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Spoon Contracts Outline 2018

Class Overview: A. Contract formation: The Agreement

ProcessB. Validation C. Operative Expressions of Assent D. Abuse of the Bargaining Process E. Breach F. Risk Allocation G. Remedies

Exam Tips - Make arguments for both sides of each case - If freeze: look for issues relating to:

o Offer, acceptance, validation, consideration, parol evidence, statute of frauds, modification, mistake, reasonableness

A: Contract Formation: The Agreement Process- Contracts:

o Requires agreement by 2+ parties to pursue future action of a kind that reasonable parties would view as legally binding and which allows courts to measure the loss suffered with reasonable certainty to provide adequate remedy

o The contract is an abstraction legal relationship between parties - UCC, Uniform Commercial Code – sale of goods, defined as tangible, moveable

property - CISG: UN Convention on Contracts for the International Sale of Goods

1. Intention to be legally bound o “A contract is an obligation attached by the mere force of law to certain acts

of the parties, usually words, which ordinarily accompany and represent a known intent”

o The Objective theory –not concerned with what was going through the parties head at the time (of the alleged contract) but talking about the objective principles of contract law

The external is what matters (Outward expression of a person) -- what was communicated outwardly is what is important

o Reasonable person standard Pepsi case—objective reasonableness – objective standard

2. Interpreting statements to determine legal consequences: - Should a party who makes statements that appear to be serious always be

understood as intending legal consequences? o English Couple case

Social and domestic agreements typically viewed as unenforceable -- social consequences

Only if enter into business together o Medical practice case

Statements of medical procedures will not impose contractual liability even if incorrect.

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- Pacta Sunt Servanda – Promises ought to be kept - Key determinants in bad faith: deliberate misconduct in negotiation, what their

subjective intent was in proposing the terms - Case: Arnold Palmer Golf Co. v. Fuqua

o They agreed to negotiate in good faith, if not bad faith then no breach o Letter of intent—title doesn’t mean shit o Clear understandings of terms of agreement and intent to be bound by them o Contemplation of final writing – not bound by writing – based on intent

“the entire document and relevant circumstances must be considered” - Missing Terms

o if parties intend to make an agreement and have agreed on enough things, under the UCC 2-204 provides "Gap Fillers" --if the parties made a deal that don’t fill the terms, the gap fillers will supply the missing terms in an agreement

o Not agreed upon terms doesn’t mean there isn’t a term - Good faith [1-201(20); 2-103]

o In the performance of the contract, parties are charged with the obligation to operate in good faith

o Doesn’t mean before the contract - Definition of "good" (UCC 2-105)

o Something that is moveable -- If you don’t have a good, don’t have the UCC

3. Preliminary negotiations v. offers - Restatement §24: Offer Defined. “An offer is the manifestation of willingness to

enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it” -- has to be communicated to the person that they want to enter into a contract

- Preliminary negotiation : distinguish between offers (when a reasonable person would believe a contract is formed) and beginning of negotiations

- Quotations are not offerso But an invitation to make an offer (except when they are offers…) o Look at context/circumstance what would a reasonable person

understand to be an offer - Ads are invitations to deal

o Exception , narrow yet well established: when an ad is “clear, definite, and explicit and leaves nothing open for negotiation”

- Offer’s can be accepted by performance - Questions: was the purchase order that was sent in an offer—can depend (more

often then not, purchase orders is an offer)

Be aware of what the courts focus on/facts to determine if an offer was made- Are there significant detailed terms in the communication

o Words used in communication - Promissory language

o Significant terms included/omitted - To whom was the communications directed (public, handful of people, one

person) - Prior relationship of the parties that will inform their communication - What common practices are/trade practices/usages (esp in UCC)

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- Totality of the circumstances- What a reasonable person thinks/expects

4. Identifying the Offeror and Offeree - If the person who is in the position of the offeree, believes the offer has been

made—would a reasonable person agree that an offer has been made - An offer for unilateral contract may only be accepted to form a contract through

performance by offeree - Exclusion clause: term in a contract that seeks to restrict the rights of the parties

to the contract - Unconscionability – describes terms that are so extremely unjust, or

overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience.

- Acceptance can be through performance of the contract (even if there is a term that specifies acceptance within the contract)

- Be aware of forms and the accidental offeror

5. Duration of offers - When an offer is made, it is open for a reasonable time - Offeror can specify how long to remain open—offeror is the master of the offer - Restatement 41: offeree’s power of acceptance is terminated at the time

specified in the offer, if no time is specified after a reasonable amount of time - Forms can lead to an accidental offeror - UCC 309: time for action under contract is under a reasonable time, no longer

than 3 months - “clear limitation about when to accept offer” – if expired, nothing to accept - late acceptance + performance = counter-offer - Question of what a reasonable time for acceptance of an offer (jury question) - Common law rule: offer is running upon receipt of the offer (when received) –

the offer by mail is made when the letter is received-6. Termination of the power of acceptance

o Default rules (offeror has the power to change—master of the offer)

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When the offer/rejection/revocation effective –when received (default rule)

When acceptance effected –when mailed (mailbox rule)

o CISG: Acceptance when it reaches the offeror – if the rejection reaches the

offeror before the acceptance then withdrawn.- Offer killed by rejection - Don’t have to receive revocation directly from offeror – has to be a reliable

source though - In general: offers are revocable - Death + mental incapacity

o If offeree has not accepted, death + incapacity revoke o Mental incapacity incapacity to contract – offeror could void

- Acceptance: o In a clear term and without any additional condition o Definite and unequivocal

- Counter-offer: o Conditional offer/qualified offer o Imposing condition limitation

7. Making offers irrevocable - Because irrevocable – offeree does not need the protection of the mailbox rule

because offer cannot be revoked, therefore mailbox rule does not apply - Option contracts – irrevocable through consideration

o Right of first refusal: Doesn’t need separate consideration Only comes up when a third party comes in If the time for performing an act is not provided in a contract, the act

must be done within a reasonable time - Irrevocability through reliance – firm offers

o Detrimental reliance Typically contractor/sub-contractor cases where they are relying on

someone’s bid to make their own bid Not the same as promissory estoppel—similar but for different

situations 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 for which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice (typically contractor situations)

Bids are binding—reliance of general contractor on the bid of the subcontractor

- Written offers giving assurance that they will be held open irrevocable – no actual reliance need be shown o Firm offer: requires more than mere statement of duration—requires

assurance that it will be held open for the time stated and if no time stated, reasonable time, no longer than 3 months

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- CISG and firm offers o Offer cannot be revoked if:

Indicated by stating fixed time for acceptance or otherwise If reasonable to rely on the offer as being irrevocable and offeree has

acted in reliance of the offer - UCC §2-205 Firm offers (needs to be signed, in writing, if no time limit—3

months) o Merchant, signed writing, any term of assurance on a form supplied by the

offeree must be separately signed by the offeror -- no accidental offeror o 3 elements test 1) offer by merchant 2) signed writing 3) term open for x

time- Irrevocability through part performance

o Bilateral contracts Involve two promises and are created when one party promises to

do or forbear from doing something in exchange for a promise from the other part to do, or forbear doing something else.

At time of formation: each party has a duty and a right o Unilateral contract

Offer becomes irrevocable when performance is started, its accepted when the performance in finished within a reasonable time

Contract created by an offer than can only be accepted by performance.

Can be formed by an express offer stating that the offer can only be accepted through performance.

Another example of a unilateral contract is a reward or a contest. At time of formation: one party has a right and one a duty Contract not accepted until performance is complete

o Problem: part performance Option contract is created once the offeree begins the performance –

makes the offer irrevocable o Any offer to enter into a unilateral contract may be withdrawn before the act

requested to be done has been performed

8. The nature of acceptance - Objective reasonable standard: a reasonable person in offerors position would

understand its manifestation of acceptance (UCC and Common law) - UCC + Common law acceptance in any manner reasonable under the

circumstances - 2 ways of accepting

o (1) Promise to perform (2) performance - Offeror is master:

o Can specify requirement o Offeree must accept in time and manner reasonable

- If you are aware of the offer, your subjective motive is not relevant - Knowledge of offer

o Cannot accept offer w/out knowledge of the offer - Public Reward: don’t need to have knowledge of the reward before hand (i.e police

reward) - Employee handbooks unilateral contracts

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- Acceptance of an offer as a voluntary act - Acceptance v. condition

o Smoke ball case –once they buy the ball its acceptance, but the contract is not binding unless P caught the flu, for the flu is the condition for performance

o Ad require specific kind of action + reasonable amount of time

9. Manner of acceptance - UCC 2-206 Offer and acceptance in formation of a contract - 2-206(1)(b):

o an on order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods.→though P disagreed with certain term of his contract, he performed his duty, that will be deemed as an acceptance.

