restitution (2 definitions) 1. a damage remedy 2. remedies based on quasi K's & unjust enrichment Day v. Caton -implied in fact k -unjust enrichment here -R.2d 69 (a) acceptance by silence applies here -like Dobos part 3

in implied in fact we IMPLY assent -if you can prove you did not assent then no K Test for unjust enrichment generally, and test for implied in fact K are gen. the same Statute of Frauds applicable here? -no, part performance/reliance gets you out of it D must have a reasonable opportunity to stop the construction Bastian v. Gafford -if implied in fact, then dont need to prove unjust enrichment -b/c its a REAL K -whats the $3250 here? -value of contractors time? -fact that no terms agreed on suggest plans done on spec Wagenseller v. SC Mem. Hospital -3 exceptions (first 2 define bad cause) 1. Pub Policu Exc. -if cause violates public policy -concerns w/ this: boundaries are fuzzy -makes it unclear when you can fire someone -asking employee out? -prob not violating law, but bad policy? 1. Personal Policy Manual Exception -why have any manuals? -to attract employees manual in this case: provision 20 here: unarticulated statement tries to take away power from articulated provision -to do this, employer must make it clear that manual not part of employment K -its prob better to have no manual at all then one that says this manual means nothing 1. Good Faith Exception -employee still gets benefits already deserved before K ended

-comes up more in Europe Pine State Bank v. Mex -wheres offer? -receipt of handbook -unilateral K -Performance (continuing work) is the acceptance and the consideration here -its ok b/c we are willing to believe they intedned acceptance by continuing work -for employment manual agreement that gives you stuff, not reason to rhink they are not accepting Pacific Bell Is continuing to work acceptance here? -no we dont beleive it Do we want employers to be able to take rights away? -Yes b/c if they cant take rights away then they will never want to give additional benefits (giving employers such a right makes them more willing to commit) -Employers must give reasonabke notice of taking benefits away -Employees can just quit Demasse v. Itt Corp -what must you do to get people to accept new deal? -give them more and more until they accept new deal What does case say for AZ? -you want disclaimers in employment manual, so you can back away w/o giving more stuff Preliminary Negotiations pg 352-373 Academy Chicago Publishing v. Cheever governed by UCC? -no, its a license agrmt At issue here: -pages -# of stories -dates -price

-satisfactoriness -even if parties agreed on a K, its too vague for them to bind -instead of K, its an idea or a plan Prof thinks originally they agreed Prof ok w/ results here -if shed delivered the 12 worst stories then could show bad faith negotiation -publisher could have invalidated it as not satisfactory but then theyd have to go negotiate other stories Hypo: A will sell to B a reasonable quantity of shirts for a reasonable price. -is this a valid K under UCC? -no -you could go fig out a reasonable price -but very hard to fig out a reasonable quantity -look at UCC 2-305 - this would be code to check but its doesnt seem to apply here SO its not a situation where you can pick a reasonable price (statute is poorly drafted) Cheever case & this hypo: -see Mistake Doctrine *** -did someone bare the risk of the uncertainty? how is output K or option K different? -gives a more structured quantity Market Street Associates -on good faith -if its in negotiations phase, you can take advantage of your knowledge -but NOT during contract phase UCC Sections on page 357 UCC 2-204 UCC 2-305 UCC 2-308 UCC 2-309 UCC 2-310 -gap filler sections -easier to fill gap for sale of goods then when not for sale of goods R.2d 33 R.2d 34

Teachers Insurance Accoc. v. Tribune factors to determine whether other parties intended to be bound: 1. express reservation of right not to be bound -stipulation that board must authorize -might be proforma -either this means nothing or leans towards tribune What if you agree to negotiate but all terms are open? -prob not binding. -it must be an agreement to negotiate on small stuff Part Performance Issue -looks like its only preparing to perform -an agreement on terms looks different then agrmy to negotiate -commitment letter here looks like agrmt ON TERMS -points to Tribune Court thinks Tribune behaved badly -did they? -not legally -Posner says no duty during negotiations -behavior not bad until bound Agrmt on Terms (can mean 2 things): 1. We might or might not continue to negotiate 2. We agree to binding obligations to negotiate in good faith to resolve other terms Prof thinks K shouldnt be binding either way Question should be: did board have to give approval to bind K? -if board had discretion to say no then theres no K here Judge assumes 1 party wouldnt commit if other party didnt but hes wrong: -think consideration section -parties do this a lot -to convince other party to commit What could TIAA hypothetically get in damages? -Force specific performance to negotiate? -not feasible -if $ damages? -damages uncertain for expectation

