Conditions
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© F.H. Buckley fbuckley@gmu.edu

2
Next Day
 Warranties PLUS Cure

Kinds of Terms
 Consider: I promise to help you on your journey, the good Lord willin’ and the crick don ’ t rise.
I’m going to drown

Kinds of terms
 Consider: I promise to help you on your journey provided the crick don ’ t rise.
 If the crick rises, am I in breach?

Kinds of terms
 Now consider: I promise to help you on your journey provided the crick don ’ t rise.
 So this is not a promise: let’s call it a nonpromissory condition
 If the event in question occurs, I am excused from performance

Kinds of terms
 Now consider: I promise the crick won ’ t rise.
 If the crick rises, am I in breach?

Kinds of conditions
 Now consider: I promise the crick won ’ t rise.
 Is there a problem about promising the occurrence of an event over which I have no control?

Kinds of conditions
 Now consider: I promise the crick won ’ t rise.
 Is there a problem about promising the occurrence of an event over which I have no control?
 Ever hear of earthquake insurance?

 Some are obligations, some not
Promises
Other terms: definitions, recitals, nonpromissory conditions, etc.

10
 A party is not liable for failure to perform the party's obligations if such failure is as a result of Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalization, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity or telephone service.

 What kind of gap-filling will the court do?

When will a court to imply a condition, absent express language?
 Paradine v. Jane at 77
Prince Rupert

How willing is a court to imply a condition, in the absence of express language?
 Paradine v. Jane at 77
 “If a lessee covenant to repair a house, though it be burnt by lightning, or thrown down by enemies, yet he ought to repair it.”

How willing is a court to imply a condition, in the absence of express language?
 Paradine v. Jane at 77
 “If a lessee covenant to repair a house, though it be burnt by lightning, or thrown down by enemies, yet he ought to repair it.”
 But “If a house be destoyed by tempest, or by enemies, the lessee is excused” (?!?)

How willing is a court to imply a condition, in the absence of express language?
 Paradine v. Jane at 77
 “If a lessee covenant to repair a house, though it be burnt by lightning, or thrown down by enemies, yet he ought to repair it.”
 But “If a house be destoyed by tempest, or by enemies, the lessee is excused” (?!?)
 Does it matter that the leasehold interest had passed?

Stees p.74
 What are the possible legal outcomes here?
Third and Minnesota, St Paul

Stees
 What are the possible legal outcomes here?
 Builder assumes risk and is liable
 Owner assumes risk and is liable
 No one is liable

Stees
 What are the possible legal outcomes here?
 Builder assumes risk and is liable in damages for non-completion

Stees
 What are the possible legal outcomes here?
 Builder assumes risk and is liable in damages for non-completion
 If this seems hard, what might the builder do?

Stees
 What are the possible legal outcomes here?
 Owner assumes risk
 And is liable for seller ’ s damages

Stees
 What are the possible legal outcomes here?
 Owner assumes risk
 Cf. Restatement § 89 (Modification), Illustration 1:
By a written contract A agrees to excavate a cellar for B for a stated price. Solid rock is unexpectedly encountered and A so notifies B. A and B then orally agree that A will remove the rock at a unit price which is reasonable but nine times that used in computing the original price, and A completes the job. B is bound to pay the increased amount.

Stees
 What are the possible legal outcomes here?
 No one is liable
 The quicksand puts an end to the contract

Stees
 What are the possible legal outcomes here?
 Can you tell which from the language of the contract?

Stees
 What doctrines might a court invoke to put an end to all obligations under the contracts?

Stees
 What doctrines might a court invoke to put an end to all obligations under the contracts?
 Mistake
 Frustration/Impracticability
 Condition

Stees
 Mistake
 Restatement § 152(1) Where a mistake of both parties at the time of contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake ….

Stees
 Mistake
 No mistake if Assumption of risk
 Restatement § 154 A party bears the risk of mistake when the risk is allocated to him by agreement of the parties, or 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 the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

Stees
 Frustration or Impracticability
 Restatement § 261 Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence 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 .

