Colin McKeon

Contracts Outline

I. Bargain Theory for Enforcing Promises & the Requirement of an Agreement

A. Bargain Theory of Consideration
1. Bargained-for exchange v. Gift promise
a) Bargained-for exchange is enforceable; gift promise is not
b) To make a promise enforceable, the promisor must ‘bargain for’ or request
the consideration supplied by the promisee in exchange for the promise
c) Conditions necessary to pick up a gift are not consideration
(1) What is a condition and what is consideration?
(a) Allegheny College case
(b) This depends on motive
(c) If something was actually extracted as the price of a promise,
or is it merely a condition to the gift?
d) A promisor’s gratitude for past good conduct is not consideration because
the promisor is not extracting anything, and the promisee is not supplying
anything as the price of the promise
(1) Dougherty v. Salt
(2) The promise was not made with the motive of extracting anything
(3) So there was no consideration
2. The promisor’s motive
a) The motive is measured by the objectively reasonable person
(1) Would a reasonable person believe the motive was to extract the
consideration?
b) The motive need not be the primary or even a substantial reason for
making the promise; just one of the reasons
c) A reasonable person must believe that the motive was to extract
consideration; also a reasonable person must believe that the promise
actually induces the promisee to deliver that consideration
(1) Baehr v. Penn-o-Tex Oil Corp.
d) If it appears that the promisee had a different motive for promising or
performing the apparent consideration, the promise is unenforceable
(1) Uncle/nephew smoking hypo - if nephew already planned on
quitting smoking for his health, his promise to stop is not consideration
for the uncle’s promise to pay him $ if he stops smoking.
(a) Uncle did not actually induce any actions
3. What must be extracted
a) Consideration must be either a return promise or a performance
(1) Promise as consideration
 (a) In a bilateral exchange (both parties made promises), the
consideration is the extraction of a promise to sell, perform a
service, to pay, etc.
(2) Performance as consideration
(a) Actual payment, sale, performance can be consideration for
a promise
b) Acts and forbearances
(1) Acts
(2) Forbearances
(a) Desisting from exercising a legal rights
(b) Forbearance from smoking or drinking is consideration if it is
actually extracted by a promise of payment
i) Hamer v. Sidway
c) Benefit to the promisor or detriment to the promisee
(1) Hardesty v. Smith
(2) Difficult to discern how a promisor’s motive is to extract
consideration if it doesn’t benefit them somehow
(3) Psychic benefit to the promisor should cause gift promises to be
enforceable
(4) Benefit to the promisor is an aid, not a conclusive test
(a) Maughs v. Porter
(5) Courts rule out benefits that are too ephemeral to be consideration
4. Forbearance to sue as consideration
a) Forbearance to sue on a valid claim is good consideration
(1) Springstead v. Neas
b) Invalid claims are not good consideration
(1) We don’t want people extorting promises in exchange for forbearing
to sue on claims they know are invalid
c) Middle ground: what if you reasonably and honestly believe your claim to
sue is a good one - is your claim to forbear from suing good consideration?
(1) Yes - all you have to be is reasonable OR honest about your belief.
(2) Contract law says your claim is ‘colorable’ or ‘doubtful’
(3) But if your motive was not to extort, your forbearance is good
consideration.