-TIAA could get reliance if they spent money negotiating w/ T ribune and if Tribune negotiated in Bad Faith -but prof says you would have to spend this in good faith or bad and if so, you shouldnt even get reliance (although you could maybe deserve if negotiations were prolonged by bad faith) at what point have you negotiated in bad faith? -maybe if Tribune says: we want every open question decided in our favor -then TIAA goes we would have accepted all -then maybe could still get damages -Court could avoid all this by just invalidating K and avoiding damages litigation Market Street Assoc v. Frey implied K's - good faith obligation here to inform of Stipulation 34 - not in K but court implies Hypos: 1. Buy prop for #100K. if you learn its worth more...is there a duty to tell other party? -NO 2. Have option K under which other party can buy property from you for $100K (duty to inform here?) -Maybe not comfortable extending duty here Posner view - Duty not to trick Question in Market Street: if reasonable to believe other party knows K terms, even if you hope they don't know... -PROF thinks there should be no duty to inform. -Posner thinks maybe theres a duty Spectrum of duty: left to right: Pre-K fraud K performance fidiciary duty (principle/agent relationship) More obligations, Ut most good faith

No duty

if info avail to both parties, no duty

duty of good faith

Judge in this case saying: if you KNOW a provision thats useful to other party, you must tell them, but you need not search The Parol Evidence Rule Parol- means oral but Parol Evi. includes more than just oral (also prior written argmts) Mitchel v. Lath think of parts 2 & 3 on pg 375 as stating parol evidence rule, forget #1 -2 & 3 do same as restat provisions (but more clear) Question is not if they had an agreement but rather should we pretend it doesnt exist. merger clause - extinguishes previous agreements always works? -no, courts dont always honor them. Generally they work though -if there was fraud, then parol evidence clause doesnt apply Mitchel v. Lath -inducement w/o intention to remove ice house could be fraud Restat says: if ambigious, we assume its a promise If icehouse was material condition, its probably ordinary to include it in written K Test: would it naturally be expected to be in written K? -judges typically make the decision of whether to allow parol ev. or not -if mitchell had offered seperate consideration for the ice house, its more likely court would enforce it -what if icehouse came up after written K? Parol ev. issue? -no enforceable? -no, no consideration. It would be a K mod. issue, could say its gratiutus promise R.2d-209 R.2d-210 -they are circular R.2d-211

R.2d-213 (1) -its #2 in Mitchell v. Lath R.2d-213 (2) -its # 3 in Mitchell v. Lath R.2d 214 - can offer evidence of icehouse agrmy to show K not fully integrated R.2d-215 - its evidentiary (dif. from 213 (1) b/c 215 discharges priot agrmts) -justification for 215: if agrmts discharged under 213, courts dont want to waste time hearing evidence about it R.2d-216 - kinda #3 in Mitchell v. Lath -nothing comes in if its completely integrated R.2d-216 (2)(b) - have to ask if naturally omitted from agrmt, look at evi. (2)(a) - seperate consideration Prof theory on restatements: dif states deal w parol ev. differently and restat is trying to incorporate it all so states wont ignore it Parol Ev issues: 1. inconsistency 2. ordinarily there -also: seperate consideration: not proof but just another point to make PAROL EVIDENCE STEPS: 1. Apply 216 (2)(a) - is it partial? or is it full? 2. Apply 216 (1) - if it is partial, admit parol evi. Hypo: -written agrmt A -written agrmt B -Oral agrmt C that breach of A is material breach of B and vice versa Apply steps to hypo 1. Apply 216 (2)(a) - is it fully integrated? 2. Apply 216 (1) -Courts could say A and B are 1 agrmt OR courts could say seperate and then say C is inconsistent

Mitchell v. Lath is considered the NY test IF PAROL EVIDENCE COMES UP ON EXAM, FOCUS ON MITCHELL V. LATH

Material breach - releases parties from obligations just breach - gives damages but might not discharge obligations -if not material breach but still breach, how much in damages for non removal of icehouse?

