GO BACK THRU NOTES AND DO HYPOS
Contracts Outline
A) Consideration *The basis for contract liability
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Consideration: *Promise or performance that the promisor bargains for, and the process
of bargaining for it.* {bargain or exchange} [benefit to the promisor or detriment to the
promise has been negated by 71, 72 of restatement!]
“not enough simply to look for detriment or benefit. It also has to be apparent that the
promisee’s detriment was suffered in exchange for the promise.”- Bargain Theory
Detriment: forbearance, immediate act, or the partial or complete abandonment of an
intangible right.
A) Consideration as a Bargained-For Exchange
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Restatement §71: To constitute consideration:
1) A performance or a return promise must be bargained for.
2) A performance or return promise is bargained for if is sought by the promisor in
exchange for his promise and is given by the promise in exchange for that
promise.
3) The performance may consist of:
a) an act other than a promise
b) a forbearance
c) the creation, modification or destruction of a legal relation.
4) The performance or return promise may be given to the promisor or to some other
person. It may be given by the promise or by some other person.
i.
Langer v Superior Steel Corp – still consideration even if you give
up a legal right to do something you had no interest in doing.
Langer gave up legal right to go and work for a competitor in
exchange for a retirement package. It was consid. even though
he had no desire to back into the workforce anyway. (he got the
money, they got the benefit of knowing competitors wouldn’t
know their secrets) (giving up legal right is also consid)
ii.
Hamer v Sidway, nephew refrained from his legal rights to
smoke, drink, gamble in exchange for money. Don’t have to really
show that uncle really got anything back, but its not a gratutity b/c
uncle didn’t say, “here’s some money!” instead, he said if you do
this, I will give you money. There’s an exchange/bargain. RULE:
Consideration means not so much that one party is profiting as that
the other abandons some legal right in the present or limits his
legal freedom of action in the future, as an inducement for the
promise.
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iii.
NO CONSIDERATION: Kirksey v. Kirksey – widow’s brother in
law writes her a letter, advising her to sell her land and come live
with him. He’d give her a place to raise her family. She left her
house, travelled many miles to him, and after 2 years he kicked her
out. Courts said because this LACKED consideration, it was a
mere GRATUITOUS promise, and therefore unenforceable.
(gratuity depends on whether or not the promisor is getting
something back from the promise) (NOTE: later on, as doctrine of
promissory estoppel comes into play, this case prob would have
been ruled differently)
EXCEPTIONS TO CONSIDERATION:
PROMISSORY ESTOPPEL,
RESTITUTION
DISCHARGING LEGAL OBLIGATION -----moral ob.=consid.
MATERIAL BENEFIT
-----moral obligation=consid
1. Promissory Estoppel: Detriment instead of consideration
**TIME WHEN YOU DO NOT NEED CONSIDERATION FOR K TO BE
ENFORCED!!
**There must be a promise.
Promissory Estoppel – promisor estopped from asserting a lack of consideration as basis
for promise not to be enforced. The Restatement does not treat the promise as estopping
denial of consideration but simply recognizes detrimental reliance on the promise as the
basis for enforcing it; no consideration necessary to enforce promissory estoppel.
Promissory estoppel thus enforces gratuitous promises.
1. Note: it can be used to enforce a contract that otherwise fails to meet the requirements
of the Statute of Frauds!
i.
Langer: could have been argued under promisorry estoppel too (but no
reason to b/c there clearly was consid). Could have said that he relied on
the company to pay him, so b/c of that he refrained from working
anywhere, and once they stopped paying he suffered detriment.
ii.
Ricketts v. Scothorn: grandpa told granddaughter that he would pay her a
certain amount of money so that she wouldn’t have to work anymore, and
in reliance she quit her job. The court acknowledges that the promise was
gratuitious (it was not bargained for; granddaughter gave nothing in
exchange for the promise) but court still enforces the promise AS IF it
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were supported by consid. b/c she materially changed her position in
reliance of the promise.
iii.
Kirksey v Kirksey: Now we could argue for her on promissory estoppel;
she relied on his word to her detriment, dragged her kids so many miles,
depended on him, he could reasonably expect that his words would induce
such action. The only way to avoid injustice is to enforce the K. the
detriment served as consid.
Restatement § 90:
1)
i.
A promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promise or a third person
and
ii.
which does induce such action or forbearance
iii.
is binding
iv.
IF injustice can be avoided ONLY by enforcement of the promise.
v.
The remedy granted for breach may be limited as justice requires.
(really need to prove detriment. Can’t just say I didn’t get what I wanted so
promissory estoppel!)
2) A CHARITABLE subscription or a marriage settlement is binding under
Subsection (1) even without proof that the promise induced action or
forbearance.
 Promissory Estoppel and Charitable Pledges
**EXCEPTION RULE TO THE REGULAR RULE OF PROMISES AND
REG RULE OF PROMISSORY ESTOPPEL***
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Restatement 90 (2)
Basically, if its for charity, you don’t need consid OR reliance. If you
pledge, you gotta pay!
When there is a promise made to a particular kind of promisee (like a
charitable org) the promise is enforceable even without consid. (in some
states) you just don’t need consid! just making the pledge/promise to pay
is enough to enforce it. (regularly, if I promise to pay & there’s not consid
then I change my mind, I can not pay if I want. But not here. Here you
also don’t need to prove reliance either)
o Allegheny College v. NCC Bank: She made a pledge to pay
$5000 to college after her death basically in return for a memorial
scholarship fund to be named after her. While she was still alive
she gave them $1000 which they accepted and set aside to be used
as she wanted it. Later, she refused to pay the rest.
-Under 90 (2) this is enforceable b/c she promised a
charitable fund.
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-But, court found no need to rely on P.E. b/c her promise
was supported by the consid. she promised to pay, they
promised to make the scholarship, and by accepting the
$1000 they assumed a duty to fulfill the condition. So, this
falls under regular promise rules.
-RULE: Promissory estoppel is the equivalent of
consideration in connection with law of charitable
subscriptions.
 Promissory Estoppel and At-Will Employment
Blinn v. Beatrice Community Hospital: A hospital at-will employee turned
down a better job elsewhere based on “promises” of continued employment with
his current employer, who six months later terminated his employment. He sued
on 2 claims: 1) breach of oral contract, and 2) on the theory of promissory
estoppel. The problem here was not that consideration was lacking, but that the
promise made was not definite. It was vague in its terms, so couldn’t tell
whether the boss was in fact changing his employment status from at-will to
contracted. (could have just meant “yea you can continue to stay here as an
at-will employee”. And in that case, he could fire him whenever he wanted,
regardless of this statement) An indefinite promise is not a promise; too
vague; defective. So couldn’t win based on breach of contract. But the same
defective promise that was insufficient to make a K, was the basis of promissory
estoppel being a good argument. D’s promise reasonably expected to induce P to
forgo the job opportunity, which he did. Suffered detriment.
1. It is NOT enough to look for a benefit or a detriment. It must be apparent that the
promisee’s detriment was suffered in exchange for the promise. Parties must bargain an
exchange of the promise for the detriment so that each induces the other.
2. Parties need not actually suffer a detriment or receive a benefit. The benefit can simply be
“getting what you bargained for.” Needn’t be a measurable benefit.
3. Bargained For Exchange v Incidental Detriment
a. “If you walk over to my car, I will give you my skis.” – Under a broad interpretation of
consideration, walking to the car is a detriment because one gives up their legal right to
stay where they are; however, this detriment is incidental to the promise. Walking to
the car is not a “price paid” for the skis but rather a condition necessary for delivery.
Walking = condition of the gift.
i. Kirksey v Kirksey – moving to her brother’s land is the condition of receiving
free rent. Therefore, the brother did not bargain for anything in exchange and the
promise was gratuitous.
4. Mixed Motives
a. Rule (§81)– The fact that what is bargained for does not itself induce the making of a
promise does not prevent it from being consideration for the promise. The fact that a
promise does not of itself induce a performance or return promise does not prevent the
performance or return promise from being consideration for the promise. A promise
may be enforceable if it is supported by some consideration, even if that
consideration was not the primary motive for making the promise.
i. Thomas v Thomas – Promise was made with gratuitous motive- to let sister in law
remain in the home after the husband’s passing. However, the requirement that she
pay rent and maintain the property was sufficient consideration to enforce the
promise for her to get to live there.
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2. Adequacy of Values Exchanged
(Limits of the Consid. Doctrine)
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Anything which fulfills the req. of consid will support a promise what may be the
comparative value of the consid, and of the thing promised.
Relative values of a promise & the consid for it do not affect the sufficiency of consid.
Restatement §79: If the requirement of consideration is met, there is no additional requirement
of:
a) a benefit to the promisor or a detriment to the promisee.
b) equivalence in the values exchanged
c) “mutuality of obligation”
(Basically, once you have any consid [bargained for exchange], even inadequate, you don’t need
any of these things anymore and it’s a K! even a bad bargain)
Browning v. Johnson: Two doctors entered into a K whereby one would sell his
practice to the other, but the seller later changed his mind and purportedly entered into an
agreement with the buyer to cancel the sale. Buyer surrendered legal right to buy. Courts
reconsider the doctrine of adequacy here, basically doesn’t matter. Any consid=sufficient
consid=k!
In re Greene: Greene and his former lover agreed at the termination of their relationship
that Greene would pay her $1,000/month, but Greene stopped paying and declared
bankruptcy. The consideration here was basically ridiculous, that can’t count. “$1
agreement,” seal doesn’t make it consid., “other good consideration”—what is that? No
consid. even though we don’t usually look at adequacy of consid, in two cases we do:
1) when the disparity in the exchange results from oppressive or underhand
bargaining or justifiable mistake. 2) when the consid. given for a promise has so
small a value ($1) in relation to the promise ($1,000/month) that it is obviously
nominal….both may fail to satisfy the req of exchange, and transaction may be
viewed as a gift.
Fiege v. Boehm: P agreed to release her right to bring a paternity suit against D, the
alleged father or her illegitimate child, in exchange for D’s agreement to pay certain
expenses. However, it was found that he wasn’t really the father, so her claim was wrong,
but she truly believed he was. Normally this would not be considered valid consid BUT it
was made on good faith. (if they never had sex then it would be impossible for her to
release her right to bring a claim against him because there isn’t one! Impossible! (in
Greene she said she’d release him of all claims, but HAD NO CLAIM so that can’t be
consid). RULE: Releasing a claim is valid consideration as long as the party releasing
the claim honestly believed the claim was valid and there was an objectively reasonable
basis for the claim. [Restatement 74]
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4. Pre-Existing Duty Rule
Restatement §73: Performance of a legal duty owed to a promisor which is neither doubtful nor the
subject of honest dispute is not consideration; but a similar performance is consideration if it differs from
what was required by the duty in a way which reflects more than a pretense (façade) of bargain.
General Ex)
Alaska Packers’ Association v. Domenico: “hold up story”. Fisherman hired for
seasonal work, but once they saw that replacement workers were not available, refused to
perform their duties unless paid $100 extra. Company said they’d pay, then backed out.
Company wins b/c the new “agreement” wasn’t based on any new consid. “based solely
upon the libellants’ agreement to render the exact services, and none other, than that they
were already under contract to render”, [ the agreed to the modification, then they wanted
to go back on this agreement so the company used preexisting duty rule as reason for
doing so]
Releasing people of claims as consid:
*An agreement modifying a K is not supported by consid. if one of the parties does or
promises to do something that he is legally obligated to do, or refrains or promises to
refrain from doing something that he is not legally privileged to do.”
(in other words, if there’s something you’re legally allowed to do and you refrain, that’s
new consid.)
EXAMPLES: In Fiege, she wasn’t legally privileged to release him of the
bastardy claim, but it was an EXCEPTION b/c she honestly and in good faith believed it
was a real claim.  so, consideration!
But in Greene, she said she’d release him from claims, but she had
no claims! So no consideration, therefore no k!
Modifications:
Levine v. Blumenthal: P leased retail space to D for an agreed amount of rent. D asked
for a reduction in the payments, P said ok. Later P sued for the rest of the payments. He could do
this because the modification wasn’t based on any new consideration. RULE: Parties are free to
modify existing agreements, as long as the modification is supported by new and independent
consideration.
-Consid would have been, for ex, D asking P not to file bankruptcy, and P agreeing.
*any consid, however insignificant, satisfies the rule. (dicta, pg 79) Prof example: So if
tenant had said $175 plus we’ll sweep the floor every Thursday” that would be consid and then
the landlord would be bound by the modification.
*if every month you pay late, and every month you’re landlord says ok fine, it starts to seem like
MODIFICATION not a waiver anymore cuz it was every single month! Unlike Levin v
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Blumenthal where the landlord did not say “ok less rent” 12 times, he said it ONCE so that looks
like a waiver for once not a modification.
(usually, for big changes you need mod, for little things waivers ok)
BUT THEN CAME ANGEL V. MURRAY WHICH CHANGED THINGS ABOUT
MODIFICATIONS!
I. COMMON LAW: Restatement 89
Angel v. Murray: Garbage collector contracted with the city for additional money b/c
the number of dwelling units he serviced increased. Issue is that he ultimately has a contract to
pick up garbage- no matter what. But the court allows for the modification increase in wage b/c
of increase in garbage was unexpected, etc. RULE: The pre-existing duty rule does not prevent
parties from modifying a K if the original K has not been fully performed, the parties did not
anticipate the circumstances necessitating the modification, and the modification is fair and
equitable.
2. Requirements for a Modification in the Absence of Additional Consideration
a. Contract must NOT be fully performed on either side
b. both parties must voluntarily agree
c. the underlying circumstances which prompted the modification were unanticipated by the parties
d. the modification is fair & equitable.
*Could have applied to Levine* (then again, market going down isn’t so un-anticipatable)
II. UCC 2-209:
RULE: “An agreement modifying a contract within this Article needs no consideration to be
binding.” However, they must be made in good faith. Bad faith bars modifications; must have a
commercially sound reason to modify. “Technical consideration” will not support a
modification made in bad faith.
5. Mutuality of Obligation
*Both parties must be bound. If one party has a free-way out, no MOB, no K.
* requirement of mutuality: undertakings on both sides must be real and meaningful.
Ex) B promises to buy A’s skis for $100, and A promises to sell them to B unless
A changes his mind.-- This qualification reserves such unlimited discretion to Al that he has
really promised nothing. His apparent promise is said to be illusory and hence cannot be consid.
B/c A is not bound, B is not bound either. (also illusory if based on condition that can never
occur)
Rehm-Zeiher Co. v FG Walker Co. : A contract between them provided that RehmZeiher would purchase a certain amount of whiskey from Walker each year, unless it
needed less for “unforeseen reasons,” then Walker should release them from the K that
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year. Every year, Rehm took less than first said, then one year he wanted it all, and
Walker refused. (agreement doesn’t say anything about Walker having to sell to Rehm.
“unforeseen reasons” means Walker could never force Rehm to take it all b/c Rehm has
excuse for anything) *Since D couldn’t enforce the K, either whole or part, on P, K
lacked MOB. If D can’t enforce it, P cant enforce it. The promise to buy was illusory
(looks like you’re bound but you’re not. “ill pay if I feel like it”). RULE: If one party
to a K has a “free way out” the contract lacks mutuality of obligation and is
unenforceable.
[this is the example I asked him: Let’s say me and you get into agreement. “I will buy from you,
but I can also buy from others, you must sell to me. IF I must still buy from him but can also go
buy from others, its still MOB b/c I must buy and you must sell. BUT if I can decide whether I
wanna buy from you or not, sometimes I do sometimes I don’t, that’s illusory, its not MOB and
neither one of us are bound. ]
Output Contracts = A contract in which a seller promises to supply and a buyer to buy all the
goods or services that a seller produces during a specified period and at a set price (quantity term
= everything, but specific quantity cannot be determined until a later time)
Exclusivity
Ucc 2.306 recognizes that exclusive dealing obligation imposes both a good faith and reasonable
expectations test.
UCC 2-306 (2) *in these kinds of cases (exclusive dealings), there is an expectation of best
efforts and good faith: (implied promise to use best efforts can be considered consideration.)
a. that seller will use best efforts to provide the goods
b. that buyer will use best efforts to promote their sale
*quantity can vary; measured by good faith; cannot deviate from the norm
disproportionately
Requirements Contracts = Buyer promises to buy and the seller to supply the buyer’s total
demand during a specific period. (no definite terms)
McMichael v. Price (sand case): P agreed to purchase all the sand he could sell from D for an
agreed-upon price, but D breached the parties agreement. P was bound to purchase all he could
sell from D, so mutuality of obligation in that D is expected to supply it to him.
Wood v. Lucy, Lady Duff Gordon: Fashion designer contracted with Wood (P) to give him
exclusive rights to market her fashion designs and sell her endorsement to other designers, but
Wood sued Lucy after she placed her endorsement elsewhere and didn’t share the profits with
him. [weaker argument for using best efforts here as opposed to sand case, b/c over there he
had to use his best efforts to sell that particular sand b/c that’s all he could get. Here, Wood
can have a bunch of other clients, so its not really expected that he MUST use his best
efforts on this one client. But courts uphold that notion nevertheless b/c its his money too]
RULE: an agreement for exclusive dealings contains an implied term that the parties will
use reasonable efforts in performing their obligations.
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Conditional Promises
*a qualified or conditional promise is good consideration provided that the contingency is
genuine. That is, it is an uncertain future event within the realm of possibility and outside
the complete and discretionary control of the promisor. If these requirements are
satisfied, the conditional promise is a commitment.
*rule of thumb: dissatisfaction must be in good faith where the performance involves a matter of
personal taste, but it must be reasonable where the performance is of a technical,
mechanical, or commercial nature.
Omni Group v. Seattle FN Bank: Omni agreed to purchase property from the Clarks, subject to
Omni’s satisfaction with a feasibility study. If satisfied, they would buy. *HE COULDN”T JUST
WALK AWAY FROM THE AGREEMENT THAT’S Y IT WASN”T ILLUSORY. IF THE
STUDY WAS SATISFACTORY, HE HAD TO BUY. Clarks backed out saying his promise was
illusory, but courts found it was not! RULE: A promise is not illusory b/c it depends on the
satisfaction of a condition. That a promise given for a promise is dependent upon a condition
does not necessarily render it illusory or affect its validity as consideration. A personal
satisfaction clause does not render a promise illusory even if the satisfaction required is that of
the promisor (subjective) rather than to a reasonable person (objective). BUT ALL MUST BE
DONE ON GOOD FAITH, OTHERWISE DOESN’T WORK.
Hypo:
a. A and B agree that B will buy A’s skis for $100 in a week if B can get a loan for that
amount. We imply into Buster’s undertaking a promise to use best efforts to
secure a loan. That’s not illusory.
6. Moral Obligation/Past Performance/Antecedent Benefit
(normally, cant recover for antecedent benefit (Mills v. Wyman) unless you
discharged someone of legal duty or gave them material benefit, like saving
their life. (Webb v. McGowen))
Restitution and the Scope of Quasi Contract
Restitution: designed to prevent “unjust” enrichment. A person who is unjustly enriched at the
expense of another is liable in restitution to the other.
Rule: without an express or implied-in fact contract, an individual may recover
if the conditions of an implied-in law/quasi-contract are met.
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 The role of Quantum Meruit – Quantum Meruit has TWO distinct branches,
both of which are rooted in justice to prevent the defendant’s unjust enrichment
and the plaintiff’s expense.
(i) Implied-in-Fact
(ii) Implied-in-Law
(i)
Implied-in Fact
 Contract established by conduct
 Its an ACTUAL CONTRACT. There is no legal difference btwn an express
K and an implied in fact K.
 The only diff is the manner and evidence of the K formation.
 Example: When you dine out, you engage in an implied-in-fact K. You
order from the menu and your food is delivered. While you do not sign an
agreement or negotiate, it is inferred from your conduct and custom that
you will pay for your meal before you leave. (implied promise to pay)
 Example: going to get a haircut. You don’t sign a K, but you obv have to
pay.
 Elements:
i. D REQUESTS P to perform work (by words or conduct)
ii. P EXPECTS D to COMPENSATE him for those services
iii. D KNEW OR HAD REASON TO KNOW P expected compensation
 Measure of recovery: The amount the parties intended as the K price. IF that
amount is unexpressed, courts will infer that the parties intended the amount to
be the reasonable market value of the P’s services.
(ii)
Implied-in Law
 AKA Quasi Contract or Unjust Enrichment
 NOT A K AT ALL, but rather a legal action in restitution (an obligation
imposed by law for the purpose of brining about justice & equity)
 Essence of this is that the D has received a benefit which it would be
inequitable for him to retain.
 Don’t need a promise
 DO NOT ASK FOR IT
 Elements:
i. Acts must be voluntary
ii. Benefit conferred upon D by P (D received benefit)
iii. Knowledge or appreciation by D of such benefit
iv. Acceptance & retention by D of such benefit under such
circumstances that it would be inequitable to retain the benefit
without payment of value thereof.
 Measure of recovery: The value of the benefit conferred on the D (the D’s
gain) and NOT the detriment incurred by the P
*Hard to recover under this b/c courts do not want to promote volunteers!
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MBE Question:
Where a client accepts the services of an attorney w/out an agreement concerning the
amount of the fee, there is:
A) an implied-in-fact K (implying a promise)
B) an implied-in-law K (quasi) (don’t need a promise)
C) an express K
D) no contract
Answer: A.
Bailey v. West: officious intermeddler. Bailey (P) boarded a horse purchased but later
rejected by West (D) and West refused to pay for Bailey’s services. West didn’t ask for the horse
to go there, and even once he found out it was there notified Bailey that it wasn’t his horse. Still,
Bailey expected to get paid either b/c of implied in fact or implied in law. NEITHER existed;
couldn’t get paid. Not an implied in fact b/c there was no mutual agreement or intent to promise
btwn P & D. Crt held that Bailey only “officiously conferred a benefit” upon West. Basically, he
just imposed his services on him so he’s nothing more than a volunteer. Thus, West’s enrichment
was not unjust. [if the owner (West) had a legal duty to take care of the horse, like you have a
legal duty to take care of a human child, and bailey discharged him of the legal obligation b/c
west was unable to do it, THEN bailey could recover. Otherwise, you’re just a volunteer and you
cant.)
Basically I think the biggest prob with arguing this under implied-in law K is the unjust thing.
It’s hard to prove that W was “unjustly enriched”. Bailey just took it upon himself and took care
of a horse.
Exception is in emergency situations where immediate action is required, advances
assent is impractical, claimant has no reason to believe the recipient would not wish for
the action to be taken. In emergency situations, restitution is appropriate even though
benefit is imposed because even if recipient rejects the benefit, the recipient still accepts
it. (Even in rejecting someone saving your life, you are still saved…Webb v McGowen)
Moral Obligation
Traditional Rule- you can’t recover when benefits given antecedent (before) the promise
*not always the case
Ex) neighbor mows lawn without asking, tells you to pay, you say you’ll pay, you don’t
have to antecedent benefit.
Neighbor also cant claim PE b/c their action wasn’t induced by your promise.
Exceptions:
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1) if the person discharges a legal duty of ours, then we must pay. Otherwise, moral
obligation not valid. (so if someone takes care of your minor child-that’s your job but
they do it for you, u must pay) (but if someone just washes your car without you asking,
don’t pay)
2) (§82) Promise to pay a debt barred by statute of limitation
3(§83) Promise to Pay Debt Discharged by bankruptcy
4) (§85) Promise to perform Voidable Obligation
Mills v Wyman: Wyman the father of an ill son (not a minor) promised to reimburse Mills after
she cared for him for expenses associated with his son’s care. Court held the promise was NOT
enforceable. There must be some pre-existing obligation, which has become inoperative by law,
to form a basis for an effective promise.
Example: neighbor cuts my grass without me asking, then I promised to pay not enforceable
But if I had asked, then I must pay.
-if the son had been a minor it would be diff.
-if Mill took care of the son, dad found out, promised to pay, then mill continued to care for son,
dad must pay.
Modern Rule: Material Benefit Rule– ANOTHER EXCEPTION. A promise based on a
moral obligation IS enforceable if the promise is based on a MATERIAL BENEFIT that was
previously conferred by the promisee upon the promisor, provided that the benefit gave rise to an
obligation (even if only a moral obligation) to make compensation. If plaintiff confers a
material benefit on defendant (enriches D) and it would be unjust for P to not be
compensated AND circumstances show that P reasonably expected to be compensated for
enriching D, a moral obligation
will be enforced. The material benefit constitutes valid consideration for the promise to
pay.
Webb v. McGowin: (first diff with this and mills is that here the D was the person who received
benefit; in mills, D was the dad of the guy who received benefit) Webb saved McGowin’s life by
diverting a falling pine block from hitting McGowin and possibly killing him. Webb was
seriously injured in the process, McGowin agreed to pay for Webb’s care and support for the rest
of Webb’s life. Court held that saving a man’s life/saving him from grievous bodily harm is not
just sentimental but a material benefit. Life & preservation of the body have material, pecuniary
values, measurable in dollars & cents. Benefit to the promisor (yes) or injury to the promisee
(yes) is suff. Legal consid for promisor’s agreement to pay. RULE: “Where the promise cares
for, improves & preserves the property of the promisor, even without his request, it is sufficient
consid for the promisor’s subsequent agreement to pay for the services, b/c of the material
benefit received.” **HERE WE DON’T EXCPET THE P TO ASK FOR THE SERVICES B/C
OBV HE WANTS SOMEONE TO SAVE HIS LIFE. I guess in Mills nobody asked her to care
for the son so it was just voluntary? He wasn’t a minor. Also the benefit wasn’t conferred upon
the D there. Just like how in Bailey noone asked him.
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Harrington v. Taylor: even professor doesn’t know why this was decided differently than
Webb, but here she was not able to recover. Taylor (D) promised to pay Harrington (P) who was
injured while preventing Taylor’s wife from killing Taylor with an axe. Rule: “A promise to
pay that was induced by the promisee’s voluntary humanitarian act is not supported by
consid.”
Lack of consid in this case and Webb b/c benefits already incurred/benefits not bargained for.
Restatement §86
1) A promise made in recognition of a benefit previously received by the promisor from
the promisee is binding to the extent necessary to prevent injustice.
2) A promise is not binding under Subsection (1)
(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not
been unjustly enriched; or
(b) to the extent that its value is disproportionate to the benefit.
2) Pursuant to §86
a) Benefits Conferred Gratuitously – Even under the modern view, a promise to make
compensation for a past benefit conferred will not be enforceable if that benefit was conferred as
a GIFT because there is no moral obligation to repay the value of a gift
b) Promise Based on Expense Incurred by Promisee – Even under the modern view, a promise
based on a moral obligation will normally not be enforced where the promisor did not receive a
material benefit / was not enriched, even if the promisee incurred expenses. (Mills v Wyman
– sick son)
END CONSIDERATION
B. Statute of Frauds: UCC 2-201
--For Contracts for the Sale of Goods
Introduction – The law of contracts gives effects to oral contracts. The exception to that rule is
that contracts designated under the statute of frauds MUST be in writing. The rationale for the
rule is somewhat undermined because the requirement of writing often allows for just as many
frauds as it prevents.
2) General Rule of SOF: A contract within its scope may NOT be enforced unless a
memorandum of it is written (the entire contract needn’t be executed in full) and signed by the
party against whom it is being enforced.
To satisfy SOF must have a FORMAL WRITING + CONSIDERATION. This is NOT an
instance where the UCC substitutes a
signed writing for consideration.
If Konic (or any other sale-of-goods contract) were determined to fall under the
Statute (by meeting the $500 threshold) - it would not matter if it is performed in
less than a year.
13
And if a contract CANNOT be performed within a year (takes longer than a year)
(It would be a breach tof the K for the party to render performance before the oneyear date) - even a sales contract for value less than $500 - it will also fall under
the Statute.
(fall under the statute= need writing)
QUESTIONS TO ASK:
QUESTION 1) Is the K of a type that falls within the statute?
1. K for the sale of land or an interest in land
2. K for sale of goods UCC 2-201
3. K that cannot be performed within a year
a. Regardless of subject matter
(2 and 3 fall under UCC Article 2)
There are others but we didn’t go over that
QUESTION 2) If statute applies, is the K effected in a writing that satisfies its
requirements?
QUESTION 3) IF statute applies and is not complied with (in writing) does the oral K fall
within any of its exceptions?
1. Part performance
2. Judicial Admission
3. Reliance (estoppel and promissory estoppel)
*statute applies to modifications. Doesn’t matter if it applied to original K or not; go based on
the modification itself.
1. Note:
a. Statute does not require the entire contract be written, but only a memorandum of it
b. Only the party against whom it is being enforced needs to have signed it
c. The consequence is usually unenforceability, not invalidity
d. “Writing” and “Signature” have taken progressive forms
a) Contracts for sale of lands must be in writing but UCC 2-201 doesn’t
apply to it.
b) Covers contracts that will take longer than a year to complete
(1) A. at the price of $500 or more, need writing. Not saying there’s no K, but it wont be
enforceable.
B. Must be signed by the party against whom enforcement is sought. So if buyer
signs it, seller can enforce it but buyer cannot. If seller signs it, buyer can enforce
it but seller cannot enforce it against the buyer.
C. Can be enforced even if some terms are missing. Don’t even all have to be
correct, just something needs to be there. You may omit certain terms EXCEPT
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the QUANTITY. Something re: quantity must be there. Beyond what is written in
terms of quantity will not be enforced.
(2) A. Applies only to merchants. Sending confirmation of agreement.
 This can be signed just by the person who sends it (unlike btwn reg ppl) and it’ll
be enforceable
 The memo evidences the existence of the oral k and says something about
quantity.
 If the receiver does nothing, then he validates the existence of the contract, not the
terms in the memo/letter (those can be proven to be false or w/e later)
 Memo melts away the statute and now we can examine the oral k
(3) A. (its enforces the oral K, works btwn all ppl as a way of getting out of the statute)
A K not satisfying the reqs. of subsection 1 but which is valid in other respects is
enforceable:
i.
ii.
iii.
when goods are to be specially manufactured for the buyer & are not
suitable to sell to anyone else & before the buyer repudiates (changes
his mind) the seller has already started making iteven though you
didn’t have writing, seller can still enforce the K. (similar to
promissory estoppel)
if the party against whom enforcement is sough admits in court or
pleading/testimony theres a K, there there’s a K. don’t worry about
statute/don’t need writing
if you’ve already paid for the stuff or already accepted the goods,
you can’t go back and say that I don’t have to pay b/c we didn’t have
writing don’t need writing anymore if you’ve already accepted.
Problems: Application of UCC 2-201 p. 177-178
1) If no quantity term, K not enforceable. If writing state 20 units and buyer claims 200
units, only 20 units is enforced. IF the writing stated that the deal was for the seller’s
output the statute is satisfied b/c it puts a parameter around the quantity. Even if you
admit in court there was a K, only the quantity term expressed in writing is enforced.
Default quantity: ZERO!
2) -Sending the memo satisfied the statute so its enforceable.
-No problems with sufficiency of the K
-There is consid (we don’t have consid. probs in sales k)
-output doesn’t tell us how many bushels, but we can assume its more than $500 and we
can just do the calculation to figure out the quantity.
-B wins
3) statute of frauds doesn’t cancel P.Estoppel
-fits into all elements of Restatement 90
- B relied on $3 price, if S doesn’t give it at that price he’ll have to buy it at $4 and still
Sell it at $4, obv suffer detriment
-in this case, statute doesn’t apply!
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-(But if you don’t go based on P.E. then the guy loses b/c then the statute applies…u need
writing and if u don’t have it then nothing is enforced)
NOTE:







Can not say the price, that’s ok
But strict on quantity. Can be erroneous, but something has to be there
Quantity term under 2-201 must be there. Doesn’t fix quantity, but caps it.
Can be EXPLICIT OR FORMULAIC
If nothings there, not enforceable
Employment and leases are different statutes!
*just b/c you don’t need writing/statute doesn’t apply doesn’t mean you don’t
have to still prove a K exists- you do!
Problem: #5 pg. 188:
 1st question to ask: are they merchants? Yes
 Just b/c we get around the statute doesn’t prove the oral K exists; still have to
prove oral K exists.
 Bazak wins: sent memo, party didn’t respond.
MBE Problem:
UCC Section 2-201 of statute of frauds
A) codified common law rules of fraud
B) requires that all formal K be in writing and signed by the parties to the k
C) does not apply if the parties waive its application in the k
D) sometimes results in a k being enforceable only by one party
D is the answer
A= no b/c fraud is an enormous subject that is in all fields of law. Statute of fraud has nothing to
do with fraud…has to do with needing writing to prevent fraud (supposedly) and when you need
writing to demonstrate existence of oral K.
B= no. reqs generally that the person against whom its sought have signed it (But doesn’t exist
btwn merchants) this is not all the time.
C= no. even though there are lots of laws that you can waive, logic is if the whole idea of the
statute is that we don’t want oral Ks cuz we don’t trust them, we cant trust oral saying that we
orally agreed not to write anything
D=yes. (2-201 (1)) has to be signed by the person against whom it is enforced. So sometimes,
only one party can enforce it on the other.
Examples of statute of frauds cases:
In general, absent extraordinary circumstances, a K for sale of land must be in writing to be
enforceable. (this applies to other things that fall under statute too..)
To get out of the statute applying, must prove an exception exists:
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EXCEPTIONS:
1) part-performance doctrine
2) promissory estoppel
3) UCC 2-201 (3)
a. If you need writing, but goods are specially manufactured
for the buyer and you already start making it (Basically
part-performance)
b. If the party against whom enforcement is sought admits in
his pleading, testimony or in court that K exists (but it wont
be enforceable beyond the quantity admitted
c. If payment for the goods or the goods themselves have
been accepted (basically part perf.)
Sullivan v. Porter: EXCEPTION BASED ON PART-PERFORMANCE D offered to sell
property to P. P orally accepted, D never formed a written K everytime P asked
for one. P began improving the property, gave $10,000 cash as down payment,
which D accepted. Then D backed out. RULE: To remove the K from the
operation of the statute of frauds, the party seeking to enforce the k must establish
by clear and convincing evidence: 1) that the parties did enter into a K. 2) that the
party seeking to enforce the K partially performed the K. 3) that the performance
was induced by the other party’s misrepresentations, which may include
acquiescence or silence.
---NOTE: the part-performance here was the tendering of the money b/c THAT
was part of the K; improvements were not part of the K so don’t count.
--NOTE: if they hadn’t partially performed, could make convincing argument for
them based on promissory estoppel instead.
“equitable estoppel” involves misrepresentation including misleading
statements, conduct, or silence, that induce detrimental reliance. Specific
performance is fair compensation.
REMEDY: P won, there was enforceable K. re: lands, anything other than
specific performance is insufficient to bring about justice.
Crabtree v. Elizabeth Arden Sales Corp.: D hired P as a sales manager and entered into a 2
year employment contract with him, but the agreement’s terms were memorialized in 3 writings,
only 2 of which were signed by D’s representatives. *statute applies here b/c its for longer than 1
year. Need writing, and had it.* RULE: If an agreement between two parties is memorialized in
several writings, both signed and unsigned, that’s ok and these writings are sufficient to satisfy
the Statute of Frauds as long as the unsigned document clearly references the same subject or
transaction. Statute doesn’t require memo to be a single document. Oral evidence may be given
to help establish the connection btwn the docs. So P won, there was an enforceable K.
C. Remedies
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Intro to Remedies:
Material breach: a breach that reaches the heart of the K’s subject matter.
Non-material breach: failure to perform a duty that only involves minor details which don’t
affect whole outcome of contract. Unrelated to subject matter of the agreement.
-When material breach by X, Y can suspend its performance or cancel the K and sue for
damages.
-When non-material breach by X, Y can not cancel but is entitled to recover damages.
CHECK WHEN HE GIVES IT ON TWEN
UCC 2-703, 706, 708, 709, 711, 713, 715, 716
a) P must prove that (1) breach was the substantial cause of the loss complained of, and (2) the
amount of the loss caused with reasonable certainty.
b) the provable losses caused by the breach must have been reasonably foreseeable to the D
at the time of contracting. If not, these consequential damages are not recoverable. (Hadley
v Baxendale)
c) P has a duty after the breach to make all reasonable efforts to avoid the consequences of the
breach.
-if D establishes that P failed to mitigate damages, this item of recovery, even if caused,
certain and foreseeable, MAY NOT BE RECOVERED.
Problem: pg. 222 Oven Problem
Sullivan v. O’Connor: nose job case. P, profession entertainer, contracted with D, plastic
surgeon, for cosmetic surgery on her nose. D promised 2 surgeries would be enough and that
they would make her look better, she had 3 and appearance only worsened and couldn’t be fixed
anymore. (Dr didn’t do what he promised to do –make her look better—breach of K). she could
recover in restitution and for the pain, suffering, and mental distress due to the breach (b/c it was
extra suffering then she thought she’d need to go thru b/c of 3rd operation)
Three different theories of damages:
 Restitution: to get paid back for what you paid. “give me back what I gave you”.
Here, this would be the fees that she paid the Dr. (which may not include all of
her costs, like the taxi ride over there)
 Expectation: puts the P in the position P would have been if the K had been
performed. (ie. had the nose come out as promised)
 Reliance: P can recover any expenditures made by him & for other detriment
following proximately & foreseeably upon the D’s failure to carry out his
promise. (puts the P back in the position he occupied just before the parties
entered upon the agreement)
o Professor doesn’t really go into this, says its not clear and “slippery”,
but COURT rules with reliance.
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Curtice Bros v. Catts: tomatoes/specific performance case. OUTPUT K. P was engaged in the
business of canning tomatoes. Contract with Catts was that Catts agreed to sell to P the entire
product of certain land planted with tomatoes. RULE: courts may grant specific performance of
K for the sale of GOODS (its usually only for unique irreplaceable things like land) IF failure to
do so will result in irreparable injury to P. Here, a remedy at law is inadequate; need equitable
relief. Because they needed those specific tomatoes, company was depending on the tomatoes
coming in at that time so they could start packing, and getting the same quality and quantity of
tomatoes elsewhere would seriously interfere with the arrangements of the company, specific
perf. is desereved. **Preferred remedy for sale of goods is damages, unless P can successfully
persuade a ct of equity that damages are inadequate and specific performance is needed. So if the
farmer already sold to another, he HAS to find same quantity and quality to give back to P.
Hadley v. Baxendale: mill shaft broken-couldn’t recover b/c the loss couldn’t have been
foreseen by D and P didn’t tell them that they were so desperate for the shaft to come back on
time. RULE: A party may recover compensation for lost profits upon a breach of K by the other
party IF such damages were in the contemplation of the parties at the time of the K, as a probably
result of the breach of it. This was not the case here, so P can’t recover. So it must fairly and
reasonably be considered that the loss resulting from breach to be CONSEQUENTIAL either
(1) arises naturally (ie. according to the usual course of things) OR (2) been in the contemplation
of both parties. Since there were alternate reasons as to why the mill could have shut down, it’s
not fair to say that D should’ve automatically foreseen such a consequence as “arising naturally”.
This was a consequential damage, as opposed to an incidental damage (UCC 2-715).
(Incidental is basically damages resulting from extra stuff done b/c of K, like paying for
transportation, inspections, etc.)
(Consequential is basically damages resulting directly from the breach AND those two things
outlined above)
D. Bargain Relationship:
Ascertainment of Assent: The OBJECTIVE Test
*Addresses question of what overall approach courts should take to ascertaining whether parties
have assented to a bargain and what their relevant intentions were in the process?
Shift from subjective to OBJECTIVE: if agreement was apparent from the manifestations of
assent, REASONABLY interpreted, a K had been formed on the terms reflected in the
manifestation. These days, courts are a little lenient in allowing examination of state of mind to
give context to words or conduct.
Only once mutual assent has been established can courts “gap fill” if necessary.
Embry v. Hargedine: P employee of D, said he’s leave unless he was guaranteed another term.
Boss said “go ahead you’re all right get your men out and don’t let that worry you”. He took that
as a renewed K, gave up the other job. Soon after he was fired. D’s defense: “he didn’t intend to
renew the K. RULE: The actual words used, as interpreted by a REASONABLE man, rather
19
than the subjective intent of the parties, determine whether a K has been formed”.(my thoughts,
so wins on the fact that reasonable person would take it the same way and reliance!) so K. {all
that needs to be done is prove THAT D said it. What he MEANT doesn’t matter if reasonable
person would take it the way P did}
Lucy v. Zehmer: 2 men drinking together, entered into a K to sell a property. P believed D
really meant it, (statute of frauds-sale of land, need writing) written down on restaurant bill,
signed, terms laid out, P acted in reliance: had his brother put up half the money, hired an
attorney to examine the title, etc. Then D said no K! I was just joking/drunk/messing around. But
when looking at the document, it looks like a valid contract to sell, so K! RULE: When a party’s
conduct and words would warrant a REASONABLE person in believing that he intended a real
agreement, the party cannot avoid the K by claiming he was only kidding/acting in jest.
(if both knew they were joking then obv doesn’t count) story doesn’t matter. What matters is
what’s written on paper.
E. Offer and Acceptance
A. An offer is the manifestation of willingness to enter into a bargain
B. RULE: For an offer to be enforceable, a reasonable person must be able to perceive an
expression of present intent, a sufficient articulation of the terms of the bargain, and the intent &
terms must be communicated to the offeree.
*The offeror is the master of the offer (usually buyer in retail transactions)
C. Key Issues:
1. Was there a reasonable expression of a promise, undertaking, or commitment to enter
into a contract?
2. Was there certainty and definiteness in the essential terms?
3. Was there communication of the above to the offeree?
4. Was this an offer or an invitation to negotiate (or part of the negotiations)?
______________________________________________________________________________
Elements of an Offer
1) Intent
a. RULE: For a communication to be an offer, it must reasonably contain a promise,
undertaking, or commitment (intent) to enter into a K.
b. Key Issues:
 Language
--- Language used was one that a reasonable person would assume was an offer
---Key to distinguishing offer from preliminary negotiations
---Embry v. McKittrick: Regardless of President’s true intent by “you’re alright,” as
long as he said it the language can be reasonably construed as intent.
 Surrounding Circumstances
20
---For ex, whether the statement is made as a joke, in anger, or by way of bragging & this
is reasonably understood as an offer.
---Lucy v. Zehmer: Lucy reasonably thought he was serious.
-Statements are interpreted OBJECTIVELY
-Subjective intent irrelevant if not possible to interpret.
 Prior practice and relationship to the parties.
---To determine offer rather than preliminary negotiations
 Industry Custom
---The courts will also look to generally accepted customs
 Methods of communication
---Broad communications media—the broader, the more likely the courts will view it as
merely the solicitation of an offer
---Advertisements and the like-usually announcement of prices at which the seller is
willing to receive offers.
-May be treated as an offer where the language of the ad can be construed as
containing a promise, the terms are certain & definite, and offeree is indentified.
-Lefkowitz v. Great Minneapolis Surplus Store: The ad was clear, definite, and
left nothing open for negotiations, so it was considered an offer. Also, it specified that the
offeree was the “first to be served”
( General rule: offers are valid for a reasonable time unless parties state otherwise.
Lonergan v. Scolnick: When its just an invitation of an offer, you must respond back with a
request for an offer) (Generally, Ads are not usually offers unless very specific)
2) Terms
a. RULE: In order for an offer to be made, the terms must be definite and certain clearly
indentifying the offeree and the subject matter.
b. Key Issues:
 Identification of the Offeree(s)
--Carbolic Smoke Ball: Offer made via advertisement; offerees identified as class of
people that buy the product
 Definiteness of Subject Matter
---The subject matter should be certain b/c the court can only enforce a promise if it can
tell reasonably what it is.
---Sale of goods: The QUANTITY TERM MUST be certain
-Requirement and Output contracts okay b/c they are capable of being made
certain
- Giving a reasonable range of choices is also valid (?)
---Services: the nature of the work to be performed is required
21
 Missing Terms
---The fact that one or more terms are left open does not prevent the formation of a K if:
- It appears the parties intended to make a K
- There is a reasonably certain basis for giving remedy
--- Note that the more terms the parties leave open, the less likely that they intended to
enter into a binding K.
--“agreements to agree”: “look, we’re still negotiating. Doesn’t mean we intend to enter
in a K with each other”
---UCC 2-204
--- Article 2 Gap Filler: UCC 2-305
- If set by one of the parties at a later time, should be done in good faith or
K can be canceled by second party
---This does not apply to vague terms, only to missing terms
- In such a case, the terms would be “indefinite” and the offer may be
deemed insufficient.
* for a K not to fail for indefiniteness, 1) parties must have intended to make a K.
and 2) there is a reasonable certain basis for giving an appropriate remedy (ct must
have ability to supply a reasonable term to fill in the gap)
* “if an agreement is not reasonably certain in its material terms, there can be no legally
enforceable K”
 Varney v. Ditmars: (example of indefinite agreement) Varney
agreed to work as an architect for Ditmars until the end of the year,
in part for a “fair share” of the profits; Varney was fired before the
end of the year and sued for a reasonable percentage of the profits.
RULE: When MATERIAL TERMS of an alleged agreement are
so indefinite/ vague that the intention of the parties is pure
conjecture, a K is not formed.