d) Perhaps this approach allows too much negligent ignorance, or allows too
much shielding behind the ‘reasonable person’ standard
5. Policies
a) Lon Fuller’s theories
(1) Formal and substantive grounds for enforcing bargained-for
exchanges
(2) Formal
(a) Evidentiary
 i) A bargained-for exchange tends to produce evidence that a
promise was really made
ii) However, not the only method of generating evidence
iii) Written gift promises have evidence
(b) Cautionary
i) A bargained-for exchange cautions the parties about what they
are doing
ii) The bargaining process will alert the parties to the legal
ramifications of their acts and promises
iii) Prevent rash decisions - like gratuitous gift promises
iv) Dougherty v. Salt - ill-advised or thoughtless promises
v) A party bargaining for the exchange has to jump through
more hoops
vi) A writing also satisfies this, but perhaps not as well
(c) Channeling
i) Bargain theory offers parties a distinct set of instructions for
parties who want to enter an enforceable exchange
ii) Gift promises too amorphous to do this
iii) A written gift promise disproves this reasoning somewhat
(3) Substantive bases of contract liability
(a) Private autonomy
i) Allow people to create their own legal relations
ii) Protects people who rely on their agreements
iii) Half-completed exchange
(b) Substantive reasons not much help in distinguishing gift
promises from bargained-for exchanges
(c) Gift enforcement supports freedom to make a gift
(4) Is the reason for not enforcing gifts because they create too little of
a benefit? Are they sterile?
(5) Or is it the opposite? Are gifts important precisely because they
are not enforceable and therefore strictly voluntary?
6. Adequacy of consideration
a) Courts are not supposed to decide the adequacy of consideration
b) Private parties are supposed to weight the adequacy themselves
c) Otherwise, contract law would collapse if courts were inspect the exact
equality of consideration value
d) The adequacy rule is subject to several exceptions
(1) Severely, obviously imbalanced exchanges make courts nervous
and reluctant to enforce
(2) Unconscionability, duress, misrepresentation - courts authorized to
strike down contracts made unfairly on the evidence of inadequate
compensation
 (3) A promisor is usually fighting an uphill battle when she urges a lack
of enforceability based solely on inadequate compensation
7.Mutuality of Obligation and illusory promises
a) To be enforceable, an agreement must require both parties to do
something - if only one party is obligated to perform or promise, or if one
party is too easily able to wriggle out, the agreement is not enforceable
(1) Party 1 promises to pay for a piano, party 2 promises to sell the
piano “if he feels like it” - no mutuality of obligation and no enforceability
b) De los Santos v. Great Western Sugar Company
(1) If an agreement doesn’t require one party to do anything, either
party can terminate the agreement at will - not enforceable except for
what has already been performed
(2) Contract was void for lack of mutuality of obligation
(3) Neither party can recover for what should have or would have
happened
(4) The contract is only valid to the extent it has already been
performed
c) Illusory promise or actual binding agreement?
(1) Wood v. Lucy, Lady Duff-Gordon
(2) Implied promises and the totality of the agreement can sometimes
overcome the charges of non-enforceability
(3) If it can be said that both parties intended an obligation
(4) ‘Reasonable efforts’ or satisfaction clauses
(a) Satisfaction clauses usually evaluated according to a ‘good
faith’ test on the part of the promisor
(b) That is, the satisfaction clause is enforceable, but not if the
promisor claims to be unsatisfied in bad faith
(c) If the satisfaction clause deals with commercial value or
quality, mechanical utility - ‘reasonableness test’
(d) If the clause deals with fancy, taste, or judgment - ‘honesty
test’
(e) Mattei v. Hopper
(5) Courts find mutuality of obligation in satisfaction clause cases by
implying an obligation of ‘good faith’ satisfaction because courts believe
that the parties probably intended these results
d) Situations where the mutuality requirement doesn’t apply: Employment
contracts
(1) Weiner v. McGraw Hill
(2) If the contract contains a provision allowing the employee to quit at
will, is a provision preventing the employer from firing him within one
year enforceable? Is the entire contract void for lack of mutuality?
(3) No - there is a lack of mutuality, but the employer is still liable if it
violates the ban on firing
 (a) The employee already supplied the consideration - this is
not an executory bilateral exchange
(b) The employee’s consideration is good even though the
employee had greater latitude to terminate the employment
8. Preexisting duty doctrine
a) Any change in an existing contract must have a new consideration to
support it
b) Why not allow freely-made modifications to agreements?