There is no objective way to see if a K is completely integrated Nature of K: Completely integrated Partially Integrated Not integrated Evidence Admitted: None, but entirely seperate K's A. Not inconsistent AND B. Naturally Omitted. (Most K's end up here) Everything

Objective and Subjective Interpretation - pg 246-254 Use of Extrinsic Evi. in Interp. - pg 254-258, 61-65, 396-412 MCC Marble v. D'Agostino -No statute of frauds under CISG (View Art. 11) -if no payment, its material breach -if defective? -its ok under CISG to give partail payment but must give notice -notice need not be written here written notice required b/c K does change the law POINT OF CASE: if one party has a subjective understanding different from written terms and other party knows this alternative subjective intent, the subjective intent is binding -BOTH UNDER CISG AND U.S. LAW -how often will one party admit that they knew the subjective intent they are being sued over? - almost never -to avoid an MCC situation, include a merger clause -doesnt always work, and wouldnt work here prof says MCC is like Lucy v. Zehmer sortof CASE: MCC-Marble Haines NY Fox Co PG & E Nanakuli Haines v. NY Trade usage/Course of Performace K ALTERED/INTERPRETED BY: Mutual contrary subjective understanding Court filling in or making up missing terms Trade usage

-adding missing terms how? -discusses K duration -options: terminable at will (court wont give this here) or perpetual: (court wont give here) -Court makes it up: As long as city needs the water -is city giving consideration here? -yes because its not entirely within the discretion of city if it needs water Foxco v. Fabric World -if order hadnt been completed could they have canceled? -no, cant cancel -they essentially offered a recission and Foxco said no -saying :not taking them if 1 wrong thread amounts to anticipatory breach Perfect Tender standards: -CISG: must give a chance to fix -UCC 2-601 (among others) UCC Parol Evi Rule: UCC2-202 (basically same as restat) POINTS TO REMEMBER IN FOXCO: -trade usage can come in. -they should have been aware of what the standard first quality means YOU CAN MODIFY UNDER UCC W/O CONSIDERATION

Form Contracts and other contracting problems Pacific Gas & Electric v. G.W. Thomas -not a UCC case -what does the indemnity clause cover? -3rd party only? or K party as well? Legal Issue: do we want to listen to extrinsic evidence to determine what indemnity clause covers? -do we listen to parties testimony or just look at K language?

-This court says we should listen to extrinsic evidence -Always do this? - not clear, Williston/Corbin debate QUESTIONS TO ASK: 1. What should be considered in deciding what is admissable? 2. What is admissible? -Answer: naturally omitted and doesnt conflict w/ written terms (not inconsistent)

PG & E What should be considered in deciding whats admissible? Whats admissible? Listen to everyting

Nanakuli everything, including trade usage, course of dealing, course of performance (UCC 2-207)

Evidence relevant to proving If it doesnt completely meaning to which contract is negate the contract reasonably suseptible (Corbin Approach)

Why not Ship Peerless situation? -in that case, no reasonable interpretation -here there would be choice of reasonable interpretation Parol Evidence vs -in parol evi. world, dont bring in interpretation Nanakuli v. Shell Issue: is nanakuli price protected or not? -Trade usage -could assume parties had understanding that K was like chevron K What if price protect provision was explicitly in Chevron K? Interpretation/Extrinsic Evidence If interpretation question invovled, Parol Evi. doesnt come into play

-that would be bad for Nanakuli -if Chevron just does it and its implicit, this shows trade usage question to ask: what did parties have in mind when they entered K? -stuff after 1969 not relevant Course of Performance vs. Waiver Course of Performance: trade usage compels performance Waiver - could be waiving condition to pay posted price -its plausible that shell thought it was obligated and then later acted like it didnt would merger clause have saved this? -no there was one here Parol Evi<----R.2d 214(c)------> Interpre/Extrinsic Koehring v. Glowacki (VERY IMPORTANT, DONT OVERLOOK) Hypo: suppose Glowacki shows up w/ truck and they put it in truck. -You apply UCC 2-207(3) -putting it on truck could constitute acceptance -you still must have something that looks like an acceptance -did parties look like they intended to accept the K? -here court says no Battle of the Forms - acceptance can still be oral UCC 2-207(1) doesnt have to be matching acceptance but still need an acceptance Gardner Zemke v. Dunham Bush First question to ask here: 1. Is there a K under 2-207 (1)? Or under 2-207(3)? 2-207(1) - ask is there def & seasonable expression of acceptance? -Does acknowledgement constitute acceptance here? - Under 2-207(1), YES

