contracts i - cunningham - 2_4.doc

8/20/2019 Contracts I - Cunningham - 2_4.doc

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Contracts Outline

I. REMEDIES FOR BREACH OF CONTRACTA. Section 1: Goals of Contract Daa!es

1. T"ree T#$es of Contract Daa!es %a. E&$ectanc# % 'laces t"e a!!rie(e) $art# in t"e sae $osition as t"e# *oul)

"a(e +een if t"e contract +een $erfore) as $roise)b. Reliance % 'laces t"e a!!rie(e) $art# in t"e sae $osition as t"e# *oul) "a(e

+een "a) t"e contract not +een a)ec. Restitution % 'laces t"e +reac"in! $art# in t"e sae $osition as t"e# *oul) "a(e

+een "a) t"e contract not +een a)e2. Hawkins v. McGee

a. E&$ectation )aa!es *ere a*ar)e) % t"e )ifference +et*een t"e (alue of t"e"an) as $roise) ,1-- !oo) "an)/ an) t"e "an) )eli(ere) ,t"e )efecti(e "an)/

b. 'ain an) sufferin! is not reco(era+le for t"e ori!inal o$eration +ut s"oul) +einclu)e) *"en )eterinin! e&$ectation )aa!es

c. Sullivan v. O’Connor

i. E&$ectation )aa!es *ere not a*ar)e) +ecause t"e# *ere too )ifficultto calculate. T"e (alue of t"e i$ro(e) nose *as in)eterinate

ii. Reliance )aa!es *ere a*ar)e)0 inclu)in! t"e $atients out of $oc2ete&$enses an) $ain an) sufferin! for su+se3uent sur!eries to re$air t"e)aa!e

3. Groves v. John Wunder Co.a. 4essor suin! lessee for failin! to $erfor i$ro(eents to lan) as $roise).b. Court a*ar)e) )aa!es as t"e cost necessar# to co$lete t"e $roise) *or2.

i. 56!l# Fountain7 $"iloso$"# % t"e lan)o*ner "as a ri!"t to )o *"at "e*ants *it" "is $ro$ert# an) courts s"oul) not allo* )aa!es to +esolel# t"e )etriental lan) (alue *"en t"at is less t"an t"e cost ofco$letion.

c. Peevhouse v. Garland Coal ! Minin" Co.i. Court a*ar)e) t"e )ifference +et*een t"e (alue of t"e lan) as $roise)

an) t"e lan) as )eli(ere).ii. Claie) t"at a*ar)in! t"e cost of co$letion *oul) not +e t"e $ro$er

easure of e&$ectanc# +ecause courts coul) not enforce its usa!e torestore t"e lan). T"e true loss to t"e $laintiff *as actuall# t"e

)ifference in lan) (alues0 not t"e cost of co$letiond. For lan) sales0 courts are )i(i)e) +et*een a*ar)in! t"e cost of co$letion an)

t"e )ifference in lan) (alue. Courts t#$icall# a*ar) *"ic"e(er ree)# *ill noto(erco$ensate t"e a!!rie(e) $art#.

i. T"is )eterination is a)e +ase) on t"e oti(e of t"e $laintiff. If t"elan) *ill +e restore) as $roise)0 t"en cost of co$letion isa$$ro$riate. If not0 t"en (alue of t"e lan) is a$$ro$riate.

ii. 8"ere t"e cost of co$letion if !reater t"an t"e )iinution in lan)(alue0 t"e cost of co$letion s"oul) al*a#s +e !rante).

e. RST 9 -1 % General 'rinci$le % Daa!es % Official Coenti. E&$ectanc# is t"e !oal of contract )aa!es

#. $c%e Mills ! &leva'or v. Johnson

a. Transfer of $ro$ert# o*ners"i$ )oes not ta2e $lace until )eli(er#

b. Contract;Mar2et Differential: T"e )ifference +et*een t"e contract $rice an) t"ear2et $rice at t"e tie an) $lace of )eli(er#i. 8"ere t"e ar2et $rice is less t"an t"e contract $rice0 t"e +u#er is

una+le to reco(er +ecause "e +enefits fro t"e +reac". 8"ere t"ear2et $rice is "i!"er t"an t"e contract $rice0 t"e seller is una+le toreco(er +ecause "e *oul) +enefit fro +reac".

c. Efficient Breac": 8"ere +reac" $ro(i)es for co$ensatin! t"e a!!rie(e) $art#s e&$ectanc# )aa!es *it" soe left o(er to +e retaine) +# t"e +reac"in! $art#

1


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Contracts Outline

i. Criti3ues: ,1/ onl# *or2s *it" a functionin! ar2et *it" o+


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Contracts Outline

i. T"e e$lo#ee ust a2e a !oo) fait" effort to iti!ate t"e )aa!es +# see2in! to o+tain a re$laceent contract. Failure to o+tain are$laceent )oes not +ar )aa!es.

ii. 8"en iti!atin! t"e )aa!es fro *ron!ful )isc"ar!e0 t"e e$lo#eeis not re3uire) to acce$t *or2 t"at is eit"er ,1/ su+stantiall# )ifferentfro t"e $re(ious *or2 or ,=/ of an inferior 2in)

c. -ille''er v. Posell

i. 6ne$lo#ent +enefits are not use) to calculate iti!ation for*ron!ful )isc"ar!e )aa!es

ii. An lo*er salar# offer +# t"e *ron!full# )isc"ar!in! e$lo#er )oes notcount as iti!ation +ecause it *oul) force t"e e$lo#ee to acce$tcontract o)ifications *it"out t"e a+ilit# to reco(er )aa!es

d. RSC 9 >- % A(oi)a+ilit# is a 4iitation on Daa!esi. A(oi)a+ilit# is a liitation on )aa!es e&ce$t as state) in su+section

ii0 )aa!es are not reco(era+le for loss t"at t"e in


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Contracts Outline

t"e +u#er a# cancel an) *"et"er or not "e "as )one soa# in a))ition to reco(erin! so uc" of t"e $rice as "as +een $ai)

1. 5co(er7 an) "a(e )aa!es un)er t"e ne&t section asto all t"e !oo)s affecte) *"et"er or not t"e# "a(e +een i)entifie) to t"e contract@ or

