Contracts Cases (summary and rule)

Feinberg v. Pfeiffer Co.

(facts not that important here) 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.

Hamer v. Sidway

- Uncle becomes indebted to nephew after uncle promises nephew $5,000 if he can refrain from drinking, using tobacco, swearing and playing cards or billiards for money until age 21 - Nephew fulfills promise to refrain - Nephew gives the right to receive the money to receive the money to Louisa Hamer. - Uncle Dies - Sidway, executor for the Estate of the Uncle refuses to pay Hamer - Executor argues there was no consideration given in exchange for the promise to pay $5,000 - Court disagrees and says the action of refraining from a legal right is consideration Rule: A party's agreement to incur a detriment constitutes adequate consideration. - 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. Adequate consideration does not depend so much on a promisor's benefit from a contract as it does on the promisee's voluntary limitation of his legal rights or freedoms in exchange for the promise.

Nguyen V Barnes and Noble

A website user lacks sufficient notice to a company's terms of use if, despite the presence of conspicuous hyperlinks to the terms of use, the website neither provides notice to users nor prompts users to affirmatively demonstrate assent. Generally, there are two types of internet contracts: (1) click-wrap agreements and (2) browse-wrap agreements. A click-wrap agreement requires a user to click on an "I agree" box after being presented with a list of terms and conditions. Conversely, a browse-wrap agreement, like the one used by Barnes & Noble, is accessed via a hyperlink on a webpage that directs a user to the appropriate content. No affirmative action is required by the website user to agree to the terms of use. However, one of the requirements of a contract is the mutual manifestation of assent. Constructive assent is frequently present in click-wrap agreements. Conversely, whether a reasonably prudent website user has constructive notice of a browse-wrap agreement depends on the conspicuousness and placement of a TOU hyperlink, other notices of the TOU given to users, and the website's general design. Despite Barnes & Noble's claims to the contrary, the placement of a TOU hyperlink at the bottom of every webpage was not enough to give rise to constructive notice.

powers of acceptance

Ardente v Horan; Peterson v Pattberg; Marchiondo v Scheck Restatement § 35. The Offeree's Power Of Acceptance (1) An offeror 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. Comment: Restatement § 36: Methods of Termination of the power of acceptance (1) An offeree's power of acceptance may be terminated by (a) rejection or counteroffer by the offeree, or § 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. § 39. Counteroffers (1) A counteroffer 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 counteroffer, unless the offeror has manifested a contrary intention or unless the counteroffer manifests a contrary intention of the offeree. § 59. Purported Acceptance Which Adds Qualifications A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counteroffer. (b) lapse of time, or § 41. Lapse Of Time (1) An offeree's power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time. (2) What is a reasonable time is a question of fact, depending on all the circumstances existing when the offer and attempted acceptance are made. (3) Unless otherwise indicated by the language or the circumstances, and subject to the rule stated in § 49, an offer sent by mail is seasonably accepted if an acceptance is mailed at any time before midnight on the day on which the offer is received. (c) revocation by the offeror, or Restatement 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. Restatement 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. Restatement 46: Revocation of General Offer Where an offer is made by advertisement in a newspaper or other general notification to the public or to a number of persons whose identity is unknown to the offeror, the offeree's power of acceptance is terminated when a notice of termination is given publicity by advertisement or other general notification equal to that given to the offer and no better means of notification is reasonably available (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 off

the statute of frauds

Baliles v Cities Services Company

Britton v. Turner

Britton (plaintiff) agreed to work for Turner (defendant) for one year for the sum of $120. After nine and a half months, Britton stopped working for Turner, without Turner's consent. Upon Turner's refusal to pay for the work completed, Britton sued Turner alleging, among other things, a claim for quantum meruit. On this basis, Britton claimed that he was entitled to $100 for the labor he had performed. At trial, Turner proved that Britton had agreed to work for one year and voluntarily failed to do so, but Turner presented no evidence of damages he incurred as a result of Britton's breach. The trial court instructed the jury that Britton was entitled to recover under quantum meruit for the value of the labor that he performed, and the jury awarded Britton $95. Rule: If an employee voluntarily breaches a contract for labor by failing to continue the agreed employment, the employee is entitled under quantum meruit to the reasonable value of the services provided, unless the contract specifically provides otherwise. (equitable theory of recovery)

Hernandez v. Banks

Bryant and Sheillia Banks (defendants) entered into a lease agreement to rent a house from Patricia Speleos. The Bankses were also given the exclusive option to purchase the property. In 1997, a group named 718 Associates (plaintiffs) purchased a tax sales certificate for the same property. In November 2001, as part of a separate proceeding, Speleos was declared mentally incapacitated. Due to this declaration, a judge voided several other real-estate transactions that Speleos had entered into in March 2001, but did not rule on the validity of the Bankses' lease. Speleos died several years later. 718 Associates eventually obtained title to the property from Speleos's estate. 718 Associates then filed action against the Bankses, seeking possession of the property. The Bankses claimed they were entitled to remain tenants at the property because they had a valid lease with Speleos. 718 Associates challenged the validity of the lease, claiming Speleos lacked capacity at the time she entered into the lease agreement with the Bankses. The trial court held that although Speleos was mentally incompetent at the time the lease was signed, the lease was voidable, rather than void. The trial court concluded that there was no evidence to demonstrate that the lease should be voided. 718 Associates appealed the decision. Rule: Contracts entered into by mentally incapacitated people are voidable, rather than inherently void. § 15. Mental Illness Or Defect (1) A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect (a) he is unable to understand in a reasonable manner the nature and consequences of the transaction, or (b) he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition. (2) Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance under Subsection (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires. Under that rule, the contractual acts of person later found to be mentally incapacitated are voidable based on the decision of the mentally incapacitated party. A voidable contract is presumed valid and legally binding.

