CONTRACTSOUTLINEFALL2015

DOESUCCAPPLY?
2105:(1)Goodsmeansallthingswhicharemoveable[]atthetimeof
identificationtocontractforsale+Software
AContractrequires:
1) Partiescapableofmanifestingconsent
2) Clearmanifestationsofassent
3) Consideration
4) Mutuality(forbilateralKsonly)
IsthereDefiniteness?(SunRemingtonPaper)
Keytermssortedout?(Texacov.Pennzoil)
Howcaneachpartybreach?(RequirementsKw/noexclusivity
clause).
WhatwasthekeypurposeoftheKforeachparty?
StatuteofFrauds?
Unilateralorbilateral?
Offer:
Isitanofferoranadvertisement(NebraskaSeedCo.)?Asolicitationforan
offer?(Restatement26)
Inthecircumstances,canitreasonablybeviewedasanoffer(Embryv.
Hargadine,McKittrickDryGoods/Leonardv.Pepsico)(Restatement24)?
Agreementtoagree?(Emprov.Ballco)
Allessentialtermsagreedto?(Texacov.Pennzoil4parttest)
Acceptance:
Wasofferrevokedbeforeacceptance(Dickinsonv.Dodd).Hastherebeena
reasonablelapseoftime?(Restatement42)
Wastheacceptanceequivocalandthereforeacounteroffer?
Isitreasonableforoffereetosubjectivelythinkofitasanoffer(Leonardo,
Embro)?
Howdiditinviteacceptance?Throughperformance(rest.45)orthrough
performanceorapromise(Rest.32/62DEFAULTRULE)
Didofferrequirenotificationofacceptanceornot(CarbolicSmokeBall).
Wasacceptanceunambiguous(Whitev.Corlies&Tifft)?
1) Wasitreasonablydesignedforofferortoknow?
2) Wastheperformanceaclearsignofacceptance?
Wasitacceptedbysilence(Rest.69/Hobbes)Offerormadethatoptionclear
andbenefitaccruedtoofferee
Defenses:
1) Duress(lackoffreewill)especiallyinmodifications(Loralv.Austin)
2) MutualMistake(ask:towhomwasriskallocated)(Nesterv.Michicigan)
3) Failureofamutualassumption(Towhomwasriskallocated?)

4) FrustrationofPurpose(Henryv.Krell)
5) Impracticability(UnderUCCImpracticablenotimpossible)(Taylorv.
Caldwell)
6) UndoInfluence(Twosides:overpersuasionandcompromisedstate)(Ordorizzi)
7) Unconscionable(Williamsv.WalkerThomasFurniture)
AcceptedTerms:
1) Whenwastimeofacceptance?Whenwereessentialtermshammeredout(Step
Saverv.Wyse)
2) Wasitclearthatpartywouldnotproceedwithoutadditionofterms(StepSaver)?
3) DoesHillOrKlocekapply?Hill:Vendormasterofofferdecidesthatoffer
acceptedathomethroughkeepingitlongerthanthirtydayshavinghadchanceto
readandaccepttermsthroughsilence.Klocek:Vendorsolicitsandofferand
acceptscustomersofferw/outmakingitclearthatacceptanceisconditionedon
termsinside.
4) DidVendorproposethatKbeformedathomethroughsilentacceptanceofthe
good(ProCD)?
5) Istherenotice(CarnivalCruise)?
a. EasterbrookinHill:Everyoneknows
Ambiguity:
1) Didonesidehavereasontoknowoftheothersmistake?(Oswaldv.Allen)
2) Wasriskallocated?
3) Wasitimmaterial(Raffles)?
4) Wasitbetweenpeoplew/acommontradelanguage(Weinbergv.Edelstein)?
5) Courseofperformancehelpful?
6) Didbothpartiesmeansamething?Thensubjectivemeaningapplies.
a. FromSpecifictoGeneral:Expressterms,courseofperformance,courseof
dealings,tradeusageINTHATORDER
7) Isonesidesinterpretationreasonableandtheothernot?(ThenReasonableside
wins.
a. Penalize,majoritarian,literal,tailoring
EmptyTerms:
1) Isthereapossibilityforcurebyconcession?(SunPrinting)
2) HowmanydifferentpossibleKsarethere(SunPrintingv.RemingtonPaper).
3) Someambiguitybutenoughthere(Texacov.Pennzoil).UCCProK
1. Istheemptytermimplied(Woodv.Lucy)?Becareful:itmustbetoo
obviousforwords
Consideration:
1) Wasitbargainedfor?Istheconsiderationrequiredforbyofferorandnot
gratuitous?(InOtterbein,promisetopaydebtdidntinduceoffer)
2) Istheremutuality?(EasternAirlines)
3) Istherelimitationsononeparty?(LadyLucy)
4) Isthereforbearance(Hamerv.Sidway/Dyerv.NationalByProducts,Inc)?
5) Wastheconsiderationaftertheact(Moorev.Elmer/Millsv.Wyman)?
6) Wasthereatacitagreementbeforehand(Webbv.McGowin)?

7) WasthereaHUGEbenefitbeforepromise(Webbv.McGowin)?
8) Isitinadequate(Schnellv.Nell)?
9) Didithavenovalue(Newmanv.Snell)?
a. Butsubjectivevalue?
OptionContract
1) IsitCLdoesithaveconsideration(Rest.25?)
a. Doesthismakesenseifyouwantsomeonetoinvestresearchorsomething
beforetheypotentiallybuy?
2) Isitsigned,w/fairandreasonableproposedtermsandtime?(Rest.87)then
nominalconsiderationisacceptableatCL
3) UCC??...noconsiderationnecessaryifbetweenmerchantsandsigned(2205)
Modification:
1) Wastheremoreworkasconsideration?(AlaskaPackerspreexistingdutyrule)
2) Dutyhadnotalreadybeenassumed(Stilkv.Myrick)?
3) Isthereadditionalworkorunanticipated/thereforeunbargaingedfor/notpriced
intoKstuffthatcameup(BrianConstructionandDevelopmentCo.)?
NOK?
EquitableDoctrines:
PromissoryEstopel:
1) Couldofferhavereasonablyexpectedreliance?(Ricketsv.Scothorn;
Feinbergv.Feifer)
2) Wasitforeseeablethatoffer/promisewouldinducesomeforbearanceor
action?(Drennan)
3) Wasreliancereasonable?(Aldenv.Presley)
4) Wasitdetrimental?(Goodmanv.Dicker)
5) Caninjusticebepreventedanyway?(Cowles/Goodman/Feifer)
6) Wasitapromiseormerepuffery(Ypsilanti)?
ParolEvidenceRuleStagesofEvaluation:
1) Extrinsicevidencealwayswelcometodeterminelevelofintegration(judge)
a. Documentonitsowncantsolelydeterminelevelofintegration(Rest.210
comment(b))/Rest.214saysprioragreementsareevidenceasto
integration(Brownv.OliverpartialintegrationK)
2) UCC2202rejectspresumptionofintegration:oralagreementexcludedonlyifit
certainly(asopposedtonaturallyorreasonably)beenintheK;UCCvery
proParolEvidencemaybeeveneliminatesrule
3) UCC2202(a)evenallowsParoleEvidenceAstobusinessnormsinadispute
overacompletelyintegratedagreement
4) JudgedecideswhetheraKisreasonablysusceptibletomeaningallegedby
parolevideneandappliesaccordingly/presentstojury
5) Inconsistentprioragreementsaredischarged(Rest.213)
6) Priorconsistentterms(Rest.216)excludedforafullyintegratedagreement
7) Partiallyintegratedagreementif:
I. Additionalconsiderationpaidforothertermsor,
II. Wouldordinarilybeomittedunderthecircumstances

ImpliedCovenants(BeCareful!):
1) Diditincreasetheoverallsizeofthepie?
2) Didpiestaythesamebutincreasedlessorsshareatlesseesexpense(Goldberg)?
3) Burdenonthelessortoprovethatrentwasbelowmarketvalueandthat
percentageofsaleswasthereforeimpliedcovenantcreating(StopandShop).
Warranties:
1) UCCImplied:Merchantability(passwithoutobjectioninthetrade)andFitness
forPurpose
2) Basisforthebargaininrestatementtalk
3) Ifbuyerdidnotstatepurpose,did
a. sellerhavereasontoknowofparticularpurpose?
b. Buyerrelyuponsellersskillorjudgment?
4) Isitanaffirmationbytheselleraboutthegoodsthatbecomesabasisforthe
bargain?
5) Expresswarrantynotdeniedbyasisclause?
Policy:DefaultwarrantiessaveTransactionCosts;clearlyallocaterisks
SubstantialPerformance:
1) Isitamaterialbreach(Bowen)?
a. Ask:WhatwasthepurposeoftheK?Thatsthematerialsubstance
2) Orimmaterial(Jacobsv.Youngs/Peevyhouse)?
3) Isitjustagoodfaithholdingofsmallamounts(Lane)?
4) Werethereidiosyncraticvalues?(Grovesv.JohnWunderCo.)?
a. IfSo,thenincludetheminthecalculus:
i. ValueifasKdforMINUSpresentvalue
5) IfUCC,didsellerhaveachancetocure?(Ramirez)
6) Didntexerciseoptiontocomplainbutcanstillsuefordamages?
7) Isthereanidiosyncraticvalue(Peevyhouse/Groves)?
8) Iscostofcompletiondisproportionatetoprobableloss?(Rest.348)
AnticipatoryRepudiation:
1) Isthereadefiniteandunequivocalmanifestationfromotherpartythattheywill
breach?(Harrelv.SeaColony)
2) Arethegroundsforinsecurityreasonableenoughtodemandreassurance?(Scott)
3) Isthedemandforreassuranceclearandconveyedproperly?(Scottv.Crown)
4) Doeslackofresponsetodemandforreassuranceconstituterepudiation(Lane)?
5)
StatuteofFrauds:
1) Morethan$500,morethanoneyear,marriage,land
2) Wasitadmitted?(Rileycouldhaveargued)?
3) CanPEtakeitouttoprotectreliance(Boonev.Coecouldhave)?
4) Isitaspeciallymanufacturedgoodthatcantbesoldtoothersintheordinary
courseofbusiness?
PrinciplesofEnforceability:

Will:Promisorhaswilledorfreelychosentobeboundandthereforemustbe
bound
Reliance:protectpromiseesreasonablereliance
Restitution:Disgorgeunjustenrichment,unjustbecausebasedonbreached
promiseextensionofrelianceb/cgainhasresultedfromrelianceofpromisee
Efficiencyprinciple:doesenforcementcreateefficiencyandincreasethesizeof
thepie?
Substantivefairnessshocktheconscienceunenforceable
Bargainedfor:createlineclearthatpromiseexisted
Misrepresentation
1) Wasitamaterialinducement?(Halpertv.Rosenthal)?
2) WasitanhonestmistakeofofferorattimeofK,notfraud?(Halpert)
a. Cureisrecissionandrestitution
3) WasitOpinionorFact
a. Marketvaluestatementsusuallyfact
b. Ifitisidiosyncraticvaluethenitsopinion
c. Sellerinpositionofspecialknowledge?(Boynton,allegedly)
d. Fiduciaryresponsibility?(Vokes)
Duress
1) Offerorthreat?Offermayimprovethestatusquo,whereasthreatmayfuckitup
2) Doesitmeetthenoreasonablealternativestest?(Austin)
3) Isitclearthatconditionsareonlyacceptedunderduress?(Progressive)
4) Didnoduressedpartycreatethelackoffreewill?
UndoInfluene
SeeOdorizzi
1) OverPersuasionand
2) Weaknessofwill(fatigue,retarded,drunk,etc.)
Unconscionability
SeeWilliamsv.WalkerThomasFurnitureCo.
1) Procedural(asymmetricbargainingpower)
2) Substantive(shocktheconscienceofthecourt)
MutualMistake
1) Isitamutualfailure?(Nester)
2) WasKpremisedonit?(Sherwoodaccordingtothemajority)
3) Wasonepartyawarethattheydidntknowsomething?(Thentheyassumerisk:
Boynton)Restatement154
UnilateralMistake
1) DidnonadverselyaffectedpartyknowofmistakeattimeofK?(Cheney)
2) Wouldenforcementbeunconscionable?(Restatement153)
3) Wasriskallocated?(Boyntonbecauseshedidntresearch)
DutytoDisclose
1) Whennecessarytoavoidmisrepresentation/fraud(restatement160)

2) Tocorrectbasicassumptionofotherparty(badfaith)?Laidlaw
3) Fiduciary/trust?(Vokes)
4) Knowsotherpartyismistaken?
FailureofaMutualAssumption
1) Isitonepartysfault?
2) Riskallocation?
3) Implicitriskallocation?(Taylorv.Caldwell)(Implicitunderstandingthatif
theaterceasestoexist,thennoK)
4) Impliedtermtooobviousforwords?
5) ForceMajeureClause?
i. EasternAirlinesTest:
1. Failureofpresupposedcondition
2. Totallyunforeseeable
3. Risknotallocated
IfvoidedK,alwaysmentionwindfallrulebutthensayitsbeenoverruled:
rememberthecasewiththePolishCompanypayingmoneytoacompanyin
England
FrustrationofPurpose
1) Changeexante?Thenitsamutualmistake
2) Govtregulation,failuretocomeintoexistenceordestruction?(Rest.261)
3) Riskallocation?
a. Traynor:Foreseeableimpliesthatriskisallocatedtobuyer/lessee
DAMAGES
Shaheenv.Knight
Facts:PlaintiffShaheenpaidDr.Knighttoperformavasectomysolelybecausehedid
notwanttoassumethefinancialburdenofafifthchild.Theoperationwasperformed
(withnoallegationsofmalpractice)andayearlaterMr.Shaheenswifehadafifthtrial.
ShaheensuedforbreachofcontractbecauseDr.Knightguaranteedhimsuccessful
sterilization.
Principle:Rulingforthedefendantbecauseplaintiffsufferednodamages,andinstead
wasblessedwithafifthchild.Torefertochildrenasdamageswouldbeagainstthe
interestsofsociety.
Note:Pennsylvanialawsabsenceofawarrantyofcureirrelevantbecausedoctor
enteredintoaseparatecontractguaranteeingsuccess.
Expectation:(BenefitoftheBargain)Placesthepromiseeinthepositionshe
wouldhavebeenhadthepromisebeenperformed.
Reliance:(Asifpartiesnevermet)Placesthepromiseeinthepositionhewould
havebeenhadthepromisenotbeenmade.
Restitution:(disgorgeprofits)Placesthepromisorinthepositionhewould
havebeenhadthepromisenotbeenmade.Or:COMPLETEREWIND
NonbreachingpartycanchoosebetweenExpectationandRelianceDamanges
LIMITATIONSONDAMAGES

1) ForeseeabilityofHarmRest.351(Hadleyv.Baxendale)
2) CertaintyofHarmRest.346(Noloss;Shaheen);349(Losseswould
havebeenincurredifKperformed:Mistletoe);352(Uncertainprofits:
Dempsey)
3) AvoidabilityofHarmRest.350(waste,dutytomitigated:
RockinghamBridge/ShirleyMcClaine);UCC2718(Liquidated
DamagesmustbereasonableWassenarv.TowneHotelifBuyer
breachesbutoverpaidandsellerwithholdsgood,buyerisentitledto
somerestitution);2708(Sellerentitledtodamagesofdifferenceinwhat
hewoudvegottenandwhathedidgetplus
incidental/consequentialLane);2710(sellersincidentaldamages
incurredbystoppingdelivery,etc.)
DamageInterest
Hawkinsv.McGee
Facts:Youngboyburnshandanddoctoroffershimcontractualguaranteetofixthe
hand,butultimatelymakesthehandworse.Juryfindsfortheplaintiffandthereisan
appealoverhowdamagesshouldbemeasured.
Principle:Expectationdamagesshouldbeawarded,i.e.theboyshouldbe
compensatedforwhatheexpectedtoreceive:agoodhand.Notethecontrastwith
RelianceDamages,whichcompensatetheboyforwherehewouldbehadhenever
enteredthecontract, andrestitutiondamages.Painandsufferingdamagesnotawarded
becausedefendantagreedtosubmithimselftothepossibilityofpainandsufferingsoas
toreceiveagoodhand.
Note:ThatNewHampshireprovidesnowarrantyofcureirrelevantbecausethedoctor
enteredintoaseparatecontractoutsideofthetypicaldoctorpatientrelationship;
Rest.347:Expectationdamagesplusconsequential/incidentaldamages(implied:
MINUSanycoststhatcouldhavebeenavoided)
McGeev.UnitedStatesFidelity&Gauranty[sic]Co.
Facts:Dr.McGeeultimatelysettledoutofcourtwithHawkinstocompensatetheboyfor
thelackofagoodhandandsueshismalpracticeinsurerforfailingtocompensatehimfor
thepayment.
Principle:InsurancecompanynotresponsibletocoverdamagesbecauseDr.McGee
engagedinaseparateandspecialcontract/guaranteenotcoveredbytypicalmedical
malpracticeinsurance.
Restatement347:
Injuredpartyhasrighttodamagesbasedonhisexpectationinterestasmeasuredby:a)
thelossinthevaluetohimoftheotherpartysperformancecausedbyitsfailureor
deficiency,b)anyotherlosses,includingincidentalorconsequential(Nursev.Barnes),
loss,c)MINUScoststhatcanbemitigated.