=. Reco(er )aa!es for non;)eli(er# as $ro(i)e) in t"isArticle ,9 =;1>/

B/ 8"ere t"e seller fails to )eli(er or re$u)iates t"e +u#er a#also

1. If t"e !oo)s "a(e +een i)entifie) reco(er t"e as $ro(i)e) in t"is Article ,9 =;-=/@ or

=. In a $ro$er case o+tain s$ecific $erforance orre$le(# t"e !oo) as $ro(i)e) in t"is Article ,9 =;1/

C/ On ri!"tful re % Bu#ers Daa!es for Non;Deli(er#A/ Contract;ar2et )ifferential after a coerciall# reasona+le

tie0 alon! *it" inci)ental or conse3uential )aa!es0 inust"e e&$enses sa(e) as a result of t"e sellers +reac"

B/ Mar2et $rice is )eterine) at t"e tie of ten)er or at t"etie of arri(al if t"e !oo)s are re


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Contracts Outline

i. 8"ere t"e +u#er *ron!full# re


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Contracts Outline

iv. 8"ere a seller "as recei(e) $a#ent in !oo)s t"eir reasona+le (alue ort"e $rocee)s of t"eir resale s"all +e treate) as $a#ents for t"e $ur$oses of su+section ii@ +ut if t"e seller "as notice of t"e +u#ers +reac" +efore resellin! !oo)s recei(e) in $art $erforance0 "is resale issu+1 % Foreseea+ilit# Clause6. Hadle v. -a4endale

a. Coon carrier )ela#e) t"e s"i$$in! of a $art0 resultin! in lost $rofits froino$erati(e anufacturin! facilit#

b. Daa!es for +reac" of contract are onl# t"ose t"at arise out of t"e +reac" itselfor t"at *ere conte$late) +# +ot" $arties at t"e tie of contract foration ,ust +e foreseea+le/

i. Conse3uential )aa!es % t"ose )aa!es arisin! naturall# fro t"e +reac" of contract t"at can +e foreseen +# +ot" $arties

ii. S$ecial circustancesJ)aa!es % ust +e counicate) at t"e tie ofcontract foration an) to a $erson *it" sufficient aut"orit# or a!enc#to $lace t"e )aa!es *it"in t"e conte$lation of +ot" $arties

A/ E&. t"e Fe)E& )es2 cler2 )oes not "a(e sufficient aut"orit#to aut"orie a L1--M loss if a $ac2a!e arri(es late

c. Hadle rules:i. Daa!es t"at are or)inar# an) natural $ose no $ro+les to reco(er#@

ii. T"ose t"at are s$ecial )aa!es ust +e foreseea+leA/ Foreseea+le eans 52no*n to t"e $arties7 at t"e tie of

contract forationd. 'roisor is lia+le for )aa!es *"ic" are foreseea+le at t"e tie of contract

foratione. 'roisee a# reco(er )aa!es t"at arise naturall# out of t"e +reac"

i. In eit"er case ,$roisor or $roisee/0 s$ecial )aa!es ust +ecounicate) at t"e tie of contract foration

. (a%kins v. +n'erna'ional Harves'er Co.

i. If t"e seller "a) 2no*n t"at failure to )eli(er a L=- li!"tin! accessor#*oul) "a(e su+


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Contracts Outline

ii. Foreseea+ilit# % a!!rie(e) $art# ust s"o* t"at t"e )aa!es *erereasona+le an) foreseea+le at t"e tie of contract foration

iii. Certaint# % Must $ro(e *it" certaint# *"at t"e (alue of t"e )aa!es isc. Note: Eotional Distress Daa!es

=. reund v. Washin"'on S>uare Press* +nc.

a. Aut"or *as not a*ar)e) ro#alties +ecause t"e# coul) not +e )eterine) *it"s$ecificit#.

i. T"e $u+lis"er )i) not contract to )eli(er +oun) +oo2s to t"e aut"or0 +utrat"er contracte) to $a# ro#alties.

ii. T"e aount of )aa!es is not t"e cost sa(e) +# t"e $u+lis"er0 +ut t"eloss incurre) +# t"e aut"or

iii. A!!rie(e) $art# ust $ro(e t"e aount lost +ecause of +reac"0 *"ic"is )ifficult to )eterine *it" +oo2 ro#alties

b. era v. 7illa"e Pla:a* +nc.

i. 8"ere t"ere is a ran!e of $ossi+le lost $rofits $ro(i)e) +# e&$ert*itnesses0 a


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Contracts Outline

i. 8"en actor re$u)iate) after acce$tin! a contract0 t"e cost incurre) +#t"e stu)io u$ to terination *as a*ar)e). Court "el) t"at actor s"oul)"a(e 2no*n t"at re$u)iation *oul) result in *aste) e&$en)itures.

. RSC 9 >i. As an alternati(e to e&$ectation )aa!es0 t"e inuan'u% %erui' / an) t"e (alue of i$ro(eents a)ec. Restitution t"eor# % easure) +# t"e (alue !aine) +# t"e +reac"in! $art# rat"er

t"an in


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Contracts Outline

A/ T"e reasona+le (alue to t"e ot"er $art# of *"at "e recei(e)in ters of *"at it *oul) "a(e cost "i to o+tain it fro a $erson in t"e claiants $osition@ or

B/ T"e e&tent to *"ic" t"e ot"er $art#s $ro$ert# "as +eenincrease) in (alue or "is ot"er interests a)(ance)

d. /earns v. $ndree

i. Contractor *as allo*e) to reco(er t"e costs incurre) in satisf#in! t"e +u#ers )ean)s e(en t"ou!" t"e# coul) not reco(er t"e cost ofre$airin! t"ose )aa!es after +reac"

A/ More of a reliance )aa!e t"an restitutione. Oliver v. Ca%0bell

i. E(en *"en *ron!full# )isc"ar!e)0 if t"e contract "as +een 5effecti(el# $erfore)7 t"en t"e (alue of t"e contract *ill liit t"e aount ofreco(er#

. Discontinuit# an) Full 'erforance#. 'laintiff in Breac" Cases:

a. -ri''on % E$lo#entb. Pinches % Constructionc. 7ines % Real 'ro$ert#

6. -ri''on v. urner

a. 8"en an e$lo#ee +reac"es an e$lo#ent contract0 "e a# sue for 3uantueruit

i. Aount of reco(er# for e$lo#ee in +reac" ; t"e sti$ulate) contract $rice inus t"e cost to $rocure ne* la+or to co$lete t"e *or2 an) an#)aa!es sustaine) +# t"e +reac"

b. hach v. )urha%

i. Denies +u#er ,+u#er in +reac"/ reco(er# of "is )o*n $a#ent,restitution/ +ecause it *oul) eliinate t"e securit# t"at a )o*n $a#ent is su$$ose) to affor)