Stees
 (Non-promissory) Condition
 Restatement § 224 A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.

Stees
 (Non-promissory) Condition
 Restatement § 224 A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.
 Restatement § 225(3) Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur

Stees
 What did the court decide?

Stees
 What did the court decide?
 The contractor must perform his engagement, unless prevented by the act of
God, the law, or the other party
 A presumption against non-promissory conditions that excuse performance

Stees
 What did the court decide?
 He must perform his engagement, unless prevented by the act of God, the law, or the other party
 If the parties had bargained for an excuse, the courts would honor this. What if we thought we knew how they would have bargained had they put their minds to it?

Stees
 What did the court decide?
 He must perform his engagement, unless prevent by the act of God, the law, or the other party
 If the parties had bargained for an excuse, the courts would honor this. What if we thought we knew how they would have bargained had they put their minds to it?
 And just how do you think they would have bargained?

Stees
 What did the court decide?
 Quicksand as an informational problem
 Who was in the best position to discover or know of the problem?

Stees
 What if one party is contractually bound to perform according to specifications that are defective?
 U.S. v. Spearin at 78

Stees
 If contractors are liable for breach of promise, what remedies might be available to plaintiff homeowners?

Stees
 If contractors are liable for breach of promise, what remedies might be available to plaintiff-homeowners?
 Damages for breach (give plaintiff the benefit of the bargain less the contract price)

Stees
 If contractors are liable for breach of promise, what remedies might be available to plaintiff-homeowners?
 Damages for breach (give plaintiff the benefit of the bargain less the contract price)
 Set aside (rescind) the contract (absolve plaintiff from paying the price)

Stees
 Set aside the contract (absolve plaintiff from paying the price)
 Confusingly, this remedy is available when the promise in question is a condition

Now it gets confusing
 So the term condition can mean two entirely different things
 That wasn’t very smart, was it?

42
 Non-promissory conditions are not promises and excuse performance by either party on their occurrence

43
 Promissory Conditions
 are promises (for which the innocent party may receive consequential damages on breach)
 and conditions (which excuse performance by the innocent party)

 Some are obligations, some not
Promissory
Conditions
Non-promissory
Conditions

45
 I agree to sell you my dog for $400, delivery at your house on Thursday.
 I come to your house with my dog on
Thursday. You tell me you want it but that you can’t pay me till Saturday
 Do I have to deliver the dog on
Thursday?

46
 UCC § 2-511(1).

47
 UCC § 2-511(1).


48
 I agree to buy your dog for $400 at your house on Thursday.
 I come to your house with $400 on
Thursday, but you tell me you won ’ t give me the dog till Saturday
 Do I have to pay you on Thursday?

49
 UCC § 2-507(1).

50
 Not every promise is a promissory condition, but only those promises which must be performed as a condition of the other party’s duty of performance
 Tender or delivery and payment as mutual conditions
 Both parties to stand “ ready, willing and able ” to perform

51
Promissory and non-promissory conditions
 In what respect do promissory and non-promissory conditions resemble each other?

52
Promissory and non-promissory conditions
 In what respect do promissory and non-promissory conditions resemble each other?
 The non-breaching party is excused from performance of a promissory condition, and both parties are excused on the occurrence of a non-promissory condition

53
Promissory and non-promissory conditions
 In what respect do promissory and non-promissory conditions NOT resemble each other?

54
Promissory and non-promissory conditions
 In what respect do promissory and non-promissory conditions NOT resemble each other?
 The breaching party is liable for damages on breach of a promissory condition, but not on the occurrence of a nonpromissory condition

 When does a promise amount to a promissory condition?

 § 234(1). Order of Performances--Where all or part of the performances to be exchanged under an exchange of promises can be rendered simultaneously, they are to that extent due simultaneously , unless the language or the circumstances indicate the contrary.