How do you make fine print on back of K binding? -Send acknowledgement form and then dont go through w/ transaction until other party accepts AND agrees! -You must get assent and be able to show that you got assent to bind someone to your provisions -doesnt need to be written, but it must be clear Under UCC 2-207(1) - no last shot rule. Its craziness and we want to avoid it What makes purported agrmt expressly condition on assent of other party? -It must be explicitly discussed UCC 2-207 - eliminated last shot -makes it unlikely that conduct could show assent of other party What if goods are transferred without assent? STEPS: 1. go to UCC 2-207(1) -you will find its no K 2. go to 2-207(3) 3 WAYS TO CONTRACT UNDER UCC 2-207 METHOD FOR EXAMINING IT: 1. start with (1) 2. go to (2) 3. go to (3) Form contracts in commercial and consumer contexts 1. UCC 2-201 Formal requirements; Statute of frauds a. Except as otherwise provided in this section a contract for sale of goods for the price of 500 dollars or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker b. Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection a against such party unless written notice of objection to its contents is given within 10 days after it is received c. A contract which does not satisfy the requirements of subsection a but which is valid in other respects is enforceable

i. If the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the sellers business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement ii. If the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted or iii. With respect to goods for which payment has been made and accepted or which have been received and accepted. 2. UCC 2-207 Additional terms in Acceptance or confirmation a. A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms b. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: i. The offer expressly limits acceptance to the terms of the offer ii. They materially alter it iii. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received c. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any provisions of the act. 3. NOTES FROM TEXT: Courts usually have been lenient in not ruling out consistent additional terms or trade usage for apparent inconsistency with express terms. 4. Notes of 2-207 a. Thel says that the first test is section a, which, if there is a contract found, proceed to section b b. If there is not a contract found, then go to c c. Section a uses additional to or different, while section b says only additional. Not sure if this means much 5. Mirror image rule a. If an acceptance changed anything about the offer, it was not an acceptance and instead functioned as a counter-offer b. If goods were shipped after sending a failed acceptance, they were treated as forming a contract through performance on the last offer (last shot rule). Court used the terms of whatever party last sent a form. 6. Gardener Zemke v Dunham Bush

a. Rejection of the common law mirror image rule b. Uses 2-207 to create a contract under a battle of the forms, when the essential contract terms agree. c. A responding document will fail to create a contract and convey a counter offer when acceptance is expressly made conditional on assent to the additional or different terms or when it is radically different from the other. d. Expressly conditional language from 2-207 applies only to the offeree communicating that unless such additional or different terms are agreed to there will be no acceptance. Whether such language has been used should be determined by the commercial context. 7. How 2-207 works a. First see whether there are different or additional terms b. If there are, check for conditional assent clause (courts disfavor finding them) i. If there is then there is no contract by operation of the forms ii. If goods have already been sent (parties have acted as though there was a contract, 2-207), then the form sections that disagree are dropped out and only the parts that agree form the contract (supplemented by UCC provisions as gap-fillers) c. Are the parties merchants i. If they are NOT then additional (and most likely different) terms are not part of the contract and operate as a request for modification. ii. If they are merchants, outcome determines on whether the terms are different or additional 1. Different- majority view is the knockout rule, which means that those terms which conflict are removed from the contract, but that contract is still enforceable, with UCC filling any necessary gaps a. Minority views i. Different treated the same as additional ii. Different terms in acceptance drop out, but different terms in offer are part of contract 2. Additional- they are part of the contract unless a. Offer expressly limits acceptance to the terms of the offer b. Terms materially alter the contract (applies in cases of surprise or hardship) i. Surprise- What the party actually knew and what it should have known about the terms ii. Hardship- different from surprise, such as shifting liability from negligent party to innocent party or limiting consequential damages. Offeror notifies the offeree within a reasonable time that he objects to additional terms

ProCD v. Zeidenberg -its not a Q of whos freeloading -its a q of who contractually promised something how was K formed here? -UCC 2-204 (1) -K formed when you purchase product -hard to get to 2-207 here Prof alternative approaches: 1. important restrictions go on outside of package (highlights license terms if they are unusual) judge says 2-204 doesnt apply b/c more than 1 form -THATS JUST WRONG, it can be just one form -result of case would be dif if they applied 2-207 Other issues of case: clickwrap licenses- must acutally click I agree 2 K approach: K1 - w/ best buy to purchase disk K2 w/ ProCD for license -Problem is that you have given the $ and its almost impossible to return it once youve opened it HYPOS: Airline or Concert Tickets -You should be aware of the trade usage when you purchase them Unconscionability Williams V. Walker-Thomas Furniture Co Unconscionability Test (need both) 1. Procedural Unconscionability: absence of meaningful choice on the part of 1 of the parties 2. Substantive Unconscionability: Contract terms which are unreasonable favorable to other party -If you have #2, you can sometimes imply #1 Did Williams have a choice here? -factual determination 2 ways (not clear which approach always taken): 1. (assume shes buying stereo), choice in situation? 2. Choice to buy stereo at all? Darner v. Universal

-think parol evidence rule first says: If naturally omitted and wouldnt contradict -here it contradicts so it doesnt get in -you could argue it was modification afterwards-but theres no consideration R.2d-211 (3) cited here -AZ takes unusual approach, most states wouldnt go 211(3) here