Possible defense: 1) he counteroffered with condition without the disagreed term; 2) alleged that is an unilateral contract, yet he has not complete his performance, which is not an acceptance.

o but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer

- U.C.C. 2-206 (2):o Where the beginning of a requested performance is a reasonable mode of

acceptanceo an offeror who is not notified of acceptance within a reasonable time may

treat the offer has having lapsed before acceptance - Restatement Section 30: form of acceptance invited

o any reasonable manner of acceptance is intended to be regarded as available unless the offeror has made clear that it will not be acceptable

- Shipment of nonconforming goods (2-206) “accommodation” o UCC §2-206(b) acceptance of an order can be made by shipment of

conforming or non-conforming goods. Hence a non-conforming repose can constitute an acceptance unless notice is given that the non-conforming response is offered as an accommodation

- Unilateral contracts o Completion of performance as acceptance – look at what the party intended

- Bilateral contracts o Beginning of performance as acceptance

- If an at-will employee has notice that the employer’s requirement to arbitrate is a condition of employment, the employee accepts the arbitration policy by continuing to work for the employer

- Silence as acceptance o Not acceptance unless it is reasonable to think that silence is acceptance

Typically when there is history between the parties o Restatement § 69 acceptance by silence or exercise of dominion

Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.

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(b) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.

(c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.

10. Battle of forms - Have to figure out what the parties ACTUALLY agreed to - A definite and seasonable expression of acceptance or a written confirmation which

is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

- Common law: last shot analysis - UCC § 2-207

o DIFFERENT BETWEEN MERCHANTS if merchants, terms automatically in agreement unless one of the three basis to exclude applies (2)

o Gap-fillers o (2) Does the arbitration clause materially alter the agreement

knock out rules: only applies where terms are expressly conflicting

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- Rolling Contract

o formation formed once consumer says I accept (contract is not formed until consumer accepts terms, if they don’t, send the merchandize back)

B. Validation: The first hurdle for a contract to be enforceable

11. Formalistic devices and consideration - 4 validation devices –need one to get over the initial hurdle of enforceability

o Seals o Consideration o Promissory estoppel o Other (moral obligation)

- Seal o payment consideration taking over seals (old fashioned—limited use) o option contract executed under seal should not be presumed to contain

sufficient consideration adoption of seal by delivery of document

o UCC made seals inoperative in contracts for the sale of goods - Consideration

o Elements of consideration: legal value and bargained for exchange

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The legal value element: A valuable consideration, in the sense of the law, may consist

either in some right, interest, profit of benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other

Either there is a detriment to the promisee OR a benefit for the promisor

Bargained for Exchange Sellers promise induces buyer detriment and the detriment

induces the promise o Test: 1) must tell promisor + promise 2) find the promise or detriment 3)

bargained for exchange - Exceptions to refusals to inquire into adequacy of consideration

o Disparity of the bargaining Where consideration for a bargain is so inadequate as to be

unconscionable and there is great inequity between the parties, an equitable remedy cannot be used to enforce the agreement against the oppressed party

o The consideration for it is grossly inadequate or its terms are otherwise unfair, or

o Its enforcement will cause unreasonable or disproportionate hardship or loss to the defendant or to third persons, or

o It was induced by some sharp practice, misrepresentation or mistake - Nominal situation: court doesn’t look to adequacy, so nominal is fine

o Exceptions Money exception: money for money If mere pretence for gift If consideration is stated not paid for

Except when its not an exception… In equitable relief

Looking for injunction, specific performance - Nominal consideration—bargained for exchange - Restatement § 81 (1) the fact that what is bargained for does not of itself induce

the making of a promise does not prevent it from being a consideration for that promise (2) that fact the a promise does not of itself induce a performance or return promise

- Exceptions where courts look into consideration: disparity of the bargaining and money for money

- The effect of recitals (intro of the contract) o Recital, introductory statement of the contract

Failure to deliver nominal consideration recited in an option contract does not preclude enforcement of the option contract

- Restatement § 87. Option contract o (1) an offer is binding as an option contract if it

(a) is in writing, signed by the offeror, recites a purported consideration for making the offer, and proposes an exchange on fair terms within a reasonable time; or

(b) is made irrevocable by statute.

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o (2) 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 action or forbearance is binding as an option contract to the extend necessary to avoid injustice

- Absence of Detriment –mutuality of obligation –illusory promises—requirement contracts

o Illusory promise—promise to perform an act unless promisor changed their mind means nothing –not sufficient to create a binding bilateral contract

Becomes binding and a unilateral contract is formed when the promise is accepted by performance

Doesn’t need consideration, performance forms the contract. - Good faith

o §1 -304. Obligation of good faith – every contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement

o § 1-201 General provisions—good faith: honestly and fact and observance of reasonable commercial standards of fair dealing

o Restatement § 205 Duty of good faith and fair dealing—every contract imposes upon each party a duty of good faith and fair dealing in its enforcement

- Concepts related to consideration, but not really consideration o Output and requirement contract:

A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes, unless otherwise agreed, an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

Factors: 1) good faith (as contrast to bad faith, like a second thought,

get rid of current contract); 2) reasonable expectation, based on past requirement or

input; 3) (minor) exclusive dealing → “best effort to sth,” it’s an

obligation. Requirement contracts

Contract for sale of goods, quantities unknown, between seller and buyer, amount buying is whatever their requirements are

Output contracts: Agreement between seller and buyer where the buyer agrees

to buy the sellers entire output Key for requirement and output contracts – obligation of good faith

o Exclusive Dealing—Implied promises

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A lawful agreement for exclusive dealing with respect to goods, if you have an exclusive distributorship, imposes on both parties an obligation to proceed with its best efforts (more than good faith)

To use all efforts reasonable available and due diligence and good faith

A contract may be enforced when there is no evidence of a promise, exchanged as consideration, in the explicit terms of the contract

A promise to use reasonable efforts may be implied from the entire circumstances of a contract

o Voidable promises and consideration—capacity to contract Minor/Infant —capacity to contract until 18th bday, violable contract,

has to do something to make it void (i.e. give it all back) Intoxicated person—voidable only of the other party knew he was

drunk and didn’t know what he was doing Mental illness – similar to intoxication

- The pre-existing duty rule o The performance of an existing duty does not amount to the consideration

necessary to support a contract - Modifications of the pre-existing duty rule

o Common law: When you make a modification there must be consideration device attached to the moderation

o Restatement § 89(a) if the modification is fair and equitable in view of circumstances that were not anticipated by the parties when the contract was made (i.e. garbage collection case)

When unexpected or unanticipated difficulties arise during the course of performance of a contract, the parties may modify the initial contract even without additional consideration for the modification as long as

(1) the parties voluntarily agree and the promise modifying the initial contract is made before the contract is fully performed on either side;

(2) the underlying circumstances prompting the modification are unanticipated by the parties; and

(3) the modification is fair and equitable.o UCC and CISG:

Modification doesn’t need consideration - Disputed claims, modification, accord and satisfaction

o Good faith: honesty and fact and observance of reasonable standard of fair dealing

o Good faith in claims can be the consideration for modification o Where there is an honest dispute in relation to the amount owed, the

liability itself, or even the method of payment, there is not duty until that dispute is settled -- therefore it is proper to hold that there is no legal duty to pay anything until the dispute is determined

o Accord and satisfaction: Substitute contract--one of the methods of discharging a contractual

obligation is by entering into a substitute contract

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Modification of the original contract supported by consideration

If, however, the new contract is made after the maturity or breach of the original contract, it is called an accord and satisfaction

- The invalid claim o As long as there is some reasonable basis for the party’s good faith belief

that the claim is legitimate, forbearance is consideration Forbearance from filing an unmeritorious legal claim that the party

in good faith believes is valid constitutes sufficient consideration for a settlement agreement.

12. Promissory estoppel - Legal principle that a promise is enforceable by law, even if made without formal

consideration, when a promisor has made a promise to a promisee who then relies on that promise to his subsequent detriment.

- A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise

o if the promisee relied on the promise in a material way, the promise and the reliance is a validation device

- Consideration for a promise defined in Restatement, Section 75 o (1) consideration for a promise is:

An act or other than a promise, or A forbearance, or The creation, modification or destruction of a legal relation, or A return promise

o Bargained for and given in exchange for the promise- In order to establish promissory estoppel, the following four elements must be

established: o (1) a “clear and definite promise”, o (2) a promise made with the expectation that the promisee would rely on it, o (3) the promisee’s reasonable reliance on the promise, and o (4) the promisee’s definite and substantial detriment as a result of that

reliance.o Can injustice be avoidable only by the enforcement of the promise

13. Past consideration—moral obligation - An enforceable contract requires only a promise capable of being enforced and

consideration to support the promise—Consideration must also be given in exchange for the promise – Past consideration cannot support a contract.

- Restatement §86 Promise for benefit received. o (1) a promise made in recognition of a benefit previously received by the

promisor form the promisee is binding to the extent necessary to prevent injustice

o (2) a promise is not binding under subjection (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 extend that its value is disproportionate to the benefit.