Sullivanv.OConner
Facts:Sullivan(P),anentertainer,contractedwithOConnor(D),aplasticsurgeon,for
cosmeticsurgeryonhernose.OConnorpromisedthatonlytwosurgerieswouldbe
necessaryandthatthenosejobwouldenhanceandimproveSullivansbeauty.After
threeoperationsSullivansnosehadbecomeasymmetricalandlookedworsethanithad
priortotheoperations.Furtherimprovementwasimpossible.
Principle:Pain,suffering,andmentaldistressesarecompensabledamagesforbreachof
contractundereitherexpectancyorareliancedamages.Anagreementbetweenadoctor
andapatientwhichcallsforaspecifiedresultcanbeenforced.
LimitationsonDamages:ForeseeabilityofHarm
Hadleyv.Baxendale
Facts:CrankshaftbrokeinamillandthemillcontractedPickford&Co.totransmitthe
shaftimmediatelytoGreenwichsothatanewonecouldbebuiltbasedonthemodel.
Pickfordguaranteedaspeedydeliverybutwasnotfastindeliveringtheshaftdueto
negligence,whilethefactoryremainedidol.Pickfordfoundguiltyofbreachingcontract,
andissueastowhetherplaintiffshouldbeawardeddamagesfortimethatthefactory
remainedidoleventhoughthedefendantclaimstohavehadnowayofknowingthatsuch
hugedamageswerebeingincurred.
Principle:Nonbreachingpartynotcompensatedforunforeseendamages,ordamages
thatcouldnotreasonablybeforeseen.Foresseeableif:ordinarycourseofbusinessor
madeselleraware.(Rest.351)(Typicallymillsinthosedayskeptmultipleshaftson
hand).Reasoning:sellermustbegiventheopportunitytochargeapremiumorput
specialcareintosomethingifbreachingcontract(deliveringgoods)wouldcause
unusuallylargedamages.Prof.:Thesearedefaultrulesandifpartiesknowthenthey
candiscountthemselvesandexcludethemselvesfromvariousliability.
HectorMartinezandCo.v.SouthernPacificTransportationCo.
Facts:Martinezcontractedrailroadtodeliveramachineinfivepiecesinagivenperiod.
Fifthpiecearrivedlateanddamages,andrailroadsettledoutofcourtforcostofrepairing
machineandstoringthepartsthatarrivedontime.Defendantsuesforfurtherdamages
basedonthelossofabilitytousethemachine(rentitout).
Principle:Courtsshouldnotusearbitraryandinflexibledefinitionsofforeseeability,
andcapitalgoodshaveusevalue:itisquiteforeseeablethatdeprivationofa
machinesusebecauseofdelaywillcausealossofinterestvalue.Furthermore,
plaintiffneednotprovethatactualdamagessufferedweremostforeseeable.
Also,calculatingthedeclinedvalueofgoodsupondeliveryisbutonemethod,andthe
generalprincipleis:themarketvalueruleisinapplicablewhen,onthefacts,itisnotthe
nearestpracticableapproachtoanascertainmentoftheactualloss.Eachcasemustbe
governedbyitsownfacts.
FORESEEABILITYOFHARM:Damagesarenotrecoverableforunforeseenlossesat
thetimeofthecontract.

Lossesmaybedeemedforeseeableasaprobableresultfromabreachif:1)Lossoccurs
intheordinarycourseofbusinessor2)Ifthebreachingpartyhadareasontoknowor
wasotherwiseawareofthespeciallosses
Murrowv.FirstNationalBankofHotSprings
Facts:Murrowhadavaluablecoincollection,putthebankonnoticeofitsvalue,and
theypromisedhimasavein3060days,andtocallhimASAPwhenitwasavailable.
Theydidnotcallhimasitcameavailable(busy),andinthatperiod,hiscoinswere
stolen.Hesuedthemforbreachofcontract,ashehadputdownmoneyforthesafety
depositboxandbeenpromisedtobemadeawareASAPwhenitwasavailable.
Acquittal.
Rule:TacitAgreementTest:Wherethereisnoexpresscontracttopaysuchspecial
damages,thefactsandcircumstancesinproofmustbesuchastomakeitreasonablefor
thejudgetobelievethatthepartyatthetimeofthecontracttacitlyconsentedtobebound
tomorethanordinarydamagesincaseofdefaultonhispart(p.103).UCCrejectsthe
tacitagreementtest,asdomustjurisdictions.ItsanaddontoHadley,sayingthat
merenoticeisnotenoughnoacceptancethroughsilence,essentially.
ZeroDamageinthefaceofuncertainty:Thoughnowadaystrendschanging;some
courtsaretryingtailoredresultstorectifybreachcases.
ChicagoColiseumv.Dempsey
Facts:Dempseyenteredinto(classicentertainmentpaymentinstages)contractwith
ChicagoColiseumtofightWills.ColiseumalsoenteredintocontractswithWillsanda
promoter,butneitherWillsnorthepromoterappearedtohavebeenpaid,norwerethey
guaranteedafight.Dempseypromisednootherfightsbeforeorafter.Dempseypulled
outofthefight,breachingthecontract,andColiseumsuedfor1)lostprofitsonthe
match,2)moneyincurredgettingDempseytosigncontract,3)moneyspentin
anticipationofthefight,and4)moneyspentonlegalfeestryingtoenforcetheaspectof
thecontractthatwouldforbidDempseyfromengaginginanotherfight.Judgeruledthat
Coliseumcouldonlyrecoupformoneyspentafterthecontractwassignedinanticipation
ofthecontractsfulfillment.
Rules:1)Norecuperationofspeculativeprofitsindamageclaims(ifitrained,maybe
thecoliseumwouldnothavesoldmanytickets).Norecuperationofmoneyspenttrying
togetabreacherbackintothecontractaftertheyhavealreadymadeitclearthatthey
intendtobreach.Whatyoudoafterthebreachyoudoatyourownrisk.Also,no
recuperationofmoneyspenttryingtogetdefendanttosignthecontractinthebeginwith.
(Slightlydifferentfromaruleagainstallmoneythatwasspentpriortothesigningofthe
contract).
Note:LikeBambinointheTongishcase,promoterWeisbergenteredintoahighrisk
conditionalcontractandisnotentitledtorecoupanydamagesfromanyone.Since
coliseumhasnoliabilitiestohim,hiscontractwithColiseumisnotgroundsforfurther
damagesagainstDempsey.
Rest.352:
Damagesarenotrecoverableforlossbeyondanamountthattheevidencepermits
torecoverwithreasonablecertainty

Ifthebreachcausednolossoriftheamountofthelossisnotproved...asmall
sumfixedwithoutregardtotheamountoflosswillbeawardedasnominal
damages.
AngliaTelevisionLtd.V.Reed
Facts:Mr.Reed(BradyBunch)wascontractedtospendafewmonthsinEngland
filmingaTVplay,butpulledoutatthelastminute.Angliahadalreadyinvestedalotand
puttogethermuchoftheproductionbefore

ithiredReed,butReedslastminute
departureledtotheentireproductionbewasted.Reedconcededbreachingthecontract,
butclaimedthathewasnotliableforanyexpensesincurredbeforehesignedthe
contract.EnglandsCourtofAppealruledinfavorofAnglia,orderingdamagesfor
expectationdamagesassumingazeroprofit.Reliancedamagesincludemoneyspent
beforeReedsignedbecauseitisreasonablytobeimputedtohimthatifhebrokehis
contract,allthatexpenditurewouldbewastewhetherornotitwasincurredbefore
orafterthecontractwastedexpenditurecanberecoveredwhenitwaswastedby
reasonofthedefendantsbreach.
Rule:Whensigningacontract,itispossiblethatapartyassumesresponsibilityfor
expensesthathavebeenincurredbytheotherpartypriortothesigningofthecontractif
thepotentialgainsfromthoseexpensesarenowatleastpartiallyinthehandsoftheparty
newtothedeal.
UncertaintyasalimitationonDamages
Damagesarenotrecoverableforlossbeyondanamountthattheevidence
permitstorecoverwithreasonablecertainty
Courtsnotwillingtotakeagambleonunexpected/uncertainprofits,butat
leastwillallownonbreachingpartytobreakeven
LosingContractandUCC349:Ifthenonbreachingpartywaslosingmoneyby
executingthecontract,thentheyareawardedreliancedamagesMINUStheloss
Dontawardfullreliancedamagesb/cdontwantthebreachingpartytobeaninsurer
MITIGATION:NonBreachingpartyhasa

dutytomitigate

losses:Mitigationdoctrine
punisheswasteandsocietyisworseoffwithmorewaste
DUTYTOAVOIDWASTE
Rule:Promiseecantincuravoidablecostsbycontinuingtoworkafter
promisorsbreach.
Policyreason:WastedoesntimprovenonbreachingpartiesEDdamages,but
onlycostsbreachingpartymorethereforenobenefittosociety
RockinghamCountyv.LutenBridgeCo.
Facts:Countycontractedforabridgetobebuiltandchangeditsmind.Lutenwent
aheadandbuiltthebridgeanyway,anddemandedtobepaidfullexpensesplus
expectationprofits.CourtrulesthatLutencannotbecompensatedforcostsafteritwas
toldthatthecontractwouldbebreached(thinkDempsey).Prof.:Uncertainprofits?
Rule:Promiseecannotexpecttobepaidforcontinuingtoworkoncontractafter
notificationofbreach.
DUTYTOMITIGATERest.350(Dutytoavoidwithoutunduerisk,burdenor
humiliation)

ShirleyMaclaineParkerv.TwentiethCenturyFoxFilmCorp.
Facts:Maclainewastoappearasthestarofafeministmusicalwithcreativecontrols,
butatthelastminutewastoldshemustbeinawesternfilmedinAustraliawithoutany
creativecontrol.ShedeclinesWesternroleandFoxclaimsnoneedtopayherdamages
becauseshedidnotattempttomitigatetheeffectsofthebreach.Courtrulesthat:
Turningdownasubstantiallylowerpositionisnotinconsistentwith
mitigatingtheeffectsofabreach,thusrulingforMaclaine.
Rule:Contractsalsotoprotectthepersonalinterestsofcontractspersonalgoals
reasonableinParker.Nocompensationofferforpersonalgoals,sothereforenot
necessaryforParkertotakethenewroll.
LOSTVOLUMEDOCTRINE
Neriv.RetailMarineCorp.
Facts:Mancontractedtobyaboatfromadealerbutpulledoutafterboathadbeen
deliveredb/checouldnolongeraffordtheboat.Dealerrefusestoreturntheprofit,even
thoughheisabletoselltheboattwoweekslater,whichplaintiffsaysisproofthat
damagesweremitigatedandthereforedontneedtobepaid.Yetcourtholdsthat
plaintiffisentitledtoexpectedprofitsforthesaleoftheboatplusconsequentialdamages
suchasstoringtheboat.
Rule:Lostvolumedoctrine:Whenresourcesarevirtuallyunlimited,suchaswithacar
dealer,simplybeingabletosellaboatorcarafterapreviouscontractwasrenegedupon
isnotsufficientmitigationbecauseifnotforthebreachthenthesellerwouldhavemade
twosales.
o Whentakingincidentalcostsintoaccount,itisimportanttocountonly
wastedexpendituresandnottodoublecountotherexpenditures.

LIQUIDATDDAMAGES
Wassenaarv.TowneHotel
Facts:Hotelmanagerfiredwith21monthsleftonthiscontract.Contractstipulatesthat
intheeventofabreach,themanagerisentitledtohispaymentforthebalanceofhistime
remaining.Managergetsanotherjobintwoandahalfmonthsbutstipulateddamages
stillmeetreasonabletestb/chesufferedotherharms(emotional,prestige,etc.)andb/c
hotelcouldnotprovethevalueofthosechargestobesmall.
Principle:ReasonablenessinLDclausesmeasuredby

:
1) Intentionofmakingdamagesapenalty
2) Istheinjurycausedbythebriefonehatisincapableofaccurateestimationofat
thetimeofthecontract
3) Arethestipulateddamagesareasonableforecastoftheharmcausedbythe
breach?(P.154)(Somecourtsruleexante,fewerexpost,(isitreasonableinthis
situation?)somemixthemup)
IntheeventofavalidLDclause,noneedtomitigate
Liquiddamagesgoodforidiosyncratic,sentimentallosses,aswellassecrecyissues.

Rest.356(1)/UCC2718(1)],
IfactualdamageshigherthanLDclause,thenLDclausealwaysenforceable
EfficientBreach?
Posner:Goodthingbecausecreateswealthifbreachingpartycancoverexpectation
damagesandstillmakemoremoney
Otherside:Badthingb/cunderminesconfidenceandb/citisthebuyingpartywho
shouldproperlybeinvolvedintheresaleifthebenefitbecomesgreaterfrompossession,
asthoughtheypurchasedanoption.
SecrecyDoctrine:Sometimessecretsthatcomeoutinexplainingcertainexpectation
damagesaremorevaluablethanrecoveringthedamages.Argumentforliquidated
damageclauses?
Perfectexpectationdamagesforcethepromisortointernalizethecostsofthe
promiseefromaresultingbreach,thusmaximizingthenetgaintobothparties
Lake River Corp v. Carborundum
Facts: A manufacturer and distributor entered into an agreement, whereby the distributor
was to distribute a product made by the manufacturer. The manufacturing party
guaranteed that the distributor would ship a certain minimum amount of tons. A clause in
the contract required the manufacturer to pay for the difference if the minimum amount
of tons was not reached.
Principle: Not a penalty if there is an efficient breach: the willingness to agree to a
penalty clause is a way of making the promisor and his promise credible and may
therefore be essential to inducing some value-maximizing contracts to be made

EQUITY:Equitabledamagescanbeawardedforanythingthatanonbreachingcannot
easilycover,thevalueofwhichishighbuttheobjectisnoteasilyreplaceable.
Examples:Heirlooms,specialattachmentitems,land,etc.Inthepast,separatecourtsof
equity(ChanceryCourts)existed,andstilldoinDelaware,butnowmostlyitsbeen
combinedwithregularcourts.Still,insuitsofequity,thereisnorighttoajurytrial,and
judgescanawareSPECIFICPERFORMANCE.
a)SPisthedefaultfordisputesoverland.
b)SPisgoodforajudgmentproofdefendant(e.g.bankrupt)
c)CannotcontractforSP
d)SPgrantableifgoodsincontractunique:specialvalueornoteasilyrepleacableon
themarket.
SpecificPerformanceforcontractsforobjects:
Lovelessv.Diehld
Facts:LovelessrentedlandtoDiehlforthreeyearsfor$100permonthandtheoptionto
buyatanytimefor$21,000.Diehlputalotofmoneyintoimprovementsandalso
brought(oncredit)cowmilkingequipmentfromLoveless.Diehlcouldnotputtogether
moneytoexerciseitsoption,sotorecoupsomeofwhatheputin,madeadealtosellthe

landtoHartfor$22,000;butLovelesskickedDiehlofftheland,thusinexcusably
breachingthecontract.CourtawardsDiehlSP(i.e.landtoselltoHart).
Principle:Inissuesofland,specificperformanceisthedefactoremedy,evenif
monetarydamagesareabletofullycompensate.
Cumbestv.Harris
Facts:Cumbestsoldhishandmadeselfdesignedoneofakind(laboroflove)stereoto
Harrisfor$10,000withanoptiontobuyitbackwithinamonth.Harrisessentiallyacted
asapawnshop.Onfinalday,HarristookextrememeasurestoavoidCumbestsothathe
couldnotgetthemoneybackandbeforcedtorelinquishthestero.Cumbestsuedand
prayedforSP.CourtsawardedSP.
Principle:SPforpossessionthingspermissiblewhen:
1) Thereisnoadequateremedyatlaw
2) Wherethespecificarticlesorpropertyareofpeculiar,sentimentalvalue,
3) Whereduetoscarcitythechattelisnotreadilyobtainable(buyercanteasily
cover).
Stereoisoneofakind,soCumbestcanteasilycover,andthereforeentitledtoSP.
Sedmakv.CharliesCheverolet,Inc.
Facts:Sedmaksorderedarare,expensivecommemorativeChevy.Madeanoral
agreementandputdownadeposit.DealeraskedtokeepChevyintheshowroomfora
fewweeksandafterwardssoldChevytosomeoneelse,claimingthattherewasnevera
contract(courtruledthatthiswaslyingonCharliespart).CourtawardedSP.
Principle:Evenifobjectisnotoneofakind,SPcanstillbeawardedundertheUCCif
itissufficientlydifficultforbuyertocover.Inthiscase,itwouldbehardtofindthe
samecardwiththesamemileageandinthesamecondition.
UCC2716
Doesntrequireimpossibletocoverstandard,onlyhardtocoverstandard.
UCCliberalinapplying:wherethegoodsareuniqueorinotherpropercirc.
Still,generalrulethatinKforgoods,damagesaremoneyunlessgoodisunique
(Becausewhenitsveryhard,costofcompensatingmoreforbreachingpartythanSP).
Rest.359:AtCL,moneystill

presumptivedamagemustprovespecialcircumstances
forSP:unique,hardtocover,specialinsomeways,noreadysubstitutes
Evenifmonetaryarefullysufficient,nonbreachingpartymayseekSPbecauseit
increasestheirleverageinnegotiatingasettlementbecauseofburdenitimposes.
DownsidestoSP:Difficult/costlytoimplement,Bargainingprocesscanbreakdown,
leadingtoinefficientperformance(andthustoexcessiveprecautionagainstbreach)
someoneshotdealsunsuitableforSP(Hawkinsv.McGee)
Lumleyv.Wagner
Facts:WagnercontractedtoperformthreetimesaweekforthreemonthsinLondon
andsignedaclausesayingthatshewouldnotperformelsewhereforthatperiodand
breachedtoearnmoremoneysinginginItaly.PlaintiffLumleyprayedtoenforcethe
partofthecontractprohibitingherfromperformingelsewhere.Courtgrantedinjunction.