/ t"e +u#eracce$ts t"e $ro)uct

iii. E&ce$tion: Ne* or20 a contractor in )efault a# not reco(er e(en ifsu+stantial $erforance

b. /elle v. Hance

i. 8"ere t"e contractor *illfull# +reac"es0 +reac" is not in !oo) fait"0 an)t"ere is not su+stantial $erforance0 no reco(er# can +e "a)

c. 58illful Breac"7=. 7ines v. Orchard Hills* +nc.

a. Bu#er in +reac" a# reco(er *"en "e can $ro(e sellers un


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Contracts Outline

b. )e(eon v. $ldre'e

i. 'urc"asers +reac" )oes not )is3ualif# $urc"aser fro restitution)aa!es if "e can s"o* un,1/

i. 'art# collectin! )aa!es ust s"o* t"at t"e actual aount of )aa!esis )ifficult to $ro(e.

ii. If t"e $art# fails to recei(e sti$ulate) )aa!es0 it is not $reclu)e) frosee2in! to reco(er t"e actual )aa!es

d. @ocke v. Horn

i. 'artners si!ne) an a!reeent on en)in! $artners"i$ statin! sti$ulate),li3ui)ate)/ )aa!es for +reac"in! t"e a!reeent. oc2e# sue) *"enHorn +ro2e t"e a!reeent.

ii. Reco(er# *as allo*e) +ecause ,1/ t"e actual )aa!e to oc2e#s +usiness coul) not +e conclusi(el# $ro(e) an) ,=/ t"e )aa!es suffere)*ere t"e t#$e antici$ate) +# t"e +reac".

e. Muldoon v. (nchi. Dela# in constructin! a onuent0 contractor suin! for t"e contract

$rice0 fail# see2in! to )e)uct L1-J)a# in )ela# as $ro(i)e) +#contract li3ui)ate) )aa!es clause.

ii. Contractor reco(ere) *it"out )e)uctions +ecause t"e li3ui)ate))aa!es clause ,1/ )i) not a))ress t"e t#$e of in


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Contracts Outline

b. Sti$ulate) )aa!es clauses a# liit t"e lia+ilit# of t"e $arties in t"e e(ent of a +reac" of contract rat"er t"an tr#in! to $re)ict t"e )aa!es t"at *ill +e suffere)

i. E&. 4ia+ilit# liitation % 5Cost of lost aterials or L--0 *"ic"e(er isless7

c. A $art# can contract to in)enif# itself a!ainst its o*n ne!li!ence as lon! ast"is is a)e e&$licitl# clear in t"e ters of t"e contract.

d. Clauses sti$ulatin! lia+ilit# liitations are !enerall# enforcea+le *"ere it isa$$arent t"at t"e $arties inten)e) for t"e clause to +e enforcea+le.

E. Section : Enforceent in E3uit# % S$ecific 'erforance an) In


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Contracts Outline

fro t"at resultin! fro a ere failure of t"e $roisor to carr# out "isaffirati(e $roise

b. RSC 9 > % Contract for 'ersonal Ser(ices of Su$er(isioni. A $roise to ren)er $ersonal ser(ice *ill not +e s$ecificall# enforce)

ii. A $roise to ren)er $ersonal ser(ice e&clusi(el# for one e$lo#er *illnot +e enforce) +# an in. Alter t"e clause to a2e it enforcea+le

ii. uller'on (u%ber Co. v. orbor" A/ E$lo#er suin! e$lo#ee *"o "a) +reac"e) a non;

co$etition a!reeent +# o$enin! a co$etin! lu+er #ar)B/ 1- #ears on t"e non co$etition a!reeent *as e&cessi(e

an) rean)e) for furt"er $rocee)in!s1. Court su!!este) t"at t"e len!t" of t"e in. Reasona+l# alter t"e clause to ren)er it enforcea+le

B/ Courts s"oul) see2 to enforce t"e su+stance of t"e clause*"ic" *as entere) into in !oo) fait" ,also consistent *it"6CC *"ic" allo*s enforceent of a contract +# )eletin!an# unconsciona+le clause an) enforcin! t"e rest/

1=


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Contracts Outline

#. 5or'hern )elaware +ndus. )ev. Cor0. v. &.W. -liss Co.

a. 4an)o*ner suin! contractor tr#in! to force "irin! of ore la+orers to s$ee) u$ a)ela#e) $ro


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Contracts Outline

1. Con"r"a'ion /adi%ah orasMoshe v. )e(eo

a. Con!re!ation see2in! to enforce an oral $roise fro )ece)entb. Rule of Consi)eration: T"ere ust +e a le!al +enefit conferre) on t"e $roisor

or a le!al )etrient to t"e $roisee for consi)eration to +e (ali)i. Gratuitous $roises are unenforcea+le

ii. Mi!"t "a(e +een enforcea+le if t"e con!re!ation "a) +ar!aine) for "o*to use t"e one#

c. Estate $roises ust +e re)uce) to *ritin!@ oral $roises are unenforcea+lea!ainst estates

d. RSC 9 1 % Re3uireents of E&c"an!e@ T#$e of E&c"an!ei. To constitute consi)eration0 a $erforance or a return $roise ust +e

+ar!aine) for.ii. A $erforance or return $roise is +ar!aine) for if it is sou!"t +# t"e

$roisor in e&c"an!e for "is $roise an) is !i(en +# t"e $roisee ine&c"an!e for t"at $roise.

iii. T"e $erforance a# consist of:A/ an act ot"er t"an a $roise0 or B/ a for+earance0 or C/ t"e creation0 o)ification0 or )estruction of a le!al relation.

iv. T"e $erforance or return $roise a# +e !i(en to t"e $roisor or to

soe ot"er $erson. It a# +e !i(en +# t"e $roisee or +# soe ot"er $erson

e. RSC 9 K1 % Consi)eration as a Moti(e or In)ucin! Causei. T"e fact t"at *"at is +ar!aine) for )oes not of itself in)uce t"e a2in!