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- Promise for benefit received. -- Minority view, if you cant find consideration or promissory estoppel, might be out of luck

- Material benefit rule: o Where a material benefit has been received and the recipient voluntarily

promises to pay for this past benefit, the promise is said to be enforceable on the basis of moral obligation

- Restatement §82 Statute of limitations o Rule; if you promise to pay and obligation for which the statute of

limitations has already run, that promise is enforceable even though there is no consideration in the traditional sense

o If beginning payment after statute of limitations, don’t need consideration

Operative expressions of Assent:What communications of the parties do we take into account in deciding what they agreed to and whether it is enforceable

14. Statutes of frauds - That with certain types of contracts, there must be a writing, if no writing,

agreement is not enforceable - MY LEGS §110 restatement

o M – marriage-- a contract made upon consideration of marriage o Y – 1 year -- contract that cant be performed within 1 year of contract o L – land --contract for the sale of an interest in land o E – executor -- contract of an executor or administrator to answer for a duty

of his decedent o G –goods (UCC §2-201) o S – suretyship -- a contract to answer for the duty of another

- Restatement writing definition o Reasonably identify subject matter o Sufficient to indicate contract has been made o Has to have essential terms of a contract o Has to be signed by the one asserting statute of frauds defense o Can be in more than one writing

- UCC requirements for writings o More than $500 o Sufficient to indicate that a contract of sale has been made o Signed by the party against whom the enforcement is sought o Quantity

- Suretyship promise o Suretyship within o 3-party relationship in which the principal debtor or obligor (D) promises to

pay a certain indebtedness to a creditor/obligee (C) and a third party surety (S) promises to pay C if D doesn’t

o Exception: leading objective rule/main purpose rule When the main purpose of the promisor is not for a debt of another

but for his own business purpose Exception more likely to be applied when the company itself is not

financially strong and in a start up phrase -- otherwise cannot

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distinguish between helping the company and helping themselves -- doing it to protect their own economic interests

- Marriage Agreements – promises in consideration of marriage o Part performance for statute of frauds exception has to be SUBSTANTIAL

PERFORMANCE - Contracts for the sale of Land

o Contracts v. conveyance o Part performance = $, improvement, using land like owner o Provision of the sale of interest on land (easement and leases longer than 1

year) - Contracts not performable within one Year of formation

o Some courts narrow construe o Have to expressly and specifically say cannot be finished in 1 year (orally)

- Contracts for the sale of Goods (UCC) o Exceptions:

Merchants must read their mail exception the party who is asserting the statute of frauds does not need to sign the writing, need to show that they have received within a reasonable time and not send back written notice of objection to its contents

o Three other exceptions to signed writing (sub 3) Specifically manufactured goods When a party admits to a contract If the goods have been paid for or accepted -- performed contract

- Estoppel and the Statute of Frauds o The doctrine of promissory estoppel can be invoked to enforce an oral

contract that is subject to the Statute of Frauds – High burden of proof and reliance on the promise

o The following must be considered under this inquiry: (Section 90 on steroids)

(1) The availability and adequacy of other remedies, particularly cancellation and restitution;

(2) The definite and substantial character of the action or forbearance in relation to the remedy sought;

(3) The extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;

(4) the reasonableness of the action or forbearance; (5) the extent to which the action or forbearance was foreseeable by

the promisor.” - Involuntary admissions of a contract can be used to satisfy the Statute of Frauds - CISG

o There is effectively no statute of fraudso No writing required

- Restitution o Where the contract is unenforceable but one party has conferred a benefit

upon the other through part performance, courts will grant restitution on the footing that such a recovery in quasi contract does not undermine the Statute of Frauds

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o Even when there is no discernible economic benefit to the D if the performance has been received under an unenforceable contract (as contrasted with mere preparation for performance) there will be a resitutionary recovery.

15. Parol Evidence Rule - Parol evidence rule: deals with usually oral, but could be written agreements, that

were between negotiation and the written contract o Can evidence of the prior agreement, usually oral, be heard when there is

litigation about the contract o Rule is whether the trier of fact can hear the evidence of discussions before

the written agreement - Was the writing intended to be fully integrated? – If yes, no terms - Judge decides if the parol evidence rule bars the trier of fact from hearing it- Rule:

o Question: is the contract totally integrated or partially integrated? o If fully integrated jury cannot hear evidence (final expression and it

contains everything agreed on) o If partially can hear only evidence that is consistent with the agreement

- Tests o The appearance test

The judge simply examines the writing, and from its appearance alone, determines that it is "complete"

o The separate consideration test ( Restatement) If the extrinsic agreement is one that has been made for a "separate

consideration" evidence of that agreement is admissible If separate consideration -- agreement is only partially integrated

therefore would hear evidence if its consistent and additional o The natural omission test ( Restatement)

Would a term naturally be omitted from the main contract? – high burden for P to prove

If the extrinsic agreement is one that might naturally and normally be made as a separate agreement by parties situated as were the parties to this contract and, therefore, not be included in the writing, the evidence is admissible.

If naturally omitted, evidence can be heard o The certain inclusion test (UCC 2-202)

Would the provision certainly be included? Lower burden for the party that want the trial to hear the evidence If the parties had agreed to this, and it certainly would have been

included and its not, then the document is fully integrated o The writing omission test

If the extrinsic matter is mentioned, covered, or dealt with in the writing, presumably the writing was meant to represent all the transaction on that element; if not, the evidence is admissible

- Merger clauses o i.e. integration clause, zipper clause

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o "This agreement contains the whole agreement between the Seller and Buyer and there are no other terms, obligations, covenants, representations, statements, or condition, oral or otherwise, of any kind whatsoever"

o Essentially says that everything you agreed to is in the writing -- saying that the writing is fully integrated

Burden to show otherwise would be very high - UCC Parol Evidence Rule—trade usage and prior dealings

o Integration complete and exclusive statement o Partial integration final expression o UCC uses the certain inclusion testo court will always hear testimony that explains or supplements that

agreement by course of dealing, course of performance or usage of trade - Condition precedent, Fraud and the Parol evidence Rule

o Parol evidence may be used to show that a document was not intended to become an effective contract until a prior condition or event occurred.

o Parol evidence rule does not bar introduction of evidence of fraud, a condition precedent, and mistake

o Parol evidence, if the court is trying to determine what a particular term in the agreement meant, will allow extra evidence --more about interpretation cases

- Parol evidence rule applies only to “prior or contemporaneous” agreements - If you admit you had an agreement, you have an agreement

o If admit, cannot use parol evidence rule

16. Subsequent Modifications- Common law: modifications require consideration

o Exception: if significant circumstances have changes and not allowing the modification is unfair and unequitable

- UCC 2-209 allows good faith to be effective without consideration (in writing)o Does a modification have to be in writing? (UCC)

Was there a non-oral modification (NOM) clause in the agreement? if no, look to 2-209(3)

look at the modified contract as a whole o majority view: If a contract must be in writing under Uniform Commercial

Code § 2-201, then any modification to it must be in writing look at the contract as modified and ask if that would need to be in

writing if we were entering into it today under 2-201 o Minority view: only some modifications need to be in writing, if the

modification is a term that would have to be in writing, then the modification needs to be in writing. The only term you really need here is the quantity

o 2-209(4) waiver to modifications being in writing o 2-209(5) a waiver can be retracted as long as the other party has not

materially relied upon o waiver and retraction

oral modification that wasn’t enforceable – waiver to writing requirement

2 week delivery hypo

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back door way of enforcing modifications

17. Mistake- §151 mistake defined. Belief not in accord with the facts. - Way to analyze:

o Was it mutual or unilateral? (mistake or just don’t know?) o Determine the person who wants to void the contract/who bares the risk of

mistake - Mutual Mistake:

o Both parties believed the same mistake o Need to be mistaken on the basic assumption of the contract—what is the

heart of the contract o §152. When mistake of both parties makes a contract voidable

Has to be at the time the contract is made, to a basic assumption to which the contract was made with a material effect of the performance of the parties

If that is the case, then the contract is voidable by the party who wants out, unless that party bears the risk of that mistake

o § 154. When a party bears the risk of mistake The party bears the risk of a mistake when

(a) the risk is allocated to him by the 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 (most common) (aka: conscious ignorance)

(c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

- Unilateral Mistake o One party has a mistaken belief and the other doesn’t o A unilateral mistake is not grounds for rescission of a contract, unless there

is ambiguity, fraud, or misrepresentation or the contract may be rescinded without prejudice to either party.

o § 153. When Mistake of one party makes a contract voidable Where the mistake of one party at the time a contract was made as to

a basic assumption on which he made the contract has a material effect on the agreed exchange of performance that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated In § 154

(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or

(b) the other party had reason to know of the mistake or his fault caused the mistake.

- Disclosure o Generally accepted principle that an offeree who knows or should know that

the offeror is making a mistake may not “snap up” the offer suggest a duty to disclose

o One party’s unilateral mistake may be sufficient to void a contract if the other party knew or should have known of the mistake

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- Follow criteria in determining whether relief should be granted o Was the mistake material?o Would enforcement of the contract be unconscionable? o Did the mistake result from “any positive duty or culpable negligence”? o Would the P suffer severe hardship if the contractor were afforded the

relief? o Was prompt notice given?

