Restatement and UCC

R2K 213 — Effect Of Integrated Agreement On Prior Agreements (Parol Evidence Rule)

(1) A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them. (2) A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope. (3) An integrated agreement that is not binding or that is voidable and avoided does not discharge a prior agreement. But an integrated agreement, even though not binding, may be effective to render inoperative a term which would have been part of the agreement if it had not been integrated.

R2K 210 — Completely and Partially Integrated Agreements

(1) A completely integrated agreement is an integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement. (2) A partially integrated agreement is an integrated agreement other than a completely integrated agreement. (3) Whether an agreement is completely or partially integrated is to be determined by the court as a question preliminary to determ

UCC 2-204 — Formation in General

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. See ProCD v. Zeidenberg (Shrinkwrap K's are governed by UCC 2-204, not UCC 2-207; ProCD conditionally offers software, by placing item in store with notice of terms on outside of product limiting acceptance to using product without returning after 30 days and reading K. Z accepts by complying with those conditions — not returning, reading K, using software. Thus, the terms are enforceable, so long as their is a right to return and the terms reasonable and notice on outside, terms on inside (opportunity to review the terms and reject to the terms). One form, no battle of the forms. Arguement for: If seller really wants the terms, allowing them to be knocked out under UCC 2-207 could translate into higher prices for conssumer. May save consumers money on product. Also, most consumers wouldn't want to pay for higher price, simply for clauses that will effect a small few, not good; cross-subsidization. Arguement Against: If there is a high cost to return the item, then sellers can get away with sneaky terms that aren't worth the cost of return to dispute. Sellers may be inclined to offer less favorable terms in the absence of policing. Alternative: Payment is offer; Being given product is acceptance; Contract. Then the new terms in the package are additional terms under 2-207. See Hill v. Gateway 2000 (Ordered computer over the phone. Similar to ProCD, Gateway conditionally offered the computer to Hill, Hill accepted not by purchasing the computer, but by keeping it for 30 days and complying with the condition. Hill had notice of the existence of terms before buying bc the computer was advertised with a warranty, and they were also given opportunity to reviewe the terms. Contra Spect, failure to reject knowable terms is not the same as agreeing to completely unknown terms. No notice need be given over the phone b/c it's unreasonable.) Contra Klocek v. Gateway (Klocek offered to purchase the computer via oral agreement. Gateway accepted by sending the computer. The standard terms included are viewed as written memorial of the initial organ agreement with additional terms. [recognized by official comment although only one form]. Gateways acceptance was not conditional on the additional terms. Thus, the additional terms are viewed as a proposal. Under 2-207(2) when the offeror is not a merchant, the additional terms do not become a part of the contract unless the buyer expressly agrees. Keeping for 30 days is not express agreement. Terms unenforceable. It would be different if the acceptance of the offer was conditional on the terms i.e. by not sending computer until user clicks agree, or making user aware that the acceptance is conditional on the terms. A clear manifestation of acceptance of the additional terms would render them operable, whereas performance would not.

UCC 2-609 — Right to Adequate Assurance of Performance

(1) A contract for saleimposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. (2) Between merchantsthe reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards. (3)Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance. (4) After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract. Scott v. Crown (This section provides that either party can demand adequate assurance of performance from the other party when there are reasonable grounds for insecurity. The party demanding assurances may, if commercially reasonable, suspend performance if those assurances are not provided. A request for assurance must be in writing, unless there is a pattern of interaction between the parties that demonstrates understanding that suspension of the performance is the alternative to providing assurance. Scott entered into K to purchase grain from Crown. Scott Recieved information suggesting Crown would not be able to pay; complaints against Crown for non payment etc. Scott refused to deliver grain Crown and sought to request assurances by telling the driver he wanted to speak with Scott, calling Scott. Eventually Scott told him he would perform, but Crown said he wanted payment up front. The COurt found that although there were grounds for insecurity, and Crwon could request assurances, he had not done so adequety. See rule above. Driver discussion not written. No prior dealing for oral to be OK; Request for payment up front is not a request for assurance, but a modification which Crown could refuse. See Restatement 251 See Lane Enterprises v. Foster Co. (A party commits anticipatory breach of a contract by failing to provide requested adequate assurances of performance. Foster manufactured steel components and contracted with Lane to coat them in two stages. The first coating was defective, and Foster withheld payment until Lane paid another company to make repairs. Afterward, Foster requested reassurances that Lane would perform. Lane said it wanted payment for first order. Foster said it would not give payment without assurances. Both companies sued each other. The Court determined that Foster withholding payment was not materiel breach because it was small sum compared to total price, and would be given after assurance. Thus Lane could not suspend performance. Also found Foster was entitled to ask for assurance because there was insecurity arising from the defective performance, and minor breach that was excused. Lanes failure to provide assurance, meant Lane had materially breached contract by failing to complete work. - A statement that a party will not or cannot perform is sufficient repudiation. - A communication of mere doubt about the party's ability to perform does not constitute a repudiation, but it may still be sufficient to warrant the other party's request for assurance of performance. - The failure to provide the requested assurance may be treated as a repudiation of the contract. - Additionally, minor breaches may also be a reasonable ground for requesting adequate assurances. A party's failure to bring a claim for a minor breach does not preclude that party from requesting assurance of performance based on the minor breach.

R2K 39 — Counter-Offers

(1) A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. (2) An offeree's power of acceptance is terminated by his making of a counter- offer, unless the offeror has manifested a contrary intention or unless the counter- offer manifests a contrary intention of the offeree.

UCC 2-207 — Additional Terms in Acceptance or Confirmation

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. (2) The additional terms are to be construed as proposals for addition to the contract. Between merchantssuch terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. (3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for salealthough the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. Contra Last Shot Rule — Where the final communication in the process of offer and acceptance contains new or different terms, the recipient is deemed to have accepted those terms by conduct is she performs without objecting to them. The rule is followed at common law, but it does not apply in the battle of the forms under UCC 2-207. 2-207 Rejects the Mirror Image Rule; Where acceptance that does not match the offer is deemed a rejection, and possibly a counter offer. See Ionics v. Elmwood (Knock-out rule under 2-207(3) — Where an acceptance is expressly conditional, and contains different/contradictory terms, but the parties conducts shows a contract has been formed, the conditional acceptance is a counter offer and the conflicting terms 'knock-out' or cancel or each other, and are replaced with UCC default rules/gap fillers. Same applies for additional terms under 2-207(2) that are not between merchants, or between merchants and exception applies) Here Elmwood and Ionics exchanged conflicting forms on damages, that were both expressly conditional. But the subsequent conduct of exchanging the thermostats for payment showed existence of a contract. Since the forms were viewed as counter offers that rejected one another, those different terms included within cancel each other out; are read out of the contract, being replaced with UCC default rules (knock-out rule). [Under common law the last shot rule would insist that the last form sent before performance was accepted and those terms would govern] [Note, an 'additional term' that contradicts a default rule, is actually a contradictory term; otherwise, parties would get treat4ed differently for relying on default rule Ian's be forced to spell out everything to get access to knockout rule in some cases] Klocek v. Gateway (Klocek offered to purchase the computer via oral agreement. Gateway accepted by sending the computer. The standard terms included are viewed as written memorial of the initial organ agreement with additional terms. [recognized by official comment although only one form]. Gateways acceptance was not conditional on the additional terms. Thus, the additional terms are viewed as a proposal. Under 2-207(2) when the offeror is not a merchant, the additional terms do not become a part of the contract unless the buyer expressly agrees. Keeping for 30 days is not express agreement. Terms unenforceable.) It would be different if the acceptance of the offer was conditional on the terms i.e. by not sending computer until user clicks agree, or making user aware that the acceptance is conditional on the terms. A clear manifestation of acceptance of the additional terms would render them operable, whereas performance would not. Most courts use 2-204 for pay now, terms later.

R2K 162 — When a Misrepresentation Is Fraudulent or Material

(1) A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker (a) knows or believes that the assertion is not in accord with the facts, or (b) does not have the confidence that he states or implies in the truth of the assertion, or (c) knows that he does not have the basis that he states or implies for the assertion. (2) A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so.

R2K 2 — Promise; Promisor; Promisee; Beneficiary

(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made. (2) The person manifesting the intention is the promisor. (3) The person to whom the manifestation is addressed is the promisee. (4) Where performance will benefit a person other than the promisee, that person is a beneficiary.

R2K 86 — Promise for Benefit Recieved

(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. (2) A promise is not binding under Subsection (1) (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or (b) to the extent that its value is disproportionate to the benefit. Moore v. Elmer (Moore predicted Elmer would die before 1900. Moore provided her with a note where he promised to pay her mortgage if it came true. It came true. Moore argued that consideration for the gift was her past physic readings for Elmer. However, Moore agreed to do those readings without compensation back then, without requesting later payment — as a favor or gift if you will. Thus the promise to pay her mortgage did not induce the physic readings. The Court held that past consideration is not sufficient for enforcement of a contract, unless the parties agreed prior to performing that compensation would be provided later.

R2K 125 — Contract to Transfer, Buy, Or Pay For An Interest In Land

(1) A promise to transfer to any person any interest in land is within the Statute of Frauds. (2) A promise to buy any interest in land is within the Statute of Frauds, irrespective of the person to whom the transfer is to be made. (3) When a transfer of an interest in land has been made, a promise to pay the price, if originally within the Statute of Frauds, ceases to be within it unless the promised price is itself in whole or in part an interest in land. (4) Statutes in most states except from the land contract and one-year provisions of the Statute of Frauds short-term leases and contracts to lease, usually for a term not longer than one year.

R2K 139 — Enforcement by Virtue of Action in Reliance

(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires. (2) In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant: (a) the availability and adequacy of other remedies, particularly cancellation and restitution; (b) the definite and substantial character of the action or forbearance in relation to the remedy sought; (c) The extent to which the action of forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence; (d) the reasonableness of the action or forbearance; (e) the extent to which the action of forbearance was foreseeable by the promisor. See McIntosh v. Murphy; Riley v. Capital Airlines; where reliance damages awarded despite contract not being valid under the statute of frauds.