(1) Schwartzreich v. Bauman-Basch
(2) Courts have devised methods of avoiding the pre-existing duty rule
(3) By modifying the contract, you have rescinded the original contract,
and formed a new contract supported by the same old consideration
(a) This is the court’s legal fiction - it goes too far
c) The courts should move to a new rule that focuses on the voluntariness of
the modification
d) Article 2 of the UCC
(1) In sale of good cases no new consideration necessary to modify a
contract
(a) Modifications enforceable if negotiated in good faith
e) In cases not involving sale of goods, the common law rule applies
9. Promise for benefit received
a) Promises based on on ‘past consideration’ are not enforced
b) Harrington v. Taylor
(1) Husband/Wife/Neighbor assault
(2) Promise to pay for damages in return for a past action is not
supported by consideration because nothing was extracted
c) Mills v. Wyman
(1) Unenforceable promise because no consideration to enforce it
(2) Logical extension of enforcing these promises is to enforce all
moral obligations
d) Webb v. McGowin
(1) Created legal fictions about new consideration
(2) Instead, courts should have directly declared that promises for
benefit received are enforceable as a distinct obligation whenever a
promisee materially benefits a promisor, not intending a gift, and the
promisor then makes a promise to pay for the benefit.
10. Summary
a) Free-and-open-source software movement (FOSS)
(1) Bargain theory capable of dealing with such transactions
B. Requirement of an Agreement
1. The objective test of assent
a) Contract law enforces the apparent, not actual intention of the promisor
b) Lucy v. Zehmer
 (1) Court ‘must look to the outward expression of a person as
manifesting his intention rather than to his secret and unexpressed
intention’
(2) The parties entered an enforceable contract even if one wasn’t
serious, if the other party reasonably believed he was serious
(3) The party’s belief must be reasonable and honest
(4) The objective test of assent trumps actual intentions
(5) Contract law enforces an agreement when a reasonable
person would believe the promisor intended to be bound
2. Offer and Acceptance
a) Offer
(1) Contract law must determine whether a reasonable person
acquainted with all the circumstances would believe that the author of
the communication alleged to be an offer intended to be bound upon
assent by the other party
(2) Lefkowitz v. Great Minneapolis Surplus Store
(a) A reasonable person would believe the store intended to be
bound upon an acceptance because its advertisement was ‘clear,
definite, and explicit, and left nothing open for negotiation’
(b) However, a more speculative advertisement will not be
enforced as an offer
(3) Ford Motor Credit Co. v. Russell
(a) Advertisement not an offer, because it was obvious that a
reasonable person would understand that not everyone would
qualify for financing, and the supply of goods is not unlimited
i) A reasonable person would understand that the offer only
stayed open until the dealer ran out of goods
(4) Offer analysis when bargaining done by letter
(a) A degree of definiteness is required to satisfy a reasonable
person that an actor intends to be bound upon an acceptance
(b) Degrees of uncertainty do not preclude a communication
from being an offer if a seller includes a phrase like ‘for immediate
acceptance’
(5) Importance of evaluating all circumstances
(a) Is an offer ‘too good to believe’?
i) Probably not enforceable as a reasonable person would
probably find no intent to be bound
b) Acceptance
(1) Whether a reasonable person would believe the offeree intends to
accept the offeror’s terms and form a contract - (OBJECTIVE TEST)
(2) Would a reasonable person believe the offeree definitely and
unequivocally intends to be bound by the offer?
(3) Ardente v. Horan
 (a) A letter injecting new issues into the negotiations, despite a
signed purchase agreement is only a qualified acceptance
i) Legally, this is not an acceptance at all
(4) Silence as an acceptance
(a) Reasonable person test - does silence under the
circumstances convey to a reasonable person that the offeree has
accepted the offer?