Caldwell v Taylor (know facts very famous)

Caldwell (defendant) owned The Surrey Gardens and Music Hall (hall) and agreed to rent it out to Taylor (plaintiff) for four separate days at a rate of one hundred pounds per day. The parties understood that Taylor wished to host a series of concerts at the hall, and their contract included provisions relating to the provision of concert supplies and equipment. After the contract was formed, but before the first concert, the hall was destroyed by fire. The destruction was such that Taylor could not host the concerts there as planned. Taylor brought suit against Caldwell to recover damages for the money spent advertising and preparing for the concerts. In contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing or destruction of the person or thing shall excuse the performance. Contract subject to implied condition the failure of which will excuse performance 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. a. SAME CASE AS TAYLOR BUT THE OWNER COMMITTED ARSON In this case there is fault to apportion to the owner of the hall They were not unable to perform, they MADE themselves unable to perform What if the same facts exist but there is a clause saying expressly who bears the risk? Express conditions take precedence over implied so the clause is valid What if a builder builds 2/3 a building and has been paid for that work and then the building burns down... is his performance excused or does he have to redo his work and then finish the building? Is he excused? How to analyze these facts § 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. What does impracticability mean? Insolvency is not impracticability --> An impracticability argument probably shouldn't rely on costing a lot of money That's not an excuse but rather breach The impracticability argument could be that it costs 900 thousand to make a building worth 600 thousand so what's the point

Gross Valentino Printing Co. v. Clarke

Clarke (defendant) was a publisher of a magazine. Gross Valentino Printing Co. (Gross) (plaintiff) was a printer.In July of 1979, Gross sent Clarke a letter offering to print 15,000 copies of Clarke's magazine for $6,695.00. --> Clarke accepted this offer and began working with Gross on the layout of the magazine.Due to problems arising with the layout, Gross was required to send the print job out to a third party.This increased the total cost of printing to $9,300.00. Gross sent Clarke a letter on August 15, 1979 advising Clarke of this fact.Clarke made no objection to the price increase at that time. On August 30, 1979, Gross delivered the first 5,000 magazines to Clarke. Clarke signed the purchase order reflecting the new price and paid Gross $4,650.00. Gross later delivered the remaining 10,000 magazines to Clarke. On October 28, 1979, however, Clarke informed Gross that he would not accept the price increase and refused to pay the remaining balance. Rule: Under the Uniform Commercial Code, a contract for the sale of goods as defined by the code is enforceable even without proof of consideration offered by both parties. consider in this case that RS 175 lays out elements of when duress by threat makes a contract voidable and this does not meet the definition of an improper threat in 176 (no bad faith in the notice of potential breach in this case)

Cole-McIntyre-Norfleet Co. v. Holloway

Cole directed its salesman to solicit an order for perishable meal from Holloway. After the order was placed, Cole's salesman had weekly opportunities to notify Holloway the order was not accepted due to his weekly visits to Holloway's store. Rule: When the subject of a contract, either due to its nature or to market conditions, will become unmarketable by delay, one party's unreasonable delay in notifying another party of its acceptance of the second party's offer constitutes an act of acceptance sufficient to form a valid contract. So, by not informing of acceptance in a reasonable time frame, Cole actually accepts the offer. The refusal to accept was unreasonable

bargained for exchange (consideration)

Congregation Kadimah Toras-Moshe v DeLeo, Schnell v Nell, Hamer v Sidway, Batsakis v Demotsis, Runzheimer Int. v Friedlen, Wood v Lucy and Lady Duff Gordon § 17. Requirement 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. RS 71 --> if something is not bargained for there is no consideration § 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. § 72. Exchange Of Promise For Performance Except as stated in §§ 73 and 74, any performance which is bargained for is consideration. § 75. Exchange Of Promise For Promise Except as stated in §§ 76 and 77, a promise which is bargained for is consideration if, but only if, the promised performance would be consideration. § 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." § 95. Requirements For Sealed Contract Or Written Contract Or Instrument promise is binding without consideration if (a) it is in writing and sealed; and (b) the document containing the promise is delivered; and (c) the promisor and promisee are named in the document or so described as to be capable of identification when it is delivered. § 96. What Constitutes A Seal 1) A seal is a manifestation in tangible and conventional form of an intention that a document be sealed. (2) A seal may take the form of a piece of wax, a wafer or other substance affixed to the document or of an impression made on the document. (3) By statute or decision in most States in which the seal retains significance a seal may take the form of a written or printed seal, word, scrawl or other sign. § 175. When Duress By Threat Makes A Contract Voidable (1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim. (2) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction § 176. When A Threat Is Improper (1) A threat is improper if (a) what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property, (b) what is threatened is a criminal prosecution, (c) what is threatened is the use of civil process and the threat is made in bad faith, or (d) the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient. (2) A threat is improper if the resulting exchange is not on fair terms, and (a) the threatened act would harm the recipient and would not significantly benefit the party making the threat, (b) the effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat, or (c) what is threatened is otherwise a use of power for illegitimate ends.

Brinderson-Newberg Joint Venture v. Pacific Erectors, Inc.

Contractor and subcontractor have dispute over what a term means... whether it means building something to completion or setting it up to industry standard Rule: Whether extrinsic evidence may be introduced to show the meaning of the express terms of a written contract when the extrinsic evidence offered is relevant to provide a meaning to which the language of the contract is reasonable susceptible. This operates as an exception to the parol evidence rule, which states that extrinsic evidence is not admissible to provide missing terms to the written contract. When the express terms are present but ambiguous, the parol evidence rule does not bar extrinsic evidence used to explain their meaning In the present case, the meaning of the terms "erect complete" and "make a complete installation" depend on the standard meaning of these terms that is commonly accepted within the construction industry. The normal meaning within the construction industry of the terms "erect complete" and "make a complete installation" includes field assembly, picking and setting, and bolting and welding the relevant components into permanent position. Thus, the common meaning of these terms within the relevant industry is significantly broader than the interpretation of the terms by Pacific. Is this a question of law or a question of fact? If the contract can only mean one thing then we can interpret it as a matter of law Unambiguous terms Extrinsic evidence not needed because the writing can only mean one thing In NY we would be done with the analysis (we are in CA) But one party is saying that it actually is ambiguous so lets hear the evidence If they show me there is ambiguity we are under 214 ( C ) IF THEY DON'T WE ARE UNDER 215 § 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. § 203. Standards Of Preference In Interpretation In the interpretation of a promise or agreement or a term thereof, the following standards of preference are generally applicable: (a) an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect; (b) express terms are given greater weight than course of performance, course of dealing, and usage of trade, course of performance is given greater weight than course of dealing or usage of trade, and course of dealing is given greater weight than usage of trade; (c) specific terms and exact terms are given greater weight than general language; (d) separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated. **** 203 gives us hierarchy of what kind of evidence is best § 200. Interpretation Of Promise Or Agreement Interpretation of a promise or agreement or a term thereof is the ascertainment of its meaning. § 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. § 206. Interpretation Against The Draftsman In choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds. § 207. Interpretation Favoring The Public In choosing among the reasonable meanings of a promise or agreement or a term thereof, a meaning that serves the public interest is generally preferred. § 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. § 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.

