Introducing Some Basic Issues
Bailey v. West
Implied in fact Contract 
Conduct/not express word  Mutual
agreement + intent to make promise
Contract  Manifestation of assent from
act + meeting of minds
Implied in Law Contract/quasi
contract/unjust enrichment  Not here
cuz merely officious benefit
Bolin
Farms
v. Forward/output
Contract

American
Cotton Unanticipated and fluctuated market
Shippers Association price = ENFORCEABLE
Remedy of Breach  Specific
Performance
Excuse Performance  ordinary
movement or change of circumstances is
not enough
Williams v. Walker- Unconscionable Contract  No
Thomas Furniture Co. meaningful choice for one party + terms
unreasonable favor the other party
No meaningful choice for one party 
significant inequality in the parties’
bargaining power + Suspect behavior by
the more powerful party
Procedural
Unconscionability
(no
meaningful choice = take or leave it) /
Substantive Unconscionability (pro rata
matter)
Sullivan v. O’Connor Pain and Suffering  recoverable in
contract IF reasonably foreseeable
consequence of a breach
Contract Damage  Compensatory OR
Reliance
Compensatory

reasonable
expectancy of benefit to be received in the
bargain
Reliance  return the injured plaintiff to
the prior state of bargain
Restitution  return the benefit
conferred to the breaching party
Hadley v. Baxendale
No implied in fact
contract when there is
no mutual agreement
and no intent to make a
promise.
Knowledge of dispute
as to the ownership is
an inconsistent fact,
shows no intent and
meeting of minds. He
was a gratuitous.
Declatory judgment
UCC
302
Request for Replevin
Cover all provision is
unconscionable
Here is pro rata
payment
NYC = no need for
procedural
Unconscionability
344
345
Loss of Profit/Consequential Damages 351
 Reasonable + Foreseeable damages +
at the time of contract /// reasonably
P may be entitled to out
of pocket expenses, to
recover
for
her
worsening
of
her
condition, and for pain
and suffering involved
with the unexpected
operation.
In order to assess
damages, no specific
measure has to be used.
It is up to the P to argue
which one should be
used to calculate.
The loss of profit
resulting the delay in
supposed to be in the contemplation of
shipment and closed
both parties  Recoverable
mill is not recoverable.
Consideration
When Is an Act or Promise Bargained for and Given in Exchange?
Bargained for exchange
Kirksey v. Kirksey
Gratuitous Promise  No consideration
No contract because of
In this case, Benefit was the consideration
no consideration
NOT detriment
No statement of time –
maybe two years are
enough
Hamer v. Sidway
Consideration  Forbearance 
Detrimental reliance
adequate consideration sufficient to form
can
count
as
a contract
consideration
even
though no benefit was
Generally  benefit to the promisor or
directly given to the
detriment
to
the
promisee
=
promisor
CONSIDERATION
Nephew’s abstinence
Bargained for = Exchanged bargain
of swearing, drinking,
(opposed to Scothorn = promissory
playing billiard (legal
estoppel)
freedom) was adequate
consideration.
*Langer v. Superior Benefit Test: Words of condition in a
Condition of loyalty
Steel Corp.
promise  condition will be a benefit to
which is agreed by act
the promisor
as an implied contract.
Detrimental reliance
Here,
express
Promissory Estoppel: promise to do
statement of time –
something in future
until his death
Equitable Estoppel: rests on statement
He refrained from
of present fact
doing what he had a
right to do to the
benefit of D  implied
agreement
with
sufficient consideration
Pennsy Supply v. *The bargain theory of consideration 71
Ds advertisement was
American Ash
does not require explicit bargaining
express and implied
warranty  therefore
Sufficient
Consideration

D made a promise, and
Unbargained- for condition benefit the
D
breached
the
promisor + at a detriment to the
warranty
promisee
Holmes’ Bargain Theory  A promise
There is detriment here,
induces detriment + the detriment induces
but we don’t need it
promise
because there is a clear
Mutuality  Exchange 2 promises OR
benefit to D, so there
make one promise in exchange for an
was consideration.
action
Inferred
consideration due to
the benefit of promise
to promisor.
The conditional gift
has denied.
In re Green
Intent to Contract
Generally => Nominal consideration is 79
sufficient
This OUTLIER CASE => Nominal
Consideration + Vague Statement  Not
sufficient
consideration/
No
consideration
Not valuable consideration  Promise is
gratuitous
Intention  can’t enforce gratuitous
contract
Exception to Consideration Doctrine in
UCC  Modification + Waiver
*Cohen v. Cowles Moral Promise  not ordinary binding
Media Co.
It is an objective standard (Not
Subjective): would a reasonable person
expect it to be legally binding
In these circumstances, not likely that
there was an intent to make a legally
enforceable oral contract, but instead this
is more of a moral promise situation
Mills v. Wyman
Webb v. McGowin
Thomas v. Thomas
Consideration
Moral Obligation, Past Consideration
A promise based on Moral Obligation 
lacking
legal
consideration/no
consideration OR pre-existing legal duty
Past Consideration is no consideration
NO consideration  pre-contractual act 86
of kindness OR subsequent moral
obligation to repay that kindness
Consideration

Material
and
Substantial
benefit
conferred
+
Recognition of such moral obligation and
promise to honor + if unjust to not enforce
This is Exception to past consideration is
not consideration
Mixed Motives and Adequacy of Consideration
Parties motives in entering into an 71 Cb
agreement  Not important for the 79-b
adequacy of consideration
Consideration  Something of value to
pass from one party to the other
Either: Bargained-for OR Value
transfer
Just because parties
intended to make a
valid agreement does
not make it so.
Past cohabitation or
nonmarital
sexual
relationship is not
consideration
and
contract is void due to
lack of consideration.
Gratuitous promises
can not be enforced
through contracts.
To impose contract law
here would put an
unwarranted
legal
rigidity on a special
ethical relationship
If
there
is
no
expectation
of
enforceability as a
matter of law, it is not
a contract
Not enforceable
No pre existing legal
obligation
due
to
maturity of child, there
is no contract due to
lack of consideration.
The
promise
for
antecedent material and
substantial which acted
as
promised,
is
enforceable.
Comparison to the
Doctor and poison
patient scenario.
Payment of 1 pound as
well as maintenance
costs were adequate
consideration.
Courts usually don’t
inquire into equal
return
value
of
Browning v. Johnson
consideration
in
contracts
71 – 3- C There is consideration
79-b
Waiving the right to
litigate is valuable
consideration, worth
something even when
the contract isn’t
Give Up the right to enforce an
unenforceable contract  Sufficient
Consideration
to
support
A
UNILATERAL contract
Adequacy  Not important unless
fraudulent/No inquiry of adequacy
Sufficiency rather than adequacy
Apfel v. Prudential- No need for novelty of consideration  71
Bache Securities
possess value to the party  Sufficient 79
Consideration
and It is paid for the idea
which has value for the
party and novelty is not
a requirement for the
sufficiency
of
consideration
P-BS paid for the
service, so it must have
had some value to them
(sufficient
consideration).
Preexisting Duty Rule, Modification, Fresh Consideration
Levine v. Blumenthal Worsening Economic Condition  Not ?
Agreed reduced rent
sufficient consideration for Modification
was not support by new
of Contract
and
independent
Common Law needs fresh consideration
consideration.
Alteration of the contract terms  New
One-way
and Independent Consideration
modification: benefit
for one, other gets what
was already agreed to
Alaska
Packers’ New Contract between parties to an UCC
The fishermen exploit
Association
v. earlier contract  same subject  NOT 209 for other party’s financial
Domenico
ENFORCEABLE if no new or different good not vulnerability, there is
job == No consideration  NEED new service,
no waiver. Due to no
consideration on both sides
here
new consideration, no
Consideration = A bargained- for
new contract.
exchange
UCC: Good faith modification + no new
consideration UCC 209
Angel v. Murray
No fresh consideration  unexpected or 89(a)
The
payment
of
unanticipated difficulties + arise during
$20,000 to Maher after
the course of performance of a contract +
the unexpected and
the parties voluntarily agree + before the
substantial increase in
contract is fully performed on either side
refuse-producing
(executory contract) + the underlying
dwellings is a legal and
circumstances
prompting
the
enforceable
modification are unanticipated by the
modification
of
parties and + the modification is fair and
Maher’s initial contract
equitable.
with the city.
There
was
unanticipated
difficulties
with
fulfillment
of
the
original terms and no
coercion
in
the
modification
agreement.
Rehm-Zeiher
Walker Co.
Discretion, Mutuality, and Implied Obligations
v. Illusory promises/No consideration
Lack
of
mutuality
of
agreement/obligation
Mutuality of obligation  if the right to
cancel the contract and avoid
performance depends on a condition or
event occurring outside the control of
both parties Rather Than one party’s
sole will/discretion
Wood v. Lucy, Lady Implied Mutuality of Obligation
Duff-Gordon
Reasonable effort
Acceptance of exclusive agencies = an
assumption of duty
*Omni Group, Inc. v. A promise that is dependent upon a
Seattle-First National condition
precedent
(engineering
Bank
feasibility)  not necessarily make the
promise illusory or invalidate it as
consideration.
Subjective Judgment  Condition
precedent
on
party’s
“personal
satisfaction with the quality of the
performance for which he has bargained”
 Valid as long as the party’s
determination that he is satisfied is made
in good faith (opposed to Rehm-Zehir)
The duty to act in good faith alone made
the promise enforceable.
Ricketts v. Scothorn
Promissory Estoppel
No condition, requirement, or request = 90
No quid pro quo.
Equitable
estoppel:
Intentional
influence + worsen position relied on
promise + grossly inequitable to permit
recourse lack of consideration
Since the buyer has the
right to walk away no
matter what, but the
seller doesn’t, it’s a
one-way
promise
(illusory). The buyer
has given nothing of
value to the seller, and
therefore
no
consideration.
If P didn’t give his
efforts, D wouldn’t
make any money.
Therefore,
its
an
implied promise, which
has
value
and
obligating yourself to
perform duties can
count as consideration.