of a $roise )oes not $re(ent it fro +ein! consi)eration for t"e $roise

ii. T"e fact t"at a $roise )oes not of itself in)uce a $erforance or return $roise )oes not $re(ent t"e $erforance or return $roise fro +ein!consi)eration for t"e $roise

C. Section =: E&c"an!e T"rou!" Bar!ain1. Ha%er v. Sidwa

a. Consi)eration consists of a ri!"t0 +enefit0 $rofit0 or interest accruin! on one $art# or a for+earance0 )etrient0 loss or res$onsi+ilit# !i(en0 suffere) or

un)erta2en +# t"e ot"er b. T"e actual +enefit conferre) on t"e $roisor is not an in3uir# for t"e court

i. T"e court *ill onl# e&aine *"et"er t"e $roisee suffers soe)etrient

c. &arle v. $n"ell

i. Ne$"e* suin! to reco(er $a#ent for atten)in! a funerealii. A contract to $a# one# after ones )eat" is (ali) if t"ere is sufficient

consi)erationd. Whi''en v. GreeleShaw

i. A $roise +# a istress not to call *as not (ali) consi)eration toren)er a contract +in)in!

ii. For consi)eration to +e (ali) it ust +e +ar!aine) for +# t"e $roiseean) !i(en in e&c"an!e for $roises

e. RSC 9 10 K1 . An A$olo!# for Consi)eration ,'atterson/2. isher v. ?nion rus' Co.

a. Grantee suin! !rantors estate for s$ecific $erforance to transfer lan)o*ners"i$

b. A !rantor a# not transfer interest in lan) if t"e )ee) is encu+ere)c. Noinal or eritorious consi)eration are insufficient to create a +in)in!

contracti. L1 t"at is clearl# a


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Contracts Outline

d. 'ersonalt# ,$ersonal $ro$ert#/ !ifts can onl# +e consuate) +# uncon)itional)eli(er#.

e. Realit# !ifts can onl# +e consuate) +# e&ecution an) )eli(er# of a )ee) . 5Meritorious7 Consi)eration ". Si%%ons v. ?ni'ed S'a'es

i. 'rie;*inner cau!"t a fis" an) sou!"t $rie one#. He 2ne* t"e offer*as outstan)in!0 +ut )i) not inten) to catc" t"e fis". Re*ar) !rante).

ii. For an e&ecutor# contract0 if t"e con)itions for acce$tance are 2no*n0t"en t"e contract a# +e acce$te) e(en for reasons unrelate) to t"eoffer

h. 5Noinal7 Consi)eration3. -a'sakis v. )e%o'sis

a. 4en)er re3uire) L=--- in $a#ent on --0--- )rac"as ,(alue L-/b. T"e court *ill not (oi) a contract for ina)e3uac# of consi)eration if t"e

consi)eration "as soe (alue.c. &%bola v. u00ela

i. 4en)er !a(e $ros$ector L- to return to Alas2a to sue to reco(er "isine in e&c"an!e for L1-0--- if t"e ine *as reco(ere).

ii. Court "el) t"at t"is *as a (ali) contract +ecause it *as 5ore of anin(estent t"an a loan7 since t"ere *as no !uarantee t"at t"e

$ros$ector *oul) !et t"e ine +ac2 d. 5A)e3uac#7 of Consi)eration

#. )uncan v. -lack

a. A contract *"ic" is ille!al or contrar# to t"e $ur$ose of a statute *ill not +eenforce)

b. Eleents of (ali) consi)eration on a settleent clai:i. Clai u$on *"ic" t"e settleent is a)e ust +e in !oo) fait"

ii. Settleent ust "a(e a le!al0 cre)i+le or reasona+le foun)ationc. Mili'ar Colle"e Co. v. -rooks

i. 'roise to $a# a $roissor# note0 an) a rene*al of t"at $roise isa)e3uate consi)eration to su$$ort a contract t"eor# ,i$lie) in fact/

d. RSC 9 % Settleent of Claisi. For+earance to assert or t"e surren)er of a cla or )efense *"ic"

$ro(es to +e in(ali) is not consi)eration unlessA/ T"e clai or )efense is in fact )ou+tful +ecause of

uncertaint# as to t"e facts or t"e la*0 or B/ T"e for+earin! or surren)erin! $art# +elie(es t"at t"e clai

or )efense a# +e fairl# )eterine) to +e (ali)ii. T"e e&ecution of a *ritten instruent surren)erin! a clai or )efense

+# one *"o is un)er no )ut# to e&ecute it is consi)eration if t"ee&ecution of t"e *ritten instruent is +ar!aine) for e(en t"ou!" t"at $art# is not assertin! t"e clai or )efense an) +elie(es no (ali) claior )efense e&ists

6. Mar'in v. (i''le* -rown ! Co.a. Rea)er suin! $u+lis"er to reco(er 3uantu eruit for $ro(i)in! a "i!"li!"te)

an) annotate) co$# of a +oo2. Court "el) t"at t"e ser(ice *as !ratuitous.

b. I$lie) Contract: arises *"ere t"e $arties a!ree a+out t"e o+li!ations to +eincurre)0 *"ic" are )eterine) fro t"e surroun)in! circustancesi. 'roise to $a# a# +e i$lie) *"ere one $art# $erfors ser(ices for

t"e recei(in! $art# a useful ser(ice of a c"aracter usuall# c"ar!e) for0an) t"e recei(in! $art# e&$resses no )issent or a(ails "iself to t"eser(ice

A/ T"is ser(ice ust not +e a !ratuit#0 an) t"e recei(in! $art#ust $erfor an action in)icatin! a $roise to $a#

c. Not i$lie) in la* contract ,3uasi contract/ +ecause t"ere is no in)ication t"att"e +enefit *as $assi(el# o+taine) an) unconsciona+le to retain

1


16/28

Contracts Outline

d. Collins v. (ewis

i. Bailor too2 $ossession of co*s an) infore) t"e +ailee t"at "e *oul) +e c"ar!e) for t"e ser(ice