(b) Ordinarily, silence does not constitute an acceptance - but
this only means that usually a reasonable person would not believe
the silent party intends to be bound
(c) In cases of continuing arrangements (lawnmowing
services), silence can constitute an acceptance since the
reasonable belief would be that unless instructed to stop, the service
arrangement will continue indefinitely
(d) Mailing of unsolicited goods - does keeping it constitute
acceptance and required compensation?
i) USC 3009 now declares unsolicited mailed goods to be gifts
3. Offeror’s power to prescribe the terms of the offer
a) The offeror can set forth any terms she likes, which the offeree must
accept to form a contract
(1) If the offeree makes a counteroffer instead of acceptance, the
counteroffer is treated as any other offer - reasonable person tests
b) An offeror can also prescribe the terms of the acceptance
(1) Allied Steel v. Ford Motor Co.
(a) When are terms of acceptance prescriptions, or merely
suggestions?
i) Objective reasonable person test - would a reasonable person
believe that the offeror required the offeree to follow the
prescribed method of acceptance, or was it merely a suggested
method?
(b) UCC (sale of goods cases) creates a presumption of
reasonable manner of acceptance, unless the offeror
unambiguously indicates otherwise
i) Offeror has the burden of proving that the term of acceptance
was actually a required one
4. Offers for unilateral and bilateral contracts
a) Offeror can require either a performance or a promise as acceptance
b) If a reasonable person would believe the offeror required a return promise
as an acceptance, the promisee can only accept by a promise
c) However, the offeree can still accept an offer for a bilateral contract by
beginning performance if a reasonable person would believe that the
offeree’s conduct in performing constitutes a promise to perform
(1) White v. Corlies
 (2) Allies Steel v. Ford Motor
(a) If the offeree begins work at the offeror’s place of business,
performance constitutes an acceptance
(b) If the offeror should reasonable believe that the performance
is an acceptance (i.e., if the offeror knows of the performance’s
beginning)
5. Duration of Offers
a) Rejection or Counter-offer
(1) When a reasonable person would believe the offeree does not
accept an offer, the offer has been rejected
(2) Once an offer is rejected, it cannot be accepted (unless of course
the offeror goes along with it - that constitutes a new offer and
acceptance)
(3) Akers v. Sedberry
(a) Offer to resign, if rejected, is no longer open and cannot be
accepted later on
(4) Counter-offers function as rejections of original offers - once a
counter offer is made, the original cannot then be accepted by
counterofferor (the counterofferor can propose the original offer again
and hope the offeror accepts)
b) Lapse of time
(1) Offerors can prescribe the length of time their offers will stay open
(2) If no time is specified, the test is how long a reasonable person
would believe the offer would stay open
(3) Personal conversations - any offers made during conversation
terminate at the end of it
(4) Statute of limitations and offers (Vaskie v. West Am. Ins. Co.)
(a) Failure of the insurance company to specify that the offer
terminated at the statute of limitations expiration implies that a
reasonable person would believe that, since accepting the offer is
forbearance from suing the statute of limitations was unimportant in
the case, the offer would stay open beyond the running of the
statute of limitations
(b) Advise your client to specify in its offer how long it stays
open!
c) Revocation
(1) A revocation occurs when a reasonable person believes the offeror
has withdrawn the offer
(2) A revocation is effective when the offeree receives the information
that the offer is no longer open
(a) Exception: reward-offer cases for capturing a criminal or
finding a lost pet
 (b) Revocation only effective if given the same notoriety as the
offer
(3) Revocation need not be explicit - if a potential buyer finds out that
the item was sold elsewhere, the offer is an effective revocation
d) Bars to revocation - option contracts
(1) Additional compensation as consideration for keeping the offer
open - an option contract
(2) Sham consideration
(a) Fair prices for options are difficult to ascertain so courts
rarely inquire into adequacy of the consideration therein
(b) Also, option contracts facilitate real estate transactions, so it
would not be good to allow an offeror to wiggle out of a promise to
leave an offer open
(3) UCC 2-205: Option Contractions in sale of goods
(a) Enforces offers left open if they are made by merchant, in
writing and signed by offeror
(b) Time limit: time stated, or three months
e) Bars to revocation - beginning performance of unilateral contracts
(1) Can an offer be revoked on a unilateral contract (where offeree
accepts by performing) if the offeree has already begun performance?
