BFEoC
Oral or Written
Expression
Gift
UNENFORCEABLE
(Dougherty)
Conditional Promise
Illusory Promise
i.e. one party not
obligated to perform
Conduct Only
see Implied-in-Fact
Contract
Statute of Frauds
i.e. Marriage, Year, Land Sales,
Lifetime, Executor, Goods over
$500, Surety
No legal right to act or
forebear
Fulfillment of condition
benefits Promisor
AwC - Maughs
Promisor has a duty to
exercise good faith – AwC
(Mattei)
Writing not sufficient
AwC (Jonesboro)
Some jurisdictions: Good
faith belief – AwC (Dyer)
Fulfillment of condition does not
benefit promisor
UNENFORCEABLE (Kirksey)
see PE
Promisor has exclusivity and
therefore an obligation to
perform – AwC (Woods)
Leading Object Rule
Applies – AwC (Schoor)
Other jurisdictions:
UNENFORCEABLE
(Springstead)
Promisor has given
consistent consideration –
AwC (Weiner)
Estoppel applies - PE
(McIntosh, Seavey)
Promisor has unrestricted
freedom to perform or withdraw
UNENFORCEABLE
(DesLosSantos)
None of the above
UNENFORCEABLE see
UE
Elements of AwC:
1) Bargained-for exchange
2) Consideration in the form of (a) an act, (b) forbearance, (c) creation, modification, or destruction
of legal relation, (d) return promise
3) Competent parties
4) Knowledge by both parties that they entered into a BFEoC
5) Mutual assent
6) Sufficiently definite terms
Expectation Damages:
Place the injured party in the
position they would have occupied
had the promise been fulfilled.
PE
Promise upon which a
reasonable person could
rely
Promisor knew or should
have known would
induce reliance
Promise induced reliance
to Promisee’s detriment
Injustice can be avoided
only be enforcement of
the promise
Promise too indefinite
UNENFORCEABLE
(Local 1330)
Act or forbearance not
substantial
UNENFORCEABLE
(Thorne v. Deas)
Contract failed in negotiation
stage after substantial change
in position
PE (Hoffman)
Promise revoked before
Promisee’s change in position
UNENFORCEABLE (Alden)
Act or forbearance sufficiently
definite or substantial
PE (Siegel)
Terms of written agreement
too indefinite to be enforced,
but substantial reliance
PE (Wheeler)
Elements of PE:
Reliance Interest:
1) Promise upon which a reasonable person could rely
Place the injured party in the position
2) Made by a promisor who knew or should have known would induce reliance they would have occupied had the
3) Upon which the Promise did in fact rely to their detriment
promise not been made
4) Where injustice can be avoided only be enforcement of the promise
UE
Test for gratuitous intent: (1) extent
service, (2) closeness, (3) time
payment requested
Partial Performance
Gift
UNENFORCEABLE
Partial performance not accepted
and cannot be given back
UNENFORCEABLE (Kelley)
Extent of services beyond that expected
of friendship
UE (Sparks)
Evidence of acceptance of partial
performance
UE (Britton)
Oral agreement subject to SoF
shows intent not gratuitous
UE (Gay)
Element Missing
Intermeddler (involuntarily benefit
cannot be given back)
UNENFORCEABLE
No Promise
UNENFORCEABLE
Promise implied by actions
showing acceptance of benefit
– UE (Watts, Britton)
No Benefit conferred on Promisor
UNENFORCEABLE
try PE
Intention to benefit
Promisor UE (Kearns)
No expectation of payment on part of
the promisee UNENFORCEABLE
(Bloomgarden)
Promisor could not reasonably have
known restitution was expected
UNENFORCEABLE (Bloomgarden)
Elements of UE (Quasi-Contract, Implied-in-Law):
1) Promise (express or implied) upon which a person could reasonably rely
2) Expectation of payment on part of the Promisee
3) Services benefit (or are intended to benefit) Promisor
4) Knowledge by Promisor at time benefit is conferred that they should make
restitution
Restitution Interest
Return to the Promisee the benefit
conferred upon the Promisor
Warranties
Seller made a warranty
Goods must comply with
the warranty
Buyer’s injury was caused
proximately and in fact by
defective nature of the goods
Buyer must prove
damages
UCC § 2-313: Express Warranty
D = (VGW – VGA)
Plus CD + ID
UCC § 2-314: Implied Warranty
of Merchantability
Two standards for VGW:
1) fair market value at time of
acceptance, or
2) contract’s purchase price (when fair
market value not easily determined)
UCC § 2-315: Implied Warranty
of Fitness
Elements to recover in warranty:
1) Seller made a warranty, express or implied, under § 2-313, 2-314, or 2-315
2) The goods did not comply with the warranty, that is, they were defective at
the time of sale
3) Buyer’s injury was caused proximately and in fact by the defective nature
of the goods (and not, for example, by his careless use of the goods), and
4) Buyer must prove his damages
Damages for Breach:
§ 2-714 – difference at the time and place
of acceptance between value of goods
accepted and value they would have had
as warranted, unless special circumstances
show proximate damages of different amt.