Principle:EventhoughSPcantforcepeopletoperformanaction,itcanforcepeopleto
asdamagesrefrainfromservingelsewhere.Note:Courtoddlyrulesthat
exclusivityclausewasonlyanexpostremedyandthathadperformedelsewhere
whilekeepinghercommitmentsinLondon,shewouldnothavebreached.
Fordv.Jermon
Facts:SimilartoLumley,anOperasingerdidnotmaintainhercommitmentsinPhilly
andthetheatersoughttopreventherfromperformingelsewhere.Courtsrefusedtogrant
theinjunction.
Principle:Here,preventingpeopleformperformingelsewhereisamitigatedformof
slavery,toocostlyforcourtstoensure,andanindirectcoerciontoperform.
Duffv.Russell
Facts:Similar:Femaleoperastardeclinestofulfillhercontractualobligationsandan
injunctionissoughttopreventherfromperformingelsewhere.Eventhoughthecontract
lackedanexclusivityclause,itrequiredhertoperformeverynight,thusmakingother
performanceseffectivelyimpossible.Courtsruledtoviewthecontract,insubstanceand
notinform,inferringanexclusivityclause.Courtsgrantedinjunction(retroactivelyas
damages).
Principle:Americancourtssortoutaprincipleforinjunctionsagainstother
performancesafterbreach:1)NotOKifitdeprivessomeoneoftheirabilitytoearna
living.2)ifitforcescontinued,undesiredrelationships(Rest.367(2))
DallasCowboysFootballClubv.Harris
Facts:CowboyshadHarrisK,andhetookayearofffromFootball.Whenhecame
back,hetriedtosignw/anotherclub,inspiteofthenegativecovenant.
Principle:Injunctivereliefwillbegrantedtorestrainviolationbyemployeeofnegative
covenantsinpersonalservicecontractifemployeeisapersonofexceptionalandunique
knowledge,skillandabilityinperformingtheservicecalledforinthecontract.
Promiseeisentitledtoseekanegativeinjunctionrestrainingpromisorfrom
performingduringthecontractperiodwithpromisee,onlyifremedyindamages
wouldbeinadequate
SPProhibitedinKsforPersonalServices
Policy:Fostercompetition,prohibitinvoluntaryservitude,protectlivelihoods
Rejoinder:Protectsemployersrelationshipspecificinvestments

RestitutionasaDamageInterest
Rest.370:NonbreachingpartyentitledtoextentthatKhasconferredbenefiton
breachingparty
Rest.371(b):Cangettoextentotherpartyspropertyhasbeenincreased
Whenrestitutionissoughtasaremedyforbreach,thepartyinbreachisrequired
toaccountforabenefitthathasbeenconferredbytheinjuredparty.

Bushv.Canfield
Facts:CanfieldagreedtodeliveranamountofmillettoNewOrleansandBushputdown
apartialpaymentof$5000.Canfielddidnotdeliver,butthendemandedthatinsteadof
beingforcedtoreturntheentire$5000,itshouldonlygiveless,becausethevalueofthe
millethadfallensincethetimeofthecontract.Thatis,hadCanfieldnotbreached,it
wouldhavemadealotofmoneybecauseitwasalosingoptionforBushCanfield
wantsthatbenefitofthatoptioneventhoughitbreached.Canfielddenied.
Principle:Theimplicitholdingofthecourtisthatyoucantsaylook,Isavedthenon
breachingpartyfromaloss,sorewardme.Dontwantbreachingpartiestobenefit
fromtheirbreach.Restitutionandreliancearenotalwaysthesame,andthedifference
mustbecalculatedcarefully.Restitutiondamagesinthiscasewouldhavetakeninto
considerationtheoperatinglossofthenonbreachingparty,thoughtheburdenofproof
wouldbeonthebreachingparty.
Note:Notbecausereliancedamageswouldfactorintheprovableandestablishedloss
thatthenonbreachingpartywouldhaveincurred.
Rule:Restitutionforcontractinbreachcannotexceedthecontractprice.So,take
HYPO:Mansignsupforfourmonthsworkatthirtydollarsamonth,thedayafterhe
signscontract,valueofhislaborshootsupto50dollarsamonth.Heworksthreemonths
andthenbreaches;heisentitledto70dollarsindamages(threemonthswagesminusthe
addedcostofhiringaworkerforthefourthmonthinahigherpricedmarket);theworker
cannotdemandcompensationforthesavingsheinferreduponthenonbreachingpartyby
workingbelowmarketrateforthreemonths,becausethatswhatheagreedto(thismay
seemobvious,butsheseemstothinkthatitsareallybigpoint).
Restitution:Completerewind.Asthoughthecontractnevertookplace.Notthatin
thepaintingHypo,thepromisordoesnotgetbackthepaintingbecausethereisathird
partyinvolved;thatcaseisunusual.
Canyougivestuffbackanddemandrestitutiondamages?
Rest.374:RestitutionDam=BenefitconferredbreachingpartyLossincurredby
breachvictim.
RestitutionDam.cannotexceedratableportionofthetotalcontractprice.
ForDefinitionsofbenefitseeRest.370comments(a)and(b)d\

CauseofActionRestitutionforBreachofContract
Vinesv.OrchardHillsInc.
Facts:Vines(P)placedadownpaymentof$7,880ona$78,800condominiumthatwas
beingsoldbyOrchardHills(D).ThecontractstipulatedthatOrchardHillswouldretain
thedownpaymentasliquidateddamagesincaseofdefault.Vineswasthentransferredto
NewJerseyanddecidednottocompletethetransactionfortherealestate.Vines
explainedthecircumstancestoOrchardHillsbutOrchardHillsrefusedtorefundthe
downpayment.

Principle:Adefaultingpartyhastherighttoseekrestitution.Apartywhosebreachis
notwillfulcanbringaclaimtorecovermoneyspaidthatunjustlyenrichtheseller.The
breachingpartymustsatisfyhisburdenofproofthattheotherpartyhasacquiredanet
gaininorderforaclaimforunjustenrichmenttobesustained.
ThecourtheldthatVineshadtheburdenofproofinshowingthattheliquidateddamages
clausewasinvalidandunenforceable,orthatthesellersdamagesweresubstantiallyless
thantheamountofliquidateddamages.Thecourtheldthatthecaseberemandedforthe
plaintifftosubstantiatehisclaim.
RestitutionandQuasiContract
Cotnamv.Wisdom
Facts:Dr.CotnamperformedmedicalservicesforanunconsciousMr.WisdomafterMr.
Wisdomwasthrownfromastreetcar.Mr.Wisdomdiedbeforeeverregaining
consciousness.Dr.Cotnamsuedthenextofkinforfeesforhisservices,andwas
awardedthefees.
Principle:Stateaffirmspaymentforservicesgiventopeoplewhoarenotinapositionto
acceptordenythembutwhoneedthemtosavetheirlives.tacitagreementofthe
culture.(ContrastwithWebbv.McGowan).
Martinv.LittleBrownandCo.
Facts:MartinsentalettertoLittletellingthemthatoneoftheirbookshadbeen
plagiarized.WhenLittlesuedthethirdpartyinfringer,Martindemandedcompensation
forhishelp.Littlesenthim$200,buthesuedforonethirdofLittle'srecoveryinthe
infringementsuitandforintentionalinflictionofmentaldistressbasedonLittle'sthreat
tocountersuehim.
Principle:Noevidenceofnegotiation.Nottheordinarycourseofdealings.Thecourt
heldtherewasnocontractualrelationshipbetweenthepartiesandasavolunteer
appellantreaderhadnoclaimforunjustenrichmentagainstappelleepublisher.
Policyconsideration:wewanttomakepeopletomakeclearcontractualterms.

TortiousInterferencewithContract
Lumleyv.Gye
Facts:PlaintiffhadacontractwithWagnerforhertoperformforPlaintiff.Defendant
knewofthiscontractandmaliciouslyretainedWagnertoperformforDefendantinstead.
PlaintiffsuedDefendantforinducementofbreechofcontract.
Principle:Ifapartymaliciouslyinterferesinacontractperformance,heisliablein
damagesforthatinterference.
Texacov.Pennzoil:

Facts:Pennzoil(P)andGettyOilenteredintoamergeragreementwherebyPennzoil
wouldacquireGetty.PennzoilandGettysignedaMemorandumofAgreementsubjectto
theapprovalofeachboardandissuedapressrelease.
Texaco(D)madeanalternativeoffertoGettysboard.Gettyrepudiateditsagreement
withPennzoilandacceptedTexacosoffer.
PsuedDfortortiousinterferencewithcontract.DassertedthattheMemorandumof
AgreementwasnotabindingcontractbecauseitwassubjecttotheapprovalofGettys
boardofdirectorsandwouldexpirebyitsowntermsifnotapproved.Passertedthatthe
contractwasbindingbecausetheMemorandumhadbeenexecutedbyagroupofparties
thatcontrolledthemajorityofoutstandingsharesinGetty.Thejuryreturnedaverdictfor
PandDappealed.
Principle:ElementsofCauseofAction:
a. Theexistenceofacontract
b. Knowledgeofthedefendantthatacontractexisted
Doesnothavetobefulloraccurateknowledge
QuestionofFACT(jury)
Proofmaybepredicatedoncircumstantialevidence
c.Thatdefendantinducedabreachofthecontact.
InducementmustbeactiveratherthanpassiveTexacohadastrategy
thattheywerepursuing(active)
AlsoaquestionofFACT(jury)
Cause
Breach
OFFERANDACCEPTANCE
Embryv.Hargadine,McKittrickDryGoodsCo.
Facts:Embrywasworkingaftertheexpirationofhiscontractduringthebusyseason,
gettingsalesmenoutontotheroad.HetriedtospeakwithbossMcKittrickabout
renewinghiscontract,butcouldnotnailhimdown,untilhethreatenedtoquitonthespot
attheheightofbusyseason.McKittricksaid,Justgogetyourmenbackontheroadand
dontworryaboutit.Courtruledthatunderthosecircumstances,McKittrickwas
offeringanextensionofthecontract.
Principle:Meetingofthemindsnotnecessary;whatsimportantismanifestedintent.
OnemustconsiderwhatMcKittrickswordsmeantinthecontextinwhichhesaidthem.
Courtusingsubjectiveandobjectivestandardsformeasuringmanifestation
OFFERVS.ADVERTISEMENT/SOLICITAIONOFANOFFER
Rest.26:Aninvitationtobargainisnotanoffer
NebraskaSeedCo.v.Harsh

Facts:sentalettertosayingIhaveabout1800mi.ofmilletandwant$2.25.
claimsthattheletteramountedtoanofferbywhichacceptedandthereforemustbe
enforced.Courtssaidthattheletterwasanadvertisement,notanoffer.
Principle:ThelettercontainedNotimefordelivery(whichisactuallyanunnecessary
defaultdoesnotneedtobespecifiedtomakeacontractvalid),andnospecific
quantities,thereforecouldnotpossiblybeanoffer.
Rest.24:Anofferveststheoffereewiththepowertoconcludethebargain(by
acceptingtheoffer);somadeastojustifyanotherpersoninunderstandingthathis
assenttothatbargainisinvitedandwillconcludeit.
Leonardv.Pepsico
Facts:PespsicommercialofferedpointsfordrinkingPepsi(orforpurchasefor10cents
each)andtoldpeoplethattheycouldredeemthepointsforstuffinacatalog.The
commercialhadayoungboyflyingaplaneandasubtitle:HarrierJet:7,000,000Pepsi
points.Thejetwasconspicuouslyabsentfromthecatalog.Boybrought$700,000of
Pepsipointsanddemandedajet,thensued.Casedismissedonsummaryjudgment.
Principle:Reasonable,objectivepersonstandard.Noreasonablepersonwouldhave
thoughtthattheadvertisementwasserious(couldnotreasonablyjustifyunder

Rest.
24:thecallowadolescentpilotingtheplanecouldbarelybetrustedwiththekeystohis
parentscar.Flyingtoschoolisanadolescentfantasy.Itsclearlynotserous.
Furthermore,anadvertisementandorderformaremerenoticesandsolicitationsfor
offerswhichcreatenopowerofacceptanceintherecipientuntilaftertheyacceptthe
moneyandchoosetoprocesstheform.
WRITTENMEMORIALSCONTEMPLATED
EmproManufacturingCo.v.BallCoManufacturingCo.
Facts:Ballco,asacompanym,solicitedpurchasesandEmpromadeanoffer.Inthe
LetterofIntent,EmproleftitselfseveralSubjectToescapehatches

.BallCodid
notaddany;however,BallCoinitsresponsetotheLetterofIntentaddedarequest
forclarificationofseveralpoints,suggestingthatithadnotfinishedironingouta
contract.BallcoendedupwalkingawayfromthedealandEmprosued,sayingthatthe
letterofintent/agreementinprincipleboundthemtosell.SeventhCircuitruledfor
BallCo.
Principle:1)Itwasnotaonesidedoptiontosellwherebyonepartyagreedtogivethe
othersideanoptiontobuyorsellbasedonfurthernegotiationbecauseBallCo
expressedequivocationitsacceptance;didnotacceptwithoutreservations.2)Valueto
businessinallowingpartiestoapproachadealinstageswithoutgivingawaytheir
bargainingposition.3)Partieswhomaketheiragreementsubjecttoalaterdefinitive
agreementhavemanifestedan(objective)intentnottobebound.
Rest.27:ClearmanifestationsofintentbythemselvessufficientevenifKwillbe
memorializedinwritingatalaterdate;butthecirc.Mayshowthattheagreementsare
preliminarynegotiations.
Texacov.Pennzoil

Facts:TexacosuedforinterferencewithGettyandPennzoilscontract.Texacoclaims
thatthereisinsufficientevidencetosuggestthatatthattimeGettyhadbounditselftoa
contract.NewYorklaw(controlling)emphasizesintentoverforminsealingacontract.
Principle:Thereisacontractwhen:thereisnounderstandingthatasignedwritingis
necessarytobelegallyboundandthereisagreementonallessentialtermsofthe
contract.
Fourstepstomeasureintent:
1) Whetherpartyexpresslyreservedtherighttobeboundonlywhenawritten
agreementissigned,
2) Whethertherewasanypartialperformancebyonepartythattheparty
disclaimingthecontractaccepted,
3) Whetherallessentialtermsoftheallegedcontracthadbeenagreedupon,
4) Whetherthecomplexityormagnitudeofthetransactionwassuchthataformal,
executedwritingwouldnormallybeexpected
Gettysstatementwordedinindicativeterms,notinsubjunctiveor
hypotheticalones,andthereforeimpliesafirmdealhasbeenreached
Toolittletimeforperformance
Aftertheexecutionanddeliveryofthisagreementclauseswereusedchiefly
toindicatethetimingofvariousactsthatweretooccur,andnottoimposeanexpress
precondition
Jurydidnotconsideropentermsassignificantobstaclesprecludinganintent
tobefound;sufficientevidencetoconcludethatthepartiesagreedonallessentialterms.
Texacorightthatatransactionofsuchamagnitudewouldusuallyrequirea
formal,signedcontract,butwecannotsaythatthisfactoraloneisdeterminativeofthe
questionofthepartiesintent.
Dickinsonv.Dodds
Facts:DoddsagreedtosellDickinsonahouseandlethaveuntilFridaytodecide.On
Thursday,DickinsonheardthatDoddswassellingsomeoneelsethehouseandthereafter
rushedtoDoddshomeandleftanacceptance.CourtwouldnotgrantDickinsonSP
becauseheneveracceptedtheofferwhiletheofferwasstillonthetable.
Principle:Anofferorcanrevokeanofferatanytimebeforeitisacceptedandan
offereesrightstoacceptanceareterminatedwhentheyfindoutthattheofferhasbeen
revoked.Hadneverheardthatintendedtoselltosomeoneelsebeforeheaccepted,
thenhisacceptancemayhavebeenvalid(becausewewanttoprotecttheofferees
relianceinterests).Butafterhefoundoutthatwassellingtosomeoneelse,thenhis
powerofacceptancewasterminated.SeeRest.42
Offersarenotbindingandcanberevokedatanytime:
Automaticallyrescindedoverlapseofreasonabletime(Rest.41)
Rejectionsterminateoffers(defaultrule)(Rest.38)
Counteroffersterminatepowerofacceptanceonpartoftheofferee(Default
Rule;Rest.39)
Deathofofferorterminatespowerofacceptance

Offermayberevokedatanytimepriortoacceptance(onnotification,seeWhite
v.ColiersandRestatement4243)

UNILATERALK
IWillGiveyouXifyouperformYcreatesanoptionforofferee
Bilateral:ExchangeofPromises:SuewilldoXandBobwilldoY
Carlillv.CarbolicSmokeBallCo.
Facts:CarbolicSmokeBallCo.placesanadvertisementinanewspaperpromising100
Poundsrewardtowhomeverusestheproductproperlyandstillcontractsinfluenza.
Womandoessomuchandgetssickandsuesbecausetheywontpayherwhatsheowed.
Courtrulesinherfavor.
Principle:Inthiscase,didnotneedtonotifyofitsacceptanceoftheofferbecause
anybodywhoperformstheconditionacceptstheoffer.Theoffershrewsbyhislanguage
andfromthenatureofthetransactionthathedoesnotexpectanddoesnotrequirenotice
ofacceptanceapartfromnoticeoftheperformance
Itfollowsbythenatureofthethingsthattheperformanceoftheconditionissufficient
acceptancewithoutthenotificationofit
Rest.45:Theoffereebybeginningperformancecreatesanoptioncontract:
Offereeisnotboundtocompleteperformance.
Offerorisboundconditionaluponcompletionofperformancebyofferee
Contrast:Whensolicitingacceptancebypromise

or
performance

,thenonce
offereebegins,s/heisboundtocomplete(Rest.32/62)
Leonardv.Pepsico
Whitev.Corlies&Tifft
Facts:CorliesrequestedWhitetobuildsomeofficesonDeyStreet,andworkedoutan
agreement,sendinganofferthatstated:Uponanagreementtofinishthefittingupof
youcanbeginatonce.Whitebeganatonce,butneversentanofficialnoticeof
acceptanceoftheoffer.Whitethereforecantbereimbursedformaterialsbroughtin
preparationforthework.
Principle:Startingperformancewasnotsufficienttosealthedealinthiscasebecauseit
failedtounambiguouslysignalWhitesacceptancetotheofferor.Offerorisnot
bound,ifthatmanifestationisnotputinaproperwaytobeintheusualcourseofevents,
insomereasonabletimecommunicatedtohim.
Performancemustbeunambiguous;Whiteisabuilder,sobuying
materialsforhimisnotunusualanddoesnotnecessarilysignalmuch.
Ifanoffercanbeacceptedbyperformance,onlythendoesitbecomeanoption.
Noticerequiredone1)offerrequestsnotifications,or2)offereeknowsthat
offerorhasnowayofknowingofperformance(Rest.54)
ACCEPTANCEOFUNILATERALOFFERS