(a) Modern view protects the offeree who is trying to perform
(b) Offeror is bound on condition that the offeree complete or
tender full performance
(c) Once you begin to perform, you have created an option
contract that binds the offeror to allow you to complete performance
(d) Beginning performance is the consideration for this option
(e) Offeree must exercise reasonable diligence to notify offeror
that performance has begin
(f) Contract law protects an offeree who relies on an offer when the
only way to accept requires the offeree to begin performance
(2) Issue: What constitutes the commencing of performance?
(a) Reasonable person test?
(3) When must an offeree who begins performance notify the offeror?
(a) Must exercise reasonable diligence to inform within a
reasonable time
f) Bars to revocation - offers for bilateral contracts
(1) Drennan v. Star Paving Co.
(a) Court holds in favor of a contractor for relying on a
subcontractor’s bid
(b) Only fair to allow Drennan to accept subcontractor’s bid
when Star had reason to understand that Drenna would rely on the
bid and did rely on it
 (2) New bar to revocation: reasonable reliance on an offer for a
bilateral contract
(a) Why would an offeror reasonable expect an offeree to rely?
(b) Drennan may be a special case due to the custom of
construction business
6. Bargaining at a distance
a) Communication via mail or telegram
(1) Main problem is that parties cannot know at the same time whether
they have formed a contract
(2) Offeror can prescribe that the offeror must receive an acceptance
before a contract is formed
(3) Mailbox rule - “acceptance is good when posted”
(a) Offerors can protect themselves against uncertainty - if they
do not avail themselves of that, the rule should favor the offeree
b) Electronic offer and acceptance
(1) Acceptance still effective when sent
(2) Same reasoning as paper communication
7.Limitations of Agreement law
a) Legal significance of business draft agreements
(1) Three categories of business drafts
(a) Not legally enforceable
(b) Obliges parties to make a reasonable effort to conclude the
deal
(c) Legally enforceable contract
(2) Contract law seeks to determine which category the parties
intended by using the reasonable person test
(3) Examine all of the consequences
b) Requirement of certainty in business agreements
(1) Even a draft intended to be binding will not be enforced if the draft
omits too many important terms
(2) Courts should make every effort to fill gaps and enforce
agreements if the parties intended to contract
(3) Base uncertainties on market values, or other ‘reasonable’ gap-
filling
c) Form contracts between sellers and buyers of goods
(1) UCC section 2-207 (pgs73-78)
(a) Route 1
i)
ii)
iii)
iv)
(b) Route 2
(c) Route 3
 (2)
(3)
(4)
d) Rolling contracts
(1) Consumers ordering and paying for goods before having an
opportunity to read most of the terms
(a) The terms just “keep rolling”
(2) Focus on fairness of the terms that come “in the box”
(a) Whether the manner of revealing the terms is fundamentally
unfair
II. Additional Theories for Enforcing Promises
A. Promissory Estoppel
1. Development of the Doctrine
a) Kirksey
(1) Gift promises not enforceable
(2) Should they be?
(a) Loss and inconvenience (shadow of reliance)
(b) Is it consideration?
(3) Ryerss
(a) Using consideration where it doesn’t belong
(4) Seavey v. Drake
(5) Justifiable reliance - promise inducing definite and substantial
action
2. Section 90 in the Second Restatement
a) Promise
(1) A promise which can reasonably expect to induce action or
forbearance and does so - is binding if injustice can be avoided only by
enforcement
(2) It must be a promise
(3) May have to be ‘clear and definite’
(4) Some courts are strict about these requirements
(5) Dickens v. Equifax
(a) PE requires definite statements to qualify as promises
(b) Promises distinguished from present intention
b) Promisor’s reasonable expectations
(1) Inquiry as to reasonableness of reliance
c) Inducement of action or forbearance
(1) Must actually induce reliance
d) Injustice
(1) Policy issue
(2) Can be raised as a pretext
3. Expansion of promissory estoppel
a) Wheeler v. White
 (1) Expansion of PE in unenforceable bargain cases
b) Aretha Franklin case
(1) No final agreement
(2) But still PE
(3) She should have known of the reliance on her assent
c) Hoffman v. Red Owl
(1) Party can be liable for representations made during negotiations
prior to the culmination of a contract
d) Why no wider application of PE?