The seller wants to get
out, so says that
“satisfaction” is so
vague that anything
could not satisfy and
the
buyer
could
basically walk at will,
therefore it’s illusory.
The
Good
faith
requirement makes the
satisfaction
requirement
real
consideration and not
illusory.
Order
to
Specific
Performance.
The girl has reasonably
relied on the note and
entitled to the money.
The
executor
of
Grandpa’s estate is
estopped from arguing
no consideration b/c
Promissory Estoppel  Significant
alternative form of liability  failure of
consideration + failure of agreement +
lack of a required writing
Langer v. Superior
Steel Corp.
Allegheny College v.
Nat’l
Chautauqua
County Bank of
Jamestown
Same above
Grandpa
reasonably
knew Katie might quit
her job in reasonable
reliance on the $$$ he
promised.
90
Legal detriment  promise to establish a
fund  Implied duty  sufficient as
consideration
When accepted $1,000  the acceptance
bound the College to use the money to
start the fund  Johnston came under the
obligation to fulfill her other part of the
bargain
Congregation
Kadimah v. DeLeo
Promissory estoppel may result from the
assumption of duty to apply the fund, but
we don’t need this theory here
Oral Promise  1) not supported by 90
consideration 2) no injustice in
Promissory Estoppel 3) Section 90 of
Restatement
Section 90 as to charity  promisor
expected the charity to rely on the
promise + injustice can be avoided only
be enforcing it
The Agreement Process: Manifestation of Mutual Assent
(A) Ascertaining Assent: The “Objective” Test
Embry v. Hargadine
Objective Standard rather than Subjective
Regardless of the parties’ subjective or
actual intent  a reasonable man could
infer from their conduct intent to enter
into a binding and enforceable contract
Intent only matters in contract
formation  if it is communicated in
some way between all parties to a
contract, or manifested by the parties’
conduct.
Lucy v. Zehmer
Objective Standard  If the words or
actions of one of the parties has only one
reasonable meaning  any undisclosed
intentions have no bearing on the
Cardozo rules that there
was
consideration
sufficient to enforce the
contract because in
accepting the $1k
payment
Here no need to
Promissory estoppel
Gratuitous
oral
promises to charities
are not enforceable.
No contract because
there
was
no
consideration
No promissory estoppel
because there was no
injustice done by not
enforcing the dying
man’s promise, because
KTM didn’t financially
rely on that promise
Not enforceable
Remanded to determine
if a reasonable person
would’ve considered
the employer’s words
as a verbal renewal of
employment
Zehmer’s
actions,
interpreted
reasonable
outward
when
by
a
person,
existence of a valid and enforceable
contract
Joke  Subjective intent is not matter 
not communicated to the other party
Raffles v. Wichelhaus Mutual misunderstanding  the meaning
of a term of the agreement  No contract
No meeting of the minds and, hence, no
binding contract.
Ambiguity as to the meaning  Parole
evidence  Wichelhaus meant one
Peerless and Raffles meant another
Offer
Implied-in-Fact Agreement
Wrench v. Taco Bell Implied in fact Contract  based solely UCC
on the parties’ conduct, language used, 206
actions, or other circumstances.
204
Implied Acceptance by performance 
used the material
Defendant understood that the Plaintiff
expected compensation for use of his
ideas.
Disclosure Request  implies a promise
to pay for the idea if the recipient uses it
Implied in fact contract  reasonable
expectation to compensate if used +
request to disclose
Lonergan v. Scolnick
Southworth v. Oliver
What is an Offer
Invitation for offer
UCC
The offeror is master of the offer and 205
controls the terms of acceptance
Reasnble
The original ad was not an offer  just Time
an invitation to do business
Open
offer
Surrounding Circumstances to establish:
-Objective Standard not subjective
intent  what a reasonable person in the
position of the offeree has been led to
believe
-No words of promise, undertaking, or
commitment  Not offer but invitation
for an offer or mere preliminary
negotiations
- Definiteness of the addressee  Offer
 If a statement to a definite individual
indicate a willingness
to be bound in his
agreement to sell his
farm to Lucy, and Lucy
is thus entitled to
specific performance of
that agreement.
The judgment is thus
for Wichelhaus.
A reasonable person
could understand it as
either ship, therefore
when it isn’t clarified
there is no mutual
assent.
Even if there were no
formal
terms
of
agreement discussed,
their actions manifest
objective intent to form
a contract.
Wrench successfully
raised genuine issues of
material fact regarding
the existence of an
implied in fact contract,
but their claims are
preempted
by
the
Copyright Act.
Defendant
clearly
indicates that there are
other potential buyers
and at no time agrees to
hold the property for
Plaintiff.
Sending the letter to a
specific buyer was a
higher standard of
communication, not a
general advertisement
with restricted terms
sent to many people.
The
letter
was
exclusive, so it was an
offer and not an ad.
or group of addressees, as opposed to an
indefinite group
- Definiteness of the proposal itself 
Offer  containing many material terms
Lefkowitz v. Great Advertisement  Offer 
clear,
Minn. Surplus
definite, and explicit, and leaves nothing
open for negotiation
Modify Offer  before acceptance
After acceptance  the offeror may not
impose additional or arbitrary conditions
on the offer
Acceptance by act  presence at the
store
Leonard v. Pepsico, Advertisement  Not offer  As a joke
Inc.
Advertisement  Offer  contain a
commitment or an invitation to take
further action
Modes of Acceptance
(1) Who Decides What Counts as Acceptance?
La Salle Bank v. Mel Acceptance Mode
Vega
Offeror’s Mastery of Offer
Offer may condition the Acceptance 
the acceptance shall be in accordance to
the terms of Offer
Common law  Not require acceptance
this way, but if the parties define the
mode of acceptance in an agreement, only
acceptance that conforms to that will
successfully bind both parties
(2) Acceptance by Performance and Acceptance by Promise
Hendricks v. Behee
Offer calls for a promise (not act/silence) 56

Communicated
Acceptance/notification
Communication to Agent  Not Enough
Offer Withdrawal  before acceptance
UNLESS consideration / detrimental
Reliance
Advertisement for the
lapin stole (opposed to
coat)
was
clear,
definite, and explicit,
and it left no terms open
to negotiation. It stated
that the stole would be
sold on a given date at a
given time to the first
person who arrived and
agreed to pay the $1
purchase
price.
Lefkowitz fulfilled this
condition, and he thus
accepted the store’s
offer.
Humor is up to trier of
fact and is judged on
reasonable
man
standard. A reasonable
person would clearly
see this as a joke,
therefore not an offer.
Not enforceable
Contract
not
enforceable
because
mode of acceptance
wasn’t in accordance
with what was agreed to
in the rider (trustee
didn’t
execute
as
required)
Offer was withdrawn
properly by giving
notice to the agent who
has authority. The
smiths telling their own
agent is not acceptance,
because
the
counterparty was not
Advertisement  Offer
Unilateral Contract  offer to anyone
that
invites
acceptance
by
performance/act  no need for
acceptance notification/communication
No notification of acceptance  offer +
nature of transaction
Corinthian
Seller’s order is the offer
Pharmaceuticals v. Non-confirming
good

Not
Lederle Labs
acceptance/Counteroffer/rejection IF as
Accommodation + seasonably notify
buyer
There is no contract  acceptance must
match the offer (Common Law Mirror
Image Rule)
Industrial America, Advertisement

Offer
invites
Inc.
v.
Fulton acceptance by performance/act 
Industries, Inc
binding contract when the performance
completed
Acceptance by performance  No need
for notification/communication
Carlill v. Carbolic
53-1
UCC
206-1
(accom)
207
(no mirir
Image)
Shipment of nonconfirming goods as
accommodation is a
counteroffer/rejection
of offer – No contract
53
Implied acceptance by
performance.
Industrial’s
full
performance
constituted acceptance
of Fulton’s offer and
created
a
binding
contract. Industrial is
thus entitled to a
judgment
of
its
$125,000
broker’s
commission
against
Fulton.
Glover didn’t know
about the offer, so the
reward was not what
motivated her to.
For there to be
acceptance
by
performance,
there
needs to be knowledge
of the offer.
Contract is enforceable
because
parties
specified the acceptable
modes of acceptance,
one of which was the
commencement
of
work, which Ever-Tite
did.
Expected revenue plus
costs
Mary
Glover
v. Acceptance of Offer required knowledge
Jewish War Veterans of offer in the first place
No acceptance by performance
No meeting of mind = Mutual assent
Voluntary
performance
without
knowledge  no agreement
Ever-Tite
Roofing Modes
of
Acceptance

Corp. v. G.T. Green
Commencement
of
work
within
reasonable time  preparation of work
(gathering
equipment)
deemed
performance
No time Specified  reasonable time
No
requirement
of
notification/communication –Res. 54
(3) Acceptance by Conduct or Silence/Dominion
informed prior to the
offer’s revocation
Sale puffery along with
the certainty payment
(certain amount in
bank) make an offer
which accepted by
performance.
54
notice
UCC
205
Theodore Russell v. Mode of Acceptance  offeree’s 69
Texas Co.
exercise of dominion
Objective standard rather than subjective
intent  Offeree’s intent is not matter
Tortious Conduct  Res - 69
R.L. Ammons
Wilson & Co
v. Silence  Implied Acceptance  69
Binding Contract
Surrounding circumstance  Previous
dealing  create reasonable belief
Schreiber v. Mills
Meeting of Mind  Mutually assent to
the same thing
Outward intention of acceptance
Beneficial National Modification of Agreement (offer) 
Bank, U.S.A. v. Obie Acceptance by Silence
Payton
Ambiguities are read in favor of the nondrafting party.
Hendricks v. Behee
Dickinson v. Dodds
Termination of Offer
Same
Implicit revocation/ termination of offer 43
by selling to other person  offeree 36
acquires reliable information to that
effect
Inconsistent Action
Defined time open for Offer  not
binding unless  Consideration or
acceptance = Option Contract: an
agreement separate from the offer to sell
 No meeting of minds// implicit
revocation
Even if circumstances
showed that Texas
indicated its intent not
to accept Russell’s
offer, Russell could still
treat Texas’ tortious use
as acceptance and a
binding contract would
exist.