Petersonv.Pattberg
Facts:Mr.PattbergofferedPetersona$780reductiononhismortgagesolongasMr.
Peterson1)madeallusualpaymentsand2)paidoffthemortgageinitsentiretybyMay
31,1925.BeforetheendofMay,Petersonshoweduptopayoffthemortgageincash,
butMr.Pattbergsaidthattheofferhadbeenrescindedandhewouldntacceptthecash.
CourtsupholdPattbergsrighttowithdrawhisoffertoenterintoaunilateralcontract
(canberevokedatanytime)becausetherewasnoconsiderationpaidandbecausehehad
therighttorevokeittherefore.
Principle:Dissenthasapoint:Itisaprincipleoffundamentaljusticethatifapromisor
ishimselfthecauseofthefailureofperformanceeitherofanobligationduehimora
conditionuponwhichhisownliabilitydepends,hecannottakeadvantageofthefailure.
ItsjustwrongtoholdforDefendantwhenhestheonepreventingthedeal.
Rest.32incaseofdoubt,anofferinvitesoffereetoaccepteitherbypromisingto
performorbyrenderingperformance.
Rest.62Ifofferorgivestheoptionofacceptancebynotificationorbyperformance,
thenonceanofferorbeginstoperform,theypromisetocomplete;yetoncetheybeginto
perform,theyalsohavefullyacceptedthecontract.
Rest.45Whenanoffertoaunilateralcontractismade,itcanbeacceptedonlybyfull
performance.Butiftheoffereebeginstoperform,mostcourtstreattheofferashaving
becometemporarilyirrevocable;thatis,theoffereereceivesanoptionconract
ACCEPTANCEBYSILENCE
Hobbsv.MassasoitWhipsCo.
Facts:HobbsregularlysenthidestoMassasoitWhipCo.andwaspaidforthem.One
timeitsentahideuninvited(asusual)andreceivednopayment,nordiditreceivethe
hide.CourtheldthatWhipCohadacceptedtheofferthroughsilence

.
Principle:ConductwhichImportsacceptanceorassentisacceptanceorassentinthe
viewofthelaw.Ifsomeoneusesthebenefitofanitem,thentheyhaveacceptedtobuy
it,Also,iftheyregularlyreceivethesethings,andiftheydontsenditback,thenthey
haveaccepted.
REST.69:Acceptancebysilenceonlyif:
1) Offereetakesthebenefitoftheofferedserviceswithreasonableopportunityto
rejectthem,(E.G.Ramirezv.Autosport)
2) whereofferorhasgivenreasonforunderstandingthatassentmaybemanifested
throughsilence.
EcommerceandMutualAssent
Spechtv.NetscapeCommunications
Facts:NetscapesuedforimplantingspywareandNetscapeseekstoenforceaforum
selectionclauseinitsBrowseWrappedcontract:atthebottomofthepagethereisa
noticetoreadthecontract.Judgerulesthatthekeyissueiswhetherthemessageatthe

bottomofthewebpageadequatelyputuseronnoticetoreadtheagreementbefore
downloadingthefreeware.JudgerulesagainstNetscape.
Principle:[An]offereeisnotboundbyinconspicuouscontractualprovisionsofwhich
hewasunaware.Onappeal,SecondCircuitaffirms,sayingthatareasonablyprudent
offereewouldnotnecessarilyhavescrolledtothebottomofthepageandseenthenotice
ofalicensingagreement.Licensingagreementthereforeunenforceable.Ifyoure
legitimatelyputonnotice,thenyouwillbeassumedtoreadthecontract/licensing
agreement.
DiscerningTheAgreement,AmbiguousandVagueTerms
Rafflesv.Wichelhaus
Facts:RafflescontractedtosellCottontobedeliveredonashipcalledthepeerlessto
Wichelhaus;Wichelhausclaims(andpoorlysupportsallegation)thatitthoughtthatthey
werebuyingcottonfromPeerlessscheduledtosetsailinOctober,whereasPlaintiff
intendedtosellfromshipthatsailedinDecember(atwhichpointpriceshadfallen).
Courtrulesthatsincetherewasnomeetingoftheminds,therewasnocontract.
Principle:Courtsdontwanttoenforcecontractwhen1)Iftheydontknowwhatboth
partieshaveagreedto,thenitishardtofindtheremedyforabreach2)whenitsnot
clearthathadtherebeenclaritythetwosideswouldhaveenteredintothecontract.
Analogy:acontractforwinefromRichlieuvinyardinFranceisnotthesameasthe
RichlieuvinyardinGerman;thus,suchacontractwouldbevoidifbothsides
legitimatelymisunderstood.Ifonesidehasreasontoknowoftheothersmistake,then
theyareboundtothecontract.
Oswaldv.Allen
Facts:AllenagreedtosellOswaldherSwissCoinCollection,butOswaldthoughtthat
hewasbuyingallofthecoins,whereasAllenclaimsthatsheonlythoughtthatshewas
sellingonebox.Negotiationwasdonethroughaninformalinterpreterandcourtruled
thattherewaslegitimateambiguityandmisunderstanding,andthatContractwas
thereforevoid.
Principle:AmericanapplicationofRafflesrules;ifsideslegitimatelyagreetosomething
thattheyunderstanddifferently,thencontractisvoided.
Weinbergv.Edelstein
Facts:Weinberghasaspartofhisstoresleaseacovenantthatnootherstoresinthe
buildingshallsellladiesdresses.Problemisthattrendchangestoblouseandskirt
combosthatlookverysimilartodresses.Astorebeginssellingsuchcombosand
Weinbergsues,butlosesbecausehiscovenantonlycoversdresses.However,skirts
andblousesatDsstoremustbepricedseparatelyandsoldindividually.
Principle:ASCERTAININGOBJECTIVEMEANING:
Wheneverpossible,expressterms,courseofperformance,courseofdealings,
andusageoftradeshallbeinterpretedasconsistentwitheachother.[Rest.
202(5)]
Unlessotherwiseexpressed,languageisinterpretedinaccordancetoits
generallyprevailingmeaning[Rest.202(3)(a)]

Technicaltermsandwordsofartaregiventheirtechnicalmeaningwhenused
inatransactionwithintheirtechnicalfield[Rest.202(3)(b)]
Ifthatisimpossible,thenthehierarchyofwhichmeaningcontrolsshallbein
thefollowingmanner:[UCC2208/Rest.202(4)]
1) ExpressTerms
2) CourseofPerformance
3) CourseofDealings
4) UsageofTrade
Hypo:IfKsaysX,andbothpartiesintendY,the
subjectivemeaningapplies(Rest.201(a))

INTERPRETIVESTRATEGIES:
1)Penalizepartiestoencouragefutureclarity
2)Majoritarian:Applyinterpretiveresultw/termthatmostpeoplewouldwant,i.e.a
technicaltermusedwithinatechnicalcommunity
3)Literalmeaning:Interpretaword.Ifitsambiguous,thentoughfortheparties;they
havetheabilitytobeasclearastheywantwhentheycontract.
4)Tailoringaresulttoputourselvesintheshoesofthepartyatthetimeofthecontract.
FillingGapsinTerms,AgreementstoAgree,IllusoryPromises
SunPrintingv.RemingtonPaper
Facts:Sellerwastosell1000tonsofpaperpermonthforsixteenthmonthsandafterfour
monthstwopartiesweretoreconfirm1)Pricepermonth(atnohigherthanpricethatSun
companywasselling)and2)termofthatprice(i.e.onemonth,restofyear,sixmonths,
etc.).Thecombinationofbothanunfixedpriceandunfixedtermsleadstothousandsof
possibilities.Thus,nocontract.
Principle:AgreementtoagreenotaK(Embry).couldhavedealtwithitthrougha
curebyconcession,whereheoffershighestpossiblepricefortherestoftheterm.
Still,contractleavesopentoomuchtobeafirmcontract:nocontract.Dissentgives
credencetomajorityinthatithighlightsmultiplepossibilitiesforrelief.
Notthepossibilitytocurebyconcessionwhichcourtcouldhaveadopted
Texacov.Pennzoil(p.410):Thoughsomeambiguity,theresenoughtheretoprovide
forreliefifthecontractisbreach;UCCveryprocontract.
NewYorkCentralIronWorksCo.v.UnitedStatesRadiatorCo.
Facts:Requirementscontractinwhichbuyerprovidedexclusivityagreementtoseller,
thusestablishingmutuality.Oneyear,buyersdemandssuddenlyrisesharply.Seller
cannotmeetthedemandsandissuedforbreach.
Principle:RequirementcontractOKif1)Mutualityofsomekindexists(usuallythrough
anexclusivityclause)and2)surgeindemandfrombuyerisnotunreasonable.Courts
assumegoodfaith.Increaseindemandmustbebasedonareasonablebusinessneed;
buyernotallowedtobuytospeculateonariskingmarket.[W]edonotmeantoassert
thattheplaintiffhadtherightunderthecontracttoordergoodstoanyamount.Both
partiesinsuchcontractareboundtocarryitoutinareasonableway.Theobligationof

goodfaithandfairdealingtowardseachotherisimpliedineverycontractofthis
character.(UCC2306)
Mustcomeupwithargumentwhyanincreaseddemandbybuyerisreasonable

orforeseeableorboth
FormContractsorContractsofAdhesion
CarnivalCruiseLinesv.Shute
Facts:CarnivalCruiselinesissuedforatortfromanaccidentandCruiseLinespointsto
forumselectionclauseincontract(/Shutecouldnothavegottenrefundforreturning
ticketafterseeingcontractbutconcedednotice(STUPID!)).Cruiselinesarguethatnon
negotiabletermscreateclarityexanteandtherebylowercosts.
Principle:Toassesstheconsciounabilityandthereforeviabilityofastandardform
contract,consider:
1)Noticeoftermstocomeessentialbecauseconsumerhasnothingbuttakeitorleave
it.
2)MotiveCarnivalCruisehadlegitmotiveinthattoomanysuitsinremotevenues
coulddramaticallyraisetheircostsandthesalutaryeffectofclarityexantegreat.(econ.
Reason:iftheresalegitreason,thenitmaybenefitthecustomertoo)
Alsoremembergoodfaith
Compagnov.CommodoreCruiseLine
Facts:Congressaltersforumselectionlanguage...
Caspiv.Microsoft
Facts:Microsoftsuedbutabletogetsuitdismissedforimproperjurisdictionbecauseof
aclickwrappedforumselectionclause.
Principle:1)ForumSelectionClausesveryvaluableandcommonbecausetheyraisethe
costofentryintolitigationformostplaintiffsand2)ClickWrapcontractsaresolid:
contractswhereyoumustclickonIAgreetotheaboveterms.

Whichtermswhereagreedto?BATTLEOFTHEFORMS2207
UCC2207(1)Knocksoutlastshotruleandinsteadstatingthatthelastshotmay
equalamereproposalfollowingtheformationofacontract(onlyagreeduponterms
govern)
StepSaverDataSystems,Inc.v.WyseTechnology
Facts:StepsaverusesWysesTSLprogramaspartofitssoftware.TSLishighly
flawedandaftersomedispute,Wysedisclaimsanywarrantybecauseitsaysthatafter
theorderwasmadeandthepaymentreceiveditputaboxtoplicenseonitsproductasa

finalcounteroffer;itsaysitwouldnothavesoldtheproductwithoutacceptanceofthose
termsitgotthelastformin.CourtrulesforPlaintiff,StepSaver,againstWyse(TSL)
Principle:lastshotruleoverafter2207theboxtoplicensecameintoolateafter
agreedupontermsweresettledmerelyproposalsforalterations(nonbinding).Judge
alsoemphasizesthatbuyerhasputeffortintogettingtheproduct,andsuggeststhateven
anofferforrefundwouldntbeenoughtoallowthesetermstobeputthroughupon
delivery.
UnionCarbideCorp.v.OscarMyerFoodsCorp.
Facts:OscarMayerFoodsCorporation(OscarMayer),purchasestheplasticcasingsit
usesinmanufacturingsausagesfromUnionCarbideCorporation(UnionCarbide).In
1980,inresponsetocompetition,UnionCarbideagreedtoeliminatetwo1percentsales
taxesapplicabletosalesthatoriginateinChicagobyinstructingitscustomers,including
OscarMayer,tosendtheirorderstoanaddressoutsideofChicago.Accordingly,Oscar
Mayersentitspreprintedformpurchaseorderstothedesignatedaddress.UnionCarbide
acceptedtheordersbysendingbackitsownpreprintedforminvoicesthatcontainedthe
followingindemnificationprovision,"BuyershallpaySellertheamountofall
governmentaltaxesthatSellermayberequiredtopaywithrespecttothesaleofany
materialsdeliveredhereunder."Eightyearslater,theIllinoistaxauthoritiesdecidedthat
thetwosalestaxesweredueonthesalesandassessedUnionCarbide$88,000inback
taxesand$55,000interesthereon.UnionCarbidepaidtheseamountsandthenturned
aroundandsuedOscarMayertorecover.Thedistrictcourtheldthattheindemnification
provisioninUnionCarbide'sacceptancewasnotpartofthesalescontract.Instead,itwas
anadditionaltermthatmateriallyalteredthesalescontract.Thecourtenteredjudgment
forOscarMayer.UnionCarbideappealed.
Principle:Opinion.Posner,CircuitJudge.The"mirrorimage"rulewaswidelybelieved
totakeinsufficientaccountoftheincorrigiblefallibilityofhumanbeingsengagedin
commercialasinotherdealings,andischangedbytheUniformCommercialCode,
whichallowsanacceptancetomakeacontractevenifitaddstermstotheoffer.
Moreover,ifitisacontractbetween"merchants"(inthesenseof"pros"asUnion
CarbideandOscarMayerare),theadditionaltermsbecomepartofthecontract.Butnot
anyadditionalterms;onlythosetowhichtheofferorwouldbeunlikelytoobject,because
theyfilloutthecontractinanexpectablefashion,andhencedonotalteritmaterially.Ifa
termaddedbytheoffereeinhisacceptanceworksamaterialalterationoftheoffer,the
acceptanceisstilleffective,butthetermisnot:thatis,thecontractisenforceableminus
thetermtheoffereetriedtoadd.Weagreewiththedistrictjudgethatthequoted
provisionisamaterialalterationintheparties'contractandisthereforeunenforceable
againstOscarMayerbecauseitwasnotagreedto.

LaterArrivingTerms&EnforcingFormContracts

ProCDv.Zeidenberg
Facts:ProCDhasadiscriminatorypricingschemebywhichitcharged$150for
corporationstouseitsdatabaseand$50forindividuals.ProCDsoldtelephone
directoriesonCDROM.Theirproducthadashrinkwraplicenseonthenoncommercial
versionoftheirsoftwarethatmadethebuyeragreenottoreselltheinformation.The
defendantignoredthisandresoldtheinformation.Zeidenbergarguesthatonlythetext
writtenontheoutsideofthepackagecountsaspartofthecontractofferedbyplacingthe
productontheshelfandagreedtobypurchasingtheproduct.Thedistrictcourtagreed
andfoundforZeidenberg.ProCDappealed
Principle:Easterbrook:2207irrelevantbecausethereisonlyoneform.2204:A
contractmaybemadeinanymattertoshowagreement,includingconductwhich
recognizestheexistence
Vendor,masteroftheoffer,offeredonthetermsthatperformance(i.e.buying)
necessarilyincludeacceptanceofthelicensingagreementmentionedonthelabel.
NotethereversecouldbeheldbyEasterbrook:Vender,Masterofthe
counteroffer,proposesaconditionalcounteroffer.
Noticeontheoutside,termsontheinside,andarighttoreturnthesoftwarefora
refundifthetermsareunacceptable,maybeameansofdoingbusiness
valuabletobuyersandsellersalike
Hillv.Gateway
Facts:Hillbroughtagatewayandhaditdelivered.Afteritwasdeliveredandkeptfor
morethanthirtydays,itbroke.Hillchallengesforumselectionclause,arguingthatsince
s/hewasneverputonnoticeaboutthelicensingagreement,itwasnotvalid.
Principle:customershaveadutytoreadagreements,knowingthattheywillbethere.
(AlsopointsoutthatHillinvokeswarranty,whichwaspartoflicensingagreement).
Maybetheyshouldaskthevendortosendacopyofagreementbeforetheydecidetobuy.
Reminds:ProCDsaysthatavendorcanproposethatacontractofsalebeformednotin
thestorebutaftertheconsumerhashadachancetoinspectboththeitemandtheterms.
Shouldthelawmandatethatsellersposttermsontheinternet?
Klocekv.Gateway
Facts:SameasGatewaybutinaDistrictCourtinKansas
Principle:Flipsthelogic:Vendorsolicitsanoffer,buyermakestheoffer,vendoraccepts
theofferandthereforemustmakeitclearthattheofferisonlyaccepteduponagreement
tothelicensingterms.SinceGatewaymadenosuchnoticeandwasnotasclear,the
contractisinvalid.2207canalsoapplyinthiscasenobattleofformsneededcan
alsoapplyifagreementisreachedorallyandthenoneormoresidessendsaformal
memorandumtoembodyitandaddstermsnotdiscussed.
PAROL/EXTRINSICEVIDENCERULE
Thompsonv.Libby