Joseph Martin Deli v. Schumacher: A lease provided for a
renewal term at a rent to be agreed upon; Schumacher, the
landlord, refused to extend the leave when no agreement on rent
was reached. RULE: A mere agreement to agree, in which a
MATERIAL TERM is left for future negotiations, is
unenforceable, especially in the context of real estate transactions.
(this case has been criticized. Prof not persuaded that filling in the
price here is much diff than MGM. Should be possible to set the
price for the prop. By using an independent appraiser’s price.
Shadow of UCC—> courts can fill prices in! prof says only way to
set this apart from MGM is that this is land and that was
employment and there’s something diff about land)
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
MGM v. Scheider: Scheider agreed to act in pilot film by MGM;
he refused to act in the subsequent TV series, although the K btwn
the parties contained all essential terms except the start date for
filming the TV series. RULE: When performance has begun on
the good faith understanding that agreement on unsettled matters
will follow, a court will fill in the missing elements if some
objective method of determining them is available.
-The start date isn’t indefinite b/c obv has to start sometime
before the summer ends.
- Should the court have fixed/filled the terms of the
architect case? No b/c that gap was a lot more open-ended
(profit margin) as opposed to here where it’s a lot more
bound.
3) Communication:
a. RULE: To have power to accept, the offeree must have knowledge of offer
 Objective intent as perceived by offeree is important here
 Glover v Jewish War Vets: Glover gave info to the police,
leading to the arrest and conviction of a murderer, without
knowing that the Jewish War Vets had offered a reward to anyone
providing that info. RULE: There can be no K unless the claimant
when giving the desired info KNEW of the offer of the reward
AND acted with the intention of accepting such offer. (“there is no
K when one gives info without knowing of the offer of a reward
for giving that info, b/c one is not acting with the intention of
accepting the offer”)
o if you don’t know, act, then find out, then act again, still no
K.
o performance + knowledge of the offer = acceptance = K
The Acceptance
A. Acceptance is a manifestation of assent to terms of the offer.
B. Who may accept?
a. RULE: Generally, only the person (or class of people) to whom the offer is
addressed has the power of acceptance.
b. The offeree must know of the offer to accept it (Glover v. Jewish War Vets)
C. Methods of acceptance?
a. RULE: Acceptance is invited to be given in the same medium as the offer.
(Restatement 65...same used by offeror or one customary in similar
transactions at the time and place the offer is received) (can’t be slower)
So you never have to notify of acceptance unless its specified? Yes
Example: advertisements or rewards (like lost dog or carbolic smoke ad)
impliedly indicate no need for notification of acceptance. Assumption is that
performance is enough.
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i.
Restatement 45: if you don’t have the option and
MUST PERFORM, then when offeree starts to perform
its an option K. offeree can stop/doesn’t have to
finish/isn’t accepted until you do, but offeror cant
revoke. (but can expire)
ii.
Restatement 62: If you can perform or make a promise,
then part-performance as a promise to completely
perform and is enforced on both.
iii.

Ever-Tite Roofing Corp. v. Green: Green (D)
contracted with EverTite Roofing Corp. (P) for the
re-roofing of their home. The agreement became
binding only upon acceptance in writing by an agent
of P OR upon commencement of the work. Green
understood that Ever-Tite needed time to check
Green’s credit. Green’s credit was approved eight
days later and P dispatched a crew to perform the
work. When they arrived they found another
contractor performing the work. Court said that (B/c
they had the option) loading the truck is when they
commenced the work, so the Green’s revocation
came after acceptance and therefore not valid. Had
they not part-performed, the power to create a
contract by acceptance of an offer terminates at
the end of a reasonable time if no time is
specified in the offer.

Carlil v. Carbolic Smoke Ball: (acceptance by
performance) RULE: If you specify: When
a person makes an offer an he expressly or
impliedly intimates a particular mode of
acceptance, it is only necessary for the
offeree to follow the indicated method of
acceptance.
If you don’t specify: If
the person making the offer expressly or
impliedly intimates in the offer that it will be
sufficient to act on the proposal w/out
communicating acceptance of it to him
(notification) performance of the condition
is a sufficient acceptance without
notification. (if nothing is specified, assume
performance is acceptance)
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b. Key Issues:
i. the Mailbox Rule: (Restatement 63—Acceptance takes effect on
dispatch of letter…DEFAULT RULE if nothing else is specified)
(Telegrams governed the same)
Mailbox Rule says an acceptance by mail or similar means creates
a K at the moment of dispatch unless:
 Offer says that acceptance is not effective until
received
 An OPTION K is involved (then effective upon
receipt)
 Special situations:
a. Offeree sends rejection, then acceptance:
RESTATEMENT 40
i.
If acceptance is received by offeror
before he receives the rejection or
counter-offer, then its acceptance.
ii.
If acceptance is received by offeror after
the rejection, then it is only a counteroffer.
iii.
(basically Mailbox rule does not apply.
whichever is received first is effective)
b. Offeree sends acceptance, then rejection or
counter-offer:
(that in effect is a revocation of acceptance)
i.
Mailbox rule generally applies
ii.
However, if the offeror received the
rejection first and changed his position
in reliance on it, the offeree will be
estopped from enforcing the K.
c. Offeror sends revocation, then offeree accepts.
i.
revocation takes effect upon receipt (like
rejection)
ii.
a K is formed as long as the acceptance
is sent before the revocation is received
(mailbox rule applies) (the revocation is
ineffective)
d. When acceptance is sent by unauthorized means
i.
Mailbox rule does not apply, but
acceptance becomes effective upon
receipt.
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ii. Silence as acceptance (Restatement 69)
Acceptance by silence is exceptional. It applies when:
o The offeree has reasonable time to reject it but takes it
anyway and has reason to know that compensation will be
required (like newspapers)
o The offeror expressly states that silence may be taken as
acceptance
o Because of prior dealings btwn the parties or trade practices
known to both create a commercially reasonable
expectation by the offeror that the silence is acceptance.
-in such cases, offeree is under duty to notify of
rejection
-however, statute of frauds may bar enforceability
-Ammons v. Wilson & Co.: P ordered 942 cases of
shortening from D, but D did not respond to the
order for 12 days. RULE: When an offeree fails to
reply to an offer, the silence can operate as an
acceptance when the oferee has, b/c of a course or
prior dealings, given the offeror reason
to understand that silence is intended by the offeree
as a manifestation of assent and the offeror so
understands it.
-orders are offers. Creates power of
acceptance in seller.
D. Valid Acceptance
a. Common Law: Mirror Image Rule (Restatement 59)
i. Rule: Any different or additional terms in the acceptance make the
response a rejection of the original offer and therefore a counteroffer.
ii. Minneapolis Railway Co. v. Columbus Rolling Mill: Original offer
was to sell 2000- 5000 lbs of rails. The response ordered 1200. This
terminated the original offer and became a counter offer. RULE: A
proposal to accept upon terms varying from those offered is a rejection
of the offer and puts an end to the negotiation, unless a) the offeror
renews it, or assents to the modification suggested. The other party,
having once rejected the offer, cannot afterwards revive it by tendering
an acceptance of it.
iii. Statements that make implicit terms explicit= valid acceptances
iv. Grumbling acceptances are valid acceptances
v. Offerees may make “inquiries”- these are not counter-offers
vi. Mirror Image rule allows for “Last Shot rule”: last form standing wins,
accepted by performance. Comes about when each party keeps sending
a counteroffer.
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b. UCC 2-207- Battle of the Forms
 does not apply to option contracts. Only for offers/acceptance
 only applies to sales of goods (but can talk about it by analogy)
 changes the common law mirror image rule
 DTE case decided under 2-207 (decided that the forum selection
clause materially altered the parties contract and was not
enforceable against D)
 Question is not “is there a K?” but “What are its terms?”
 UCC 2-207 provides rules for 1) written confirmations and 2)
offer/acceptance situations
 How do you know what is a material alteration? Can burden other
party in an unexpected way. Example: providing forum selection
clause. (need to read 1,000 cases before really getting it)
1) Additional or different terms are considered to be valid
acceptances, not counteroffers
 Unless acceptance is expressly made conditional on
asent to the additional/different terms (other person
must accept for you to accept)
a. Ex) “I accept you offer so long as the car is
blue”
b. Ex) “I accept your offer as long as you agree tot
his additional term”
c. NO! need Mirror Image rule then.
2) The additional terms are to be construed as proposals for
addition to the K. Between merchants such terms
automatically become part of the K unless:
a. offer expressly limits acceptance to the terms of
the offer (the original offer prohibits changes
and basically says “take this as it is or nothing)
b. terms materially alter the K (like forum
selection clause; changing something vital; also
like price)
c. if acceptance comes back that has additional
terms but is not material, it becomes part of the
K unless the offeror see it and rejects it.
3) (Knockout rule: K consists only of terms agreed upon and
everything else is knocked out) we still have possibility that
we never each agreement on certain terms. But just b/c
writing don’t come out a K doesn’t mean theres no K. (like if
goods have been sold K) but in those cases, terms of K
depends on conduct agreed on. If we get down to a story
where previous provisions don’t work, we get this final
saving clause. (yes, we have a K and those terms are the
parts on which there was agreement and then just fill in the
rest with default rules in UCC). Either individual or
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merchant, we have offer and someone says take it or leave it
you must accept on my terms, but then you still act, that you
turn to (3). The terms of your K become what you’ve agreed
upon thru your CONDUCT; rest is filled in by other ucc
provisions.
*But references to acceptance in 2.207 (1) are inappropriate in
the context of confirmations and should be disregarded. (b/c
confirmations say we already have a K)
So, if an oral or informal K is formed, and a written memo is sent
after but one or both confirmations go beyond or vary what was
agreed upon before, those terms cannot simply become part of
the K and instead are treated as proposals in the same way as
proposals in an acceptance.

Example of Battle of the Forms case:
o DTE Technologies v. Briggs Electric: We know there’s a K b/c
goods were sold and delivered. Problem is that we don’t know the
terms of the K…did the forum selection clause make it into the K?
no. The forum selection clause was considered a material addition.
So the contract was still valid but just didn’t include the added
term. (offer= X. acceptance= X plus forum selection clause.
Performed the contract, so terms are X. forum selection didn’t
make it in)
Termination of an Offer
A. Restatement 41: “An offeree’s power of acceptance is terminated at the time specified
in the offer, or, if no time is specified, at the end of a reasonable time”
a. Lonergan v. Scolnick: Offer to sell land clearly stated that acceptance would
need to be received promptly because of other prospective buyers. This
limited the buyer’s power to acceptance to a short time period. (main pt of this
case tho was that the guy was soliciting offers, not making an offer)
B. Revocation by offeror
a. RULE: A revocation terminated the offeree’s power of acceptance if it is
communicated to him before he accepts.
i. Key points:
1. Revocations are effective when received
a. The mailbox rule may create a K even if the revocation
is sent before the acceptance (b/c once the acceptance is
sent, as long as revocation hasn’t been received, it’s a
K)
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2. If promise was made to keep offer open for a certain time (or allows
offeree certain time to accept)
a. He can still revoke unless there was consideration (in
that case it would be an option K and couldn’t revoke)
OR UNLESS IT’S A FIRM OFFER UNDER UCC
THEN CANT REVOKE
b. Humble Oil v. Westside Investment: Humble had an
option K to purchase real estate from Westside; Humble
suggested changes to the purchase contract. Before the
option expired, Humble withdrew the proposed changes
and exercised the option to purchase the property.
RULE: if the original offer is an irrevocable offer that
creates a binding option in the offeree, counteroffers or
further negotiations by the offeree do not terminate the
power of acceptance. **rule of conditional acceptances
as rejections does not apply to option contracts.
UNLESS if offeror heavily relies on the rejection and
takes steps b/c of it, the subsequent acceptance will then
be inoperative and his power of acceptance will then be
gone. (even though you can’t accept an option K with
additional terms, an acceptance afterwards as long as its
within the time allowed is still valid)
** If an acceptance is sent after rejection but arrives to the offeror first, its an acceptance.
Otherwise, it’s a counteroffer.
**Inquiries are not counteroffers. (The test is whether a reasonable person would believe that the
original offer has been rejected/terminated.
E. Irrevocable Offers
a. Option Contracts (restatement 87)
i. An option is a distinct K in which the offeree gives consid. (usually
$$) for a promise by the offeror not to revoke an outstanding offer.
ii. A rejection or a counteroffer to an option does not terminate it.
1. the offeree is still free to accept the original offer within
the option period unless the offeror has detrimentally
relied on the offeree’s rejection
2. Humble Oil v Westside
b. Firm Offers under UCC 2-205
i. RULE: Allows for merchants to keep offers open to be enforceable
even if no consideration has been given
ii. Key elements:
1. If a merchant
2. offers to buy/sell goods in a signed writing
3. The writing gives assurance that it will be held open
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4. The offer is not revocable for lack of consideration
during the time stated, or it no time is stated, for a
reasonable time.
a. In no event may such period exceed 3 months.
(diff from when you just say “you have X amount
of time to accept…there, the offeror can revoke
whenever)
c. Detrimental Reliance (Restatement 87)
i. RULE: An offer which the offeror should reasonably expect to induce
action or forbearance of a substantial character on the part of the offeree
before acceptance and which does induce such reliance is binding as an
option K to the extent nec to avoid injustice. (don’t need consid. just like
promissory estoppel)
ii. Drennan v. Star Paving Co.: (P doesn’t have to accept/doesn’t have
to hire D. but if it does, D HAS to perform. That’s how its an option. P has
the option.) A subcontractor submitted their bid, knowing that it may be
used as part of contractor’s bigger bid for the project. After the bigger bid
was accepted, subcontractor revoked their bid (offer) before it was
accepted. (normally this would be ok) HOWEVER, it was held that the bid
should be irrevocable because it was reasonably known to the offeror that
the offeree would rely on such an offer. RULE: reasonable reliance
resulting in a foreseeable prejudicial change in position implies a
subsidiary promise not to revoke an offer. (restatement 87?)
BID=OFFFER=OPTION K (just in the bid/contractor things)
Defective Formulation and Expression of Agreement
(Mutual misunderstanding)
 Restatement 20: There is no manifestation of mutual assent to an exchange if the parties
attach materially different meanings to their manifestations and
a. neither knows or has reason to know the meaning
attached by the other
b. or each party knows or each party has reason to
know the meaning attached by the to other
obv has to be reasonable.
 neither party aware of ambiguity=no K
 both parties aware of ambiguity=no K
 one party aware of ambiguity= K
Raffles v Wichelhaus: (Peerless) Peerless ship was supposed to be bringing cotton.
Turns out there were 2 ships with same name. One party means October ship, the other
meant December ship, so the K is void on the grounds of misunderstanding. RULE: A
mutual mistake as to the subject matter means that a K is void b/c the parties did not
consent to the same thing. (no K ever formed at all)
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Konic v. Spokane: Spokane ordered surge protector for “fifty-six twenty”. Konic meant
$5,620, Spokane thought $56.20. RULE: Even though the parties manifest mutual assent
to the same words of agreement, there may be no K b/c of a material difference in
understanding as to the terms of exchange. (has to be reasonable) No binding K ever
formed at all, so buyer got to escape liability.
*both of these cases: they are not a mistake, there is no right answer. The problem is that
both are right in their own minds…each attach diff meaning to words. In other cases,
there is a right answer so it’s a mistake.
With mutual misunderstanding, there was NEVER a K made.
F. Avoidance of Contracts
(mutual misunderstanding is one)
A. Indefiniteness
1. RULE: When material terms of an alleged agreement are so indefinite and
uncertain that the intention of the parties is pure conjecture, a K is not formed.
2. Quantum meruit: A claim or right of action for the reasonable value of the
services rendered; damages awarded in an amount considered reasonable to
compensate a person who has rendered services in a quasi-contractual
relationship or in relying on a promise that is indefinite (Unjust enrichment)
(in my words: exception to this is if one party to an alleged K has
performed in reliance upon the terms thereof (even if vague, indefinite, and
uncertain) the law will presume a promise to pay the reasonable value of the
services)
3. Varney v. Ditmars (architects, “fair share”): Employer has an at-will
employee, then promises to pay him a “fair share” of his profits at the end of
the year (which would modify his employment to a set term EXCEPT for the
fact that those words are so vague that it invalidates the entire K) B/c of
vagueness of the promise, it was held to be unenforceable. However,
employee could recover the value of the work given under the principle of
quantum meruit.
B. Agreements to Agree
1. There are instances when parties may reach an agreement on some terms of
the exchange but have deliberately left other terms open or for future
agreement. IN MOST CASES courts will not fill gaps here, b/c 1st courts need
to see that there was mutual assent to be bound, and agreements to agree
usually show lack of such assent. No mutual assent=no promise=no k.
2. agreements to agree reserves ability not to be bound
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3. if you say, “I agree to sell the painting.” Then price is MISSING, courts can
fill using reasonable standards. But when you agree to agree later, price is
addressed, but avoided…courts wont fill it.
4. Joseph Martin Deli v. Schumacher: The tenant and landlord had an
“agreement to agree” on a price for the renewal of a lease. The K was
unenforceable due to this. RULE: A mere agreement to agree, in which a
material term is left for future negotiations, is unenforceable, especially in the
context of real estate.
5. MGM case RULE: when performance has begun on the good faith
understanding that agreement on unsettled matters will follow, a court will fill
in the missing elements if some objective method of determining them is
available. I THINK that this was diff b/c obv parties had mutual assent to be
bound- they already started! Prior dealings also could be argued both ways,
both as being relevant and irrelevant. ALSO this follows restatement and not
ucc!
6. Under UCC 2-204 (3) the fact that one or more terms are left to be agreed
upon is not enough of itself to defeat an otherwise adequate agreement.
 “even though one or more terms are left open a K for sale does not
fail for indefiniteness if the parties have INTENDED to make a K
and there is reasonably certain basis for giving an appropriate
remedy.
 Under UCC 2-305 IF THE REQUISITE INTENT IS PRESENT
and the price is left to be agreed by the parties and they fail to
agree, the price is a reasonable price at the time for delivery.
 Default for quantity term: zero.
Default Fillers under UCC
 Shipment from korea to la of 300 tvs.
K doesn’t say if its all at once or separate shipments. Default: all at
once
 If K doesn’t specify where goods should be shipped to. Still a K.
can ship to seller’s place of business
 If K doesn’t say when you have to ship. Doesn’t mean you don’t
have a k! just have to ship at a reasonable time (judge will decide
wuts reasonable)
 When you pay? Default: when goods are delivered.
*** absence of these terms doesn’t make K void for indefiniteness. There’s still a
K. judge can grant a remedy.
168th and Dodge v. Rave Reviews Cinema: Even though most terms were set out by
both parties in their letter of intent, b/c it expressly said it “shall not be construed as a lease
agreement or an option to lease” Rave was not held to the terms of the letter b/c not a true K.
RULE: To recover for break of express K, the P must plead and prove the existence of a
promise, its breach, damage, and compliance with any conditions precedent that activate the D’s
duty. (can’t have implied K when you have express agreement)
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Hoffman v Red Owl Stores: P bought and sold prop and business on the basis of D’s promises
that hew would get a franchise; D was basically directing P and telling him what to do; P finally
got pissed when D again raised the amount of the req. investment at the closing meeting.
Idea of pre-contractual liability: still have a duty to bargain in good faith. He used
promissory estoppel; got reliance (The store) couldn’t get expectations (profits he would have
made at they not been so shifty)
C. Capacity
1. Age
 RULE: A K entered into by a minor is voidable as long as he disaffirms
the K anytime until shortly after reaching the age of majority.
o Voidable by the infant, but binding on the adult (adult cant rescind)
o Enforceable by the kid but not enforceable by the adult
o If a minor chooses to disaffirm, she must return anything that she
received under the K that still remains at the time of disaffirmance.
No obligation to return any part of the consid that has been used
wasted or destroyed.
o Bowling v. Sperry: The minor was able to return a used car that
he bought even though his aunt and grandma went with him to
purchase the car. Since his name was on the K, it was voidable.
 EXCEPTIONS:
o Doctrine of Necessities: If K is for something for the life of kid to
continue (food, clothes, medical attn, etc) the infant must pay the
reasonable price. (if it’s a necessity, kid doesn’t escape having to
pay at least a reasonable price (as opposed to the K price))
2. Intoxication
 If a person was sufficiently intoxicated to lack mental capacity, the transaction
is voidable at the option of the intoxicated person.
3. Mental incompetency
 A K can be void or voidable if entered into by a person who is mentally
incompetent.
D. Mistake
(here, as opposed to misunderstanding, there is a right
answer. In misrep, no “right” ship)
-if have mutual mistake, there was K formed but its not
void.
7. Mutual Mistake
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 Restatement 152: When both parties entering into a K are mistaken about facts
relating to the agreement, the K may be voidable by the adversely affected
party if:
a. The mistake concerns a basic assumption on which the
K is made
b. The mistake has a material effect on the agreed-upon
exchange
c. The party seeking avoidance did not assume the risk of
the mistake (in Sherwood, weird b/c the owner/seller
DOES assume the risk) (no “as-is” clause, as is clause
says you know there might be risk… buyer signs an as
is clause, buyer assumes the risk)
(mistakes need to be about things in the present)
A party bears the risk of a mistake when
(a) the risk is allocated to him by agreement of the parties, or
(b) he is aware, at the time the contract is made, that he has only
limited knowledge with respect to the facts to which the mistake
relates but treats his limited knowledge as sufficient, or
(c) the risk is allocated to him by the court on the ground that it is
reasonable in the circumstances to do so.
(mutual mistake: 1) at the time of contracting, the parties must have shared an erroenous belief
concerning a fact (about the present, not the future). 2) the erroneous fact was a basic assumption
on which the contract was made. 3) the mistake must have a material effect on the agreed
exchange of performances (it has to substantially deprive the adversely affected party of the
value expected.) 4) the adversely affected party must not have borne the risk of the mistake.
KEY POINTS:
 Mutual mistake is not a defense if the adversely affected party bore
the risk that the assumption was mistaken
 Mistake in value is generally not a defense
o Unless based on reliance on expert opinion
Sherwood v. Walker: (cow) Walker agreed to sell Sherwood a cow they both believed
to be barren, but then he refused to give it once he realized she was pregnant. Court said
that since the mistake was related to substance/nature of the thing and not the value, K
could be rescinded and walker (seller) won. RULE: Rescission is a proper remedy when
the parties’ mutual mistake goes to the agreement’s substance or nature (not value) [K
was formed but is void, so buyer suffered]
Lenawee County Board of Health v. Messerly: mutual mistake was that both parties
thought the property could produce income, but turned out to be valueless and
inhabitable. Can argue this had to do with substance/nature of the place. But b/c of the
“as is” clause, they couldn’t rescind (Pickels signed an “as is clause” they bore the risk)
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2) When analyzing (remedies) ask:
a) How fundamental is the discrepancy between the expected and actual exchange? Relief is only
available when the impact is so material that it changes the very basis of the bargain.
b) Which party should be made to bear the consequences? Mutual mistake is NOT a neutral result,
someone MUST lose.
Relief for Mutual Mistake
1) Principal remedy = AVOIDANCE OF CONTRACT (relief for mistake derives from equity)
a) If both parties wish to avoid the contract, it can be rescinded (unless the risk is allocated)
8. Unilateral Mistake
 RULE: Restatement 153:
o Where a mistake of one party at the time a K was made as to a basic assumption
on which he made the K has material effect on the agreed exchange of
performances that is adverse to him, the K is voidable by him if he does not bear
the risk of the mistake and
(a) the effect of the mistake is such that
enforcement of the K would be
unconscionable, or
(b) the other party had reason to know of the
mistake or his fault cased the mistake.
Boise Jr College v Mattefs Construction Co.: D
was awarded the construction K based on a bid that it
submitted, but it refused to sign the k b/c the bid
erroneously omitted a significant item (glass price). D was
able to rescind. RULE: A party is entitled to the equitable
relief of rescission if it submitted a bid that contains a
material clerical mistake. RULE: one who errs in preparing
a bid for a public works K is entitled to the equitable relief
of rescission if he can establish:
1) the mistake is material
2) enforcement of a K pursuant to
the terms of the erroneous bid
would be unconscionable
3) The mistake did not result from
violation of a positive legal duty
or from culpable negligence
4) The party to whom the bid is
submitted will not be prejudiced
except by the loss of his bargain
5) Prompt notice of the error is
given
 (pg 482 of E E) Unilateral Mistake:
1. the error concerns a fact
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2. the fact is a basic assumption on
which the mistaken party made the K
3. The mistake has a material effect on
the exchange, adverse to the
mistaken party
4. The mistaken party must not bear the
risk of the mistake: {courts are
willing to tolerate some degree of
miscalculation errors, provided that
the other elements are satisfied. As
long as its not like gross negligence,
courts understand the bidding
process is a scramble, so they won’t
automatically place risk of error on
mistaken party b/c then unilateral
mistakes would rarely permit
avoidance) (negligence usually
means carelessness or lack of good
faith in calculation. In contractor
bids, these kinds of mistakes can
happen even if your cautious.)
5. The equities must favor relief for the
mistake
The party who has made a unilateral mistake must make a stronger case for relief by
demonstrating that the unfairness of enforcing the contract outweighs the need to protect the
reasonable reliance of the other party
E. Misrepresentation
E&E notes:
 Where the opinion of one of the parties is a decisive factor in inducing the other
to enter the transaction, the misrepresentation of that opinion goes to the heart
of the K.
 Particularly true where the party expressing the opinion has expertise and the
other party relies on his recommendation.