§ 2-715 – incidental and consequential
damages.
Express Warranty
UCC § 2-313
UCC 2-105(1): “goods” means all things . . .
which are movable at the time of identification to
the contract for sale.
UCC 2-106: A "sale" consists in the passing
of title from the seller to the buyer for a price.
Affirmation of fact or promise, description of
the goods, or model or sample
Part of the basis of the bargain
(presumed)
Goods must conform to seller’s
affirmation of fact, promise,
description, model or sample
Not seller’s opinion or commendation of the
goods:
Burden is on the seller to prove that the
buyer did not rely on the seller’s
affirmation
D = (VGW – VGA)
Plus CD + ID
Factors indicating opinion:
1) lack of specificity,
2) made in equivocal manner,
3) reveals goods are experimental in nature
Examination or inspection by buyer does not
discharge seller from warranty if defect was not
actually discovered and waived.
Elements of Express Warranty:
1) Affirmation of fact or promise, description of the goods, model or sample
2) Not the seller’s opinion or commendation of the goods
3) Presumptively part of the basis of the bargain unless seller proves otherwise
4) Examination or inspection by buyer does not discharge seller from
warranty if defect was not actually discovered and waived.
5) Goods must conform to the seller’s affirmation (this determines breach)
Two standards for VGW:
1) fair market value at time of acceptance, or
2) contract’s purchase price (when fair market
value not easily determined)
Damages for Breach:
§ 2-714 – difference at the time and place
of acceptance between value of goods
accepted and value they would have had
as warranted, unless special circumstances
show proximate damages of different amt.
§ 2-715 – incidental and consequential
damages.
Implied Warranty of Merchantability
UCC § 2-314
UCC 2-105(1): “goods” means all things . . .
which are movable at the time of identification to
the contract for sale.
Seller is a merchant of the goods
UCC 2-104: "Merchant" means a person who
deals in goods of the kind or otherwise by his
occupation holds himself out as having
knowledge or skill….
UCC 2-106: A "sale" consists in the passing
of title from the seller to the buyer for a price.
No warranty if buyer inspects the
goods or refuses to inspect the goods.
Goods must be fit for the ordinary
purpose for which they are used
Buyer must anticipate hazards within
the nature of the goods
D = (VGW – VGA)
Plus CD + ID
Two standards for VGW:
1) fair market value at time of acceptance, or
2) contract’s purchase price (when fair market
value not easily determined)
Elements of Implied Warranty of Merchantability:
1) Seller is a merchant of the goods
2) No warranty if defects are discoverable through an examination period
prior to contract
3) Goods must be fit for the ordinary purpose for which they are used
Damages for Breach:
§ 2-714 – difference at the time and place
of acceptance between value of goods
accepted and value they would have had
as warranted, unless special circumstances
show proximate damages of different amt.
§ 2-715 – incidental and consequential
damages.
Implied Warranty of Fitness for a
Particular Purpose
UCC § 2-315
UCC 2-105(1): “goods” means all things . . .
which are movable at the time of identification to
the contract for sale.
UCC 2-106: A "sale" consists in the passing
of title from the seller to the buyer for a price.
The buyer at the time of contracting
intends to use the goods for a
particular purpose
The buyer relies on the seller’s skill or
judgment to select or furnish goods
suitable for the particular purpose
Goods must suited to the buyer’s
intended purpose
The seller at the time of contracting
has reason to know of this particular
purpose
The seller at the time of contracting
has reason to know that the buyer is
relying on such skill and judgment
D = (VGW – VGA)
Plus CD + ID
Two standards for VGW:
1) fair market value at time of acceptance, or
2) contract’s purchase price (when fair market
value not easily determined)
Elements of Implied Warranty of Fitness for a Particular Purpose:
1) The buyer at the time of contracting intends to use the goods for a particular
purpose
2) The seller at the time of contracting has reason to know of this particular purpose
3) The buyer relies on the seller’s skill or judgment to select or furnish goods
suitable for the particular purpose
4) The seller at the time of contracting has reason to know that the buyer is
relying on such skill and judgment
5) Goods must suited to the buyer’s intended purpose
Damages for Breach:
§ 2-714 – difference at the time and place
of acceptance between value of goods
accepted and value they would have had
as warranted, unless special circumstances
show proximate damages of different amt.
§ 2-715 – incidental and consequential
damages.
UCC
as applied to Buyer
UCC 2-105: Goods: all things moveable,
unborn young of animals, growing crops.
NOT Goods: Services, money, securities,
things in action, real estate
UCC 2-104: Merchant: is person who (1)
deals in goods on regular basis,
(2) holds himself out to have knowledge or
skill in transaction involved.