UCC 2-306 — Output, Requirements and Exclusive Dealings

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded. (2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

UCC 2-306 — Output, Requirements and Exclusive Dealings

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded. (2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale. Eastern Airlines v. Gulf Oil Corp. (Eastern Airlines enters a requirments contract with Gulf Oil Corp.; EA promises to buy exclusively from G; G promises to provide all EA's fuel requirments at certain locations. EA and G had been in this contractual relationship for decades. The fuel price was tied to an index that was independent of the market price. When the price of fuel skyrockets, G breaches the contract, and claims there is a lack of mutuality in the K. The Court found the agreement was not void for lack of mutuality because EA was required to make good faith demands, which it has done since it's demands are consistent with previous practices, and their stated estimate. This section can be breached by: - Acting in Bad Faith — Gaining profit or avoiding losses at the expense of the other party. - Having unreasonably disproportionate estimates; - Demands that grossly exceed stated estimate, or previous dealing not okay. Even if done in good faith. - Demands that go far below estimate, or previous dealing okay if done in good faith; [can seem circular, must not be reasonble dis and good faith, but if in good faith reaso dis is okay..?] The key though is too look at what risks the parties accepted going into K; immunization from those risks is not okay, and allowing a party to benefit from market prices increases, by buying at sated price, and competing by selling at the higher price market price, is not good Requirements Contract = The buyer agrees to buy all it's requirements for the goods from the seller during the term of the contract, and seller agrees to supply whatever the buyer orders. Output Contract = The seller agrees to sell and the buyer agrees to buy the entire output of goods during the contract period. The buyer's discretion to fix quantities, or the sellers discretion to fix production levels, may be limited by a stated or customary range, or by an obligation to act reasonably and in good faith. These standards solve for the issue of mutuality and indefiniteness that could otherwise render a requirements/output contract illusory, or invalid. Indefinitness resolved by tying output/requirement to previous dealings, or stated estimate. Mutuality resolved by placing good faith requirement on party with discretion, and the exclusivity component Empire Gas Corp. v. American Bakeries Co. (Under a requirements contract, a buyer may reduce his requirements to zero, but only if he was acting in good faith.) American Bakeries entered a requirments contract with Empire Gas. American Bakeries promised to purchase it's conversion units exclusively from Empire, and Empire promised to sell A all it's required units. The stated estimate was 3k units. AB decided to purchase none without giving a reason. The Court determined that AB was entitled to decrease it's requirements to zero consistent with the disproportionality element, but ONLY if it had a good faith reason for doing so consistent with the good faith element which applies to over and under demand. The Court also found that AB could go to zero in good faith becasue it would not place the seller at risk b/c they can go to market for someone else, but it must do so for a good faith reason to justify sunken costs. However, it could not over demand even in good faith, becasue it is harder for seller to protect themselves from it.

UCC 2-712 — "Cover"; Buyer's Procurement of Substitute Goods.

(1) After a breach within the preceding section the buyer may "cover" by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller. (2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (Section 2-715), but less expenses saved in consequence of the seller's breach. (3) Failure of the buyerto effect cover within this section does not bar him from any other remedy. KGM Harvesting v. Fresh Network (KGM [Seller] breached it's contract to sell lettuce to Fresh Network [Buyer]. Buyer covered at a higher price than K, and resold at the higher cover price. Court awarded expectation damages as difference between cover price and contract price. Seller argued that the resale made Buyer whole, and damages would be unjust enrichment. Court disagreed, finding that the breach caused Buyer to pay more, irrespective of whether those costs were later passed on, Buyer could only be put in as good a position under the K by being compensated fort the extra expense. Also, Court is protecting the initial risk allocation in forward contracts by refusing to limit expectation damages to lost profits (measuring losses ex post) when Buyer covers; Instead cover price minus contract price (measuring losses ex ante by value of option) continually preserves the initial risk allocation for price increases and decreases.

UCC 2-209 — Modification, Rescission and Waiver

(1) An agreement modifying a contract within this Article needs no consideration to be binding. (2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchantmust be separately signed by the other party. (3) The requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions. (4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver. (5) A party who has made a waiver affecting an executory portion of the contractmay retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver. UCC 2-209 rejects the pre-existing duty rule; Instead of requiring consideration for modification, it requires "good faith"; using bad faith to escape performance of original terms is barred; extortion of a modification without legitimate commercial reason is also bad faith (comment 2) Contra Alaska Packers' Association v. Domenico (Preexisting Duty Rule: Where parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, the new agreement is unenforceable for lack of consideration. Alaska contracted group of sailors to fish far away at sea, and be paid per fish caught. Sailors claimed the fish nets were faulty, and wanted double the price to fish, or they wouldn't fish at all. Alaska reluctantly agreed to higher price. When sailors got back, Alaska paid them the orignal price. Sailors sued. Court found that nets weren't faulty, and the modification to the contract lacked consideration because the sailors were already under a preexisting duty to catch fish, and nothing else was offered for the higher price.) Pro: Does provide some assistance with the hold up problem, by not allowing them to use power from a situational monopoly to obtain higher price, for same performance already agreed upon. Cons: Even a little extra consideration, performance above existing duty, can allow the coercive party to enforce the new contract. Not a good way of dealing with one-sided modification.

R2K 168 — Reliance on Assertions of Opinion

(1) An assertion is one of opinion if it expresses only a belief, without certainty, as to the existence of a fact or expresses only a judgment as to quality, value, authenticity, or similar matters. (2) If it is reasonable to do so, the recipient of an assertion of a person's opinion as to facts not disclosed and not otherwise known to the recipient may properly interpret it as an assertion (a) that the facts known to that person are not incompatible with his opinion, or (b) that he knows facts sufficient to justify him in forming it.

R2K 209 — Integrated Agreements

(1) An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. (2) Whether there is an integrated agreement is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule. (3) Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression.

R2K 35 — The Offeree's Power of Acceptance

(1) An offer gives to the offeree a continuing power to complete the manifestation of mutual assent by acceptance of the offer. (2) A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the ways listed in § 36.

R2K 87 — Option Contract

(1) An offer is binding as an option contract if it (a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or (b) is made irrevocable by statute. (2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice. See Dickinson v. Dodds (Refusing to recognize Dodd's promise to hold the offer open to Dickinson until a certain time as an option base Dickinson provided no consideration) Contra James Baird Co. v. Gimbel Brothers (Where a sub-contractors offer, which was reasonably and foreseeable relied upon by the contractor in submitting a bid for a construction contract, was not an option contract because it was not supported by consideration; Also court found that sub-k would not agree to an option K, because who would allow themselves to be bound, while the contractor can shop around.) Pre-Contractural liablity —> similar to R.90

R2K 30 — Form of Acceptance Invited

(1) An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance. (2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.

R2K 38 — Rejection

(1) An offeree's power of acceptance is terminated by his rejection of the offer, unless the offeror has manifested a contrary intention. (2) A manifestation of intention not to accept an offer is a rejection unless the offeree manifests an intention to take it under further advisement.

R2K 36 — Methods of Terminating of the Power of Acceptance

(1) An offeree's power of acceptance may be terminated by (a) rejection or counter-offer by the offeree, or (b) lapse of time, or (c) revocation by the offeror, or (d) death or incapacity of the offeror or offeree. (2) In addition, an offeree's power of acceptance is terminated by the nonoccurrence of any condition of acceptance under the terms of the offer.

R2K 351 — Unforeseeability and Related Limitations on Damages

(1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made. (2) Loss may be foreseeable as a probable result of a breach because it follows from the breach (a) in the ordinary course of events, or (b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know. (3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation. *Hadley v. Baxendale (Fixing the insurance moral hazard, and forcing information from the more knowledgable party, i.e. the least cost avoider; Declining to award lost profits where Hadley never told Pickford that delay in shipping the shaft would result in Hadley's lost profits, and thus Baxendale is not liable for the consequences of these unforeseeable "special circumstances") Security Stove v. American Railway Express (Awarding reliance damages for wasted expenditures made in securing accommodations for event where Buyer informed Shipper about special circumstances, and shipper failed to meet deadline)

R2K 356 — Liquidated Damages and Penalties

(1) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty. (2) A term in a bond providing for an amount of money as a penalty for nonoccurrence of the condition of the bond is unenforceable on grounds of public policy to the extent that the amount exceeds the loss caused by such non-occurrence. See California & Hawaiian Sugar Co. v. Sun Ship, Inc. (Where sophisticated parties with bargaining parity have agreed to a liquidated damages clause as a reasonable measure of anticipated damages, and actual damages are difficult to measure (ex ante), the court will uphold the parties' bargain; and not look beyond the contract to find contrary evidence for what was explicitly contracted for) (Finding that a liquidated damages clause was valid which required Sun Ship to pay $17k per day late on creating barge, even though the other party creating the tug was also late, and the finished product wouldn't have been completed in time either way.) Lake River v. Carborundum (Take-or-pay contract; Liquidated damages clause required Carborundum to pay full contract price, whether or not it used all Lake River's distribution services. Based on Illinois law, Posner was required to declare the clause a penalty (although FMV has different take, similar to Hawaiian Sugar where maybe there is value to accepting high penalty that is understood by sophisticated parties, i.e. credibility or managing risk); The law determines a penalty based on whether the clause was a reasonable estimate of expected damages ex ante, and of actual damages ex post, and difficult to estimate ex ante. Here the take-or-pay clause was invariable to the extent of breach, and thus grossly disproportionate to probably actually harm suffered by Lake River. Thus, penalty; burden of party going against LD to prove)

UCC 2-718 — Liquidation or Limitation of Damages; Deposits

(1) Damages for breach by either party may be liquidated in the agreementbut only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty. (2) Where the seller justifiably withholds delivery of goods because of the buyer'sbreach, the buyer is entitled to restitution of any amount by which the sum of his payments exceeds (a) the amount to which the selleris entitled by virtue of terms liquidating the seller's damages in accordance with subsection (1), or (b) in the absence of such terms, twenty per cent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller. (3) The buyer's right to restitution under subsection (2) is subject to offset to the extent that the sellerestablishes (a) a right to recover damages under the provisions of this Article other than subsection (1), and (b) the amount or value of any benefits received by the buyer directly or indirectly by reason of the contract. (4) Where a seller has received payment in goods their reasonable value or the proceeds of their resale shall be treated as payments for the purposes of subsection (2); but if the seller has notice of the buyer's breach before reselling goods received in part performance, his resale is subject to the conditions laid down in this Article on resale by an aggrieved seller (Section 2-706). See California & Hawaiian Sugar Co. v. Sun Ship, Inc. (Where sophisticated parties with bargaining parity have agreed to a liquidated damages clause as a reasonable measure of anticipated damages, and actual damages are difficult to measure (ex ante), the court will uphold the parties' bargain; and not look beyond the contract to find contrary evidence for what was explicitly contracted for) (Finding that a liquidated damages clause was valid which required Sun Ship to pay $17k per day late on creating barge, even though the other party creating the tug was also late, and the finished product wouldn't have been completed in time either way.) Lake River v. Carborundum (Take-or-pay contract; Liquidated damages clause required Carborundum to pay full contract price, whether or not it used all Lake River's distribution services. Based on Illinois law, Posner was required to declare the clause a penalty (although FMV has different take, similar to Hawaiian Sugar where maybe there is value to accepting high penalty that is understood by sophisticated parties, i.e. credibility or managing risk); The law determines a penalty based on whether the clause was a reasonable estimate of expected damages ex ante, and of actual damages ex post, and difficult to estimate ex ante. Here the take-or-pay clause was invariable to the extent of breach, and thus grossly disproportionate to probably actually harm suffered by Lake River. Thus, penalty; burden of party going against LD to prove)

R2K 33 — Certainty

(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain. (2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. (3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

R2K 216 — Consistent Additional Terms

(1) Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated. (2) An agreement is not completely integrated if the writing omits a consistent additional agreed term which is (a) agreed to for separate consideration, or (b) such a term as in the circumstances might naturally be omitted from the writing. Mitchel v. Lath (The majority adopts the four corners approach; A written contracted is integrated, and PER excludes oral evidence of proposed terms if (1) The organ agreement is not distinct and independent of the written agreement (not collateral agreement); (2) the oral agreement does contradicts the written agreement; (3) the oral agreement is ordinarily be expected to be embodied in a written agreement. The majority looked at the incredible detail within the contract and determined that is was unlikely the oral agreement for removal of the icehouse would have been left out, especially considering it's close relationship to the property, thus the 3rd prong was met = integrated agreement = parole evidence Inadmissable. The dissent adopted the modern contextualist approach and concluded that the third prong was met by looking at the circumstances and concluding that conveyance of property has nothing to do with removal of an unsightly icebox. Thus, it was natural for it not to be included in the agreement for a land transfer, in spite of all the detail of the contract. Fully Integrated Writing — A written record of agreement is said to be agreed to by the parties and is intended by them to be a complete and final expression of all terms of their contract. Also is an additional to written K, not contradiction. Partially Integrated Writing — If the written record does not fully and finally incorporate all of the agreed terms, but it does set out some of them completely, clearly and unambiguously, it is said to be partially integrated — That is, the writing is a final expression of agreement with regard to those terms that are fully set out. See also, Masterson v. Sine, allowing in consistent terms to determine whether the writing is integrated.

