DEFENSES BASED ON SUPERVENING ISSUES STEP BY STEP

[4 Types] 1) Determine MISUNDERSTANDING (4) Trigger = Totally separate meanings

a) Different Meaning: Parties have different meanings for the same word(s) b) Knowledge: Neither party knows what the other party means c) Materiality: Word(s) are material to the K d) Reasonableness: One partys meaning is not more reasonable than other partys meaning e) Cases: Raffles, Konic (surge protector fifty six twenty)

2) Determine MUTUAL MISTAKE (5) Trigger = Both parties mistaken

a) Fact Existed at Time of K: Error must be made at the time of contracting and it must relate to a state of affairs existing at the time, rather than one predicted to occur in the future b) Mutual Mistake: Parties are both wrong concerning the fact c) Basic Assumption: Mistaken fact must be fundamental to shared intent of parties such that they would not have entered a K at all / on these terms. Test examines both parties motivations d) Mistake has Material Effect: OBJ assessment of mistakes impact on the exchange to see if it substantially deprived the adversely affected party of the value expected e) Complaining Party doesnt Bear Risk: Key element! Risk allocated by i) K itself: Either through an express clause or inferred from terms ii) Culpability: Was complaining party reckless about lack of knowledge? iii) Reasonableness: Is it reasonable for X party to bear the risk? f) Cases: Barren Cow Case / Topaz was a Diamond Case (no mistake -> parties arguing over value, not gem type)

4) Determine IMPRACTICABILITY (4) Trigger = Supervening event > performance impractical

a) Supervening Event: Unforeseeable future event occurs. When parties made a K they expressly/impliedly made assumptions about future course of events that were central motivation of the K b) Event is Unduly Burdensome: Event has such a severe impact on party that performance incurs great loss/risk/hardship

c) No Fault: Party seeking relief was not at fault in causing the event d) No Risk: Party seeking relief did not bear risk of event occurring. First look in K for express/implied risk allocation. Then look at context, including normal commercial practices and expectations e) Cases: Music Hall Burns Down Case (Impractical -> providing hall was basic purpose of performance) / Wheat Lost to Cold Case (Not impractical -> farmer could buy wheat to fill quota)

5) Determine FRUSTRATION OF PURPOSE Trigger = Supervening event > performance moot

a) Supervening Event b) Event Frustrates Ks Purpose: Purpose must be so patent/obvious to the other party that it can reasonably be regarded as the shared basis of the K. c) No Fault d) No Risk e) Cases: King Coronation (King sick, sublet apt. now useless -> can still perform, but purpose moot = FoP) / Iraq War Convention (Company backs out of convention center deal because off Iraq War terror flight concerns -> can still perform, purpose of K for convention center was not same as Company = no FoP)