There is a possibility of
implied acceptance by
silence if the trier of
fact finds that the
circumstances support
that inference in the eye
of a reasonable person
and whether it was
reasonable for the
buyer to interpret the
seller’s silence as
acceptance.
The letter was more
akin to a cease-anddesist letter than an
offer to contract. No
contract here because
no meeting of the
minds,
constructive
acceptance
doesn’t
apply here.
Not enforceable
There is acceptance by
silence. They were
already in a contractual
relationship, so can rely
on customer reading the
terms.
Acceptance after sold
property
which
Dickson knew that the
property has already
sold = no meeting of
minds
Humble
Westside
Oil
v. Consideration attached to offer as an
option contract
qualified acceptance = rejection
Option contract  independent,
irrevocable, complete contract (from sale
agreement) = It is secured through
independent Consideration
Ever-Tite v. Green
Acceptance attached to offer before
offer’s withdrawal
Contrary to Dickinson, they did not know
of withdrawal
Offer was withdrawal after the offer has
been already accepted by commencement
of performance.
Marchiondo
v. Revocation of an offer invited
Scheck
performance (Unilateral Contract) 
before partial performance of broker
Part Performance in offer to accept
through performance = An option
contract = Res.45
Partial performance can count as
acceptance
Baird v. Gimbel
Drennan v. Star
Paving Co.
Adams v. Lindsell
25
87-1-a
Option contract can
NOT be rejected by a
proposed amendment
to the Sale Agreement
45
45
Revocation of offer before acceptance = 36
No binding Contract
Mistake in bid
No promissory Estoppel
Bidding was a mere offer not a promise
No Contract Award (General Contract) =
neither party were bound
Offer  in exchange for consideration 
Counter-promise / act = PROMISE
Offer = Promise  if the equivalent was
received
Mere Offer with no exchanged
consideration (contingent No promissory
estoppel
General Rule  Offer revocable before 87-2
Acceptance  EXCEPTION  Offer
foreseeably induce reliance before
acceptance = Irrevocable
Mistake  damages should impose on
person made mistake based on
promissory estoppel
(F) Timing Issues
Mailbox Rule: Acceptance is valid and 63
binding when it is properly posted, not
when it is received by the offeror
Offeror is the Master of offer  He
choose mail communication
Once
performance
pursuant to the offer is
begun, even if not
completed, the offer
cannot be revoked.
It’s a contract with
condition which the
performance shall be
completed.
Offer was withdrawn
before it was accepted.
The mere bid is not
acceptance of offer.
Due
lack
of
consideration
exchange,
no
promise/just
offer.
Therefore, No PE
The use
of
the
subcontractor’s figures
is NOT acceptance, but
P did rely on the
numbers submitted
The acceptance by mail
was valid as soon as it
was posted by the buyer
even before it was
received by the seller.
Minneapolis
v. Columbus
DTE Energy
v. Briggs Electric
Textile
v. A.BMH
Hill v. Gateway
Klocek v. Gateway
Specht v. Netscape
2. Special Problems in the Agreement Process
Counteroffers, Form Battles and UCC § 2–207
Counter Offer = Rejection/ Mirror Image 59
Rule
61
39(2)
Form Battels
2-207
Exception to the 2-207: Express
Conditional acceptance of offeror,
materially alter conditions, objection of
offeror and other UCC exceptions
Conditional Acceptance  Counteroffer 2-207-3
 needs specific and unequivocal assent.
Conduct  written agreement + UCC
supplement
Assent  need specific and unequivocal
assent  SILENCE is not sufficient for
2-207-3 purposes
Contract is not under 207-1 but 207-3.
Shrinkwrap and Browsewrap
Contract
formation

after 2–204
communicating terms
accept-or-return
offer

invite
acceptance by conduct, Offer Acceptance
by keeping the product/ One form = No
UCC 207
No need for contract reading/Caveat
Emptor
Contract
formation

before 2-207
communicating terms/ One Form = Yes
UCC 207 – No Merchant = required
express assent to ST
Keeping the product  NOT sufficient to
expressly agreed to ST
Unequivocal and specific assent is
required
Express Acceptance required in cyber
law rather than conduct (downloading)
Reasonably conspicuous notice of terms
+ unambiguous manifestation of assent to
terms = electronic bargaining
A reasonably prudent consumer would
not assent to contractual terms that are so
inconspicuous that they could completely
overlook them.
Minimizing the amount
of goods mentioned in
offer via a counter-offer
Forum-selection
materially alters the
parties’ contract
Conditional
Acceptance followed
by conduct (shipment)
is under 207-3. There is
no
generic,
“gapfilling” arbitration term
provided in the UCC,
and thus no arbitration
clause is incorporated
into the contract.
Additional Term in box
is binding by not
returning the products
Additional Term in box
is NOT binding by not
returning the products –
Express Assent is
required. Here, the
contract was formed
over the phone, not
after
holding
the
computer for 5 days
There was no contract
because
express
acceptance is needed in
cyberspace law.
A reasonably prudent
offeree in plaintiffs’
position would not have
known or learned of
terms hidden below the
“Download” button on
the next screen.
NO knowledge
Cairo v. CMS
Varney v. Ditmars
Oglebay
v. Armco
Blinn v. Beatrice
Heights v.
Phillips
*The inquiry notice doctrine does not
apply  because a reasonable person
wouldn’t necessarily find the hidden
terms
Acceptance by Silence due to taking 69-a
Benefit
Take the benefit with knowledge of the
terms of the offer  taking benefit
constitutes acceptance of the terms/
actual knowledge Terms  Contrary to
Specht/ repeated and automated use =
imputing knowledge
Indefiniteness of Agreements and Gaps
Promise/agreement  definite/explicit + 33
full intention be ascertained to a
reasonable degree of certainty
Term is too indefinite = No meeting of
minds
Quantum Meruit/valebant  Hard to
quantify + NOT applicable in Executory
Contracts
No Parole Evidence to clarify parties’
intent in forming the agreement
Cardozo Dissent: Varney could have
presented sufficient evidence of the
meaning of the term “fair share” as
contemplated by himself and Ditmars.
Varney was not an “at will” employee,
and is entitled to these wages.
Price Uncertainty
R 33 C.e
Where Parties bound  court can UCC
determine reasonable price + Mediation 305
for specific performance
Indefiniteness treated more flexibly here
than in Varney
Indefinite promise  No meeting of R 2,90
mind
Indefinite term in Offer  No PE in
Restatement
Indefinite term in Offer  PE if =
reasonable + foreseeable reliance
Formation Defenses
Capacity to Contract
Test of mental capacity  a person is R 15
capable of understanding in a
The case is dismissed
because the forum
selection clause is
binding.
Actual knowledge as to
the term as well as
imputed
knowledge
due to the repeating and
automated use can
establish acceptance.
Fair share is indefinite
and
vague
not
applicable. There is no
intention.
Close and long-lasting
relationship between
parties shows their
bound to contract and
gap filling by court
The indefinite promise
does not make Blinn a
employer at-cause so
his termination as an
employee at will was
correct.
BUT
Promissory Estoppel
due to reasonable and
foreseeable reliance
The competency was
overcome by clear and
reasonable manner the nature and
effect of the act engaged in
Competency Overcome  by clear and
convincing evidence
Competency
Presumption:
Law
presumes every party is competent,
burden is on the person alleging
incompetency
Ervin v. Hosanna
Bull
Riders
AutoZone
(Colorado State)
Intoxication  voidable
R 16
Test of mental capacity  at the time of
execution,
the
maker
possessed
understanding sufficient to comprehend
the nature, extent and consequences of
the transaction.
Statute of Frauds 2-201
v. Statute of Frauds  Every agreement
that by the terms is not to be performed
within one year after the making thereof
should be in writing  Oral Agreement
is not enforceable.
An alternative performance that could be
completed in less than one year  No
SOF
Termination Option Role:
Courts are divided, however, on whether
a contract contemplating performance in
more than one year but containing an
option to terminate the agreement within
one year should be considered as
presenting an alternate method of
performing.
Crabtree v. Elizabeth Multiple documents  taken together
Arden Sales Corp.
may constitute a signed writing sufficient
to fulfill the statute of frauds  if all
documents refer to the same subject
matter or transaction + at least one is
signed by the party to be charged with the
contractual obligations
Parole Evidence  NOT used to supply
any missing material terms in the
documents  CAN be admissible to
demonstrate the connection between the
documents or the assent of the party to be
convincing evidence
collected
through
experts, family and
evidences prior and
subsequently.
Gholson lacked the
mental capacity to
contract at the time of
contract formation with
Heights, and thus the
listing contract between
Gholson and Heights is
void.
A party cannot be
bound to a contract if
they were intoxicated
when they entered into
the contract.
No Statute of Fraud
here. The goal of this
option was not to
provide an excuse for
at-will termination of
the
contract
by
AutoZone, but rather to
secure at least one full
year of sponsorship for
PBR by AutoZone. It is
fair and reasonable to
interpret
the
termination option as
presenting
an
alternative method for
performance of the
contract.
The
memorandum
drafted by Ms. Arden’s
secretary,
combined
with the two payroll
change cards signed by
Arden’s senior staff,
constitutes sufficient
evidence
of
an
enforceable
written
agreement made by
Arden
to
employ
Crabtree for two years.
Sullivan v. Porter
charged to the contents of the unsigned
documents.
Exception to Statute of Frauds  Part
Performance Doctrine = 1) contract exist
+ 2) partial performance + 3) inducement
by
misrepresentation,
including
acquiescence or silence.
Specific Performance  uniqueness of
land + significant improvements
DF Activities Corp. v. Statute of Fraud  Additional Discovery 2–201(3)
Brown
UCC § 2-201(3)(b)  Additional
Discovery  permits an Exception to its
statute of frauds where “the party against
whom enforcement is sought admits in
his pleading, testimony, or otherwise in
court that a contract for sale was made.”