- Mistakes o Unilateral (153) or mutual mistake (152) o Then apply 154

CISG: Subjective (if know the intent) v. objective theory Time for acceptance of offer runs from date of letter, not date received No mailbox rule

o It is when the acceptance teaches the offeror, not mailed Firm offers --irrevocable if states a duration Last shot principles apply

o Similar to common law but not UCC 2-207 No statute of frauds or parol evidence rule

18. Interpretation - If one of two innocent parties must sustain a loss, the burden is on the party that has

agreed to sustain it/or who wrote the contract - The words used in a contract must be given their usual and established

meaning unless there is sufficient evidence showing that the parties intended a different meaning.

- Most modern courts will say that they really have to hear what the parties believed they intended-- what kind of evidence will the court hear in determining what they meant

o Once they agree to hear, can introduce anything that is relevant - Not applicable with the parol evidence rule - Guides

o Contra Profernetem (412) How to get rid of the ambiguity, construe it against the drafter They had the ability to make it clear and didn’t

o Exoressio uniuis est erchurio alterias Give a list in a contract of breaches, if something is not in that list,

then its not included o Ejuadem Generia

When you have general language followed by specifics By including general phrase and a list, not exclusive, things similar to

the list will be included - When the parties to a contract subjectively, but in good faith, construe an

ambiguous term differently, courts may look to external factors to determine the proper interpretation of the term.

o How to interpret a word/wording of a contract Intrinsic evidence

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Communication (between the parties) P and D sources Quality of the goods – what the contract itself said

- Latent ambiguity o There is no contract if there is a mutual misunderstanding by both parties as

to the meaning of a term of an agreement

H. Abuse of the Bargaining Process - Continuum of abuses of the bargaining process

o Physical duress (really bad) “sign the contract or else” o Improper threats

Example: case where husband stole $, got wife to sign notes Abuse of civil process Innocent party can void the contract

o Fraud Tell someone a fact that will induce them to sign the contract and

you know what you are telling them is false Statement that is not in accord with the facts that the maker of

the statement knows is false Innocent party can void the contract

o Material misrepresentation The party did not know, but was an important fact that induced

the other party to sign Innocent party can void the contract

o Undue influence Where there is a relationship of trust, one person is under the

domination of the other (parent child, doctor patient, etc), because of the relationship, they are able to induce them to something that is false or clearly not in their best interest, agree because that are told to do so

Rarer than you would think Need relationship of trust where one party dominates the other

o Unconscionability Doctrine that gives the court the right to essentially not enforce a

contract or provision of the contract Has its own provision in the UCC

o Bad faith Don’t sue for bad faith, but a court may not enforce a provision if

there was bad faith in the way the contract was formed Relevant tool that courts can use, that as a result of bad faith will

not enforce a particular provisions o Public policy considerations

Court will not enforce a particular provision because of relevant policy in the jurisdiction

Under certain circumstances, the court will not enforce

19. Duty to read

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- Short answer: don’t have a duty to read in the sense that you are liable for everything, if you don’t not a breach-- but if you have an opportunity to read and you don’t, you are still bound by what is in it

- If an agreement has already been reached, UCC § 2-207 does not make additional terms proposed in a later writing a part of that contract.

20. Standardized contracts - Contracts of adhesion – contract that is entirely prepared by one party,

transaction is acceptance of the other, disparity in bargaining power and a take or leave it option

o Reasonable expectations of the insurer o Looking at the language of the policy and if it would be rational for the

terms -- is there ambiguity of what is covered and excluded or masked in very technical language that the layman wouldn’t understand anyway

- Under the reasonable expectations doctrine, if an insurance policy is ambiguous or contains exclusions that are masked by technical or obscure language, the policy will be interpreted according to the reasonable expectations of the insured.

- Two types of misrepresentation o Fraudulent o Material

- § 163. When a Misrepresentation is fraudulent or material - §164. When a misrepresentation makes a contract voidable - Restatement § 162 distinguishes 3 types of misrepresentation (460)

o Maker if misrepresentation knows of believes that the assertion is not in accord with the facts

Fraud o Involves a situation where the maker expressly or impliedly suggests

that the statement is based on knowledge though he knows it is mere opinion

o Involves a situation in which the maker honestly believes his assertion but lies about its basis

- §176. when a threat is improper o Criminal prosecution

- Improper threat §175-176 When Duress by threat makes a contract voidableo When is it a threat of criminal prosecution? Where do you draw the line

between simply information and a threat -- risky for the party being a victim of embezzlement to play that game

Where does giving them information become a implied threat If they had their own counsel, it would be the counsels job to tell

them

21. Duty to disclose - Cannot snap up an offer that is too good to be true - Implication that the offeree has a duty to speak/disclose the fact that the offeror

is making a mistake - Misrepresentation -- Defined as an assertion not in accord with the facts - Concealment

o an affirmative act designed to prevent another from learning the fact - Nondisclosure

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o Involves no affirmative act o The notion of a duty to disclose is antithetical to traditional views of

individuality and bargaining o May have the same effect as misrepresentation

- HYPO: o Selling house, big hole in the wall, hang a picture over it o Misrepresentation or fraudulent o Concealment -- same as making a statement saying there is nothing

wrong with the wall-- affirmative of fraudulent misrepresentation - HYPO

o Buyer applying for mortgage to buy house, giving lending financial info, and 5 days before closing on the sale of the house -- guy loses job

No he makes nothing, went from 150k to nothing Says nothing, close on the loan, loaner then discovers this,

wouldn’t have gone forward with the loan if they had known o Does he have to say anything?

Not concealment o Are there circumstances where failure to disclose the same as a

fraudulent misstatement - § 161. When non-disclosure is equivalent to an assertion

o He knows the lender thinks he makes 150k a year when he makes 0 o Under this restatement, that is the equivalent of saying "I still make

150k" Fraudulent material misstatement

22. Unconscionability - Unconscionability is a defensive contractual remedy which serves to relieve a party

from an unfair contract or from an unfair portion of a contract (determination made by the court, not the jury)

- Behavior can be benign with no intent of misrepresentation or improper threats - Concept that allows a court to not enforce the contract or provision of the contract - §2-302 unconscionable contract or clause & § 208. Unconscionable contract or

term o Neither really say much about it -- court defines what it means

- A contract is voidable as unconscionable of: o The parties bargaining power is significantly unequal and o The weaker party has no choice but to agree to the contract terms dictated

by the stronger party - Two components

o Procedural unconscionability They way the contract is negotiated Have to at least have an Adhesion contract

Most courts say there has to be something more than that Need terms that were difficult to understand, buried in the

contract where a reasonable consumer would see or understand them

Various behaviors that don’t involve the terms of the objective provision itself

o Substantive unconscionability

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Dealing with the provision itself and how it is totally one-sided and fair

Impact of the provision itself being unfair Unreasonably favors the one who wrote it

o Allow the party who is being accused of the provision being able to describe the circumstances of the provision and the consequences of not having such a provision in the contract

- UCC §2-302 o Question of law for the court (not jury) o If unconscionable AT THE TIME IT WAS MADE o Court has several options

Refuse to enforce the contract // Take out that provision // Rewrite the contract

o Can present evidence as to its commercial setting, purpose and effect - Unconscionability requires determination of whether a given term of entire contract

is procedurally unconscionable and substantively unconscionable

23. Good faith - Every contract imposes a duty of good faith upon the parties – read into the contract - Components

o Honesty in fact // observance of reasonable commercial standards of fair dealing

- Restatement § 205 implies a standard of good faith and fair dealing in all contracts o Performance and enforcement (not negotiations unless negotiated for)

- UCC §1-203 o Every contract or duty within this act imposes an obligation of good faith in

its performance or enforcement o Doesn’t say anything about fair dealing b/c good faith is defined as

commercial standard of fair dealing - The duty of good faith prevents a party from taking opportunistic advantage of

another party in a way that was not resolved explicitly by the parties at the time of drafting and that undermines the parties' cooperative venture.

- Don’t sue for bad faith, but bad faith can lead to breach of the agreement

24. Illegal bargains - Public policy in legislation If a statute or other governmental regulation

expressly prohibits the enforcement of an agreement, courts will not enforce it, notwithstanding the presence of all requirements for an otherwise enforceable agreement

- Licensing statutes § 181 o If a party is prohibited from doing an act because of his failure to comply

with licensing, registration or similar requirement, a prose in consideration of doing his act or of his promise to do it is unenforceable on the grounds of public policy if

A) The requirement has a regulatory purpose, and B) The interest in the enforcement of the promise is clearly

outweighed by the public policy behind the requirement o Temp nurses case

- The innocent party doesn’t have to perform his side

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- Contracts in restraint of Trade In considering enforcement of contracts in restraint of trade –contracts in restraint of trade – covenants not to compete

o Analyze is there a protection of the legitimate interest of the party that is enforcing the covenant – if it does, go to the balancing test – balance the interest of both parties to the covenant and the interest of the public

- Two types o Ancillary Restraints

Done in connection with another agreement Typically, when you sell a business, non-compete cause

o Non-ancillary (direct) Restraints Agreement to restrain trade Fix prices or divide markets Direct restraint on trade Not enforceable on contract

- Restatement § 188 Ancillary Restraints on Competition o Balancing test

The buyer, the seller and the public Is the restraint greater than needed to protect the buyer's

interest The buyers need for the protect is outweighed by the hardship to

the seller in not being able to work and injury to the public Injury to public -- if the public doesn’t have access to

whatever the seller was going to do - An agreement to restrain competitive employment will generally be enforced

unless it is:o (1) contrary to public policy, o (2) unnecessary for the employer’s protection, or o (3) unnecessarily restrictive of the employee’s rights.