UCC 2-201 — Formal Requirements; Statute of Frauds

(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing. (2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received. (3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable (a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or (b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or (c) with respect to goods for which payment has been made and accepted or which have been received and accepted (Sec. 2-606). Riley v. Capital Airlines, Inc. Riley entered an oral agreement to supply Capital Airlines with methanol for fives years. Riley purchased equipment to fulfill the orders specifically for Capital. After a couple of transaction in which Riley made the methanol on demand and received payment, Capital breached the contract. Riley sued. Capital then argued the contract was unenforceable since it was under the statute of frauds one-year rule. The Court held that the specially manufactured exception to statute of frauds under 3(a) was not applicable because the five years worth of methanol was not manufactured in advance. Instead, it was created on demand and paid for — Thus all goods that fell under the exception were paid for; no unjust enrichment. The rest of the goods were executory — to be made at a later date. For same reason, partial performance exception does not apply. However, Riley was allowed to recover equipment cost under the foreseeable reliance / avoiding injustice exception to SoF. [also does Snapchat satisfy written requirment. Cali — if ephemeral, not intended to be permeannt, then no.

R2K 350 — Avoidability as a Limitation on Damages

(1) Except as stated in Subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation. (2) The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss. Duty to Mitigate: See Rockingham County v. Luten Bridge Co. (Refusing to allow Luten Bridge Co. to recover for expenses incurred by continuing to build bridge after the County notified it of breach.) (Duty to mitigate; Breach indicates one party values performance less than cost; the rule lessens moral hazard of engaging in wasteful work to rack up damages; forces NBP to treat BP costs as if they were his own) (When a non-breaching party in a contract for services receives notice of another party's breach, the non-breaching party must treat the contract as broken when notice is received, cease performance, and sue for any losses sustained from the breach as well as profits that would have been realized upon performance. The non-breaching party may not incur additional costs after notice is provided and then hold the breaching party for damages which did not need to be incurred.) Exceptions to Duty to Mitigate: See Parker v. Twentieth Century Fox (Finding that an employee has not obligation to mitigate if mitigation is difficult, onerous or risky; As applied, there was not duty to mitigate because the alternative employment was not substantially similar, or superior to the role she had before; The Court considered objective factors beyond monetary value, including rights under the alternative role; characteristics or the role; and so forth.) **Also may not be a mitigation issue, if we view the Fox contract as an option on Parker's time, in which it had an obligation to pay her for being available during the specific time frame, which she was, leading to Fox breaching for not paying. Neri v. Retail Marine Corp.

R2K 17 — Requirment of a Bargain

(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration. (2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§ 82-94. Lucy v. Zehmer (The objective, outward expression of a party's intent to be bound in an agreement, as opposed to that party's subjective mental assent to the agreement, is all that matters when determining the existence of a valid and enforceable contract.)

R2K 211 — Standardized Agreements

(1) Except as stated in Subsection (3), where a party to an agreement signs or otherwise manifests assent to a writing and has reason to believe that like writings are regularly used to embody terms of agreements of the same type, he adopts the writing as an integrated agreement with respect to the terms included in the writing. (2) Such a writing is interpreted wherever reasonable as treating alike all those similarly situated, without regard to their knowledge or understanding of the standard terms of the writing. (3) Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement. See Carnival Cruise v. Shute (Here, the forum selection clause is fair and enforceable even though it appeared in a form contract in the plaintiffs' cruise tickets and there was no opportunity to negotiate the terms of the contract. The clause, of which plaintiffs admit they were on notice, is fair and reasonable because it limits the fora in which Carnival could be sued and Carnival passes along the resulting savings in the form of less expensive cruise fares.) See Specht v. Netscape (Browsewrap — An offeree, regardless of apparent manifestation of his consent, is not bound by or charged with having "inquiry notice" of inconspicuous contractual provisions of which he is unaware, displayed in a format whose contractual nature is not obvious when judged according to a "reasonably prudent offeree" standard.) Register.com, Inc. v. Verio, Inc. (Browsewrap — When a benefit is offered subject to stated conditions, and the offeree accepts the benefit with knowledge of the terms, the taking constitutes a binding acceptance of the terms. On a daily basis, Verio was submitting numerous queries, each of which was accompanied by notice of Register's restrictive terms. Verio's queries were regular and numerous, not sporadic and infrequent, so its contention that it obtained the contact information without being conscious of the new conditions is implausible. ) Nguyen v. Barnes & Nobles (A website user lacks sufficient notice to a company's TOU if, despite the presence of a conspicuous hyperlink to the TOU on every page of the website, the website provides no notice to users and does not prompt users to take affirmative action to demonstrate assent to the TOU. — Seeking to create an informed minority)

UCC 2-313 — Express Warranties by Affirmation, Promise, Description, Sample.

(1) Express warranties by the seller are created as follows: (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goodsand becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. (b) Any description of the goodswhich is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. (c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model. (2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goodsor a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty. Role of Warranties: Signaling superior product; Providing insurance (although sellers are not always best insurer, sometimes buyers can self insurers, must look to see who has comparative advantage; Buyers want warranties when cost is high, or can't inspect good yourself; INformation revelatition; risk allocation; efficient precautions; save transaction costs; Warranties impose liablity despite negligence or fault — strictly liable; Warranty applies only after good has been accepted. Future promise as to it's condition. Misrepresentation deals with promises before acceptance. Past promises as to condition. CBS v. Ziff Davis ( A buyer is not required to show that it reasonably relied upon a seller's affirmations. Express warranties are bargained-for contractual terms that become a part of the agreement. The buyer need not establish that the affirmations of fact in the warranty would be fulfilled in order to recover; the buyer only needs to establish that the warranty was breached. CBS agreed to buy Ziff-Davis' businesses. The agreement contained express warranties attesting to the accuracy of Ziff Davis' financial information that it sent. CBS did it's own investagation and found the financial info to be incorrect. Ziff denied. The parties agreed to close the deal, but also agreed that the decision did not constitute a wavier of any rights either party may have. The info turned out to be false. Ziff claimed that CBS did not rely on the information since it did it's own investagion. The Court concluded that CBS did not have to rely on it, becasue it was a contractural provision in the contract that CBS had bargained for. Thus, the falsity is a violation of the contract.

R2K 348 — Alternatives to Loss in Value of Performance

(1) If a breach delays the use of property and the loss in value to the injured party is not proved with reasonable certainty, he may recover damages based on the rental value of the property or on interest on the value of the property. (2) If a breach results in defective or unfinished construction and the loss in value to the injured party is not proved with sufficient certainty, he may recover damages based on (a) the diminution in the market price of the property caused by the breach, or (b) the reasonable cost of completing performance or of remedying the defects if that cost is not clearly disproportionate to the probable loss in value to him. (3) If a breach is of a promise conditioned on a fortuitous event and it is uncertain whether the event would have occurred had there been no breach, the injured party may recover damages based on the value of the conditional right at the time of breach.

R2K 164 — When a Misrepresentation Makes a Contract Voidable

(1) If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient. (2) If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction.

UCC 2-302 — Unconscionable contract or Clause

(1) If the court as a matter of law finds the contractor any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (2) When it is claimed or appears to the court that the contractor any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

R2K 158 — Relief Including Restitution

(1) In any case governed by the rules stated in this Chapter, either party may have a claim for relief including restitution under the rules stated in §§ 240 and 376. (2) In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties' reliance interests.

UCC 2-103 — Definitions and Index of Definitions

(1) In this Article unless the context otherwise requires (a) "Buyer" means a person who buys or contracts to buy goods. (b) "Good faith" in the case of a merchantmeans honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. (c) "Receipt" of goods means taking physical possession of them. (d) "Seller" means a person who sells or contracts to sell goods. See Goldberg, Mutual Life Insurance

UCC 2-715 — Buyer's Incidental and Consequential Damages

(1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goodsrightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach. (2) Consequential damages resulting from the seller'sbreach include (a) any loss resulting from general or particular requirements and needs of which the sellerat the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) injury to person or property proximately resulting from any breach of warranty.

UCC 2-716 — Buyer's Right to Specific Performance or Replevin

(1) Specific performance may be decreed where the goodsare unique or in other proper circumstances. (2)The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just. (3) The buyer has a right of replevin for goods identified to the contractif after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. See Sedmak v. Chevrolet (One proper circumstance is when the goods could only be obtained elsewhere at a considerable expense, trouble, or loss, none of which could have been expected at the time of contracting. In the current matter, the Pace car is impossible to purchase elsewhere unless the Sedmaks pay a considerable amount of money and suffer delay and inconvenience in trying to purchase it. Thus specific performance is valid. — In thin market sellers have far more latitude to act strategically, thus we don't worry about protecting efficient breach because it usually ins't one. In think market, breach is seen more as a cry for help, rather than strategic, thus ED are preferred to allow for efficient breach)

R2K 359 — Effect of Adequacy of Damages

(1) Specific performance or an injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party. (2) The adequacy of the damage remedy for failure to render one part of the performance due does not preclude specific performance or injunction as to the contract as a whole. (3) Specific performance or an injunction will not be refused merely because there, is a remedy for breach other than damages, but such a remedy may be considered in exercising discretion under the rule stated in § 357. See Loveless v. Diehl (Awarding specific performance of option contract for purchase of land even though expectation damages would have provided Diehl's with the profits they expected from immediately re-selling the land to Mr. Hart. However, similar to KGM, it doesn't matter what Diehl's do with land after purchase. Thus, expectation damages should not enter equation simply because a re-sale was in order, only specific performance for contract. This allows future land purchasers to rely on option contracts, rather than creating strategic behavior where they could be deprived of specific performance by preparing a re-sale; specific performance also default for unique good such as land.)

