Bottomline:analyzethefacts.Pwillclaim....Dwilldefend....

EvenifDisright,Pwill
argue....IfPissuccessful,Pwillseekspecificperformance....IfPlosesthebreachofcontract
claim,Pmightsueforunjustenrichment....
ArguingHardcases
I.
Operativelanguage(UCC&Restatement&Court)
II.
Analogizingfactsfrompriorcases
III.
Underlyingtheoryofruling,etc
TOOLKIT
Linedrawing/Slipperyslopevs.DistinguishingFacts
ItstheLegislaturesjobvs.Courtscanfillthegap
FloodofLitigationvs.Justice
IndividualAutonomyvs.GovernmentProtection
Policy/FutureEffectsofDecision
SocialNormsvs.RulesofContractLaw
Marketvs.Adhesion

Step1:Statetheissue
Step2:Identitytherule,butdontwastetimestatingtherule.
Step3:Summarizetheelementsoftherulethatareeasilysatisfiedbythefacts.
Step4:Statethestickingpointonwhichthisissueturnsi.e.theambiguityinthefactsthat
makesitadifficultquestion
Step5:Applyoneormoreofthefourtypesofanalysistotheproblem.
Step6:Contrastconflictingauthority.
Step7:Whatarethedefenses?
Step8:Makeaconclusion.CourtswouldGivenfact,highlylikely
Step9:Gotothenextissue.

BasicContractsQuestionstoaskyourselfwhenyouseethefactpattern:
1. Goodfaith
2. UCC/CommonLaw
3. Wasthereconsideration?
4. Wasthereanoffer?
5. Wasthereanacceptance?
6. Isthereadeal(promise)?
7. Howdocourtsenforcethedeal(promise)?
i. Breachofcontract
ii. Unjustenrichment
iii. Promissoryestoppel/DetrimentalReliance
8. Isthereanyreasonforthecourtnottoenforcethedeal(promise)?
i. holdup
ii. extortion
iii. publicpolicy
iv. Duress
v. Unconsicionability
1

9. Exactlywhatisthedeal(promise)?Whatwasagreedto?
i. interpretation,performance,remedis?
ii. ParolEvidence
iii. Extrinsicevidecen
iv. Substantialperformance
v. Remedies
vi. SOF
vii. BattleofForms
10. Didanyonefailtodowhatheagreedtodo?
11. Ifsomeonefailed,istherealegallyrecognizedexcuse?
12. Lackofvaliddefenseorexcuse?
i. mistake
ii. statuteoffraud
iii. Incapacity
iv. Impossibiliy
v. FrustrationofPurpose
2. Performance
1. Conditions
i. Typeprecedent,concurrentorsubsequentANDexpress,impliedor
constructive
ii. Excusedanticipatoryrepudiation,impossibility,impracticability,
waiver
iii. Satisfactionquestionoffact
2. Remedies
i. Benefitofbargain
ii. Reliance
iii. Restitutionunjustenrichment
iv. EXCEPTION:Monetarydamangessomtiemsnotenough
v. LiquidationClauseenforceable
1. tellstorynotapenalty
UCCArticle2
Whendoesarticle2apply?
SaleofGoodsmovablepersonalproperty
o Neverappliestorealestateoremployment/service
MixeddealsPayingforgoodsalongwithlabor2partrule:
o Whatisthemoreimportantpartofthedeal?
Isitbasicallyasaleofgoodsorasaleofservice?
o AllorNothingeitherarticle2appliestoallofthedealoritdoesnotapply
RelationshipbetweenArticle2andCommonLawContract
OverlapmostanswersunderArticle2arethesameasCommonLaw
CommonLawdealswithissuesthatArticle2neveraddresses
focusonsituationswhereUCCdictatesdifferentanswerfromCommonLaw
Haley:grouptypesofcasesinreviewtoknowcommonissuesfor3importantfactpatterntypes:
3. saleofgoods
4. employmentcontracts
2

5. constructioncontracts

I.
II.
III.

CommonlaworUCC?
a. Ifthisisanissue,discusswhichdominatescontractandthenanalyzebothways
WhatistheClaim?
a. SeeksdamagesforBreachofContract?
b. Restitution?
IsthereaBasisonwhichtoEnforcetheClaim?(Consideration+Offer+Acceptance=
K)
a. IsthereConsiderationforthepromise?(Hamerv.Sidway)
b. Checksufficiency(valuebothdirection)notadequacy(fairness)ofconsideration.
i. Wasthereanexchange?(past/futureperformanceorgiftsdontcount)
1. Waiveroflegalrightorimposition(usecard)
ii. Wasthereabargain?
iii. Isthereanunderlyingmotivation?(Notrelevanteveraslongasvalue
goingeachdirection)
iv. WasitanIllusoryPromise?(Kirkseyv.Kirksey)
1. Requirement/output/exclusivedealing(besteffort,goodfaith,
reasonable)
2. Isithisjob,sobesteffortandgoodfaithimplied?
3. Satisfactionclause(objective/subjective)
4. Wasthereapromisetodoanything?
5. Istheretoomuchdiscretion?
6. Waspromiseillusory?(goodfaith,BE)
7. Waspromisegiveninexchangeforanything?(preexistingduty)
8. Didpromisecreatreasonableanddetrimentalreliance?
c. ArethereImpliedTermstoobligatointoactingoodfaith(impliedinlaw)or
makereasonableefforts(impliedinfact)?(Woodv.Lucy,Matteiv.Hopper)
I. IMPLIEDTERMS
1. Woodv.LadyDuffGordon(instinctwithanobligation)
2. Leibelv.RaynorManufacturing(reasonablenotification)
II. GOODFAITH
1. 205DutyofGoodFaithandFairDealing=impliedineveryK
2. Requirement/output/exclusivedealing(besteffort,goodfaith,
reasonable)
a. cantaskfordisapportinateamountsortakeadvantage
3. Satisfactionclause(objective/subjective)
4. Lockev.WarnerBros.(performanceisdiscretionary)
5. EmpireGasv.AmericanBakeries(requirementsK)
6. Donahuev.FederalExpress(atwillemployment)
III. WARRANTIES
1. 2314Merchantability=sellerismerchantofthosegoods,
tradestandard&fitforordinarypurpose
2. 2315FitnessforParticularPurpose=sellerknewofparticular
purposeandbuyerreliedonseller
3

c.

3. BaylinerMarineCorp.[D]v.Crow[Pl](merchantability&fitness
foraparticularpurpose)
4. Caceciv.DeCanioConstructionCorp.
(habitability/merchantability)
d. Didyougiveupyourrighttoaclaim?
e. Didyougiveupalegalrighttodosomething?
f. UCCwritungenough
g. Isthereasettlementoflegalclaim?(value)
h. Atwillemployee(continuednonbargainedforservice)
i. Forbearancefromassertinganinvalidclaimneedstobeingoodfaith
j. Promisestomakegiftsincludingconditionalpromises
k. shambargain(peppercorn)
l. Valueinyoureyes
m. Aretheymeaningtoenterintoalegallyenforceablecontract?(newpaper)
n. DideithersideattemptatModification/NewPromiseforPreexistingduty?
a. Saleofgoods(ousideLA)
1. Consideration
a. New/diffperformance?
b. Disputedperformance/amount?
i. previousdebt
2. Isnoconsideration,goodfaithmodificationwithoutanythreats
(unlessotheralternativesavailable)underUCC2209?
b. NotSaleofgoods
1. Consideration
a. New/diffperformance?
b. Payment/performanceofdisputedduty/amount?
i. previousobligation(debt)
2. Isnonew
considerationinTraditionalRulejurisdiction,NOT
bindingif
a. pastbenefit+PreExistingDutyRuleapply?(Alaska
PackersAssnv.Domenico)
3. IfnoconsiderationinModernrulejurisdiction,mustbe:
a. Unanticipatedcircumstances
b. Fair+equitable(ententainermorevaluable)
i. pastbenefit
c. Notfullyperformedoneitherside
2. Isconsiderationsufficient?(valueexchangedinbothdirection?
a. Dontcheckadequacy(wetherbalancedexchange)
Ifnoconsideratoin,ispromiseenforceableonbasisofRelianceonpromise?
1. EquitableEstoppel?(relianceonstatementoffact)(Rickettsv.Scothorn)
2. PromissoryEstoppel?(90)(Feinbergv.Pfeiffer,Cohenv.CowlesMediaCo.)
a. DidDmakeapromise?
b. Diditresultinaciton/forberancebyP?(determinealreliance)
i. Wastherejustplanorhopeforthepromisetobefulfilled?(notreliance)
c. CouldDreasonablyexpectANDforseePtotakeanaction/forbearance?
d. WasPsactioninducedby(takeninrelianceon)thepromise?(wouldthataction
occuranyhow)
4