 § 234(1). Order of Performances Where all or part of the performances to be exchanged under an exchange of promises can be rendered simultaneously, they are to that extent due simultaneously , unless the language or the circumstances indicate the contrary.
 I.e., a presumption of conditions

What about non-sale of goods
 § 234(2) Except to the extent stated in
Subsection (1), where the performance of only one party under such an exchange requires a period of time , his performance is due at an earlier time than that of the other party, unless the language or the circumstances indicate the contrary.

What about non-sale of goods
 § 234(2) Except to the extent stated in
Subsection (1), where the performance of only one party under such an exchange requires a period of time, his performance is due at an earlier time than that of the other party, unless the language or the circumstances indicate the contrary.
 So he has to do everything before the other party has to perform

What about non-sale of goods
 § 234(2) Except to the extent stated in
Subsection (1), where the performance of only one party under such an exchange requires a period of time, his performance is due at an earlier time than that of the other party, unless the language or the circumstances indicate the contrary.
 “Work before pay”

Promissory conditions
 When I agree to build you a house, when do you have to pay?

 What did the contract say about progress payments?

 What did the contract say about progress payments?
 The presumption: If you want progress payments, you have to bargain for them

Bell v. Elder at 616

Bell v. Elder
 What were the obligations of the parties as to performance?
 Seller to provide the water, power and roads
 Buyer to pay a hook-up fee and apply for a building permit

Bell v. Elder
Elders land Bell
The remedy sought: Purchaser Bell sues to recover deposit because Elders failed to supply water

Bell v. Elder
 Was the buyer acting opportunistically?

Bell v. Elder
 Here there was no order as to when each party should do their work and
“ work before pay ” applied to both parties
 Presumption of simultaneous performances

 Can a party in breach of a promissory condition resist forfeiture by asserting that conditions are divisible?

Divisibility
 Suppose that a builder contracts to build seven motels in seven different cities.
 Separate payment and completion schedule for each motel.
 Builder defaults on last motel.
 Could buyer rescind on all?

Divisibility
 Restatement § 240. If the performances to be exchanged under an exchange of promises can be apportioned into corresponding pairs of part performances so that the parts of each pair are properly regarded as agreed equivale nts , a party’s performance of his part of such a pair has the same effect on the other’s duties to render performance of the agreed equivalent as it would have if only that pair of performances had been promised.

Divisibility
 Restatement § 240. If the performances to be exchanged under an exchange of promises can be apportioned into corresponding pairs of part performances so that the parts of each pair are properly regarded as agreed equivalents, a party’s performance of his part of such a pair has the same effect on the other’s duties to render performance of the agreed equivalent as it would have if only that pair of performances had been promised.

Divisibility
 Same case, but now:
 All motels built to the same specifications
 Builder to be paid $7M for the seven motels.

Divisibility
 Same case, but now:
 All motels built to the same specifications
 Builder to be paid $7M for the seven motels
 Restatement § 240, illustration 5

 Are highway signs different?
Englewood CO

John v. United Advertsing
 Are highway signs different?
 Is this like losing your GPS signal at a crucial point?
 “ Take the first available U-Turn ”

John v. United Advertsing
 What are the options for the court?

John v. United Advertsing
 What are the options for the court?
 Set aside the entire contract
 Set aside the severable parts of it

John v. United Advertsing

 Restatement § 237. Except as stated in § 240, it is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.
 Was it that?

John v. United Advertsing

 Materiality defined in Restatement
241: will damages suffice? Is cure possible? Unjust forfeiture?

John v. United Advertsing
 A severable contract
 Sever the breaches and enforce as to the rest?
 Suppose the contract had been for a lump sum payment?