Laidlaw v. Organ
Vokes v.
Murray
Hill v. Jones
Fraud, Duress and Unconscionability
No duty to share important information
 No lie + No actively mislead
Silence does not amount to fraud where
both parties had equal opportunity to get
the information.
Arthur Fraud and Misrepresentation  Material
facts not opinion
Fraud and misrepresentation in Statement
of opinion is applicable in  Fiduciary
relationship/ employed artific or trick/ no
arm’s length deal/ no equal opportunity to
appraise/ superior knowledge  Opinion
will be treated like statement of fact
Non-disclosure
=
fraud
and 161
misrepresentation
164
Duty of Disclosure  Facts materially
affecting the value of the property + are
not readily observable + are not known to
the buyer
Duress and Undue Influence
The
Porters’
oral
agreement to transfer
their
property
to
Sullivan and Andrews
is enforceable based on
the part performance
exception to the statute
of frauds. Partial down
payment
given,
renovations
started,
“buyers” moved in, and
many oral reassurances
from the seller
When Brown raises a
statute
of
frauds
defense and submits a
sworn
affidavit
denying the formation
of a contract with the
plaintiff, the plaintiff
may
not
seek
additional discovery to
attempt to gain an
admission from the
defendant
of
the
contract under oath.
Case remanded
When a party asked a
question, actively lying
to or misleading a party
can void the term of
contract.
Here due to fiduciary
relationship and also no
arm’s
length
and
superior knowledge of
trainer, the new trial
ordered.
The seller was under
duty to disclose. The
existence of termite
damage is sufficiently
material to warrant
disclosure.
Rubenstein
Rubenstein
v. A contract is voidable under duress when 492
 (1) fear of loss of life; (2) fear of loss
of limb; (3) fear of great danger; or (4)
fear of imprisonment.
Duress = Voidable
Subjective Standard: subjective inquiry
depending on the unique circumstances
and psychological reactions of the party
to whom the duress is applied
Austin Instrument v. Economic Duress  party making the
Loral Corp.
claim was forced to agree to the contract
by means of a wrongful threat precluding
the exercise of his free will
Such duress can be proved by showing 
threatened to breach the contract by
withholding goods unless the other party
agrees to some further demand + could
not obtain the goods from another source
of supply + that the ordinary remedies
available for breach of contract (e.g.,
accepting the breach and later suing for
damages) are inadequate.
Williams v. Walker- The doctrine of unconscionability can be
Thomas Furniture Co. used as a means to render contracts
unenforceable.
Jones v. Star Credit Excessive Price  unconscionable as a
Corp
matter of law
Circumstances and Factors
Equality of bargaining power, whether
the price was exorbitant in relation to the
value of the goods, the seller's knowledge
of the financial condition of the purchaser
and the reasonableness of the credit terms
that were extended.
Court applied UCC § 2-302
In re Louis Fleet v. Excessive Price  unconscionable as a
U.S.
Consumer matter of law
Council
Circumstances and factors:
Mr. Rubenstein is
entitled to a trial
regarding whether his
wife, Mrs. Rubenstein,
wrongfully
induced
him to transfer his
property
through
duress.
There was a prima facie
showing here of a
compulsive yielding to
the demand for the
conveyances
In this case, Loral was
deprived of its free will
by Austin, as Austin’s
breach
threatened
Loral’s ability to fulfill
its contract with the
U.S. government. Loral
could not accept the
normal
contractual
remedy of accepting
Austin’s breach and
later suing for damages
because doing so would
impermissibly cause it
to breach its own Navy
contract.
UCC
§ 2-302
UCC
§ 2-302
The purchase price of
the
agreement
is
determined
to
be
unconscionable
pursuant to the UCC.
The appropriate remedy
is to reform the parties'
agreement to limit the
amount due thereunder
to $619.88, the amount
that the Joneses have
already paid toward the
purchase price.
The
price
being
charged by USCC is
grossly
excessive
relative to its costs, and
the value of its services
The price charged for a good or service +
the gross excessiveness of the price
charged in relation to the seller’s costs +
and the value of the good or service sold
relative to the price paid by the consumer.
Sinnar v. Roy
7. Illegality and Public Policy
The court’s independent inquiry 
Serious Illegality  suicide Dante: court
accord doing something on its own made
on its own motion.
Pari Delicto  both are in default
No unjust Enrichment
Illegal Purpose/object  circumventing
federal Law  Contract is void for
illegality
NO Actual Illegality (not yet tax filed) 
contemplated illegality is enough
Contrary to Sinner  the money backed
to iranzadi
Illegality  UNenforceable
Broadley v. Mashpee Unfair Dealing
184
Neck Marina, Inc.
Broad exculpatory clause  Public
policy voids waivers of gross negligence.
Overbroad Waiver Clause  unfair
dealing
Absence of bad faith or unfair dealing 
the trier of fact may reform a waiver 
Equitable Reformation
Unfair Dealing
i) a party is required to sign a waiver that
is overbroad and unclear, ii) absence of
negotiations between the parties
(signature as is), iii) when the waiver
specifically prohibits an injured party
from bringing suit for any claims.
Public Policy  Potentially Not
Enforceable (Court may engage in
equitable reformation)
*The court can (but need not) equitably
reform overly broad contract language
Homami v. Iranzadi
is actually zero. These
factors, combined with
USCC’s
fraudulent
misrepresentations
about the extent of its
services
in
its
marketing
campaign
make
USCC’s
commercial
conduct
unconscionable
and
thus prohibited by the
NJ UDPA.
The alleged contract
formed between Le
Roy and Sinnar to
obtain a beer license for
Sinnar is void for
illegality.
A contract created with
an illegal intent is void
as against public policy.
Marina
induced
Broadley to sign the
waiver through unfair
dealing,
and
thus
should not be entitled to
reformation of the
clause to permit limited
liability for ordinary
negligence
only.
Marina’s waiver is
extremely overbroad
and thus contrary to
public policy in that it
completely
absolves
Marina
from
any
liability for even gross
negligence
and
intentional
wrongdoing.
drafted in good faith that would otherwise
violate public policy.
Data Management, v. Good faith
Greene
Surrounding factors
The intent of the parties in making the
covenant not to compete + the overall
“reasonableness” of the agreement.
An overbroad anti-competition covenant
 be reasonably altered to render it
enforceable  if drafted in good faith.
Overbroad is a matter of public policy
1. Render
them
unenforceable
2. Blue Pencil Approachcross out but don’t add
3. Equitable reformationrewrite if in good faith
Public Policy  Potentially Not
Enforceable (Court may engage in
equitable reformation, here good faith)
Watts v. Watts
Unmarried Couple  No harm to Public
Policy
(Illinois consider it Unmarried property entitlement
against Public Policy) *Breach of contract: express or implied
Courts are divided
in fact Contract => Contract is not against
public policy
*Unjust enrichment (1) a benefit is
conferred on a party, with (2) knowledge
or appreciation of the benefit, and (3) the
party unjustly accepts or retains the
benefit.
*Partitioning: a claim for division of any
property that is jointly held. When parties
act jointly financially and socially while
living together, it is strong evidence that
they intended to share property equally.
Kass v. Kass
No violation of Public Policy in the
New York
Agreement to disposition of genetic
material
* Public policy does not bar enforcement
of embryo disposition contract protecting
party from involuntarily becoming a
parent.
A.Z. v. B.Z.
(Courts are divided)
Against Public Policy
No force to enter in familial relationship
Court finds possibility
of good faith here;
employer has burden of
proof upon remand.
Public policy does not
preclude an unmarried
cohabitant
from
asserting a contract
claim against the other
party
to
the
cohabitation so long as
the
claim
exists
independently of the
sexual relationship and
is
supported
by
separate
consideration.
An agreement between
the two biological
donors
regarding
disposition of their
preembryo is presumed
valid and binding and
should be enforced in
the case of a dispute.
Public policy disfavors
agreements that bind
parties to future family
relationships even if the
contract is enforceable.
In the Matter of Baby The Surrogacy Agreement was against
M
the public policy
3. Mistake
Boise
Junior
v. Material Mistake  would somebody
Mattefs Construction come to the deal or not
Co.
Unilateral Mistake
Unconscionable  It would be still
profitable
Recession as a remedy  proves that the
mistake is material, enforcement of a
contract based on the terms of the
erroneous bid would be unconscionable,
the mistake did not result from violation
of a positive legal duty or from culpable
negligence, the party to whom the bid is
submitted will not be prejudiced except
by the loss of his bargain, and prompt
notice of the error is given.
Beachcomber Coins, Mutual Mistake  enforcement of the
v. Ron Boskett
contract would be materially more
difficult  rescind by either Party
negligent in failing to know or to discover
the facts  Still right to seek to rescind
the contract by adversely effected
party/Voidable by either party
Assume the Risk of a Mistake  NO
Rescission
The Custom of Trade cited to isn’t
sufficiently “widespread”
Pricing can be an evidence of
materiality/adverse effect
Sherwood v. Walker
153
Govert
Contract
Innocent mistake not
gross negligence which
is material
152/154
Where parties enter a
contract and are under a
mistake regarding a fact
that forms the basis for
the transaction, the
contract is voidable by
either
party
if
enforcement of the
contract would be
materially
more
difficult than it would
have been had the fact
been as the parties
believed it to be.
When a contract is
made based on the
mutual mistake of the
parties that relates to a
material fact such as the
subject matter of the
sale, the price, or some
other
fact
which
materially affects the
agreement, the parties
may
rescind
the
contract once they learn
of the mistake.
Bearing the risk with an
“as is” clause makes the
contract not voidable
by the buyer
Mutual Mistake  Voidable by 152
adversely affected person
Material Mistake in Fact
Mistake in Quality/ degree  Not rescind
Mistake on substance/ kind/ subject
matter of the sale  Rescind
Large discrepancy in value shows 
Material Mistake
Lenawee
County Material Mistake  Allocation of risk of 154
Board v. Messerly
loss/Assumed Risk of any mistake  No
rescission
Mutual Mistake => Mistake as to the
basic assumption undelaying the
agreement
Contract AS IS Clause
Ayer v. Western Means of communication bind sender
Union Telegraph Co. Mistake by transmitter:
2 Agreements
Indemnification: The Court held the
Plaintiff could recover the difference
caused by the mistake of the Defendant.