Danaan Realty v Harris

Danann Realty Corp. (Danann) (plaintiff) entered into a written contract with Harris and others (defendants) for the sale of a lease on a building held by the defendants. The contract stated that Danann agreed it had inspected the premises, was familiar with the condition, and was taking the premises "as is." The contract also provided that the defendants were not making any representations about the condition, rents, expenses, operation, or any other matter affecting the premises, and Danann specifically agreed that no such representations had been made. The contract also stated that all understandings between the parties were merged into the written contract. Danann brought suit against the defendants, alleging that it was induced to enter into the contract because of oral misrepresentations that the defendants made about the operating expenses of the building and the profits that would result from the investment. The contract language from the case: "The contract, annexed to and made a part of the complaint, contains the following language pertaining to the particular facts of representations: 'The Purchaser has examined the premises agreed to be sold and is familiar with the physical condition thereof. The Seller has not made and does not make any representations as to the physical condition, rents, leases, expenses, operation or any other matter or thing affecting or related to the aforesaid premises, except as herein specifically set forth, and the Purchaser hereby expressly acknowledges that no such representations have been made, and the Purchaser further acknowledges that it has inspected the premises and agrees to take the premises 'as is' * * * It is understood and agreed that all understandings and agreements heretofore had between the parties hereto are merged in this contract, which alone fully and completely expresses their agreement, and that the same is entered into after full investigation, neither party relying upon any statement or representation, not embodied in this contract, made by the other. The Purchaser has inspected the buildings standing on said premises and is thoroughly acquainted with their condition.' (Emphasis supplied.) " Rule: A disclaimer of reliance on specific representations contained in a contract bars the use of parol evidence showing fraud. A contract clause disclaiming reliance on specific representations is sufficient to exclude parol evidence of fraud. Usually, a general disclaimer or merger clause, stating that no representations have been made other than those included in the contract, does not operate to exclude parol evidence showing that fraud has occurred. However, in this case, the disclaimer is not general. Rather, it is a disclaimer as to specific representations. In the contract, Danann specifically agreed that it was not relying on any representations relating to the premises made by the defendants. Danann cannot now argue that it executed the contract in reliance on those same representations The dissent in this case (NY court) is a better statement of the general law: A clause in a contract disclaiming reliance on representations should never be a bar to bringing an action for fraud. It is irrelevant whether the clause states generally that no representations were made, or the clause states that the seller has not made any representations regarding specific subjects, that the purchaser has made his own investigation, and that he is not relying on any representation made by the seller. A party to a contract may not, by misrepresentation, induce another to enter into the contract and also protect himself from the effects of the misrepresentation by including a clause in that contract stating he is not liable for the very misrepresentation that induced the other party to enter the contract. § 196. Term Exempting From Consequences Of Misrepresentation A term unreasonably exempting a party from the legal consequences of a misrepresentation is unenforceable on grounds of public policy. - reasonable is key word... in this case the Danaan court is saying the clause IS reasonable In misrepresentation cases a common question is whether it was material or not... 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. § 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 § 172. When Fault Makes Reliance Unjustified A recipient's fault in not knowing or discovering the facts before making the contract does not make his reliance unjustified unless it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. *** note that justifiable reliance is a lower bar to clear than reasonable reliance (NY)

Runzheimer v. Friedlen

David Friedlen (defendant) had been an at-will employee at Runzheimer International, Ltd. (Runzheimer) (plaintiff) for more than 20 years. Runzheimer implemented a new requirement that all employees sign a restrictive covenant. The restrictive covenant stated that Runzheimer employees were not permitted to work for a competitor within 24 months of separation from Runzheimer. A Runzheimer representative told Friedlen that if he did not sign the restrictive covenant, he would be fired. Friedlen signed the covenant. Approximately two years later, Runzheimer legally terminated Friedlen. After a lawyer hired by Friedlen determined that the covenant was unenforceable, Friedlen then went to work for a competitor of Runzheimer. Runzheimer then filed a complaint against Friedlen, arguing that he breached the restrictive covenant. Runzheimer argued that the covenant was valid because Runzheimer promised employment in exchange for Friedlen's signing of the covenant. Friedlen maintained that the covenant was invalid because Runzheimer did not provide the requisite consideration for Friedlen's agreement. Friedlen argued that since he was an existing employee of Runzheimer's, there was no exchange of benefits or detriments. According to Friedlen, Runzheimer's promise of continued employment did not alter Runzheimer's situation. The trial court ruled in favor of Friedlen, arguing that Runzheimer made an illusory promise of continued employment to Friedlen. According to the court, such a promise could not constitute consideration for Friedlen signing the covenant. Runzheimer appealed. The court of appeals certified the case for the state supreme court. Rule: An employer's promise of continued employment constitutes consideration for an employee's agreement to a restrictive covenant. - in this case, the consideration was that Friedlein would not be fired without cause for a reasonable amount of time - A contract is illusory if it is conditional on some fact or event that is wholly under the promisor's control and the occurrence of the fact or event is left wholly to the promisor's own will and discretion. In this case, Runzheimer's promise not to fire Friedlen was not illusory because it was not a promise implicating Runzheimer's future discretionary conduct. Instead, Runzheimer's promise was that it would not fire Friedlen at that time and for that reason If Runzheimer promised to forbear only from immediately firing Friedlen, then the promise was illusory and cannot serve as consideration.

acceptance

Davis v Jacoby; Houston Dairy Inc. v John Hancock Mutual Life Insurance, Cole-McIntyre-Norfleet Co. v Holloway Restatement 50: Acceptance of offer defined, Acceptance by performance, acceptance by promise (1) Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. (Definition) Restatement 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. (2) Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise. (we can accept by performance) Restatement 53: Acceptance by performance, manifestation of intention not to accept (1) An offer can be accepted by the rendering of a performance only if the offer invites such an acceptance. (2) Except as stated in § 69, the rendering of a performance does not constitute an acceptance if within a reasonable time the offeree exercises reasonable diligence to notify the offeror of non-acceptance. (3) Where an offer of a promise invites acceptance by performance and does not invite a promissory acceptance, the rendering of the invited performance does not constitute an acceptance if before the offeror performs his promise the offeree manifests an intention not to accept. Restatement 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. (3) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise. (we can accept by promise) Restatement 56: Acceptance by Promise; Necessity of notification to offeror Except as stated in § 69 or where the offer manifests a contrary intention, it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably. Restatement 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: (must fit into one of these cases) (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. Restatement 32: Invitation of promise or performance In case of doubt, an offer is interpreted as inviting the offerree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses. Restatement 58: Necessity of Acceptance Complying with Terms of Offer An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered. Restatement 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.