 UCC § 2-307 Delivery in Single Lot or Several
Lots. Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.
 A presumption of non-divisibility

Divisibility in the UCC
 UCC § 2-307 Delivery in Single Lot or Several
Lots. Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.
 But this might be rebutted if separate deliveries contemplated

 § 2-612(1) An " installment contract " is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause "each delivery is a separate contract" or its equivalent

UCC
2-612: Installment
Contracts
 § 2-612(2) The buyer may reject any installment which is non-conforming if the nonconformity substantially impairs the value of that installment and cannot be cured or if the non-conformity is a defect in the required documents

UCC
2-612: Installment
Contracts
 § 2-612(3) Whenever non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole.

Promises vs. Conditions
Nonpromissory
Conditions
Promissory
Conditions
Bare promises

 Non-promissory conditions
 On its occurrence both parties excused
 Promissory conditions
 On its breach, innocent party may rescind or sue for damages
 Bare promises
 On its breach, innocent party can sue for damages, but not rescind

Howard
 What are the farmer’s remedies if he did not comply with clause 5(b)?

Howard
 What are the farmer’s remedies if he did not comply with clause 5(b)?
 Could he be sued for failure to comply with it?

Howard
 What are the farmer’s remedies if he did not comply with clause 5(b)?
 Could he be sued for failure to comply with it?
 So a non-promissory condition

Howard
 And for non-compliance with Clause
5(f)?

Howard
 Qu. Clause 5(f)
 If this is not met, Can Howard recover?
 If this is not met, is Howard liable in damages?

Howard
 What are the options?

Howard
 What are the options?
 Bare promise: Not a condition precedent, but a promise that the event will happen, breach of which gives FCIC a damages remedy at best
 Promissory condition: A promise that the event will happen plus non-occurrence excuses the other party from performance
 Condition precedent: No promise that event will happen, but non-performance excuses both parties

Howard
 What are the options?
 Held a Bare promise

 Restatement § 227(1) In resolving doubts as to whether an event is made a condition of an obligor's duty, and as to the nature of such an event, an interpretation is preferred that will reduce the obligee's risk of forfeiture , unless the event is within the obligee's control or the circumstances indicate that he has assumed the risk.

What are the presumptions in the Restatement?
 Restatement § 227(1) In resolving doubts as to whether an event is made a condition of an obligor's duty, and as to the nature of such an event, an interpretation is preferred that will reduce the obligee's risk of forfeiture, unless the event is within the obligee's control or the circumstances indicate that he has assumed the risk .
 So a presumption against promissory and non-promissory conditions

What are the presumptions in the Restatement?
 Restatement § 227(2) Unless the contract is of a type under which only one party generally undertakes duties, when it is doubtful whether
(a) a duty is imposed on an obligee that an event occur, or (b) the event is made a condition of the obligor's duty, or (c) the event is made a condition of the obligor's duty and a duty is imposed on the obligee that the event occur,
 (a) = bare promise by obligee
 (b) = non-promissory condition
 (c) = promissory condition by obligee

What are the presumptions in the Restatement?
 Restatement § 227(2) Unless the contract is of a type under which only one party generally undertakes duties, when it is doubtful whether
(a) a duty is imposed on an obligee that an event occur , or (b) the event is made a condition of the obligor's duty, or (c) the event is made a condition of the obligor's duty and a duty is imposed on the obligee that the event occur, the first interpretation is preferred if the event is within the obligee's control.
 I.e., bare promise

Nonpromissory
Conditions
Promissory
Conditions
Bare promises

 Restatement § 224 A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.

 Restatement § 225(3) Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur

105
Promises and Conditions
Conditions
Conditions Precedent Promissory
No liability if non-occurrence
Restatement § 224
Liability if non-occurrence
Restatement § 225(3 )

106
Promises and Conditions
Promises
Conditions Bare Promises
(Warranties)

107
Promises and Conditions
Promises
Forfeiture
Conditions
Election
Warranties
Damages Damages only

 What ’ s the difference?

109
Defining Conditions
 Conditions precedent : The obligations of the parties will not arise if x has occurred.
 Conditions subsequent : The obligations of the parties are suspended if x occurs.