Facts:ThompsonhadacontractinwritingtobuylogsfromLibby.Thompsonclaims
thatatthetimeofcontracting,Libbypromisedawarrantyforthequalityofthegoods,
eventhoughitsnotspelledoutinthecontract.Courtdeniesparolevidenceofaparol
warranty.
Principle:OldRule.Fourcornersrule:Whentwosidesenterintoawrittenagreement
itisconclusivelypresumedthattheyputallthattheyintendedtocontractforintothe
writing.REJECTEDbyUCCandRestatements;stillusedinsomeinsurancecontracts.
Brownv.Oliver
Facts:Brownpurchasedahotelandthewrittencontractsaysnothingaboutfurniture,
thoughBrownclaimsthatatthetimeofwriting,Oliveragreedtosellthefurniture.
Agreementonlypartiallyintegrated.Courtadmitsevidencethatoftheparolcontract
andrulesforplaintiff.
Principle:Partiesnotobligedtocommemoratetransactioninasingledocument
Transactionmaybeintegratedwithregardstosomeaspectsbutnotcompletely
integrated.Ifacontractedisonlypartiallyintegratedi.e.onlyfinalizedwith
regardstosomeaspectsofthepartiesdealthenitcanbesusceptibletoallegationsthat
otheragreementswerealsoreached.Thereforeinordertodeterminewhentouseparol
evidenceorhowtointerpretwords,firstdeterminewhethercontractwascompletelyor
partiallyintegrated:scope(integratedastowhat)(Rest.210(3))
Rest.215:contemporaneousoralagreementcannotcontradictwithawriting.
Note:Ifvagueness,thenuseextrinsicevidencetointerpret.Ifgaps,thenthink
indefinitenessandthereforenocontract.
COMPLETELYINTEGRATEDv.PARTIALLYINTEGRATEDKs
IntegratedContrast:Rest.110:DeterminedpriortoapplicationofParolEvidence
Rues
Noparolevidenceadmittedtoreadacompletelyintegratedcontract
Forapartialintegration,termsthatdonotcontradictthewritingbut
merelyaddtoitarepermitted.
ParolEvidencealwaysadmitted:
i) Toshowfraud,misrepresentation
ii) Toshowabsenceofconsideration
iii) Toresolveambiguity(California)
iv) EvidenceofBadFaith
v) Extrinsicevidencethatacauseinthecontractunconscionable
UCC2202:Parol/ExtrensiceevidenceCannotcontradictpartofthewrittenK;parol
contemporaneoustoKIRREEVANTbutthingscanbeinferredfromcourseofK
UCC2208:Expresstermsalwaysruleovereverythingelseeventoleranceinthepast
ofshittyperformance

Lookupmergerclause
TridentCenterv.ConnecticutGeneralLifeInsuranceCo.
Facts:TridentCentercontractedtobuyabuildingathighinterestratesintheearly80s
andsoughtrefinancesevenyearslater,butthecontractrequiredwaiting12yearsbefore
refinancing.Inspiteofapparentclarityofthecontract,Tridentarguesthatitshouldbe
abletoofferextrinsicevidencetosupportpotentialalternativemeanings.9thCir.
ReluctantlyallowsitbecauseithasnochoiceunderCAlawsPacificGasprecedent.
Principle:LotsofhostilitytoPacificGasandmanywhowouldinterpretonlytheplain
languageoftheagreement.PacificGasunderminesthebasicprinciplethatlanguage
providesameaningfulconstraintonpublicandprivateconduct.

STATUTEOFFRAUDS
i) ExecutoradministeredK
ii) Suretyshipprovision(Ktoanswerforthedutyofanother/anagent)
iii) Marriage
iv) Land
v) Nottobeperformedw/in1Year(REST.110)
vi) Goodsmorethan$500(UCC2201(1))
EXCEPTIONSTOSTAT.OFFRAUDS
a) PromissoryestoppelcantakeKoutofStat.ofFrauds(REST.)
b) SocanUCC2201(3)(b)Speciallymanufacturedforbuyerandmanufacturer
hasmadesubstantialbeginningbeforenotificationandnotsuitabletosell
elsewhereundersellersbusiness(UCC)
c) Admissionsintestimonyorotherwiseincourt(UCC)
Policy:incentivestoreduceKtowriting;preventfraudthatKwasorwasnotmade
Boonev.Coe
Facts:BoonepromisedbyofferorthatifhemoveshisfamilyfromKentuckytoTexas,
hewillhaveaplacetolive.UponBoonesarrival,Coedecidesnottorentorsellhimthe
landandBoonesuesforbreachofcontract,butthejudgerulesthatnocontractexisted
becauseitwaswithintheStatuteofFrauds.
Principle:Alllandsalesandrentalsformorethanoneyeararecoveredbythestatuteof
frauds.Thecontractsthereforemustbeinwriting.Rulethatdamagescannotbe
recoveredforviolationofacontractwithinthestatuteoffraudsYetcourtalsorefuses
toprovidefortheplaintiffsreliancedamages,anapproachthatlatercourtsoftenreject.
CoveredbyStatuteofFrauds:(Rest.110,p.490)1)willsestates,2)indemnity,3)
marriage,4)saleofinterestinland,5)Contracttobeperformedovermorethanoneyear,
UCC2201alsocovers:1)saleofsecurities,2)goodsover$500,3)saleofpropertynot
otherwisecoveredworthmorethan$5000.
NOTERESTATEMENTUPDATE:(Rest.129,p.494)enforcementmaybeawarded
despiteStat.ofF.ifactedinream,sonablerelianceonofferortosuchanextentthat
injusticecanbeavoidedonlybyspecificenforcement.

Rest.130:Ifonepartycompletesperformance,butothersidetakesmorethanayear,then
NOTwithinthestatuteoffrauds
Rileyv.CapitalAirlines,Inc.
Facts:OralcontractforRileytosellmethanoltolocalairlineforfiveyearswithan
optiontorenew.Everytimeadeliverywasmade,sowasapayment.Airlinedecidesnot
tobuyandsellersues.Courtrulesthatacontractexistedbutthatbecauseitfellwithin
thestatuteoffrauds,itisunenforceable.
Principle:Noexecutorycontract(oranyotherkind)tobeperformedovermorethanone
yearpermittedwithintheboundsoftheStat.ofF.(NOTEthatiftheproducthadbeen
madespecificallyforthebuyerwhorefusedtopaythencourtmayawarddamages(UCC
2201(3)(a)buthereclientpaidforallthatitreceivedandmethanolpresumablyhas
valuetootherpeople).Courtdoes,incontrasttoBoone,awardreliancedamagesforthe
equipmentthatRileypurchasedtomanufacturmethanolforthebuyer.failedtoprove
thatexpenseswereunreasonablyincurred.
Rest.131providesthatthingslikethecontinuouspurchasesorreceiptsor
anythingthatreasonablyidentifiesthesubjectmatteroftheKcanremove
somethingfromStat.ofF.(muststatew/reasonablecertaintyunperformedparts)
Rest.139andUCC2201(p.499)offerexceptions:defendantadmitsexistenceof
contractorusedStatofFmaliciously,etc.
Rest.143(p.500):Unenforceablecontractcanstillbe(extrinsic)evidencefor
interpretingothercontracts
Schwedesv.Romain
Facts:SchwedessueforSPaftertheyagreedtobylandandinteractedwithlawyer,
receivedsomedocumentsfromsellerslawyerandwasdickedaroundabouttheclosing
date.Finallyfindsoutthatsellersoldtosomeoneelseformoremoney,theyareirate.
Nocontractexisted,andifonedid,thencoveredbyStat.ofF.
Principle:Thelawyersendingtitleinsuranceisanactioninanticipationofacontract
(thinkDempsey)andnotamanifestationofassent.Landsalenottakenoutofstatuteof
fraudsbyexchangesofmemorandaofunderstandingthatarenotequivalenttoacontract.
Leonardv.Pepico
ManifestingAssentThroughanAgent:TypesofAuthority
Defn:Actualauthority
Defn:Expressauthority
Defn:ImpliedAuthority
Defn:ApparentAuthority
NewEnglandEducationalTrainingService,Inc.v.SilverStreetPartnership
Facts:FactsAttorneyhadgeneralauthoritytosettlecasebeforetheywereactually
suedfor10,000.Mortgagewasmisindexedbuyerdidnotknowaboutoutstanding

mortgage.Dsaysattorneywasnotexpresslyauthorizedtosettleforabovethatamount.
60,000.
Principle:Couldattorneybindtheclientbysettlingfor60,000?Normallyaclientis
boundbywhathisattorneysettlefor.

Jenningsv.PittsburghMercantileCo
Facts:Thecompany,representedbyitsvicepresident,askedtherealtortosolicitoffers
forasaleandleasebackofthecompany'spropertyandpromisedacommissionifanoffer
wasaccepted.Therealtorpresentedthreeofferstothecompany,thethirdofwhichcame
closetotheoriginalterms.Therealtorallegedthatthevicepresident'sinitialstatement
thattheexecutivecommitteehadapprovedthethirdoffer,whichwascommunicatedto
therealtorbythecompany'sfinancialconsultant,constitutedacceptanceoftheoffer,
althoughtherealtorwastoldwithinaweekbythevicepresidentdirectlythattheoffer
hadbeenrejected.Thecompanyrefusedtopaytherealtor'sbillforthecommission.
Principle:Thecompanyshouldnotbeboundbyagentbecausethevicepresidentdidnot
haveapparentauthoritytoacceptanofferforthesaleandleasebackofthecompany's
property,anextraordinarytransaction.
PrinciplesOfEnforceability
MichelleMarvinv.LeeMarvin
Facts:MichelleMarvinandtheactorLeeMarvinlivedtogetherforsixyearsbeforehe
"compelled"hertoleavehishouseholdin1970.Shesued,sayingthatthetwoofthem
hadenteredintoanoralagreementthatwhile"thepartieslivedtogether,theywould
combinetheireffortsandearningsandwouldshareequallyanyandallproperty
accumulatedasaresultoftheireffortswhetherindividualorcombined."Furthermore,
theyagreed"toholdthemselvesouttothegeneralpublicashusbandandwifeandthat
Michellewouldrenderherservicedasacompanion,homemaker,housekeeperandcook
toLee."
Principle:Nonmaritalpartnersarenotentitledtodivisionofcommunityproperty,but
thecourtswillinsteadenforceexpressagreementsbetweenthepartiestotheextentthat
theseagreementsdonotrestonanunlawfulmeretriciousconsideration.Intheabsenceof
anexpressagreement,thecourtsmaylooktoavarietyofotherremediesinorderto
protecttheparties'lawfulexpectations.
FrancesMoronev.FrankMorone

Consideration
Considerationsofpromisorwhenofferingpromise
Apromiselackingsuchconsiderationscannothavebeenserious

Actionabilityturnsuponmotivatingfactorsofpromisor
Key:Didthebenefit,detrimentorcounterpromiseinducethepromise?
ThinkParolEvidenceinreverse
Rest.17:[T]heformationofacontractrequiresa

bargain

inwhichthereis[a
manifestationofmutualassenttotheexchangeand]aconsideration

.
Rest.71:Toconstituteconsideration,aperformanceorareturnpromisemustbe
bargainedfor.Bargainedif:soughtbypromisorinexchangeforhispromiseandis
givenbythepromiseeinexchangeforthatpromiseincludingforbearance,actother
thanapromise,creation,modification,ordestructionoflegalrelationandmaybemade
bythirdpartyorgiventoathirdparty
Bargaindoesnotrequireactualhaggling.
Rest.79:Considerationadequateif:
1) mutualityofobligation
2) again,advantage,orbenefittothepromisororaloss,disadvanageor
detrimenttothepromisee
3) equivalenceinvaluesexchanged
Think:didtheconsiderationinducethecontractwasitbargainedfor?
Johnsonv.OtterbeinUniversity
Facts:JohnsonpromisestogivemoneytoaschoolayearaftertimeofKandschool
promisestouseittopayoffdebt.Johnsonrenegesonthedealandschoolsues.School
loses,despitepleadingthatitspromisetousethemoneytopaydownthedebtwas
adequateconsideration.
Principle:Promisingtodosomethingwithmoneyafterthemoneyisreceiveddoesnot
transformapromiseintoacontractbecausepromisetodosomethingwithmoneyafterit
isreceivedstilldoesnotamounttoconsideration.Ifsomedebthadbeentakenonin
relianceofthefuturepromisedgift,thenthatwouldbedifferent.Itisimpliedthatthe
moneywillbespentontheschoolnomatterwhat;promisesforthedebtsareirrelevant.
Wasntbargainedfor:promisetopaydebtwasgratuitousanddidntinduceanything.
Hamerv.Sidway
Facts:Unclemakesbigdealaboutpromises15yearoldnephewfivegrandonhis21stB
dayifherefrainsfromsmoking,drinking,andcards.Nephewcompliesandunclesends
himaletterpromisingtosendhimfundsbutalsosayingIdonotintendtointerferewith
thismoneyinanywaytillIthinkyouarecapableoftakingcareofitIntermediate
appealscourtsaysthatthecaveatisnotenoughofanaffirmationtoremovethecontract
fromthestatuteoffrauds.CourtofAppealsofNYrulesinfavorofandawardsSP.
Principle:Itissufficientthatherestrictedhislawfulfreedomofactionwithin
certainprescribedlimitstoamounttoconsideration.Evenifhewouldhavedoneso
otherwise,simplytakingawaytheoptionissufficientforconsideration.
Courtdoesntwanttogettoomuchintomutualbenefitbutinsteadintoexchange.
Questionsofbenefitarehighlysubjectiveandcourtsdontlikebeingthejudgeofthem.
ThereforeRest.adoptspromisedforandexchangedfor.
Kirkseyv.Kirksey

Facts:PwasthewidowedwifeofD'sbrother.DadvisedPtosellherlandandofferedP
aplacetoraiseherfamily.PabandonedherlandandmovedintotheD'snicehousefor2
years.After2years,DmadePleavehishouseandputherinanuncomfortablehousein
thewoods,whichherequiredhertoleavesometimelater.
Principle:Agratuitouspromiseisnotenforceableevenifthepromiseereasonablyrelies
onthepromiseandincursadetrimenttodoso.
Dissent:ThelossandinconveniencethatthePsustainedinmovingtolivewiththeD
wassufficientconsiderationtosupportthepromise.
Dahlv.HEMPharmaceuticalsCorp
Facts:Dahl(P)wasoneof18sufferersofchronicfatiguesyndromeenrolledinan
experimentalprogramtotestanewmedicinecalledAmpligenmadebyHem(D).Itwas
adoubleblindexperimentdesignedtomeetFDArequirements.Allofthepatientssigned
aconsentformthatdisclosedpossiblesideeffectsandthevolunteerswerefreeto
withdrawatanytime.Hempromisedafullyearssupplyofthedrugtoanypatientwho
completedtheexperiment.Aftertheexperiment,theFDAdeterminedthatthedrugwas
notsafeforwidespreadusealthoughitpermittedclinicaltestingtocontinue.Drefusedto
supplythepatientswiththefullyearssupplyofthedrug.Psoughtamandatory
injunctiontocompelDtoprovidethedrug.Darguedthattherewasnosuchcontract.
Principle:Thecourtheldthatthearrangementwasaunilateralofferandnotabargain
ofapromiseforapromise.Thepromisewasthatiftheparticipantscompletedthe
experimenttheywouldreceiveafreeyearssupplyofthedrug.BecausePscompleted
theexperimentDwasrequiredtofulfillitspromisebysupplyingPswithoneyears
supplyofthedrugatnocharge.Uponcompletionofthedoubleblindtests,therewasa
bindingcontract.
PastConsideration
Moorev.Elmer
Facts:Manwritesbizarreletterpromisingafortunetellerthathisfundswillpayoffher
mortgageifhediesbeforeacertaindate(whichheclaimsnottoexpect)andhedoes.
WomansuesforSPbutisdeniedbecausetherewasnoconsideration.Shesatdownwith
himbeforehewrotetheletter,thusherfortunereadingwasnotadequateconsideration.
Principle:Ifthesittingsweregiveninexchangeforthismoney,thenitshouldhavebeen
consideration.Themodernauthoritieswhichspeakofservicesrendereduponrequestas
supportingapromisemustbeconfinedtocaseswheretherequestimpliesanundertaking
topay,anddonotmeanthatwhatwasdoneasamerefavorcanbeturnedintoa
considerationatalatertimebythefactthatitwasaskedfor.
MoralConsideration
Millsv.Wyman
Facts:YoungmantakenillandgivenrefugebygoodSamaritaninHartford.Fatherof
strickenyouthpromisestopaygoodSamaritanbutthenrenegesandSamaritansues.
Courtdeniesanythingbecauseitwasapromisewithoutconsideration.
Principle:Ethicalobligationsarenotalwayslegalobligation.Adeliberatepromise
cannotbebrokenwithoutaviolationofmoralduty.Butiftherewasnothingpaidor

promisedforit,thelaw,perhapswisely,leavestheexecutionofittotheconscienceof
himwhomakesit.Itisonlywhenthepartymakingthepromisegainssomething,orheto
whomitismadelosessomething,thatthelawgivesthepromisevalidity.However
discraceful,itneednotbeenforced.
Webbv.McGowin
Facts:ManinfactoryinAlabamafallswithlargeobjecttodirectitawayfromman
belowwhowouldhavedied.Fallersustainsmajorinjuries,andsavedmanpromiseshim
$15perweekfortherestofsaviorslife.Aftersavedmandies,hisfamilyrefusesto
continuethepaymentsandsaysthatitwasapromisewithoutconsideration.Courtsays
thatthecontractcanbeupheld.
Principle:IfonegetsaHUGEmaterialbenefit(i.e.theirlifeissaved),andsubsequently
makeapromiseofthanks,thehugebenefitcountsasconsiderationevenifittakesplace
beforethefact.(Ifyouclosesomeoneswindowstosavetheirhousefromgettingwet,
thenitmaynotbethesameassavingtheirlife).Notjustameremoralobligationtopay
(notlikeforonesson,butforonesself).Servicesrenderedcarriedwithpresumptionof
gratitude.Thereforeitcanbeseenasconsideration.DifferentfromCotmanv.Wisdom
inthatthedecedentinthatcaseneverhadanychancetoassentcourtreliedongeneral
understandingthathospitalsanddoctorswillaidthesickandthatweshallallbeaided,
thustheaidingisconsideration.Here,itsasimilarissuethatthepromisoraffirmed.
SeeRest.86(extentnecessarytopreventinjusticedamages)Also,seeRest.17(2)
CONTRACTMODIFICATIONS
Stilkv.Myrick
Facts:Somecrewmanleftashipmidvoyageonshoretherestofthecrewmenallegeto
haveagreedtocontinueonwithmoredutiesformoremoney.Butcourtsaysthatthe
originalcontractastodoallthattheycouldunderall...thevoyage.Courtrefusesto
recognizerenegotiation.
Principle:Contractforservicesmaynotbemodifiedwithoutconsideration.
Courtsaysthatextraworkdoesnotmeananyconsiderationbecauseitwasadutythat
hadalreadybeenassumed.NotethatUCCrejectstheneedforconsiderationina
renegotiation.
AlaskaPackersAssn.v.Domenico
Facts:PackersagreeinSanFrantoworkfor50/60dollarsforshortfishingseasonplus2
centsperfish.WhentheygettoremoteAlaskaplace,netsareofpoorqualityand
fishermanbelievethattheywillmakethemworkmoreforfewerfish.Fishermenhold
uptheoperationandthengetapromisefor$100basepay.Uponreturn,ajudgerejects
ideathatnetswerelousyandsaysthattherewasnoconsiderationforthemodifications.
Principle:PreexistingDutyRule:Workthatonealreadyhadadutytoperformcannot
countasconsideration.Alsonotepossibilities:iffishingnetswereadequatethenitsa
classicholdup,butifthenetswerelousy,thenthefishermendidmoreworkthanthey
bargainedforthusmakingpreexistingdutyruleinvalid.