WWW Associates v. Giancontieri (this does not have to do w 213 (Parole evidence)

Defendants contracted to sell a parcel of land to the plaintiff. The contract contained a reciprocal cancellation provision stating that if litigation the defendants were involved in at the time did not conclude by a certain date, either party may cancel the contract. In addition, the contract contained a merger clause stating that the contract was the parties' full agreement and that all prior agreements between them were merged into the contract. The defendants' litigation was still ongoing when the relevant date passed, and the defendants cancelled the contract. The plaintiff brought suit for specific performance, claiming that the cancellation provision was meant to apply to the plaintiff only and offering to introduce extrinsic evidence of the origination of the clause. Rule: when a contract is unambiguous and complete, it will be enforced according to its terms and extrinsic evidence regarding the terms is inadmissible Whether a contract is ambiguous is a question of law. Here, the contract and the provisions in questions are clear and unambiguous. The reciprocal cancellation provision states that both parties may cancel, and the merger provision states that the contract comprises the parties' entire agreement, including "prior understandings and agreements." It cannot be said that the contract is ambiguous on these terms. Therefore, the extrinsic evidence offered by the plaintiff is inadmissible, and his case is dismissed. Important Note: When it says "either party" it doesn't mean we both can do it... only the buyer! - This is one of the dumbest statements so why are we wasting our time with this? Appellate div agrees with the buyer... how? Its a tough argument for the buyer but not crazy App Court analysis... Contract is very unclear so lets try to understand what the purpose of the provision is.. If it is clearly a provision put in place to protect the buyer and not the seller - Ruled for the buyer... does this mean it is accepting the buyers interpretation? - Trial court says agreement is unambiguous and I don't want to hear the testimony about what went on in negotiations--> § 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. § 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 (c) the meaning of the writing, whether or not integrated; This is where we get the split between NY and Cali CA would say that you say it is unambiguous, but that just means that you (judge) think its unambiguous but lets hear out the parties PAROLE evidence COURT CAN INTERPRET THE CoNTRACT AS A MATTER OF LAW if they find it to be unambiguous If there is a factual question that must first be sorted out then they cannot rule on a contract as a matter of law right away What does the court of appeals do... Writing is clear and you are trying to contradict it - Buyer then argues maybe it isn't clear because you are not seeing the real issue here... Court of appeals says NO! we don't want to hear any evidence that suggests it might be ambiguous

Dobson Bay Club v. La Sonrisa

Dobson Bay Club II DD, LLC (defendant), received a $28.6 million loan from a bank. The loan provided for payment of default interest and collection costs, and a 5 percent late fee on late payments. La Sonrisa de Sienna, LLC (plaintiff), purchased the note and deed of trust from the bank and held a trustee's sale. La Sonrisa claimed that Dobson owed it approximately $30 million on the note, including a $1.4 million late fee. Dobson argued that the late fee was not enforceable. The superior court disagreed and granted Sonrisa partial summary judgment. The court of appeals reversed, finding as a matter of law that the late fee was unenforceable. The Arizona Supreme Court granted review. Rule: A liquidated damages contract provision is enforceable if the predetermined amount for damages seeks to compensate the non-breaching party rather than penalize the breaching party. Liquidated damages" provisions: parties agree in advance to the amount of damages for any breach - Provides certainty when actual damages would be difficult to calculate - Alleviate the need for potentially expensive litigation Parties do not have free rein in setting liquidated damages--- the central objective of contract remedies is compensatory not punitive damages, so parties cannot provide a penalty for breach [RES 356(1)]--- a liquidated damages provision is enforceable 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. Requires courts to consider 2 elements: The anticipated or actual loss caused by breach; AND The difficulty of proof of loss - [RES 356, comment b]--- if the difficulty of proof of loss is great, considerable latitude is allowed in the approximation of anticipated or actual harm. If the difficulty of proof of loss is slight, less latitude is allowed in that approximation. [RES 356, comment a]--- "punishment of a promisor for having broken his promise has no justification on either economic or other grounds and a term providing such a penalty is unenforceable on grounds of public policy" HOWEVER, the contract remains valid and the parties can still recover actual damages 2 part test for determining if the liquidated damages provision is enforceable based off of 356(1)---- A stipulated damages provision is an unenforceable penalty unless... 1. The amount fixed is a reasonable forecast of just compensation for harm that is caused by the breach 2. The harm caused is 'incapable or very difficult of accurate estimation' ANTICIPATED LOSS The late fee did not reasonably forecast anticipated damages likely to result from an untimely balloon payment The 5% fee is static, payable on demand whether it was one day late or a year late--- 5% of the loan principal is a large sum of money which did not likely reflect losses from a short delay in payment. The late fee was grossly disproportionate to any remaining sums needed to compensate for the anticipated losses identified in the late fee provision ACTUAL LOSS The $1.4 million late fee did not reasonably approximate either the actual costs of handling and processing the late balloon payment or the loss of use of that payment--- nothing indicates that either lender suffered an uncompensated loss that approached $1.4 million DIFFICULTY OF PROOF OF LOSS Under the circumstances here, the difficulty of proving loss as identified in the late fee provision was slight

liquidated damages and specific performance

Dobson Bay Club v La Sonrisa de Sienna, Gianni v R Russell and Co., Masterson v Sine, Mcallister v Patton (again) Restatement 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. - this restatement section is the line between damages (good!) and penalty (bad!) ***liquidated means fixed in amount Liquidated damages = good (enforceable) Penalties = bad (unenforceable) Efficient breach... breach is welcomed as long as the breaching party knows they must monetarily compensate the other party (make them whole)... specific performance only in certain specific instances If contracts impose penalties then the cost benefit analysis from companies is not in line w/what is best for society You perform until the losses of performance are less than the penalty of not performing despite the best action for society being zero performance Penalties create incentives for companies to undercut one another § 344. Purposes 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. § 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. § 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. § 2-709. Action for the Price. (1) When the buyer fails to pay the price as it becomes due the sellermay recover, together with any incidental damages under the next section, the price (a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and (b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing. (2) Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contractand are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him to any goods not resold. (3) After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (Section 2-610), a sellerwho is held not entitled to the price under this section shall nevertheless be awarded damages for non-acceptance under the preceding section. § 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.