Illegal Gambling contracts -- contracts where gambling is prohibited Court will leave the parties where they are, either having the bet paid, or not

having paid.

I. Breach25. Conditions, breach and repudiation - Conditions:

o If a condition is not satisfied, one of the parties has the absolute ability to not perform

o If promise, may have to perform o If promissory condition, function as a condition and a promise

The party that was not responsible for the condition doesn’t have perform and they get to sue

o Need to determine if parties agreed/intended to agree to a contract/promise/promissory condition

o Carbolic Smokeball condition -- accepted contract by taking ball under the instructions -- The only condition where you would be paid was if you got the flu

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Condition that had to occur before the obligation to pay was triggered

o § 224 Condition Defined Event, not certain to occur, which must occur before performance is

due - § 225 Restatement-- consequences of the non-occurrence of a condition. (534)

o Performance of a duty or subject cannot become due unless the condition occurs or its non-occurrence is excused

o Unless it has been excused, the non-occurrence of a condition discharges the duty when the condition can no longer occur

o Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur

26. Conditions - If a condition is not fulfilled, the only performance called for after that non-

occurrence were excused - The nonoccurrence of a condition precedent does not excuse the entire

contract obligation.- When it is doubtful whether words create a promise or a condition precedent,

they will be construed as creating a promise- §261 Interpretation of doubtful words as promise or condition (532)

o Where it is doubtful whether words create a promise or an express condition, they are interpreted as creating a promise but the same words may sometimes mean that one party promises a performance and that the other party's promise is conditional on that performance

- §227. Standards of preference with Regard to conditions o More likely to categorize something as a promise and not a condition o Interpretation preferred that avoids forfeiture

- Pay if paid condition - Pay when paid promise - An event that terminates a duty Restatement 230

o Formally known as a condition subsequent o Obligation to do something, but agreement is, if something happens, no

longer have that duty to preform o Case: homeowner/home improvement contract reliant on insurance

- Under § 230 of the Restatement (Second) of Contracts, if a contract provides that a specified event terminates a duty to perform or pay damages, that duty is discharged when the event occurs.

o However, the duty is not discharged if: (1) The specified event occurs as a result of a breach of the

promisor’s duty of good faith and fair dealing, or (2) The event could not practically have been prevented, and

continuing the duty does not subject the promisor to a materially increased burden.

o The duty is also not discharged if, before the specified event occurs, the promisor promises to perform the duty even if the event that terminates a duty occurs.

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- If a contract provides that a specified event terminates a duty to perform, that duty is discharged when the event occurs. Event that if/when it occurs, it terminates the party's contractual obligation

- Condition of personal satisfaction: - A contract term requiring an architect or engineer’s approval before a contractor

may be paid is a binding condition precedent to the contractor’s payment.- Standards of Satisfaction: Objective is the default unless otherwise stated

o Objective reasonable satisfaction standard Applied when the contract involves commercial quality, operative

fitness or mechanical utility which knowledgeable persons are capable of judging

Would a reasonable person would find satisfactory -- must be some standard to measure satisfaction

Mets some objective standardo Subjective personal satisfaction standard

Applied when the contract involves personal aesthetics, taste or fancy

Either someone is satisfied or they are not Has to be honest satisfaction -- good faith Can agree to have subjective satisfaction -- have to be clear that that

is the one you are using - § 228 "if the agreement leaves no doubt that it is only honest satisfaction that is

meant and no more, it will be so interpreted, and the condition does not occur if the obligor is honestly, even though unreasonably, dissatisfied"

- UCC--Expert Judgment o Recognizes that parties to a contract may have agreed to buy and sell certain

items conditioned exclusively upon the price being determined by a particular expert

- UCC -- Sale on approval o The condition of personal satisfaction of the UCC is found in § 2-326(1)(a) o That a buyer of the goods may return them even though they conform to the

contract where the transaction was a "sale upon approval"- Express conditions

o Conditions agreed to between parties as part of their agreement o If explicit in the contract, or done through conduct o Conditions implied in fact -- done through the conduct

- Constructive Condition o Conditions that the court imposes because the parties have not addressed in

in their contract o Restatement § 231. Criterion for determining when performances are

to be exchanged under an exchange of promises Performances are to be exchanged under an exchange of promises if

each promise is at least part of the consideration for the other and the performance of each promise is to be exchanged at least in part for the performance of the other

o Restatement §234. Order of performance (1) where all or part of the performances to be exchanged under an

exchange of promises can be rendered simultaneously, they are to

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that extent due simultaneously, unless the language or the circumstances indicate the contrary

(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 us due at an earlier time than that of the other party, unless the language or the circumstances indicate the contrary.

o The constructive condition of cooperation requires each party to a contract to do what is necessary to enable the other party to perform.

o Each party to a contract has an implied duty to do what is necessary to allow the other parties to perform.

- UCC § 2-307o 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

27. Divisible and instalment contracts - Divisible Contracts

o Contract where there are various parts to it, can be looked at individually o Default in one part of the contract does not mean that the rest of the contract

can be terminated - Under § 183 of the Restatement of Contracts, for a contract to be severable or

divisible: when agreement is enforceable as to agreed equivalents o (1) The parties’ performances must be separable into corresponding

pairs of part performances, and o (2) The parts of each pair must be for equivalent value.

- Think, if they default on something, do they default on everything or is it separate? - UCC – Instalment Contracts

o Treated differently then other contracts under the UCC o IT IS NOT A CONTRACT WHERE YOU MAKE PAYMENTS IN INSTALLMENTS o Number of deliveries of goods separately accepted o Section 2-612(1) Installment contract; breach.

Installment contract -- one that requires or authorizes 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

A provision for separate payment for each lot delivered ordinarily means that the price is at least roughly calculable by units of quantity, but such provision is not essential to an installment contract

o Makes it difficult to get out of the contract just because they blow one installment Would have to mess up several installments before buyer can get out of (if one bad delivery, have to let them cure)

- Excusing the non-occurrence of the condition o Certain circumstances where a court will ignore that conditions existed at all o Have to perform even if the condition has not occurred

- Restatement 229 Avoid disproportionate forfeiture

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- Restatement 84 - Breach of contractual condition of cooperation (Bath Faith) - Repudiation

o If a party repudiation the contract (i.e. option agreement, the party giving the option repudiates, the court may say not going to make the party make the option payment or exercise the option, going to read that condition out of the contract)

28. Breach - Three kinds of breach

o Material and total o Material o Immaterial

- Material and total o Innocent party can stop performing/withhold performanceo Can terminate the contract o Can sue for damages

- Material o Withhold performance until the breach is cured o Sue for damages o Cannot terminate unless the breach becomes material in total

- Immaterial o Sue for damages o Cannot withhold performance and cannot terminate the contract o Smaller breaches

- §241. Circumstances significant in determining whether a failure of material o Was the lessee deprived o Compensation o Would the lessor suffer forfeiture if material breach o Likelihood of curing the failure

- Whether a breach is material is determined by considering the following factors:

o Things to consider when trying to assess--- ask how important and how it effects the parties

o The extent to which the injured party will obtain the substantial benefit which he could have reasonably anticipated;

o The extent to which the injured party may be adequately compensated in damages for lack of complete performance;

o The extent to which the party failing to perform has already partly performed or made preparations for performance;

o The greater or less hardship on the party failing to perform in terminating the contract;

o The willful, negligent or innocent behavior of the party failing to perform;o And the greater or less uncertainty that the party failing to perform will

perform the remainder of the contract. - § 242. Circumstances significant in Determining when the Remaining Duties

are discharged

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o If there is a time problem, might convert a material breach into a material and total breach

o Then the innocent party no longer has to perform and can sue for damages - An accord is a contract under which an obligee promises to accept a substituted

performance in future satisfaction of the obligor’s duty. o Satisfaction is the performance of the accord. o If the obligor breaches an accord, the obligee may enforce either the original

duty or the duty under the accord, but in either case the breach must be material.

- Under § 241 of the Restatement (Second) of Contracts, in deciding whether a breach is material, a court should consider: (563)

o (1) The extent to which the injured party will lose its reasonably expected benefit,

o (2) The extent to which the injured party can be adequately compensated for the part of the benefit it has lost,

o (3) The extent to which the nonperforming party will suffer forfeiture, o (4) The likelihood that the nonperforming party will cure its failure, and o (5) The extent to which the nonperforming party’s behavior comports with

standards of good faith and fair dealing. - IF THERE IS A BREACH, GO THROUGH §241 ANALYSIS - Substantial performance and material breach

o The distinction is very clear, where mutual covenants go to the whole of the construction on both sides; they are mutual conditions, the one precedent to the other. But where they go only a part, where the beach my bay paid in damages, there the D has a remedy on his covenant and shall not plead it as a condition precedent

o Case example: building the house with the wrong brand of pipe o § 229 Excuse of a condition to avoid forfeiture.