e. Isenforcementofpromisenecessarytopreventinjustice?(enforcefullpromise
orcompensatereliance)
f. Wasitpreparationorperformance?
i. Ifbuyuniqueequipmentduringpreparation,Dexpectedtopayforthat.
g. Hoffman(substantialactionstakenunderapromisetoextendoffer)
h. Isitacharitysubscription?
i. Isitasubcontractor?
i. Optioncontractduetodetermentalreliance
j. Isthepersonnotobviouslymentallyimpaired?
B. IsthereaMoralObligationtoenforcepromise?(Millsv.Wyman)
1. Isitaspecialcase,e.g.dischargedbySOL,bankruptcy,voidableduetoinfancy?
a. promisetopaydebt>newlimitationperiod(hadduty;savedbylaw)
2. DidDpromisetopaymoneyinrecognitionofmaterialbenefitPconferredon
D?(Webbv.McGowin)(Quasicontractcompletedwithoutcourtinterference)
a. traditionalrule:notenforceable>noconsideration
C. Implicitrenewal?
1. Didpartiesimplicitlyrenewagreementthroughconduct?(listingagreement)
a. Ifso,wasagreementsupportedbyconsideration?(illusorypromise)
2. Ifdidntimplictlyrenew,wasnewpromisegiveninexchangefornew
consideration?
3. Ifdidntimplictlyrenew,isnewpromiseenforceableaspromise?
4. Ifdidntimplictlyrenew,isnewpromiseenforceablebasedonpastservice?
a. TraditionalRule?(newpromise,basedonpastconsiderationnot
enforceablegenerally,butrenewalofpreviousdebtis)
b. R2dapproach
1. Promisetopayquasicontratualdebt?
2. Promisebasedonpastbenefitconferred?
D. Ifallelsefails,canPgetRestitution?
1. WasthereBenefitconferred?(listingagreement)
2. Appreciation/acknowledgementofbenefit
3. Accceptundercircumstancesthatwouldmakeitinequitablenottopay.
4. DidDreceiveUnjustEnrichmentatPsexpense?
5. CanDassertthefollowingdefenses?
a. PconferredbenefitasVolunteerORIntenttocharge
b. PwasanOfficiousIntermeddler(Cotnamv.Wisdom)
c. PhasOtherRemedies(Callanov.OakwoodParkHomes)
3. Compensationforserviceslimitedtoreasonablevalue(Cotnam)
III. WasthereproperOfferandAcceptance?
A. DidpartyAssenttobebound?
a. Manifestwillingnesstobeboundnotacutalwillingness,butreasonableperson
expectations.
b. Wouldreasonablepersonassumepowerofacceptancecreatedinhim?
c. Misunderstanding?>sonomutualassent(pearless)
6. neitherpartymorereasonablethanotherinargumentforitsmeaning
7. noreasontoknowwhattheotherpartymeans
d. Objectivev.Subjective
5

6. fact+circumstancesoverintentions
7. Lookatwords,actions,andcircumstances(Wrenchv.TacoBell)
8. priornegotiations?(JWSouthworth>neighborslandsale)
9. alltermsdontneedtobedecidedattime
e. Isitpreliminarynegotiationsoristhereintenttobebound?
f. Contractualnegotiations(intenttobebound,definiteness,consideration)
B. WasthereanOffer?(Owenv.Tunison,FairmountGlass,Lefkowitz)
a. Offerormasterofoffer
6. Cansaynotgivingpowertoconcludeofferandretainpowertoaccept
7. otherwisedefaultrules
b. Doesotherpartyhaveabilitytoconcludebargain?Createpowerofacceptance?
6. offerorcontrolstermsofofferandmodeofacceptance>overcome
defaultrules
c. Directedataspecificparty?
d. Sufficientlycertainterms?(subjectmatter,timeforperformance,price)
e. Howwasitcommunicated?Identifiableofferee?
f. Wasitirrevocable?(promissoryestoppel?UCC?Statute?)
g. Otherpartyknowofoffer?
h. Answeringquestion?
i. Weretherepriordealings?
j. Pricequote/lists?(invitationforotherstomakeanoffer)Corinthianorderviles
k. Orderform?(offer)
l. Advertisementvs.unilateralcontract(CarbolicSmokeBallperformance=accept)
6. notusuallyanoffer,butratherinvitationforoffer.(canbeofferifclear,
definite,explicit,nothingleftfornegotiation)
7. openterms?
8. rationale:wouldnevergivethatmanypplpowertoacceptplacing
offerorintoughposition
1. limitedquantity?
9. doesntseemappropriatethatanyonecouldaccept?
1. saysfirstcome
10. Consideration:Offerorgetsperformanceandoffereegetstheoffer
m. Letterofintentnotusuallyoffer(unlesspartymakesitcleartheyarebound)
n. Formletter>notoffer/doesntgivepowertoaccept
o. unsolicitedpricequote(unlessyousaidforimmediateacceptance
p. Isitasubcontractor?(invitationforoffers)
q. Wasitafirmoffer?
r. Isitpreliminarynegotiations?notdefiniteenoughforcontract
6. Notbindingifbothpartiesknowthattheyarenotintendedtobe
7. Butreliancebasedonassurancesduringnegotiations(RedOwl)
C. WastheofferTerminated/Revoked?
a. IfRevocable,didofferorrevoke?
b. Expiration?Specifiedtimeframeofacceptanceend?
6. Notime,therelapseafterreasonabletime?
7. Offerorkeepitopenthroughconduct?
6

c. Wasitrevokedpriortoacceptance?(EvertiteRoofing)
6. Revocation:directorindirect(Takingactioninconsistentofkeeping
offeropenisvalidrevocationifoffereelearnsfromreliablesource.)
1. definitetobeeffectiverevocatoin
d. OptionContract(openevenaftercounterofferorrejection)?(Dickinsonv.
Doddsnooptiontokeepcontractopen,heardsoldland,triedtoaccept.unable)
6. Wasthereapromisetoholdopen,plus
1. consideration,OR
2. signedwritingunderR2d87,OR
3. signedwritingunderUCC2205(noconsiderationrequired)
7. BeginningperformanceunderR2d45
1. Givesoptiontocompleteperformancebutnotrequired
2. Buyequipment?specificequipmenttotheproject?
8. Detrimentalreliance(R2d87)Subcontractors
9. Didofferorrelyoncounterofferorrejection?
1. Relianceonalaterrejectioncanovercomeoptioncontractascan
agreementbetweenthem
e. DidofferorDie/incapacity?(Earlev.Angell)
f. Wasitrejected?Rejection,orCounteroffernotinmirrorimage?(Columbus
RollingMill)
6. EXCEPTIONS:
1. Optioncontract
2. UCC2206:nonconforminggoodsarenotacounterofferbut
ratheranacceptanceunlessnotifiedthattheyarenotacceptance
butcouterofferorofferedasaccomodations.
3. UCC2207:Mirrorimagerule(deviatesfromcommonlawwhich
wouldsaynoagreementifcounteroffer)
a. Resultsinmorecontracts
b. BUT
c. Mayfindcontractwherepartieshaventfullyagreed
i. partiesneededinsteadtositdown&clarifiedterms
d. introducescomplexityegmateriallyalter+different
terms
i. goodforecnomicefficieny&sociallygood
4. Intenttokeepitopen/prserveoriginalofferw/clearlangauge?
D. Wasthereareasonoffercouldnotberevoked?Option?Impliedoptionbypart
performance?
E. WasthereAcceptance?(IntlFilter,CarbolicSmokeBall,Evertite)
a. Whatistheoffer?
b. Doestheoffereeknowoftheoffer?
6. Didhe/shefindoutmidway?
c. Didtheacceptanceinviteperformance,promise,oreither?
6. Ifpromise,wastherecommunicationofreturnpromise?(Hendricks
offereesigneddidntnotify)
1. Ifpromiseandcommonlaw,mirrorimage?ORUCC
2. Ifperforminstead,wasanoptioncreatedthroughreliance?
7. Ifperformancerequested?
7

d.

e.

f.
g.