Hawkins v. McGee (HAIRY HAND CASE)

Doctor breaches contract for like new hand in skin graft surgery patient Rule/Holding: When one party breaches a contract, the non-breaching party may recover damages based on the difference between the value of the contract as fully performed and the actual value of the non-breaching party's present condition, plus any incidental damages reasonably foreseeable to all parties at the time of contract formation. The purpose of this is to put the non-breaching party in as good a position as he would have been in had the breaching party kept the contract,

Insteel wire products v Dywidag Systems Int'l

Dywidag Systems (Dywidag) (defendant) agreed to buy wire strand from Insteel Wire Products (Insteel) (plaintiff). Insteel claimed Dywidag breached their contract, and filed suit in North Carolina state court. Dywidag moved the case to federal court based on diversity jurisdiction. Insteel filed a motion to remand, claiming that the parties' agreement included a forum-selection clause requiring that disputes be brought only in North Carolina state court. The forum-selection clause was included in Insteel's sales-order acknowledgment. The case was heard by the United States District Court for the Middle District of North Carolina. Definition: Forum selection clause = A clause in a contract which, if enforced, binds the parties to submit any disputes arising from the contract in the designated judicial forum. Rule: (UCC2-207) Under the Uniform Commercial Code, additional terms that materially alter an agreement do not become part of the contract if the parties do not specifically and affirmatively assent to the addition.

contract formation under the UCC (battle of the forms, knockout rule)

Empire Machinery Co v Litton Business Telephone Systems, Insteel Wire Products v Dywidag Systems, ReillY Foam v Rubbermaid For contracts involving the sale of goods (supplants common law in these cases) o UCC 2-102: "goods is defined to include all things which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities... And things in action." o UCC 2-105: " Goods also includes the unborn young animals and growing crops and other identified things attached to realty." - UCC 2-204: Formation in General: 1. A contract for the 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 intended to make a contract and there is reasonably certain basis for giving an appropriate remedy 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 § 2-207. 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 merchants such 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 Materially alter means to put hardship on the other party (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 sale although 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 · Battle of the Forms-- UCC Sec. 2-207(1), 2-207(2)(a)-(c ) o An expression of acceptance can validly operate as a legally binding acceptance even if it contains additional or different terms than the original offer o The additional terms become part of the contract unless: (1) the offer expressly limits acceptance to the terms of the offer; or (2) the inserted term materially alters the offer; or (3) notification of objection to the inserted term has been given or is given within a reasonable amount of time · Knockout Rule--- UCC Sec. 2-207 comment 6) o the knockout rule requires that conflicting terms in both parties' documents negate one another and do not become part of the contract, whether the terms are in confirmation notices or in the offer and acceptance themselves. The conflicting terms are to be removed and supplemented by terms from UCC provisions. How to deal with conflicting terms in contracts: · One side's terms cannot control--- this was the way to handle disputes of conflicting terms in contracts under common law alone but the UCC implements safety nets to protect buyers and sellers · MINORITY APPROACH: UCC Section 2-207 Comment 3 o Whether or not additional or different terms will become part of the agreement depends upon the provisions of subsection (2). If they are such as materially to alter the original bargain, they will not be included unless expressly agreed to by the other party. If, however, they are terms which would not so change the bargain they will be incorporated unless notice of objection to them has already been given or is given within a reasonable time · MAJORITY APPROACH: Knockout Rule--- UCC Sec. 2-207 Comment 6 o the knockout rule requires that conflicting terms in both parties' documents negate one another and do not become part of the contract, whether the terms are in confirmation notices or in the offer and acceptance themselves. The conflicting terms are to be removed and supplemented by terms from UCC provisions.

Batsakis v. Demotsis

Facts: Batsakis (P) and Demotsis (D) executed an agreement in 1942 in which Demotsis received $2000 dollars from Batsakis and agreed to repay it with 8% interest per year when she was able. Demotsis in fact only received 500,000 drachmae valued at approximately U.S. $25. Black letter law: Consideration need not be equitable, but it cannot be sham or nominal consideration. Rule: Although a valid contract requires all parties to provide consideration, mere inadequacy of consideration will not void a contract. - Demotsis testified that she agreed to a contract with these terms, and her receipt of $25 is thus exactly what she contracted for based on this testimony. Batsakis fulfilled his contractual obligations, and the trial court should enforce the terms of the agreement as written.

Levine v. Blumenthal - Common Law approach to modifications

Facts: Blumenthal (D) obtained a two year lease for commercial space from Levine (P) Blumenthal told Levine before the end of the first year that it would be impossible for him to pay the increased rate and Levine allowed him to continue to lease the space at the lower rate until business improved. Levine brought this lawsuit to recover the rent Black letter law: Modification of an executory contract requires new consideration, however insignificant. Rule: Adequate additional consideration is necessary to support a subsequent agreement made by parties to a contract that changes the terms of the contract. - A promise to do what a party is already contractually obligated to do cannot constitute sufficient consideration. - Restatement 73 and this case: Modification means new contract and needs new consideration... paying the old amount of rent is just carrying out the preexistent promise (this is not consideration!!!)... so both parties are not giving something new just the landlord

Peevyhouse v. Garland Coal & Mining Co.

Facts: Contract to strip mine, with promise to restore land to original condition, would cost about 29K and D doesn't do it. Rule: Using 348 of R2K, Regardless of any agreement of the parties, damages awarded for breach of an agreement to perform remedial work on property should normally be measured by the reasonable cost of performance of the work; but, when the contract provision breached is merely incidental to the main purpose in view and where the economic benefit which would result to the owner from full performance is grossly disproportionate to the cost of performance, damages should instead be limited to the diminution in value resulting to the premises because of the non-performance. - Tracht disagrees with the courts ruling against the coal company because there was a material change after contracting that made the cleanup effort astronomically more expensive so there is an opportunity for efficient breach

Masterson v. Sine (the opposite of Gianni - writing not enough to show intent)

Facts: Dallas and Rebecca Masterson (P) owned a ranch as tenants in common which they conveyed by grant deed to Dallas' sister and her husband (i.e. Sine, D). Masterson reserved an option to repurchase the ranch within ten years in exchange for the consideration paid by Sine, plus the depreciation value of any improvements. Dallas later went bankrupt. Rebecca and Dallas' trustee in bankruptcy (P1) brought a declaratory judgment action to establish their right to exercise the option. At a bench trial the court determined that the parol evidence rule precluded admission of extrinsic evidence offered by Ds to show that the parties wanted the property kept in the Masterson family, and that the option was therefore personal to the grantors and could not be exercised by the trustee in bankruptcy. The court entered judgment in favor of P and D appealed on the grounds that the option provision was too uncertain to be enforced and extrinsic evidence as to meaning should not have been admitted. Rule: Even when it is unclear whether a written contract is intended by the parties to be complete, 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. § 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 What is 210.3 is saying... is this writing the complete agreement between the parties? It is what the parties intended... that is a question of fact! The paper itself is evidence and we can debate what else is evidence Fact questions usually go to the finder of fact... but 210 says the judge (not the jury) answers the question of integration before anything else So it becomes a question of law If the judge rules it is not fully integrated then the oral evidence can be submitted for consideration and the jury will decide if it matters from opinion: Even when it is unclear whether a written contract is intended by the parties to be complete, 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. Generally, evidence of oral collateral agreements should always be admitted unless it is likely to mislead the trier of fact. The deed executed by the Mastersons is completely silent on its completeness and the question of assignability. However, because of the structured nature of a deed, it is unlikely that the deed itself incorporated all existing oral collateral agreements and it would be inappropriate for a court to assume as much. While many states have statutes preventing restrictions on the assignability of options, California has no such statute. Thus, no overriding statutory provision prohibits the introduction of an oral collateral agreement showing that the parties intended to create a familial restriction on the assignability of the grantors' option to repurchase