-court likes 211(3) but then adopts dif approaches 1. Equittable estoppel (sortof like 211(3) 2. Reformation -parties agree on K -write it down -terms recorded were wrong -court would ask for lots of evi. on this Procedural Unconscionability Legal standard for motion to dismiss: -assume all facts in complaint are true, does P still have a case for proceduaral unconscionability?' Summary Judgement standard: could reasonable jury... VIII Mistake and Changed Circumstances R.2d-153 -can get out of K if offer is unconscionable reformation - R.2d-155 -court can reform K to parties intentions -(rule requires HIGH standard of evidence to do so) R.2d-155 does explicitly state HIGH standard aspect, but know it is the standard How to get around Parol Evidence? - R.2d-214 (fraud thing..defrauded by mistake) THINK MCC Marble -could say we had this other agreement: parol evidence -could also say they defrauded me into K: mistake

Sherwood v. Walker How to decide if should rescind? -must be material, substantive element -even if D knew, its not clear he had to disclose general approach taken by courts: must be something fundamental to the K -Restat is consistent w/ maj approach (R.2d 154?)

HYPO: Cow thought highly of. Cow-rater comes and says its not as good. Value plummets. -Mistake? -NO, no mistake of character of cow, merely perception of it. How is Sherwood dif from Peerless? -Peerless an interpr. issue: no meeting of the minds (whats going on in K) -Sherwood: Mistake about whats going on in the world Griffith v. Brymer KEY POINT: K made at time in world where coronation was know not to take place Mistake about nature of K Does it fit substance test? Symmetry issue - what if renter still wants the room? Everett Case X If both parties mistake and mistake is fundamental, courts can rescind K *** Non Disclosure Hill v. Jones POINT OF CASE: if your concerned about something, ask.

Test court adopts: (Florida test pg 506<--standard for sale of homes) -determine if materially effects value of property -seller knows, buyer doesnt -even if not material, must disclose if buyer inquires NO SOCIAL VALUE HERE to reward for knowledge b/c they just learned through living in the house Causation prob here: maybe buyer would have still bought house -thats what jury should decide R2d-161(b) - standard of good faith and fair dealing -circular definition -unhelpful Nondisclosure -what damages can get? -ask what damages did you incur before K? after K? -reliance probably IN HOUSE SITUATION: (DAMAGES MEASURES) -can try to get reliance -but normally, you will just get enrichment -in Hill Case, you could work out deal to reflect difference in value (due to termites) -or buyer could just walk IMPOSSIBILITY Differences from Mistake: -in Mistake: state of world doesnt reflect parties understanding at K time -In change of circumstances: state of world doesnt reflect it later on Impossibility/impracticability/frustration of purpose: all similar courts are allowing less and less change of circs to allow recission Transatlantic Fin. Corp v. U.S. In Normal situation you would rescind & then deliv. and collect unjust enrichment P tries asking to keep K price and then get quantum meruit for addition $ (on one hand P wants to enforce K, on other hand P wants to say K impossible) -Courts wont allow both

3 PART TEST FOR IMPOSSIBILITY in case (restat except #1 slight dif.) 1. something unexpected must happen 2. risk must not have been allocated 3. occurence of the contingency must have rendered performance commercially impracticable How to tell if rick allocated? -maybe look at industry standard for that shipping route Court deals w/ this case by asking who should have had better info bout risk?

Commercial impracticability -we dont ask: will it be unprofitable -we want them to get out of K if NO WAY FOR THEM TO MAKE A GOOD DECISION American Trading & Production Corp v. Shell -extra expense must be significant -ask about rick allocation -if not present than courts put risk on 1 party -who should bare it? -Whoever is in better position to do so -NOT IN RESTATEMENT but recent development and risk has to go on someone. Courts admit no one planned to bare risk and just picks someone UCC 2-615 - impracticability -UCC has provision telling us who bares risk and when risk transfers seller to buyer Krell v. Henry -frustration of purpose idea -not that its a bad deal but it frustrates the purpose Prof says: loosening up of things that release you from K -must be something that frustrates the purpose IX. Contract Performance Issues -pg 592-601 The Obligation for perform in good faith -In Market Street Asso, - was prelim negotiations, here its in

performance context 3 takes: 1. Farnsworth: implied term 2. Summers: excluder (think Wagenseller) -idea of terminatinf for refusal to do illegal conduct included in excluder type 1. Burton: regaining a foregone opportunity How to line up to: -illustration 7, pg 591: regaining a foregone opportu -Wagenseller: excluder -K to sell land if zoning change and seller must seek change and doesnt: Farnsworth implied term BUT ALL BLEND TOGETHER, CAN PROB PUT ALL OF THESE IN BOTH -duty of good faith not well defined