1. Wasnotificationrequested?
2. Acceptthroughfull/completedperformance?
a. Ifnot,offereebeganperformanceorgavepartial
performance?
i. Optioncontractcreatedtocompleteperfomance,
notrequiredandnotactualacceptanceuntilfull
performance(MarchiondoBrokeroptiontoComPer
ii. Buyequipment?specificequipmenttothejob?
b. Orstillinpreparationstage?
i. Ifbuyuniqueequipmentduringpreparation,D
expectedtopayforthat.
3. Wasperformancegiveninreasonabletime?
a. preparationdoneinreasonabletime?(EverTiteRoofing)
i. creditcheck>D&Pawareofprocedureetc
4. Wasnotificationofperformancegiveninreasonabletime?
8. Offerseekseither,ambiguityonrequirmentdecidedbytheofferee
1. Beginningperformance(offereeobligatedtofinish)
2. Promiseasacceptance
Didacceptanceoccurthroughnonconforminggoods?
6. Werethegoodsanaccomodations?
1. No,cansueforbreach;boundtocompleteperformanceonce
started.
Isitasubcontractor?
6. Advertisment:Invitationforoffers
7. Wasthereanoffer?
1. wasitoptioncontract?Noconsiderationokay?
8. Wasthereacceptance?
9. Wasrevocationallowed?(split)
1. JamesBairdv.GimbelBros.(subcontractorDminorityview)
a. Allowsrevocationbyofferor
b. considerationtomakeitoptioncontract
2. Drennanv.StarPaving(subcontractorPlmajorityview)
a. createoptionduetodetermentialreliance
10. Washelookingaround/openbargaining/oranythingelsetoloseoption?
Didyousubstantiallyrelyonoffer?>optioncreated
Doestheacceptanceaddqualifications?
6. Commonlaw:counteroffer,offerterminated
7. UCC2207:KeyQuestionsforAnalysis
1. Wasthereanoffer?
2. Wasthereadefinite/seasonalexpressionofacceptance?
3. Didtheexpressionofacceptanceincludeadditional/different
termnotpresentintheoffer?
4. Wastheacceptanceexpresslyconditionalontheofferorsassent
totheadditional/differentterms?TEST:DidAmakeitclearthat
offereeisunwillingtoproceedw/thetransactionifthenewterms
arenotaccepted?
8

a. Ifso,theacceptancedoesntcreateacontractunlessthe
offerorassenttotheterms.(Acceptancecantbeimplied
fromconduct/silence;mustexpressspecific/unequvoical
assent)
i. Ifnoassent,nocontractformedBUTcontract
maystillformthroughpartiesconduct2207
(3)
1. TermspartiesagreeincludedinK
2. Throwoutanyconflictingterms,andUCC
gapfillers(indemnityclausesnotgapfillers)
b. Ifnot,thenlooktoseewhothetransactionisbetween?
c. Ifnotbetweenmerchants,acceptanceisrestrictedto
offerorstermsofdeal;additional/differenttermsare
merelyproposalswhennoexpressacceptanceor
rejection(fallawayandofferorsoriginaltermsapply)
d. Ifthetransactionisbetweenmerchant
i. Additionaltermsbecomepartofthecontract
unless:
1. Offerexpresslylimitsacceptanceto
originaltermsofofferor
a. Offerorisstillmasteroftheoffer.If
dontwantaddtltermsimposedby
acceptance,theycanputthat
languageintheoffermustbe
explicit.
2. Additionaltermsmateriallyalteroffer,or
a. Price,quantity,typeofgood,limits
onliability,damages,warranty
disclaimers,choiceoflaw,
arbitration,indemnification
3. Offerorobjectstoadditionalterms
a. Withinareaonsbletime
ii. Differenttermsarehandledinoneoftwoways
1. Differenttermscancanceleachotherout
(knockout),MAJOR
a. Problem:opensuppotentialfor
offerortoburytermsinb/p
b. Advantage:ifdisputeovermaterial
terms,noK;b/ptermsarenot
meaningfulagreedtoterms;prevents
offerorsfromslidinginterms;
offerorsdonthaveunlimited
dominance
2. Differenttermsareanalyzedlike
additionalterms
9

h.
i.

j.

k.
l.

m.

a. Advantage:offerordoesnthaveto
beboundbytermsnotintended;
offereehas2options
8. PolicyconsiderationforUCC2207>deviatesfromcommonlaw
whichwouldsaynoagreementifcounteroffer)
1. Resultsinmorecontracts
2. BUT
3. Mayfindcontractwherepartieshaventfullyagreed
a. partiesneededinsteadtositdown&clarifiedterms
4. introducescomplexityegmateriallyalter+differentterms
a. goodforecnomicefficieny&sociallygood
IsthereImpliedAcceptance?(listingagreement)
6. Issowasagreementsupportedbyconsideration?(illusorypromise)
DoesSilenceconstituteAcceptance?(Hobbsv.MassasoitWhipCo.)
6. Offereetakesbenefitofservicewithtimetoreject?
7. Dopreviouscoureofdealingsmakesilenceasufficientformof
acceptance?(reasonableforonetoassumeacceptance)Ammons
8. Didoffereeuseofferedpropertyinawayinconsistentwithofferors
continuedownership?Tortiousact(TexasCo.)
9. Issilenceanexplicitagreedoptionforacceptance(contract)Beneficial
NationalBank
Wasitanoptioncontract?
6. Wasthereapromisetoholdopen,plus
1. consideration,OR
2. signedwritingunderR2d87,OR
3. signedwritingunderUCC2205(noconsiderationrequired)
7. BeginningperformanceunderR2d45
1. Givesoptiontocompleteperfomrancebutnotrequired
8. Detrimentalreliance(R2d87)Subcontractors
1. Didsubcontractorlookaround?
9. Didofferorrelyoncounterofferorrejection?
1. Relianceonalaterrejectioncanovercomeoptioncontractascan
agreementbetweenthem
Wasitafirmoffer?
Wasitsaleofcomputer?Shrinkwrap
6. Whatwasoffer?
1. Sellingthecompwithterms(ProCD)ORorderingcomp
(Gateway)
7. Whatwasacceptance?
1. Keepingthecompafterreadingthetermsandrejectthemby
returingtheproduct(ProCD)ORshippingthecompwithnew/diff
terms(UCC2207)
8. Howaretermstreated?
1. PartofKORmereproposals(notconditionalonofferorsassent)
Shrinkwrap?Clickwrap?Browsewrap?
6. manefistedyourassent
1. imputeknowledgebyclickingsimilarlyimputeknowledgetouser
10

2. Policy:allowwelfaretoincreasebyprotectingbusinesses>
burdenshiftedtoconsumer(nomeetingoftheminds)
F. Whenisacceptanceeffective?
a. Generallyeffectiveupondispatch(mailboxrule)unlessspecifiedotherwise
6. Protectstheoffereefromrevocationoftheofferfromtheofferor
7. Exceptions
1. Offersaysotherwise(notacceptanceuntilreceived)
2. OptionK:acceptedwhenreceived
3. Rejection/countersentfirst
4. Improperdisptach
b. Effectiveuponreceipt
6. Counteroffer
7. Rejection
8. Revocation
c. UCC2206Anymannerreasonable(shipmentcountsasacceptance)
6. Acceptancenonconforminggoods/notperfecttender,sobreach
G. LiabilitydespiteIncompleteNegotiations?(Drennan,Hoffman,Channel)
H. Isthereanagreement?
a. IsthereDefiniteness?(Varneyv.Ditmars,Toys,Inc.v.M.BurlingtonCo.)
6. Areessential/materialtermsofKdefinedforittobeenforceable?
1. NoKifincurableuncertainityaboutmaterialaspect
7. Isthereambiguity/uncertainityinterms?
1. Whosmeaningprevails?
2. ifonepartyeitherhasnoreasontoknowordoesnotknowanother
meaningattachedbytheother,andtheotherknowsorhasreason
toknowofthemeaningattachedbythefirst,thefirst's
interpretationwillbeoperative
3. lookbeyond4cornersofKwhendocumentuncleartogaugeparty
intent>parolevidence
4. Thingstolookat:contractitself(nodefinitionor
clarity?),>negotiations,tradeusage,federalregulations,
commercialcontext,courseofdealing(wouldonepartyhavetaken
loss)FrigalimentImportingv.BNSIntl
8. Whenindefinitetermslookfortoenforce
1. Intenttobebound
a. circumstancial?interdependence,mutualinvestmentsin
products/inventorycloselylinkingthetwotogether,long
termproceduresArmco
b. langaugevague?
2. Andbasisfordeterminingremedy(cancourtsdetermine
remedy)
a. Armcosaidwouldworkitout
3. Ifbothabsent,thenlookfordetrimentalreliance(HoffmanRed
Owlstore)orunjustenrichment.
9. Goodfaithandreasonableeffortaredefinitetermsifdeterminableby
externalstandardVarneyv.Ditmar
11