Marchiondo v. Scheck

Facts: Defendant unilaterally offered, in writing, to sell real estate to a specified prospective buyer and agreed to pay a percentage of the sales price to plaintiff broker as a commission. The offer fixed a six-day time limit for acceptance. Defendant, in writing, then revoked the offer. The revocation was received by plaintiff on the morning of the sixth day. Later that day, plaintiff obtained the offeree's acceptance. Holding: Partial performance in response to an offer could render a contract enforceable. Rule: When an offer for a unilateral contract is made, and part performance of the offer is completed by the offeree, the offeror may not then revoke the offer. Note: preparing to perform is not part performance (must get at least 1% of whatever the performance is supposed to be) § 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 (UNILATERAL CONTRACT), an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. § 25. Option Contracts VERY COMMON WHERE THERE IS RELIANCE INTEREST An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer.

Garwood Packaging v. Allen & Co.

Facts: GPI had flopped in marketing its food-packaging system and by 1993 had run up debts of $3 million and was broke. It sought investors to stay in business. Martin told Garwood and McNamara (GPI's principals) that he would see that the deal went through "come hell or high water." Eventually, however, Allen decided not to invest, the deal collapsed, and GPI was forced to declare bankruptcy. The district court granted summary judgment in favor of Allen and dismissed the suit. Issue: Can Allen be forced to honor an agreement because Martin's unequivocal promise to see the deal through to completion bound Allen by the doctrine of promissory estoppel, which makes a promise tterm-9hat induces reasonable reliance legally enforceable? Rule: doctrine merely allows reliance to be substituted for consideration as the basis for making a promise enforceable Analysis: There was costly reliance by GPI, which forewent other opportunities for salvation, and by Garwood and McNamara, who moved from Indiana to Ohio, and who forgave their personal loans to GPI and incurred other costs as well. However, nothing is more common than for a deal to rescue a failing company to fall apart because all the creditors' consent to the deal cannot be obtained — that is one of the reasons for bankruptcy law. Again these were things of which McNamara was perfectly aware. Conclusion: No reasonable reliance; no promissory estoppel. § 90. Promise Reasonably Inducing Action Or Forbearance (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 such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

Davis v. Jacoby

Facts: Plaintiffs alleged that they and decedent entered into a contract whereby plaintiffs agreed to assist decedent in his affairs and take care of his ailing wife in exchange for an inheritance under decedent's will. Decedent made the offer by letter and plaintiffs sent a letter back stating they agreed to assist him. Holding: The court reversed, holding that because the offer to contract was ambiguous as to whether it was an offer to enter into a bilateral or unilateral contract, a presumption existed that the offer was for a bilateral contract. Thus, plaintiffs' letter, in which they promised to assist decedent, was an acceptance of the offer and a contract was formed. Rule: An offer is to enter into a bilateral contract as opposed to a unilateral contract when only a promise to perform and not actual performance is requested by the offeror as proper acceptance. difference between a unilateral and bilateral contract is that a unilateral contract is a promise in exchange for performance and a bilateral contract is a promise in exchange for a promise to perform In this case the judges say that there was a bilateral contract (I put you in will if you come and take care of us until we die)

Oswald v. Allen

Facts: Swiss coins case. Π is a coin collector of swiss coins. Δ has 2 types of Swiss coin collections called: 1) Swiss Coin Collection 2) Rarity Coin Collection. Π can barely speak English and depended on his brother for translation. Agreed on a $50,000 price for the Swiss coins (both parties did not realize one meant all the Swiss coins and the other thought it was just the "Swiss Coin Collection" On April 8, π wrote to Δ to "confirm my purchase of all your Swiss coins (gold, silver and copper) at a price of $50,000. In response, Δ wrote a letter on April 15, that she and the receiver would meet on April 24, but did not otherwise mention the alleged contract of sale or the quantity of coins sold. On April 20, she realized that her original estimation of the number of coins was erroneous, and allowed π to re-examine, but he wanted to proceed with the sale. Rule:A misunderstanding is when both parties to a contract attach materially different meanings to a term. § Rule: No contract exists between two parties if their understandings of the agreement differ and neither party had knowledge or reason to know of the misunderstanding [RES 201(3)]

Gianni v. R. Russell & Co. (Tracht says this is shaky law and says Masterson is better - know both) (writing is all that is needed t. show intent)

Frank Gianni (Gianni) (plaintiff) rented a room in an office building where he conducted a business selling tobacco, fruit, candy and soft drinks. After R. Russell & Co. (Russell) (defendant) acquired the office building, its agents entered into leasing negotiations with Gianni with regard to Gianni's continued rental of the room. A lease was signed for a three-year term and provided that Gianni could use the premises only for the sale of fruit, candy and soda water, but could not use it to sell tobacco. There was no stipulation in the lease that Gianni had an exclusive right to sell soft drinks in the building. Shortly after the lease was signed, Russell leased a room, adjoining Gianni's room, to a drug company without restricting its right to sell soda water and soft drinks. Gianni commenced an action against Russell for breach of an alleged oral contract alleging that the drug company's sale of these beverages had greatly reduced his revenue. Gianni contended in the action and offered the testimony of a witness at trial that several days prior to the execution of the lease Russell's agent made an offer, which he accepted, that he would have the exclusive right to sell soda water and soft drinks. Gianni did not produce a witness to support his contention that this offer was repeated at the time the lease was executed. Russell's agents denied making any such offer either prior to or at the execution of the lease. The trial court entered judgment for Gianni. Russell appealed. Rule: If the parties, absent fraud or mistake, have put their oral negotiations in writing, the writing is not only the best evidence of their agreement, but is the only evidence of the agreement. Preliminary negotiations and verbal agreements are merged into and become part of a subsequent written contract. Parol evidence will be excluded where it is clear that the written contract was intended to be the entire and complete agreement between the parties. Under this rule a preliminary oral agreement is superseded by, and becomes part of, the written contract when, after comparison of the terms, it appears that the former was intended to be covered within the latter.