A/ Bailees silent acce$tance !i(es rise to an i$lie) in la*contract

ii. Ho* an i$lie) in la* contract arises: *"ere t"e $laintiff0 *it"out +ein! re3ueste) to )o so0 ren)ers ser(ices un)er circustancesin)icatin! t"at "e e&$ects to +e $ai)0 an) t"e )efen)ant0 2no*in! suc"circustances0 a(ails "iself to t"e +enefit of t"ose ser(ices

e. Seaview $ss’n o ire +sland* 5.@.* +nc. v. Willia%s

i. Hoeo*ners association suin! to reco(er un$ai) association feesii. Create) an i$lie) in fact contract +ecause t"e "oeo*ner "a) 5actual

or constructi(e 2no*le)!e7 t"at t"e fees nee)e) to +e $ai)0 an) $urc"asin! one or ore "oes *as i$lie) consent to $a# t"e resultin!fees

A/ Coul) also +e i$lie) in la* contract +ecause "oeo*nersrecei(e) a +enefit fro t"e association *it"out $a#in! for itan) coul) +e consi)ere) un: 'roises Groun)e) in t"e 'ast1. Mills v. W%an

a. 'roisee atte$tin! to sue $roisors fail# for un$ai) ser(ices. Noo+li!ation to $a# +ecause fat"er recei(e) no +enefit fro treatent of non;inor sons illness

b. In or)er for a $roise to +e enforcea+le0 t"e $roisor ust "a(e recei(e) soe +enefit fro t"e $roisee

c. A *ritten $roise is unenforcea+le +# la* unless soet"in! is $ai) or $roise)in e&c"an!e for t"e $roise.

i. It is onl# *"en t"e $roisor a2in! t"e $roise !ains soet"in!0 ort"e $roisee loses soet"in!0 t"at t"e la* *ill !i(e t"e $roise

(ali)it#d. 'roises to 'a# Barre) O+li!ations

2. Webb v. McGowina. 'roisee suffere) in


17/28

Contracts Outline

A/ If t"e $roisee conferre) t"e +enefit as a !ift or for ot"erreasons t"e $roisor "as not +een un


18/28

Contracts Outline

e. Ho* is $roissor# esto$$el )ifferent fro +ar!ain t"eor#?i. Bar!ain t"eor# is enforcea+le *it"out reliance on a $roise

ii. 'roissor# esto$$el is enforcea+le +ecause one $art# *as in)uce) torel# on t"e $roise an) $erfor soe act

. Misfeasance an) Nonfeasance3. &as' Providence Credi' ?nion v. Gere%ia

a. 4en)ers $roise to $a# insurance $reiu is ore t"an a !ratuitous $roise +ecause t"e len)er "as t"e o$tion to c"ar!e interest on t"e loan0 so it $ro(i)esconsi)eration

b. Rule of 'roissor# Esto$$el: 'roissor# esto$$el a# +e a$$lie) if t"efollo*in! t"ree 3uestions are ans*ere) affirati(el#:

i. 8as t"ere a $roise *"ic" t"e $roisor s"oul) reasona+l# e&$ect toin)uce action or for+earance +# t"e $roisee?

ii. Di) t"e $roisee in)uce suc" action or for+earance?iii. Can in


19/28

Contracts Outline

i. E$lo#ent at *ill allo*s t"e contract to +e terinate) +# eit"er $art#0at an# tie0 *it" or *it"out cause0 *it"out constitutin! a +reac" ofcontract

ii. 8"en an e$lo#ee is actuall# "ire)0 for an# len!t" of tie0 t"en t"ee$lo#ers $roise "as +een $erfore)

iii. It is not enou!" to s"o* reliance in e$lo#ent cases0 ust s"o* t"att"e e$lo#er actuall# +enefitte)

b. Hun'er v. Haesi. E$lo#ee *as allo*e) to reco(er t*o ont"s +ecause s"e *as ne(er

"ire)0 resultin! in "er lac2 of e$lo#ent for t*o ont"s froreliance

c. It is too eas# to s"o* reliance in e$lo#ent at *ill cases0 so $roissor#esto$$el is rarel# !rante)


20/28

Contracts Outline

i. E3uita+le esto$$el *as enforce) a!ainst a lessor *"en t"e lessor tol)t"e lessee to un)erta2e actions in $re$aration for re;o$enin! an) lesseetoo2 t"ose actions.

A/ Court allo*e) lessee to reco(er t"e costs associate) *it" $re$arin! to reo$en

i. Daa!es for $roissor# esto$$el are t#$icall# reliance )aa!esA. (evine v. -lu%en'hal

a. 8"en $art of a li3ui)ate) )aa!e clause "as +een $ai)0 it is not sufficient reliefunless t"ere *as a su+se3uent a!reeent0 *it" (ali) consi)eration0 t"at $artialrelief *as a)e3uate

i. Test for a)e3uate consi)eration of su+se3uent a!reeent % 8"et"er t"ea))itional consi)eration consiste) of soet"in! *"ic" t"e $roisor*as not alrea)# le!all# +oun) to )o or !i(e

b. T"e 4e!al;Dut# RuleF. Section : 'roises of 4iite) Coitent

1. Intro)uctiona. )avis v. General Goods Cor0.

i. 8"ere t"e $roisor "as unliite) ri!"ts to )eterine t"e nature an)e&tent of $erforance0 t"e a!reeent is illusor# an) *ill not +eenforce)

ii. Ma# not reco(er 3uantu eruit +ecause $roisee relie) on t"eli+eralit# an) !oo) *ill of t"e $roisor rat"er t"an a contractuala!reeent

b. 5a' 5al Service S'a'ions* +nc. v. Wol i. Eac" in)e$en)ent sale constitute) a uni3ue contract *"ere neit"er $art#

*as o+li!ate) to )eal *it" t"e ot"er A/ Bu#er recei(e) t"e $roise) )iscount

c. Mutualit# of O+li!ation2. Oberin" v. Swain,oach (u%ber Co.

a. O+erin! is re3uire) to +u# t"e $ro$ert# fro S*ain;Roac" $ursuant to t"econtract in S*ain;Roac" +u#in! t"e ori!inal $ro$ert# an) reser(in! ti+er

b. 8"ere t"e contract is not enforcea+le at t"e tie of si!nin! +ecause it iscontin!ent on a future e(ent0 $erforance of t"e future e(ent +# one $art# *ill

ren)er t"e contract +in)in! an) enforcea+le on +ot" $artiesc. Paul v. ,osen

i. Contract for sale is unenforcea+le *"ere t"e +u#er "as not $erfore)t"e action necessar# to +in) t"e seller0 an) t"e +u#er $ossesse) t"e)iscretion *"et"er or not to $erfor t"at action

d. RSC 9 % Illusor# an) Alternati(e 'roisesi. A $roise or a$$arent $roise is not consi)eration if +# its ters t"e