 Conditions precedent
 Restatement § 224 A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due .

 Conditions subsequent
 Restatement § 230 “the occurrence of an event is to terminate an obligor’s duty”
 Cf. Restatement § 224 cmt e

 Conditions subsequent
 Restatement § 230 “the occurrence of an event is to terminate an obligor’s duty”
 But not under 230(2) if the obligor is in breach of duties of good faith and fair dealing or no undue hardship to obligor

 Restatement § 227(3) An interpretation is preferred under which an event is a condition of an obligor’s duty is preferred over an interpretation under which the non-occurrence of the event is a ground for discharge of that duty after it becomes a duty to perform
 That is, a presumption of a condition precedent over a condition subsequent

 Gray v. Gardner at 633

 Gray v. Gardner
 Parties bargain for a price by providing that the contract is void if a greater amount of sperm oil arrive than in the same period of the prior year
 Buyer to pay a premium if a shortage

 Gray v. Gardner
 Parties bargain for a price by providing that the contract is void if a greater amount of sperm oil arrive than in the same period of the prior year
 If a condition precedent the contract did not arise, as the plaintiff must show the condition happened

 Gray v. Gardner
 Parties bargain for a price by providing that the contract is void if a greater amount of sperm oil arrive than in the same period of the prior year
 If a condition subsequent the contract did arise, and the onus is on the defendant to show the condition happened

 Gray v. Gardner
 Parties bargain for a price by providing that the contract is void if a greater amount of sperm oil arrive than in the same period of the prior year
 Held a condition subsequent: onus on defendant

 Draft the Gray v. Gardner promise
 as a CP
 as a CS

Attorney-approval clauses at 635
 I agree “ subject to my lawyer ’ s approval.
”
 Gaglia v. Kirchner
 If a buyer has an attorney approval clause, and the attorney wants changes, can the seller back out?

The dirty little secret of textbook publishing revealed

Modification, Waiver,
Estoppel
 Distinguish Modifications, waiver, estoppel

Modification, Waiver,
Estoppel
 Modifications are bilateral agreements to vary obligations under a contract
 Promises are modified

Modification, Waiver,
Estoppel
 Modifications are bilateral agreements to vary obligations under a contract
 Waivers are unilateral acts by one party to excuse another ’ s performance of an obligation
 Conditions are waived

Modification, Waiver,
Estoppel
 Modifications are bilateral agreements to vary obligations under a contract
 Waivers are unilateral acts by one party to excuse another ’ s performance of an obligation
 (Promissory) Estoppel bars a promisor from enforcing a right where he knows that a promisee has detrimentally relied on him.

126
Agreement
Required?
Reliance required?
Modification
Waiver
Estoppel

127
Agreement
Required?
Modification yes
Reliance required?
no
Waiver
Estoppel

128
Agreement
Required?
Modification yes
Reliance required?
no no no Waiver
Estoppel

129
Agreement
Required?
Modification yes
Reliance required?
no
Waiver
Estoppel no no no yes

Clark v. West
 What was the promise?
 Now you know why textbooks are so long.

Clark v. West
 What was the promise?
 Now you know why textbooks are so long.
 Facts alleged on 636
 Would this be enough for an estoppel?
 A waiver?

132
(1) An agreement modifying a contract within this Article needs no consideration to be binding.
(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
(3) The requirements of the statute of frauds section of this Article
(Section 2-201) must be satisfied if the contract as modified is within its provisions.
(4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver .
(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

133
 What was the contract?

134
Wisconsin Knife Works at 639
 What was the contract?
Metal Crafters
Spade bit blank
Wisconsin
Spade bit
Black & Decker
Spade Bits

Wisconsin Knife Works
 What was the contract?
 Wisconsin orders 280,000 blanks from
Metal Crafters in Aug-Sept 1981 for delivery in Oct-Nov
 New purchase orders in July 1982
 Seller not able to deliver until December
1982—13 months late
 Jan 1983—144,000 blanks produced but
Wisconsin rescinds

Wisconsin Knife Works


137
2-209(1) An agreement modifying a contract within this Article needs no consideration to be binding.
Posner: Replaced by good faith
§ 1-304. Obligation of Good Faith.
Every contract or duty within [the
Uniform Commercial Code] imposes an obligation of good faith in its performance and enforcement.