When a mistake is
made
in
the
transmission of an
offer, the party that
chose the method of
transmission is liable
for the mistake, but
may
seek
indemnification from
the transmitter (the
difference).
Chapter Five
Performance
1. Determining Scope and Content of Obligation
(A) Integrated Writings and the Parole Evidence Rule
Catherine v. Charles Parole Evidence = Oral/written extrinsic
Icehouse oral promise
Lath
(out
of
four
corner)
+
fails
the
parole
evidence rule b/c the
prior/contemporaneous
written contract was
Admissible Parole Evidence = Constitute
very detailed, Court
a parole collateral agreement
finds contract was
- Agreement be collateral
intended to be fully
- Not contradict express or implied
integrated w/ respect to
provisions
the parties obligations.
- Not ordinarily be expected to embody in
the writing.
*Collateral  means connected but
subordinated/ distinct and independent
from the written agreement  An oral
agreement is not collateral to the written
agreement if its subject is closely related
to the subject of the written agreement.
Masterson v. Sine
Inadmissible
Parole
Evidence
B/c there was no
(Exclusion)  When contract is
integration clause &
nothing in the contract
integrated
about assignment, the
Admissible Parole Evidence  Unclear
Court ruled it was an
parties’ intention to integration + the oral
open term, and can thus
agreement would naturally be made as a
be supplemented w/
separate agreement by the parties given
oral agreement.
their actual situation and circumstances
The
collateral
when drafting the written contract
agreement is one that
might naturally be
Notion
of
Complete
made as a separate
Agreement/integration
clause/merger
agreement, and the case
clause/total agreement clause  Here, no
is not one in which the
reference to complete agreement 
minimize the risk of PER
Silence in the Contract
Inclusion of additional terms  is it
integrated or not + is it contradicts or
inconsistent with the integrated portion of
the writing
Alaska v. Alyeska
Inconsistency  “absence of reasonable
harmony in terms of the language and
respective obligations of the parties.”
Parole evidence cannot contradict written
terms.
Pacific
Thomas
Gas
(B) Interpretation and Construction
v. Interpretation and Explanation/ambiguity 202
in agreement  PER is admissible if 
extrinsic evidence to show intent is
admissible in almost every case. Not
intent for formation intent in the
provision o agreement
This is a Minority Approach:
Subjective Approach to Contractual
Interpretation: evidence of the
subjective thoughts of the parties is
allowed when certain terms are
ambiguous to help define what the terms
mean in relation to the contract.
Frigaliment v. B.N.S.
Plain Meaning Rule  No PER
Contextual Meaning Rule  PER is
admissible
UCC
Ambiguous Term
-Plain Meaning; negotiation; other 202
contract provision; market factors; course 208
of dealing; trade usage
Trade Usage/Newcomer  (1) actual
knowledge or (2) that the usage is so
pervasive that the party’s acceptance of it
may be presumed.
Objective Approach to Contractual
Interpretation
parties
“would
certainly”
have
included the collateral
agreement in the deed.
Letter of intent was
partially integrated per
“subject to approval”
language, thus anything
relating to that term
needed to be in writing.
Since the December
11th letter of intent was
integrated, AND may
not introduce extrinsic
evidence
that
is
inconsistent with this
interpretation of the
owner
committee
approval clause.
B/c there is ambiguity
in the indemnity clause
language, ok for GWT
to introduce extrinsic
evidence to interpret.
Instead of relying on its
own interpretation of
the “plain meaning” of
Thomas’
indemnity
clause, the trial court
should have examined
the contract language
itself and any credible
extrinsic
evidence
relevant to ascertaining
the intent of the parties
surrounding
that
language.
The parties’ subjective
intention is not what
matters
when
interpreting ambiguous
terms, the court instead
uses
an
objective
standard to determine
the meaning of an
ambiguous term like
“chicken”.
The burden was on the
plaintiff to prove the
*In re Katrina Canal Reasonable Expectations Doctrine 
Breaches Litigation
only available when the terms are
ambiguous  what the party signed
expected at time of signature
prevailing meaning
*Contract terms should be construed
according to their plain, ordinary, and
generally prevailing meaning
*Contra Proferentem two or more
reasonable interpretations of the
ambiguous term exists, the contract is
construed against the drafter.
Objective Approach to Contractual
Interpretation: don’t care what the
parties say/think the term means, look to
the objective meaning of the term.
2. The Duty of Good Faith
(A)Scope and Content of the Good Faith Duty 1-201 (b-20); 1-304
Centronics
v. Discretion in performance  sufficient 205
Genicom
to deprive a substantial proportion of
value  implied obligation of Good
Faith
Express term of contract  Safe
Harbor/insulating from accusation of bad
faith
Implied GF in Discretion Scenario
Criteria:
-one party have discretion in
performance amounting to a power to
deprive the other party of a substantial
proportion of the agreement’s value,
-parties intended by their agreement to
make a legally enforceable contract,
-The party with discretion must have
acted unreasonably in doing so.
- Any damage caused must directly
related to abuse of discretion and not by
events beyond the control of either party.
2 definitions of discretion that are not
good faith:  both satisfied here
○ Surpassing common standard of
decency (Summers)
○ Depriving the other side of the bargain
(Burton)
(B)Prevention, Hindrance and the Duty of Cooperation
Patterson
v. Hindrance and Interruption
Meyerhofer
Breach of the implied duty of good faith
 make it hard for the other party in a
contract
used
the
narrower definition
The terms of the flood
exclusions
in
the
plaintiffs’
insurance
policies
are
unambiguous and the
water damage to their
property is not covered
by insurance.
The contract contains
express
provisions
governing the timing of
payment,
thus
Defendant has no
discretion to withhold
approval for pay out
beyond that time or to
affect the timing of the
arbitration.
In every contract there
is an undertaking by
each party that they will
contract to perform the terms of the
contract.
*The party who causes the breach may
not raise the breach as a defense for her
own nonperformance.
Interference / failure to cooperate 
based on comment D in Restatement
Both Summer and Burton are satisfied:
Summer: violating the community
standard
Burton: Depriving Patterson from the
bargain
Market
Street Opportunistic advantage of other
Associates Limited person’s unawareness
Partnership v. Dale Good faith  prevents a party from
Frey
taking opportunistic advantage of
another party in a way that was not
resolved explicitly by the parties at the
time of drafting and that undermines the
parties' cooperative venture.
(C)Exercise of Reserved Discretion
Omni Group, Inc. v. Repeated
Seattle-First National
Bank
Billman v. Hensel
Subject to Financing
Financing clauses  make a reasonable
and good faith effort to satisfy the
condition
Existence of a condition precedent  NO
excuse performance where the promisor
prevents performance of the condition
Austrian Airlines v. Rejecting non-conformity
UT Finance
Bad faith claim due to drop in price
Industry custom does not apply where
express terms of a contract say something
different
Fred Feld v. Henry S. output contract
2-306
Levy & Sons, Inc.
*Seller must continue producing the
goods in good faith, until it determines in
good faith that it will sustain losses that
are “more than trivial” if production
continues.
not intentionally and
purposely do anything
to prevent the other
party from carrying out
the contract.
Remanded for further
fact finding.
It would be not bad
faith to engage in sharp
dealing and make it
harder for the other
party to perform.
The Billmans did not
fulfill their obligation
to make a reasonable
and good faith effort to
obtain financing to
purchase the Hensels’
home, and are thus not
excused
from
performance of the
contract.
A merchant buyer does
not necessarily act in
bad faith when it rejects
a
nonconforming
tender because the
market for the resale of
the goods has declined.
it is not clear whether
the
wholesaler
exercised good faith in
that determination, and
it is not clear if “very
uneconomical” means
that the wholesaler
sustained substantial
losses due to the
continued production.
These are questions of
fact that are not
determinable on the
record.
Alfred L. Angel v. Repeated
John E. Murray, Jr.
Roth Steel Products v. Modification of contract in Good faith
Sharon Steel Corp.
Commercial Context: GF conduct that is
consistent with reasonable commercial
standards of fair dealing in the trade, and
motivation by an honest desire to
compensate for commercial exigencies.
Modification: motivated by a legitimate
commercial reason + that such a reason is
not offered merely as a pretext + not have
engaged in extortion or coercive means
Hillesland v. Federal An employment having no specified term
Land Bank
 At will employment  terminated
“for good cause, for no cause or even for
cause morally wrong,”
Exceptions to this rule:
-public policy
- implied covenant of good faith and fair
dealing  transforms every employment
contract into an agreement to terminate
only for good cause  NOT accepted by
some jurisdiction
(D)Modification by Agreement
Alfred L. Angel v. Repeated
John E. Murray, Jr.
Roth Steel Products v. Good Faith  conduct is consistent with 2–615(a)
Sharon Steel Corp.
“reasonable commercial standards of fair 2–209(1)
dealing in the trade + motivated to seek 2–103
modification by an honest desire to
compensate for commercial exigencies
Beneficial National Repeated
Bank, U.S.A. v. Obie
Payton
3. Liability for Representations of Fact
(A)Warranties
(1)Express Warranties
Rogath
v. Disclosed of fact by Seller  Knowledge
Siebenmann
of Buyer  NO Breach of Warranty 
deem to waive right
Disclosed by third party/Common
knowledge  Breach of Warranty 
deemed to have bought the seller’s
warranty as insurance
Sharon did not act in
good
faith
when
seeking modification of
its contract with Roth,
and is thus liable for
breach of contract.
Court decides that there
is no implied duty of
good faith in at will
employment contracts.
Different states have
different approaches
Impracticability:
Accepting more order
rather than raw material
In this case, there is a
genuine
issue
of
material
fact
surrounding
Siebenmann’s
disclosure to Rogath
about the challenge
* Buyer has to have relied on the
warranties for it to be actionable.