Restatement 159: “An assertion (conduct or words) that is not in accord with the facts.”
The effect of such an assertion by one party inducing another to enter into a K may proved the
latter with a tort claim for damages or alternatively, the aggrieved party may sue to rescind the K
b/c of others deceptive language or conduct. (Generally of fact not opinion EXCEPT WHEN 1)
there is a fiduciary relationship (one of trust) btwn the parties. 2) some artifice or trick employed
by the representor. 3) parties don’t generally deal at “arm’s length” (aren’t generally in business,
so are like family). 4) Where the representee does not have equal opportunity to become apprised
of the truth.)
Restatement 164
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When a misrep. makes K voidable:
1) If a party's manifestation of assent is induced by either a
fraudulent or a material misrepresentation by the other party upon
which the recipient is justified in relying, the contract is voidable by
the recipient.
A. Innocent Misrepresentation
 RULE: An innocent misrepresentation or omission of a material fact may
make a K voidable by the innocent party if the misrepresentation was
material.
a) It’s material if a) the information asserted would induce a
reasonable person to agree, and b). the maker of the
misrepresentation knew the info asserted would cause a particular
person to agree.
 The innocent party justifiably relied on the misrepresentation
 The reliance caused harm to one of the parties to the K
F. Fraud
 RULE: If a party induces another to enter in a K by using fraudulent
misrepresentation, the k is voidable by the innocent party if
a) she justifiably relied on the fraudulent misrepresentation
b) such reliance caused harm
a) General Rule of Non-Disclosure
(i) Non-disclosure is only fraudulent if the circumstances impose a duty on the
party to disclose information. A party who proposes a contract does NOT have an
obligation to affirmatively disclose facts concerning the subject matter of the
contract UNLESS
1. Disclosure is required where a material fact is known to one party by virtue of
special position and could not readily be determined by the other party in the
exercise of normal diligence (if fact in public domain, no duty)
2. Disclosure is required if a party VOLUNTARILY undertakes a duty to disclose,
then must disclose whole truth (Arthur Murray School of Dance)
Vokes v. Arthur Murray Inc.: Widow Vokes was induced by false statements to sign up for
more than 2300 hours of dance lessons at a cost of over $31,000. RULE: Generally, a
misrepresentation, to be actionable, must be one of fact and not one of opinion. But this does not
apply where:
a) there is a fiduciary relationship between the parties
b) or where there has been some artifice or trick employed
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c) or where the parties do no in general deal at arm’s length
d) or where the representee does not have equal opportunity to become apprised of the truth
or falsity of the fact represented
In such cases, stated opinion may be considered a statement of fact.
Doctrine of Opinion: We can have opinions, we can communication them. But the problem is
when you know your opinion is not true, then its misrepresentation (stating contrary to your
true opinion). There must be some knowingness of statement’s falsity by the person making
the statements.
So b/c studio had superior knowledge she couldn’t have known, so K may be voidable.
 Duty to Disclose:
A. The modern view (Restatement 161) is that a vendor has an
affirmative duty to disclose material facts where:
(a) Disclosure is necessary to prevent some previous assertion from being
a misrepresentation or from being fraudulent or material.
(b) Disclosure of the fact would correct a mistake of the other party as to a
basic assumption on which that party is making the contract and if nondisclosure of the fact amounts to a failure to act in good faith and in
accordance with reasonable standards of fair dealing.
(c) Disclosure of the fact would correct a mistake of the other party as to
the contents or effect of a writing, evidencing or embodying an agreement
in whole or in part.
(d) where the other person is entitled to know the fact because of a
relationship of trust and confidence between them.
Laidlaw v. Organ: Seller asks buyer before the sale is final if there is any
news that would change the price of the goods. The buyer knew but
remains silent. (no clear rule here…asking a question might impose duty
to disclose, might not. The fact that seller had the means of finding out for
himself and didn’t also might show that buyer didn’t have to disclose. On
the other hand, I think this falls under 161 (b) b/c the knowledge is about a
basic assumption and when he was asked his silence is basically like a
false answer. Also his silence “imposed” on the seller to sell at a much
lower price than actually worth...not talking about small profit here, it was
50% higher than what he sold it for. Not good faith)
Hill v. Jones: The sellers of the house knew that there was previous
termite infestation and did not disclose this to the buyers, knowing that it
was a material fact to them (b/c inquiry was made). Restatement 161. also,
Restatement 164 “Where a misrepresentation is fraudulent or where a
negligent misrep is one of material fact, the policy of finality rightly gives
way to the policy of promoting honest dealings btwn the parties.” RULE:
A homeowner has a duty to disclose material facts that affect the
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property’s value or desireability and that are known or accessible only to
him, provided the seller knows that the buyer does not know the facts or
that they are not within the reach of the buyer’s diligent attention and
observation.
A matter is material if it one to which a reasonable person would
attach importance in determining his choice of action in the transaction.
(me: basically, it has to be a material term: something that the action depends on/necessary. Then
if its special knowledge, other party can’t find out for themselves, fiduciary, etc…have to say it.
Good faith, have to say it. In business deals, I don’t think the other party should have to incur the
extra cost of finding out for themselves, other party should just tell them so other party should
follow honest dealings and say the truth)
REMEDY FOR FRAUD
i) Injury could simply lie in the fact that the victim finds himself in a contract that is completely
different from what he wanted and or expected
1) REMEDY OFTEN BASED upon economic loss  avoidance = rescission goes to claim for
restitution
2) Rescission action is RESTITUTIONARY – there is a “dissolution” or “undoing” of the
contract and a restoration of the parties to their pre-contract position
a) When a party elects to RESCIND
(i) The plaintiff must restore any benefit received under the contract (property or
value of use of property) (restore parties to pre-K position)
(ii) Defendant must restore any money, plus interest
G. Duress and Undue Influence
 Undue Influence:
o Using your special position of trust to unduly influence someone to
enter into a K for your own economic advantage. Unfair
persuasion/high pressure/approached the boundaries of coercion
o Usually limited to situations where there is relationship of trust and
confidence
 Duress:
o Claimed that one’s “free will” was overcome by the threat & therefore
the bargain is not enforceable.
o Need to see when the defense that the choice was impaired by threat is
likely to succeed.
o Using physical/improper threats to force someone to K
o Restatement 176: Economic of Business Duress: Where the P is forced
into a transaction as a result of unlawful threats or wrongful,
oppressive, or unconscionable conduct on the part of the D which
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leaves the P no reasonable alternative but to acquiesce, the P may void
the transaction & recover.
MBE Example:
P filed a $20,000 fire loss claim with WFI Co. Dick, William’s adjuster, called P on
the phone and invited him to come to his hotel room to settle the claim. Upon P’s entry
to the room, Dick locked the door and place the key in his pocket. He then accused P of
having set the building on fire and of having been involved in several previous suspicious
fire claims. Dick concluded by telling P that unless he signed a relase in exchange for
$500 he would personally see to it that P was criminally prosecuted by the company for
arson. Visibly shaken by all this, P signed the release. P has now repudiated the release
he signed. The release is NOT BINDING BECAUSE:
A) Fraud
B) Lack of consideration
C) Undue Influence
D) Duress
A) don’t have enough facts to say it’s A
B) Even if the company doesn’t have a legal claim like the bastardy case, he still got
$500 in return for signing
C) Need some kind of special relationship where one has more power than the other.
Relationship of trust where one party is susceptible to pressure
D) THIS IS RIGHT. He’s forced into doing something and has no way out.
2 theories of duress:
1) “overriding will AND constraining free choice: of the other party
2) physical coercion/ physical compulsion.
Restatement § 174
-must be a threat (“you don’t sign, we will prosecute you”)
-“threats to do what the threatening person had a legal right to do does not
constitute duress” !!
BUT NOTE:
**If Paul was completely guilty, can you threaten to prosecute in exchange for
signing? (ie. Is it still duress if he’s guilty?) NO! You can not threaten to prosecute!,
even if you know he’s guilty! That’s duress.
Restatement § 176
REMEDY FOR DURESS
a) Duress by physical compulsion = no manifestation of assent, contract is PREVENTED from
being formed
b) Duress by threat = contract is VOIDABLE
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Economic Duress = A party’s threat to do something the threatening party already has a legal
right to do DOES NOT constitute economic duress. Also, future expectancy is NOT a legal
right on which a plaintiff can anchor an economic claim.
Economic Duress is a valid defense where:
1. One party commits or threatens to commit a wrongful act, including a breach of
contract, that would place the other in a position that would seriously threaten his property or
finances unless the other party enters into a contract; and
2. No adequate means are available to avoid or prevent the threatened loss, other than
entering into the contract
“Unlawful Threats” = may not be illegal per se, but are made in bad faith, coercion, compulsion,
etc
Machinery Hauling Inc. V. Steel of West Virginia: Steel was selling to Shelby
(third party buyer) - and Machinery Hauling was contracted to transport the goods (steel). After
Shelby rejected the goods, Steel instructed Machinery Hauling to return the last three loads - and
asked for the return of $31,000 that (it appears) Steel pre-paid Machinery Hauling for its transport
services or else D would never do business with P again which would mean a $1,000,000 loss
per year for P. RULE: Future expectancy is not a legal right on which a P can anchor an
economic duress claim. The complaint was dismissed: “while we recognize the concept
of business or economic duress, we do not find it exists in this case. THERE WAS NO
CONTINUING CONTRACT BTWN THE P AND THE D. Thus, the demand by the D
that the P pay $31,000 for the defective steel was not coupled with a threat to
terminate an existing contract. Furthermore, the P did not accede to the D’s demand
and pay over the money. (he didn’t acquiesce. Would have needed to perform the act
based on compulsion) Ct says there’s extortion here b/c that would involve D
doing/threatening something illegal. (“do it or ill kill you/break your legs”) (I think the
point is that D had a right not to want to do business with P; that wasn’t wrongful)
A) would it be duress if the P owed D $31,000 and the D said “If you
don’t pay me I’ll never do business with you?” NO THAT’S NOT DURESS
B) But what if P owed $31,000 but the statute of limitation had run (and P
never said I promise to pay you, which could create valid moral obligation). So P didn’t
owe anymore/D was not legally entitled to it, but demanded it or else D would put P out
of business? Seems like business duress b/c P has to chose btwn paying or go out of
business.
*The idea is: that the will of the P is overridden by some act or threat*
*usually, duress is pleaded as a defense or as a basis for avoiding a transaction & securing
restitution relief.
*where duress usually comes into play is when P wants to rescind the K b/c he claims he entered
the K under duress.
H. Unconscionability
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-only applies if it was unconscionable at the time the K
was made.
- UCC 2-302 and Restatement (2nd) Section 208.
a) Restatement 208: Unconscionable Term or Contract
(i) If a contract or term thereof is unconscionable at the time the contract is made a court may
refuse to enforce the contract, or may enforce the remainder of the contract without the
unconscionable
term, or may so limit the application of any unconscionable term as to avoid unconscionable
result
b) UCC 2-302
If the court as a matter of law finds the contract or any clause of the contract to have been
unconscionable at the time it was made the court may refuse to enforce the contract, or it may
enforce the remainder of the contract without the uncon clause, or it may so limit the application
of the uncon clause so as to avoid any uncon result
When it is claimed or appears to the court that the contract or any clause thereof may be uncon,
parties shall be afforded reasonable opportunity to present evidence as to its commercial
setting, purpose and effect to aid the court in making its determination
- It is the principle or prevention of oppression and unfair surprise
- Generally: absence of meaningful choice on the part of one of the parties
-
together with K terms which are unreasonably favorable to the other
party.
BASIC TEST: whether clauses involved are so one-sided as to be
unconscionable under the circumstances existing at the time of the making
of the K.
Like Promissory Estoppel: operates to achieve fairness
Unlike Promissory Estoppel: fairness is achieved by restricting rather than
expanding the scope of K’l liability.
Indicators of Unconscionability:
1) Lack of knowledge: lack of understanding the K terms b/c of
inconspicuous print or the use of complex legalistic language. Disparity in
sophistication/education of parties. Lack of opportunity to study the K and inquire
about k terms.
2) Lack of voluntariness: disparity in parties’ BARGAINING POWER.
Williams v. Walker Thomas Furniture Co.: woman is kinda poor and uneducated. Buys
furniture from these ppl, signs 14 K but doesn’t read it or ask anyone to explain it to her. There’s
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a clause in there that basically outlines how the furniture is not being sold to her, but leased, and
the furniture store can reclaim it if she doesn’t pay.(as long as she had any outstanding payments
due, the company could take EVERYTHING back  CROSS COLLATERALIZATION
CLAUSE. Both lower courts held for the furniture company, and said that anyone signing a K
has a duty to read/understand what their signing. RULE: a person has a duty to read a K or to
have it explained to him and any unilateral mistake resulting from a failure to read the K does not
render the K unenforceable. However, at the US court of appeals, they remand and say it was
unconscionable. RULE: where the element of unconscionability is present at the time a K is
made, the K should not be enforced. Here, court takes into consideration the manner in which the
K was entered. (i.e. consider lack of education, did other person have reasonable opportunity to
understand the terms f the K, or were the important terms hidden in a maze of fine print and
minimized by deceptive sales practices?) *I think this extends to duty to disclose. When dealing
with party with little bargaining power and hence little real choice, the court should
consider whether the terms of the K are so unfair that enforcement should be withheld.
Lower Court: is it the company’s fault that Williams doesn’t understand this? No she
should have read it. Ct feels bad for her but cant rule in her favor b/c theres no law to support it.
It wasn’t fraud or misrep!
Ct. of Appeals: UCC 2-302 now passed, but wasn’t at the time the K was made. (aren’t
supposed to apply laws retroactively but this court did to save the P) *they’re not saying that
selling her the stereo was unconscionable, but what was arguably unconscionable for which she
is to be discharged was the cross-collateralization clause.
Jones v. Star Credit Corp: Jones (welfare recipients) agreed to buy a home freezer that
was worth maximum $300 but had to buy it on credit so ended up costing $1200. So far, P
had paid about $600 of it. Issue: whether this transaction and the resulting contract could
be considered unconscionable within ucc 2-302? YES. 2-302 prevents oppression an
dunfair surprise. Fraud is not present nor necessary. The salesman knew what he was
doing-he knows the true value of the freezer-there’s a knowledge differential. Doesn’t look
like it matters whether they were uneducated or not. Judge is determining on the basis of
the K on it’s own. Why unconscionable? 1) Diff btwn the amt paid and real retail value is
“exorbitant”. 2) based on ucc! (but 1 is sufficient on its own anyway) -limited financial
resources of P which seller knew; knowingly took advantage of P; inequality of bargaining
power. REMEDY: they got to keep the freezer and not pay anymore b/c they already paid
double what it was worth! (still not a good deal for P)
I. Illegality: Agreements Unenforceable on Grounds of Public Policy
Restatement 178
Homami v. Iranzadi: Homami sued to collect balance due on a promissory note but the
whole contract was determined to be VOID for purposes of illegality b/c the agreement
between them was for the express purpose of violating the law and defrauding the state
and fed government by evading paying taxes. (Homami said that they had oral agreement
to pay interest but admit that the only reason they didn’t write down that interest was
going to be taken was because he didn’t want to have to pay taxes on it!) D claims they
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never came to such an oral agreement. If this K is illegal, D gets to keep the money he
borrowed and not pay it back…is that just? (Prof doesn’t seen how this K was illegal). Court
says that the object of the agreement is illegal. But PROFESSOR says that the object of the K
was to borrow $ and buy land (not like they agreed to lend $ so D could buy drugs!) What’s
illegal is P receiving interest and not reporting to IRS. P says that his intention. There’s
nothing illegal IN the K. (if he does report or not that has nothing to do with the illegality
of this relationship) if there’s any illegality, it’s unilateral as to Homami.
But the other side of this is what the COURT says: “The test is ‘whether the P
requires the aid of the illegal transaction to establish his case. If he P cannot open his case
without showing that he has broken the law, the court will not assist him”
Baby M. Case: Not an illegality question, but the K is against public policy (sperm donor,
woman agreeing to carry the baby then give it up. “sale of a child”. The agreement was
void. Custody was awarded to Mr Stern with visitation rights to the surrogate mother.
Chapter 6: Performance
1. Integrated Writings and the Parol Evidence Rule
(pay attention to the facts of the case to distinguish when courts
think a writing is complete and when not)
A. Parol Evidence Rule & Integrated Writings
a. Definition: The Parol Evidence Rule determines the provability of a prior or
contemporaneous oral agreement when the parties have assented to a written
agreement. It depends upon the intention of the parties.
1. If not integrated, then evidence extrinsic to the writing of other agreed
terms will be admitted under the usual rules of evidence
2. Parol evidence rule applies only to prior or contemporaneous
negotiations. (Parties may alter the integrated writing after its making.
This rule doesn’t extend to that)
b. Where the parties to a contract express their agreement in a writing with intent
that it embody the full & final expression of their bargain, any other expressions,
written or oral, made prior to the writing, are inadmissible to vary the terms of
the writing.
1. Contract usually contains a clause that it is the full agreement
c. Question: Is the writing an “integration” of all agreements?
 The more complete an agreement appears to be on its face, the
more likely it is intended as an integration
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
If the agreement contains a merger clause reciting that
the agreement is complete on its face, this clause
strengthens the presumption that all negations were
merged into the written document.
d. The Rule prohibits admissibility only of extrinsic evidence that seeks to vary,
contradict, or add to an “integration”
1. Other forms of extrinsic evidence may be admitted where they fall
outside the scope of the parol evidence rule
e. Naturally omitted terms doctrine: allows evidence of terms that wound naturally
be omitted from the written agreement. Usually the case if:
1. It does not conflict with the written integration; and
2. It concerns a subject that similarly situated parties would not ordinarily
be expected to include in the written instrument
MBE Problem:
E is attempting to introduce oral evidence in court to explain or modify the
written K he made with W. W has pleaded the parol evidence rule. In which of the
following circumstances will E not be able to introduce the oral evidence?
A) The modification asserted was made several days after the written K had been
executed
B) The K indicates that it was intended at the “entire contract” btwn the parties & the
point is covered in detail
C) There was a mutual mistake of facts by the parties regarding the subject matter of
the K
D) The K contains an ambiguity on the point at issue
Not A: parol evidence rule only goes to prior or contemporaneous agreements,
but doesn’t touch post-K modifications (You can make oral modifications later) In A, E
would be able to tell his story
Not C: Like both thinking it’s a barren cow. Mutual Mistake is an avoidance
doctrine OF COURSE YOU CAN HAVE ORAL EVIDENCE
Not D: Of course he can testify as to ambiguous point (if judge says it’s plain
meaning you cant’ testify! But IF IT’S AMBIGUOUS OF COURSE YOU CAN TESTIFY!
B: THIS IS NOT PLAIN MEANING. (MERGER CLAUSE) CREATES STRONG
PRESUMPTION THAT IT S INTEGRATED and THE POINT E WANTS TO ARGUE IS
COVERED IN DETAIL!
HYPO P. 679 CASE OF THE UNEXPECTED SPOUSE
Guy left his “wife” has the beneficiary on the insurance contract. Had 2 wives.
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o Adeline (first wife)
o Argue the plane meaning rule!
o “the instrument (K) directs “$5000 to ‘the wife’ –has a plain meaning! I
am the wife! You, judge, can not even listen another story! Wife has
common and legal meaning and I fit both”
**we wont get to party’s intentions unless we think “wife” is an ambiguous term!
HOW would we get out of the plain meaning rule?
Let’s pretend we do get past the plain meaning rule and judge decides the term is
ambiguous:
o Then 2nd woman wins! b/c they ALL INTENDED Gertrude when they wrote the K
(all the ppl: the husband, partner, and insurance co.) all had Gertrude in mind
when they wrote the K.
*If this was a will or intestacy, Adeline would win no matter what.
But this is a story of contract, which sometimes allows us to look at party intentions.
Cases:
3. Mitchell v. Lath:
 Facts: Mitchell agreed to buy a farm from Lath who had orally
agreed to tear down an icehouse as part of the consideration for
the purchase price, but later refused to.
 They have a written K and oral agreement on the side
 Rule: Evidence of an oral agreement may be used to vary a
written contract only if all three conditions exist:
 The agreement relates to a collateral (side) agreement
 The oral agreement does not contradict terms of the
written agreement, and
 It is one the parties would not ordinarily be expected to
put into writing.
 Holding: Court decided for Lath. They did not allow the extrinsic
evidence about the oral agreement about the ice house because
it is something that one would ordinarily expect to put into
writing.
 How does the judge know this is integrated? He looks at
the agreement! This looks like a complete agreement
therefore it is complete= precludes any oral agreements
simply by looking at the paper.
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