Note:UCC2209replacesconsiderationwithgoodfaith:nocontractmodifications
shallbeunenforceableaslongastheyareingoodfaith
BrianConstructionandDevelopmentCo.v.Brighenti
Facts:Acontractorsubcontractedclearinggroundforabuildingandsubcontractorwas
surprisedtofindmorerockstomovethananticipated.First,contractortriestoforce
subcontractortodomoreworkforsamecostbecausecontractincluded,everything
requisiteandnecessarytofinishalloftheworkproperly.Thenitrenegotiatedorally
andsubcontractorworkedalittlemorebeforeitwalkedoff.Subcontractorheldto
modifiedcontractandforcedtopaydamages.
Principle:Additionalworkcountsasconsiderationinacontractmodification.Working
onaburdensomeconditionnotanticipatedcountsasconsideration.Ifithadbeen
anticipated,thenitwouldhavebeenpricedintothecontract.
ContrastRestatement89withUCC2209
PosnerinUSv.StumpHomeSpecialities:
Considerationunnecessaryinrenegotiationsbecause1)bothpartieshaveclearlyassented
toenterintothedeal,2)considerationofapeppercorninexchangeforarenegotiated
contractisnotfunctionallydifferentthensurrenderfornothingthereforecoercion.
Suggestion:Doawaywithconsiderationrequirementandinsteadrelyondefenseof
The Intention to Be Legally Bound
Schnellv.Nell
Facts:Schnellagreesforonecentconsiderationtopayahugeestatetohiswifesfamily
onherbehalfeventhoughsheneverhadanythingtobeginwith.Relativesclaimas
consideration:onepenny,theloveheboreforhiswife,andherdesires.Courtdenies
contractexisted.
Principle:Theallegedcontractsetforththreedistinctformsofconsiderationuponwhich
thecontractwastobeformed:thepromisetopayonecent,theloveandaffectionofhis
deceasedwife,andthedesiretoleaveabequesttothethreebeneficiaries.Thecourtheld
thattheconsiderationofonecentwasnotsufficienttorenderSchnellspromise
enforceable.Whileinadequacyofconsiderationwillnotvitiateanagreement,that
doctrinedoesnotapplytoamereunequalexchangeofmoney.Theexchangewouldhave
beenvalidifthecenthadbeenatitemofindeterminatevaluebecauseitwasuniqueor
differentorsentimental.Itwouldhaveworkedifitwasherluckypenny.
SeeRestatement71commentb(670)
Smithv.Wheeler
Facts:Plaintiff entered into an option contract with the defendant to be able to buy land
where the consideration for the option was to be one dollar. The plaintiff never paid the
dollar, but wants to enforce the contract.
Principle: Whether an option contract that is made with what seems to be nominal
consideration that is not paid will be enforced? The option contract presents the implied
promise to pay, and is completely enforceable even though the consideration is not met.
Judgment for the plaintiff.

Look up recitals?
Notes:

2-205 Firm Offers

Restatement 87 Option Contracts
Seals UCC says no
Restatement 79 Adequacy of Consideration

WrittenExpressionofIntentiontoBeLegallyBound
Minority Approach: Pennsylvania Uniform Written Obligation Act of May, 33 Pa. Cons.
Stat. 6
Majority Approach: Must have consideration in the contract, always.
Thomasv.FirstNationalBankOfScranton
Facts:Plaintifffiledanactioninassumpsitagainstdefendanttorecoverfundspaidby
defendantoutofplaintiff'sbankaccountafterplaintiffsignedastoppaymentorderona
check.Thetrialcourtawardedplaintifftheamountofthecheckplusinterest.
Principle:On appeal, the court reversed the judgment. The printed form that plaintiff
signed to stop payment on the check contained a statement releasing the bank from
liability if the check was paid through inadvertence, accident, or oversight. Plaintiff's
stop-payment order was not absolute but was qualified by the terms of the request, which
he signed. The common law liability of a bank may be limited provided the limitation has
the assent of the depositor. The release signed by plaintiff provided that plaintiff agreed to
be legally bound by the terms of the stop-payment form
Kayv.Kay
Facts:In a post-divorce action filed by appellee wife that sought specific performance of
an agreement in which appellant husband was to pay weekly support to appellee, the trial
court ruled in appellee's favor and found that appellant was obligated for past due
amounts for support.
Principle:The court affirmed the trial court's order, finding that under the uniform
written obligation act of May 13, 1927, 33 Pa. Cons. Stat. 6, the absence of
consideration did not render an agreement unenforceable where a statement that appellant
intended to be bound by the agreement was made part of the contract.
FederalDepositInsuranceCorp.v.Barness
Facts:Defendantexecutedanonnegotiablepromissorynotetoafederallyinsuredbank
payableondemand.Thestate'sdepartmentofbankingtookoverthebankandplaintiff
receivedthepromissorynoteviaanassignmentfromthestate'sreceiver.Thecasewas
removedfromstatecourttofederaldistrictcourtonplaintiff'smotion.Defendantthen
movedtoopenthejudgmentallegingseveraldefenses.Plaintiffcontendedthatthe
groundsassertedbydefendantdidnotconstitutedefenses,butwerecounterclaimsfor
whichthejudgmentcouldnotbeopened.
Principle:Inhiscase,thecourtrefusedtoenforcethenotethatcontainedthefollowing
language:theUndersigned...promisestopaytotheorderofCentennialBank...
[685]Thecourtconcludedthatdefendant'sclaimthatthenotewasmadeasan

accommodationandhiscontentionsthattheassignmentwasinvalidduetotheillegality
ofthetakeoverwerebothvaliddefensestothenoteandrequiredopeningofthe
judgment.
FirstFederalSavingsAndLoanAssn.OfPittstonV.Reggie,SuperiorCourtOf
Pennsylvania

LackofIntentiontoBeLegallyBound
Disclaimersofintentiontobelegallybound:notalwaysdispositive;tobeenforceable,
itneedstobeclearandconspicuous,unambiguous,andnotcontradictedbythe
partiesconduct
Rest21.IntentiontobeLegallyBound
PrivacyNoticevs.PrivacyContract(Exampleformclass)
Ferrerav.A.C.Nielsen
Facts:Plaintiff was fired as a result of falsifying her timesheets. She sued for wrongful
discharge of employment, because the handbook stated that she had certain things to be
done before her termination.
Principle:Courtsaystheprovisionsintheemployeehandbookarenotlegallybinding,
becausethereisaclearandexplicitdisclaimer
1. Forimpliedcontractclaimstatementsmustmanifestemployers
intenttobebound(heretheydont)
2. Forpromissoryestoppelemployermusthavereasonablyexpected
employeetoconsiderhandbookapromise(heretheydont)
Evenson v. Colorado Farm Bureau Mutual Insurance Co., Court Of Appeals Of Colorado

Facts: To establish that the manual resulted in a contract, the employee must establish
that the employers actions manifested to a reasonable person an intent to be bound by the
provisions of the manual or handbook.
Principle: Courtsaystheemployeehandbookisbinding,becausedisclaimerisless
explicitandthepracticewithinthecompanywastoregardthehandbookasmandatory
Eilandv.Wolf
Facts/Principle:(medicalstudentsuesschoolfordismissal,basedoncatalogclaimthat
youwouldleavewithdegree)courtfindsexpressdisclaimerrelievesschoolno
contract

DURESS.
Newman&SnellsStateBankv.Hunter
Facts:Widowshusbanddiedwith$3700indebtandshefeltobligationtoclearhis
name,soshehadhisdebtstransferredontohernote,i.e.hercreditline.Latershe
decidedthatshedidntwanttopayoffhisdebts,sosheclaimedthattherewasno
considerationinthebargainbecauseallthatthebankgaveherwasaworthlessnotei.e.
nothing.
Principle:ZEROconsiderationoftenconsideredtoinvalidateacontract,butherethe
courtoverlooksthesubjectivevalueoftheitemtoMs.Hunter.Sheclearlyfeltan
obligationtoclearherhusbandsname,andthereforethenotehadvaluetoher.
Dyerv.NationalByProducts,Inc.
Facts:Dyerlosthisfootinafactoryaccidentandthendecidesnottofileasuitagainst
thefactoryinexchangefortheirofferofemploymentforlife.Lateritisdeterminedthat
thesuitwouldnothavebeenmeritorious.Dyerisfired.Heclaimsthatheforebeareda
goodfaithsuitinexchangeforemploymentforlifeFactoryclaimsthatforebearingan
invalidsuitisnotadequateconsideration.CourtrulesforDyer.
Principle:Givingupanonmeritorioussuit(filedingoodfaith)isadequate
consideration.Amongotherthings,itsavestheothersidealotoflitigationcosts.
Rest.74:SurrenderofaninvalidlegalclaimisadequateconsiderationIF:1)
doubtfulnessrisesfromuncertaintyastolaworfactsor2)theforebearingpartyhonestly
believesinthevalidityoftheclaim
PROMISSORYESTOPEL
Rickettsv.Scothorn
Facts:Grandfatherpromisesgranddaughter$2000saying,Noneofmygrandchildren
workandIdontwantyouworking.Shequitsherjobonthespot(infrontofhim),but
neverreceivesanymoney.Noconsideration,apparentlybecauseitwasexplicitlystated
thattheagreementwasdependantuponherleavingherjobIwasapromiseintendedto
inducebehavior,butbehaviornotessentialforgivingthepromise.
Principle:Injusticecannotbeavoidedunlessthepromiseisenforced.Promiseintended
toinducebehavior,reliancetodetrimentofpromisor,nowayforhertorecover.
RESTATEMENT90:PromissoryestoppelOKwhen:
1)Promisereasonablyexpectedtoinduceactionorforbearance,
2)ReasonableDetrimentalrelianceonpartofpromisor,and
3)Injusticeunavoidablewithoutenforcement.
Remedy:maybelimitedasjusticerequiresusuallyrelianceorconsequential
damages.
Courtsusuallyfocusonthereasonablenessofreliance
Rest.90(2):Noconsiderationnecessaryformarriageorcharitablegifts
Adetrimentwhichismerelyaconsequenceofthepromisevs.adetrimentwhichisin
truththemotiveorinducement(Holmes,TheCommonLaw).
Unbargainedforrelianceasanalternativegroundsforenforcingpromises.

Greinerv.Greiner
Facts:Mandiesandonlyleavesalllandtooneson,andafewcentstotwoothersjustto
makesurethatitwasknownthathehadntexcludedthembymistake.Motherinherits
somelandandtellsoneofhersonstomovebacktotown.Hemovesbackandliveson
thelandgiventohimforayear,butthenhesaskedtoleave.Hegetstokeeptheland:
Principle:Noconsiderationbecauseitwasaunilateraloffer,notbargainedfor,andnot
dependentuponthesonsmoving.Yetitwasreasonabledetrimentalreliancetoa
promiseintendedtoinducesuchbehavioranditwouldbeunjusttotherebydenyhimthe
land.Sohekeepsit:SP(Inthehopesofnotenoughforconsideration)
Feinbergv.Pfeifer
Facts:Womanworksatcompanyformanyyearsandisvaluedandappreciated:atboard
meetingthatvoteonandtellherthatshecanretireatanytimeandthatshewillget
fiftypercentsalaryaspension.Sheretiresandafterafewyears,shebecomesill,and
cantworkanymoreandthenthecompanydecidestorenegeonitspromise.
Principle:Shegetsreliancedamages(orexpectationifthepaymentswillkeepcoming)
becauseeventhoughitwasagratuitousoffer,itreasonablyinduceddetrimentallyreliant
behavior.
JamesBairdCo.v.GimbelBros.,Inc.
Facts:Subcontractorsendsoutanoffer,Ifyougeneralcontractorwinbid,welldothis
partofitforXamount.ButsubcontractGimbelsmessedupandunderestimatedthe
cost.TheysaythattherewasnoKb/cBairdneverinformedthemofacceptance.Court
rulesthattheresnoK,andnoreasonabledetrimentalreliance.
Principle:Whatsthedifferencebetweenapromiseandanoffer?Hand:NoMutuality
existedbecauseusingthesubcontractorsofferinbidcreatesnodutytosubcontractor
1) Rejectsideathatusingsubcontractorbidinmainbidwasacceptancebecausehes
worriedaboutstrategicbehavior;2)Subcontractisnotanoptionbecauseitsnot
supportedbyconsideration.(butmaybeitisbecauseitincreasesoddsof
subcontractorgettingtheirofferaccepted).3)Detrimentalreliance?No,justan
offercantsaythatrelianceonamereofferisreasonable.ALTERNATIVES:
2) Submissionofmainbid=acceptancebyBairdenforceableK(Consideration)
3) Submissionofmainbid=creationofanoptiontobuy(QuestionableRest.25)
4) Submissionofmainbid=reliancebindingpromiseunderPE(Rest.87/Trayn.)
a. WouldBairdwanttobestuckw/goodsifKdidntgothrough?
b. Noevidenceofatraditionalbilateralagreement
c. PurposeofSubcontractornottocreatereliancecourthostiletoPE
LookatthiscaseinretrospectwithUCC2205FirmOffers.
Rest87(1)pg.671adopts2205approachofrequiringaformalitytosupporttheoption
Drennanv.StarPavingCo.(Notassigned,butreferencedinclass)
Facts:Similartoprevious:Subcontractormakesanofferandgeneralcontractor
incorporatesitintobidTraynorinvokesPE.

Principle:HandwasaholdoutonPE.NoKbecause:1)noindicationthatsoughtto
makebidirrevocablebasedonsuseofhisfigureand2)noevidencethatinterprets
suseofsbidasacceptancethereof,binding,onconditionhereceivedmainK,to
awardToanswerHandsconcernsaboutstrategicplay:Itbearsnotingthatthe
generalcontractorisnotfreetodelayacceptanceafterhehasbeenawardedthegeneral
contractinthehopeofgettingabetterprice
Subcontractorcouldhaveprotectedselfbyputtingindontrelyclause
Rest.87:Anofferforanoptionisbindingifitshouldreasonablyexpecttoinduce
actionorforbearancebeforeacceptanceandwhichdoesandwhichmustbeenforced
toavoidinjustice.
Rest.25OptionKpromisethatmeetsrequirementsforKandlimitspromisors
powertorevoke
DRENNANbetterprecedentthanGimbels
Goodmanv.Dicker
Facts:Goodman(D)wasthelocaldistributorforEmersonRadio.Goodmanencouraged
Dicker(P)toapplyforanEmersonfranchise.GoodmaninducedDickertoincur
expensestodobusinessunderthefranchiseincludingtheemploymentofsalesmenand
solicitationofordersformerchandise.DrepresentedthatPhadbeenapprovedfora
franchiseandthathewouldreceiveadeliveryof30radiosbutlaterinformedPthatthere
wouldbenodeal.PsuedDandwasgrantedajudgmentof$1500ofwhich$350wasfor
expectedprofitsfromthesaleoftheradios.Dappealed,assertingthatthefranchise
agreementwasatwillandthereforetherewasnoliability.
Principle:Ifapartyactstohisdetrimentontheaffirmativeassurancesofanother,that
partycanbeprotectedbyestoppingtheotherpartyfromalleginganythinginopposition
tothenaturalconsequencesofhisowncourseofconduct.Reliancedamagesareproper
underpromissoryestoppel.DsconductleadPtodosomethingthatPwouldnot
otherwisehavedone.DcannotsubjectPtolossorinjurybydisappointingthe
expectationsuponwhichPacted.Thetrialcourterredinaddingthe$350forlossof
profitsontheradiospromised.Thetruemeasureofdamagesisthelosssustainedby
expendituresmadeinrelianceupontheassuranceofadealerfranchise.
HereNomanifestationtobelegallybound.ContrastthiscasewiththepreviousPE
cases.
Hoffmanv.RedOwlStores,Inc.
Facts:RedOwlpromisesHoffmanafranchise;togetpractice,heoperatesasuccessful
grocerystore;HoffmansfatherinlawgiveshimmoreandmoremoneythatRedOwl
demands(agentsmakingpromiseswithoutproperauthority);eventuallyRedOwlwants
somuchmoneythatHoffmansfatherinlawwantspartnership,whichRedOwlcant
allowb/ctheywantthestoreiftheresabankruptcysodealrevoked.But,wait,
HoffmangetssomePEdamagesbecausehewaspromisedastoreforXmoneyandjust
couldntlateronmeettheYmoneyrequirement

Principle:Thewrongisnotprimarilyindeprivingtheplaintiffofthepromisedreward,
butincausingtheplaintifftochangehispositiontohisdetriment.Itwouldfollowthat
thedamagesshouldnotexceedthelosscausedbythechangeinposition,whichwould
neverbemoreinamount,butmightbelessthanthepromisedreward.