Restatement 2nd of Contracts - 205 Pree-2001 UCC Art 1. (in force in most states) 1-201 (19) UCC 1-203 UCC 2-103 (1)(b) 2001 version of Art 1, 1-201 (20) CISG Art 7 (1) UNIDROIT 1.7 Principles of Eruo K Law 1.201 Southwest Savings and Loans Ass'n v. Sunamp Systems Bloor v. Falstaff Brewing Corp -not an implied good faith term, instead an express best efforts term -pg 599 list (big para 1/2 way down page) -enough to treat Ballintine same as Falstaff? -no, court says cant stress profit over volume here bc of K terms w/ Bloor -Is there a conflict here b/t the K and a Corporations obligation to

shareholders to maximize profits? -no, the company thought the K was the best way to maximize profits and now they must honor obligations -Why is K set up like this? -prob couldnt reach common ground on Ballintines worth -maybe they dont have the cash on hand -Not clear from this case what courts now require from future performances -good faith req unclear -Once you have K'd, you can't ignore best efforts clause regardless of what it does to profits -What is the burden on the Plaintiff here? -court doesnt make Plaintiff show what steps could be taken -Case turns on burden allocation * PG 596 - clause 2 (a) (v) - the cash payment -FOR EXAM - recognize that 2 (2) (v) could be: A: Alternate Performance or, B: Liquid Damages Clause -if liq. dam, is it enforceable or a penalty? PROF says: its alternative performance -you could pay royalty, OR -discontinue brand and pay $1000000 per/yr 3 Possibilities: 1. Give best efforts 2. dont give best efforts but dont substantially discontinue 3. substantially discontinue -good faith same as best efforts basically, maybe, maybe not -even w/o best efforts clause, theres still an implied covenant of good faith Which of F, S, or B used by court? -Burton:Foregone Opportunity, you want to reclaim What damages would they get here?

-expectation Wood v. Lucy, Lady Duff-Gordon UCC 2-306 pg 611-615 The Doctrine of Substantial Performance -Under what circumstances is B excused from performing if A doesn't perform? Implications of A's breach: -always, B gets damages (usually cost of completion or diminution in value) -sometimes, B is excused from duty to perform (when A has materially breached or when A has not substantially performed) -if be is not excused, than A can sue if B breaches breach always entitles someone to damages -it sometimes entitles other party to stop performing Not Substantially perform = material breach Jacob & Young v. Kent -Substantial performance test - mid-pg. 613 - (cardozo) -is it enough to put Reading Pipe in K if you really want Reading Pipe? -here it wasnt -nothing else you can do -You might have to: SAY ITS A CONDITION

pg 619UCC 2-508 UCC 2-601 UCC 2-608 UCC 2-612

CISG Art 35 (1) CISG Art 37 CISG Art 45 CISG Art 46 CISG Art 48 CISG Art 49 TW Oil, inc v. Consolidated Edison Co. 1% - orig. suppliers claim, and limit for Con. Ed. use .52% - in transit information .92% - actual Con. Ed. says: it shouldnt have to pay at all Con Ed says: should have to know its non-conforming -court disagrees -Look at UCC 2-508 (2) -damages should have been offset by the amount they fell short of perfect tender -Should it have been presented that seller tried to offer a substitute? -What about seasonable req. here? -Court's rule on whats seasonable here: -immediately after negotiations fail -PROF SAYS THIS WOULD BE BAD! -it would lead to more negotiations breaking down earlier -better rule is: some objective timeframe after negotiations fail UCC 2-508 - gives courts opportunity that they will take to chip away at perfect tender -it gives parties time to cure the fault -Explicit UCC statement: no perfect tender with TIME, only perfect tender with GOODS THEMSELVES UCC Perfect Tender Rule: UCC 2-601 (under UCC, only full performance or breach) BUT, several sections lessen its effect: -UCC 2-508: -UCC 2-612: installment K's lessen this effect

-UCC 2-608: revocation (good faith) promise condition promise Subst. perf/no Mater Brch --->implied condtn of Subst Perf -->counterparty obli. persists -Common law says: if 1 party has substan. performed, other party still has obligation Perfect tender under CISG? -No, uses material breach instead

Zabriske Chevrolet v. Smith -How could Zabriske have given a proper cure? -it basically cant here -would prob have to give a dif BRAND of car -not even same type of car would work -faith lost in Chevrolet -Courts dont like to allow this outcome but on small scale w/ personal transactions, more likely allowable -But NOT w/ business to business