UCC 2-708 — Seller's Damages for Non-acceptance or Repudiation

(1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (Section 2-723), the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article (Section 2-710), but less expenses saved in consequence of the buyer's breach. (2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article (Section 2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale. See Neri v. Retail Marine Corp (Holding that Retail [lost-volume seller] is entitled to lost profits and incidental damages, because Neri's [buyer] breach cost them a full sale, in spite of resale for the same price (mitigation), since Retail could have made two sales instead of one but for the breach. However, Neri is still entitled to resitution damages for deposit under UCC 2-718(2) and (3). Final equation is lost profits + incidental damages - restitution for buyer; supply > demand) R.E. Davis Chemical Corporation v. Diasonics, Inc (Holding that for a lost-volume seller to recover under 2-708(2) instead of (1) it must not only prove that its supply is greater than demand, but also that it would have been profitable for the Seller to make the additional sale (the additional cost of producing the additional sale was still profitable)

UCC 2-713 — Buyer's Damages for Non-delivery or Repudiation

(1) Subject to the provisions of this Article with respect to proof of market price (Section 2-723), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article (Section 2-715), but less expenses saved in consequence of the seller's breach. (2)Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival. See KGM Harvesting v. Fresh Network

R2K 374 — Restitution in Favor of Party in Breach

(1) Subject to the rule stated in Subsection (2), if a party justifiably refuses to perform on the ground that his remaining duties of performance have been discharged by the other party's breach, the party in breach is entitled to restitution for any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach. (2) To the extent that, under the manifested assent of the parties, a party's performance is to be retained in the case of breach, that party is not entitled to restitution if the value of the performance as liquidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. See Britton v. Turner (Quantum Meriut (reasonable sum of money to be paid for services rendered when the amount due is not stipulated); Where BP is an employee who has provided NBP with labor, and then breaches before the end of K, the BP is entitled to recover for payment for services rendered; If NBP can show it suffered damages from breach, those will be subtracted; This is a default rule that the parties can contract out of; However, it prevents employer from strategic behavior by treating employment badly after substantial performance to get out of paying the entire contract; in the employment context Where employee breaches the contract price is the limit of recovery)

R2K 373 — Restitution When Other Party Is in Breach

(1) Subject to the rule stated in Subsection (2), on a breach by non-performance that gives rise to a claim for damages for total breach or on a repudiation, the injured party is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance. (2) The injured party has no right to restitution if he has performed all of his duties under the contract and no performance by the other party remains due other than payment of a definite sum of money for that performance. See United States for Use of Susi Contracting Co. v. Zara Contracting Co. (Losing K b/c increased cost of excavation would have required P to spend more in fulfilling K than they were expected to earn under K; Thus, Susi requested restitution damages for work performed and reasonable value for equipment; Resitution damages can exceed contract price; NBP has the option of choosing restitution instead of ED; Breaching party cannot sue for cost he saved NBP by breaching) — Hypo: NBP cannot sue for damages outside the benefit conferred; i.e. if breach allowed them to profit more, the NBP cannot recover those profits under resitution; only benefit conferred)

R2K 81 — Consideration as Motive or Inducing Cause

(1) The fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise. (2) The fact that a promise does not of itself induce a performance or return promise does not prevent the performance or return promise from being consideration for the promise. *It is immaterial that the promisors desire for the consideration is incidental to other objectives.

R2K 110 — Classes of Contracts Covered

(1) The following classes of contracts are subject to a statute, commonly called the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception: (a) a contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision); (b) a contract to answer for the duty of another (the suretyship provision); (c) a contract made upon consideration of marriage (the marriage provision); (d) a contract for the sale of an interest in land (the land contract provision); (e) a contract that is not to be performed within one year from the making thereof (the one-year provision). (2) The following classes of contracts, which were traditionally subject to the Statute of Frauds, are now governed by Statute of Frauds provisions of the Uniform Commercial Code: (a) a contract for the sale of goods for the price of $500 or more (Uniform Commercial Code § 2-201); (b) a contract for the sale of securities (Uniform Commercial Code § 8-319); (c) a contract for the sale of personal property not otherwise covered, to the extent of enforcement by way of action or defense beyond $5,000 in amount or value of remedy (Uniform Commercial Code § 1-206). (3) In addition the Uniform Commercial Code requires a writing signed by the debtor for an agreement which creates or provides for a security interest in personal property or fixtures not in the possession of the secured party. (4) Statutes in most states provide that no acknowledgment or promise is sufficient evidence of a new or continuing contract to take a case out of the operation of a statute of limitations unless made in some writing signed by the party to be charged, but that the statute does not alter the effect of any payment of principal or interest. (5) In many states other classes of contracts are subject to a requirement of a writing.

R2K 346 — Availability of Damages

(1) The injured party has a right to damages for any breach by a party against whom the contract is enforceable unless the claim for damages has been suspended or discharged. (2) If the breach caused no loss or if the amount of the loss is not proved under the rules stated in this Chapter, a small sum fixed without regard to the amount of loss will be awarded as nominal damages. See Freund v. Washington Square (Awarding nominal damages for loss of royalties caused by breach of a book publishing contract because the plaintiff could not prove the amount of royalties he would have received from the contract; speculative) Chicago Coliseum v. Dempsey (Finding that the lost profits Chicago Coliseum might have recovered if the fight happened were unrecoverable because there was no way to ascertain how profitable the fight would been with so many variables)

R2K 212 — Interpretation of Integrated Agreement

(1) The interpretation of an integrated agreement is directed to the meaning of the terms of the writing or writings in the light of the circumstances, in accordance with the rules stated in this Chapter. (2) A question of interpretation of an integrated agreement is to be determined by the trier of fact if it depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence. Otherwise a question of interpretation of an integrated agreement is to be determined as a question of law.

R2K 19 — Conduct as Manifestation of Assent

(1) The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act. (2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents. (3) The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause. Embry v. Hagardine (To determine a party's objective intent, we look at an objective element and subjective element; What would a reasonable person in the party's position understand [objective] and what would the party, given the particular circumstances, reasonably understand [subjective])

R2K 22 — Mode of Assent: Offer and Acceptance

(1) The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties. (2) A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.

R2K 29 — To Whom an Offer is Addressed

(1) The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance. (2) An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance.

UCC 2-305 — Open Price Term

(1) The parties if they so intend can conclude a contract for saleeven though the price is not settled. In such a case the price is a reasonable price at the time for delivery if (a) nothing is said as to price; or (b) the price is left to be agreed by the parties and they fail to agree; or (c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded. (2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith. (3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contractas cancelled or himself fix a reasonable price. (4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the sellermust return any portion of the price paid on account.

R2K 34 — Certainty and Choice of Terms; Effect of Performance or Reliance

(1) The terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance. (2) Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed. (3) Action in reliance on an agreement may make a contractual remedy appropriate even though uncertainty is not removed.

UCC 2-309 — Absence of Specific Time Provisions; Notice of Termination

(1) The time for shipment or delivery or any other action under a contractif not provided in this Article or agreed upon shall be a reasonable time. (2) Where the contractprovides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party. (3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreementdispensing with notification is invalid if its operation would be unconscionable.

R2K 20 — Effect of Misunderstanding

(1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and (a) neither party knows or has reason to know the meaning attached by the other; or (b) each party knows or each party has reason to know the meaning attached by the other. (2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if (a) that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or (b) that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party. Raffles v. Wichelhaus (Ambiguous Terms — There is no contract if there is a mutual misunderstanding by both parties as to the meaning of a term of an agreement.; Two different peerless case; penalty default rule to force more knowledgable party to speak up) See Oswald v. Allen (Ambiguity — Swiss coins v. Swiss Coin Collection dispute; No contract exists between two parties if their understandings of the agreement differ and neither knows of the meaning attached by the other)

R2K 71 — Requirement of Exchange; Types of Exchange

(1) To constitute consideration, a performance or a return promise must be bargained for. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. (3) The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation. (4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

R2K 71 — Requirement of Exchange; Types of Exchange

(1) To constitute consideration, a performance or a return promise must be bargained for. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. (3) The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation. (4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person. Consideration = a bargained for exchange = a bargain requires mutuality. Promise to make gift usually lacks mutuality. However, a conditional promise can have mutuality when... A promise needs to be connected with a return or expected behavior or action or something from the promisee — it is this mutual inducement that separates bargained for exchange from conditional gifts. The key is connecting the promisor';s promise and their intent for a return promise based on the gift. Johnson v. Otterbein (Where a promisor conditions a gift on an obligation that the promisee already has, the gift is not supported by consideration. Johnson promises to donate to Otterbein only so they can pay off debt. He decides not to. Otterbein sues. Although the gift was contingent on Otterbein using it to pay off debt, that is something they were already obligated to do, thus the conditional gift did not induce anything from Otterbein, therefore no bargain, no consideration, no enforceability. — Had Otterbein not made paying debt a priority, and Johnson to make them change course with the donation, then there would have been inducement.) Hamer v. Sidway (Consideration can also be found where one party induces another to suffer a detriment — A party's agreement to incur a detriment (forebearance from a legal right) constitutes adequate consideration. Adequate consideration sufficient to form a valid and enforceable contract may consist of either a right, interest, profit, or benefit accrued to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. It does not matter whether one party actually received a benefit or whether the thing that forms the consideration is of any substantial value to either party. Kirksey v. Kirksey (Where a promisor is not motivated to promises a gift by any return promise, act, or whatever from the promisee, the promise is gratuitous and unenforceable) Brother in law offers sister-in-law to stay on his land after her husband died for free. She moves all the way there. He later kicks her off land. The question considerations turns on the intent of the promisor in this case — He had not intention of receiving anything in return. The act of her moving was a condition of the gift. No bargain because the brother-in-law was not motivated to the gift by receiving something in return. No mutual inducement. No consideration.) Consideration; Benefit Detriment; Bargain; Inducement — All are evidence of a bargain. A bargain is comprised of two promises that are intertwined — One performance invites the other simultaneously. Quid pro Quo. The underlying test is inducement; did the benefit/detriment/counterpromise induce the promise? Conditional gratuitous promise v. Bargained for promise - Inducement test can seperate; Focus on the motivation of the promisor.

UCC 2-706 — Seller's Resale Including Contract for Resale

(1) Under the conditions stated in Section 2-703 on seller's remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (Section 2-710), but less expenses saved in consequence of the buyer'sbreach. (2) Except as otherwise provided in subsection (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goodsbe in existence or that any or all of them have been identified to the contract before the breach. (3) Where the resale is at private sale the seller must give the buyerreasonable notification of his intention to resell. (4) Where the resale is at public sale (a) only identified goods can be sold except where there is a recognized market for a public sale of futures in goodsof the kind; and (b) it must be made at a usual place or market for public sale if one is reasonably available and except in the case of goods which are perishable or threaten to decline in value speedily the seller must give the buyerreasonable notice of the time and place of the resale; and (c) if the goods are not to be within the view of those attending the sale the notification of sale must state the place where the goodsare located and provide for their reasonable inspection by prospective bidders; and (d) the seller may buy. (5) A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer even though the sellerfails to comply with one or more of the requirements of this section. (6) The seller is not accountable to the buyer for any profit made on any resale. A person in the position of a seller (Section 2-707) or a buyer who has rightfully rejected or justifiably revoked acceptance must account for any excess over the amount of his security interest, as hereinafter defined (subsection (3) of Section 2-711).

UCC 2-314 — Implied Warranty: Merchantability; Usage of Trade

(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchantwith respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale. (2) Goodsto be merchantable must be at least such as (a) pass without objection in the trade under the contractdescription; and (b) in the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goodsare used; and (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreementmay require; and (f) conform to the promise or affirmations of fact made on the container or label if any. (3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade. **only avlaaible under UCC When is good not merchantable: - incorrect labeling, defective parts (not design, that's torts), unexpected object. - Reasonable expectations test Can be disclaimed; Sets allocation of risk when contract doesn't specify.

UCC 2-206 — Offer and Acceptance in Formation of Contract

(1) Unless otherwise unambiguously indicated by the language or circumstances (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances; (b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. (2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

UCC 2-611 — Retraction of Anticipatory Repudiation

(1) Until the repudiating party's next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final. (2) Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of this Article (Section 2-609). (3) Retraction reinstates the repudiating party's rights under the contractwith due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.