Reliance on Promise (go back to find relevant restatements)

Garwood Packaging v Allen, Feinberg v Pfeiffer, Drennan v Star Paving

Spaulding v. Morse

George Morse (defendant) and his wife Ruth divorced. The couple later entered into an agreement that provided that Ruth would have custody of the couple's son, Richard, and that George was to make payments to a trustee for Richard's "care, custody, maintenance and support." Specifically, George was to pay to the trustee $1200 per year until Richard entered "into some college, university or higher institution of learning beyond the completion of the high school grades" and $2200 per year for up to four years while Richard was attending the institution of higher education. Richard joined the army after completing high school, and George ceased making payments. Rule: If a written instrument as a whole suggests that the parties desired a particular result, but the parties did not express that result in formal words, the defect in the instrument may be supplied by implication to effectuate the parties' underlying intention, as long as it is sufficiently declared by the entire instrument. If the parties fail to express their intent in the agreement, a court may not guess at the parties' intentions to remedy the omission. However, if a written instrument as a whole suggests that the parties desired a particular result, but the parties did not express that result in formal words, the defect in the instrument may be supplied by implication to effectuate the parties' underlying intention, as long as it is sufficiently declared by the entire instrument. In this case, the support provision in the trust agreement was intended to provide for Richard's maintenance while he was in Ruth's custody and for his education thereafter. After Richard completed high school, he was inducted into the army and so was no longer in his mother's custody, nor was he enrolled in an institution of higher education. Thus, neither of the purposes of the trust agreement was applicable at that time.

Sparks v. Gustafson

Gustafson (plaintiff) was a close personal friend and business associate of Robert Sparks, Sr. (decedent). In 1980, Sparks, Sr. purchase a building. Gustafson managed the building without charge for Sparks, Sr. until Sparks, Sr. died on March 1, 1981. Gustafson continued to perform extensive management and maintenance work on the building without charge. Gustafson did so with the full knowledge and approval of Robert Sparks, Jr. (defendant), executor of Sparks, Sr.'s estate (Estate) (defendant). In February 1982, the Estate signed a document titled "purchase agreement" that indicated that Gustafson had purchased the building from the Estate. The purchase agreement stated that Gustafson would receive the deed to the building as soon as details of the purchase were worked out. The Estate sold the building to a third party, however, in February 1983. Gustafson ceased managing the building at this time. In July 1983, Gustafson brought suit in Alaska state court against the Estate and Robert Sparks, Jr. on the ground that the Estate and Sparks, Jr. breached an oral agreement to sell the building to Gustafson. Additionally, Gustafson claimed that he was entitled to the value of the services he performed in managing and maintaining the building based on a theory of unjust enrichment. The trial court held that it would be inequitable to allow the Estate to retain the benefits Gustafson had incurred upon the building at his own expense. The trial court ordered the Estate to pay Gustafson $65,706.07, and Sparks, Jr. appealed. Rule: Unjust enrichment occurs when a defendant has received a benefit from a plaintiff and it would be inequitable for the defendant to retain the benefit without compensating the plaintiff for its value. A person confers a benefit upon another if he gives the other some interest in money, land, or possessions; performs services beneficial to or at the request of the other; satisfies a debt of the other; or in any way adds to the other's advantage. Even when a person has conferred a benefit upon another, however, he is entitled to compensation only if it would be just and equitable to require compensation under the circumstances. Courts will allow the defendant to retain a benefit without compensating the plaintiff in several situations. One such situation exists when the benefit was given gratuitously without expectation of payment. A benefit may be considered to have been given "gratuitously" when it is the type of benefit ordinarily expected to be provided without charge by a friend or close business partner. Otherwise, the defendant generally must pay compensation to the plaintiff for the benefit received. Gustafson clearly conferred a benefit on the Estate by providing extensive management and maintenance services for the building, including making repairs and paying debts with his own money. Even though Gustafson was a close friend and business partner of Sparks, Sr., the benefit conferred by Gustafson upon the Estate is not typically the type of benefit provided without charge by a friend or close business partner. Rather, Gustafson provided the types of extensive business services for which one would ordinarily expect to be paid. Given these circumstances, Gustafson cannot be said to have offered his services "gratuitously

Hadley v Baxendale

Hadley (plaintiff) owned and operated a corn mill in Gloucester. The crank shaft that operated the mill broke and halted all mill operations. To obtain a new shaft, Hadley was required to ship the old crank shaft to Joyce & Co., an engineering company in Greenwich, to be used as a model for a new shaft. Hadley contacted Pickford & Co. (Pickford), a shipping company owned by Baxendale (defendant), and obtained shipping information for the crank shaft. Hadley was informed that if the crank shaft was delivered to Pickford before noon, it would be shipped and delivered to Greenwich the following day. The following day, Hadley delivered the crank shaft to Pickford before noon and paid the shipping price in full. However, Pickford negligently delayed shipping, and the crank shaft was not delivered until several days later. As a result, Hadley obtained the new crank shaft several days later than expected, during which time the mill remained closed. Hadley brought suit against Baxendale for damages, including lost profits from the delay. The jury awarded Hadley lost profits, and Baxendale appealed. Rule: When one party breaches a contract, the other party may recover all damages that are reasonably foreseeable to both parties at the time of making the contract, as well as damages stemming from any special circumstances, provided those circumstances were communicated to and known by all parties at contract formation. Is there any question whether there was breach, actual losses or a causal connection between the breach and the losses? No! Why is this not enough? Court says yes but you don't get these damages because hadley didn't tell pickford that he couldn't operate his mill without the shaft to be delivered These are not damages that would flow from the breach of this nature most of the time Expectation damages measure is that you must pay me what it takes to make me whole as If the deal hadn't been done Part of exp damages is getting back what you lost if they hadn't breached so why does court hear say they wont grant the prayed damages EFFICIENT BREACH Im the shipping company and I have to make a decision how to ship/ when to ship/ etc. If I don't know that there is something specific at stake then I will act in whatever way is best for me If you inform them of the specific need then they can decide to contract or not understanding that Court says you couldve gotten the damages if they ha made their needs known