*The key issue is not whether the buyer
believed the facts the seller warranted, but
whether the buyer purchased the seller’s
promise of the truth of the warranted
facts.
(B)Tort and Statutory Liability for Falsehoods
All-Tech Telecom, Breach of Warranty
UCC 2Inc.
v.
Amway Economic-loss doctrine  Confining 316(4)
Corporation
contracting parties to their contract
remedies not tort
Warranty  Shield for the Seller
UCC  limit the remedy
Promissory Estoppel  Future / Not
supported by consideration / Not
enforceable under contract
Warranty  Past/ present / express
contract / support by consideration
Dove v. Rose Farms, Express/Explicit Condition  It should
Inc.
be respected UNLESS other party’s
fraud, bad faith or public policy
*No substantial Performance if Condition
with strict Compliance
* Material Breach of condition
Excused performance by other party  If
breach is of a dependent condition,
performance on other side is excused/A
party seeking to be removed from
performance obligations under a contract
due to impossibility may not then sue the
other party to the contract for
nonperformance.
Impossibility is defense NOT an
offensive theory of recovery
In re Carter’s Claim
Condition is Condition / Warranty is
warranty  Not treat Condition as
Warranty
Consummating the deal means Waiver of
Warranty  No damage
Condition:
Prerequisite
to
performance/failure to meet is not
contract breach/ remedy is pulling out of
deal/or failure to meet is waived
Warranty: a promise/failure to meet can
be contract breach/failure to meet isn’t
necessarily waived at closing
from the London art
gallery
Court rules in favor of
All-Tech
on
breach of warranty
claim but, b/c the
commercial
loss
doctrine
limited
damages for breach of
warranty to $0, AllTech is not able to
recover any monetary
judgment
from
Amway.
Dove did not perform
the condition required
for obtaining the bonus
from Rose Acre, and
thus Rose Acre is not
liable for breach of
contract in failing to
pay Dove the bonus.
Paragraph 5 concerns
financial changes
outside ordinary course
of business (labelled
warranty).
Paragraph 9 concerns
financial changes in the
ordinary course of
business,
(labelled
condition). Money in
Escrow
Clark v. West
Waiver of Condition precedent
possible not condition as consideration
Condition as Consideration  can Not
waive
Mere precedent Condition  waive 
Expressly mentioned
Waiver:
affirmative/voluntarily
relinquishment of a known right
Forfeiture:
* A “waiver” either Express or implied
Not Parole Evidence: waiver is post
contractual
communication
NOT
prior/contemporaneous
Ferguson v. Phoenix Condition of rule of Evidence  Against
Assurance
Public Policy
Condition against public policy  NOT
Enforceable
Palmer v. Fox
Dependent or independent Contract
Clark’s
complaint
alleges facts that could
possibly be construed
as an express waiver of
the provision requiring
West to only pay Clark
$2 per page if Clark
fails to completely
abstain
from
intoxicating alcohol.
West
should
be
permitted to answer
Clark’s allegations in
the complaint.
Court
says
the
condition that all doors
need to be damaged
goes against Kansas
public policy b/c the
condition relates to
evidence, & only courts
govern the rules of
evidence—parties can’t
contract around them.
Not enforceable
Concurrent conditions
are dependent unless it
is explicitly mentioned
in the contract
*Default rule is that if it is not explicit in
the contract, the court will presume the
conditions are dependent.
Youngs v. Kent
No strict compliance specified 
Jacob
substantially
Doctrine of Substantial performance 
performed its contract
(Very Important)
case by case based on trivial or substantial
with Kent with only
matter
trivial defects and is
Omission = Both  trivial + innocent
thus entitled to receive
Difference in value = Diminution of value
the remainder of the
To breach trivially not materially +
amount owed under the
unfairly disproportionate
contract.
Damage: expectation damages for any
remaining payment owed under the
contract, minus an offset for defects in the
party’s performance.
*Dependent conditions when there is a
departure point of substance, will be
viewed as independent and collateral
when the departure is insignificant and
performance has thus been substantial
Changed Circumstances: Impracticability and Frustration of Purpose
* Excuse Performance Doctrines: Impossibility, Impracticability and Frustration / expressed by
parties in the contract  Force Major
(A)Existing Impracticability
United States v. Commercial Impracticability  excuse 2-615/
Where a product such
Wegematic
performance  Not engineering Federal
as the Wegematic’s is
difficulties
Common advertised
as
a
Seller: assumes the risk of that revolution Law
revolutionary
failing to occur
breakthrough, the risk
Purchaser: assume revolution has
of the revolution's
occurred or will occur by time of delivery
occurrence does not fall
No true impracticability  more money
on the purchaser.
+ more time
On time delivery
(B)Supervening Impracticability
Taylor v. Caldwell
263
Destruction of the hall
Impossibility
through no fault of the
Implied Condition of Continuous
parties
renders
Existence
Doctrine of impossibility through
performance of the
destruction of the subject
contract
impossible,
Continued Existence + Implied condition
and
excuses
Exception: Risk Allocation or Cause the
performance for both
non-existence by defaulting party =
Taylor and Caldwell.
(Absolute Contract without implied
If a contract depends on
condition)
something that doesn’t
exist
when
performance is due, the
law imply a condition
of excusing the parties’
performance.
Canadian Industrial v. Third party Supplier impossibility
2–615(a) A contracted seller that
Dunbar Molasses Co. Implied condition of performance 
counts
on
the
excused by i) the failure of those
continuation of special
circumstance; ii) catastrophic events
circumstances to meet
its
contractual
Extreme or unavoidable events are
obligation
is
not
excused
released
from
When a court believes that the risk was
performance
when
foreseeable and under the control of one
those
circumstances
of the parties, then the court will not
end
relieve performance of that party due to
impossibility. D could have obtained
supply from an alternative supplier once
the first supplier underproduced.
Centex v. Dalton
impossibility due to illegality  It is a 264/2–
The payment of fees by
defense even foreseeable at the time of 615(a)
Centex to Dalton was
conditioned on the
contract
Doctrine of impracticability  Change
Bank Board’s ultimate
of Law
approval of Centex’s
acquisition
as
a
condition
precedent.
Government regulations  Make
contract illegal  impracticable and
unenforceable.
Damage: recoverable based on the
equitable remedy of quantum meruit
Provided requested in complaint
Kaiser-Francis
Oil Force Major  Catch All
Co. v. Producer’s Gas take-or-pay provision  Risk allocation
Co.
between seller and buyer
The buyer bears the risk of ordinary
changes in market demand
Neither a decline in demand or inability
to sell gas at or above the contract price
constitutes a majeure event
Paradine v. Jane
Krell v. Henry
(C)Frustration of Purpose
Frustration of Purpose about a duty based
on law  Excused
Frustration of Purpose about a duty based
on contract  Not Excused
*When a party by his own contract
creates a duty upon himself, he is bound
to make it good notwithstanding accident
because he could have provided against it
in the contract.
*D was engaged in a profit-making
venture and thus implicitly accepted the
risk of loss.
Profit Making Lease in comparison to
the Residential Lease (NY rule)
Implied Purpose of Contract as the 265/271
subject matter
Frustration of purpose = Excuse from
performance
Purpose = Implied Condition = Parole
Evidence
A purpose is frustrated when events occur
which destroy the purpose, even though
performance of the contract is possible.
However, it prohibited
payment of fees to
Dalton. Centex is
excused
from
performance of its
contract with Dalton
based on the defense of
impossibility due to
illegality.
The force majeure
clause in the contract
between PGC and
Kaiser is designed to
apply in the event of a
relatively catastrophic
event.
Market
fluctuations resulting in
the mere decline of
natural gas prices are
not force majeure
events. PGC is not
excluded
from
performing
its
obligations under its
contract with Kaiser.
He should pay Rent
Commercial
Lease
which make profit
Man made risk/ the
party can claim against
rather than natural
event
*** Its relation with
Taylor v. Caldwell
Defendant is excused
from
performance
because his purpose for
entering
into
the
contract was frustrated.
* you can’t recover the
deposit
using
an
affirmative Defense
and
excuse
like
Washington
State Supervening Frustration
265
Hop v. Goschie Farms Principal purpose
(W.D.C)
NA
As a Defense if
- principal purpose of contract is
frustrated
- frustration is substantial
- non-occurrence of the frustrating event
must have been a basic assumption
Meaningful Foreseeability of a possible
frustrating  party seeking relief could
have controlled the language of the
contract to allocate the risk
*The contract rescinded under the
doctrine of “frustration of purpose” by
determining that the principal purpose of
the party to enter into the contract was
frustrated without fault of either of the
contracting parties.
*The fact that the event was foreseeable
or even foreseen, does not necessarily
compel a conclusion that its nonoccurrence was not a basic assumption.
Chapter Six
Remedies
1. Right to Suspend Performance or Cancel
Hochster v. De La Anticipatory
Breach/repudiation
Tour
Doctrine
*Express repudiation of a contract 
Non breaching party absolve from his
obligation + breach of contract + request
for remedy
*In the case of a clear anticipatory
repudiation, the injured party may also
have a duty to mitigate the damages
caused by the breach.
Mitigation of damage (like Reliance
Cooperage)
Taylor v. Johnston
Retracted Repudiation
An anticipatory breach  only when one
of the parties to an agreement expressly
or impliedly repudiates the contract or
unequivocally refuses to perform.
frustration
or
impossibility, you want
to recover the deposit
you have to do
something like Unjust
enrichment or contract
allocate the risk itself.
The
sudden
and
unexpected irrelevance
of control of hop base
after 1985 caused a
frustration of contract’s
purpose.
*Seller: should have
been anticipated the
government, but then
this policy at any time
it's foreseeable and, of
course,
as
well
foreseeable as a factor,
surely, but it's not a
dispositive
factor,
because it's not a
showstopper
necessarily
The
injured party
retains the option to sue
immediately or to wait
until
the
date
performance is due
before bringing an
action for breach.