When there’s a written K and then you have a side oral
understanding, it must be put in writing to be enforced
The judge concludes that HERE this is a complete
agreement and there are no ‘holes’ so the oral
agreement will NOT be taken into account.
When can an oral agreement be asserted? Where the writing is
not complete
Can an oral agreement and an integrated/complete co-exist?
 When the oral agreement is independent of the written
agreement
 Ex) written K to sell watch, oral K to sell pen  both of
these contracts are enforceable. They are re. diff. subject
matters
 Is the promise to destroy the ice house an independent
agreement from the purchase of the property transaction?
o Could argue both ways: pay attn to how this works
i. Paid $ in consideration for the property
PLUS the removal of the ice house and
that’s what the bargain was. [this says
the transactions are linked] [benefits
the D b/c then the oral cant be
enforced]
ii. The agreement was for the sale of the
property and the ice house is not on
the property, so it’s separate
transaction. [this benefits the P b/c
then oral agreement could be
enforced.] [for P to dismiss the parol
evidence rule they need to say that this
was a separate agreement]
o This would have been different if they had paid
separate consideration for the removal of the
ice house! Then that would have shown
independent oral agreement that would have
been enforced!!!
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4. Masterson v. Sine
 Masterson conveyed his property to Sine (relative). Part of the
agreement was that Masterson had the option to repurchase the
property from Sine within 10 years.
 Masterson then went bankrupt. The trustee brought this
declaratory relief action to establish rights to exercise the option.
Sine tried to bring in evidence that the option for personal to
Masterson – want to keep property in the family
 The Appellate Court held that such extrinsic evidence should be
allowed because it may naturally be made as a separate
agreement. The law usually presumes that an option agreement is
assignable if it contains no provisions forbidding its transfer. But, a
writing does not necessarily preclude parol evidence rebutting
this presumption of law.
 Dissent: Opening the doors to new techniques of defrauding






D sought to introduce evidence that the option couldn’t
be assigned to the trustee
The grant deed is not the contract, but it contains the
option clause – must be there. Cant be oral! Existence of
option is clear.
So what’s wrong? Disputed term that’s not in the writing
is who the option is assignable to
D is saying that it’s not assignable and that only the
brother can buy it back; the option can’t be exercised by
the creditors ---BUT this is not in the writing
Courts ruling: this parol evidence rule doesn’t function
here (EXTRINSIC EVIDENCE ALLOWED)
PAY ATTENTION TO FACTS: WHAT MAKES THIS DIFF
THAN LATH CASE? (IN LATH NO EXTRINSIC EVIDENCE
ALLOWED) WELL, COULD SAY THIS IS ABOUT “OPTION
CLAUSES” AND MAYBE THERES JUST SOMETHING DIFF
ABOUT THOSE IN EYES OF COURT. SAID THE ICE HOUSE
WAS SOMETHING YOU’D EXPECT TO BE IN THE WRITING,
MAYBE FOR SOME REASON THOUGHT THIS WASN’T
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
So, D is allowed to show the evidence; lower ct doesn’t
have to accept their evidence but must at least listen
and consider it.
f. Restatement Rules and parol evidence
1. §240(1)(b) permits proof of a collateral agreement if it is such an
agreement as might naturally be made as a separate agreement by
parties situated as were the parties to this written contract.
2. §209(1): An integrated agreement is a writing constituting a final
expression of one or more terms of an agreement
3. §210(3): Whether an agreement is completely or partially integrated is to
be determined by the court as a question of preliminary to determination
of a question of interpretation or to application of the parol evidence
rule.
 (can have a writing where one aspect is integrated and one is not;
can bring extrinsic evidence about the part that is not)
4. §212(2): A question of interpretation of an integrated agreement is to be
determined by the trier of fact if it depends on the credibility of extrinsic
evidence or on a choice among reasonable inferences to be drawn from
extrinsic evidence. Otherwise a question of interpretation of an
integrated agreement is to be determined as a question of law.
5. §213: Effect of integrated agreement on prior agreements
 A binding integrated agreement discharges prior agreements
to the extent that it is inconsistent with them
 A binding completely integrated agreement discharges prior
agreements to the extent that they are within its scope
6. §216: Consistent additional terms
 Evidence of a consistent additional term is admissible to
supplement an integrated agreement unless the court finds
that the agreement was completely integrated.
 An agreement is not completely integrated if the writing
omits a consistent additional agreed term which is
 Agreed to for separate consideration; or
 Such a term as in the circumstances might naturally
be omitted from the writing.
2. Interpretation
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Pacific Gas v. Thomas Dryage
 Thomas (D) performed work for Pacific (P) pursuant to a
contract that called for D to indemnify P for injury to
property. While work was being performed by Thomas, the
property of P was damaged.
 The trial court looked at the plain meaning of the indemnity
clause and decided that it covered damage to all property
regardless of ownership; didn’t allow extrinsic evidence
 The higher court reversed, stating the trial court erroneously
refused to consider extrinsic evidence offered by D to show
that the indemnity clause was not intended to cover injuries
to plaintiff’s property, only that of 3rd parties. [D ALLOWED
TO BRING IT EXTRINSIC EVIDENCE TO EXPLAIN MEANING OF
THE TERM]
 RULE: (PAROL evidence rule allows outside facts to explain
meanings of words in a contract) The test of admissibility of
extrinsic evidence to explain the meaning of a writing [this
is diff than introducing new term about an ice house or
assignability re. option K; here its interpretation prob] is NOT
whether it appears to be clear and unambiguous on its face,
but whether the offered evidence is relevant to prove a
meaning to which the LANGUAGE of the instrument is
reasonably susceptible. The exclusion of relevant extrinsic
evidence to explain the meaning of a written instrument
could be justified only if it were feasible to determine the
meaning the parties gave to the words from the instrument
alone.
 both agree that the writing is their whole agreement but
disagree as to its MEANING
 D’s argument: everyone knows that indemnity clauses only
extend to damage done to 3rd parties property, not to the
P/owner itself!
 P is saying “all” means all and owner is included (plain
meaning)
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 D saying you can still try suing us in tort and try to prove we
were negligent (Then theyd have to pay) but just based on
the indemnity clause we aren’t required to pay
 The appellate court says the trial court erred: trial ct stuck
to plain meaning rule. Retrial, this time let D tell his story)
 D is going against the plain meaning rule but has a better
argument b/c D is arguing for what ppl usually expect
indemnity clause to mean.
Confold Pacific v. Polaris
 Confold sued Polaris for disclosing a container design
proposed by Confold to a third party.
 If the K was ambiguous like Peerless extrinsic evidence is
admissible to help solve ambiguity.
 The court found that such disclosure was outside the scope
of the non-disclosure agreement between the two parties
which was specifically for a logistics analysis.
 The district judge thought it was ambiguous and allowed for
extrinsic evidence
 Appellate judge says that this could have been a plain
meaning rule case (Restatement 212)
 Both came to same result: D wins (Non-disclosure
agreement didn’t extend to the designs)
 UCC 2-202 provides that “terms in an integrated writing
may be explained or supplemented by course of dealings or
usage of trade (2-205) or by course of performance (2-208)
 Rule: the meaning of an unambiguous contract term is a
question of law with the consequences being that
unambiguous contract language must be enforced as
written
Frigaliment Importing Co. v. B.N.S. International Sales Corp.
 Frigaliment (P) bought chickens from BNS (D), which shipped
stewing chickens instead of the boilers P has intended to buy
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 Court accepted that the term was ambiguous so allowed for
extrinsic evidence to clarify the meaning on the term chicken
 The court held that the seller (BNS) should win because its
understanding coincided with an “objective” meaning of
“chicken” and the buyer failed to show that the word was
“used in the narrower rather than broader sense”
 Additionally, the buyer failed to prove that the seller “knew
or had reason to know that P intended to buy broilers only”
 Thus, extrinsic evidence both demonstrated that the word
“chicken” was ambiguous and that the seller’s understanding
of “chicken” was apparently reasonable and buyer’s was not
 Rule: The party advocating a special meaning for a contract
term has the burden of proving that the special meaning was
the one intended by both parties.
 Not a mutual mistake case (Peerless was mutual mistake)
 Both P and D are arguing specialized meanings
 P has narrow interpretation
 D has broad interpretation
 Both parties generally believed their interpretation
 What does the judge do? –allows for extrinsic
evidence b/c “chicken” is ambiguous
 (in some ways, the price gives evidence as to what
“chicken” meant b/c price is objective.
 P speaks German: doesn’t understand what D meant
by “chicken”
 ***Outcome different depending on if its mutual
misunderstanding case (no K ever formed at all, so P would
win this case could be read as Peerless case) or
interpretation problem (D wins) (in this situation,
interpretation, so D won.)
Scope and Content of the Duty of Good Faith
Market Street Assoc. v. Frey: Market Street Associates v. Frey
52
1. Facts: In a contract between Market Street (lessee) and a pension
trust administered by Frey (property owner), the lease provided
that if negotiations for financing improvements failed Market Street
would be entitled to purchase the property from Frey for the price
Frey’s trust originally paid for the property plus six percent per year
2. When financing negotiations did fail, Market Street informed Frey
that they would be exercising the option to purchase the property
3. The trial judge entered summary judgment for Frey, finding that
Market Street’s request for financing was just a pretext, and the
Market Street just wanted to buy the property for a bargain price
and hoped that Frey would overlook the purchase option clause.
 Good faith requires that one party not take intentional
advantage of the mistake of the other
 The deliberate exploitation of an oversight or error by a
party in the performance of a K is breach of the duty of
good fait in the performance of the K.
4. The appellate court reversed and remanded the trial court’s
decision because the record is insufficient to determine if Market
street wanted to exploit Frey’s oversight or that they, in good faith,
assumed that Frey would be familiar with the lease’s terms.
EXERCISE OF RESERVED DISCRETION
Main question: “Is the exercise of reserved discretion such that it makes their
promise illusory so no contract, or is there still a contract?”
(always remember that duty of good faith is imposed.)
a. As the Omni Group decision (satisfaction clause not illusory) indicates, where the
agreement reserves discretion in performance to one party, the first question
may be whether there is a contract at all. (illusory = no K)
1. The combination of a commitment to do something and the duty of good
faith in performance is normally enough for consideration
b. When a promisor conditions a duty to perform upon being satisfied with the
other party’s performance or with respect to something else, the expression of
dissatisfaction must be in good faith.
A common example of bad faith is where the promisor is dissatisfied with the overall
bargain rather than the performance
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c. Billman v. Hensel:
1. Billman agreed to purchase a house from Hensel subject (condition) to
Billman’s ability to obtain financing. Billman made a very minimal effort
to obtain financing, and so did not purchase the house.
2. It was determined that because the buyers did not make a reasonable,
good faith effort to secure the necessary financing. Also,
3. never told the seller how much more he needed to even get the loan, so
4. They therefore could not rely upon the condition to relieve themselves
from the duty to perform.
5. Rule: A provision in the contract that makes a party’s performance
subject to a condition creates an implied obligation on that party to make
a reasonable and good faith effort to satisfy that condition.
 “such subject to financing clauses impose upon the buyers an
implied obligation to make a reasonable and good faith effort to
satisfy the condition”
6. Sellers get the $1,000 earnest money (win) (Billman not able to get out of
the K)
7. the buyer has misrepresented his financial situation to the seller. He
acted like he had the necessary money in order to get the loan when he
didn’t.
8. *subject to financing clauses are not illusory (generally)! BUT there is a
duty of good faith for the buyer to try to get it.
 If he tries to get financing but doesn’t succeed (like bank wont
give it) then buyers are free to get out of it.
Neumiller Farms Inc. v Corenett: (potato chips)
 Neumiller sold chipping potatoes to Cornett at a pre-determined
price. Reservation of discretion/condition precendent was that
they “chip to buyer satisfaction.” During the course of
performance, the price of potatoes declined by $2.25, which is
when Cornett began to complain about the chipping quality of
Neumiller’s potatoes. Neumiller used several “tactics” (other
farmer’s potatoes, expert testing) to establish objective way of
proving the satisfactory clause was met and prove that Cornett
was refusing to accept his potatoes in bad faith because of the
price drop.
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9. Under the Restatement §228, expression of dissatisfaction must be in
good faith. Check to see if it is practicable to determine whether a
reasonable person in the position of the obligor would be satisfied
 Objective standard
10. It is well established that where the condition requires satisfaction as to
commercial value or quality, operative fitness, or mechanical utility, an
objective standard is to be used.
11. again, like in Billman, b/c of bad faith they couldn’t win.
12. Damages awarded to P b/c he tried to resell and couldn’t.
13. UCC 2-703 Seller’s remedies
 “wrongful rejection” depends on whether condition precedent
was satisfied.
 They’re both merchants
14. UCC 2-103 good faith requirement
EXPRESS CONDITIONS AND EXCUSE OF EXPRESS
CONDITIONS:
(example of uncle promises to pay nephew $ if he gets a B or better.)
a. An express condition is an event that is not certain to occur and which
must occur (unless its non-occurrence is excused) before performance
under a contract becomes due.
1. Moreover, the event was made a condition by agreement of parties
2. If the condition is not satisfied, the contract is discharged
3. An obligor may make an event a condition of his duty in order to
shift to the oblige the risk of its nonoccurrence
4. The event may be in the control of obligor, obligee, or neither
b. Excuses/Counter-arguments to express conditions include: (nephew’s side)
1. The event was not a condition at all, but rather a matter of
convenience that did not affect the rights and duties of the parties
2. The event was promised by Nephew as a part of the exchange. The
other’s duty is constructively conditioned which may be satisfied by
substantial rather than literal compliance.
3. The condition was excused – waived
c. Some possible grounds for excuses include:
1. An agreement by both parties modifying the contract to discharge
the condition
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2. Conduct by the party for whose benefit the condition was made
“waives” the condition.
 Waiver = voluntary relinquishment of a known right
3. Changed circumstances that make compliance by the promisee with
the condition impracticable
4. Discharge by the court
d. Since a condition is a term of the contract, it can be deleted or modified by
a subsequent agreement between the parties.
1. If however, the condition is a material part of the agreed exchange
the agreement must satisfy the usual requirements for an
enforceable modification, like in some cases, new consideration.
2. The doctrine of waivers applied to incidental conditions of the K
e. Cases:
Dove v. Rose Acre Farms: (Guy who worked for a 9 and a half weeks out of
10 and got sick on last couple days….here, court held he couldn’t recover.) ( if you
compare this to the case later on where guy worked for 9 months then left but got
paid for those months (substantial performance) it might come out diff) here it was
strict interpretation of the conditions of the contract)
 Dove voluntarily participated in a bonus program offered by
his employer, Rose Acre, which required perfect attendance
for a period of time. Dove was not given the bonus because
he missed the last two days of the 10-week bonus period.
 Rule: A part’s failure to comply with an express condition in a
contract will excuse the other party from performing
 Held that because Dove did not perform all of the express
conditions of the contract he is not entitled to recover the
bonus.
 There were no reasons that could excuse him from
such conditions (i.e. substantial performance,
impossibility, fraud/bad faith, public policy reasons)
Clark v. West: (main idea of this case was the idea of what was the substance of
the K and if u fulfilled the substance then you deserved to be paid) (also if D
waived then clark gets the $)
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 Clark was hired by West to write a series of law books. Part
of the agreement was that Clark must refrain from drinking
in order to receive additional fees for his work. However, he
claims that West waived this condition by conduct (accepting
some of the books & promising full pay with knowledge that
Clark was in fact not refraining from liquor)
 Supp book RULE: Additional consideration is not necessary
for the waiver of a condition that is not part of the subject
matter of the contract.
 Clark should tell a waiver story (or “substantial performance
story”)
 What were the obligations/conditions:
 Publisher’s promise:
1. pay you $2/pg
2. pay you extra $4/pg
 Clark’s promise: write the books.
1. did he say he’ll write the books for sure or did
he say he’ll try to?
2. Way to test this is to see if there would be a
breach if the guy didn’t perform. Here,
probably would be.
*bilateral contract, promises on both sides.
*NOTE: *if you waive something, you can go back and
reinstate it; BUT if you do a modification, can’t just go
back on it.
o Clark argued that the substance of the
contract was the write the books at $6/pg.
and only if he completed less than 3 books
would get only get $2.
o Argued that West waived by
accepting the manuscript so obv
he though the book was good;
says that west could have
rejected the book but didn’t (if he
thought non-drinking was so important)
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o (if West had rejected the books,
Clark could prob still sue on other
grounds…like “oh we had a
contract I performed you’re in
breach)
o West’s argument is that no the
substance of the K was for you to not to drink;
its not all about the books.
o *** so, if the substance of the K was to
produce books of acceptable quality, the P
wins b/c that’s what he delivered and west
accepted.
o ***if substance of the K was not to
drink, West wins.
*In Dove, he was warned about the
consequences of not working. Here, Clark wasn’t
warned about the effect of him drinking on the
acceptance by West. Dove cant say oh they
didn’t say anything so they waived me not
working, but Clark can.
What is the difference between an
express condition and a waiver
versus a proposed modification?
 Cant have mod
without consid.
 Waiver doesn’t
require consideration!
 It matters if we tell this as a waiver
story or a modification story.
 Matters if you say it was a 1 time
unitary waiver (that’s easier to refute b/c
can say no the contract was for a long
time 1 waiver didn’t extend to all 3 books,
would need consid for that. – that would
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be west’s argument) OR if you say it was 3
separate waivers each time clark
delivered a book
 Modification seems a little more
permanent and long term
 Warning seems more like a one-time
waiver then a reinstating of the condition.