10. courtsreluctanttofindindefinitenessbecausebothpartieswantedtobe
boundinspiteofessentialtermsmissing
11. Courtmaylookatfourcorners/contextual,preliminarynegotiations,
priorcommunications,externalsources,tradeusages,courseof
dealing,performance
12. Optioncontractconstruedtobebindingifpossible,notalltermsmust
belistedjustmaterialterm.
b. Doesagreementhaveopenterms?
6. Isthereanintenttobebound?
1. defense:nointenttobebound.stillnegotatingonterm.
7. UCC2204:
1. Evenif1ormoretermsareleftoutofK,willbeenforceableif
partiesintendedK
8. Arethereopentermsthatcanbefilledin?(MGMactorcontract)
1. industrystandard,customs,defaultrules
c. Isthereagreementtoagree?(Delicatessenretailshop;renewlease5yearslater)
6. courtswillnotmakecontractifnoagreementreached.
d. Isthereagreementtonegotaite?(Empro,teacherinsurance)
6. Doesntgiveotherpartypowertoaccept.Itsnotoffer.
7. Ingoodfaith?
IV. ArethereanyStatuteofFraudsissues?
A. Iswritingandsignatureofdefendantrequiredtoproveexistenceofcontract?
1. Marriage(notbetweencouple)?
2. IstheagrementformorethanaYear?
a. CanpromisebeperformedwithinYear?
1. Yes,looktoseeifalternativeperformances?Autozone2seasons
a. onealternativeperfomancecanbecompletedinayear?
i. hasoptiontoandcanelecttoterminateafterAP
complete
b. courtslooktofindawaytosayitwillfinishinlessthan
year
2. No,thenEarlyTerminationisnotperformance.
3. TransactionrelatedtoLand?Exceptions
b. Hasthelandbeenconveyed?
c. PartialPerformance?Improvements?Payments?(Sullivan)
4. DoesExecutorpayadecedentsdebtoutofpocket?
5. AreGoods>$500beingexchanged?
a. Canomitessentialtermsandincorectlystateessentialterms
b. Quantityissealingkeytomakingwritingsufficient
c. Arethegoodsspeciallymade?
8. HasSuretyguaranteedsomeonesdebt?(Langmanv.AlumniAssnofUva)
B. Aretherelevantwritingssufficient?
1. ArealloftheEssentialTermswritten?(price,duration,parties,subjectmatter)
2. HastheDefendantSignedanyofthewritings?(letterhead/logo/initialsok)
12

a. Criticims:lackofmutualitybetweenpartiesmakesKenforceableby
oneparty,butnotagainsttheother.DcantsueP.
3. Dothewritingindicaterealtionstosametransaction?(Crabtree)
C. Isthereanapplicableexception?
1. partperformanceinsaleoflandormisrepresentationreasonablereliancetheory
2. adimitedtooralcontractunderoath?
D. Canthepersonrecoverinspiteofthecontractnotbeingwritten?
1. Canthepersonrecoverf/unjustenrichment?(Restitution)
2. EquitableEstoppel?(Dassertssignedwritingmade,butmistakeoffact)
3. WastherePartialPerformance?(Sullivansaleofland)
4. DoesPromissoryEstoppelapply?(Prelied)(Monarcov.LoGreco)
E. PoliceRationales(avoidfraud&carelessness;nottoletpeopleoutoflegitimate
agreements)butsometimespeoplegetoutoflegitimateagreementsbecauseofSOF
V. ArethereotherreasonstoPolicetheBargain?Dischargeofduties?Voidable
A. DidPhavetheCapacitytoenterintothecontract?
1. IsheanInfant?(Bowlingcar)
a. Generalrule:voidableatelectionofminor(mustrestorenotgiverestitution)
b. Specialrule:necessaries
c. Unjustenrichment
1. Showitwasnecessarygoodtorecoverunderenrichmentandnot
contract
2. Notrecoverfullvaluebutreasonablevalue
2. Courtslesslikelytoworkoutdealbecausetransactedyourownperil.
2. DoeshehaveaMentalinfirmity?
a. DidPunderstandsubstanceofcontract?(traditional)(Cundickv.Broadbent)
b. WasPabletoactreasonablywhileformingcontract,anddidotherpartyhave
noticeofdefect?(modern)(Ortelerev.TeachersRetirement)
c. Didtheothersidestartperforming?Payforperformance
d. IfunderFairterms,thencourtshavediscretiontoworkoutdeal?
B. Intoxication:showotherpartyhadreasontoknowwasintoxicated
C. WasthereaMistakeastobasicassumption?(allowsrescissionofcontract)
1. MutualMistake?(Sherwoodv.Walker)
b. Mistakeastobasicassumption
c. Materialeffect(notvalueofthing)Sherwoodbarrencow
d. Noassumptionofriskbymistakenparty/disadvantagedparty?(LeanweeCounty
BoardHealthrentalproperty,clauseasisproperty)
1. Sometimesnotdirectlyacknowldged,butriskallocatedwhenreasonable
2. bothpariesinnocent?
3. UnilateralMistake?(BoiseJuniorCollegebidcalculations)
a. Mistakeastobasicassumption
b. Materialeffect(notvalueofthing)Sherwood
c. Noassumptionofriskbymistakenparty/disadvantagedparty?(LeanweeCounty
BoardHealthrentalproperty,clauseasisproperty)
c. Wouldenforcementbeunconscionable?(substantialloss,etc),OR
d. Wastherenondisclosurebyotherpartywhokneworsuspectedmistake?
e. Willaffectedpartydoesnotbearriskofmistake?
13

f. Istheresubstantialharshiptononmistakenparty?
g. Wasthereviolationoflegalduty,grossnegligence,ordeviationfromcommon
indsutyrpractice?
h. Werereasonablestepstaken,whichstillleadtomistake?
i. Waspromptnoticegivenofmistakebymistakenparty?(notspecualtingtomake
money)
j. Ifitisunilateralitmustgettohigherlevelofunconscionable.Sometimesthe
courtwillsaythatapartymustbearthemistakeifitisreasonablefor
thatsideto
k. Wasthereamisrepresenation?
4. Arguments:Plaintiffwillsaythatitwasamaterialmistakeoffact
e. Defendantwillsaythatitwasanincorrectprediction
D. WasthereMistakeastoExpression?(allowsreformationofcontract)
1. Didwhatwritingnotmatchwhatwasagreedupon?OneBeaconv.
Travelerstryingtotaketakeadvantageofambugities,reformationnot
allowed.
2. Misunderstandingnotmistake:Peerlesseachpartyright,neither
mistaken,nocontractcameintobeingcauenevermeeintofminds
3. Checkforfraudandunilateralmistake?
E. Wasthereadutytodisclose?
a. Startingpoint:Nodutytodiscloseeverythingyouknow(Laidlaw)
1. peopleshouldgooutandgetinformation
b. Thereanaffirmativedutytodisclose,when
1. informationnotreasonablycapableofbeingknown(ordiscoveredby)
tobuyer/seller(Hill)
2. itsmaterialinfo
1. innocentmisrepresentaitonallowsrecession)
3. aquestionasked?(Hilltermiteinspection)
1. fraudordeceptioninvolved?
4. Isthereaspecialrelationshipoftrust?
5. Isarmslengthdealing?>materialinfomightnotbereasonablyknown
throughreasonablediligence
6. disclosurerequiredbygoodfaith/fairdealing?
1. infouniquelyinpossessionofotherORtocorrectmisconception
F. WasthereaMisrepresentation?
a. GenerallysilenceisNOTmisrepresenation(nodutytospeak)
b. innocentmisrepresentation,whenmaterialallowsrecession
1. contextsuggestfailuretodisclose
1. fraudordeceptioninvovled?
2. WasitMaterialorFraudulent,anddidthepartyJustifiablyRelyuponit?
3. WasthereActiveConcealmentofafact?
4. disclosurewasnecessarytopreventmisrepresentation/correctmistake
5. wasitinformationtheywouldnthavegottenontheirown?
6. Opinion=merebelief(NOTmisrepresentation).168,169
7. WasthereBareNondisclosure?(Swintonv.WhitinsvilleSavingsBank)
a. DidtheDtellaHalfTruth?(Kannavosv.Annino)
14

G.

H.

I.

J.

K.

b. DoesPexpectfulldisclosurebecauseofConfidentialRelations?
8. Arguments:Plaintiffwillarguematerialfraudulentmisrepresentationbasedonactive
concealementorhalftruthsORotherinfinanciallybetterposition?
1. Defendantwillarguebarenondisclosure,thiswillnotworkifin
specialrelationship
2. Ordefendantwillarguethatitwasjustopinon/puffing
DoesPublicPolicyoutweighenforcement?(BlackIndustries,Inc.v.Bush)
a. Wouldenforcingcontractgoagainstpublicpolicy?(Sinnarliquorlicense)
1. lookatSpecificpolicy(health&safety),seriousnessofoffense,degree
offaultofparties?
b. Cananypartbesaved/reformed?
c. Whatshouldbedonewithpartiesifcontractisunenforeable?
1. leavewherefindsororderrestituion?
d. Canwetakeoutoverbroadstuff?
Isthereacovenantnottocomplete?
a. Isittoobroad?
1. Whollyunenforceable?
2. Bluepencilrule(deletewords)
3. Goodfaith?
IsthereanExculpationClauseaspartofanAdhesionContract?
1. CanlanguagebeStrictlyConstruedagainstdrafter?(Galliganv.Arovich)
2. DidpartyreceiveAdequateNoticethathewasenteringintoacontract?(Klar)
3. WouldenforcingthecontractgoagainstPublicPolicy(OCallaghan)
4. WouldenforcementbeUnconscionable?(shockingtoconscienceofordinaryperson)
b. Clausewaivesnotjustordinarybutalsogrossnegligence?
1. Courtsrefusetonarrowbecausewasntbargained,toooverbroad,no
noiceofwhatwaived?(Broadlyv.Marina)
PromisemadeunderDuress?(externalthreatsdontmatter)AustinvCoral
1. Improperthreattocommitatortorcrime,orbreakthecontractinbadfaith?
b. Dependsonmotivationofparty
1. AbsenceofReasonableAlternative?
c. findanothersupplierandsuefordifference
1. Whatarethebargainingpowersofparties?
2. Couldyouhavesuedforbreachinsteadofmakingpromise?
a. suinginadequtetomakeyouwhole(lossoffurturebusiness)?
3. Agreedtoavoidlossoffuturebusinesswithcompany?Machinery
d. norighttofuturebusiness.couldhavelostbusinessforotherreasons?notduress!
Whywasassenttomodificationgiven?
a. Wasitgivenwillingly?
b. Arethetworequirmentsabovemissing?
c. Inabsenseofduress(politerequest),ifthereislackofreasonablechoice,could
meanabsenceofgoodfaith
1. iftheyknowyouhavenoreasonablealternative
d. Wasthereduress?
1. Improperthreat
2. Absenceofreasonablealternative
15