ConstructionBidsCases/Limitsonthepowertorevokeanoffer:

Reliance[Rest45(optionKcreatedbybeginningortenderingofperformance);
87(2)(akintoRest.90)]
Moregenerally:

OfferorexplicitlyassumesalimitFirmoffer/optioncontract[UCC2205;
Rest.25,87(1)]
Blattv.U.ofSouthernCalifornia
Facts:BlattenrollsinlawschoolwiththepromiseofIfyoudowell,youwillbe
consideredforOrderoftheCoif.Heisfourthinhisclassbutdoesntmakethecut
becausehe,asacommuterstudent,wasntonlawreview,whichwasntarequirement
whenheenrolled.DemandsPEforthedetrimentalrelianceofworkingsohardfor
somethingthathewasntconsideredfor.
Principle:Basicallyacaseofnodamages.Also,hewaspromisedconsideration,
andhejustdidntgetthething.Buthedidallegedlygetconsidered(maybenotthough,
becauserulemayhaveremovedhimfromconsideration.
Spoonerv.ReserveLifeInsuranceCo.
Facts:ReserveLifesendsoutalettertoitssalesmenthatsaysIfyouworkhard,well
giveyouasuperbonus.Addsaclause,butwewontifwedontwantto.Suedfor
PEbecauseitssalesmensaythattheyworkedsohardinrelianceofthepromiseto
receivethebonus.Didntseeotherwise.
Principle:Whileborderingonfraud,youcannothavePEwhenthereisabutnotif
wedontwanttogiveittoyouclause,essentiallybecauserelianceonthatkindof
languagewouldbeunreasonable;notethatthisiswhatTraynorwantspeopletodowith
constructionKs.Thereisanaturalaversiontosuchonesidedpropositions,butwe
cannotdeletetermsorwordsfromanoffer,norcanweignorethem,tomakeabinding
contractforthepartieswherenoneexists.
Ypsilantiv.GeneralMotors
Facts:GMgetstaxincentivestostayinYpsilantiandkeepjobsthere.Intermediate
appellatecourtjudgerulesthatPEpreventsGMfromleavingbecause1)itspromiseto
keepjobsintownwasintendedtoinducethetaxbreaks,2)foregoingthetaxbreaks
amountedtodetrimentalrelianceonthepartofthecity,and3)injusticecouldnotbe
preventedotherwise.SupremeCourtofMichiganreverses.
Principle:Merehufferyisnotapromise.[A]lmostallthestatementsthetrialcourt
citedasfoundationsforapromisewere,instead,expressionsofdefendantshopesor
expectationsofcontinuedemploymentatWillowRun.
Aldenv.VernonPresley

Facts:Elvisdomestichelpsfamily(orsomething)isawomannamedAlden;Elvislikes
herandwhenhefindsoutthatshecantgetadivorce,heassignshisattorneyhelpher
andpromisesherthathellpayoffthemortgagetoherhouse.Whenhedies,hehasnt
paidoffthemortgage.Itwasagratuitouspromise.OnlyafterElvisfatherannounces
hisdecisionnottopayoffthemortgagedoeswomanfinallyfinalizedivorceandgetthe
house(whosemortgageshecantpay).
Principle:Courtrulesthatshegetsnothingbecauseher

reliancewasnotreasonable

.
Sheshouldnothavepursuedthereliantactivityafterthepromisewasrevoked.
Cohenv.CowlesMedia
Facts:CohenisahatchetmaninMinnesotapoliticswhosaystoareporter,Promiseme
anonymityandIllgiveyougooddirt.Reporterpromisesandfindsoutaboutminor
arrestsrecordsofagubernatorialcandidate.Thus,Cohenssleazinessbecomesthestory
andthenewspaperpublishestheCohenissleazystory,breakingitsreporterspromise.
Reportertestifiesthatsheurgedpapernottobreakpromise(differentfromRedOwl
becauseagenthadgoodreasontobelievethatshewasauthorizedtomakethepromise).
Cohenwinsattrial.ButMinnesotaSupremeCourtoverruleson1stAmend.Grounds
freedomofthepress.
Principle:SupremeCourtreverses,sayingthatpromisemadebyareporterisstilla
promiseandthatthecommonlawthatappliestoallpeopleshouldapplyequallyto
reportershere.OnremandwithoutthefirstamendmentconcernsMinnesotacourt
rulesforCohenontypicalreliancePEdamages.Promiseinducedhisaction,etc.
NOTE:possibilityforefficientbreachonthepartoftheNewspaperbiggerstory,more
circulation

IMPLIEDCOVENANTS
AllcontractshaveanimpliedcovenantofGoodFaith
Rest.205:Goodfaithperformanceemphasizedfaithfulnesstoanagreedcommon
purposeandconsistencywiththejustifiedexpectationsoftheotherparty

UCC1203;2103(Immutablerule)
PosnerinCookie:Contractlawimposesaduty,nottobereasonable,buttoavoid
takingadvantageofgapsinacontractinordertoexploitthevulnerabilitiesthatarise
whencontractualperformanceissequentialratherthansimultaneous.
Goldbergv.Levy
Facts:LandlordrentedtostoreinOzonePark.ownedtwosuchstoresanddiverted
traffictohisotherstore.Partoftheleaseincludedapercentageofthesales,sothe
diversionviolatedacovenantofgoodfaith
Principle:Itviolatesgoodfaithtodiverttrafficawaytoanotherlocationtoincreasethe
sizeforyouattheexpenseofthelandlordwhentheresnoincreaseoverall.
MutualLifev.TailoredWomen
Facts:Storerearrangedtoavoidpayingfeesforexpensivestuffsoldinonepartofstore.
Yetprofitsforlandlorddidnotdecline.

Principle:Thecourtaffirmedthejudgmentfromtheappellatecourt,whichmodifiedthe
judgmentfromthetrialcourtinfavorofthelessortorequirethelesseetopayasrenta
percentageoffursalesonanupperfloorwhichwerereferredbyclerksonthelowerthree
floors.As long as it did not divert from the contracts formulated by both parties,
defendant can carry on its business in the way that suited it.
StopandShopv.Ganem
Facts:StopandShoppurchasedaleaseinwhich1)itwastopayallpropertytaxes
regardlessofrates,2)pay$22,000annuallyinrentand3)pay%1.25oftheprofitsofthe
storetothelessor.StopandShopthenwantstoclosedownthisstore.Doesthe
percentagesalenotgrantanimpliedcovenantofcontinuedoperationtothelessor?
Principle:Noimpliedcovenantbecausemorethannominalrentsufficesburdenon
thelessortoprovethatrentwasbelowmarketandthatpercentageofsaleswas
thereforeasubstantialimpliedcovenantcreatingpartoftherent
WARRANTIES
Onlywantwarrantieswhenitscostjustified(whenthebuyercantbuyinsurancefor
less)
DontwantthemtocovertoomuchconsequentialdamagesthinkHadleybecauseit
variessomuch
UCC:TWOimpliedwarranties
1. Merchantability(UCC2314)Specifically,UCC2314(2)(c):Fitnessfor
ordinarypurpose.Passw/outobjectionintradethetrade.
2. FitnessforParticularPurpose(UCC2315) Buyerdoesnotneedtoexpressly
statetheparticularpurpose.BUT
Sellermusthavereasontoknowoftheparticularpurpose.
Buyermusthaverelieduponsellersskillorjudgment.(dontwantused
cardealershipthatbuysmycarfromsayingthattheytrustedmyjudgment
inlookingunderthehood).

ImpliedwarrantiesonlyavailableunderUCC.;Applyonlyifsellerisamerchant
ingoodsofthatkind;IWM:Howdoyouprovethatagoodisnotmerchantable?
IWFPP:Howcanabuyerrecoverunderthiswarranty?;
ExpressWarranties;Affirmationbyseller,whichrelatestothegoodsandbecomes
partofthebasisforthebargaincreatesandexpresswarranty.[UCC2313(1)(a)];
Reliance(Truthv.Insurance);Warrantyvs.Puffing[UCC2313(2)]
CommonLaw:Impliedwarrantyofa

Step-Saver Data Systems, Inc. v. WYSE Technology

CBS,Inc.v.ZiffDavisPublishingCo.
Facts:CBSisplanningtobyZiffsmagazinesforover$300,000butthenbecomes
suspiciousofZiffsnumbers.Ziffagainoffersagratuitousexpresswarranty,andthat
sealsthedeal.CBSthenfindsoutthatitsinstinctswereright,andsues,butZiffclaims
thatitsrelianceuponthewarrantywasunreasonable.
Principle:Butthewarrantywaslikeakindofinsurance;agratuitousconsiderationifI
seeacarandIdontcareabouttheairconditionerbuttheACiswarrantedtowork,and
itdoesnt,thenIgetaworkingACBECAUSEIPAIDFORIT.Becauseotherwise
expresswarrantiescouldbefraudulentinducementswithnoconsequences.
Anaffirmationoffactordescriptionofgoodsthatcreatesanexpresswarrantyunder
UCC2313CANNOTbedisclaimedinthecontractviaanasisordisclaimer
clause.[UCC2313,cmt.4]
IfKprovidedremedy[fails]itsessentialpurpose,thevictimcaninvoketheCodes
defaultremedies.[(2719(2)](IncommercialKs,aforeswearingofconsequential
damagessurviveseveniftheremedyfailsitsintendedpurpose;consumerKs
opposite) Unconscionabilityconstraintstheabilitytoexcludeconsequentialdamages.
[(2719(3)]

PolicyConsiderations

Warrantiesservevaluablepurposes

Informationrevelation

Riskallocation;EfficientPrecautions
Generally,partiesshouldbefreetogive/disclaimwarranties.[Freedomof
Contract]

TheCodesdefaultwarrantiessaveTCs.
Constraintsonthesellersabilitytodisclaimwarranties/limitremediesarejustifiedto
theextentthatconsumersareimperfectlyrational.
SUBSTANTIALPERFORMANCE
Whentheresabreachinpart:
1) PerfectTenderRule(NoMore)
2) Paynow;suelater
3) Compromise:nopayonlyifbreachismaterial;ifitsminor,subtractthe
differenceandsue
Jacob&Youngsv.Kent
Facts:Mancontractsforhousetobebuiltwithgoodqualityreadingpipesbutinstead
getslousypipes.Hesuestohavetheentirehousetorndownandrebuiltsothathegets
thecorrectpipes.
Principle:Cardozorulesthatsmalldeviationsdonotbreachanentirecontract,butthat
thedifferenceinvalueshouldbepaidtothenonbreachingparty.Alsoaddsthatthere
canbeaclausethisisadefaultrule.

Question:IfCardozohadrealizedthatitwasmorethanmerenegligence,wouldhave
haveruledotherwisebecauseofthecovenantofgoodfaith?Wouldtherebethe
possibilityofpunitivedamages?thecostofcompletionisgrosslyandunfairlyofout
ofproportiontothegoodtobeattained.Whenthatistrue,themeasureisthedifference
invalue.
AlbertHochsterv.EdgardelaTour
Facts:TourhiresHochstertobehisvaletinEuropebeginningonJune1.OnMay12he
informsHochsterinaletterthattheKshallbebreached.OnMay24,Hocshsterfiles
suit,atwhichpointTourofferstheKback.Hoshcterslawyersaysthattherecantbea
breachuntilthedaythattheKwassettostart.
Principle:Nonbreachingpartyshouldbeallowedtoceaseallworkandpursuereliefas
soonastheothersidehasannouncedanintentiontobreach.[U]ponacontracttodoan
actonafutureday,arenunciationofthecontractbyonepartydispenseswithacondition
tobeperformedinthemeantimebytheother,thereseemsnoreasonforrequiringthe
othertowaittillthedayarrivesforseekinghisremedybyaction.
Dutytoavoidwasteandtomitigate
Whenthereisaclearmessagethattherewillbeabreach,thenalldutiesof
nonbreachingpartyceaseasdoallresponsibilities
ANTICIPITORYBREACH
Harrelv.SeaColony,Inc.
Facts:Harrelcontractedtobuyacondobutcouldntafforditlater,aftervalueshotup.
SetsupaprincipleinAgreementtogetoutofKandletSeaColonyearnalltheprofits
(notapplyingTongish).SeaColonygotgreedy,however,andsaidthatHarrels
suggestionthathemightbeinterestedingettingoutoftheKwasasignthathewould
breach,andanticipatorilyrepudiatedsoasnottohavetopaybackdeposit.Busted.
Principle:ToconstituteananticipatorybreachofK,theremustadefiniteand
unequivocalmanifestationofintentiononthepartoftherepudiatorthathewill
notrenderthepromisedperformancewhenthetimefixedforitintheKarrives.
UCC2609Adequateassuranceofperformance:Whenreasonablegroundsfor
insecurityarise,onepartymayinwritingdemandadequateassuranceofdue
performanceanduntilhereceivessuchassurancemayifcommerciallyreasonable
suspendperformance.Merchants:reasonablnessdeterminedaccordingtocommercial
standards.Acceptanceofsomemoneydoesnotnullifyrighttostilldemand
assurance(3).
o Afterreceivingjustdemand,otherpartyhadthirtydaystoreplyorelse
theyaredeemedtohaverepudiatedtheK
Scottv.Crown
Facts:TwosmallKs.Firstonecompleteddelivery,secondonepartialdelivery,when
sellersuspectsthatbuyerwontpayforeither.Hearsbadrumor,yellsatbuyerstruck
driver,wontmakedeliveryw/outassurance.But,paymentsimplywasntdueyet.
Courtdeterminesthatgroundsforinsecuritywerereasonable.

Principle:Ifyoudontcomplywith2609tothedot,thenlikelyyouwillbetheone
inbreach.Inspiteofreasonablegroundsforinsecurity,basedoncomplainttodriver,it
wasnotreasonablyconveyed:
Generalgroundsforreassurancemustbeinwriting(unlessunusuallyclear)
CannotdemandperformancebeyondrequiredK
Contentofdemandmustbesufficient,notmeredemandtomeetwithbuyer
Code
UCC2610:AnticipatoryRepudiation:1)Mayceasework,2)Maywaitreasonable
timeforperformance,3)evenifnotifyingrepudiatorthatwillwait,maystillseek
damages
UCC2611:RetractionofAnticipatoryRepudiation:Repudiatormay,uptoscheduled
nextperformance,gobacktoK,andassumeallrightsunderK,solongasnon
repudiatingpartyhasnotyetcancelledormateriallyrepudiatedhisposition
Rest.250257:ProspectiveNonPerformance:Breachingpartycanbeliablebeforean
actofnonperformancehasoccurredifrepudiatedthrough1)explicitlystatementor2)
affirmativeact;whenreasonablegroundstoexpectbreach,maydemandadequate
assurance,butmaynotceaseperformanceuntiltherehasalreadybeenalapseby
potentialrepudiator.256:Nullifiedifretractionreachesnonbreacherpriortoamaterial
changeinposition.
Ifthereisaclearstatementfromrepudiator,thannonbreacherissafe,butifthere
isonlysuspicion,thennonbreachingparty,byceasingperformance,seriously
risksbecomingthebreachingparty
MATERIALBREACHDOCTRINE
Intendedtobalancethecompetinggoalsofprotectingthepromiseeandavoiding
strategicmanipulation(lookingforminordeviationsasanexcusetogetoutofK)
B&BEquipmentCo.v.Bowen
Facts:Bownwasbroughtintoasmallcompanyb/ctheownersneededsomeonewithhis
expertise.MainpurposeoftheKwasforBowentoperform;thereforehislousy
performanceconstitutedamaterialbreach(notethathedidperformwellforseveralyears
butcourtandWurglerthinkthatthatsirrelevant).
Principle:Alwaysask:whatwasthemainpurposeofK?
Inamaterialbreach,awardrestitutiondamages
InsanebalancingtestunderRestatement(refertocase)
LaneEnterprises,Inc.v.L.B.FosterCo.
Facts:Fostersubcontractedtobuildacomponentofabridgeandsubcontractedfinishing
toLane,agreeingthatLanewould1)beincompliancew/inspectionandstandardsand2)
dobothstages.Lanecantdoit,andsaysitsimpossible,soLanehiressomeoneelseto
finishthejobandcoverthecost.FosterasksforassurancethatLanecandophasetwo
andwithholds5%payment;LaneclaimswithholdingwasabreachofKand
Principle:
Agoodfaithholdingofsmallamountsisnotamaterialbreach
Demandforreassurancewasreasonableandlackofresponseconstituted
arepudiation
SUBSTANTIALPERFORMANCE