It was determined that because the express condition was not part of the subject
matter/substance of the publishing contract, it could be waived, and that it may have been
waived by West’s actions. (reversed and remanded for resolution) if really waived, Clark
wins
CONSTRUCTIVE CONDITIONS OF EXCHANGE
Jacob and Youngs v. Kent** : focus on this case (Reading pipe case. SP yes)
P built house for D, contract said that all pipes had to be Reading pipes. Some
pipes were not. P would have to demolish the whole house to fix this but
didn’t, asked to be paid the rest of the balance D refused to pay and P sued. P
DID BREACH by not using the right kind of pipe, but the judge says that the
damage is nominal; no harm done to the P). Jmt for P based on SUBSTANTIAL
PERFORMANCE: P’s omission was neither fraud nor willful; the pipes
installed were basically the exact same thing; it would be economic waste to
allow D to destroy house and rebuild (B/c cost of rectification is so
disproportionate to the actual harm suffered); trivial and innocent mistake.
Cordoza says that in at least SOME situations, you don’t need full (strict)
performance; sometimes substantial performance is enough. Cordoza said P
had due diligence. D basically got the exact same thing so has to pay for it.
Good faith and fair dealing is an important circumstance in determining if
there was substantial performance. (under substantial perf, its possible to get
contract price while under quantum meruit you cant)
(under substantial performance, the non-breacher usually can get the amount
needed to put him in position he would’ve been in if there had been full
compliance (give him money equal to finish the job)
-sometimes take into account difference in value of what was promised
and what they got so one doesn’t get more than deserved.
-The owner is entitled to the money which will permit him to
complete, UNLESS the cost of completion is grossly and unfairly
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out of proportion to the good to be attained. What that is the case,
the measure is the difference in VALUE.
O.W. Grun Roofing v. Cope **: focus on this case (streaky yellow roof case.
SP NO)
P supposed to build new roof for D’s house. Supposed to be one color, had
streaky yellow lines. D would not and did not pay. The only way for D to get
what he wanted was to take off the whole roof and start over. Court gives D
the difference btwn the contract price and the price for the roof she wanted.
(otherwise would have gotten the cost of the whole good new roof.) [ bad
roof/K price: $648. good roof would have been $777.60. she didn’t pay the K
price, so she only got the diff btwn the two so she could get a whole new good
one) the whole point of the K wasn’t to just have a roof, but a roof of uniform
color. That’s not what D got. P tried to win based on quantum meruit but 1)
evidence didn’t establish that D received any benefit from D’s defective
performance and 2) evidence doesn’t establish that D accepted the claimed
benefit. D is gonna have to tear it all down and build over again! [side note: if
the homeowner was suing the company u could say, “listen you got the roof at
such a discounted price what do u expect u get what u pay for u shoulda done
ur due diligence and checked out competing prices”] DAMAGES: “how much $
does it take to put you where you would have been if P had performed?” here,
its 122. *so, substantial performance didn’t work here. WHY? Maybe this was
seen as willful/fraud by roofing company. Also, this court might think that
roof might not only be about keeping out the rain; could be an aesthetics
thing- ct might think the substance of the K was not fulfilled. Company lost.
Reconciling Jacobs & O.W. Grun:
NOTE: in Roof case, they got the cost of replacement
In Reading pipe, it was calculated by difference in value btwn
what they got and what they wanted, which turned out to be 0.
 The essence/subject matter of the contract
 Cope never accepted the roof, while Kent accepted house
 Partial payment vs. no payment
 The reason for the item; roof not only for weather reasons
 Roof is part of aesthetics of the house; pipes are not
(Noone can see your pipes, ppl can see your roof)
 Roof may go to the value of the house while pipes would not
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SEVERABILITY AND GUILTY PARTY RESTITUTION



what the guilty party seeks is restitution, not damages.
Doesn’t necessarily depend on morality
If money rather than specific interest is sought, it may as
justice requires be measured by either (Restatement §371):
 The reasonable value to the other party of which the
received in terms of what it would have cost him to
obtain it from another person in the claimant’s position,
or
 The extent to which the other party’s property has been
increased in value to the other interests advanced
Divisible contracts and apportionment
1. As one court put it, a divisible contract is not two (or more) separate
contracts; if it is broken it is broken entirely. The only significance of
its divisibility is that the contract price will be used to determine the
value of any partial performance of the contract.
2. Commonly stated that whether a contract is divisible depends on the
intention of the parties. Intent may be inferred from:
 Ease with which the agreed consideration can be apportioned to
separate performances
 The exchange-ability of those performances
 The lack of evidence that the parties would have refused to deal
for less than the whole
3. Under the Restatement (§240) it states that the question is whether
the “performances to be exchanged under an exchange of promises
can be apportioned into corresponding pairs of part performances so
that parts of each pair are properly regarded as agreed equals.”
a. The rule can only be applied where
calculation is feasible
b. The injured party will not be required to
pay for a part of the performance that
he has received if he cannot make full
use of it without the remainder of the
performance
c. Court must also take into account the
possibility that the remainder of the
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performance can be easily obtained
from some other source



UCC 2-307
Restatement 240, 371, 374
Cant recover more than the K price
Lowy v. United Pacific Insurance Co.: focus on this case. (case where substantial
performance works; K divided into 2 separate parts) Contract for 1) excavation and
grading work and 2) street improvement. D completed 98% of the first phase then
stopped working. P and D both breached b/c D just stopped working and P hired
someone else to finish the job.
Court decided that since the consideration was apportioned, the contract was a
severable or divisible (the K had 2 phases). Just b/c he didn’t perform the 2nd phase of
the K doesnt prevent him from recovering for the 1st phase. He didn’t entirely perform
the 1st phase, but substantial performance: he completed 98% of the job for phase 1,
and was prevented from completing the rest of the job through the fault of P.
DAMAGES: recover the amount of the contract price remaining unpaid, minus the
amount allowed as damages for the failure of strict performance.
 Rule: A party who does not fulfill all of its contractual obligations
is entitled to partial compensation if full performance has been
excused, prevented, or delayed by the other party.
 Lowy prevented Wolpin from completing the job by hiring
another contractor.
 Contract price was divisible & restitution easily computed.
 Severability Doctrine: “the use of the contract price is to
determine entitlements when the contract has not been fully
performed is defensible only when the contract itself can be
said to specify the price of partial performance. The fact that
many courts nevertheless treat employment contracts as
divisible probably has less to do with the logic of the doctrine
than with a policy”
 Although the P can not recover “on the contract” (b/c he didn’t
actually finish the job) he can recover in restitution of the net
benefit retained by the D after full compensation for P’s breach.
 It’s beneficial to say its 2 separate contracts b/c it was all one substantial
performance would not work. (b/c he would’ve barely done even 48% of all
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the work) but when you say its 2 separate things he can say he’s completed
98% of phase 1!
o So let’s say we lose this idea of divisibility and severability, then how
does D win?
 By showing that P breached first ( by not paying) which
entitled D to stop working. ( d wasn’t in breach re. phase 1)
 By dividing the contractual relationship into separate parts, D
can recover where he otherwise could not.
 If they’re separate, a D breach regarding part B doesn’t
endanger part A.
 If all one contract, if P breached D had the right to
suspend performance.
If its one K: then cant use substantial performance, but if P breached first then that
excuses D from further performance. But if P didn’t breach first then D is out of luck
b/c then P had the right to go hire someone else.
If its 2 separate K’s: can use substantial performance. Also, can say yes D breached
part 2 but that didn’t affect part 1 payment deserved.
 Difference between substantial performance and quantum meruit:
SUBSTANTIAL PERFORMANCE:
-can recover costs plus profit
-you get what you did (if K price is $100,000 & u only did 98% you get
that 98%)
-possible to get the K price
QUANTUM MERUIT:
-you get the value of your work (to the other person)
-can be diff than K price but can’t get more than K
-K price acts as a ceiling
MBE PROBLEM:
Magnum contracted with Kent to construct 4 small dwellings according
to specifications provided by Magnum. To save $, Kent deliberately substituted 2 X 4s
for the more expensive 2 X 6s called for in the plans in all places were 2X4s wouldn’t
really be detected. M’s inspection revealed the variance and M is now withholding
the final payment on the contract. The contract was for $100,000 and the final
payment would have been $25,000. Damages were estimated to be $15,000. In a
lawsuit for the balance due, Kent will:
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A) Prevail on the contract, less damages
of $15,000 b/c it has substantially
performed.
B) Prevail b/c the damages in question
were not substantial in relation to the
contract amount
C) Lose b/c the law unqualifiedly
requires literal performance of such
contracts
D) Lose all rights under the contract b/c it
has intentionally breached it.
Answer: D
Not A b/c the diff btwn the two poles is serious! The brand of “Reading pipe” vs
Cohost pipe didn’t make any difference but by using cheaper poles the house will be
flimsy and unsafe! Also, substitution was intentional! Bad! Fraud! Concealment! (in
the pipe case the judge found the contract to be innocent) MAIN POINT: even if
innocent, still not substantial performance b/c a house built on 2X4s is substantially
different than a house built on 2X6’s!
Not B b/c its hard to have substantial performance case where the difference in $/
damages is so big! ($15000) that means that you really didn’t substantially perform
if the diff in value is so much.
HYPO in book p. 849: there, “almost” isn’t good enough. (substantial perf. isn’t gonna
work) the difference btwn 93% and 95% is objectively significant (unlike Reading v
Cohost pipes which the judge said are objectively insignificant/not diff objectively)
Britton v. Turner: focus on this case. (SP works here too) P was supposed to work
for a year, but only worked for 9.5 months then quit for no good reason. P WAS IN
BREACH. D was supposed to pay P all at once $120 at the end of the year. No
evidence of any damages to D from P leaving. P got $95 (the value of his work for
those 9.5 months)
RULE: A party who receives a benefit from the partial performance of a K is
liable for the value of that part performance, less any damages suffered due to noncompletion of the performance of the contract” (calculating $ to be paid for labor
-P not entitled to recover under the contract itself (b/c he didn’t finish the full year
work and breached) but can recover under quantum meruit. (again, breaching
party wants to get paid)
 IN CONTRACT: D has a claim! He can say you promised to work for a year,
you didn’t, im suing you.
o But the problem is: what’s the remedy? Whatever the D suffered as a
result of P not working, but in this case we are told that D isn’t
damaged!! (other ppl can just come in and substitute)
 Can D get court order to force P to work? NO
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 Can P win based on substantial performance?
o No. It’ll be hard to argue SP
o He had 2.5 months left to go before finishing. Even though you cant
put a number on these things, 2.5 months is a long way to go to
completion, compared to other cases we’ve studied.
 What else can we do under substantial performance?
o Like Lowy, we can split the contract into 12-1 contracts
SEVERABILITY
 NOW we would have substantial performance b/c we have
COMPLETE PERFORMANCE for 9 months!
 You can even take it farther and divide into weekly or daily.
 DIVIDING UP THE CONTRACT, if possible, ALLOWS P TO
RECOVER IN RESTITUTION
 Quantum meruit: getting the amount of benefit that D got
 If there were damages to D, you would subtract that from $
paid to P
**in employment context, we really do have this notion of
divisibility.
IMPRACTICABILITY
 One’s duty to perform a contract is normally conditioned not only upon
the absence of a material breach by the other side, but also conditioned
upon performance not becoming impracticable because of changed
circumstances. Impracticability is an equitable defense – fair and just.
 The event must have such a severe impact on the performance that it
cannot be rendered without great loss, risk, or other hardship.
 The idea is that non-compliance is excused (no liability. It’s not “breach”
when you’re excused from performance. Doesn’t matter if you have
liquidated damages or not) (“sorry, we just can’t perform this contract”)
SO NO BREACH. DON’T HAVE TO PAY. IF YOU CONSENT THAT YOU
BREACHED YOU CANT USE THIS!
 The occurrence of an unanticipated or extraordinary event may make
contractual duties impossible or impracticable to perform. Where the
nonoccurrence of the event which occurred was a basic assumption of the
parties in making the contract and neither party has expressly or
impliedly assumed the risk of the event occurring, contractual duties may
be discharged.
 Mere increases in price isn’t enough
 UCC 2-615
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 Restatement (Second) §261: “Where a contract is made, a party’s (1)
performance is made impracticable without his fault by the occurrence of
an event (2) the nonoccurrence of which was a basic assumption on
which the contract was made, his duty to render that performance is
discharged unless the language or the circumstances indicate the
contrary.”
o BOTH ASSUME SOMETHING WILL NOT HAPPEN THAT
HAPPENS ABOUT A BASIC ASSUMPTION ON WHICH THE
CONTRACT WAS MADE THAT THEREFORE MAKES
PERFORMANCE IMPRACTICABLE! (if something happened but
doesn’t really have an effect on it being impracticable then obv
you cant use this!!)
 SOMETHING HAPPENED THAT BOTH PARTIES
EXPECTED NOT TO HAPPEN
 pay attention to how you phrase the situation to make it
fit/not fit into this theory
 if that party bore the risk then he can’t use this!
TAKE NOTE OF SUBTLE DIFFERENCE HERE:
1. Occurrence of a contingency, the nonoccurrence of which was a basic
assumption on which the contract was made.
a. this means: the happening of the unexpected
i. example: building burns down impracticability works b/c
no one expected there to be a fire but there was. When that
happens, may be discharged.
VERSUS
2. The non-happening of what was expected
a. that’s tricky. Have to formulate it to fit the language of
impracticability if you want to use that argument.
i. example: Wegematic. Both expected there would be a
computer but there wasn’t. note how impracticability
did not work there.
MBE Problem:
Landlord owned a building, one spaces, Sally Sleazy rented under 2 year
lease at $1,000/month without telling L that she wanted it to be a weed shop. One
month after the dispensary opened the city council passed a new law prohibiting
marijuana dispensaries in that neighborhood. Sally told Loretta that the new law
66
made her business impossible so she was leaving. If L sues Sally for breach of the
lease contract, the likely outcome is a judgment for:
A) Sally, b/c the law made performance of her contract impossible.
B) Loretta b/c the new law was passed after the lease was executed
C) Loretta ONLY IF SHE DID NOT KNOW THE USE SALLY INTENDED FOR
THE SPACE
D) Sally b/c the lease contract was discharged under impossibility of
performance
ANSWER: C
Not A: b/c she can still pay the rent, she just cant operate a weed store. The contract is to
pay and that’s not impossible.
Not B b/c a prior in time contract may still be avoided when there’s a supervening
illegality. [lets say law is passed prohibition 191 and we had a contract from 1914-1920.
Prob have to pay from 1914-1916 then discharged from payment 1916-1920.
Not D: again, Sally’s performance was needing to PAY; she could still pay rent, she just
couldn’t run the weed shop.
C: What’s important is L’s knowledge at the time the contract was made. If she did not
know, then it couldn’t have been a basic assumption that the prohibition wouldn’t occur, so
contract would have to be enforced. If L knew, Sally would win b/c Sally could say that they
both shared the risk and/or basic assumption thing.
United States v. Wegematic Corp.: (impracticability does not work here. Just b/c it
costs more doesn’t make it impracticable! It was still possible to make the computer,
they were just losing money) Wegematic, a manufacturer of computing systems,
won a bid with the US government to sell a new computer system. Wegematic
however did not actually have their proposed item, and therefore asked for multiple
extensions of the delivery date as well as a waiver of liquidated damages.
Eventually, after much delay, the government set out to buy computers from IBM, a
different manufacturer. In the agreement it said that Wegematic would be
responsible for ANY delays or extra costs P had to incur if D failed.
 Wegematic was not able to claim “impracticability” due to
“basic engineering difficulties” and escape the contract
 Rule: A party will not be excused from contractual
performance due to that party’s inability to meet
performance standards
 Manufacturers should not be free to express what are
only aspirations & chance and have the other party rely
on those hopes and take the risk with them, unless it is
explicitly stated and known.
 What is D’s theory that they shouldn’t be liable to P?
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1. That it’s impracticable due to engineering
difficulties
a. It would be too costly for them
2. Here, this theory doesn’t work to relieve them of
having to perform.
a. First of all, ucc says that when seller
assumes a greater responsibility,
impracticability doesn’t apply.
i. Here, we can say the seller
assumed this greater risk by the
terms of the K
b. P didn’t know that they didn’t have a
computer ready, so cant say it was a basic
assumption on which the contract was made that
something would come in the way of D making it.
 this is like the MBE hypo we did in class with
the landlord and the weed-selling tenant.
Landlord would win by saying impracticability
doesn’t apply only if she didn’t know what the
tenant was using the space for.
3. This story is challenging b/c parties expected
something TO happen! = making a computer that
did not happen (when you phrase it like that,
impracticability doesn’t work)
4. but to make it work, could reframe the story:
a. Basic assumption that both didn’t think
would happen: (need something that both
expected NOT to happen that did)
i. “both didn’t expect costs to rise so
much but they did”
UCC 2-615: but doesn’t apply to Washington DC/federal govt b/c it’s passed by the
states.
“Except so far as a seller may have assumed a greater obligation…delay in
delivery or non-delivery is not a breach of his duty under a contract for sale if
performance as greed has been made impracticable by the occurrence of a
contingency the nonoccurrence of which was a basic assumption on which the
contract was made”
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Taylor v. Caldwell: focus on this case (Music hall burned down so they couldn’t
perform the contract. Impracticability worked here) P sued for breach and sought
reimbursement for costs in preparing for the concerts. “we think, therefore, that the Music
Hall having ceased to exist, without fault of either party, both parties are excuse, the P from
taking the gardens and paying the $ and the D from performing their promise to allow the
use of the Hall”. (Both parties discharged- don’t owe each other anything) Verdict for D.
(basically if you really look at it P suffered b/c he spent $ on advertisement and wasn’t able
to get paid back)
*occurrence of a contingency the nonoccurrence of which was a basic
assumption on which the contract was made: (hall burning down) didn’t think a fire would
happen but it did. No fires basic assumption on which the contract was made that
occurred.
* court says there was an implied condition that the Music Hall WOULD exist. (it’s
not expressly stated “if this burns down we wont be liable) it was just so obvious they
didn’t say it. (so when we you wanna use this doctrine and nothing was talked about it in
the contract, say it was an implied condition)
Example: guy was contracted to run, broke his ankle so couldn’t. wants to get
out of it using this doctrine: say that it was a basic assumption that he wouldn’t be injured but
he was, and that it was an implied condition that if he couldn’t perform the contract anymore
neither would be liable) (other guy could argue: no, it was assumed that he would run and he
didn’t so he breached and he’s liable. We didn’t BOTH have this assumption that he wouldn’t
be injured in our minds. It was always a possibility that he would be hurt so can’t get out of it
now. When he entered this contract HE bore the risk that something might happen to him so
he should pay.)
RESTATEMENT 262: If the existence of a particular person is necessary for the performance of
a duty, his death or such incapacity as makes performance impracticable is an event the nonoccurrence of which was a basic assumption on which the contract was made.
RESTATEMENT 263: If the existence of a particular person is necessary for the performance
of a duty, his death or such incapacity as makes performance impracticable is an event the nonoccurrence of which was a basic assumption on which the contract was made.
2. A party may not, by its own conduct, create the even causing the
impracticability of performance; in fact, it must make all reasonable
efforts to avoid the impossibility and once the event occurs, it must
employ any practicable means of fulfilling the contract, even if it had
originally expected to meet its obligation in a particular way.
3. Under UCC 2-615(a), if the parties specify a particular source of supply in
the contract and that source fails, seller will be excused if:
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

Both parties assumed that the source was exclusive
The sellers employed all due measures to assure that the source
would perform
Canadian Alcohol v. Dunbar Molasses co: (impracticability does not work here. I guess
it wasn’t impossible for them to get molasses from elsewhere?) D was a middleman who
bought from a refinery then sold to P (P knew this) D was saying that refinery didn’t sell
him enough to be able to sell to P. D didn’t try to secure a contract with the refinery. The
duty will be discharged if the refinery was destroyed before delivery is due. The duty will
subsist if the output is reduced b/c times turn out to be hard and labor charges high. Jmt
for plaintiff. (theory maybe didn’t work here b/c can say it was foreseeable and the more
foreseeable it is to one party the more that party should bear the risk b/c then they should
have contracted about it. Also maybe b/c court thought that D didn’t do his due diligence)
*SIDE NOTE*: if parties don’t talk about something in the contract, can say it was too
obvious didn’t need to or too expensive doesn’t mean they didn’t have it as a basic
assumption. Also, it wasn’t foreseeable…) (maybe can say look it was SO foreseeable,
you cant say it was a basic assumption that it wouldn’t happen. They knew the possibility
that it might happen, should have contracted around it but didn’t so they bore the risk
and should pay!)
Government Making it Impossible:
 RESTATEMENT 264: (Prevention by Governmental Regulation or Order) If the
performance of a duty is made impracticable by having to comply with a
domestic or foreign governmental regulation or order, that regulation or order is
an event the non-occurrence of which was a basic assumption on which the
contract was made.
*When a contract is originally legal, but performance becomes illegal due to a change
in the law, any subsequent performance is against public policy and the party who
has agreed to perform is excused from doing so.
*presumption that parties assume law wont change
Centex v. Dalton: (impracticability worked b/c Centex could not carry out the contract)
The parties entered into a deal whereby Dalton (P) would acquire certain failed thrifts on
Centex’s (D) behalf and be paid very nicely for doing so. At the last minute Centex
learned that the payment of such finders’ fees violated a bank board regulation
(regulation banned PAYMENT not the act of finding properties…so for example Dalton
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couldn’t bring up that he didn’t have to perform b/c the law made it illegal, but the law
didn’t make his actions illegal but centex’s) , but had Dalton acquire the thrifts anyways.
Centex then refused to pay Dalton and he sued for breach. Held that Centex’s obligation
to pay Dalton is discharged because the contract is unenforceable due to the regulation.
(Centex couldn’t pay D and obey the governmental regulation at the same time so his
duty to perform is excused) so to use impracticability need to say both assumed law
wouldn’t change and it did so both excused.
UCC 2-501, UCC 2-509, UCC 2-319, UCC 2-613, UCC 2-614, UCC 2-615- (identified
goods, suffered a casualty. Must give notice. If goods are damaged, but still give the
other guy chance to at least take it)
FRUSTRATION OF PURPOSE
Frustration will exist if the purpose of the contract has become valueless by virtue of some
supervening event not the fault of the party seeking discharge. If the purpose has been
frustrated, a number of courts will discharge contractual duties even though performance of
these duties is still possible. Value of transaction is destroyed, so contract’s underlying purpose
is frustrated/pointless. (ex in Krell, the purpose of the contract was to get a room in order to
watch the coronation; with that not happening, there’s no point in the contract being carried
out anymore)
Example: If you buy a wedding dress, both parties know what the purpose of that
purchase is: to get married in it. If the wedding is cancelled, you can return the dress b/c
the dress is of no value anymore to the bride! (unless the bride herself was the one to call
off the wedding…then its her fault and cant use this excuse)
(if you knew something would happen then the risk is on you; other party cant use
impracticability/frustration of purpose)
(decreased benefits to the promisee/ value of the obligor’s performance is diminished in
the eyes of oblige (lessee))
Elements necessary to establish frustration
1. There is some supervening act or event leading to the frustration
2. At the time of entering into the contract, the parties did not reasonably
foresee the act or event occurring
3. The purpose of the contract has been completely or almost completely
destroyed by this act or event; and
4. The purpose of the contract was realized by both parties at the time of
making the contract
(cant be if things just aren’t profitable anymore)
Krell v. Henry: (frustration of purpose works for D) D supposed to rent a room from P
to watch King’s coronation, king got sick so coronation postponed, D not gonna pay the
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rest of the payment for the room. JMT FOR D. NOTE: both parties still capable of
performing the contract BUT the lessee’s (D) ultimate purpose was frustrated and he
was released from the contract. No interference with the possibility of performance here,
it’s just that now there’s really no point anymore. Unlike Taylor v. Caldwell, the
apartment is still there, nothing stops them from completing the contract! Henry could
still rent a room from Krell and sit in it- the problem is not that its
impossible/impracticable. The D should be let off b/c there purpose of the contract
has been completely destroyed by the event of the king getting sick and there not
being a coronation.
RULE: Performance of a contract will be excused if the purpose of the contract is
prevented from being performed by an unforeseen event.
*parol evidence is admissible to show that the subject of the K was rooms to view
the coronation procession and was to the knowledge of BOTH parties.
 was this an example of when the unexpected happens or when the expected
doesn’t happen?
o Well, the news outlines the non-happening of an expected event
 When put it that way, it looks like expecting something to happen
(coronation) which does not.
 That’s like Wegematic where impracticability didn’t work
 But! You can mentally flip this around and say “postponement
wasn’t expected but it happened” and make it fit impracticability
 The court assumes that people assumed it would not be postponed
but it was.