To the extent that the non-occurrence of a condition could cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange

Cannot have substantial performance and a material breach at the same time

- The doctrine of substantial performance does not apply to express conditions - §229. Excuse of a condition to avoid forfeiture

o To the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange

o Excusing the non-occurrence of the condition o Court will read the contract as if the condition were not there

- If it’s a condition and you want the court to overlook it –use §229 - A party who is guilty of a wilful breach of contract is not prohibited from recovering

for that party’s substantial performance on the contract - The “perfect tender” rule – rejection – revocation of acceptance

o §2-106. Buyer's Rights on improper delivery If it fails in ANY respect, then the buyer can reject the good

What is the level of perfection that the UCC demands

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o Practice -- if it is super technical there is an argument that if the buyer rejects, (doesn’t affect them whatsoever), then they are acting in bad faith

Between merchants -- If there is usage of trade in that industry, one bundle out of 100 is bad, cannot reject

o if the buyer rejects the goods after the time set for performance passes, then the seller is provided reasonable time to cure if he reasonably believes the goods would have been accepted with or without a money allowance.

o The seller has the burden to prove that any nonconformity was cured. Cured: making the goods conform to the specs that the parties

agreed to - A party may rescind a contract when the goods delivered do not conform precisely

to the contract and the seller has not cured the defects within a reasonable time.- What if the buyer rejects properly -- the seller has a right under the UCC in many

cases to be given the opportunity to cure the defect - §2-508. Cure by seller of improper tender or delivery; replacement

o (1) Where any tender or delivery by the seller is rejected because non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery

o (2) Where the buyer rejects non-conforming tender which the seller had reasonable grounds to believe would be acceptable with ot without money allowance the seller may if he seasonable notifies the buyer have a further reasonable time to substitute a conforming tender

- Revocation of acceptance o If you have accepted something and then want to revoke that acceptance,

standard much higher than rejecting the goods in the first place - §2-608. Revocation of acceptance in whole or in part

o (1) The buyer may revoke his acceptance of a lot of commercial unit whose non-conformity substantially impairs its value to him if he has accepted it

(a) On the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured; or

(b) Without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the sellers assurances

o (2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the found for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

o (3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them

- Sometimes if you don’t properly reject within a reasonable time, you are deemed to have accepted them

o A failure to reject properly is an acceptance under the UCC - If the buyer accepts and realizes later, revocation of acceptance

o Must be a significant problem with the goods o If they can revoke acceptance, same as if they had rejected in the first place o Requires something major to be wrong with the goods, if it is not, cannot

revoke acceptance, but might have a claim for damages against the seller

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- If a buyer does not communicate to the seller within a reasonable time -- deemed to have accepted

- If they use the goods -- even if rejected before but then used, you accepted -- took ownership of the good and then used it

- §2-603. Manner and Effect of rightful rejection o How your supposed to reject o Reasonable time after delivery or tender o If you take ownership/using the goods after rejecting, may be deemed to

have acceptance - §2-606. What constitutes acceptance of goods

o Reasonable opportunity o Fails to make a rejection o Uses the goods as an owner

- If the seller cures and the buyer doesn’t accept, they are in breach

29. Repudiation and excused conditions - Common law: if there is a repudiation, don’t have to wait for the other party to not

perform, can precede now with whatever remedies you have - Early breach -- designed so the innocent party doesn’t have to wait around - Certain circumstances where you shouldn’t have to wait if you know that the other

party will not perform their obligations - Risks

o If you're going to say the other party repudiated, so I'm going to make a deal with someone else, and you do so, and the other party didn’t repudiate, you have repudiated

o Have to have some level of certainty o What would a reasonable person think the communication meant

- Anticipatory repudiation (2-610/11)

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o Anticipatory repudiation occurs when a party states an intention not to perform unless conditions outside of the contract are met.

o A request to modify the contract, including the price term, does not constitute anticipatory repudiation.

- §250. When a statement or an act is a repudiation o A repudiation is

(a) A statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach under § 243, or

(b) A voluntary affirmative act which renders the obligor unable or apparently unable to perform without such breach

o The innocent party has no obligation to perform and can terminate the contract

- “The doctrine of anticipatory repudiation requires a clear manifestation of an intent not to perform the contract on the date of performance….”

o The intention must be stated in a definite an unequivocal manner, not in doubtful and indefinite statements.

o Has to be clear and unequivocal -- common law restatement -- reasonable person standard -- would a reasonable

person believe this to be a total breach UCC similar standard

- Restatement 256: Retraction of repudiation o Can only retract if the innocent party hasn’t changed in a material way o Cannot retract if the innocent party has said they consider the repudiation to

be final - If the innocent party acknowledges the repudiation and they tell the party they

consider it to be final, it cannot be retracted. - Retraction of Repudiation

o UCC § 2-611, Retraction of Anticipatory Repudiation, states: (1) Until the repudiating party's next performance is due he can

retract his repudiation unless the aggrieved party has since the repudiation canceled or materially changed his position or otherwise indicated that he considers the repudiation final

(2) Retraction may be by any method which clearly indicated to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of this article

(3) Retraction reinstates the repudiating party's rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation

o SAME AS UNDER THE COMMON LAW - Careful with proceeding as if there was a repudiation – need to make sure there is

one, otherwise you could be in breach - UCC § 2-609 have to have reasonable grounds for insecurity and what you ask for

has to be reasonable assurance o (1) A contract for sale imposes an obligation on each party that the other's

expectation of receiving due performance will not be impaired. When reasonable founds for insecurity arises with respect to the performance of either party, the other may in written demand adequate assurance of due

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performance and until he received such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return

2-609 is chill with modifications -- we good fam. o (2) Between merchants the reasonableness of grounds for insecurity and the

adequacy of any assurance offered shall be determined according to commercial standards

o (3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance

o (4) After receipt of a justified demand failure to provide within a reasonable time not exceeding 30 days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract

- If you make a demand, assuming reasonable, and buyer refuses, then 2-609(4) says that if they had a reasonable time, and they don’t do anything, then they had repudiated and go back to 2-610 and figure out what to do

- Demanding assurance (UCC 2-609, Rest 251) o Don’t know if repudiated o Made demand on the party to give assurance that they are not repudiating o If they do so, proceed with the contract o Have to have some reasonable basis to do so

Unreasonable demand, you are in breach- Excused conditions -- prevention, hindrance and waiver

o Non-occurrence of a condition may be excused on a variety of grounds o Excusing a condition o Prevention or hindrance of their occurrence through a breach of the duty of

good faith and fair dealing which may also be viewed as a "Constructive condition of cooperation" and the "waiver" of conditions

- An insurer waives the performance of conditions precedent when it acts in a way that is inconsistent with insisting on strict compliance with those conditions.

- § 297 of the Restatement of Contracts, a party whose performance is dependent on another party’s performance of a condition may waive that condition only if it is not “a material part of the agreed exchange.”

o If the condition is a material part of the agreed exchange, then its waiver involves a new undertaking to such a degree that the requirements for creating a new contract must exist.

- Restatement § 84(1) Waivers of technical things are okay, waivers of material things need

consideration o (1) Except as stated in subsection (2) a promise to perform all or part of a

conditional duty under an antecedent contract in spite of the non-occurrence of the condition is binding, whether the promise is made before or after the time for the condition to occur, unless

(a) Occurrence of the condition was a material part of the agreed exchange for the performance of the duty and the promisee was under no duty that it occur; or courts will enforce promises to perform in spite of the condition not being satisfied as long as it wasn’t part of the material part of the exchange

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o If you are promise to do something, not withstanding the fact the condition as not being satisfied and its important -- need consideration

- To supply the money? QUESTION – WHEN IS CONSIDERATION NEEDED HEREo If the condition is technical, don’t need consideration, the promise will be

enforceable anyways - (b) Uncertainty of the occurrence of the condition was an element of the ricks

assumed by the promisor

J. Risk Allocation 30. Risk allocation- Reasons of un-performance but still not in breach because of outside factors (of a

contract that is otherwise enforceable) - In contracts in which the performance depends on the continued existence of a

given person or thing, a condition is implied that the impossibility of performance arising from the perishing or destruction of the person or thing shall excuse the performance.