R2K 152 — When Mistake of Both Parties Makes a Contract Voidable

(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154. (2) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.

R2K 45 — Option Contract Created by Part Performance or Tender

(1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer. Policy (Protects offeree's reliance because the offeree cannot be deprived of contract after beginning peformance) [Pre-contractual liablity — limit on the power to revoke offer]; Similar to R. 90

R2K 54 — Acceptance by Performance; Necessity of Notification to Offeror

(1) Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification. (2) If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless (a) the offeree exercises reasonable diligence to notify the offeror of acceptance, or (b) the offeror learns of the performance within a reasonable time, or (c) the offer indicates that notification of acceptance is not required. See Carlil v. Carbolic Smoke Ball Co. (In stating that it deposited one thousand pounds in a local bank to prove its seriousness in the matter, Carbolic clearly made an offer that was capable of being accepted by any person who buys a Carbolic Smoke Ball, uses it as directed, and contracts influenza. Carlill accepted this offer by fulfilling the advertised condition. This acceptance does not fail simply because Carbolic only received notification of the acceptance with notification of the condition's fulfillment.) See White v. Corlies & Tift (A letter indicating White could begin building office space once the parties reached an agreement was viewed as an offer. Corlies did not expressly accept but instead began preparing for performance by buying wood. Because acceptance by performance - to constitute acceptance - must be unambiguous and give notice. It is not that any performance will hold the offeror to an irrevocable offer, it has to be an unambiguous manifestation of acceptance by performance. Here, the performance was ambiguous - buying wood is what a carpenter does every day - it is not sufficient to be a manifestation of acceptance by performance. Thus White was free to revoke the offer since it had not been accepted. — Rule designed to prevent the offeror from being exposed by offeree lack of performance, and offeror from acting strategically by changing terms once performance in reliance on relationship had begun)

R2K 62 — Effect of Performance by Offeree Where Offer Invites Either Performance or Promise

(1) Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance. (2) Such an acceptance operates as a promise to render complete performance.

R2K 69 — Acceptance by Silence or Exercise of Dominion

(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only: Page 15 (a) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation. (b) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer. (c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept. (2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him. See Hobbs v. Massasoit Whip Co. (Here, due to prior sales of similar eel skins between the parties where defendant accepted by silence, a duty was imposed on the defendant to act in some way with regards to the skins when the skins were received. It was implied that the defendant had to respond to the plaintiff with a rejection if the defendant did not want the skins and was thus rejecting the offer. No such rejection combined with the defendant keeping the skins for an unreasonable time is sufficient to warrant an assumption on the part of the plaintiff that the skins were accepted, and, accordingly, an acceptance.) Also for 69(1)(a) most states change this rule to being an unconditional gift if the product is no solicited. Auto-Renewal Hypo — Opportunity to Reject, and Notice = Valid.

R2K 130 — Contract Not To Be Performed Within A Year

(1) Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the Statute of Frauds until one party to the contract completes his performance. (2) When one party to a contract has completed his performance, the one-year provision of the Statute does not prevent enforcement of the promises of other parties. Staute of Frauds — Certain agreements that are costly to perform are required to be in writing in order to be enforceable. The statute gives incentive to put things in writing since we prefer written statements and not relying on imperfect oral testimony that is subject to memory issues and evidence that is less reliable than a writing. McIntosh v. Murphy An oral employment promise is enforceable, notwithstanding the one-year rule (any contract that cannot be performed within a year is subject) Statute of Frauds, if the injured party seriously changes his position in reliance on the promise and failing to enforce the promise would result in unconscionable injury [equitable estoppel]. Here, Murphy made an oral agreement to hire McIntosh. McIntosh moved from LA to Honolulu for the job. He was fired in three months. McIntosh sought to prove that the oral agreement was for one-year employment. But this brings the statute of frauds rule into play, that type of agreement must be in writing to be enforceable. However, the Court found that the Doctrine of equitable estoppel justified enforcement of an agreement in violation of the statute of frauds where there has been substnatial reliance, which was foreseeable, and injustice can only be avoided by enforcing K. All apply here. Dissent argues that if we take this exception too far we begin to impose contracts of people who did not want to enter into a bargain to begin with, by not placing the agreement in writing.

UCC 2-714 — Buyer's Damages for Breach in Regard to Accepted Goods

(1) Where the buyer has accepted goods and given notification (subsection (3) of Section 2-607) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller'sbreach as determined in any manner which is reasonable. (2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goodsaccepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount. (3) In a proper case any incidental and consequential damages under the next section may also be recovered.

UCC 2-208 — Course of Performance or Practical Construction

(1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement. (2) The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade (Section 1-205). (3)Subject to the provisions of the next section on modification and waiver, such course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance. See Frigaliment v. BNS; and Weinberg v. Edlestein

R2K 201 — Whose Meaning Prevails

(1) Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning. (2) Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made (a) that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or (b) that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party. (3) Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent. Raffles v. Wichelhaus (Ambiguous Terms — There is no contract if there is a mutual misunderstanding by both parties as to the meaning of a term of an agreement.; Two different peerless case; penalty default rule to force more knowledgable party to speak up) See Oswald v. Allen (Ambiguity — Swiss coins v. Swiss Coin Collection dispute; No contract exists between two parties if their understandings of the agreement differ and neither knows of the meaning attached by the other)

UCC 2-711 — Buyer's Remedies in General; Buyer's Security Interest in Rejected Goods

(1) Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract (Section 2-612), the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid (a) "cover" and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or (b) recover damages for non-delivery as provided in this Article (Section 2-713). (2) Where the seller fails to deliver or repudiates the buyermay also (a) if the goods have been identified recover them as provided in this Article (Section 2-502); or (b) in a proper case obtain specific performance or replevy the goods as provided in this Article (Section 2-716). (3) On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller (Section 2-706).

R2K 202 — Rules in Aid of Interpretation

(1) Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight. (2) A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together. (3) Unless a different intention is manifested, (a) where language has a generally prevailing meaning, it is interpreted in accordance with that meaning; (b) technical terms and words of art are given their technical meaning when used in a transaction within their technical field. (4) Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement. (5) Wherever reasonable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade. Cases determining whether one party's meaning is objectively reasonable; If both meanings are reasonble, or no unique objective meaning then no K. (201(3)) See Weinberg v. Edelstein (Vague Terms — Dress case, should broad or narrow definition apply? Since broad definition would cover Edlesteins skirt-blouse combos and lead to enforcement of restrictive covenant which is anticomeptive, the burden was on the enforcing party to show the covenant intended a broad definition. Looked toward industry practice s which showed a division between the two types of garments; Since the Weinberg covenant and Edlestein covenant overlapped, the vague term in Weinberg's precluded enforcement) See also Frigaliment (Vague Terms — What's a chicken, should broad or narrow definition apply? Applying the Hiearchy of Interperation by looking toward plain meaning of the term, the negotiations between the parties, trade usuage, other contracts provisions, market factors (would the meaning attached be consistent with price), and the course of dealing between the parties (F allowed second shipment after first was shipped with BNS interpretation of chicken). With respect to trade usage, when one party is not a member of the trade, the other party must show either (1) actual knowledge or (2) that the usage is so pervasive that the party's acceptance of it may be presumed. Here, Frigalment did not show that BNS, who was new, should have known because it's use is so pervasive. The Court said F did not meet burden of showing narrow meaning should apply; However FMV said Judge Friendly later regretted the decision and said the correct ruling would have been no contract) Hierarchy of interpretation; (1) Express terms = actual terms in agreement; (2) If terms cannot help, we go to the course of performance (based on the performance of this particular agreement, can the term be given definition or still ambiguous? (3) Still ambiguous, we look to course of dealings between the parties (4) If not clear, we look at how the industry/trade interprets the terms; To the extent possible we interpret these as consistent with each other;

UCC 2-316 — Exclusion or Modification of Warranties

(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable. (2)Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that "There are no warranties which extend beyond the description on the face hereof." (3)Notwithstanding subsection (2) (a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is", "with all faults" or other language which in common understanding calls the buyer'sattention to the exclusion of warranties and makes plain that there is no implied warranty; and (b) when the buyer before entering into the contract has examined the goodsor the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and (c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade. (4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (Sections 2-718 and 2-719). Allowing conspicuous disclaimer of warranty; must say merchantability or as is or with faults in bold, conspicuous font.

UCC 2-719 — Contractual Modification or Limitation of Remedy

(1)Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages, (a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goodsand repayment of the price or to repair and replacement of non-conforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. (2)Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goodsis prima facie unconscionable but limitation of damages where the loss is commercial is not.

UCC 2-719 — Contractual Modification or Limitation of Remedy

(1)Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages, (a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goodsand repayment of the price or to repair and replacement of non-conforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. (2)Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goodsis prima facie unconscionable but limitation of damages where the loss is commercial is not. Limits on remedy generally allowed — Seller can limit remedy for breach of warrant to repair and replacement. There are unconscionability constrains on the ability to exclude consequential damages, Failure of remedy's essential purpose also imposes a limit on remedies.

R2K 129 — Action In Reliance; Specific Performance

A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.

R2K 1 — Contract Defined

A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

R2K 26 — Preliminary Negotiation

A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent. See Nebraska Seed v. Harsh (The letter sent by Harsh to Nebraska Seed was determined to be a proposal/invitation to bargain, rather than an offer, because it was missing essential terms (time of delivery for seed, amount of seed); Court did not want to subject people to liability for every person they invite to bargain with them; further assent was required from Harsh) See Empro v. Ball-Co Manufacturing, Inc (Finding that Empro's letter of intent to purchase Ball-Co did not reveal an objective intention of the parties to be contractually bound at that particular time; Preliminary negotiation; Finding based on objective from K and subjective intent of parties; subject to final agreement; approval by Empro's board; Empro deposit refundable; parties in dispute over final terms; Ball-Co was free to exit negotiation; pre-contractual reliance expenditures also not given to Empro because it assumed those on it's own, not in reliance on any promise form Ball-Co)

R2K 167 — When a Misrepresentation Is an Inducing Cause

A misrepresentation induces a party's manifestation of assent if it substantially contributes to his decision to manifest his assent.

R2K 159 — Misrepresentation Defined

A misrepresentation is an assertion that is not in accord with the facts.

R2K 151 — Mistake Defined

A mistake is a belief that is not in accord with the facts.

R2K 157 — Effect of Fault of Party Seeking Relief

A mistaken party's fault in failing to know or discover the facts before making the contract does not bar him from avoidance or reformation under the rules stated in this Chapter, unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.

R2K 154 — When a Party Bears the Risk of a Mistake

A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

R2K 161 — When Non-Disclosure Is Equivalent to an Assertion

A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only: (a) where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material. (b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. (c) where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part. (d) where the other person is entitled to know the fact because of a relation of trust and confidence between them.

R2K 4 — How a Promise May Be Made

A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.

