George Mason School of Law
Contracts II
Specific Performance
F.H. Buckley
fbuckley@gmu.edu
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Next day
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We’re against “economic waste”…
 But just what does that mean?
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Is it economic waste when Newt
Gingrich goes shopping?
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Is it economic waste when Newt
Gingrich goes shopping?
 You wouldn’t ask that if you knew
Callista…
 I don’t even want to go there…
 There is no evidence of force or fraud
or a want of capacity…
 All of the above.
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Pareto-Superiority was our
definition of waste
Bess
A
E

D
C

B 
Mary
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Which implies subjective value
Bess
A
E

D
C

B 
Mary
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How would we apply Paretian
criteria to the law of damages?
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Give them the remedy specified in
the contract (absent externalities)
 Globe Refining at 93
Oliver Wendell Holmes
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1841-1935
What happens when the contract is
silent about the penalty?
Give them
what they
“probably
would have
said if they
had spoken
about the
matter.”
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Would the parties have bargained
for the expectation interest?
 The expectation interest sets the
measure for compensatory damages
 It seeks to put the parties in the position
they would have been in had the
contract been enforced
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Would the parties have bargained
for the expectation interest?
 The expectation interest sets the
measure for compensatory damages
 And what do we need to know to do that
in Peevyhouse?
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Would the parties have bargained
for the expectation interest?
 The expectation interest sets the
measure for compensatory damages
 And what do we need to know to do that
in Peevyhouse?
 How much money would Garland have to
pay the Peevyhouses to make them
indifferent between the money and the
repair
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Would the parties have bargained
for the expectation interest?
 Problems in calculating subjective
valuations
 Condition vs Warranties
 Cost of Repair and “waste”
 Specific Performance
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Would the parties have bargained
for the expectation interest?
 Condition vs Warranties
 Jacob & Youngs
 Grun Roofing
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Would the parties have bargained
for the expectation interest?
 Cost of Repair and “waste”
 A $300 award in Peevyhouse amounts to
undercompensation
 Does this give Garland an inefficient
incentive to breach?
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Would the parties have bargained
for the expectation interest?
 Cost of Repair and “waste”
 Is there overcompensation in American
Standard?
 Does this deter an efficient breach?
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When would the parties bargain
for specific performance?
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When would the parties bargain
for specific performance?
 Things of idiosyncratic value to a
purchaser
 Subjective value to Π exceeds market
value
 Courts would flub subjective value
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When would the parties bargain
for specific performance?
 Things of idiosyncratic value to a
purchaser
 Land: Lucy v. Zehmer at 17
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“Tis the only thing worth
fighting for, worth dying for”
When would the parties bargain
for specific performance?
 Why Land?
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When would the parties bargain
for specific performance?
 Why Land?
 Idiosyncratic?
 Ease of Enforcement
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When would the parties bargain
for specific performance?
 Why Land?
 Idiosyncratic?
 Ease of Enforcement
 Ease of renegotiation to a higher-valued
third party
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When would the parties bargain
for specific performance?
 Things of idiosyncratic value to a
purchaser
 Heirlooms
The Pusey Horn
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When would the parties bargain
for specific performance?
 Things of idiosyncratic value to a
purchaser
 Beyond that? Sedmak at 880
1978 Corvette Pace Car
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When do damages
not suffice?
 What kind of a doctor would want
seven Corvettes?
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When do damages
not suffice?
 Sedmak
 Deposit paid, sale at MSRP with options
 After the changes, dealer to provide a
“contract”
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When do damages
not suffice?
 Sedmak
 Was there a contract?
 What about the Statute of Frauds?
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When do damages
not suffice?
 Was there a contract?
 What about the Statute of Frauds?
 What about Specific Performance?
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When do damages
not suffice?
 Specific Performance
 UCC § 2-716(1): “unique goods or in other
proper circumstances”
 Comment 1
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When do damages
not suffice?
 Specific Performance
 UCC § 2-716(1): “unique goods or in other
proper circumstances”
 Is this like Boeving at 882?
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When do damages
not suffice?
 Why “proper circumstances” in
Sedmak?
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When do damages
not suffice?
 Why “proper circumstances” in
Sedmak?
 Limited production and availability
problems
 Rise in price?
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When do damages
not suffice?
 Why “proper circumstances” in
Sedmak?
 Limited production and availability
problems
 Rise in price?
 Why wouldn’t damages cover it?
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When do damages
not suffice?
 Why “proper circumstances” in
Sedmak?
 Limited production and availability
problems
 Rise in price?
 Why wouldn’t damages cover it?
 What might the buyer have done?
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When do damages not suffice?
Klein v. Pepsico 107
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The Law School’s Gulfstream G-II
The “Efficient Breach”
When do damages
not suffice?
PepsiCo (Rashid)
Universal Jet Sales (Janas)
Klein
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When do damages
not suffice?
 So why did PepsiCo back out?
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When do damages
not suffice?
 Klein v. Pepsico
Donald Kendall pours Nikita Khrushchev a Pepsi
as Richard Nixon observes greedily, 1959
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When do damages
not suffice?
 Why did Klein want the plane?
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When do damages
not suffice?
 Klein v. Pepsico
 Was the plane unique?
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When do damages
not suffice?
 Klein v. Pepsico
 Was the plane unique?
 What about the price increase?
 Could money damages make the Π whole
with respect to the price increase?
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When do damages
not suffice?
 Klein v. Pepsico
 Was the plane unique?
 What about the price increase?
 Could money damages make the Π whole
with respect to the price increase?
 So why didn’t Klein cover under UCC §§ 2712, 2-715?
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When do damages
not suffice?
 Klein v. Pepsico
 Was the plane unique?
 What about the price increase?
 Is cover risk-free for the buyer?
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When do damages
not suffice?
 Why a different result in King v. Lane
at 883?
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When do damages
not suffice?
 Why a different result in King v. Lane
at 883?
 What does “unique” mean?
 Is “other proper circumstances” all about
cover?
 If one can’t cover, could damages still
suffice?
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When do damages
not suffice?
 Triple A Baseball Club at 884
The Maine Phillies
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When do damages
not suffice?
 Are people always unique?
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When do damages
not suffice?
 Triple A Baseball Club
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Doug Jones, 303 saves
in the majors
Special Issues