e. Dutyofgoodfaithdoesntrequirecharity,needtohavereaonsablestandof
dealingANDhonestyinfact!
f.
L. WastheagreementUnconscionable?Williamsv.WalkerThomasFurniture
1. WouldenforcementbeUnconscionable?(shockingtoconscienceofordinaryperson)
b. Wasthereunfairnessinbargainingprocess?(procedural)
c. Wastheirunfairnessinoppressiveterms?(Substantive)
1. Unfairlyonesided:highcostsoflitigatoin,onlyoneparty
2. Shockingasto:(a)industryor(b)Psspecificcircs
d. Didpersonjustnotshoparoundenough/waslazy?
e. Didpersonhaveinformationaldisadvantage?(MacIverKvoidable,causeof
hiddenchargesforhome,Henningsen)
f. Wasthereastructuredmonopoly?
g. Isthereanabsenceofmeaningfulchoice?(Needtoshowthistoprove
k=unconscionable,BadpriceisNOTenough!
h. Isthereamajorimbalanceinknowledge/bargainingpower?(Needtoshowthisto
provek=unconscionable,
i. Wastheremarketirrationality?(ex.Racism)
j. Arewetalkingaboutamarketofnecessities?(andshouldberegulated)
k. Isconsideration=adequateORgrosslyinadequate(and,thus,unconscionable)
(Embola,Marksv.Gates)
l. DidDgetwindfall?(However,BadpriceisNOTenough!
m. Ifexclude/modifywarranty,itmustbedoneinconspicuouswriting(2316)
(WalkerThomasv.Williams:Hiddenaddonclause=unconscionable/not
allowed)
n. Carmanufacturercases:disclaimersofimpliedwarrantyareinvalidduelackof
knowledge/grossinequalityinbargainingpower(Henningsen)
o. Policyquestions:ifcourtvoidsKisitactingpaternalistically(Shwartz)?Should
welookatentireclasses?IsthisatortorKquestion?Whatiscourtsrolein
distributivejustice?Wouldvoidingthecontractleavelessoptionsforthe
disadvantagedpartybecausetheyarehighriskandbusinessesarewaryabout
dealingwiththemwithoutsomeoulandishtermsthatlookproblematicatfirst?
M. Impossibility/ImpracticabilityUnanticipatedorextraordinaryevent
N. FrustrationofpurposeKhasbecomevaluelessbyvirtueofsomeinterveningevent

16

PrinciplesofInterpretation
I. INDEFINITENESS
II. AMBUIGIOUSTERMS?
III. PAROLEVIDENCERULE:ANALYTICALPROGRESSION
o ExceptionstoParolEvidenceRule=evidenceexplainingmeaning,agreementsmade
afterwriting,oralconditionprecedent,fraud/duress/mistake/illegality,equitableremedy,
collateralagreement
1. Doestheexpressionoftheiragreementinfinalwritingincludeotherwrittenororal
agreementmadepriortoorcontemporaneouswiththewriting?
2. Wouldtherelevanttermnaturallyhavebeenincludedinthewrittenagreement?
3. Didpartiesintendwritingtobefinalexpressiononallterms?(completeintegration)
a. Allcontradictorytermsexcluded
i. Aretermsinharmonywithwriting?
b. Alladditionaltermsexcluded
i. UNLESSAgreements/termsthatwouldntnaturallyhavebeenincludedin
writingcanbeshown(LathFarmicehouse)
1. Wouldnotnaturallyhaveincluded:
a. ifusingstandardformhardtomodify(Mastersonfamily
home)
2. Wouldnaturallyhaveincludedif
a. industrypractice
b. extensiveanddetailedK
c. Mergerclauseincluded
4. Didpartiesintendittobewritingtobefinalagreementonsometerms?(partialintegrat.)
a. Allconflictingtermsexcluded
b. Additionaltermsallowedifitsinharmonywithwhatswritten
i. UNLESSspecificlimitationsonnewterms
5. Wasthereamergerclause?
17

a. Doesntallowargumentsoftermsnaturallykeptout,becausegivesnoticeto
peopletoputEVERYTHINGinwriting
6. Canyoumakeanambiguoustermargumenttogetextrinsicevidencein?(PG&E
indemnifyclause,covereveryoneoronly3rdparty)
a. lookbeyond4cornersofcontractwhendocumentuncleartogaugepartyintent
b. Thingstolookat:contractitself(nodefinitionorclarity?),negotiations,trade
usage,federalregulations,commercialcontext,courseofdealing(wouldone
partyhavetakenloss)FrigalimentImportingv.BNSIntl
7. Whatisthereasonableexpectation?
a. wouldnothaveassumedoralagreementwouldhavebeennaturallyincludedin
mergerclause?AMF
b. insurance?
8. RemembertheseparateruleforUCC2202.ParolEvidence=expressintegratedterms
cannotbecontradictedbyextrinsicevidence
9. Beawareofsomekeydebates
a. whenisextrinsicevidencecontradictory?
b. whenwouldagreementnaturallyhavebeenincludedinthewriting?
i. effectofmergerclause
10. RememberLimitsonparolevidencerule(illegality,explainambiguities,fraud,oral
conditionprecedent,mistake/reformationofK,boilerplate,unequalbargainingpower(no
choice),knowledgeofpartysintent)
11. Purposeofkeepingoutoralevidence:Ifyouputsomethinginwriting,youshouldbeable
torelyonit.Iforalevidencealwaysadmitted,thenonceadisputearises,dontwant
peoplerunningtoctw/oralevidence:Underlyingnotion:PEruleassumesthatjuries
wouldbelieveoralevidenceorsidewithsympatheticpartyeventhoughknowtruth;
distrustofjuries.Alsoincentivizecertaintypeofconduct(getwriting)
12. ArgumentsagainstPErule:contractlawisaboutintention.Sowhynotlookatextentof
negotiation.lookatoralagreementsaswell.
13. WhodoesPErulefavor?Bigbusinesscompanies;givingthewritingweightgivesgrafter
ofKtheadvantage
Arethereconditions?
PerformanceCondition
Isitexpress?
Isitimplied?(payyouifyoucompletex)
o Isitsmallpartofthecontract?
Istherestofthecontractsubstantiallyperformed?
o Isitmainpartofcontract?
Partieswouldnothaveagreedtocontract.
Itispartofconsideration?
o Isthecontractdivisible?
Performancecanbesplit
o Canweimposevaluesoffairnessonpartiescontracttorereadintentions?
o Issatisficationexpressilyconditionalonperformance?
Expresscondition
o Isperformancedependentorindependent?
o Istheresubstantialperformance?(ifnotcompletelysatisfied)
18