R2K 89 — Modification of Executory Contract

A promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or (b) to the extent provided by statute; or (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise. Can be opted out of by including a unilateral modification clause. Under Restatement 89: if no unanticipated circumstance, or reliance; arguably might need consideration. See Alaska Packers (Pre-existing duty rule; modification requires consideration) See also Brian Construction and Development v. Brighenti (When an unforeseen, burdensome condition arises during the performance of a contract, the promise of additional compensation in return for the promise to do the additional work is a separate, valid agreement. Unforeseen circumstances provide get you out of the pre-existing duty rule; modification is allowed) A contractor engaged a sub-contractor to compelte excavation. however there was debris beneath the surface that was not detected by the contractor when he performed his task of surveying the land. Sub contractor asked for additional compensation to remove. Contractor agreed. Sub contractor started but the breached. The Court found that the defendants promise to remove the Unforseen debris in exchange for greater compensation consituted valid consideration for the subsequent agreement.) Note also that it was the obligation of the contractor to survey the land. Thus although the K required D to do all neccesary work, the sub contractor was excused from the clause. If the sub contractor had done the survey, might be a different story. It depends on who the risk of the detecting the unforseen circumstnace was assigned to. See Stees v. Leonard.

R2K 90 — Promise Reasonably Inducing Definite and Substantial Action

A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.] Ricketts v. Scothorn — (Equitable estoppel prevents a promisor from revoking an otherwise unenforceable gratuitous promise if the promisee foreseeably and reasonably relied on the promise to her detriment. Grandfather, Ricketts, provides granddaughter with note for 2k plus interest, stating that none of children work, and neither should she. Although she was not required to quit her job to recieve the gift, she did so any way. When he died, the executor refused to honor the promise, arguing that it was gratuitous and lacked consideration.) The Court found that although the promise lacked consideration, Ricketts could reasonably expect to induce Ricketts to quit, and here he even wanted Ricketts to quit, and she actually did. Thus, the executor is estoppel from denying the obligation under the note. Reasonableness of reliance is determined by the fact that it was contemplated by the promisor; it HAS to be within the knowledge of the promisor to be reasonable. If not, not reasonable. Also the injustice piece simply means there must be some harm done be the reliance — detrimental reliance. Promise Detrimentally relied upon The reliance is reasonably foreseeable by the promisor Injustice can only be avoided by enforcing the K. Contra Allegheny College v. National Chautauqua County Bank (Johnston promised to have 5k given to Allegheny College after he death to the endowment OR to establish a memorial fund in her name. She gave 1k to be set aside for those purposes. College chose to establish a memorial fund in her name. She later revoked her promise to pay the rest. She died. College sued to recover. Although it seems like a gratuitous promise, where promissory estoppel swooped into to cure the lack of consideration, there actually was consideration. Johnson payment and promise induced the college to create fund, colleges creation of a fund induced Johnson to donate as indicated by her letter. Mutual inducement. Garden variety consideration case. However there is also a charitable subscription exception for promisor estoppel, where a charity or school who relies on acts of charitable giving do not need to prove detrimental reliance, but must show other factors. Else, they would have to provide detrimental reliance in every case which seem problematic. Feinberg v. Pfeiffer Co. (Where detrimental reliance on gratuitous promise, the Court will subsistute the reliance for consideration and enforce the promise under promissory estoppel. Long time employee promised a pension for the rest of her life. The promise was not contingent on her retiring but the company stated that one purpose of providing the gift was so that she could retire. She continued working for several years then retired. The payments kept coming until now management stopped them arguing that the promise was gratutitiuous with no consideration; However, Feinberg had been relying on the pension to not work, eventually became sick and could not work. The Court found that this reliance, her quitting and not looking for another job, was reasonble and foreseeable, since Co. expected and even encouraged it. She also suffered a detriment by losing out on other jobs. A gratuitous (and thus unenforceable) promise is nevertheless transformed into a binding and enforceable contract if the promisee reasonably and detrimentally relies on the promise. Contra James Baird v. Gimbel Brothers (The court found that promissory estoppel could not be used to turn an OFFER into a binding agreement simply because there was detrimental reliance on the offer. **At odds with R.87. Hand: Refusing to apply PE to Offer; no mutuality of obligation; no implicit terms; offer revocable; no PE Sub-contractor submitted the very low, but incorrect, offer to a contractor. The sub-contractor required the contractor to provide him with explicit acceptance, after the construction contract was awarded. The contractor incorporated the sub-k's offer into his bid and won. But in between, the sub-k sent letter revoking the offer since it was wrong, and giving real numbers. R.25 suggests this is an offer, since explicit acceptance was required. Thus, since sub-k revoked before offer was explicitly accepted, no K. And promissory estoppel cannot save, because it was an offer, not promise. Also not option K which sub-k cannot withdraw from because not consideration; thus that cannot turn offer into promise either. Traynor: Applying PE to offer; Reading implicit terms; Mutuality of obligation between sub-k and k; offer irrecoverable; solved with PE See Drennan v. Star Paving Co. (Similar to James Baird; Sub-K submitted wrong bid. Contractor relied on it and was awarded contract. However, here, the contractor was required to include the sub-contractors name in the bid for the contract. Thus, unlike in James Baird, where it was questionable whether there was mutual obligation, it is clear here that the sub-k and k would not be able to shop around once the sub-k bid was incorporated. Although the offer seems irrevocable from custom, the court concluded that it wasn't. However, unlike James Baird, it concluded that promissory estoppel would enforce the K b/c the K reasonably relied on the bid and it was foreseeable, and did so to its detriment because it had to cover by using a higher bid. However, modern Courts are better about reading implicit terms into K rather than resorting to promissory estoppel; for example, here, there would have been consideration for promise b/c sub-k recieved a higher likelihood of getting K when bid accepted. And in return contractor also had higher chance of recieving bid. COurt also more so look to custom to read in implicit terms. PE is a theory of enforcement; some exceptions apply when consideration is missing, or there is no promise at all and the COurt reading implicit terms into K. Hoffman v. Red Owl Stores (Red Owl Stores made an indefinite promise to Hoffman that it would provide him with store if he sold bakery, opened small store, closed small store as a loss, moved to Chilton, paid 36k for franchise etc. However, the oral promise was indefinite because there were no terms about when he would get store, which store, terms of franchise agreement, etc. It was more akin to a preliminary negotiation, and agreement to agree on the specifics at a later time. However, Hoffman sued for damages on the indefinite promise. There was mutual inducement, i.e. consideration, but not definite promise. Normally, it would be impossible to award damages for breach. To support an action for promissory estoppel, a promise need not contain all of the essential details of the proposed transaction between the promisor and the promisee, so as to be equivalent to an offer that would result in a binding contract between the parties if accepted by the promisee. Instead, where the promisor induces substantial behavior for its own benefit, the court will award pre-contractural reliance damages under the doctrine of promissory estoppel. Strikes a balance between not chilling negotitiations by imposing full blown expectation damages, and curbing inducement of foreseeable and substnatial reliance, in which case we want to apply some remedy. Rather than acting as a substitute for consideration, PE is acting a remedy for something more akin to misrepresentation. Here, damages are limited to reliance damages, [note the lost profits from the small store were not awarded but should have been because they were also incurred in reliance on the indefinite promise) Consideration is such a bright line rule that is likely to be under and over inclusive; thus promissory estoppel and quasi contracts provide needed exceptions.

R2K 64 — Acceptance By Telephone Or Teletype

Acceptance given by telephone or other medium of substantially instantaneous two-way communication is governed by the principles applicable to acceptances where the parties are in the presence of each other.

R2K 160 — When Action Is Equivalent to an Assertion (Concealment)

Action intended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exist.

R2K 214 — Evidence of Prior or Contemporaneous Agreements and Negotiations

Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish (a) that the writing is or is not an integrated agreement; (b) that the integrated agreement, if any, is completely or partially integrated; (c) the meaning of the writing, whether or not integrated; (d) illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause; (e) ground for granting or denying rescission, reformation, specific performance, or other remedy. Masterson v. Sine (Natural Omissions Test for admitting oral evidence to determine whether writing was integrated or not. Masterson sold land to family member with unqualified option buy back. Masterson went into bankruptcy and his trustee wanted to excercise option to sell land. Sines wanted to introduce evidence that she had an agreement with Masterson that the option could only be excercises within the family. Even thought the contract did not state this, the Court held that evidence of a separate oral agreement may be admissible to prove the terms of the contract if the oral agreement is something that would naturally be made as a separate agreement by the parties given their actual situation and circumstances when drafting the written contract. Here the extrinsic circumstnaces of the them already being family made it reasonable that they might have made a seperate agreement about the option being within the family. It also finds that silence in a contract on a term, implies it is open for interpretation. Therefore it does not contradict any terms in the writing. The dissent relies on the four corners approach and says that by not explicitly placing a limitation on the option, the default rule in California is that it is unqualified. Thus the Admitted evidence would be contradicting that default rule. (But see R2K 215) For 214(c) In re Soper (Guy dies an leaves Insruance to "wife"; was it his current wife or the one he never divorced? Parole evidence admissible to determine the meaning of a term that, although plain on the face of the contract, is ambiguous in light of the circumstances. Here, wife could have meant either in light of the circumstances. Thus to determine the intent of the parties, extrinsic evidence is allowed to be admitted. However, it still cannot contradict the term in the contract. So wife cannot mean anyone but my wife. Contra — Plain meaning jurisdiction — If a term has plain meaning, extrinsic evidence will not be admitted to contradict THAT meaning. That is the interpretation. If it does not have a plain meaning, Court will see if the K defines the term better, or gives the court an indication of the intent of the parties. See also Pacific Gas v. Thomas Drayage and Rigging Co. (Rejects plain meaning approach; Thomas Drayage entered a contract with Pacific Gas to replace their steam turbine; the top it fell and damges property during the work; TD had agreed in the K to indemnify TD for any damages to property. The trial court refused to allow TD to admit extrinsic evidence that the indemnity clause only applied to damages to third parties, claiming the provision had a plain meaning. Rejects plain meaning approach; If a preliminary consideration of all credible evidence offered to prove the intent of the parties still leaves contractual terms "reasonably susceptible" to at least two rational interpretations, extrinsic evidence relevant to prove either of these meanings is admissible. Despite the purported plain meaning of the K provision, the California Court held that e extrinsic evidence is admissible to prove the meaning of contractual terms. Test: Judge makes a preliminary consideration of all the extrinsic evidence and if it is reasonably susceptible to one or both of the competing interpretations then the judge sends admits the evidence to the jury to receive which evidence resolves the ambiguity. See Trident Center v. Connecticut General Life Ins. Co. (Trident and General Life were sophisticated corporations, who drafted a loan agreement for the creation of a building. The loan agreement explicitly did no allow prepayment. But when interest rates went up, Trident tried to re-finance, General said no. And Trident sued on bogus claim that it could pre-pay and wanted to introduce extrinsic evidence despite the clear prohibiton on pre-payment. The Court reluctantly applied the holding from Pacific Gas that Under California law, a contract must be interpreted in light of any relevant evidence of the parties' intent, including evidence extrinsic to the written agreement itself, even if the agreement is clear and unambiguous on its face. Although traditional contract principles do not permit admission of extrinsic evidence to interpret the terms of a clear and unambiguous contract, Pacific Gas established a different rule in California by holding that it is not possible to determine contractual intentions merely from the words of the contract itself, and therefore any relevant evidence regarding the parties' intent must be admitted. The Court warned that this approach would cast uncertainty over any contract created in California.