$roisor or $ur$orte) $roisor reser(es a c"oice of alternati(e $erforances unless

A/ Eac" of t"e alternati(e $erforance *oul) "a(e +eenconsi)eration if it alone "a) +een +ar!aine) for@ or

B/ One of t"e alternati(e $erforances *oul) "a(e +eenconsi)eration an) t"ere is or a$$ears to t"e $arties to +e a

su+stantial $ossi+ilit# t"at +efore t"e $roisor e&ercises "isc"oice e(ents a# eliinate t"e alternati(es *"ic" *oul)not "a(e +een consi)eration

e. Gurein v. Werbelovsk

i. Bu#er see2in! s$ecific $erforance for t"e sale of $late !lass.ii. 8"ere t"e seller "as t"e o$$ortunit# to co$el t"e +u#er to $a#0 t"ere

is utualit# of o+li!ation an) a (ali)0 +in)in! contract3. Wood v. (uc* (ad )uGordon

a. A (ali) contract *as fore) an) actions *ere i$lie) +# t"e a!reeent toconfer a +enefit ,$rofits/ on t"e $roisee

=-


21/28

Contracts Outline

i. Since $rofits *ere t"e sole source of co$ensation0 t"e# create) ani$lie) $roise +# t"e $roisor to $erfor actions to o+tain t"ose $rofits. T"is i$lie) action ren)ere) t"e contract +in)in!

ii. Acce$tance of an e&clusi(e a!enc# is an assu$tion of its )uties0 an) a $roise +# t"e a!ent to $erfor t"e ters of t"e contract creates autualit# of o+li!ation t"at a# +e i$lie) e(en t"ou!" it is note&$resse)

A/ T"is stan)ar) can +e e&$an)e) +e#on) e&clusi(e a!enciesan) can inclu)e in)ustr# stan)ar)s

#. O%ni Grou0* +nc. v. Sea''leirs' 5a'’l -ank

a. Illusor# $roises "a(e no consi)eration an) are unenforcea+le at la*i. 'arties cannot create an enforcea+le contract +# *ai(in! t"e con)ition

t"at a2es t"e contract illusor#ii. A +ilateral contract *"ic" is )e$en)ent on soe con)ition ,e&. An

en!ineers re$ort/ is not necessaril# illusor#b. Fle&i+le Business Arran!eentsc. (i%a (oco%o'ive ! Mach. Co. v. 5a'ional S'eel Cas'in"s* Co.

i. Re3uireent contracts are not illusor# +ecause t"e +u#er is co$elle)onl# to +u# *"at is re3uire) for "is +usiness

A/ T"ere is a )efinite *a# to $ro(e +reac" e(en t"ou!" t"e

3uantit# is in)efiniteB/ To $re(ent a+use0 3uantities are often estiate) in !oo)

fait"ii. Out$ut contracts are not illusor# for t"e sae reason

6. eld v. Henr S. (ev ! Sons* +nc.

a. 6CC 9 =;>-,=/ %i. A la*ful a!reeent +# eit"er t"e seller or t"e +u#er for e&clusi(e

)ealin! in t"e 2in) of !oo)s concerne) i$oses0 unless ot"er*isea!ree)0 an o+li!ation +# t"e seller to use +est efforts to su$$l# t"e!oo)s an) +# t"e +u#er to use +est efforts to $roote t"eir sales.

b. Goo) fait" cessation of $ro)uction terinates an# furt"er o+li!ations an)e&cuses furt"er $erforance +# t"e $art# )iscontinuin! $ro)uction

c. Corenswe'* +nc. v. $%ana ,eri"era'ion* +nc.

i. 'arties can contract out of 6CC $ro(isions0 +ut cannot contract out oft"e !oo) fait" re3uireent to fulfill t"e contract

A/ 8"en a $art# "as a unilateral a+ilit# to terinate t"econtract0 it a# onl# )o so in !oo) fait" e(en if


22/28

Contracts Outline

i. T"e "an)+oo2 clearl# inten)e) no' to create an offer ca$a+le ofacce$tance an) *as 5couc"e)7 in )isclaiers.

e. Pine ,iver S'a'e -ank v. Me''ille

i. 8"ere an at;*ill e$lo#ee retains e$lo#ent *it" 2no*le)!e of ne*or c"an!e) con)itions0 t"e ne* or c"an!e) con)itions a# +ecoecontractual o+li!ations.

ii. E$lo#ent contracts can +e re$lace) +# su+se3uent unilateralcontracts an) t"e e$lo#ees retention constitutes acce$tance.

iii. A$$l#in! unilateral contract )octrine to $ersonnel "an)+oo2s )oes notun)ul# circuscri+e t"e e$lo#ers )iscretion

. Alterin! t"e Ters of At;8ill E$lo#ent#. Moul'on v. /ershaw

a. 4etter sent to +u#er statin! t"at it *as an offerin! a certain $rice. Bu#er sue) toreco(er a 3uantit# or)ere).

b. T"e letter containe) no s$ecific 3uantities0 constitutin! it as an a)(ertiseentnot an offer to sell

c. A)(ertiseents an) for letters are not offers to selli. If t"e reasona+le $erson *oul) un)erstan) t"e a)) to +e e&a!!erate)0

t"en an# lia+ilit# of $otential offers is lost ,ie. too !oo) to +e true isnot an offer

ii. If t"e stateent is )eli+eratel# islea)in!0 t"en in soe cases it a# +econstrue) as an offer

d. Anal#in! ters to )eterine *"et"er t"ere is a contract % ,not e&clusi(e list0 +ut "el$ful !ui)elines/

i. Definite 3uantit# % courts are less for!i(in! for in)efinite 3uantitiesii. 'rice ter % courts are ore for!i(in! for in)efinite $rices0 es$eciall#

*"ere t"ere is a "istor# of $a#ent or an un)erstan)in! of ar2et $riceiii. Goo)s (s. real $ro$ert# % courts are ore for!i(in! *"en !oo)s ters

are in 3uestion0 an) less *"en real $ro$ert# is in 3uestionA/ 'artiall# +ecause it is (er# )ifficult to $ro(i)e )aa!es for