Note the difference btwn: “no one anticipated the postponement, but it
happened” [that’s like Taylor. ] versus “we expected coronation to happen but it was
cancelled and didn’t” (that’s like Wegematic]
Subtle difference:
-In Taylor, obligation of owner of Hall owed to concert
promoter. In burning down rendered the ability of obligor to
perform IMPRACTICABLE.
- In Wegematic, Wegematic owed obligation to gov’t and
some thing made it impracticable to perform (though not
accepted by court)
-HERE, the owner owed obligation to lessee there’s
not impediment on the obligor to render to oblige what’s different is that there’s no
value in performance anymore.
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Washington State Hop Producers Inc. v. Goschie Farms Inc.: (frustration of purpose
accepted, D discharged). Hop Producers (P) sold government required allotments for
growing hops. Goschie Farms was a buyer of such allotments. Once the government no
longer required the allotments to be regulated, everyone could grow hops so the price
drastically went down. Goschie Farms refused to perform the sales contract with Hop
Producers.
*SO, is this impossibility/impracticability?
NO. there’s nothing impossible here (financial loss doesn’t count) nothing is
stopping them from continuing to grow.
*SO is this frustration of purpose?
YES. the point of the contract was to be pay to have permission to grow, now
noone needs permission to grow, no more point in their contract. there is no more
function for this contract, shouldn’t have to pay the price outlined in the contract.
Rule: When the principal purpose of a K is frustrated so that performance of the K
makes little sense, the duty to render performance is discharged. Held: contractual
obligations are discharged.
This is one of the rare American decisions granting relief under the doctrine of
“frustration of purpose.”
Restatement 272
Restatement 265: deals with the problem that arises when a change in
circumstances makes one party’s performance vitually worthless to the other, frustrating
his purpose in making the K.
1)the purpose that is frustrated must have been a
principle purpose of that party in making the K
that both parties were aware of.
2)The frustration must be substantial
a. not enough that transaction becomes less
profitable or that he will sustain loss
b. the frustration must be so severe that is
not fairly regarded as part of the risks assumed
under the K
3) the non-occurrence of the frustrating event must
have been a basic assumption on which the K was
made.
a. but just b/c something was
foreseen/foreseeable doesn’t mean it’s nonoccurrence wasn’t a basic assumption on which
the contract was made.
To use these doctrines:
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1) it wasn’t foreseen at all, that’s why its not in our contract, so implied condition is that
in the event it does happen no1 should be liable
OR
2) it was foreseen/foreseeable, but the reason we didn’t put it in our contract was b/c we
still were functioning on the basic assumption that it wouldn’t happen, so again no one
should be liable.
To say no, you cant use these excuses:
1) it was foreseen, you should have put it in the contract and you didn’t so now you must
bear the risk and suffer for it.
(professor says that the closer we get to it having been foreseen, the less appropriate it is
to invoke these 2 doctrines)
Force Majeure clauses and “take-or-pay” contracts:
-take or pay provisions do not provide for liquidated damages. Rather, they give the
buyer a choice btwn alternative performances under the K
-you can either pay and take the goods, or pay and take the goods later
-ucc 2-615 will not be applied to excuse the buyer from the contract, even though the
gov’t played a big role in deregulation
Force Majeure Clauses
- are not intended to excuse the buyer from changes in the market, no
matter how dramatic
- they do the same thing as impracticability doctrine
- articulates certain situations that will discharge parties in the event
they happen
- obviously these things are foreseen (that’s how they made it into the
clause!) but still have same effect as impracticability (discharging
parties)
- don’t have to show the non-occurrence basic assumption thing
- anything that isn’t covered under this clause cant be used to discharge
- can include acts of Gd or acts done by humans BUT MUST BE
OUTSIDE THE CONTROL OF BOTH PARTIES involved. (cause
cause something then use it as excuse, or cant be responsible for
something happening then use it as an excuse)
Kaiser Francis Oil v. Producer’s Gas Co.:
Pipelines are transportation system/carrier of natural gas (sale of goods, merchants) take
or pay contract! This contract was created when prices were fixed/regulated and entends
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into the future when there is no more regulation and prices fluctuate. (this is a story of
regret. Prices go up, buyer is happy b/c he locked in good price. Prices go down, buyer is
sad b/c he’s paying too much now) Here, buyer is sad and wants to get out of it.
*main point: yes, deregulation was the occurrence of a contingency, the
nonoccurrence of which was a basic assumption on which the contract was made.
HOWEVER, the occurrence of that contingency doesn’t make the contract
impracticable/impossible! Nothing has been interrupted by deregulation. It would’ve
been different if before we had deregulation and now have regulation…that fits better b/c
now the govt is getting involved and is doing something. But here, govt is not doing
anything and is in fact making performance easier!
BREACH OF CONTRACT




If a promisor breaches and the promise has fully performed his part of the
exchange, then he can either sue for damages or specific performance.
If promisor commits material breach and the promise still has duties to
perform, then he can discharge those remaining duties. (that’s rescission,
so you’d have to put parties back where they were pre-K)
Exercising a defensive remedy is often full of uncertainty. If a promisee
suspends her performance and a court subsequently determines that the
other side did not materially breach the contract, then the promisee’s
suspension of performance would itself be deemed to be a breach.
UCC 2-609
Anticipatory Repudiation
 It’s a breach, even though time for performance hasn’t come up yet.
 Can repudiate through words or acts but it must be CLEAR that you do not intend
to carry out this contract any longer. [there must be a definite and final
communication of the intention to forego performance before the anticipated
breach may be the subject of legal action.
 When one party anticipatorily repudiates, other guy has the option/
“an election” to accept the repudiation and sue for damages right
then OR not accept the repudiation (affirm the contract) and wait
for performance.
o If you accept the repudiation, then you have right to sue
plus a “duty” to mitigate damages through substitute
performance
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
If you fail to mitigate, you lesson the amount you
can recover in damages
 If you do mitigate, “cover,” you subtract what you
paid from the contract price
o If you affirm the contract, then you just wait for time of
performance to arrive and then if nothing happens you can
sue
 You do not have to mitigate damages
 For there to be actual breach¸ the time for performance must have
arrived.
 If its unclear whether the guy is gonna perform or not, other party
can also demand “adequate assurances” and if he doesn’t get them,
then he can treat that as repudiation and sue for damages or cancel
the contract.
 Express Repudiation: clear, positive unequivocal refusal to perform
 Implied Repudiation: results from conduct where the promisor puts it out of his
power to perform (horse case) so as to make substantial performance of his promise
impossible.
 Before jumping to the conclusion that other party is anticipatorily repudiating, it
is best to FIRST ask for “assurances” (can be both in commercial setting and
regular) (RESTATEMENT 251)
o If other guy doesn’t adequately assure you, then you have a
right to claim repudiation/breach/sue.
HYPO: Let’s say 2 ppl have a contract, then one guy (A) wants change
the terms (modify). Suppose B rejects this and insists upon performance.
And then A threatens not to perform/pay unless B negotiates with him in
good faith. What should B do?
Was that anticipatory repudiation? Was that coercion?
UCC 2-609 gives us something to do so we don’t jump the gun on
claiming anticipatory repudiation: A’s actions gives B a “grounds for
insecurity” so B can ask for assurances. (and btwn merchants, saying your
gonna withhold payment is grounds for insecurity that’s coercive!
If the other party doesn’t assure you, then its anticipatory
repudiation and damages would be contract price – market price going to
B.
Hochster v. De La Tour: P (courier) engaged by D to accompany him on a tour on June 1st. On
May 11 D wrote P declining his services. After, P contracted with something else (mitigating the
damages) and sued D before the date of performance (June 1st). (D said P was in breach for this,
but obv not) Jmt for P. RULE: A party who renounces a contract before its start date releases the
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other party from any obligations under the contract. P can still sue D for damages resulting from
breach (but you would subtract what he made from the other job) Legal point of this case: 1) Do
you have to wait to sue? NO you don’t. 2) Once other guy repudiates (and you accept it)
you are released and free to contract with another. 3) may still recover damages (get paid).
RESTATEMENT 250, 256. UCC 2-610.
Taylor v. Johnston: (focus on this case) (horse breeding case)
 Johnston (D) entered into a contract with Taylor (P) to breed his stallion with two of
Taylor’s mares. Before the breeding season, Johnston informed Taylor that he has
decided to sell his stallion. (this WAS a repudiation, but Taylor insisted on performance,
so repudiation was retracted and therefore nullified.) Taylor insisted that he still be
allowed to breed his two mares with the stallion, and Johnston agreed.
 Then, when Taylor’s agent tried numerous times to breed the two mares with the stallion,
the stallion was always busy with the shareholders, who now owned him. Taylor
eventually bred his mares with another stallion in the area b/c he took this to be a
repudiation. BUT court decided that it was not. They never said they wouldn’t perform,
and it wasn’t implied repudiation either b/c D didn’t put it out of his power to perform,
the horses could have still bread the only problem was it might be postponed. AND end
date for performance still hadn’t come up, so they still had time.
o Professor says it wasn’t impossible for D to still breed the horses b/c the D could
enter into some kind of agreements with the new owners to allow for it to happen
( D would lose $ but its still possible to render performance)
 Taylor sued Johnston for breach of contract. However, the court held for Johnston, stating
that he never repudiated (so I guess Taylor breached to breeding to another horse before
time for performance had arrived)
 2 ways to look at it:
o To argue for the P, you can say that by moving the horse to Kentucky AND
putting the P last in line to breed, D changed the terms of the deal, D cant perform
anymore, so that’s repudiation
o To argue for the D, no, carrying out the K was still possible.
 Rule: If a promisor repudiates a contract, but the injured party treats the contract as
though it is still in force, the repudiation is nullified.
 When Johnston notified Taylor of the sale, it was an
express repudiation, but when Taylor insisted on
performance and Johnston agreed, the nullified the original
repudiation.
 Then, when Taylor bred his mares with a different stallion,
that was a breach of contract because the performance by
the other party was never repudiated but only made
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
difficult (not sufficient for repudiation) . TAYLOR
SHOULD HAVE ASKED FOR ASSURANCES BEFORE
HE BREAD HIS HORSES TO ANOTHER PARTY
(RESTATEMENT 251). By breaching himself, he lost his
claim to damages!
IN TOTAL: P was wrong in thinking that D committed
anticipatory repudiation (there was a whole breeding
season for D to perform and P cut them off)
COMPENSATORY DAMAGES
A party who relied on a breach of contract must take such measures as are reasonable in
the circumstances to mitigate the loss. If he fails to take such measures, the party in
breach may claim a reduction in the damages by which the loss should have been
mitigated.
American Mechanical Corp. v. Union Machine: important case. D contracted to buy from P
its real estate and business equipments for $135,000. D KNEW that P was in financial difficulty
and that the bank had a mortgage. (HADLEY BAXENDALE FORESEEABILITY!) then D
repudiated the K and said it wouldn’t buy (11/1). So bank took possession of property, sold
equipment for $35,000 and the real estate for $55,000 (6/1. 7 months later). P sued D for breach
and wants the diff btwn 100,000 and 55,000.
So trial court says NO, and calculates damages according to the GENERAL PRINCIPAL OF
DAMAGES (always used): CONTRACT PRICE – FAIR MARKET VALUE AT THE
TIME OF BREACH
D says it was the same, so nominal damages only.
P says no, it was lower.
(we basically don’t know what the value was at the time of breach b/c the stuff wasn’t
sold exactly at the time of breach. [normally, we know the “fair maket value at the time of
breach” b/c of the duty to mitigate. Things are sold and then we know. But here that didn’t
happen…it was sold 7 months later, which might not be representative of the value at the time of
breach]
BUT higher court say NO, that’s not fair and the fact that D knew the likely result of the
breach means P can get ACTUAL DAMAGES: CONTRACT PRICE – THE PRICE P
ACTUALLY OBTAINED
-the aim in measuring damages is to place the injured party in as good a position as he would
have been in had the contract been performed.
-this loss was in the contemplation of D, so P can recover for it.
RESTATEMENT 350
UCC 2-708
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New Era Homes v. Forster: (Forster is the one in breach) RESTATEMENT 373. P entered
into a written agreement with D to make extensive alterations to D’s home. Contract outlined
payments in 4 installments: $150 on signing of K, $1000 upon delivery of materials and starting
of work, $1500 on completion of rough carpentry and rough plumbing, and $425 upon job being
completed. First two payments were made, Rough work was done, D wouldn’t pay, P stopped
work and sued for the rest of balance (1500, 425) [D was definitely in breach and P was entitled
to suspend performance]. At trial, P reduced its demand to just 1500. (if the contract was
divisible, he could recover his $1500 b/c he completed the work) *When an owner breaches,
unless the contract is divisible or the contractor has “substantially performed,” an action
for the agreed price for the job will not lie. (I think you couldn’t argue substantial
performance here b/c you still don’t know how much was left for him to finish the job. He could
have had a whileee to go before he finished)
 Ct held that BECAUSE this contract was NOT DIVISIBLE, P should be compensated
either by
QUANTUM MERUIT (for the work finished) or (in contract) THE VALUE OF
WHAT HE LOST




QUANTUM MERUIT:
get a 3rd party to evaluate the value of the work done
but you do not get profits under quantum meruit
The VALUE of what he LOST:
CONTRACT PRICE – PAYMENTS MADE TO HIM BY D – COST OF
COMPLETION = DAMAGES
(cost of completion means the amount of money P saved from not having to fully
perform. It was an “expense saved” from D’s breach, so need to deduct that)
(so notice: on a test, if you have a situation where you cant use divisibility, and you cant
use substantial performance, you can recover either the value of what you did (quantum
meruit) or the value of what you lost.)
Glendale Federal Bank v. US: US induced Glendale Bank to take over and operate failing
banks. In return, promised to give Glendale favorable regulatory treatment until the good will
was amortized. Then the US repudiated the favorable accounting treatment and in a new scheme
required Glendale to contribute new capital to maintain their reserve requirements. 1) Glendale
sought expectancy , but court denied that (b/c you’d have to forecast their profits and that’s
difficult.) 2) Trial court gave restitution , (based on the assumed risk that Glendale undertook at
formation of K) but higher court rejected this too b/c said it was based on the assumption that P
was entitled to the supposed gains received by the D. 3) so part of what trial court awarded
Glendale was $381 in wounded bank damages (and this court affirms ONLY that). Higher court
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didn’t give it more in reliance b/c P failed to measure the actual losses sustained by it as a result
of gov’t breach. (but still got expenses they made) (the increase in the cost of funds Glendale
allegedly incurred as a result of its having been wounded by the Gov’t’s breach. wounded
bank damages)
*Restitution damages can be viewed as a form of reliance damages when they are based on
recovery of the expenditures of the non-breaching party.
*reliance damages supported when based on actual damages that are fully proven
-that is the real costs incurred for capital and services that the thrit would not have
incurred but for the contract and its breach.
-based on actual losses that are fully prove
*expectation damages (fully comp. P for D’s failure to perform K.
-in purchase and sale agreements, expectation is very easy to measure
-same in real estate b/c in both, b/c could use price on the date performance would have
been due.)
-but here, its hard to measure how much the profits would have been (how much the
failing S&L’s would have been worth had gov’t performed. “too speculative to maintain”
-based on lost profits. Cant be too speculative
*restitution: theory based on assumed benefits conferred onto D
NOTE:
A. if a breach is total and material: the promise may
i. withhold performance
ii. terminate
iii. claim full damages for breach
B. if a breach is material but not total: the promise may
i. suspend performance
ii. await cure
iii. claim compensation for any loss suffered
C. If the breach is not material (substantial performance): the promise may
i. claim compensation for any loss suffered
Locks v. Wade: FOCUS ON THIS CASE. (LOST VOLUME SELLER) P leased a jukebox to
D, but before machine installed D repudiated. Issue was whether to award damages based on
difference between the contract price minus the (cover) of getting another lessor (D’s argument)
OR (P’s argument) the FULL contract price minus costs saved minus deprecation of the machine
(profits). Even though P sold to someone else for exact same price, the court sides with P b/c he
was a lost volume seller (UCC 2-708), which means:
Lost Volume Seller: P could have sold another juke box to someone else and made two
profits instead of one had D not breached. Now that D breached, he cost P a sale to the extent of
one. (When the product is not limited, which means there’s a lot of it/infinite supply, you can
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sell many items to many people and keep making profit) SO, a lost volume seller can recover
BOTH PROFITS. (in a situation like property where the item is unique, you cant resell to
another person unless the D breaches, so in that case you’d be entitled to the difference in price.)
(his expectation wasn’t satisfied by the resale)
SO MEASURE OF DAMAGES: contract price – (cost of performance ie.) costs
saved from D’s breach.
EXAMPLES:
1) Airlines: They are lost volume sellers. They have a relatively unlimited number of seats to
sell, so they sell to you but you cancel, they could have sold that seat to someone else so you
deprived them of that profit. So, they can resell to another guy for any price and still collect the
profit they would have made from you.
2) Car Dealers: They are lost volume sellers. They have an unlimited number of cars they can
sell, so if they sell you one they have another they can pull out to sell to someone else. So again,
they got double profits. (not whole price of K, but profit they would’ve made)
--can try to rebut this by saying no, you are selling one specific car with one specific VIN
number, so when you resold you mitigated your damages so you get nothing or nominal $1.
3) You friend wants to sell you his car, or antique car dealership: They are NOT lost volume
sellers b/c they only have one b/c he only could have made one profit and whether he makes it on
you or other guy doesn’t matter.
4) Huge Apartment complex as opposed to just one room to rent: Huge Apartment is more like
lost volume b/c if guy didn’t breach you’d have two tenants not just one.
-general rule (for employment): that the measure of recovery by a wrongfully discharged
employee is the amount of salary agreed upon for the period of service, minus the amount which
the employer affirmatively proves the employee has earned or with reasonable effort might have
earned from other employment.
Reliance Cooperage Corp. v. Treat: Formed a contract to be performed on Dec. 31 at price
$450. In August, D sends letter asking to “modify” and increase how much buyer should pay
court says that’s a repudiation and the P does not accept this repudiation.
DAMAGES:
D liable to pay the contract price – the price it would have been at time of performance.
(this is the one that’s used)
---IF P had accepted the repudiation, measure of damages would be:
the K price - price at the time of breach (risk of waiting= prices go down, then yea D would be
liable but then there’d be no damages so P couldn’t recover. But then again, P would get to pay
less anyway, so all happy)
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Peevyhouse v. Garland Coal and Mining: P owned a farm containing coal, leased the premises
to D for 5 years for coal mining purposes. D agreed to fix the place up once they finished, but
didn’t do it. P sued them and wanted the amount it would cost them to clean up ($25,000)
(damages, not specific performance that they want!) The court decides that if D had done the
work, the house would’ve increase in value $300, so basically P was damaged by $300. so court
decides to only award $300.
Cost of Performance rule: cost of performance is the proper measure of damages if this
is possible and does not involve unreasonable economic waste.
Ex. Ugly roof case
Cost of Value rule: The diminution in value caused by the breach is the proper measure
if construction and completion in according with the contract would involve unreasonable
economic waste.
Ex. This case
Ex. Reading case
-basically saying, when the end to be attained ($300 increase in value to home) is
disproportionate to the expenses for reconstruction ($25000), you should recover based on the
difference in value.
(in sum: court decides that in assessing damages, you pay damages EXCEPT when cost of
performance is disproportionate to the value rendered. Here, the farm was worth $5000 before,
now worth $4700= diff in value $300. (diff btwn what it was and what it becomes)
NOTE: THIS IS A GOOD ARGUMENT A D WOULD MAKE TO CONTEST
HAVING TO PAY P THE COST TO FINISH THE JOB
EQUITABLE REMEDIES FOR BREACH: (injunctions and specific performance)
 These remedies are granted when at-law remedies are inadequate
 RESTATEMENT 363, 345, 357, 358, 359, 360, 364
 Positive Injunction: making you work for that person (prob never gonna get this)
 Negative Injunction: stopping ou from working for someone else
 In an action for injunction, courts may consider four flexible factors:
 Without such relief, will P suffer irreparable harm?
 Is there a substantial probability of success on the merits?
 Will others be injured by the injunction
 Will the injunction be inconsistent with/further the public interest
 Reasons why specific performance may not be granted in personal service
ii. It is undesirable to compel the continuation of a personal relationship after
a dispute has undercut confidence and loyalty
iii. The difficulties inherent in passing judgment on the quality of what
frequently is a subjective performance are too great
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
iv. An award requiring performance may impose a form of involuntary
servitude that is prohibited by the Constitution’s 13th Amendment
Specific performance is usually only for unique things (like land)
o But for goods, there is an emphasis on “commercial feasibility or
replacement”
o The goods don’t have to be already ascertained at the time of contracting
o Typical specific performance situation for goods: output/requirements
contracts involving a particular or peculiarly available good
o UCC 2-716
o **GENERALLY, SPECIFIC PERFORMANCE IS AVAILABLE
WHEN THERE’S A UNIQUE ASSET AND DAMGES ARE
INADEQUATE.
 Damages are generally adequate when dealing with
goods/commodities
 But tomato case goes the other way they got specific
performance
Laclede Gas Co. v. Amoco Oil: Agreement was designed to provide central propane gas
distribution systems to various residential developments in Missouri. (Amoco was supposed to
supply propane gas distribution systems to certain residential developments). Agreement also
gave Laclede the right to cancel the agreement but there was no such provision under which
Amoco could cancel the agreement. Court said this was ok in terms of mutuality of obligation
[NOTE that if it wasn’t, then no K so no breach.] Amoco notified Laclede that it was increasing
its prices with no explanation as to why. Then almost a month later Amoco sent letter
“terminating” the contract altogether claimed it had right to do this b/c the “agreement lacked
mutuality”. P seeking an injunction prohibiting the continuing breach, or in the alternative,
damages. RULE: Specific performance is a matter of right when equitable rules have been met
and the contract is fair and plain. The reason Laclede can get specific performance: Because the
contract involved a long-term contract for the supply of propane, Laclede probably could not
find another propane supplier willing to enter into such a long-term contract with the possibility
of change to natural gas in the near future, and even if it could, it prob would still face
considerable expense and trouble. INJUNCTION GRANTED. Here, b/c there’s a propane
crisis and the homeowner will freeze to death if they don’t get propane that they NEED, a check
isn’t good enough b/c at this time in this city propane is basically scarce. (you need to tell a story
as to why damages aren’t good enough)
*tomato case and this case show how specific performance can work in a commodities case
where remedy at law is inadequate.
 One good argument against specific performance: “Oh but Mr. Judge! It’ll be so
burdensome for you to have to enforce b/c you’ll have to constantly check up
whether the guy is doing it or not!”
o Works sometimes, not always.
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ABC v. Wolf: D is a sportscaster who was employed by P. D negotiated with another employer
(CBS) during the negotiation period and accepted an offer from them. Part of his contract with
ABC was at three-month period when he would engage in negotiations for a new contract,
followed by a period of time when he would not accept any job offer from anyone else without
giving P the opportunity to match it. If no agreement was reached, D was not to accept another
offer for a job as a sportscaster without presenting the offer to P and giving P opportunity to
match it within 45 days. D met with CBS after time period for negotiations had expired, but
before the time period for first refusal had expired, and signed an employment agreement. When
P found out, sued D for breach of contract and sought injunction against Wolf’s employment
with CBS. While he did breach his good faith obligation, he did not violate the first-refusal
provision b/c he accepted the offer before that time happened. RULE: Breach of an employment
contract’s good faith negotiation clause AFTER THE CONTRACT HAS EXPIRED does not
entitle an employer to injunctive relief barring the former employer from working for a new
employer. (still might be able to get damages, especially expectation b/c profits easily
ascertainable here based on past data and ratings, but NO INJUNCTION GIVEN.
*Where an employee refuses to render services to an employer in violation of a
CURRENT existing contract, and the services are unique or extraordinary, an injunction may
issue to PREVENT the employee from furnishing those services to another person for the
duration of that contract. = “negative enforcement”
*once the contract has expired, equitable relief is potentially available ONLY to
prevent injury from unfair competition or similar tortuous behavior or to enfoce an express and
valid anticompetitive covenant. In the absence of such circumstances, probably will not get it.
LIQUIDATED DAMAGE
 Usually in breach of K, cant get punitive damages (we aim to compensate the P,