R2K 66 — Acceptance Must be Properly Dispatched

An acceptance sent by mail or otherwise from a distance is not operative when dispatched, unless it is properly addressed and such other precautions taken as are ordinarily observed to insure safe transmission of similar messages. See Mailbox Rule (The mailbox rule is a default that can be written-out by agreement. It holds that the acceptance is valid upon mailing of the acceptance (not upon receipt). If the offer is revoked before acceptance, then there is no contract. Both parties are bound when the acceptance leaves the possession of the offeree (the offeror can no longer revoke). To protect offeree reliance on contract)

R2K 61 — Acceptance Which Requests Change of Terms

An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms. See Ardente v. Horan (Mirror Image rule — the offer and acceptance must match to create contract. Horan offered to sell house to Ardente. Ardente sent deposit, with additional letter that included a confirmation that it would retain the furniture. Ardente's accompanying letter imposes additional conditions that cannot be construed as independent of his underlying acceptance. The language of Ardente's letter actually inquires as to whether the additional furniture and fixtures are a part of the underlying transaction. Ardente in no way communicates that he is willing to move forward with the purchase and sale agreement even without the additional conditions. Thus, his letter operates as a conditional acceptance properly construed as a rejection of the Horans' offer to sell their property; a counteroffer with additional terms, terminating power of acceptance)

R2K 3 — Agreement Defined, Bargain Defined

An agreement is a manifestation of mutual assent on the part of two or more persons. A bargain is an agreement to exchange promises or to exchange a promise for a performance or to exchange performances.

UCC 2-205 — Firm Offers

An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

R2K 24 — Offer Defined

An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. Leonard v. Pepsi Co (An advertisement does not constitute an offer unless its terms are sufficiently clear and leaves nothing open for negotiation and an advertisement intended to be a joke cannot be sufficiently clear.) Lefkowitz v. Great Minneapolis Surplus Store (An advertisement constitutes a binding offer if it is clear, definite, and explicit, and leaves nothing open for negotiation; Here the advertisement met these conditions: stole will be sold on given date and time to first person who arrived and agreed to pay $1; Lefkowitz met condition; Unitaletral contract; once performed the promisor cannot alter the conditions, but can before it is accepted/performed; Thus Store was not able to add condition about females only once conditions were met by L)

R2K 42 — Revocation by Communication from Offeror Received by Offeree

An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract.

R2K 43 — Indirect Communication of Revocation

An offeree's power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. See Dickinson v. Dodds (Dodds effectively revoked his offer to sell property to Dickinson by expressing intent to sell instead to Allen; a fact which was communicated to Dickinson before his acceptance of Dodds' offer. An offer may be revoked by the offeror without an express or actual statement of revocation communicated to the offeree provided there has been no meeting of the minds and the offeree is aware of conduct by the offeror demonstrating intent to revoke the offer. Protect pre-contractural reliance by not allowing the offer to be revoked unless offeree could reasonably find out)

R2K 349 — Damages Based on Reliance

As an alternative to the measure of damages stated in § 347, the injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed. *Nurse v. Barns (Plaintiff had purchased mill equipment in reliance on promise to use mills, Defendant breached; Reliance damages awarded for the cost of the equipment) *Sullivan v. O'Connor (Plaintiff contracted for two nose surgeries, which failed. Doctor promised third surgery would fix, which also failed. Reliance damages awarded because expectation damages were too speculative (value of good nose); Reliance damages included out-of-pocket expenses, and pain and suffering, and emotional distress for third surgery that Plaintiff endured in reliance on Doctors promise to fix) *Kizas v. Webster (Reliance damages cannot be more than expectation damages; If Defendant can prove Plaintiff would have suffered a loss if the K was performed, then Plaintiff's reliance damages would have been limited by their expectation. Not proven. Reliance damages awarded where P relied on D promise for consideration of FBI agent employment to forgo other employment; Damages awarded as the difference between what Plaintiff earned as low-level FBI Clerk and average wage of a person with Plaintiff's background.) **See Chicago v. Dempsey (Pre-contractural expenses not awarded for Willis K where it was not made in reliance on Dempsey K; Example: Dempsey could have rejected the offer, even though Willis K was made) See Security Stove v. American Railway (Expectation damages were uncertain, because it wasn't clear whether Security Stove would have profited at all from the venture, thus SS requested reliance damages)

R2K 352 Uncertainty as a Limitation on Damages

Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty. Chicago Coliseum v. Dempsey (Finding that the lost profits Chicago Coliseum might have recovered if the fight happened were unrecoverable because there was no way to ascertain how profitable the fight would been with so many variables) Security Stove v. American Railway Express (Finding that damages for lodging expenditures for exhibition were recoverable where the costs were easily calculated, and Buyer had relied on Seller's promised shipping date in making the wasted expenditures, instead of going to another Shipper)

R2K 205 — Duty of Good Faith and Fair Dealing

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement. See Goldberg 168-05 Corp v. Levy (FInding that behavior performed with no legit the business reason, and for the sole purpose of benefiting at the expense of the other party, constitutes a violation of good faith, which is implicit in every contract. Goldberg leased property to Levy for store, and charged set rental fee , plus a percentage of profits from store. The contract provided that if profits dipped below a certain amount, Levy could cancel the lease. Levy began to divert business away from that store, to another store he owned, and allowed the former store to be mismanaged. Profits dropped below amount, Levy cancelled K. Although all of Levy's actions were consistent with K, the Court found that he violated the implicit duty of good faith in every contract. Here to reasonably attempt to make the store profitable. By divertining sales, he profitted at the expense of the lessor with no legislate business reason for doing so. Therefore, he breached his duty of good faith.) See Mutual Life v. Tailored Women (Mutual Life leased a first floor space to Tailored Women that allowed it to sell clothing, at fixed rent plus percentage of profits. Is also leaded a fifth floor that allowed clothing sales, at fixed rent, no percentage. The first agreement said TW could not divert sales. TW moved fur sales to fifth floor and paid no percentage on them. Majority found that TW was merely excercising rights under contract, not bad faith, because the contract allowed clothing to be sold from both stores. Majority beleived there may have been a business rationale behind the move. Dissent argued that TW violated good faith and lease by diverting sales, to fifth floor in a manipulative way by selling furs in a similar way as before but simply from the fifth floor with no percentage. Hypo: Higher price charged = Higher Gross Sales = More for Lessor Higher mark-up = Higher profit margin = More for lessee Both combined - Higher Joint Gains (contract pie) Charging higher price, with higher markup -> Good for both parties. And contract pie. Charging lower price, with higher markup -> transfers gains from lessor to lessee - If the contract pie is increased, this may be a legitimate business reason. Lessee is not obligated to maximize lessors gains, only cannot minimize them for no legitimate reason, for their own gain. Charging lower price, with lower markup -> Lower gains for lessor and lessee; lower joint gains (contract pie) - Bad faith if lessors gains are less, proportional to lessee's gains. No reason to do this other than to profit at the expense of the other party. Litmus Test for Good Faith: - Is the decision you're making going to maximize or diminish joint gains? - Is the decision benefiting you at the other parities expense? - Is there a legitimate business reason for the decision (may feed into whether you're maximizing joint gains) - If first two are yes, it's likely bad faith especially if no other legitimate business reason.

R2K 215 — Contradiction of Integrated Terms

Except as stated in the preceding Section, where there is a binding agreement, either completely or partially integrated, evidence of prior or contemporaneous agreements or negotiations is not admissible in evidence to contradict a term of the writing.

R2K 133 — Memorandum Not Made as Such

Except in the case of a writing evidencing a contract upon consideration of marriage, the Statute may be satisfied by a signed writing not made as a memorandum of a contract.

UCC 2-615 — Excuse by Failure of Presupposed Conditions

Except so far as a sellermay have assumed a greater obligation and subject to the preceding section on substituted performance: (a) Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faithwith any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid. (b) Where the causes mentioned in paragraph (a) affect only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contractas well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable. (c) The seller must notify the buyer seasonably that there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.

R2K 208 — Unconscionable Contract or Term

If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.

R2K 371 — Measure of Restitution Interest

If a sum of money is awarded to protect a party's restitution interest, it may as justice requires be measured by either (a) the reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant's position, or (b) the extent to which the other party's property has been increased in value or his other interests advanced. See Britton v. Turner (Calculating services rendered as the cost it would have been for NBP to obtain those services under K from person in BP position) See Use of Susi Contracting Co. v. Zara Contracting Co. (Calculating services and loaned cost of tools as a reasonable value to the other party, using K as a reference) See Cotnam v. Wisdom (Quasi-Contract found where Surgeon attempted to revive an unconscious victim. No express contract or implied in fact (from conduct) because defendant was unconscious; However, in an emergency situation where there is no opportunity to negotiate, and Court determines that the party receiving the services would have certainly accepted them had there been, and person conferred benefit (chance to live) then a quasi-contract is found; Benefit is valued at a reasonable market value without regard to financial position of parties; Seeks to incentivize people to take action where needed, even though no opportunity to negotiate)

R2K 25 — When a Manifestation of Intention is Not an Offer

If from a promise, or manifestation of intention, or from the circumstances existing at the time, the person to whom the promise or manifestation is addressed knows or has reason to know that the person making it does not intend it as an expression of his fixed purpose until he has given a further expression of assent, he has not made an offer. See James Baird Co. v. Gimbel (A sub-contractors bid was deemed to be an offer, rather than a promise, because it explicitly required "acceptance after the general contract was awarded"— Thus, not binding until contractor provided further assent.)

R2K 263 — Destruction, Deterioration or Failure to Come into Existence of Thing Necessary for Performance

If the existence of a specific thing is necessary for the performance of a duty, its failure to come into existence, destruction, or such deterioration as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made.

R2K 79 — Adequacy of Consideration; Mutuality of Obligation

If the requirement of consideration is met, there is no additional requirement of (a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or (b) equivalence in the values exchanged; or (c) "mutuality of obligation." See Batsakis v. Demotsis (Although a valid contract requires all parties to provide consideration, mere inadequacy of consideration will not void a contract; Here Batakis loaned Demotsis $25 in exchange for her paying him back $2000 plus interest. Although the equivalence in value exchanged is off, there was still mutual inducement, and thus consideration.) Contra sham consideration where there really is no inducement, but the parties provide some nominal consideration (like a dollar) to conceal what is really a gift. See Wolford v. Powers (Mere inadequacy of consideration will also not void a contract that is for non-pecuniary returns. An elderly man provided Wolford with 10k for naming his son after him and compensating him for medical care. Court found that the value of services is subjective, and no one else can place a value on what they got from a non-monetary return than the promisor. Court cannot step into the promisors bargaining position and change terms of promise that is supported by consideration — Peppercorn Theory)

R2K 32 — Invitation of Promise or Performance

In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.