+reac"es of real $ro$ert# contractse. 'roissor# 4ia+ilit# ,S"ar$/

. RSC 9 1 % Re3uireent of a Bar!ain

i. E&ce$t as state) in su+section ii0 t"e foration of a contract re3uiresa +ar!ain in *"ic" t"ere is a anifestation of utual assent to t"ee&c"an!e an) a consi)eration

". RSC 9 1K % Manifestation of Mutual Assenti. Manifestation of utual assent to an e&c"an!e re3uires t"at t"e $art#

eit"er a2e a $roise or +e!in or ren)er a $erforanceh. RSC 9 =1 % Intention to +e 4e!all# Boun)

i. Neot"er real nor a$$arent intention t"at a $roise +e le!all# +in)in! isessential to t"e foration of a contract0 +ut a anifestation of intentiont"at a $roise s"all not affect le!al relations a# $re(ent t"e forationof a contract

i. RSC 9 => % Necessit# t"at Manifestations "a(e Reference to Eac" Ot"er i. It is essential to a +ar!ain t"at eac" $art# anifest assent *it" reference

to t"e anifestation of t"e ot"er 6. Jose0h Mar'in* Jr. )elica'essen v. Schu%acher a. Contract containe) a ter *it" future rent 5to +e )eterine)7 is not enforcea+le

i. Contract offere) no et"o) for )eterinin! a reasona+le rent fro*"ic" t"e T.C. coul) construct a ree)#

b. An a!reeent to a2e a future a!reeent0 in *"ic" aterial ters are left forfuture ne!otiations0 is unenforcea+le0 es$eciall# for real estate or lease of real $ro$ert#

i. Soeties $rior "istor# *ill allo* for enforceent of a contract *it"an in)efinite ter

==


23/28

Contracts Outline

c. 6CC 9 =;=- %i. If one $art# can s"o* a "istor# of course of )ealin! fro *"ic" it

i!"t +e $ossi+le to construct a reasona+le ree)# for t"e uncertainter t"en t"e contract a# +e enforce)

d. RSC 9 >> % Certaint#i. E(en t"ou!" a anifestation of intention is inten)e) to +e un)erstoo)

as an offer0 it cannot +e acce$te) so as to for a contract unless t"eters of t"e contract are reasona+l# certain

ii. T"e ters of t"e contract are reasona+l# certain if t"e# $ro(i)e a +asisfor )eterinin! t"e e&istence of a +reac" an) for !i(in! an a$$ro$riateree)#

iii. T"e fact t"at one or ore ters of a $ro$ose) +ar!ain are left o$en oruncertain a# s"o* t"at a anifestation of intention is not inten)e) to +e un)erstoo) as an offer or as an acce$tance.

e. Sou'hwes' &n"’" Co. v. Mar'in rac'or Co.

i. 6CC 9 =;=-,>/ % A/ E(en t"ou!" one or ore ters are left o$en a contract for

sale )oes not fail for in)efiniteness if t"e $arties "a(einten)e) to a2e a contract an) t"ere is a reasona+l# certain +asis for !i(in! an a$$ro$riate ree)#

ii. If t"e $arties inten) to +e +oun) +# an a!reeent0 +ut lea(e one orore ters o$en0 t"en t"e a!reeent is enforcea+le if t"ere is areasona+le +asis for !rantin! a ree)#

iii. 8"ere $arties "a(e reac"e) an enforcea+le a!reeent for t"e sale of!oo)s0 +ut oit t"e ters of $a#ent0 t"e la* *ill i$l#0 as $art of t"ea!reeent0 t"at $a#ent is to +e a)e at t"e tie of )eli(er#


24/28

Contracts Outline

i. No e(i)ence t"at t"e $rie *inner 2ne* t"at t"e tie for acce$tance"as e&$ire)

b. T"e $rooter of a $rie *innin! contest0 +# a2in! $u+lic t"e con)itions an)rules of t"e contest0 a2es an offer0 an) if +efore t"e offer is *it")ra*n anot"er $erson acts u$on it0 t"e $rooter is +oun) to $erfor "is $roise.

i. T"e onl# acce$tance of t"e offer t"at is necessar# is t"e $erforance oft"e act re3ueste) to *in t"e $rie

c. 6n2no*n Offers of Re*ar)sd. 5Master of t"e Offer7

i. Offeror can )eterine t"e ters of t"e offer ,$erforance0 e&$iration0 $roise0 etcQ/

ii. Offeror can )eterine t"e tie an) et"o) of acce$tancee. Ho* to terinate t"e $o*er of acce$tance an offer

i. 4a$se of tie % t"e tie $erio) for acce$tin! t"e offer e&$iresii. Counter offer +# t"e offeree %

iii. Deat" of t"e offeror or offeree % . RSC 9 = % Offer )efine)

i. An offer is t"e anifestation of *illin!ness to enter into a +ar!ain0 soa)e as to


25/28

Contracts Outline

e. Deat" of t"e offeror or t"e offeree terinates t"e offerees $o*er of acce$tancei. If t"e contract is +ilateral0 an) a return $roise is !i(en0 t"en t"e

contract is enforcea+le e(en after t"e )eat" of t"e offeror or offereeii. If it is unilateral an) t"e act cannot +e $erfore) +efore t"e offerors

)eat"0 t"en t"e offer is re(o2e) on )eat" . Jordan v. )obbins

i. T"is !uarant# is re(oca+le +# t"e !uarantor at an# tie +efore t"e!uarant# is acte) u$on.