138
A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded , but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

139
What was the problem with UCC 2-209(2)?

140
A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
Does this refer to the agreement or to the modification?

141
A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
What does this mean?

142
A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
UCC 1-201(37): “Signed” includes any symbol executed or adopted with present intention to adopt or execute a writing

143
A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

144
How did Posner decide on modifications?

145
How did Posner decide on waiver?

146
2-209(4) Although an attempt at modification or rescission does not satisfy the requirements of subsection
(2) or (3) it can operate as a waiver .
Note how this supplements the bias against forfeiture

Wisconsin Knife Works
 When does something which fails as a modification succeed as a waiver in 2-
209(4)?
 “ can operate as a waiver ”

Wisconsin Knife Works
 Does something which fails as a modification always succeed as a waiver in 2-209(4)?

Wisconsin Knife Works
 When does something which fails as a modification succeed as a waiver in 2-
209(4)?
 Posner: so as not to render 2-209(2) otiose, let ’ s add a reliance requirement to 2-209(4)

Wisconsin Knife Works
 When does something which fails as a modification succeed as a waiver in 2-
209(4)?
 Posner: so as not to render 2-209(2) otiose, let ’ s add a reliance requirement to 2-209(4)
 But is 2-209(5) then otiose?

Wisconsin Knife Works
 But is 2-209(5) then otiose?
 2-209(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

Wisconsin Knife Works
 How to reconcile the provisions:
 If there is a no modification clause, the waiver doesn’t work without reliance
 If there isn’t a no modification clause, then no reliance needed, but under 2-
209(5), one who waives can’t retract if the other party relies

Wisconsin Knife Works
 Why does Easterbrook dissent?

Wisconsin Knife Works
 Why does Easterbrook dissent?
 Waiver has never required reliance

Wisconsin Knife Works
 UCC § 1-107. Waiver or Renunciation of
Claim or Right After Breach. Any claim or right arising out of an alleged breach can be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party.

Wisconsin Knife Works
 How to reconcile the provisions
 Waiver in 2-209(4) might encompass either past or future performance
 Estoppel in 2-209(5) refers only to future
(executory) performance

Wisconsin Knife Works
 So how would Easterbrook prevent 2-
209(2) from being otiose?

Wisconsin Knife Works
 So how would Easterbrook prevent 2-
209(2) from being otiose?
 A stricter standard of proof as to intention?

159
Agreement
Required?
Modification yes
Waiver
Estoppel no no
Reliance required?
no no yes

Agreement
Required?
Modification no consideration needed 2-209(1)
Reliance required?
no
Good Faith in § 1-
304
But no modification clause enforced 2-209(2)
Waiver
160
Estoppel

161
Agreement
Required?
Reliance required?
Modification
Waiver No Yes: Posner
No: Easterbrook
Estoppel

162
Agreement
Required?
Reliance required?
Modification
Waiver
Estoppel No Executory only 2-
209(5)

Why no waiver in Suzuki at
657?
 Did Suzuki waive Kummer’s failure to order Suzuki parts?

Why no waiver in Suzuki at
657?
 The onus of proof to satisfy 2-209(4)
 unequivocal and unambiguous actions needed for a waiver

Why no waiver in Suzuki?
 Termination clauses and agency costs
 Wisconsin Fair Dealership Law, 1974
 135.03 Cancellation and alteration of
dealerships. No grantor, directly or through any officer, agent or employee, may terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without good cause. The burden of proving good cause is on the grantor.