Conditions
ExpressCondition:aneventmustoccurbeforeobligationtoperformarises
1. Wasthereanexpresscondition?
2. Wasitsatisfied?
a. Isitaskingforperfect/strictperformance?
i. Isitconditionalonthingsinyourcontrol?
ii. Isitconditionalonsomethingbeyondyourcontrol?
1. Isitimpossibletoperform?(impossibilityisashield(ifgetsued
forbreach)notasword(forgettingwhatyouwant).
iii. Istheconditionamaterialpartofthecontract?
1. Istheconditionpartoftheconsideration?Clarkbargainedfor
booksnotsobriety
2. Istheconditionwhatthepartieswerebargaingfor?
3. Wasitwaived?
a. Wasthereconsideration?
iv. Istheconditionimmaterial(technical)?
1. Wasitjustatechnicalcondition?
2. Didpartiesgetwhattheybargainedfor?
3. Noneedforconsideration.
b. Isitaskingforsubstantialperformance?
i. Didtheothersidegetwhattheybargainedfor?
ii. Wasitjustatechncialcondtion?
3. Ifnot,wastheexpressconditionwaived?
a. Isitmaterialpartofexhange?
i. Wasthereconsideration?
b. Ifnotmaterial,canbewaivedwithoutconsideration.
c. Wasthereanexpresswaiver?
d. Wasthereanimpliedwaiverbywordsorconductindicatingnocondition?
4. Ifnot,mightacourtreintrepretorexcusecondition?
a. Isthereanimmaterialconditionpluspresenceofforfeiture?
b. Istheforfeitureagainstpublicpolicy?
c. Wastheregoodfaithcomplicance?
d. Docourtsgetcreative?
e. PublicPolicy:B/cfindingofanexpressconditioncanhaveanextremelyharsh
effectontheparties,soctssometimesworkhardtoNOTfindanexpresscond.
5. Ifperfectperformancewasntenoughordidntoccur,restitution?(unjustenrichment)
a. Didperformancebenefitinjuredparty?
i. No,didyoumakeclearincontractthatlessthanwhatyourequireisno
benefttoyou?
1. evenifdidntmentionthatitsofnobenefit,clearconditionmakes
itnotunjust.otherwisenovalueofexpresscondition.
2. Wastheconferredbenefitoffsetbydamages?
ii. Evenifclearaboutconductwasthereabenefitconferredwouldwouldbe
unjusttoretain.
b. Isstrictenforcementofaclearconditionunjust?
c. Howmuchwasthebenefit?
d. Istheregrossnegligence?norecovery
e. Istherelittleforfeiture?norecovery
19

f. Wastheregoodfaitheffortatcompliance?
ConstructiveConditionAnalysis
1. Underlyingassumption:partiesmeanttohavereasonablecontract,unlesssaidotherwise.
Partieswouldnothaveenteredintoanunreasonablecontractiftheyhadknown.
a. courts:offendsjusticetoallowforfeturewhenthereissubstantialperformance
2. Whogoesfirst?
a. Ifcanperformsimutaneouslythenexpectedto.
b. Ifoneobligationtakeslongerthanthatsduefirstbeforetriggeringotherparties
performance.
3. Issubstantialperformanceenoughtotriggerotherpartysduty?
a. Wasthecontractdivisible?
i. substantialperformanceofeachpartenough
ii. Howdoyouknowitisdivisible?
1. Twophases,differenttasks,differenportionofmoneyforeach
task,exchangeforeachphase(paymentconsiderationfordifftask)
b. Ifso,didsubstantial(material)performanceoccur?(breach;notmaterialbreach)
i. Whatistheproportionofmistaketothevalueoftheproject?(Jacob&
YoungReddingpipesnotused)
1. Whatwaslostvalue?
2. Howmuchwasthebenefitconferred?
ii. Willbreachingpartysufferforfeiture?
iii. Whatleadtothemistake?(willful)
1. Wasitagoodfaithdeviation?
iv. Ifaffectsartistic/desiredtaste,thenperfectionnotnecessary
1. peformanceacceptablewithcavaetofdamages
v. Ifaffectsutility/functionality,thendeviationsubstantial/material
1. notaperformance
vi. Note:Canbeimperfect.
c. Istheconditionimpracticable?(shieldnotsword)
i. Isitconditionalonthingsinyourcontrol?
ii. Isitconditionalonsomethingbeyondyourcontrol?
1. Isitimpossibletoperform?(impossibilityisashield(ifgetsued
forbreach)notasword(forgettingwhatyouwant)
d. Isthereamaterialbreach?
e. Ifperformancewassubstantial,whatarenonbreachingpartysdamages?
i. Standardmeasure=costtoreplaceandgetwhatwanted
ii. UNLESScostofreplacementisgrosslydisporportinatetooverallproject
1. Thendifferenceinvalueofwhatdesiredandwhatwanted
f. BUT:couldmakeconitionexpressbyApt+certainwords(alsotellwhy)
4. Wasconstructiveconditionwaived?
a. Isitmaterialpartofexhange?
i. Wasthereconsideration?
b. Wasthereanexpresswaiver?
c. Wasthereanimpliedwaiverbywordsorconductindicatingnocondition?
5. Ifsubstantialperformancewasntenoughordidntoccur,restitution?
a. Didperformancebenefitinjuredparty?(unjustenrichment)
i. No,madeitclearincontractthatlessthanwhatrequireisnobeneft?
1. Iconferrednobenefit?
20

2. Wastheconferredbenefitoffsetbydamages?
ii. Evenifconductdidnotmeetexpectationtherewasbenefitconferredthat
wouldbeunjusttoretain.(Brittonquitsearly,notsubstantialperformance)
b. Howmuchwasthebenefit?
c. Wastheregoodfaithefforttocomply?
d. Wouldanypartywillinglyassenttotheimpliedcondition?

Isthereabreach?
I.
DutyofgoodfaithApplications(notindependentduty)
a. Didpartybreachbynotperformingingoodfaith?(canttrytorecapturea
foregoneopportunity)
i. Performanceofconditions:gaveuprighttowalkawayifcondition
satisfied
1. Henselcontractconditionalonobtainingmortgageimplied
commitmenttoengageingoodfaith;gaveuprighttowalkawayif
dontlikehouse;canonlywalkawayifcantgetmortgage
ii. Satisfactionrequirement:objectiveorsubjectiveneedtobeingoodfaith
(chipmarker)
iii. OutputcontractsBakerallbreadcrumbsproduced(what may occur in
good faith, as long as proportionate to an estimate or to normal
otherwise comparable prior output or requirement)
iv. Requirementcontracts
v. Modification(doesnthavetobegiven,butiflaterregretmodification
provetworequirmentsmissing)
1. UnderUCC,incommercialcontextnoconsiderationnecessary.
(2requirments)
a. Legitimatereasonforseekingmodification?(Objective)
i. Asviewedthroughreaonsblestandardofdealing
(nottryingtoextort)
b. Honestyinfact(Subjective)
21

II.
III.

i. havetotellothersideyourgenuinereasonfor
modification
2. Whywasassenttomodificationgiven?
a. Wasitgivenwillingly?
b. Arethetworequirmentsabovemissing?
c. Inabsenseofduress(politerequest),ifthereislackof
reasonablechoice,couldmeanabsenceofgoodfaith
i. iftheyknowyouhavenoreasonablealternative
d. Wasthereduress?
i. Improperthreat
ii. Absenceofreasonablealternative
e. Dutyofgoodfaithdoesntrequirecharity,needtohave
reaonsablestandofdealingANDhonestyinfact!
vi. Terminations
1. Isitatwillemployment?
a. Protectionshouldcomefromstatute?
b. Didemployerfollowitsterminationprocess?
c. Wasthereimplied/expressconditions?(fireonlyfor
cause)Hillesland
d. Wasthereimpliedmodifictaionfromatwilltojustcause
throughconversationsandconduct?
e. Isthereadutyofgoodfaiththatwecanreadin?
i. transformatwillintojustcause?
1. problem:interferwithabilitytofire;youcan
alwayshavebadfaithclaim
f. Doesnonenforcementinterferwithemployersnormal
exerciseofhisright?
g. Canyousuefordetrimentalreliance?(relied&turndown
jobs)
2. Policy:youcanalwaysturnintobadfaithfiringandweare
movingawayfromintentoftheparty!
b. Agreementtoagreeonspecifictermatlatertime?
i. havetobecooperative,canttrytoweaselout,orchangeolderterms
c. Expresswarrantyofmerchantabilityorfitnessforaparticularpurpose?
d. Isthereanimpliedwarrantyofgoodfaithandfairdealing?
e. Twowaystolookatcases:
i. Concernedwithpartysintent
ii. Importingmoralduties/principlesoffairdealing
Isthebreachmaterialorwastheresubstantialperformance?
a. Looktoseeifthereisanexpressorimpliedcondition
AnticipatoryRepudiation(=statement:intenttobreach,righttostopperformance,sue
fordamanges)
Didothersideindicateitwillnotperformgivingrighttostopperformanceandsue?
Isitamaterialbreach?(Hochsterv.DeLaTourtravelerchangesmindbeforestartofK)
Wasthereaclearexpressunequivicoalstatementofnonperfomance?
Wasthereanimpliedrepudiation?
o Wereactionsandconductequivlanttoanunequivocalrefusualtoperform?
22

o Didthepartyputitoutoftheirpowertoperform?
Wasitjustapostponing?H.BTaylorbreedinghorsestillposible
Wasthereactionthatmakesperformanceimpossibleorpracticallyimpossible?
Didtherepudiatingpartyretract?UNLESS
o Didtheotherpartysayrepudiationfinal?
o Didotherpartychangepostionmaterally?
Policy:notjustcontractingforperfromancebutforpieceofmindandecouraging
mitigationofdamages
Mitigation
o Didthepartywaitforreasonableamountoftimeforperformance(retraction)
afterrepudiation?
o Didthepartytakereaonsoablestepstomitigatehislosses?
Cannotrecoverforavoidablelosses,butcanifmadereasonablebut
unsuccessfulefforts
Suerightaway?
o POLICY:ifrepudiation,thencansue.encouragingmitigationsofdamangesso
thatPtakesreaonsblesteps,soastopreventdamagedpartyfromrunningup
damgesandreducesreliance.
Assurances
o Whatarethegroundsforinsecurity?
o Wastherereasonablegroundsforinsecurity?(AMFprotypedelayed)
allowsyoutosuspendyourperformance&demandassurancesofdue
performance
relevantfactors:defects,delays,fallingbehindorbreachingotherKs(not
justyoursbutalsoothers)
o Didyousendwrittendemandforadequateassurances?(AMFwrittendemand)
o Whatkindsofassurancesmayonerequest?
Businesspractice,commerciallyreasonablepractices,alternatives
available
o Wereadequateassurancesgivenwithinareasonabletimeunderthe
circumstances?
Yes,keepperforming/contractkeepsgoing.
No,stopperformanceandterminatecontract>Suefordamanges.
o Canyoususpendperformance?