- Because impossible, excusing the nonperformance o The idea of excusing the non-performance, tied in to behavior, if it burned

down because of owners negligence, the doctrine of impossibility would not be applied

- Doctrine of impracticability o Relieves a particular party from the obligation to perform o Event occurs that is so fundamental that one of the parties is relieved from

their obligation to perform and its not a breach o I.e. theater burned down example

- 2-615, 261 o UCC, market changes aren’t an event that would cause impracticability

Ie. Tomato farmer with drought example - §2-615. Excuse by failure of presupposed conditions

o ONLY DEALS WITH SELLERS, NOT BUYERS -- except when you can bring in the restatement/common law "frustration of purpose"

o If you don’t deliver, its not a breach if performance has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made

o Only for the sale of goods o What situations are they talking about

Seller, market price for goods costs have increased 5x, according to the seller, that is an occurrence of a condition, the non-occurrence of which was a basic assumption that the market for the raw materials would remain the same -- this is not covered b 2-615 (increased costs alone are not a sufficient contingency)

If dealing with situation where the costs of raw materials have increased because of something like a massive drought, does that change the ability to apply 2-615 to seller?

Maybe, because the contingency is the massive drought, not something that can be foreseen and that nobody is responsible as such.

Consequence might be increased costs, but the underlying reason would be the drought

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o Is there always an underlying reason Unforeseen

- § 261. Discharge by supervening impracticability o 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 tender that performance is discharged, unless the language or the circumstances indicate the contrary

- Commercial impracticabilityo The court listed three conditions that must occur for the doctrine of

impossibility to apply. o First, something unexpected must have occurred.

The non-occurrence of which is a basic assumption of the contract Cannot be something completely unexpected

o Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom.

"Unless the language of the circumstances indicate the contrary" – if they knew that this was a possibility and went through with the contract anyways -- circumstances indicate that they were not expecting to be refused-- they knew about it

Just because something is foreseeable, doesn’t automatically mean you cannot use that as a basis for impractability, but it makes it more difficult

o Third, occurrence of the contingency must have rendered performance commercially impracticable.

Policy issues -- court should rescue people from entering into a bad contract, because of the conflict, they could have added additional costs to the contract and added conditions for the closure. Could have also gotten insurance

- 2-615. Excuse by failure of presupposed conditions o (b) -- have to make allocation decisions on who gets what -- supposed to

give the seller flexibility -- standard, what is fair and reasonable (regular customer v. one time buyer)

If a buyer receives a reduced about under this, not obligated to take it (2-616)

o If buyer cannot use 2-615 o By its terms, only available to sellers o HYPO: If a buyer agreed to buy goods from seller and then their

manufacturing plant destroyed by weather event, cant use 2-615 because they are a buyer, is the buyer still obligated to buy the goods from the seller?

If this happened to the seller, they can make a good argument for 2-615 and be off the hook

What can the buyer do? In the comments of this section: The reasoning behind this

section, ought to apply to buyers (similarly situated) How to make that happen?

o UCC will allow the importation of ideas from the restatement as long as there is no explicate section under the UCC

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o 1-103. construction of ICC to promote its purposes and policies; applicability of supplemental principles of law

Take the reasoning of the restatement and use 1-103 and that it authorizes section 265 of restatement because there is no UCC provision

- Frustration of purpose o frustration of purpose excuses contract performance when:

(1) the party’s principal purpose in making the contract is frustrated, (2) without that party’s fault, (3) by the occurrence of an event, the non-occurrence of which was a

basic assumption on which the contract was made. o Restatement § 265: The principal purpose: "must be so completely the

basis of the contract that, as both parties understand, without it the transaction would make little sense"

- Contract to assume the risk o A party to a contract is not excused from performance because of

impracticability or frustration of purpose if the party specifically agreed to assume the risk of the contract and perform despite impracticability or frustration of purpose.

- Relationship of these concepts and the idea of mistake o Mistake -- belief not in accord with the facts o Typically mistake happens at the time the contract was made

Has to have a material effect o Impractability and frustration of purpose -- event typically happens after the

contract has been made during the performance Something more than a material effect -- higher threshold

- Force Majeure Clause o Contract (particularly long term contracts) often contain excusable delay or

force majeure clauses, which seek to excuse a party for various events outside his control

"Without limitations" "Including, but not limited to"

o Function: don’t have to worry about what the court tells the parties to do, they already agreed privately under what circumstances will they be relieved of their obligations

o Anything that was unforeseeable that would significantly change how the contract would be carried out

Similar to 2-615? What is the difference? Depends on how you draft the clause, there is overlap to some extent Critical difference between having the clause in the contract and the

application of 2-615 2-615 is something that the parties agree to, they don’t have

to then wonder how a court will handle a situation. Force majeure takes that decision out of the courts hand and

have the parties decide how they want to handle it o What happens in practice

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Becomes a boilerplate clause that gets stuck into the contract and is rarely negotiated

Need to pay sufficient attention to it - A party to a fixed-price contract cannot excuse performance for frustration of

purpose or impossibility.- Doctrine of Mistake of fact requires the mistake related to a basic assumption on

which the contract was made - Doctrine of impracticability requires that the non-occurrence of the event or the

non-existence of the fact causing the impracticability be a basic assumption on which the contract was made

- The doctrine of frustration of purpose rests on the same non-occurrence or non-existence basic assumption equation

K. Remedies 31. Intro and purpose

- Three interests: find the one that fits the fact pattern the best o Restitution interest o Reliance interest o Expectation interest

- Restitution interest o P has in reliance on the promise of the D conferred some value on the D.

D fails to perform his promise o Court may force D to disgorge the value he received form the P o The prevention of unjust enrichment o Not a typical thing you would ask foro Can be measured by what the contract price was

If you finished half the contract, then the reinstitution price would be half the price

- Reliance interest o Objective is to put the P in as good a position as he was in before the

promise is made o Reimbursement of out of pocket costs o Can be useful when there is no profit in the transaction

- Expectation interest o Where you would have been if the contract had been performed o Most common -- this was the goal entered into the contract for

- Concept of EFFICIENT BREACH o Those involved in law and economics use this term o Efficient breach

Seller will come ahead by breaching, that it is worth it to breach with buyer 1

Everyone gets what they want Seller -- more money Buyer 1 -- breached remedy Buyer 2 -- goods

o NOT A LEGAL CONCEPT Just a tool to describe what has happened

32. Expectation interest

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- Core expectations of remedies -- to be put in a position that they were before - Hadley v. Baxendale, (needed the part for the mill, shipping company delay)

o When one party breaches a contract, the other party may recover all damages that are reasonably foreseeable to both parties at the time of making the contract.

o Anything that happens as a consequence of the breach is a proper damage that the breaching party has to pay

The fact that the mill could not operate under the existing law before this case, that was a consequence of the breach, didn’t ask, who knew what and when // the damage was the damage

This case changed that o Limitation on collecting expectation damages

If applicable a party wouldn’t be put in the same position as if the contract did perform

THE DEFENDANT HAD TO BE ABLE TO FORESEE THAT THIS WOULD HAPPEN AS A RESULT OF THEIR BREACH

They were not told that the mill was stopped or if it was normal for the mill to have a back up -- that’s why there was a big dispute if they were told or not

o When one party breaches a contract, the other party may recover all damages that are reasonably foreseeable to both parties at the time of making the contract, as well as damages stemming from any special circumstances, provided those circumstances were communicated to and known by all parties at contract formation.

Hadley rule places a limitation on recoverable damages Not just all damages occurring as the result of the breach, the

damages have to be something the breacher knew or should have known about

o If told, the loss becomes foreseeable and can be recovered in damages - §351. Foreseeability and related limitations on damages (consequential

damages) o (1) Damages are not recoverable for loss that the party in breach did not

have reason to foresee as a probable result of the breach when the contract was made

o (2) Loss may be foreseeable as a probable result of a breach because it follows from the breach

(a) In the ordinary course of events, or (general damages) (b) As a result of special circumstances, beyond the ordinary course

of events, that the party in breach had reason to know. (special damages)

o (3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.

- §351. Foreseeability and Related Limitations on Damages o What was known AT THE TIME THE CONTRACT WAS MADE o Can apply reliance damages as well as expectation o Need to ask was it obvious or were they told? o Special consequential damages

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In order for the D to be liable, needed to know or should have known of the potential damages

Reason to foresee o General consequential damages

The ordinary course of events o Courts retain some ability to draw a line for liability if it would be an unjust

situation -- disproportionate compensation - The essential limitation is foreseeability -- either because its obvious or

because you were told - CISG: as a "possible result" of the breach

o More likely to recover more damages because you only need a possible result of the breach and not a probable result of the breach

- Special damages are those that a party would not have reason to foresee as a natural consequence of the breach when the contract was made

o To be liable for special damages a party would have to be notified of the otherwise unforeseeable circumstances at the time of the contract formation

- When the contract was made or modified, could the issue be foreseeable - Difference between UCC and Restatement (same concept slightly different words)

o UCC -- Incidental damages -- dealing with a sellers breach, buyer has expenses of returning goods or buying other goods

Equivalent to general consequential damages o UCC -- consequential damages

Restatement -- special consequential damages - Damages for a breach of contract may be recovered only if they were actually

caused by the breach // Need to be foreseeable causation of breach - UCC § 2-715. Buyer's incidental and consequential damages

o (1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

o (2) Consequential damages resulting from the seller's breach include (a) any loss resulting from general or particular requirements and

needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of warranty.