UCC 2-106: A "sale" consists in the
passing of title from the seller to the
buyer for a price
UCC 1-106: remedies shall be
liberally administered to place injured
party in position as if agreement
performed (D=KP-MP)
Measure of damages is difference
between market price and contract
price at time and place of breach
(Cooper)
UCC 2-712:
Buyer’s Cover
[(KP-Cover) + (ID)] - ES
UCC 2-713:
Buyer’s damages
[(KP-MP) + (CD+ID)] - ES
UCC 2-710
Seller’s Incidental Damages
UCC
as applied to Seller
UCC 2-105: Goods: all things moveable,
unborn young of animals, growing crops.
NOT Goods: Services, money, securities,
things in action, real estate
UCC 2-104: Merchant: is person who (1)
deals in goods on regular basis,
(2) holds himself out to have knowledge or
skill in transaction involved.
UCC 2-106: A "sale" consists in the
passing of title from the seller to the
buyer for a price
UCC 1-106: remedies shall be
liberally administered to place injured
party in position as if agreement
performed (D=KP-MP)
UCC 2-706:
Seller’s Resale
[(KP-RP) + (ID)] - ES
UCC 2-708 (1):
Seller’s damages
[(KP-MP) + (ID)] - ES
UCC 2-710
Seller’s Incidental Damages
Measure of damages is difference
between market price and contract
price at time and place of breach
(Cooper)
Sellers have an affirmative
duty to reasonable efforts to
mitigate loss (Schiavi)
UCC 2-708 (2): If measure
provided in (1) is inadequate,
then profit plus ID
Any commercially reasonable charges
… in connection with return or resale
of goods or otherwise resulting from
breach
Lost volume sellers are entitled
to expected profits (Neri)
Expectancy
(LOV+OL) – (CA + LA)
Injured party may recover only for
losses that are the natural and probable
consequence of breach
(no better roof Thorne)
LOV
CoP + P = (ER+R) + P
OL
CD + ID, where CD=IR
CA + LA
(Mitigation)
The court’s goal is to effectuate the intent
of the parties by using the value of
consideration set by the parties themselves
(Groves, 1939)
CD must be reasonable
foreseeable as a probable result
of breach (Hadley)
The non-breaching party has a
duty to mitigate the loss upon
learning of the breach (Clarke)
Damages limited to diminution in value of
property where economic benefit of
performance grossly disproportionate to
cost of performance
CD may be implied when
misfeasance is at issue
(Armstrong)
Reasonableness refers to the efforts to
mitigate, not the reasonableness of a
particular decisions (Parker, Schiavi)
Legislative intent may be considered in
determining value of performance (Rock
Island, 1983)
The injured party is entitled to
reasonable lost profits on
dependent venture (Olds)
Where services may be provided
through others, the injured party does
not have a duty to mitigate lost profits as
loss avoided (Olds)
Value of performance determined by the
value to injured party himself, not value
to hypothetical reasonable person or
market (Radford 1977)
Exception:
New Business Rule
SPLIT
Injured party is entitled to value of
performance, even if efforts to mitigate
result in higher cost (Handicapped
Children)
Injured party is entitled to profits
that would have been realized if
contract performed (Warner)
Maj (liberal view): Injured party may
present evidence to show a rational
basis for calculating lost profits (Lakota)
Min (conservative view): evidence of lost
profits from a new business not allowed
because merely speculative (Evergreen)
LOV
= CoP + P = ER + Rest + P
The court’s goal is to effectuate the intent of the
parties by using the value of consideration set by the
parties themselves (Groves, 1939)
Damages limited to diminution in value of property
where economic benefit of performance grossly
disproportionate to cost of performance (Peevyhouse,
Value of performance determined by the value to
injured party himself, not value to hypothetical
reasonable person or market (building wall, Radford)
Legislative intent may be considered in determining
value of performance (Rock Island, 1983)
Essential Reliance
Restitution interest
Profit
Injured party entitled to profits that would have
been realized if contract had been performed
(Warner)
Burden of proof
SPLIT
In context of AwC, burden of proof on defendant
to show negative expectancy to reduce reliance
damages (L Albert)
In context of PE, burden of proof on plaintiff to
show reasonableness of reliance damages
(Hoffman v Red Owl)
Overhead (fixed costs) only if reasonable
certainty of foregone business (Autotrol)
Includes cash outlays in anticipation of
performance (radio franchise, Goodman)
Includes damages lost in quitting prior
employment (Grouse) and moving expenses
(McIntosh)
Includes expenditures incurred prior to contract
if necessary to prepare for performance
(Anglia Television)
Where services may be provided through
others, the injured party does not have a duty to
mitigate lost profits as loss avoided (Olds)
OL
CD + ID, where CD=IR
CD (Incidental reliance):
Damages expended that are “wasted” as a
result of the breach
Must be reasonably foreseeable (£500
loss of stock, Nurse v. Barns)
Incidental Damages:
Damages expended to avoid further injury,
UCC 2-715
Must be reasonably certain and not
speculative (Chicago Coliseum v.
Dempsey)
Includes lost opportunity and expenditures
on a dependent venture
(D&G Stout v. Bacardi)
May include other gain sacrificed, including
profits on a dependent venture
(Walters v. Marathon Oil)