Defendants did not
repudiate
or
anticipatorily breach
the contract, and are not
Retracted that Repudiation
If non-breaching does not recourse to the
anticipatory breach  the breaching
party has opportunity cures the breach by
performing on time  non-breaching
party has no recourse for the anticipatory
breach.
(reasonable
insecurity/
adequate
assurance doctrine - 251)
2. Introduction to Affirmative Remedies
Northern
Indiana Specific Performance  is not
Public v. Carbon appropriate when there is an adequate
County Coal
remedy at law and declaring specific
performance would further injure the
defendant and society as a whole.
Recourse to force major  order of civil
authority  Not here because Normal
risk of contract
Specific Performance  Contrary to
Public Policy
Monetary damages is the default (and
here the appropriate) legal remedy as
adequate remedy.
Injunctive relief is available only when
there is not an adequate remedy at law.
Walgreen Co. v. Sara Specific
Performance/injunctive
Creek Property Co.
relief/equitable relief
Permanent Injunctive Relief 
plaintiff shows that damages are
inadequate based on balancing the costs
and benefits of the alternatives.
Monetary Damage => Inadequate =>
Speculative
If the costs to P were higher than D’s
costs as the result of the injunction, then
the market would naturally resolve the
problem by giving P an incentive to agree
to lift the injunction in exchange for
appropriate compensation.
3. Damages
Alice Sullivan
James O’Connor
v. Expectancy damages seek to put the
plaintiff back in the position they would
have been in if the contract had been
performed and no breach occurred.
liable to Plaintiff for
damages.
*Even if a statutory
violation occurred in
some way, the contract
itself was not illegal.
*The force majeure
clause
cannot
be
invoked to protect a
party against normal
risks of a contract
*The court finds public
policy reasons for not
granting
specific
performance. Still, the
case turns on the fact
that money damages
were enough to make
the Plaintiff whole.
Workers are not party
to the contract
Seventh Cir. decided
that the district court
made a reasonable
determination that the
injunction was justified
because a damages
remedy
for
the
remainder of the lease
would
be
highly
speculative and costly
to determine Especially
as to lost profit and
good will based on
confidential
information.
Reliance damages seek to put the
plaintiff in the position she would have
been in if she had not entered into the
contract.
Bernstein v. Nemeyer Theory of restitution damages  an
Bernstein is not entitled
equitable remedy designed to avoid
to restitution damages
unjust enrichment of the breaching
from Nemeyer because
party by putting the breaching party
Nemeyer has not been
back in the position he would have been
unjustly enriched.
in if the contract had not been made.
(2)General Limits on Recovery
Clark v. Marsiglia
Duty of Mitigation of damage after
Once a contract is
breach  calculation of true loss 
breached, the nonALWAYS APPLY
breaching party is not
No entitlement for damage of works done
entitled to recover for
after repudiation
work performed after
Independent duty of Good faith: to persist
the breach.
in accumulating a larger demand is not
consistent with good faith towards the
employer.
* Mitigation like impossibility and frustration is an affirmative defense. Then, the
Defendant/breaching party should prove it.
Hadley v. Baxendale Reason to know
Spang Industries v. Cost of Mitigation is recoverable.
When
potential
Aetna Casualty
*Incurring the extra costs due to rushing
damages from a breach
was a mitigation of losses because it
of contract may be
would have been more expensive to wait
foreseen by the parties
another year for warmer weather.
at the time of contract
Consequential loss/Damage
formation and a breach
“the rule does not require that the direct
actually does occur, the
damages must necessarily follow, but
breaching party must
only that they are likely to are they “on
provide recovery for
the cards”? We believe here that the
these damages to the
damages sought to be recovered were also
injured party.
“in the cards.” Possibility Not
Definiteness
Hydraform Products Lost Profit/Consequential Damages
2-715
Hydraform is only
& Aluminum Corp.
Limitation in damages Clause = limiting
permitted
recovery
consequential damage  unenforceable
from American for
under UCC  Material alteration to
consequential damages
contract OR unconscionable
totaling lost profits
Foreseeable: contemplated by parties at
based on 150 stoves,
contract formation/ natural flow of breach
not more (not future
Ascertainable: Profits claimed were
two years sale or
“reasonably certain” in the absence of
business sale).
breach of contract/not speculative losses
Unavoidable: Recoverable only if the
loss could not reasonably be prevented by
cover or otherwise
(B) Seller Remedies for Buyer’s Breach
American Mechanical Burden of proof for mitigation of damage
Corp.
v.
Union  on Defendant
Machine Co.
Mitigation Duty fulfilled
*A party suing to recover damages for
breach of contract may recover if the loss
was reasonably foreseeable by the parties
or actually within their contemplation at
the time the contract was entered into.
Locks v. Wade
Common
Law not
UCC
Because
primary
purpose
was real
estate
not
equipmt
Expectation Damage
2-708(2)
Loss Volume Seller Doctrine  when
there is a loss volume seller with excess
capacity,
mitigation is not an
available defense. Like Hotel/Airplane
Mitigation of Loss in the lease of movable
property  lost profits earned on the
contract minus the cost incurred
performing the contract.
Actual damages  the
contract price minus the
price Plaintiff actually
obtained for the real
estate and equipment,
rather than the fair
market value of the real
estate and equipment.
* AMC foreclosure sale
price
was
also
sufficient mitigation.
Locks is entitled to
recover from Wade his
lost profits due to
Wade’s breach, minus
the cost of performing
the contract with Wade.
Lease of Realty  Lessor is only
entitled to damages amounting to the
difference between the agreed-upon
rental price to the lessee and the actual
rental value of the property.
Glendale
Federal After Established Liability  alternative
Bank, FSB v. United theories of damages are available so long
States
as supported by evidence
Out of pocket  Reliance  Not
speculative + actual loss + other
alternative remedies are inappropriate
Expectancy Damages  loss of profit 
too speculative + difficult to prove
Restitution  Govern’s gain 
speculative + difficult to determine
*Speculative  not recoverable
*Reasonable Probability/Uncertainty of
amount  Recovery is allowed
Inchaustegui v. 666 Collateral Source rule  Not applicable
5th Avenue
= it is in torts not contract
Breach of Lease Agreement  the
landlord incurred the cost of maintaining
and securing an insurance policy, as well
as other associated costs.
Here,
Plaintiff’s
“wounded
bank”
reliance damages are
the increase in the cost
of
funds
Plaintiff
incurred when it had to
pay higher interest to
attract depositors and
pay higher deposit
insurance when it could
not meet its capital
reserve requirement.
Tenant breached by
failing
to
obtain
insurance.
Landlord
must mitigate by using
its own insurance. But
tenant is responsible for
landlord’s
consequential damages.
(C) Buyer Remedies for Seller’s Breach
Reliance Cooperage Anticipatory Repudiation  injured UCC 2- Reliance is entitled to
Corp. v. Treat
party the option of  accepting or 712
recover as damages the
rejecting the refusal of performance
difference between the
without impairing his rights or increasing
contract price for the
his burdens.
staves and the market
* The duty to mitigate begins at
price on December 31,
performance. Anticipatory breach gives
1950.
right to mitigate. But buyer doesn’t have
to mitigate until delivery date.
* When one party to a contract repudiates,
the other party has the option of accepting
repudiation, seeking damages, and
mitigating damages or not accepting
repudiation, thereby, holding the other
party to the contract liable until time of
performance has past. (De La tour)
Youngs v. Kent
The “difference in value rule” applies
when a builder’s failure to perform under
a construction contract is both trivial and
innocent. In this circumstance, the
measure of damages is the diminution in
value of the building rather than the cost
of tearing apart the structure and properly
completing the contract.
Rivers v. Deane
Substantial defect in performance
In this case, the
(construction)  the measure of damage
structure is unusable
is the market price of completing or
and
dangerous.
correcting the performance
Damages should be
calculated using market
value of the work
Cardozo’s Formula/ Difference in Value
Rule/ diminution in value  trivial and
needed to fix the
innocent default
problems.
Avoid Economic waste  case by case =
here contractor wants to complete rather
than diminution
Peevyhouse
v. Remedial Work on Property
The cost to Garland is
Garland Coal Mining Proper Remedy  Diminution in Value
thus
grossly
Co.
*Breach is incidental, not a substantial
disproportionate to the
part of the contract (In Kent, it was
economic benefit to the
Peevyhouses.
innocent. In Schectman, it was primary
rather than incidental)
*Economic waste  economic benefit
which result from full performance is
grossly disproportionate to the cost of
performance  diminution in value
resulting to the premises because of the
non-performance
American Standard v. Recoverable Damages  Damages that
Diminution in value is
Harold Schectman
are direct, natural, and immediate
not appropriate because
consequences of the breach + reasonably
within the parties' contemplation at the
time they entered the contract
Remedy  the reasonable cost of
completion/performance  UNLESS
 Diminution in Value i) substantially
completed the work with good faith ii)
that his failure to complete did not
concern the main purpose of the contract
(D) Divisible and Indivisible Contracts
Lowy
v.
United Divisible Contract  Substantial
Pacific Insurance Co. Performance Doctrine as to part
performance
Excused, prevented, or delayed full
performance by other Party  a party
that
has
completed
substantial
performance of his obligations is entitled
to the reasonable value of the goods and
services provided 
Also applicable in Divisible Contract
- performance of each party is divided
into two or more parts
- the number of parts due from each party
is the same
- the performance of each part by one
party is the agreed-upon consideration
offered in exchange for a corresponding
part by the other party
Hiring another Contractor  make the
performance impossible  Excuse other
party from full performance
New Era Homes installment
payments
throughout
Corp. v. Forster
performance  not necessarily make the
contract divisible
intent of the parties as evidenced by the
facts and circumstances of each
individual case
Britton v. Turner
quantum meruit provides a basis outside
the contract
the breach was willful,
not innocent. Breach
was essential part of
contract, not incidental.