o (2) is the same as general/special consequential damages - Certainty Limitation

o Estimations are not sufficient to overcome reasonable certainty bar to recover lost profits

o Lost profits are recoverable if they are a natural consequence of the breach of contract, reasonably foreseeable, and established with reasonable certainty.

o The new business rule does not operate to automatically preclude the recovery of lost profits by a new business or enterprise

o Lost profits can be established with reasonably certainty

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If cannot prove lost profits, can use reliance damages or restitution damages

- Standard by which courts measure being able to get lost profits o REASONABLE CERTAINTY o Has to be enough data for the court to say there is a rational basis for

whatever the calculation is - Even if no data from that particular location, doesn’t completely close the ability to

show what the profits would be o Market forecast for similar businesses o Restaurants in the area o If the owner is a restaurant or and has a consistent track record

- Consequential damages after something happens to a business that loses their profit o Profits before minus profits after = consequential damages o Or can look at the good will of the business which was damages because of

the breach What the business was worth before (-) what it is worth after the

breach - §352. Uncertainty as a limitation on damages

o Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonably clarity

- §353. Loss due to Emotional disturbance o Needs to be a particularly likely result or bodily harm o Very limited o Typically if emotional distress need to go into torts, not contracts

- In general: courts will not give damages for emotional distress as a result of a breach of contract

o Exceptions: Bodily harm associated with the contract breach Nature of the contract has to be foreseeable that there would be

emotional distress i.e. mishandling a body (funeral home), public facilities and public

shamingo VERY limited -- tends to be associated with outrageous conduct in the

context of something that would be clear that some form of emotional distress would occur if the contract was breached

- Limitations of [foreseeability, lack of certainty, lack of emotional distress and responsibility to minimize damages (mitigation/avoidance)]

- The Mitigation Limitation – avoidable consequences o §350. Avoidability as a limitation on damages

Cannot recover damages for losses you could have avoided as long as you could avoid them without undue risk, burden or humiliation

o Not a duty that can be sued for if you breach, but your damages might be reduced if you don’t try and mitigate

o Before a employees damages may be reduced by wages earned form other employment, there must be proof that such other employment was

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incompatible with his obligations under the contract breached by his employer

- If a wrongfully discharged employee makes no reasonable effort to seek or accept similar work, the employer is entitled to a reduction in the amount of damages awarded to the employee.

- UCC Mitigation o §2-715(2)(a): consequential damages include any loss which could not

reasonably be prevented by cover or otherwise -- this is the mitigation concept built into the UCC

HYPO: that a seller supposed to deliver goods to the buyer, doesn’t, if the buyer normally would go out and buy from someone else to complete its project -- if they did, this would be called cover -- if they ended up paying more, damages to the seller would be the difference -- this is mitigation for a UCC buyer

If the buyer didn’t get the parts form someone else, they cannot say they lost of profits they would have made from the project because they didn’t buy the parts from someone else (if they could) and therefore they have failed to mitigate -- consequences, they cannot ask for lost profits (consequential damages) as a result of the sellers breach

- Liquidated Damages o Parties have agreed in their contract how much they will pay (what the

damages will be) if there is a breach o Has to be reasonable in light of loss and difficulties of proof of loss o Courts likely to strike down if there a huge disparity o Requirement of uncertainty o § 356 Liquidated damages and penalties

Damages for a breach by either party may be liquidated in the contract, but only in an amount that is reasonable in light of both the anticipated or actual loss caused by the breach and the difficulties of proving the loss.

Has to be reasonable in light of the anticipated or actual loss If the anticipated loss was there at the time they entered into

the contract How easy it would be to calculate what the loss from a breach would

be, if it was easily calculable and the amount in the liquidated damages clause was easily calculable, the court might not enforce as it was easy to calculate

The more difficult it is to calculate damages upfront, the more likely the court will enforce the liquidated damages clause

- Liquidated damages are allowed only if the amount is reasonable in light of: o (1) The anticipated or actual loss caused by the breach and o (2) The difficulties of proving the loss.

- §2-718. Liquidation or limitation of damages; deposits o Very similar to the restatement o Whether under UCC or common law, the standard is the same o Have to be reasonable at one or the other time, unless the amount is too

much

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o The amount in the clause must be reasonable in the light of anticipated or actual harm

- What if you had a contract that said either perform or pay money o Is that liquidated damages or alternative performances the party can elect o If alternative performance -- not liquidated damages o How to tell? o Situations to perform services, and can be paid by getting services from

buyer or $ o Obligation is either one, doesn’t matter to the seller, bargained for

- What if liquidation clause in contract and a number of performances, they perform some but not others

o Liquidated damages -- based on the damages from the particular breach(s) that the party made (not all the breaches that they could have made)

o Don’t need a clause for each kind of breach that the party made, can have a general one

- Traditional expectation damages o Contract price (-) cost to complete = damages o Typically with the owner in default in construction project use the contract

price – the cost to compete - Case: used the wrong pipes: Value comparison

o Did using the non-reading pipe diminish the value in anyway? o What is the difference in value of the house with the reading pipe compared

to non-reading pipe (Diminution in value) o Substantial performance – immaterial breach

- In a construction contract, the injured party may recover the cost of completing unfinished work even when the value of the property as a whole is not diminished by the unfinished work. [Contract price] – [cost of completion]

o How to put the builder in the position they would have been in - Look into how important it was at the time they entered into the contract, was

it a principle part of the contract? And how much of the work did the contractor do?

33. Reliance and restitution interests - Reliance damages -- the amount of out of pocket damages you have suffered

o Out of pocket costs - Restitution damages -- what is the value you have given/bestowed upon the

breaching party (did someone become unjustly enriched?) o Amount of enrichment the breaching partyo Restitution also applies to quasi-contract situations

- Expectation damages: the potential of lost profits- A party injured by a breach of contract may recover both restitution (for the

breaching party) and reliance damages (from third party payments).- §2-306. Output, requirement and exclusive dealing

o Best efforts standard (more than good faith) - §349 Damages based on reliance interest

o "Less any loss that the party in breach can prove in reasonably certainty that the injured party would have suffered if the contract was performed"

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- Cannot get full reliance interest if you are going to lose money under that contract - Go over the different types of damages when assessing which one to use (why

using that one compared to the others) - Restitution interest

o Can only get restitution is the contract is not finished, if finished cannot get restitution

o Nothing gets deducted o Unjust enrichment

- Expectation and reliance interest o Any loss you were going to suffer under the contract will be deducted from

any amount you claim - §373. Restitution when the other party is in breach

o 1) Subject to the rule stated in Subsection (2), on a breach by non-performance that gives rise to a claim for damages for total breach or on a repudiation, the injured party is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance.

o (2) The injured party has no right to restitution if he has performed all of his duties under the contract and no performance by the other party remains due other than payment of a definite sum of money for that performance.

- Damages o Expectation

Contract price (–) cost to complete o Reliance

The amount out of pocket (-) the amount they would have lost What is the out of pocket amount that the non-breaching party can

collect Deduct from what would have been lost had the contract been

completed o Restitution

How much did they benefit the other party? (Unjust enrichment)- §374. Restitution in favor of party in breach.

o May be entitled to something, but can only get that amount that is in excess of the lost that you have caused

- A party who breaches a contract is entitled to recover the benefit he has conferred on the non-breaching party by his partial performance.

- Quasi Contract o Not a contract remedy because there is no contract o Cant recover in contract, but can in restitution o 2 ways to calculate

What is the value of the services performed? What is the value of X before the services were performed v. after?

34. Specific performance (enforcing the promise) - Is not adequate remedy at law, such as uncertainty in damages or unique/scarce

goods // Cant determine what the damages are going to be - Standard for specific performance – when the normal damage remedy is not

adequate o Must do something – positive decree

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o Must not do something – injunctive decree - Damages are the normal remedy for a breach of contract, but a permanent

injunction may be more appropriate if the plaintiff shows that damages are inadequate based on balancing the costs and benefits of the alternatives.

- § 360. Factors affecting adequacy of damages o In determining whether the remedy in damages would be adequate, the

following circumstances are significant: (a) The difficulty of proving damages with reasonable certainty, (b) The difficulty of procuring a suitable substitute performance by

means of money awarded as damages, and (c) The likelihood that an award of damages could not be collected.

- Usually that you cannot compute the damages - §2-716 allows the remedy of specific performance where the goods are unique

or in other proper circumstances o Specific performance (in the sale of goods) may be decreed where the goods

are unique or in other proper circumstances Unique: collectable, -- damages would not be adequate because "I

want the good and this is the only place to get it" Other proper circumstances: the good might not be strictly unique,

but the ability to get another one is impossible/hard to get/wont be able to get it in time from another source

o Equitable relief Having specific performance or injunction When the court is granting this, it has wide discretion The courts under the restatement have similar discretion

- CISG: o Foreseeability is broader, since it captures things that a possible result of the

breach as opposed to probable result o Basic remedy is specific performance, not damages o Default rule for CISG: Article 46 and 62

Essentially that we prefer specific performance in the CISG General rule with respect to it Force sellers to sell, force buyers to buy

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