(1) Subverts unenforceability doctrines
(2) Makes them into enforceable
(3) Reliance, not expectancy
B. Unjust Enrichment
1. Unenforceable agreements
a) Keeping the benefit is not unjust
(1) Gift, or no compensation expected
b) No benefit
(1) If you don’t receive the benefit but asked for the services, you are
still liable for the costs (Kearns v. Andree) (Willis v. Int’l Oil)
(2) Isn’t this really more like justifiable reliance?
2. Breach of an enforceable contract (restitution)
a) Injured party recovery
(1) If fair market value of performance is greater than contract price
(2) Contract price is no shield for breaching party most of the time
(a) Isn’t this punitive to go beyond contract price?
(3) Full performance - no UE recovery. Contract price is the limit.
b) Breaching party recovery
(1) Britton v. Turner
(2) Why breachers can recover
(a) Bars good faith failure to perform otherwise
(b) Day to day payment for work
i) Not always clear benefits are conferred on that basis
(c) General understanding of the community
(d) No express agreement
(e) Denying recovery creates incentives for employers to create
unfavorable conditions at the end of an employment contract
i) This may be a material breach however
(3) Breaching party recovery limited by contract price
(4) Also liable for damages caused by the breach of contract
(a) Damages will be reduced by the cost of a cover
3. Conferral of a benefit in the absence of a contract
a) Business relationships
 (1) Did the party conferring the benefit intend a gift? Foist? Does
justice require?
b) Personal relationships
C. Warranties
1. Express warranty
2. Implied warranty of merchantability
3. Implied warranty of fitness for a particular purpose
4. Disclaimers
a) Disclaiming express warranties
b) Disclaiming implied warranties
5. Article 2 amendments
6. Caveat
III. Statute of Frauds
A. Background
B. Does the Statute of Frauds Apply?
C. Does a Writing Satisfy the Statute of Frauds?
1. The nature of the writing
2. Who must sign
3. Electronic contracts
D. Does an Exception to the Writing Requirement Apply?
E. Does Another Theory Apply?
IV. Remedies
A. Remedies for Breach of Contract
1. Expectancy damages introduction
2. Measuring expectancy damages
3. General & consequential expectancy
4. Expectancy in context
a) Construction contracts
b) Employment and other services contracts
c) Sales of goods
d) Sale of real property
e) Summary of limitations on expectancy damages
5. Reliance recoveries for breach
a) Reliance damages defined
b) Hurdles to reliance recoveries
c) Fixed overhead
d) More theories for awarding reliance damages
6. Liquidated damages
7. Emotional distress and punitive damages
a) Emotional distress damages
b) Punitive damages
8. Specific performance
B. Remedies for Promissory Estoppel
 1. Introduction
2. Judicial decisions
C. Remedies for Unjust Enrichment
V. Policing Contracts
A. Duress
1. Contract law should decline to enforce a promise because the promisor
did not make the promise of her own free will
2. If someone threatens with violence, contract is obviously void.
3. Party must be aware of the other party’s hardship and deliberately exploit
it
4. No duress if the party could have freely contracted otherwise
5. If the motive is not to take advantage of a party’s precarious position, no
duress
6. Courts should ignore how the party got itself into a precarious position
7. Opportunity to adjudicate the contract not enough to negate a claim of duress
8. How to investigate a duress claim
a) Consider first the actions of the party accused of duress
b) Did the client have other reasonable choices or was he stuck dealing with
the party accused of duress?