Whynoperfecttenderrule:wedontwanttoinvitestrategicbehaviortoinduce
breachessothatpeopleangetoutoftheKs;findlittlethings;likeinTongishthe
breachingpartycouldhavetriedtofindsomethingsmallandinducedabreach
Ramirzev.Autosport
Facts:Ramirezstradeintheiroldcamperforanewone.Butthenewoneislatein
coming,andwhentheinspectit,itsucks.Theygivebuyerachancetofixit,butwhen
theygoback,noonewillspeakwiththem.
Principle:mustgiveselleropportunitytocure;

rejectiondoesntendtheKunder
theUCC
Todeterminewhatgoodgoodsare:lookatK;buyerhasrighttoinspect(2515)ndit
mustbeinareasonabletime,tokeepcorrectioncostslowerforseller
acceptancebysilenceagooddefaultrule;savestransactioncosts
Rest.241;UCC2612(3)
Promiseemaytreatcontractasrepudiatedwhenbreachismaterial.
Ifyoudontexerciseyouroptiontoreject/complainyoucanstillsuefordamages
Ifbreachisnotmaterial,promiseecannotsuspendperformance;Factorsin241should
beusedtoaddressthecompetinginterestsofprotectingtheinterestsofthepromiseeand
preventingstrategicbehavior
UCC2601:PerfectTenderRule
Butwatchout:Righttocureifbuyerrejectsgoods(2508)
Buyercanrevokeacceptanceif1)goodsnotseasonablycuredor2)no
discoverybecauseitshard(2608).
DelayedshipmentBuyercanrejectonlyifdelayismaterial(2504)
UCC2711:Buyersrightstorejectgoods:
Cancelthecontract;Cover;RecoverMPKPdamagesunder2713(ifnondelivery);seek
specificperformance,ifappropriate;seekconsequentialdamagespursuantto1106
2714:Remediesforacceptedgoodsthatsuck
LookatcarHypofordifferencebetweenrejectionandrevocation:Ramirezisclearly
rejectiontheynevertookit;iftheguyw/thecardiscoverssomethingverysoonand
returnsit,thenthatsrejection,butifitsawhilelaterthenitsrevocation.
DAMAGES:COSTOFCOMPLETIONV.DIMUNITIONINVALUE
Grovesv.JohnWunderCo.
Facts:Grovescontractedtohavehislandfixedup.Landhadlittlevalue,butGroves
thoughtitwouldyearsdowntheline;butWunderfuckedupanddidntfixuptheland.
CourtinvokespartofCardozotestthatsayswillfultransgressormustacceptthepenalty
ofhistransgression.Sotheyawardcostoffixinguptheland.
Principle:Dissentdisagrees,andwouldonlyawardthedifferenceinvalueoftheland,
whichhereisverysmallbecauselandisshit.Wurglerthinksdissentisright.Butthe
crucialflawinthedissentisthatitdoesnttakeintoaccountidiosyncraticvalues.
Correctdamagesshouldbedifferenceinvalue(dissent)buttakinginto
accountidiosyncraticvaluetononbreachingparty
Peevyhousev.GarlandCoalMiningCo.

Facts:GarlandknowsthatPeevyhousedoesntwanttoletminingonitsland,andgoes
outofitswaytoofferthatitllfixupthelandlaterbutcompletelyfails.Courtawards
differenceinvaluemeasureofdamages,whichisfuckedupbecauseitallowsfraudto
slipby;butWurglerthinksthatitsOKinprinciple,justshouldhavetakenidiosyncratic
valuesintoconsideration.
Ifyouawardidiosyncraticlosses,theresnowaste,justpotentiallyunfairredistribution
ofwealth.
Rest.348:Nonbreachingpartycanrecovereither:1)diminutioninvalueor2)costof
completion(solongasitisnotdisproportionatetotheprobableloss)consider
idiosyncraticvalues
BorateCase
Wurgler:highlydubiousintoxicationclaim(doesnotexplainwhy)eventhoughother
partyknewofintoxication.Guysweredrinkers.
Rest.15MentalIllnessMentallyillenterintoonlyvoidableKsbutifotherparty
isunaware,thecourtmygrantPEstylereliefasjusticesorequires
Rest.16Intoxication:Onlyadefenseifotherpartyknowsthatintox.Hasbadeffect
onotherparty
MISREPRESENTATION
Halpertv.Rosenthal
Facts:Rosenthalwastobuyhouseandasked,aretheirtermites?HalpertsaidNo.
Rosenthalchecked,andfoundthattherewould,sodidnotgothroughwiththedeal.
HalpertsuestogetdifferencebetweenwhatRosenthalofferedtopayandwhatHalpert
ultimatelygot.
Principle:
Misrepresentationmustbeofamaterial

issues(termitesarematerial).(ifits
fraudulent,thenmaterialityisirrelevant).
o Material:ifitssubstantiallycontributingtograntingassent
CureforMisreprsentation:recissionandrestitution(thoughitisanequitable
powerandtheoreticallythejudgecandoalittlemore)
IfyouseeforMisrepresntation,younevergetexpectationdamages
Honestmisrepresentationarestillmisrepresentations:strictliability
Misrepresentationmusthavebeenagoodfaithbelievedfactatthetimeof
contracting,orelseitsfraud
Whyisthesellerspromisenotawarranty?Forastatementtobecomea
warrantyismustbecomepartofthebasisforthebargain.
Nodutytodisclose
But,nondisclosureofsomethingthatbuyershouldknowisfailuretoobtain
goodfaith
Buyerscanprotectthemselvesbyasking,isthereanythingthatIshouldknow?
Rest.161onwhenadutytodisclose:tocorrectamistakeoftheotherparty;good
faith;tocorrectaknownbasicassumptionmaterialtootherpartysinducement;
topreventpreviousstatementfrombeingamisrepresentationorfraud

 MergerClausenogoodbecauseitdidnoteffectivelydisclaimtermiteissue??
Rest.162(2):Misrepresentationmaterialifitwouldlikelyinducereasonablereliance
ormakerknowsthatitwillinducerecipienttodosomuch
Rest.164:Contractvoidableifbasedonfraudormaterialmisrepresentation.Ifitis
inducedbya3rdparty,thenthe3rdpartymustknowthatitsgoingtobeinfluentialinaK
dealornotbeingoodfaithforittovoidK.
Rest.167:inducingassentshouldbedefinedassubstantiallycontributingtodecision
tomanifestassent.
Byersv.FederalLandCo.
Facts:FederalLandCo.willseeByerslandinWyomingvaluedat$15anacrethrough
anagentinNebraska.Landactuallyworth$35andFederalLandCo.1)doesntownit
and2)theperson(Carpenter)whoFederalLandCo.bringsintorentitforfirstfive
yearsaftersaleisreallyjustashame.
Principle:1)FederalLandCo.smisrepresentationaboutownershipisimmaterial
notthecruxofthedeal
Lieaboutpossessorshipismaterialbecauseofthevalueofthatandthe
misrepresentationwasthroughconduct.
Statementofvalueisanopinionandthereforenotamisrepresntation
OpinionandFactdifferential:
1) Astatementaboutsomethingwithmarketvalueisgenerallyfact
2) Astatementaboutsomethingofidiosyncraticvalueisgenerally
opinion
3) Relianceonanopinion

isunjustifiedunless
a. Offerorhasfiduciaryresponsibilityorotherclose
relationshipwithpromisee,(Rest.169(a))
b. Sellerisinpositionofspecialknowledgebuyerreasonably
believesthemtohavespecialskill,judgment,orobjectivity
(heretherealestateagentknewnothing)(Rest.169(b))
c. Someotherreasoncausesparticularsusceptibilitytomisrep.
(Rest.169(c))
Rest.168:Opinion:beliefwithoutcertaintyandrecipientmayinterpretunknownfacts
as,offerersknowledge,consistentwithopinion.
Vokesv.AurthurMurray,Inc.
Facts:Lonelywidowbuyslotsofdancinglessons.Theykeeptellingher,youregetting
reallygood.Shebroughtatonoflessons.
Principe:Theywereinarelationshipwheretheyhadafiduciarystyleresponsibilityto
her(Rest.169)andthereforetheycrossedthelineovermerepuffery.eventhoughit
wouldbeconsideredasopinionifthepartiesweredealingonequalterms.
DURESS
Hackleyv.Headley
Facts:HackleywenttogethispaymentbutKdidnothaveatermforpaymentand
neededthemoneynow.Headleygavehimthemoneynowbuttookahuge

percentageforthetransaction.Hackleyclaimedduress.Heclaimedthathehadntthe
timeorresourcestosueonthespot,buthethathesecretlyintendedtosuelater.
Principle:ThiswasjustanhonestthoughperhapspredatoryKrenegotiation.
Policy:Betterfortobeabletogetmoneyupfrontatafeetohavethatoption.
DifferencebetweenOfferv.Threat:Anoffermayimprovethe
statusquowhereasathreatmayworsenstatusquo
IfHeadleyhadtakenmeasurestocreateHackleysneedsaybycutting
offhisothersourcesofmoneythenitwouldbeduress
AustinInstrumentv.LoralCorp
Facts:AustinmadestuffforNavyandsubcontractedoutmanypartstoLoral.Loral
didntgetabidonanewpieceofmachinery,anddemandedthatasforthepreexisting
K,itwantedretroactiveadvancesofmoney.Austinsaid,OK,butthisisonlybecauseI
havenootheroption.
Principle:LoralguiltyofDuressbecauseittookanaffirmativeactiontolimitfreewill.
Rest.175:Noreasonablealternativestest:mixessubjectivity/
objectivity(reasonableness)asalwayshereAustinneedntgotopeoplewhoitdoesnt
trust,normustittakeriskinrenegotiatinghisKw/thenavy.
AustincantjustbreachNavyKbecauseofhugeliquidateddamagesand
reputationalharmifAustinhadalegitimateexcusetodemandrenegotiation
pursuantto2209thenitcouldhavesaidsomuch
UnitedStatesv.ProgressiveEnterprises
Facts:/CraneisasubcontractorandProgressivehasaKwiththemilitary.Cranehad
legitimatereasonstorequirerenegotiation(costofmaterialshadgoneup)andwhen
Progressiveacceptedtherenegotiation,itneversaidthatitwasdoingsow/outfreewill.
Principle:Partyunderduressmustmakeitclearthattheyonlyareacceptingrevisionsas
aresultofduress.
NowayforCranetoknowthatProgressivewasfeelingduress
o Sellermustbedealtwithhonestlytobeabletoconsiderother
possibilities.Keepingsuchinfosecrethardlyconsistentwithgood
faith.
o Mustcomplainandidentifythenatureoftheproblem
Here,thecircumstanceshadchanged.RiskwasnotpricedintotheKand
thereforedemandforrenegotiationispermissiblepursuantto2209.
Odorizziv.BloomfieldSchoolDistrict
Facts:Odorizziwasateacherwhowasarrestedforhomosexualconduct(framed?)and
aftergettingouthewaswearyanddazed.Immediatelyhisprincipleandotherscameto
hisapartmentandsaid,Wereyourfriend.Thisisforyourowngood.Notimeto
speakwithanattorney.Justsignthisandresign.Thatwaywewonthumiliate
you.Odorizzisignsandhislateracquitted.Hewantshisjobbackandclaimsundo
influence.
Principle:UndueInfluencehastwofactors:
1) Weaknessonpartofvictims

a. Dizzy/tired/elderly/particularlysusceptibletoabuse;weaknessof
mindwhichleavesunderstandinglacking;orlesserweakness
whichprovidessufficientgroundstorescindneednotbelong
lastingdueto1)AGE,2)PHYSICALCONDITION,3)
EMOTIONALANGUISH
2) Overpersuasion
a. Discuss/consummationatunusualtime/place
b. Insistentthatbusinessbefinishedatonce
c. Extremeemphasisonuntowardconsequences
d. Useofmultiplepersuaders
e. Absenceofthirdpartyadvisor;Notimetocontact
UNCONSCIONABILITY
Williamsv.WalkerThomasFurnitureCo.
Facts:Williamsrentedwithacollateralizeddebtclause.Thatis,eachtimesherenteda
newpieceoffurniturefromtherentacenter,allpreviouspieceswereputupas
collateral.
Principle:AbsenceofMEANINGFULCHOICE
1) Proceduralside:unequalbargainingpower
2) SubstantiveSide:alotmorefarreachingthananyconsumerwouldimagingto
bealternativeargument.:hugecreditrisksforlender
a. Pricealoneisneverunconscionable
Sherwoodv.Walker
Facts:Purchaseforacowthatsellerthinksisbarrenbutbuyertakesachance.Before
transfer,itgetspregnantandsellerwantstorescindtheKbecausethevaluehasgoneup
somuch.
Facts:ItwasThewholesubstanceofthething.Ifmistakewasmutual,andexante,
andonthewholesubstance,thennoK.
Cruxoftheissueoverwhetherithadpassedwantsanefficientbreach
Everyoneknowsthatassetshavevaluesthatcangoupanddown,thereforeissue
is:whoisriskallocatedto
Rest.152:WhenthereisamutualfailureofamaterialelementuponwhichKis
premised,Kisvoidablebyadverselyeffectedparty
Rest.154:IfoneisawareattimeofKthattheydontknowsomethingthentheyassume
therisk.
Incentives:Whoinbetterpositiontoavoidrisk?Whoisefficientrisktaker?
Nesterv.MichiganLand&IronCo.
Facts:Manbuyspineforestandhasadequatetimeexantetoassessthepinesandguess
astotheirquality,butexpostfindsthattheyreallyareoflowquality.Thereforewants
nottopaywholesumduebasedonSherwoodv.Walker.
Principle:Plaintiffassumedtheriskoferrorinassessingthetimber.
HowtoAnalyzeaMistake:
1) Wasthereamistake

2) AboutaPreorPostKFact?
3) BasicassumptionoftheK?
4) MutualMistake?
5) Towhomistheriskallocated?
Woodv.Boynton
Facts:Womansellsherdiamondringknowingthatitmaybeofsomevaluebuthasno
ideathatitisadiamondanddoesntfindout.Sheknowsthatshedoesntknow.
Principle:KnowingthatyoudontknowimplicitlyassumesriskRest.154(b)
Tyrav.Cheney
Facts:Subcontractorclaimsthathetoldbuilderthathisbidwastoolowbeforeitwas
accepted.
Principle:Ifoneknowsthathebidiswrongormistakenthentheycantsnapit
up.Burdenontoprovethatothersideknew.
Laidlawv.Organ
Facts:Manknowsthatwarisoverbutdeliberatelydoesntdisclosetootherpartytoget
benefitofperceivedlowerprice.
Principle:
Rest.153:UnilateralMistakevoidableifadverselyaffecteddoesntbearriskofmistake
andeitherenforcementwouldbeunconscionableorothersideknewofmistake.
Rest.160,161:DUTYTODISCLOSE:
1) Whennecessarytoavoidamisrepresentation/fraud
2) Tocorrectabasicassumptiontheotherpartywherefailuretodiscloseisbadfaith
3) Fiduciary/trust/confidenceduty
4) Whenheknowsthattheotherpartyismistaken
Policy:WhoisinabetterpositiontoavoidMistake?
WithholdDeliberatelybutnotcasuallyacquiredinformation(Kronman)
Productivev.distributivefacts(Cooter)
Paradinev.Jane
Facts:Armyinvadedbyenemyaliens.Istherestilladutytopaytherent?
Principle:
StandsforStrictLiabilityexceptwhenriskallocationisexplicit
o Freewillassumptionofrisk
Lesseesperformancehasnotbecomeimpracticable
DefensesinRaffles:immaterial,riskallocation,nomistakeatall.
Taylorv.Caldwell
Facts:Ktoperforminamusichall,whichburnsdownpriortodateofperformance.
Principle:
Implicitunderstandingthatifthetheaterceasestoexist,thennoK
TOOOBVIOUSFORWORDSRULE:Shelikestodefineimpliedtermsas
thosethataretooobviousforwords:LadyDuffGordon;Taylorv.Caldwell
GodsWillPermittingclause;
o ForceMajeureClause

 IMPLICITRISKALLOCATION
EasternAirlinesv.GulfOil
Facts:OilpricesgoupandGulfwantstogetoutofKbecauseitclaimsthatits
commerciallyimpracticablepursuanttoUCC2316
Principe:NotallowedoutofKbecauseitsstillPossible.ButUCConlysaysimpractical
Rulefordeterminingimpracticability:
1) Failureofapresupposedcondition
2) Failurewasunforeseeable
3) Nospecificriskallocation
UCC2615:Selleroffthehookforfailuretoperformiftheresafailureofamutual
assumptionsolongas1)whenonlypartiallyincapacitated,maystillselltopeoplenot
underK,and2)mustnotifybuyerseasonablymustbeconsistentwith

goodfaith
Comment4:Increasedcostsalonearenotenough
Isriskexplicitlyorimplicitlyallocated?
FRUSTRATIONOFPURPOSE
Henryv.Krell
Facts:ManrentsroomtoseethecoronationoftheKing.Hepusdown25pounds,butis
suedforremainingfifty,eventhoughKingisbecomesillandthereisnocoronationthat
day.Kvoidable.
Principle:Notalostvolumeseller:willbeabletocoverjustondifferentday
WindfallRuleCantgetbackmoneyalreadypaid
Notamutualmistakecasebecausethechangewasexpost
Loydv.Murphy
Facts:Manrentsastorefronttosellcars,butthengovtrestrictssalesofnewcars.But
manstillsellscarsatanotherlocation.HewantsoutofKforfrustrationofpurpose.
Principle:
Policy:Whowasinabetterpositiontominimizetherisk?Whowastheefficientrisk
bearer?
DontwanttooverapplyfrustrationofpurposeandcallallKsintoquestion
whilepromotingmassivelyexpensivelitigation.
Thefactthatitwasforeseeableimplicitlyallocatedtherisktothelessee
Ret.261266,271:Preventionbygovtregulation,destructionorfailuretocomeinto
existenceofnecessarything,deathorincapacity,dischargebysupervening
impracticabilitywithouthisfault.