Midwest Mobile v. Dynamics pg 629-635 Express Conditions express condition Oppenheimer & Co v. Oppenheim -Substantial Performance apply? -Court says no, b/c its an express condition precedent If you can't argue substantial performance, what do you argue? -Waiver or, -Excuse (w/ this you want to write into K that its a 1 time waiver and it doesnt apply always) If you want to get result youd get by arguing substantial performance, ARGUE EXCUSE

When do we excuse? -in case of forfieture why no forfeiture here? Hype: suppose K provided: regardless if conditions are met, subtenant must pay P $100,000. -If conditions not met, will they have to pay? Answer: you must ask if tenant provided consideration. (think Scott v. Morges Lumber) -In Oppenheimer v. Oppenheim, if conditions not met, K explicitly says if conditions not met, K is null and void -bad K here -instead write it as if K still there, so make certain obligations dependant on certain conditions express conditions v. implied conditions - see restate 2nd K's 229 pg 640-645 Conditions of Vanadium Corp v. Fidelity 2 conditions: #1 Express Condition -> creates implied promise ->creates implied condition -(Since case in common (performce of implied obli. law, its a substantial to cooperated) performance obli., not an obli to FULLY perform) -obligation to cooperate Issue of Metal Reserve Corp Purchase -changed circumstance argument possible to get deposit back Winslow v. Mell differs from Vanadium b/c in Vanadium, K didnt make sense without condition, here it still does -ask what did parties intend? -can say here - K still makes sense w/o obligation to obtain timber rights

pg 655

Restatement says you cant excuse a material condition Restatement 230 - Conditions subsequent -Conditions precedent - gives rise to a duty -condition subsequent - duty has already risen, and condition eliminates it Excuse - it can excuse a condition if: 1. its not material 2. it would result in forfeiture -THIS REACHES SAME RESULT AS SUBSTANTIAL PERFORMANCE BUT ITS MORE HONEST Lach v. Cahill McCartney v. Badovinge Mattei v. Hopper Restatement 2nd K's -227 Restatement 2nd K's - 229 Restatement 2nd K's - 230 Restatement 2nd K's - 271 Restatement 2nd K's - 84 pg 658 Breach and its effect on obligation of performance (658-61, 666672) Prospective Failure to Perform (pgs 677-680, 684-697) Restatement 2nd K's - 233 Restatement 2nd K's - 234

-rules for determining order of performance (common law)

UCC 2-507: (UCC order of performance rule) UCC 2-511: (show me the $ - simultaneously - makes it that neither party can sue until they are ready to perform) CISG Art. 58 Unidroit 6.1.4 Unidroit 7.1.3 Principles of Euro K Law Art 7.104

Principles of Eruo K Law Art. 9.201 Prof. hypos: ~Restaurant order of performance -fit Restatement 2nd K's -234? -Yes, the circumstances allow it where is acceptance in a restaurant situations? -they take your order and walk away - walking away is acceptance by conduct does restatement 233 (2) fit to restaurant scenario? -no, circumstances indicate the contrary ~movies situation fit restatement 234? -yes, think circumstances -more practical to pay first ~Home improvements? -fit restat 233? -you pay after Kanavos v. Hancock Bank -restate 233 rule: transaction simultanouesly Q is: what must they establish to prove they could tender performance? whos burden is this to prove? Burden is on Kanavos -Plaintiff must say i was ready, willing and able -courts suggests he must do more -give eveidence maybe that bank would have loaned him the $ -Why isnt the burden on the defenant? -The defendant isnt suing TRADE USAGE CAN ALTER ORDER OF PERFORMANCE Restatement 2nd K's - 237 pg 666-672 Walker & Co v. Harrison if lookin at restate 240 then think restat 251 Plaintiffs best action here: Cite restat 251 - ask for assurances Damages? (put signmaker in position they would have been in if they had performed)

-signmaker gets: K Price - cost avoided -signmaker must no longer maintain the sign but we must include this expense under cost avoided Zulla Steel v. A & M Gregos Restatement 2nd K's - 241 Restatement 2nd K's - 242 -material breach provisions CISG Art. 25 CISG Art. 49 UNIDROIT 7.3.1 UNIDROIT 7.3.5 UNIDROIT 7.3.6 Principles of Euro K Law - 9.301 Principles of Euro K Law - 9.302 Principles of Euro K Law - 9.305 Principles of Euro K Law - 9.307 Principles of Euro K Law - 9.308 Principles of Euro K Law - 9.309 UNIDROIT 7.1.4 Principles of Euro K Law - 8.104 Unique Systems v. Zotos -if demand make w/ understanding that if not accepted, performance wont happen: that is reupdiation [Lingenfelder was anticipatory repudiation]