c) Did the accused party enjoy gains she otherwise wouldn’t have made
9. What about duress induced by a third party?
a) Not bound unless there is reliance on the contract
10. Pre-existing duty doctrine
a) Good faith test on the party benefitting from the modification in order to
deny enforcement of modifications achieved by extortion
B. Fraudulent and Other Misrepresentation
1. Innocent, negligent, and fraudulent misrepresentation
a) Innocent
(1) If an innocent misrepresentation is material, if it was made to
induce an agreement, if there was reasonable reliance on the promise,
there is a remedy
(2) The non-misrepresenting party may rescind the transaction, and
recover the purchase price plus any damages necessary to restore you
to your position prior to the contract
(3) Alternatively, you can keep the property and recover damages.
(4) IR closely related to the concept of express warranty
b) Negligent
(1) Same remedy as innocent misrepresentation
c) Fradulent
(1) Misrepresenter must intend for the other party to rely, other party
must reasonably rely and suffer damages
(2) More remedial options
(a) Same as IM
 (b) You can also recover the benefit of the bargain (difference
between the value of what you received and what you were
promised)
(c) Tort - punitive damages also possible
(d) Victim’s reliance must be reasonable
2. Fraudulent concealment
a) Some courts impose no duty to disclose
b) Others narrow this idea - purposeful concealment of a condition not within
the other party’s reasonably diligent attention causing damage - must be
disclosed
c) Partial disclosures that are themselves misleading may constitute fraud
3. Tortious breach
a)
b)
c)
d)
C. Public Policy
1. Exculpatory clauses
2. Non-compete covenants
3. Illegal contracts
D. Unconscionability
1. Procedural unconsc.
2. Substantive unconsc.
E. Special Problems of Standard Form Contracts
1. Paper standard forms
2. Rolling contracts
3. Electronic standard forms
VI. Parol Evidence Rule
A. Parol Evidence Rule
1. Collateral contract exception
2. Ambiguity exception
3. Proof of fraud, duress, mistake
4. Parol evidence and promissory estoppel
5. UCC section 2-202
6. Conclusion
B. Contract Interpretation
1. Objective Contract Interpretation
a) Purposive interpretation
b) Usage of trade, course of dealing, & course of performance
c) Other rules of interpretation
2. Exceptions
a) Restatement 2nd section 201
b) Misunderstanding
 3. Rules of gap-filling
a) What the parties would have done
b) Creating incentives
c) Fairness concerns
4. Good-faith performance
VII. Conditions and Breach
A. Express Conditions
1. Creation of an express condition
2. Content of an express condition
3. Avoiding express conditions
a) Impossibility
b) Waiver
c) Forfeiture
4. Condition subsequent
B. Implied Conditions
1. Order of performance
2. Quality of performance
a) Substantial performance
b) Material breach
c) Divisible contracts
d) UCC
C. Anticipatory Repudiation
VIII. Grounds for Excusing Performance
A. Mistake
1. Mutual
2. Material
3. Mistake
B. Impossibility of Performance
1. Objective impossibility
a) Express risk allocation
b) Implied-in-fact risk allocation
c) Implied-in-law risk allocation
d) Restatemend 2nd & the UCC
2. Subjective impossibility
C. Impracticability of Performance
1. Impracticability
2. Basic assumption
D. Frustration of Purpose
E. Remedies after Finding of Excuse
1. Judicial approach
2. Judicial reformation after an unanticipated event
IX. Third Parties
A. Third - Party Beneficiaries
 1. Introduction
2. Creditor beneficiaries
3. Donee beneficiaries
4. Restatement 2nd approach
5. Defenses
6. Third parties under the UCC
B. Assignment of Rights and Delegation of Duties
1. Introduction
2. Assignment of Rights
a) The obligor’s defenses and claims
3. Delegation of Duties
a) Does an obligee have to accept the delegatee’s performance?
b) Can the obligee enforce its rights against the delegatee?
c) Does the obligee have a right against the delegatoe even after delegation?