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Monetary Specific performance
Marketing Contracts
Performance Contracts
Personal Services Contracts
Monetary Specific Performance
 Bander v. Grossman at 884
Aston Martin DB-5
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Monetary Specific Performance
 Bander v. Grossman
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



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Purchase price of $40,000
Price at breach of $60,000
Resale for $225,000
Price at trial of $80,000
How would a constructive trust work and
is it applicable here?
Monetary Specific Performance
 Bander v. Grossman
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



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Purchase price of $40,000
Price at breach of $60,000
Resale for $225,000
Price at trial of $80,000
Why did the court award damages of
$20,000?
Monetary Specific Performance
 Monetary Specific Performance: Bander
v. Grossman





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Purchase price of $40,000
Price at breach of $60,000
Resale for $225,000
Price at trial of $80,000
Why did the court award damages of
$20,000?
Monetary Specific Performance
 Monetary Specific Performance: Bander
v. Grossman
 What makes a car unique?
 The only Aston Martin the dealer has?
 The only one in the state?
 What about the Ferrari and the Lamborghini?
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Marketing Contracts
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Marketing Contracts
 Playgirl at 886
Playgirl Centerfold Winner Sen. Scott Brown (R. MA)
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Marketing Contracts
 Did the court agree that “Playgirl alone
and uniquely provides an advertising
audience composed of young, malleable
and affluent females”?
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Marketing Contracts
 Did the court agree that “Playgirl alone
and uniquely provides an advertising
audience composed of young, malleable
and affluent females”?
 The Court: We think there are lots of other
magazines that cater to this market
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Marketing Contracts
 Whom do the equities favor?
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Marketing Contracts
 Can you distinguish Playgirl from Davis
v. Ziff?
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Marketing Contracts
 Can you distinguish Playgirl from Davis
v. Ziff?
 Life and death for PC Brand?
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Performance contracts
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Performance contracts
 Why might SP be inappropriate in a case
like Jacob & Youngs v. Kent or
Peeyhouse?
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Performance contracts
 Why might SP be inappropriate in a case
like Jacob & Youngs v. Kent or
Peeyhouse?
 Costs of judicial supervision
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Performance contracts
 Why might SP be inappropriate in a case
like Jacob & Youngs v. Kent or
Peevyhouse?
 Recall condition vs warranty:
overcompensation
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Performance contracts
 Why might SP be inappropriate in a case
like Jacob & Youngs v. Kent or
Peevyhouse?
 Recall condition vs warranty: perverse
incentives
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Performance contracts
 Why might SP be inappropriate in a case
like Jacob & Youngs v. Kent or
Peevyhouse?
 Recall condition vs warranty: transaction
costs
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Personal Service Contracts
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Personal Services Contracts
http://www.youtube.com/watch?v=iXw9olWJ0Ak
Anita Baker
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Personal Services Contracts?
 How was the application for injunctive
relief like SP?
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Personal Service Contracts
 Why no specific performance?
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Personal Service Contracts
 Why no specific performance?
 Cost of judicial spervision
 Incentive to underperform
 Liberty interest (remember noncompetes)
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Personal Services Contracts?
 Why wasn’t Mellon v. Cessna at 885 a
personal services contract?
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George Mason School of Law
Contracts II
Reliance Damages
F.H. Buckley
fbuckley@gmu.edu
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