R2K 241 — Circumstances Significant in Determining Whether a Failure Is Material

In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing. Factors in 241 should be used to address the competing interests of protecting the interests of the NBP and preventing strategic behavior by the NBP Promisee may treat contract as repudiated and suspend performance when breach is material Policy: limiting repudiation to material breach ensures that we avoid excessive care by performing party, and the resulting high prices; but also allocate risk appropriately. See B&B Equipment Co. v. Bowen (A party may rescind a contract when the other party has materially breached the contract. B&B brought Bower in as partner to perform the duties of the previous partner who had just retired. Since he could not buy in, the entered agreement as a part of his employment contract that he would put down a deposit and use his dividends from to pay off a loan for the stock he would need. The stock rose in value. Bowen was fired for performing unsuccessfully for a while. B&B resinceded the employment contract, and gave back Bowen his deposit plus all divendends paid and retained the valuable stock. Bowen claimed he did not materially breach. Court consdiered the following factors in determining breach: (1) the extent to which the injured party gets the substantial benefit, which he could have anticipated reasonably, Bad employee; B&B did not get benefit they reasonbly anticipated. (2) the extent to which the injured party could be compensated adequately, Inapplicable. (3) the extent to which the breaching party has partly performed or prepared to perform, Although he partially performed, it was part defective. (4) the degree of hardship suffered by the breaching party due to the breach, He will recieve dividends and deposit; fair considering hardship he caused B&B (5) whether the breaching party was willful, negligent, or innocent, and Bowen was negligent at the least, for not conforming after fair warning. (6) the degree of uncertainty under which the breaching party is willing to perform the remainder of the contract. B&B can't keep waiting for Bowen to get better. Bowen had failed each, or it was inapplicable, leading to conclusion that it was a materiel breach and Co. had right to rescind contract.

UCC 2-710 — Seller's Incidental Damages

Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer'sbreach, in connection with return or resale of the goods or otherwise resulting from the breach.

R2K 200 — Interpretation of a promise or agreement or a term thereof is the ascertainment of its meaning.

Interpretation of a promise or agreement or a term thereof is the ascertainment of its meaning.

R2K 344 — Purpose of Remedies

Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promisee: (a) his "expectation interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed, (b) his "reliance interest," which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made, or (c) his "restitution interest," which is his interest in having restored to him any benefit that he has conferred on the other party.

R2K 18 — Manifestation of Mutual Assent

Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance. Bailey v. West (A contract is implied in fact if there is a mutual agreement between the parties and intent to promise, but the agreement and promise are implied from the parties' conduct and other facts, rather than made in words.)

R2K 27 — Existence of Contract Where Written Memorial is Contemplated

Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof, but the circumstances may show that the agreements are preliminary negotiations. Ciaramella v. Reader's Digest Association (Settlement agreement for discrimination case, where C's attorney oral agreed to final settlement, but C refused to sign. However, the K specified that the agreement was not effective until signed and also contained a merger clause stating any other agreement must be in writing... Where the parties intend not to be bound until the agreement is set forth in writing and signed, they cannot be bound by an oral agreement to those terms. To determine if this is the case, the Court looked to (1) whether there was an express reservation to not be bound until the agreement is signed; (2) whether the agreement was partially performed; (3) whether the parties agree on all terms of the agreement; and (4) whether the agreement is of a kind usually reduced to writing. No individual factor is decisive, but in the case at bar, all factors weigh in favor of finding that the parties intended not to be bound without a signed agreement.)

R2K 37 — Termination of Power of Acceptance Under Option Contract

Notwithstanding §§ 38-49, the power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or by death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty.

R2K 73 — Performance of Legal Duty

Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain. See Alaska Packers' Association v. Domenico (Preexisting Duty Rule: Where parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, the new agreement is unenforceable for lack of consideration. Alaska contracted group of sailors to fish far away at sea, and be paid per fish caught. Sailors claimed the fish nets were faulty, and wanted double the price to fish, or they wouldn't fish at all. Alaska reluctantly agreed to higher price. When sailors got back, Alaska paid them the orignal price. Sailors sued. Court found that nets weren't faulty, and the modification to the contract lacked consideration because the sailors were already under a preexisting duty to catch fish, and nothing else was offered for the higher price.) Pro: Does provide some assistance with the hold up problem, by not allowing them to use power from a situational monopoly to obtain higher price, for same performance already agreed upon. Cons: Even a little extra consideration, performance above existing duty, can allow the coercive party to enforce the new contract. Not a good way of dealing with one-sided modification. See also Brian Construction (Unforeseen debris created new duty, which became consideration for increased compensation through modification)

R2K 355 — Punitive Damages

Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.

R2K 347 — Measure of Damages in General

Subject to the limitations stated in §§ 350-53, the injured party has a right to damages based on his expectation interest as measured by (a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that he has avoided by not having to perform. See Hawkins v. McGee (Determining the measure of expectation damages to be the difference between the value of a "perfect" hand and the hand delivered, excluding damages for pain and suffering associated with the surgery because it would have been the same had the promise been performed.)

UCC 2-202 — Final Written Expression: Parol or Extrinsic Evidence

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreementwith respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented (a) by course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208); and (b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement. Hunt Foods v. Doliner (Hunt Foods offered to purchase a company that Doliner was the majority shareholder of. The negotiations fell through and Hunt acquired an unrestricted option contract to purchase stock from Doliner in order to ensure that he did not use their offer to sell for more. Before Doliner even attempted to sell to someone else Hunt foods excercised the option. Doliner refused. In Court Doliner argued that the two had an oral agreement that the option only applied if Hunt Foods attempted to sell to someone; conditional option. The Court held that the oral agreement was admissable since the K was silent on whether the option was conditional, and therefore the proposed term was an addition, not contradiction or negation, of the writing under the PER. Broad definition of contradiction under UCC. **FMV says case may have been wrongly decided. Also; [determining integration] Additional terms that the parties would have naturally included are barred by the parol evidence rule. The parties' expectations of further negotiations indicated that the alleged condition precedent to the exercise of the option-Doliner soliciting an outside offer-was not impossible. The trial court's grant of summary judgment is thus reversed Terms set forth in a writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement, but may be explained or supplemented by evidence of consistent additional terms, unless the court finds the writing to have been intended also as a complete statement of the terms of the agreement. Columbia Nitrogen Corp v. Royster (Evidence of course of dealing and trade usage is admissible to supplement and explain a contract, even if it is integrated and unambiguous, as long as the proffered evidence can be reasonably construed as consistent with the terms of the written agreement. Columbia Nitrogen entered a K to purchase phosphate from Royster at a fixed price and amount. The parties had a prior history of dealing. The agreement contained a merger clause. Columbia sought to purchase less than the minimum amount when prices began to fluctuate. Royster sued for breach. However, Columbia sought to introduce evidence that in their course of dealing they had veered from the price, and in the industry price and quantity were merely projections. Court found that the merger clause excluded oral agreements only, not trade usage. Therefore, trade usage was admissible to the extent that it was consistent with written agreement. Since the contract was silent on modification of price quantity, the proffered testimony did not negate or contradict the written agreement. (Rejection of texrtualist approach under UCC) To refute you car argue that custom is narrow, and does not cover this contract.

UCC 2-717 — Deduction of Damages From The Price

The buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contractfrom any part of the price still due under the same contract.

R2K 345 — Judicial Remedies Available

The judicial remedies available for the protection of the interests stated in §344 include a judgment or order (a) awarding a sum of money due under the contract or as damages, (b) requiring specific performance of a contract or enjoining its non-performance, (c) requiring restoration of a specific thing to prevent unjust enrichment, (d) awarding a sum of money to prevent unjust enrichment, (e) declaring the rights of the parties, and (f) enforcing an arbitration award.

R2K 169 — When Reliance on an Assertion of Opinion Is Not justified

To the extent that an assertion is one of opinion only, the recipient is not justified in relying on it unless the recipient (a) stands in such a relation of trust and confidence to the person whose opinion is asserted that the recipient is reasonable in relying on it, or (b) reasonably believes that, as compared with himself, the person whose opinion is asserted has special skill, judgment or objectivity with respect to the subject matter, or (c) is for some other special reason particularly susceptible to a misrepresentation of the type involved

R2K 131 — General Requisites of a Memorandum

Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which (a) reasonably identifies the subject matter of the contract, (b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and (c) states with reasonable certainty the essential terms of the unperformed promises in the contract.

R2K 65 — Reasonableness Of Medium Of Acceptance

Unless circumstances known to the offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similar transactions at the time and place the offer is received.

UCC 2-310 — Open Time for Payment or Running of Credit; Authority to Ship Under Reservation

Unless otherwise agreed (a) payment is due at the time and place at which the buyer is to receive the goodseven though the place of shipment is the place of delivery; and (b) if the seller is authorized to send the goods he may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (Section 2-513); and (c) if delivery is authorized and made by way of documents of title otherwise than by subsection (b) then payment is due at the time and place at which the buyer is to receive the documents regardless of where the goodsare to be received; and (d) where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but post-dating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.

UCC 2-308 — Absence of Specified Place for Delivery

Unless otherwise agreed (a) the place for delivery of goods is the seller'splace of business or if he has none his residence; but (b) in a contract for sale of identified goodswhich to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and (c) documents of title may be delivered through customary banking channels.

UCC 2-102 — Scope; Certain Security and Other Transactions Excluded From This Article.

Unless the context otherwise requires, this Article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.

R2K 63 — Time When Acceptance Takes Effect

Unless the offer provides otherwise, (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but (b) an acceptance under an option contract is not operative until received by the offeror.

UCC 2-610 — Anticipatory Repudiation

When either party repudiates the contractwith respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may (a) for a commercially reasonable time await performance by the repudiating party; or (b) resort to any remedy for breach (Section 2-703 or Section 2-711), even though he has notified the repudiating party that he would await the latter's performance and has urged retraction; and (c) in either case suspend his own performance or proceed in accordance with the provisions of this Article on the seller's right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (Section 2-704). Horchester v. De La Tour (When one party to an agreement is informed by another party to the agreement that the second party intends to breach the agreement, the first party has an option to file suit for damages immediately in anticipation of the breach, or to wait until the act was supposed to be done De La Tour entered contract to tour with Horchester in summer. Prior to that, De La Tour expressed an intent to breach. Horchester sued. DLT argued that since he had not yet breached, Horchester could not sue for breach. However, the court found that as soon as H was informed of intent to breach, H was entitled to seek damages, or wait. Otherwise, H will miss out on opportunity to mitigate damages by seeking other employment.. See Harrell v. Sea Colony Inc. (With regard to anticipatory breach, there must be a "definite and unequivocal manifestation of intention on the part of the repudiator" that he will not perform under the contract. The repudiator's refusal to perform must be "positive and unconditional." A request to change terms or a request to cancel is not sufficient to establish an anticipatory breach. Harrell entered contract with Sea Colony to purchase condo. Harrell later sent a request to cancel, conditional on return of the deposit. Sea Colony entered an agreement with another to sell the condo to them, and refused to return Harrell's deposit. Harrell filed suit. Sea Colony claimed Harrell had comitted anticipatory breach, therefore it was allowed to mitigate. However, the Court found that anticipatory breach must be definite and unequivocal intent not to perform. A request to cancel does not establish this. No anti. Breach. K was still one. Sea COlony may be liable for breach by selling to another. See also R. 250 — When a Statemnt or an Act is Repudicaiton

R2K 153 — When Mistake of One Party Makes a Contract Voidable

Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.

UCC 2-315 — Implied Warranty: Fitness for Particular Purpose

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyeris relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose. **only avaliable under UCC For Buyer to Recover: - Seller must know specific use that the goods are being used for; - Buyer must have relied upon seller's skill/judgement — If buyer is knowledgable, the reliance may be less clear. Must be asymmetry in information. Information forcing default rule.

R2K 261 — Discharge by Supervening Impracticability

Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.

R2K 265 — Discharge by Supervening Frustration

Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.