AFTER K FORMATION: (THIS WILL BE AN EXAM Q!) I I I I

Joking

request for assuran ces Whinin g/reque st request Reques for t for modific recissio ation n (req's acceptance by other party) (req's accpt by other party) (K gone but no breach) anticipa tory repudia tion

(K gone and theres breach) (mutual agrmt to rescind) (the preceding chart is a spectrum left to right) Thermo Electron Corp v. Schiavone PROF SAYS WILL EXAM ON THE FOLLOWING: -a mere request to change terms doesnt constitute repudiation Request for Recission - just asking to cancel a contract -no problem there -Why no consideration issue here? -both sides are relieved of their obligations Request for Modification -Needs consideration Anticipatory Repudiation - saying your not gonna perform -includes a threat -Antic Repud - gives cause for rise of action for TOTAL breach -if you are confident of impossibility defense, think obligations over, have you made your situation worse by saying you are not gonna perform? -Maybe/Maybe not. -you may have mitigated damages by putting them on notice that you cant perform -Market Street - obligation of good faith and fair dealing during K, but no such duty exists during negotiations Taylor v. Johnston

United States v. Seacoast Gas Co. Restatement 2nd K's -250 Restatement 2nd K's -253 Restatement 2nd K's -256 pg 684-697 Section 2. Prospective inability to perform and adequate assurance of performance UCC 2-609 UCC 2-702 (1) UCC 2-705 (1) Restatement 2nd K's - 251 CISG Art 71 Unidroit 7.3.4 Principles of Eruo K Law - 8.105 Pittsburgh - Des Moines Steel v. Brookhaven -could read this as either a service or a goods K -but its written as a goods K (UCC) saying they dont need tank till next year -> like the Nancy, northeastern exam q Q: is it an ok request for assurance under UCC 2-609? -if they have the right to ask for assurance: then its not antic. repudiation -if they dont have the right to ask for assrance: then YES, antic. repudiatn If 2-609 allows you to ask for assurances, why put that in K express? -smart to do so? -You are entitled to ask for assurance requests in some circs but you can make request beyond bounds of the K -The Personal Garantee in this case prob went too far Sequence in Pittsburgh v. Brookhaven -K formed -conversation w/ foundation builder -letter to Diversified: could be antic repud here

-letter re: per garantee: could be antic repud here as well -Meeting w/ Brookhaven (If other party had not repudiated, would Brookhaven have repudiated here? Maybe yes POINT TO TAKE: You can always ask for assurances but can only include threats of repudiation if you meet UCC 2-609 standard (if you have reasonable grounds for insecurity) -all of UCC 2-609 is beyond what K contemplated -what your entitled to ask for is debatable -If assurance is allowed to be requested and requestee gives INadequate assurance, the other party can repudiate What damages should brookhaven get? -Expectation: value of tank - cost saved ($175k) + profits? (CD) Court gives: value of tank - Cost Saved + profits + cost of foundation + cost of removal (maybe reliance here b/c prop could be worth less w/ foundation) cost of foundation would be included in costs incurred - odd that they get this then cost of removal - why in damages? - wierd, reliance? so they can sell prop? what did brookhaven actually get? reliance UCC 2-609 = Restat 251 Why wasnt Neon Sign case under UCC? -it was a LEASE, not a sale -leases are not under UCC

Norcon Power v. Niagra Mohawk -not in UCC b/c electricity is not a TANGIBLE good -When Fed Courts apply state law in diversity cases, Fed can request Court of Appeals (in NY case) to look at the case -Court here allows asking for assurances even in a non UCC case

New Rule in NY: You can ask for assurances when business entitites, long term contracting w/ reasonable grounds -Norcon basically adopts UCC 2-609 for this context -cites other cases in other states that have done the same in common law - BUT AUTHORITIES WILL BE SPLIT NATIONWIDE -makes you think court would apply it outside of this context as well REMEMBER TO REVIEW ORAL CASES (PRINT AND BRING THEM TO THE FINAL) PROF EXAM TIPS: -If UCC applicable, quote it. -Restatement on exam- strongly review R2d-90, R.2d-45, R.2d-89 -also remem: courts dont alwasy follow 90 & 45 -R.2d.-90 Substitute for consideration, it has evolved over time, some courts use it, some dont STATE ALL OF THIS -other restatements, you can just say what rule is -case names unimportant -review NY statutes on syllabus -multichoice might have CISG q (if you see italy, think CISG)