A/ T"e !uarantors )eat" acts as t"e re(ocation of t"e offer ift"e !uarant# "as not +een acte) u$on

". RSC 9 > % Met"o)s of Terination of t"e 'o*er of Acce$tancei. An offerees $o*er of acce$tance a# +e terinate) +#

A/ Re: 'recontractual O+li!ation1. ho%ason v. -escher

a. A co(enant un)er seal ser(es t"e $ur$ose of 2ee$in! t"e offer o$en for t"e ties$ecifie) an) $re(entin! t"e *it")ra*al +# t"e offeror

i. On acce$tance an offer to $erfor *it"in t"e tie allotte) constitutes a +ilateral contract

b. )ickenson v. )odds % offerors o$tion is not +in)in! *"en not"in! is +ar!aine)

in e&c"an!e for t"e o$tion ,ie. o$tion is !ratuitous/c. Marsh v. (o'' i. L-.= *as $ai) for an o$tion on a contract0 alt"ou!" L>-0--- *as t"e

u$front (alue to +e $ai) for t"e lan) on acce$tanceii. An# one# consi)eration0 "o*e(er sall0 $ai) an) recei(e) for an

o$tion to $urc"ase $ro$ert# at its a)e3uate (alue is +in)in! u$on t"eseller t"ereof for t"e tie s$ecifie) t"erein

d. S%i'h v. Wheeler

i. 8"en an o$tionor ac2no*le)!es recei$t of $a#ent for an o$tioncontract0 "e is esto$$e) fro )en#in! t"e o$tion

=


26/28

Contracts Outline

e. RSC 9 K,1/ % O$tion Contracti. An offer is +in)in! as an o$tion contract if it

A/ Is in *ritin! an) si!ne) +# t"e offeror0 recites a $ur$orte)consi)eration for t"e a2in! of t"e offer0 an) $ro$oses ane&c"an!e on fair ters *it"in a reasona+le tie@ or

B/ Is a)e irre(oca+le +# statute2. Ja%es -aird Co. v. Gi%bel -ros.* +nc.

a. Re!ulator# lan!ua!e in t"e su+s contract *ill ser(e to $re(ent !enerals relianceon t"e su+s +i)0 +in)in! t"e su+ to a contractual o+li!ation

3. )rennan v. S'arPavin" Co.

a. Default rule % *"en t"e su+s +i) )oes not contain re!ulator# lan!ua!e an) t"e!eneral reasona+l# relies on t"e +i) for its o*n +i) ,fir offer/0 t"en t"e su+ is +oun) to t"e $rice if t"e !eneral *ins t"e +i)

i. T"e !eneral is not allo*e) to use a su+s +i) to see2 lo*er +i)s an) ift"e !eneral *ins0 "e is o+li!ate) to use t"e su+s +i) in t"e contract

b. &.$. Coronis $ssocia'es v. M. Gordon Cons'ruc'ion. Co.c. T"e Fir Offer in Conte&td. 4ia+ilit# in t"e Re(erse Casee. ,a"os'a v. Wilder

D. Section : Con)uct Conclu)in! a Bar!ain

1. (ivin"s'one v. &vansa. Mirror Ia!e Rule % Out)ate) rule statin! t"at an# )e(iation fro t"e ters of

t"e offer terinates t"e offer b. T"e 5De(iant Acce$tance7 at Coon 4a*c. Contract Foration T"rou!" E&c"an!e of 'rinte) Fors

2. +daho Power Co. v. Wes'in"house &lec'ric Cor0.

a. 6CC 9 =;=-,1/ % A))itional Ters in Acce$tance or Confiration ,Re


27/28

Contracts Outline

#. Morrison v. hoelke

a. Mail+o& Rule , $da%s v. (indsell /% T"e offeree "as $o*er to acce$t an) closet"e contract +# ailin! a letter of acce$tance0 $ro$erl# sta$e) an) a))resse)0*it"in a reasona+le tie.

i. T"e contract is re!ar)e) as a)e at t"e tie an) $lace t"at t"e letter ofacce$tance is $ut into t"e $ossession of t"e $ost office )e$artent

ii. 4a*full# interce$tin! t"e letter or renouncin! t"e acce$tance )oes not $re(ent t"e foration of t"e contract

b. De$osite) Acce$tance Rule % T"e contract is co$lete u$on )e$osit of t"eacce$tance in t"e ail

c. General Rule % Acce$tance is effecti(e u$on )is$atc" *"en sent +# ail0tele!ra0 or courier

i. E&ce$tion: O$tion contracts % an o$tion contract is onl# effecti(e u$onrecei$t

ii. Minorit# rule: Acce$tance is effecti(e on recei$t ,sall inorit#/d. Re$lies fro a Distancee. /ibler v. Ca0lis

i. Acce$tances of o$tion contracts are not +in)in! until after t"e# arerecei(e) +# t"e offeror

. RSC 9 > % Tie 8"en Acce$tance Ta2es Affect

i. 6nless an offer $ro(i)es ot"er*ise0A/ An acce$tance a)e in a anner an) +# a e)iu in(ite)

+# an offer is o$erati(e an) co$lete) t"e anifestation ofutual assent as soon as $ut out of t"e offerees $ossession0*it"out re!ar) to *"et"er it e(er reac"e) t"e offeror0 +ut

B/ An acce$tance un)er an o$tion contract is not o$erati(euntil recei(e) +# t"e offeror

". T"e Euro$ean A$$roac"h. Silence as Consent: T"e I$lie) Contract Re(isite)

6. Hobbs v. Massasoi' Whi0 Co.

a. RSC 9 % Acce$tance +# Silence or E&ercise of Doinioni. 8"ere an offeree fails to re$l# to an offer0 "is silence an) inaction

o$erate as an acce$tance in t"e follo*in! cases onl#: reco!nies

)efault rule t"at silence is not acce$tanceA/ 8"ere an offeree ta2es t"e +enefit of t"e offere) ser(ices

*it" reasona+le o$$ortunit# to re


28/28

Contracts Outline

ii. An# erc"an)ise aile) in (iolation of su+section ,a/ of t"is section0or *it"in t"e e&ce$tions containe) t"erein0 a# +e treate) as a !ift +#t"e reci$ient0 *"o s"all "a(e t"e ri!"t to retain0 use0 )iscar)0 or )is$oseof it in an# anner "e sees fit *it"out an# o+li!ation *"atsoe(er to t"esen)er

iii. No ailer of an# erc"an)ise aile) in (iolation of su+section ,a/ oft"is section0 or *it"in t"e e&ce$tions containe) t"erein0 s"all ail toan# reci$ient of suc" erc"an)ise a +ill for suc" erc"an)ise or an#)unnin! counications

c. T"e 'ri(ile!e of Silenced. $us'in v. -ur"e

i. Su+scri+er *as sent0 an) retaine)0 ne*s$a$ers t"at *ere sent after "ecancelle) "is su+scri$tion. Court or)ere) "i to $a#

ii. 8"ere a $erson "as recei(e) an) retaine) !oo)s0 t"en t"e# areo+li!ate) to $a# for t"e !oo)s.

A/ Re(erse) +# unsolicite) erc"an)ise statute in ost statese. 6nsolicite) Merc"an)ise

contracts i - cunningham - 2_4.doc

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