23

Defenses
1. Didntperformingoodfaith
2. Againstpublicpolicy
3. StatuteofFraud
4. Unconscionability
5. Mistake(unilateralormutual)
6. Duress(lookaboveformore)
a. Whywasassenttomodificationgiven?
i. Wasitgivenwillingly?
ii. Arethetworequirmentsabovemissing?
iii. Inabsenseofduress(politerequest),ifthereislackofreasonablechoice,
couldmeanabsenceofgoodfaith
1. iftheyknowyouhavenoreasonablealternative
iv. Wasthereduress?
1. Improperthreat
2. Absenceofreasonablealternative
v. Dutyofgoodfaithdoesntrequirecharity,needtohavereaonsablestand
ofdealingANDhonestyinfact!
7. Impracticability(objectiveimpossibletoperformbecausepersonorthingis
unavailable)
I.
Usewhenotherpartysaysnotomodification
a. Whatisthesourceofhardship?(1)
i. Wasitsomethingthatcouldnotforseentheriskiftheyhadsatdown?
24

b.
c.
d.

e.

f.

g.

ii. Didyoudoenoughtoprotectyourselfbyallocatingrisk?
1. Forcemajeureexcusesperformance(argumentoncontractlang)
a. Isexcusecounter/againsttheentirecontract?
i. Whatdidpartiesmean?
ii. Wouldothersidehaveagreetothisprovision?
b. Whataretherelativebargainingpowers?
iii. Didonepartyassumetherisk?
1. Wastheriskintheirbasicassumption?(U.S.v.Wegematicbids
computers)
2. Arethereconditionsthatdischargeduties?
Whatistheextentofharship?(2)
i. Wasperfromancesoburdensom/onorous.expensivetorequirecompletion?
1. Isthedegreeofburdenjustdifficultnotimpracticable?
Wastheiraresponsetoharship?(3)
i. Didyoutakestepstoallocatehardship?
ii. Didyoutakeaffirmativestepstocomplywithcontract?
Counter:allabovedoesntmatter;enforceK;otherwisenovalueincontracting
i. increasesincostandmarketchangesarerisksyoutake.
1. shouldhavealllocatedrisksbeforehandnowshouldperforn.
ii. Problem:Isitefficienttorequirethemtositdownandallocate
unforeseeablerisks?
Policy:importingsocialnormsintocontractwhenpartiesdontthinkofall
possiblerisks
i. Courtsthinkaboutwhatpartieswouldhavedoneiftheyhadanticipated
therisk.(readingingoodfaithbehavior)
1. Whatisthebasicassumptionofthepartieswhencontracting?
(Wegematicleadtobelievecomputerwereready)
2. Isthereanimpliedagreementthatifcertainconditonsoccur
dischargedfromduties?
a. UNLESSdirectlanguagesaysotherwise.
3. Whocanbestbearrisk?
Situationsinwhichhaveagoodchanceofmakingoutanimpracticability
defense:
i. Changesingovtregulationthatmakeperformanceillegal
1. canyoucallbackonunjustenrichment?
a. reasonablevalueofserviceorvalueofbenefitconferred
2. ArgumentsagainstUE:publicpolicy
ii. ActsofGod
iii. Mineral,cropgrownin1country
iv. Politicalcrises
Situationsinwhichnoimpracticabilitydefense:
i. theriskwasforseeable,evenifoutsidethebasicassumptionofparties
ii. Fallback:quantummeruit(unjustienrichment)
1. sueoncontractfirst
2. unjustenrichment
a. retainthebenefitconferred1)reasonablevalueofservice;
OR2)valueofbenefit
25

8. FrustrationofPurpose(canperformbutunderminespointofagreement>rarelywins)
II.
Canyoustillperform?
a. Yes,notimpractiability.
b. No,impracticability?
III.
Canyouinsteaduse"frustrationofpurposeargument?
c. IsthecentralpurposeofKnolongerviable(pointlesstoperform)?
i. Governmentpolicychange,etc.
d. Doesitundermindthepurposeofcontract?
e. WhatonepartywantedtogetoutoftheKisnolongeravailable?
f. Isthereanimpliedcondition?
i. Wouldeitherpartyhaveagreediftheyhadanticipatedthisrisk?
g. Aretherelangaugeoractionsusedtoprotectonselffromrisks?(buyer
intermediarysupplier,interme.didntgetcontracttofulfillobligationwithbuyer)
h. Didyoutakeaffirmativestepstocomplywithcontract?
i. Wouldthejudgebesympathetic?
j. Couldyouhaveprotectedyourselffromrisk?(trusthadpapers;cantadd
expresslanguagetoallocaterisk)
k. Whataretherelativebargainingpowers?
9. Conditonnotmet/wasthereacondition?
VI. WhatRemediesareavailabletoP?
A. Saleoffurnace,buyerrefusesdelivery
Scenario1:Sellerresellsfurance,suesfordifferencebetweensale&Kprice(recover
incidentaldamagesandadditionalresources
Scenario2:SellerchoosesNOTtoresell;suesfordifferentbetweenKandmarketprice
Scenario3:Sellertriesbutcantsell;suesforKpricebutmustholdfuranceforB
(Specificperformance)
Scenario4:Sellersellsfurnacetoanothercutomer,BUTsellerwouldvesold2bufo
breach;sellersuesbreachingbuyerforlostprofit.Argue:Imnotmadewholeby
substiatuesalebecausecouldhavesoldboth.Lostvolumeseller(UCC2708(2))
B. Typesofbreaches
a. Employebreaches
1. Whatthecontractprice?
2. Havedutytomitigatedamges(findnewjob)
1. jobmustbecomparable/fungible;differentorinferiorjobmay
notworktomitigatedamages(scripts)
2. takejobcomparablejob?>suefordifference
3. donttakecomparablejob?>getdifference
4. notoffsetbyunemploymentbenefits
3. Whatthebenefitofthebargain?
1. entitiledtowhatyouwereoffered
4. Policy:incentivenottofireifhavetopayfull
b. Insurance(Rosariov.6665thAve)
1. askedothertogetinsurance,hadalternateinsurance;payforthe
alternateinsurance
2. putinpositionyouwouldhavebeeninbygivingbenefitofbargain
c. Repudiation
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1. Commonlaw:dontrequireyoutocoveryourdamages
2. UCC:Differenceinmarketpriceandcontractpricewhenyoulearnedof
thebreach
1. whenotherpartyrepudiates,requiredtofindsubstituteorgetto
recovermarketprice(cuzyoushouldhavereduceddamages)
C. Damageschecklist
a. causation
b. foreseeabilityvs.unforseeable(attimeofK)nonoticeofconsequentialdamages
1. Arisingnaturally(oftenoccurs)
1. ordinarilywouldntoccur?
2. Specialfactorshadtobeknowntobothparties(communicatedto
breakingparties)Hadleyv.Baxendaledelivermachinepart
1. ORbreachingpartyhadreasontoknow
3. NOTliableforforeseeableafterKortimeofbreach
1. notonhookcausecouldnthavetakenprovisiontoprotectyourself
4. Termslikedateleftopen>lookfromtimefixedforforeseeablefactors
c. Candamangesbeprovenwithcertaintiy?cantcalculatedamages
1. LossofprofitsinKyear
1.
2. Lossofprofitsforfutureyears
1. showcancaluculateandnotsheerspeculationtorecover;show
reaonsablecertainty
2. cantbesurebreachcausedlosscouldbeotherfactors
3. Lossofvalueonsaleofdivision
1. hardtocomeupwithreaonsblecertainityandhardtoprovebreach
ledtofuturedamangesandnotsomeotherfactor
d. avoidabilitydutytomitigate
1. Theresconstructivelaborunlesstheresreasonablealternativeavailable
D. Limitstodamages
a. causation
b. foreseeabilityv.unforseeable(attimeofK)nonoticeofconsequentialdamages
c. Candamangesbeprovenwithcertaintiy?cantcalculatedamages
d. avoidabilitydutytomitigate
1. Theresconstructivelaborunlesstheresreasonablealternativeavailable
e. Noneconomicloss(emotionalanguish/disturbance)
1. whenengagingincontractwherenoneconomicmotivationsarebigger
2. usuallynotrecoverablebecausecertainty&foreseeabilityproblem
3. UNLESSisforeseeableandfailuretooperateingoodfaith
E. Goalsofcontractualremedies
a. Compensation(esp.economiclossnotemotional)
1. okaywithpartiesbreachingaslongasohersidemadewhole.
2. increaseefficiency:wewanttoallowyoutofindmoreefficientuseof
yourproductaslongasyoumakeothersidewhole
1. problem:assupmtionotherpartycanbemadewhole
3. ContractlawispromsietopaydamangesNOTtoperform
b. Deterrence(notinKlawgenerally)Punativedamages
27

F.
G.

H.