The trial court held that
Lowy’s breach excused
Wolpin from further
performance
and
awarded damages of
$17,836.50 based on
the excavation and
grading
work
performed plus $4,000
in attorney’s fees to
Wolpin. The trial court
also found that Wolpin
breached the portion of
the contract relating to
street-improvement
work and was not
entitled to recover
damages for loss of
profits in connection
with this work.
Contract is not divisible
and
wasn’t
substantially
performed.
Can’t
recover contact price,
only amount of benefit
conferred
(quantum
meruit).
Distinguish
from Lowy.
Employer is excused
from
performance.
Employee can recover
value
of
work
performed on offcontract theory of
quantum meruit. Court
produces a number for
benefit conferred based
on
market
value.
Distinguish from Dove.
Kaplan
Clinic
v.
Remedy II
(E) Mental Anguish and Punitive Damages
Mayo Claim for breach of contract
-Formation of contract,
-Breach of contract,
-resulting damages.
Some jurisdiction order pain and
suffering due to contract breach some not.
Plotnik v. Meihaus
Damages for emotional distress 
recovered in an action for trespass to
personal property (dog)
*California law authorizes punitive
damages against an individual who
wrongfully injures an animal either
willfully or through gross negligence.
Angelo Acquista v. Bad Faith
New
York
Life
Insurance Company
Position of minority of states and NYC
Failure to pay benefits to which the
insured is entitled  contract damages
may include foreseeable money damages
beyond the limit of the insurance policy
 include recovery for non-pecuniary
losses such as mental distress or
aggravation  a foreseeable result of a
breach at the time the insurance policy
was issued 
“goal of contract damages is to place the
plaintiff in the position he would have
been in had the contract been
performed”
Position of Majority of states
It was a contract:
Kaplan declare his
concern about cancer.
Contract breached: Dr.
did
not
perform
intraoperative biopsy
procedures
during
surgeries.
Damage:
Kaplan
underwent
an
unnecessary surgery.
Settlement agreement
also had a clause that
parties would refrain
from
vexing
or
annoying one another.
When the express
object of the contract is
the
mental
and
emotional wellbeing of
one of the contracting
parties, the breach of
contract may give rise
to damages for mental
suffering and emotional
distress.
When the insurer’s
denial of the claim was
deliberately made in
bad faith w/ knowledge
of
the
lack
of
reasonable basis for the
denial, the insured may
be
entitled
to
compensatory
damages. The policy
caps do not apply in
case of breach.
Dodge, Inc. v. Clark
Independent tort cause of action known as
breach of the insurer’s duty of good faith
 compensatory tort damages
Punitive damage in Fraud Case
Commercial Fraud  Compensatory
damages would be an inadequate
deterrent
Punitive damages  a reasonable
relation to the amount of actual damages
suffered
Reasonableness of punitive damages:
- amount of actual damages
- prospective deterrent effect
- defendant’s motives
- the degree of calculation involved in the
defendant’s conduct
- extent of the defendant’s disregard of
the rights of others
Punitive damages are rare but available in
breach of contract cases, especially in
those involving fraud.
4. Injunctive Relief
Curtice Brothers Co. Specific Performance => Generally  2-716
v. Catts
real property and Unique property +
inadequateness of money damage as
remedy + lack of performance by the
seller would cause undue hardship for the
buyer
5. Agreed-Upon Remedies
(A) Liquidated Damages
Southwest
Liquidated Damage  the damages must
Engineering Co. v. be a reasonable estimate of what
United States
damages for the breach would likely be
and + the loss that the damages are meant
to cure must be difficult to accurately
estimate.
* The Actual loss is irrelevant when LD
is reasonable.
* The intent of the parties based on the
situation existing at the time of the
contract is controlling in determining the
reasonableness of liquidated damages.
Defendant acted in a
calculated and deceitful
way, harming, not only
Plaintiff, but the public
at large. The jury
awarded P $350.00 in
actual damages and
$12, 500.00 in punitive
damages.
Punitive
damages must bear a
reasonable relation to a
compensatory award
and are also subject to
constitutional
limitations.
Specific performance is
an appropriate remedy
for Curtice as it is
impossible for Curtice
to obtain replacement
tomatoes of the same
quality and quantity on
such short notice.
When parties at the
time
of
contract
formation have agreed
upon
a
liquidated
damage provision as a
reasonable forecast of
just compensation for
breach of contract and
damages are difficult to
estimate accurately, the
liquidated
damages
provision should be
enforced. The Actual
loss is irrelevant.
Cellphone
Termination
Cases
Liquidated Damage  Reasonable
Fee endeavor to estimate fair compensation
for the loss sustained + difficult to fixing
the amount of actual damages
(B) Damages Limitations
Lewis Refrigeration Exclusive Remedy  failed its essential 2-719(3)
Co. v. Sawyer Fruit, purpose  other remedies including
Vegetable and Cold
consequential damages
Limitation on consequential damages 
Merchant-Consumer  unconscionable
Limitation on consequential damages 
Merchant-Merchant  enforceable
UNLESS prove unconscionable in court
Chapter Seven. Third-Party Interests
Delegation of Performance; Assignment of Rights
1. Assignment of Rights
Allhusen v. Caristo Anti-assignment provision  here,
Construction Co.
restrict power of assignment
Strong language: “any assignment shall
be void” means there is no power to
assign at all.
General Rule  Assignability of Rights
UNLESS  express agreement of parties
or public policy
Owen
v.
CNA Anti-assignment provision  here, NOT
Insurance/Continental restrict power of assignment 
Casualty Co.
assignment is valid/enforceable BUT it is
a breach of contract
Weak language: “shall not be subject to
assignment” means no right to assign but
assignment won’t be voided.
For
a
liquidated
damages clause to be
enforced, actual losses
must be difficult to
calculate up front and a
reasonable endeavor to
do so must be made.
Court says the $73
million
in
early
termination fees were
not properly estimated
ex ante and therefore
were not enforceable.
The repair or rescind
portion of the contract
was valid as long as it
fulfilled its purpose, to
keep the contracting
parties in the positions
they hoped to achieve
by entering into the
contract. When the
parties’ agreed upon
remedy fails of its
essential purpose, the
court will revert to the
default remedies for
breach that the law
otherwise supplies.
The general principle
that any property right
is
assignable
is
overcome by the clear
intent of Caristo and
Kroo to the contrary.
Kroo’s assignment of
its property rights to
Allhusen was invalid
and unenforceable.
Because the language
in the non-assignment
provision in Owen’s
structured settlement
agreement does not
specifically
restrict
Owen’s
power
of
Provision limiting or prohibiting
assignments  only to limit the parties’
rights to assign the contract, but not their
power to assign, unless the parties
specifically manifest an intent to the
contrary  a covenant not to assign, the
breach of which renders the assigning
party liable in damages.
Continental
Purchasing Co.
Van Raalte Co.
Notice of Assignment to the debtor 
v. obligated debtor to pay to assignee
Notice is enough NO NEED of showing
assignment instrument
2. Delegation of Duties
through Merger and UCC
210-1
assignment,
and
because the assignment
would not “materially
increase the burden or
risk”
imposed
on
Continental,
Continental’s
nonassignment clause is
unenforceable
Van Raalte received
notice and had full
knowledge of Potter’s
assignment of her
wages to Continental,
and thus is liable for
damages
to
Continental.
Best’s
performance
could not be delegated
to Sally. It undermines
Exclusive-distribution agreement is UCC § the bargain that Nexxus
Under UCC based on  Dominant- 2-306
reached,
which
anticipated Best to use
Factor Test
If the sale of goods is the dominant factor
its best efforts to
of the agreement, then the UCC applies;
promote
Nexxus
if the provision of services dominates,
products.
Sally’s
then the UCC is inapplicable.
performance of that
*Under UCC § 2-210, an obligor may
promise, as a wholly
delegate its performance under the
owned subsidiary of
contract unless the parties have agreed
Nexxus’
direct
otherwise or the obligee has a substantial
competitor, cannot be
substituted. Nexxus had
interest in having the original obligor
a substantial interest in
perform or control the performance
required by the contract.
not delegation.
Further Note: “a relationship of personal
trust and confidence,” is NOT assignable
3. Third-Party Beneficiaries
(A) Creation of Rights
K-Mart Corp. v. Third party beneficiary
Both parties intended
Balfour Beatty, Inc.
for K-Mart to be a
Intended third-party beneficiary V.
beneficiary
with
Incidental third-party beneficiary
standing to enforce the
construction contract,
Intended has both right and obligation
K-Mart has third-party
under main contract  Arbitration
standing and can bring
Clause
action against Balfour
Beatty on the contract.
K-Mart is also bound
Sally Beauty Co. v. Assignment
Nexxus Products Co. acquisition
Hale v. Groce
Intended third-party beneficiary
If the purported beneficiary is an intended
third-party beneficiary of a lawyer's
promise to his client, the court is willing
to enforce this part of the contract against
the attorney.
Zigas
Court
v.
Superior Standing to sue as an Intended third-party
beneficiary:
* intent of the parties
- if a third party, not the government,
suffered a pecuniary loss as a result of
breach
- contained no administrative procedure
providing for the resolution of complaints
by third parties
- contract does not limit liability for a
breaching party
- a reasonable interpretation make third
parties direct beneficiaries and not
incidental beneficiaries
*Surrounding circumstances
(B) Nature of Rights
Tweeddale
v. Immediate right of
third-party
Tweeddale
beneficiary without requirement to his
knowledge
Rights of third-party beneficiary cannot
be rescinded or modified without his
consent
by
the
contract’s
arbitration clause.
Hale has a right to sue
Groce as a third-party
beneficiary of the
contract between Groce
& the decedent. This is
a valid claim under
contract
law,
the
plaintiff’s claim for
breach of contract is
reinstated.
The tenants were an
intended beneficiary of
the HUD housing, they
have
third-party
beneficiary standing.
The tenants are entitled
to sue under California
law to recover the
excess rents charged by
the landlords.
Even though Edward
was
unaware
of
Daniel’s
agreement
with his mother, the
immediate right was
vested. Daniel and his
mother may not later
rescind or modify the
contractual relationship
without
Edward’s
consent.