not punish the D)
When you have a liquidated damages clause, the amount there is fixed. In the
event your damages are less or more, you get that amount. Can not combine it
with restitution/expectancy/reliance or anything else. If courts see that due to the
liquidated damage clause you are getting WAY more money than you deserve
from the breach, then might void it as a “penalty”
Courts will uphold provisions in contracts fixing damages for breach when the
terms constitute a reasonable mechanism for estimating the compensation which
should be paid to satisfy any loss flowing from the breach.
Courts will not uphold liquidated damages provision in contracts if its plainly or
grossly disproportionate to the probable loss. b/c that make the damages a
breacher would have to pay too excessive/disproportionate.
o NOTE: THAT’S A GOOD ARGUMENT A D WILL MAKE TO TRY
TO GET OUT OF THE LIQUIDATED DAMAGES CLAUSE, say
it’s acting like a “penalty”
LIQUDIATED DAMAGES WILL NOT BE VOID IF:
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1) the amount of actual loss is incapable or
difficult of precise calculation, and
2) there must be a reasonable relationship
between the estimate of actual damages
and the amount fixed. (not a reasonable
relationship btwn the damages actually
suffered and the amount fixed)
3) THET IME THE CONTRACT WAS
MADE, NOT WHEN IT WAS
BREACHED
NOTE: Liquidated Damages are recoverable even if there are no actual damages. If the above
requirements are met, the P will get the liquidated damages even if no actually damages have
been suffered.
Southwest Engineering Co. v. United States: Southwest had 4 construction contracts with the
US. Contract had liquidated damages clause, $100 per day for 1 of the sites, $50 for each day
late on the rest of the 3 sights. Total was over $8,000 that the US was gonna withhold from
Southwest. The United States admit that it did not suffer any actual damage despite the tardiness.
(so, if there had not been a liquidated damages clause, yes the P would still have been in breach
but the US could not recover anything except nominal damages $1!) D won and was entitled to
keep the money. Liquidated damages are useful when actual damages are uncertain in nature or
amount or immeasurable (as is the case with many gov’t contracts) courts prefer not to use
liquidated damages, so if actual damages are easily calculated, they will not use the provision.
UCC 2-718, Restatement 356
THIRD-PARTY INTERESTS
Assignment of Rights and Delegation of Duties
A. Assignment of Rights
a. Presumption/General Rule: All contract rights are assignable (exceptions)
b. When a party to a contract is in need of present cash, they can assign or sell the
other party’s promise of future payment to a third party for immediate, but
discounted cash.
c. The rights of an assignee are, in general, subject to all the terms of the contract
between the assignor and the account debtor.
d. For the sale of goods, the assignment of contractual rights is presumptively valid
unless otherwise agreed or unless the assignment would materially change the
duty of the other party or increase materially the burden or risk imposed on him
by his contract.
e. Pure payment obligations (when the other has completed performance and all
that’s left to do is pay) are assignable.
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f. UCC 2-210, Restatement 317
g. Fitzroy v. Cave: D owed 5 ppl money, so those 5 ppl assigned their rights (to
get paid) to Fitzroy. Fitzroy was to collect all the debt from D and distribute it to
each of the creditors (obviously keeping some for himself.) The issue was
whether D’s creditors could have assigned D’s debts to P, and the court said yes.
A debt is regarded as a piece of property and can be legally assigned. Motives
behind why the parties do it do not matter. RESTATEMENT 332, 331. A debt
is a contract right between D and the 5 creditors, and Fitzroy, as the assignee,
succeeds to all contractual rights (right to demand payment). Title vested in
Fitzroy.
h. Allhusen v. Caristo Construction: D contracted with Kroo for painting work.
Kroo actually does perform the job. Their contract, however, contained a
prohibitory provision basically saying any assignment (re. payment due OR
delegation of duties) would be void unless Caristo consented. Kroo went and
assigned his rights to someone who in turn assigned it to P without Caristo’s
consent. (again, just payment. Duties were already done) The issue was whether
an anti-assignment clause is effective, and the court said yes. RULE: When
“clear language” is used, and the “plainest words have been chosen” parties may
“limit the freedom of alienation of rights and prohibit the assignment. Main
point: rights are delegable, UNLESS the parties contract otherwise. If they do,
their contract provisions are upheld. (so had the clause not been there, Kroo’s
assignment would have been valid)
i. Why does Caristo care who he pays? B/c if Kroo does a bad job he can
withhold the cost of completion from him (even if Kroo claimed
substantial performance) If Kroo delegates to other guy Caristo has to pay
the other guy. Other guys gonna be like well I don’t care whats wrong
between you two, but Kroo did the job now its time for me to get paid.
[defects/bad paint jobs are harder to recover a third party is involved]
B. Delegation of Duties
a. Lets say A and B have a contract. B delegates to C. B cannot get paid (lost his
rights) BUT B still has duties B can be sued if C screws up. Then it’s btwn B
and C how they wanna handle it btwn themselves.
b. The test for delegation under Restatement (Second) §318 and UCC 2-210 turns
crucially on the phrase “substantial interest”
c. RESTATEMENT 318
i. An obligor can properly delegate the performance of his duty to another
unless the delegation is contrary to public policy or the terms of his
promise
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ii. Unless otherwise agreed, promise requires performance by a particular
person only to the extent that the obligee has a substantial interest in 1.
having that person perform OR 2. control the acts promised
iii. Unless the obligee agrees otherwise, neither delegation of performance nor
a contract to assume the duty made with the obligor by the person
delegated discharges any duty or liability of the delegating obligor.
1. (THIS MEANS YOUR DUTIES & LIABILITIES ARE NOT
DISCHARGED)
d. UCC 2-210
i. A party may perform his duty through a delegate (SALES
AGREEMENTS ARE PRESUMPTIVELY DELEGABLE UNLESS…)
unless otherwise agreed or unless the other party has a substantial interest
in having his original promisor perform or control the acts required by the
contract. No delegation of performance relieves the party delegating of
any duty to perform or any liability for breach.
ii. (Read the rest)
e. Sally Beauty Co. v. Nexxus Products Co., Inc.
-Nexxus entered into a contract with Best Beauty Supply, under which Best
was to be the exclusive distributor of Nexxus products. When Best was
acquired by and merged into Sally Beauty, Nexxus cancelled the agreement
b/c Sally was a wholly owned subsidiary of Nexxus’s competitor, Albert
Culver. Sally’s argument: That Nexxus breached by cancelling. Nexxus
argument: That the contract was not assignable, or at least not to Sally
Beauty (prof says Nexxus also should argue that when they made the
contract, they never agreed that if Best delegated the contract would still
exist). The court held that because Sally Beauty was owned by Nexxus’
competitor, it is sufficient to bar the delegation of Best’s duties under the
agreement to Sally Beauty because Nexxus has a substantial interest in
controlling the acts required by the contract (that a competitor will not be its
distributor). [he didn’t necessarily care that Best should be the one to do the
job, he just didn’t want Sally to do it b/c they had doubts as to whether Sally
could carry out the contract in best efforts].
MBE Problem: F and M entered into a binding contract, where M was to
perform routine construction services according to F’s blueprints. M delegated
the contract to C. After the delegation:
A) F can bring suit under the doctrine of
anticipatory breach
B) M extinguishes all his rights and duties
under the contract.
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C) M extinguishes all his rights but is not
relieved of his duties under the contract.
D) M still has all his rights but is relieved of his
duties under the contract.
Answer: C.
Not A, b/c a delegation is not anticipatory repudiation if the contract is delegable,
and it is here b/c its routine construction, so F prob doesn’t care who does the
work.
Not B, b/c delegation doesn’t release the original person (M) from his duties
Not D, b/c M does not have the right to get paid anymore (he does not have all his
rights)
It is C, b/c he no longer has rights to get paid, but still has duty to make sure job
gets done and he can be held liable if it’s not.
C. Third Party Beneficiaries
a. A person may be a protected third party beneficiary of a contract between two
other parties.
b. Privity = name for a legal relation arising from right and obligation
c. RESTATEMENT 302:
(1) Unless otherwise agreed between promisor and promisee, a beneficiary of
a promise is an intended beneficiary (acquires a right by virtue of a promise)
if recognition of a right to performance in the beneficiary is appropriate to
effectuate the intention of the parties and either
(a) the performance of the promise will satisfy an obligation of the
promisee to pay money to the beneficiary; or
(b) the circumstances indicate that the promisee intends to give the
beneficiary the benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not an intended
beneficiary.
d. Johnson v. Holmes Tuttle Lincoln-Mercury Inc.
i. Caldera was told by the car salesman that he was getting “Full coverage”
insurance (oral agreement), but the guy didn’t really give it (guy breached)
and Caldera didn’t know. Caldera got into an accident and the injured 3rd
parties (Johnson and Jones) sued Caldera and won (Caldera was liable),
but Caldera is poor so couldn’t really get anything out of him, so they sued
the dealership. Issue: May the plaintiff recover damages from D for failing
to sell the Calderas full insurance despite the promise to do so? Yes.
ii. Rule: other drivers are intended beneficiaries of full-coverage automobile
insurance policies. As such, they may maintain an action against the
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iii.
iv.
v.
vi.
vii.
promisor (the car dealership) for the breach of his engagement. (3rd party
beneficiaries may enforce a contract and/or sue on a promise)
Beneficiaries don’t need to be named or identified; a third party may
enforce a contract if he can show is a member of a class for whose
benefit it was made.
But these intended beneficiaries need to be within the contemplation of
both parties, and here it clearly was.
Jmt for P
Now, note: before we even discuss 3rd parties, we must establish what the
terms of the contract are.
1. oral evidence was allowed here to prove that full insurance was
agreed to but dealer breached by not giving it.
Step 2: Are Johnson and Jones 3rd party beneficiaries such that they could
demand payment from the car ppl? Court says yes
1. Had the car dealer performed, Caldera would have been insured
and the injured ppl would have been able to benefit from it as 3PB.
Ok so, if Caldera wanted to sue the Car company:
Caldera would say, we had an agreement that you would provide me with full coverage
and you didn’t. you breached the agreement.
Dealer would say: Parol Evidence Rule! Look at our written agreement, it has a merger
clause, its integrated and complete. There’s nothing in here about full coverage insurance
so I never agreed and even if I did they cant enforce it.
To rebut this, Caldera would have to say that the contract for the sale of the car was a
SEPARATE AGREEMENT from the agreement to procure insurance so they have
nothing to do with each other and parol evidence should be allowed.
Last Year’s Final Review:
NEED TO LOOK AT UCC 2-718 in particular. In the green binder.
Chapter 1 – The Importance of Promise
Introduction
A&S 1-13
Chapter 2 – The Basis for Contractual Liability
Consideration – The Bargain Requirement
A&S 28-39; 48-54
Kirksey v. Kirksey
Hamer v. Sidway
Langer v. Superior Steel
89
Consideration - Adequacy of Values Exchanged
A&S 54-57; 65-77
Browning v. Johnson
In re Greene
Fiege v. Boehm
Consideration - Pre-existing Duty Rule
A&S 77-92
Levine v. Blumenthal
Alaska Packers’ Assn. v. Domenico
Angel v. Murray
Consideration - Mutuality of Obligation
A&S 92-108; 760-761
Rehm-Zeiher v. F.G. Walker
McMichael v. Price
Wood v. Lucy, Lady-Duff Gordon
Omni Group v. Seattle-First National Bank
Moral Obligation
A&S 13-18; 108-116; 120-127
Bailey v. West
Mills v. Wyman
Webb v. McGowin
Harrington v. Taylor
Promissory Estoppel
A&S 127-139; 141 (note 3); 142-150; 160-163
Ricketts v. Scothorn
Allegheny College v. National Chautauqua County Bank
Blinn v. Beatrice Community Hospital and Health Center, Inc.
Statute of Frauds
A&S 163-168; 174-189
Sullivan v. Porter
Crabtree v. Elizabeth Arden Sales Corp.
Chapter 3 – Introduction to Remedies
Remedies - Damages Interests and Specific Performance
A&S 198-213
Sullivan v. O’Connor
Curtice Bros. v. Catts
Remedies – Foreseeability
A&S 213-218; 222-225
Hadley v. Baxendale
Chapter 4 – The Bargain Relationship
Ascertainment of Assent: The “Objective” Test
A&S 226-237; 239 (from note 3)-241
Embry v. Hargadine, McKittrick Dry Goods Co.
Lucy v. Zehmer
Offer: Creation of Power of Acceptance
A&S 250-256; 268-269
Lonergan v. Scolnick
90
Lefkowitz v. Great Minneapolis Surplus Store
Acceptance by Promise and Mailbox Rule
A&S 325-330
Adams v. Lindsell
Acceptance by Promise or Performance
A&S 288-291
Ever-Tite Roofing Corp. v. Green
Acceptance by Performance Not by Promise
A&S 296-305; 309-311
Carlill v. Carbolic Smoke Ball Co.
Glover v. Jewish War Veterans of United States
Acceptance by Conduct or Silence
A&S 319 (note 4)-325
Ammons v. Wilson & Co.
Nature and Effect of Counter-Offer: the Mirror Image Rule
A&S 330-334
Minneapolis & St. Louis Railway v. Columbus Rolling-Mill
Battle of the Forms
A&S 334-342; 370-376
DTE Energy Technologies, Inc. v. Briggs Electric, Inc.
Irrevocable Offer: Nondestructible Power of Acceptance
A&S 376-382; 392-397
Humble Oil & Refining v. Westside Investment
Drennan v. Star Paving
Defective Formulation and Expression of Agreement
A&S 400-409
Raffles v. Wichelhaus
Konic International Corporation v. Spokane Computer Services
Indefinite Agreements
A&S 409-415
Varney v. Ditmars
Incompleteness and Deferred Agreement
A&S 420-425; 432 (from note 2)-450; 454-463
Metro-Goldwyn-Mayer v. Scheider
Joseph Martin, Jr. Delicatessen v. Schumacher
168th and Dodge v. Rave Reviews Cinemas
Hoffman v. Red Owl Stores, Inc.
Chapter 5 – Avoidance of Contract
Capacity
A&S 464-471; 474-475
Bowling v. Sperry
91
Mistake
A&S 488-497; 500-512
Boise Junior College District v. Mattefs Construction Co.
Sherwood v. Walker
Lenawee County Board of Health v. Messerly
Misrepresentation and Fraud
A&S 522-550
Laidlaw v. Organ
Vokes v. Arthur Murray
Hill v. Jones
Duress
A&S 550; 557-561
Machinery Hauling, Inc. v. Steel of West Virginia
Unconscionability
A&S 561-577; 61-65
Williams v. Walker-Thomas Furniture
Jones v. Star Credit Corp.
Illegality: Agreements Unenforceable on Grounds of Public Policy
A&S 601-604; 608 (from note 5)-616; 645-648
Homami v. Iranzadi
Comment on Baby M.
Chapter 6 – Performance
Integrated Writings and the Parol Evidence Rule
A&S 655-665
Mitchell v. Lath
Masterson v. Sine
Interpretation
A&S 679-698
Pacific Gas & Electric v. G.W. Thomas Drayage & Rigging Co.
ConFold Pacific v. Polaris Industries
Frigaliment Importing v. B.N.S. International Sales
Scope and Content of the Duty of Good Faith
A&S 718-720; 736-748
Market Street Assoc. v. Frey
Exercise of Reserved Discretion
S&S 748-753
Billman v. Hensel
Neumiller Farms v. Cornett
Express Conditions and Excuse of Express Conditions
A&S 791-797; 808-813 (to note 2)
Dove v. Rose Acre Farms
Clark v. West
92
Constructive Conditions of Exchange
A&S 826-827; 835-837 (notes 2 and 4); 838-848
Jacob & Youngs v. Kent
O.W. Grun Roofing & Construction v. Cope
Severability and Guilty Party Restitution
A&S 849-861
Lowy v. United Pacific Insurance Co.
Britton v. Turner
Impracticability
A&S 861-876; 883-889
United States v. Wegematic Corp.
Taylor v. Caldwell
Canadian Industrial Alcohol Co. v. Dunbar Molasses Co.
Centex v. Dalton
Frustration of Purpose
A&S 898-914
Krell v. Henry
Washington State Hop Producers, Inc. v Goschie Farms, Inc.
Chapter 7 – Breach of Contract and Permissible Remedial Responses
Anticipatory Repudiation
A&S 915-929
Hochster v. De La Tour
Taylor v. Johnston
More Principles of Compensatory Damages
A&S 946-956; 218-222; 962-970; 973-978; 982-987
American Mechanical Corp. v. Union Machine Co.
New Era Homes Corp. v. Foster
Glendale Federal Bank v. United States
Locks v. Wade
Reliance Cooperage Corp. v. Treat
Peevyhouse v. Garland Coal & Mining Company
More Equitable Remedies
A&S 1029-1040; 1050-1059
Laclede Gas Co. v. Amoco Oil Co.
ABC v. Wolf
Liquidated Damages
A&S 1063-1072
Southwest Engineering Co. v. United States
Chapter 9 – Third Party Interests
Assignment of Rights
A&S 1143-1151; 1163-1168
93
Fitzroy v. Cave
Alhusen v. Caristo Construction Corp.
Sally Beauty C0. V. Nexxus Products Co., Inc.
Third-Party Beneficiaries
A&S 1168-1169; 1172-1177
Johnson v. Holmes Tuttle Lincoln-Mercury, Inc.
94