I.

J.

1. certaintypesofbreachesexpections.whenconductisREALLYbad.
2. insurancedoesntpayoutintentionally
3. fraud:overpay>suefordifferenceinwhatyoupaidandmarketvalue
c. Punishment(notinKlaw)
1. willfulbreaches&certaintypesofK
d. Tortvs.Contract
1. Tortaboutdeterrence+punishmentUNLESSreallyextreme
2. Contractisaboutbenefitofbargain
Steps
a. Gotoexpectationdamagesfirst
b. Ifmonetarydamagesnotenough,thengotootherdamages.
Injunctions&SpecificPerformanceAnalyticalFramework
a. TraditionalCategory(e.g.SaleofLand)
b. Adequactyofmonetarydamages(availabilityofsubstiatutes,difficultiesin
provingamount,etc)
1. damagesenoughUNLESSspecialskills&knowledge
2. damagesnotenoughtheninjunctionUNLESSnoothermeans&
contractwouldforcetheemployeebackcuznootherreaonsblemeans
c. CompetingPolicyconsideration(e.g.person,services,etc)(Wolf)
1. Publicpolicy+Equity
2. Favoreconomiccompetition
3. Negativeapproach(injunction)
1. otherwiseinvoluntaryservitutde
PersonalServicesContracts:Analytical
a. UniqueSkills
b. Tradesercretsorspecialknowledge?
c. Wouldinjunctionleavebreacjingpartywithawaytomakealiving?
PotentialdamagesuponBreach
a. Highercostofsubstitues
b. Ifnosubstiatuesavaialblelostprofitsforcontractseason
1. Reasonablyforseebale?
2. Reasonablycertain?
1. pastyeat,competitorsprice,marketrates
3. Goodwill/reputationaleffects:
1. lostsalesinfutureyears
c. Ifhardtobecertain,maybemonetayrdamagesareinadeuqate?
1. difficultprovingreaosblecertay?
1. procuringsuitablesubstiatue
2. awardofdamgescouldnotbecollecte
2. Usespecificperformance
1. goodsunique
2. propercircumstance
a. inabailitytocover(replacement)
AreLiquidatedDamagesprovidedforinthecontract?(Southwest)
1. Reasonableforceastofloss?(allowLD)
2. Difficultiesofcalculating/provingloss?(allowLD)
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b. iflossclearthenpenalty
1. AretheyUnreasonablyLarge,i.e.apenalty?(DaveGustafson&Co.)
2. AretheyUnconscionablySmall?(Henningson)
3. Policy:noteconomiclatoprosecuteeverycase,sosetupdamagesattimeofcontract.
1. morecomfortablebecausesomeonehasagreedtopayyouvs.
Covenantnottocompetewheredeprivedfrommakinglivelihood
2. savelitigationcost,hardtoprove,expectation,onnotice
3. damagesgreaterthanstipulatedholdtoLD
4. damageslessthantookacalculatedrisksoheldtoprovision
4. Tactic:Agueitsapenaltyandnotareaonsbleforecastofdamagesofharmor
difficulttoestimate.
1. purposeofcontractisnottopunishpplforbreachingordeter.
2. Instead:aboutcompensation/contractlawaboutpartygets
benefitofbargain
K. SpecificPerformance?
1. AreDamagesanAdequateRemedy?
a. Candamagesbeprovenw/ReasonableCertainty?
b. AvailabilityofSuitableSubstitute?(notw/raregoods)
c. Aregoodunique?(ifso,useSPasremedy,causenocover)
d. LikelihoodDamageswillbeCollected?
e. WasitbreachofcontracttosellLand?
f. Isitapersonalservice?(cantuseSPbecausewouldproducestateofservitude
(slaverylike))
2. WasBargainUnfairorGrosslyInadequate?(McKinnonv.Benedict,Tuckwiller)
3. Ifspecificperformanceappropriate,willitbe:
a. SpecificPerformance?
b. Injunction?
c. Rescission?(restoringtostatusquo,afterPmakesrestitution)
d. Restitution?
e. Reformation?(makingcontractconsistentw/oralagreement)
L. ExpectationDamages?(Palwaysentitledtobenefitofbargain)(Sullivanv.OConnor)
1. Lossinvalue+otherlosscostsavoidedotherlossavoided
2. CanDclaimthefollowingLimitations?
a. Avoidability?Dutytomitigate.DidP
o CeasePerformance?(Luten)
o MakeReasonableeffortstomakeComparablearrangements?(Parker)
o ClaimConstructiveService?
b. IncompleteorDefectivePerformance?
o Lossin(sentimenta)valuetoP(idealbuthardtofigure).(Peevyhouse
irrational/butwhatwasbargainedfor.Notaboutmoney)
o Lossinmarket/economicvalue(alwayspossible/reasonableperson
standard).(Peevyhouse)
o Costtoremedy/complete.Isitgrosslydisproportionatetolossinvalue
toP?(Jacob&Youngsv.Kent,Groves)
29

o ThiscannotbedisproportionatetovaluetoplaintiffJacob&
Young,JohnWunderdisagrees
o Peevyhouserepaircostmorethanthemarketvalueaddedto
property
c. Unforeseeability?(Hadleyv.Baxendale)
o OrdinaryCircumstances?
o SpecialCircumstances,andNoticegiventoD?
d. Uncertainty?DoesPshow
1. FactofLoss?(Collatz)
2. ExtentofLoss?(Fera)(extrapolatingpastperformance)
3. ValueofLoss?
e. Iscontractdivisible?(mostKarentdivisible)
o Isthereseparatecondideration?
o Moneylinkedtoseparateparts?
o Isitprortionedtotheperfomrance?(linnkedtoperformanceandnot
disproportionate)
M. EquitableRemedies
a. Traditionalcategories(saleofland)
b. Adeequacyofmonetarydamages
1. eg.whenmonetarydamagesnotenoughspecificperformanceordered
1. injunctiverelief(notdosomething)(Cannery6weekseason)
a. cantfindadequaesubstitute
b. So:preventDfromsellingtoother
c. Makethempayotherforservices
2. specificperformance
N. PromissoryEstoppel:RelianceDamages?(wherePwouldbeifcontractnevermade)
a. Costsincurred
b. Pain&suffering
O. QuasiK:RestitutionDamages?(wherePbestowedbenefitonD)
a. Oncontractornotoncontract
b. AskbreachingpartywhenKisbad&werentgoingtobenefitunderKanyways.
P. NominalDamages?($1or6cents)

Whatarethedamages?
o CommonLaw
Canaspecificrulebeapplied?
ConstructionorPersonalServices:Costofcompletionor
DiminutioninValue
RealEstatesellerbreaches=MarketValueKprice
RealEstatebuyerbreach=KpriceMarketValue
Expectation(General)Damages?
FarnsworthFormulaDamages(LV+OLCALA)
o Lossinvalue+OtherLossCostAvoidedLossAvoided
o UCC
Buyerbreaches
SellergetsMVK;or
30

 ResaleKprice(probobligationtoresell)
Sellerbreaches
BuyergetsMVK;or
CoverpriceKprice
ConsequentialandIncidentalHadleyRulesatisfied(foreseeability)?
Nonrecoverabledamages?
Didthenonbreachingpartymitigate?
LostVolumeSeller?
RelianceDamages?
RestitutionaryDamages?(Nonbreachingpartyaswellasbreachingpartycan
requestthis.)
BenefitMeasure
EnrichmentMeasure
Kpriceasacap(orlesseroftheabovetwomeasures)
SpecificPerformance
Canyousubstitute?
Damagesareuncertain?
LiquidatedDamagesterm?
Doesitreasonablyforecastdamages?
Damageswouldbehardtocompute?
Damageslowerthanamount?

o
o
o
o
o

31