damages

Hawkins v Mcgee, Mcallister v Patton, Locke v United States, Hadley v Baxendale, Peevyhouse v Garland § 344. Purposes 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. - these are tiers... if you receive expectation damages then you are getting all three inherently - NO PUNITIVE DAMAGES IN CONTRACT LAW - efficient breach is not only allowed but promoted The law of contract remedies implements the policy in favor of allowing individuals to order their own affairs by making legally enforceable promises. Ordinarily, when a court concludes that there has been a breach of contract, it enforces the broken promise by protecting the expectation that the injured party had when he made the contract. It does this by attempting to put him in as good a position as he would have been in had the contract been performed, that is, had there been no breach. The interest protected in this way is called the "expectation interest." It is sometimes said to give the injured party the "benefit of the bargain." This is not, however, the only interest that may be protected. The promisee may have changed his position in reliance on the contract by, for example, incurring expenses in preparing to perform, in performing, or in foregoing opportunities to make other contracts. In that case, the court may recognize a claim based on his reliance rather than on his expectation. It does this by attempting to put him back in the position in which he would have been had the contract not been made. The interest protected in this way is called "reliance interest." Although it may be equal to the expectation interest, it is ordinarily smaller because it does not include the injured party's lost profit. In some situations a court will recognize yet a third interest and grant relief to prevent unjust enrichment. This may be done if a party has not only changed his own position in reliance on the contract but has also conferred a benefit on the other party by, for example, making a part payment or furnishing services under the contract. The court may then require the other party to disgorge the benefit that he has received by returning it to the party who conferred it. The interest of the claimant protected in this way is called the "restitution interest." Although it may be equal to the expectation or reliance interest, it is ordinarily smaller because it includes neither the injured party's lost profit nor that part of his expenditures in reliance that resulted in no benefit to the other party. The interests described in this Section are not inflexible limits on relief and in situations in which a court grants such relief as justice requires, the relief may not correspond precisely to any of these interests § 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. § 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. § 2-709. Action for the Price. (1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price (a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and (b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing. (2) Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him to any goods not resold. (3) After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (Section 2-610), a seller who is held not entitled to the price under this section shall nevertheless be awarded damages for non-acceptance under the preceding section. § 2-716. Buyer's Right to Specific Performance or Replevin. Primary tabs (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. § 351. Unforeseeability And Related Limitations On Damages Link to Case Citations (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.

the domain of freedom of contract

Hernandez v Banks, AZ v BZ, Kass v Kass Fairness Principle Now we are looking at affirmative defenses The basic elements of a promise are met but it shouldn't be enforceable because... What does fairness mean? We have looked at consideration It is unfair if I give you a lot and you give me a little... but we have already said we don't evaluate the adequacy of consideration... not considered a violation of fairness to the courts So what are we talking about? Maybe its inequality of the exchange brought on by something problematic Lying to get me to enter a deal that is dramatically unequal Misunderstanding leading to unequal deal If it benefits you and me but harms others outside of our agreement

formation of consumer contracts

Hill v Gateway 2000, Klocek v Gateway 2000, Nguyen v Barnes and Noble, Note on Standard Form Contracts: Contracts drafted in advance of any particular transaction Pre-printed with blanks to fill in the identity of the other party, goods/services to be provided, price, time for performance, and little else (all other terms standardized and filled in --> exculpatory clauses, disclaimers, limitation of warranty, dispute res clause notice requirements, etc.) Few people read the fine print and often this is by design of the drafters Standardized form contracts have some benefits but they also expose the gap between objective and subjective theories of contract formation are Buyers signature on lengthy form may bind them to ALL terms despite the fact that they did not actually mean to assent to all the terms Impossible to expect a signature to only count for certain terms but also not good to allow the party who drafts the form to dictate the terms completely Courts still struggling with upholding both these principles § 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 (Integrated agreement means the final version of a contract) 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. - (Do the same terms on a form mean different things to each different person based on their understanding of the language? No! we treat every person as the same in regard to knowledge and understanding of the terms Maybe some ppl understand terms and some don't... can companies take advantage of those that don't? Notice that they use the same form for everyone So as long as most people understand the form, if the company is being unreasonable the people will move to an alternative company) (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 - (Three is trying to say that there will be all the standard stuff that companies do that screws over the consumer and if you agree to all that stuff then sorry your stuck... but the company cant stick something in there that no person could anticipate... no surprises buried in the provisions Avoid unfair surprise not unfair terms) . § 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. § 2-206. 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. § 2-207. 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 merchants such 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 sale although 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.

Houston Dairy v. John Hancock Mutual Life Insurance Co.

Houston Dairy, Inc. (Houston Dairy) (plaintiff) applied for a loan from John Hancock Mutual Life Insurance Co. (John Hancock) (defendant). On December 30, 1977, John Hancock agreed to lend Houston Dairy $800,000 at 9.25 percent interest if Houston Dairy would return a commitment letter with a $16,000 good faith deposit within seven days. Houston Dairy did not return the letter and deposit within seven days, but rather sent its acceptance and the $16,000 after eighteen days. Upon receiving the communication from Houston Dairy, John Hancock deposited the check. Additionally, attorneys for Houston Dairy and John Hancock met to discuss procedures for closing the loan. No other communication was exchanged between John Hancock and Houston Dairy. On January 30, 1978, Houston Dairy was able to obtain a loan at a 9.0 percent interest rate from a state bank. On January 31st, Houston Dairy informed John Hancock of this fact and sought a refund of its $16,000 deposit. Houston Dairy argued that since it did not accept John Hancock's original offer within the required seven day time period, its acceptance after eighteen days was actually a counteroffer. Houston Dairy argued that since it never received communication of John Hancock's acceptance of the counteroffer, the counteroffer was never actually accepted and Houston Dairy was entitled to a return of its deposit. John Hancock refused to return the deposit, and Houston Dairy brought suit against John Hancock in Mississippi state court. The case was removed to federal district court. The district court ruled there was a binding contract between the parties and entered judgment for John Hancock. Houston Dairy appealed. Rule: Acceptance of an offer is invalid unless it is communicated to the offeror An offeree's mere depositing of a check provided by an offeror, without more, is insufficient to communicate acceptance. if an offer specifies a time frame for acceptance and acceptance is not given within this time, the offer terminates. Acceptance after this time frame constitutes a counteroffer

Jacob & Youngs v. Kent

If a party substantially performs its obligations under a contract, that party will not be forced to bear the replacement cost needed to fully comply with the agreement but instead will owe the non-breaching party the difference in value between full performance and the performance received. A party that substantially performs its obligations under a contract may recover expectation damages for any remaining payment owed under the contract, minus an offset for defects in the party's performance. "Substantial performance" is a question of degree and is appropriate for determination by a trier of fact. The trier of fact appropriately concluded that the defect in the pipes supplied by Jacob is insignificant in relation to the overall project. Thus, even though full performance of the contract was not completed, principles of fairness and equity justify not penalizing Jacob significantly by withholding payment when the effect of the defect itself was so insignifican

Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.

In 1960, G.W. Thomas Drayage & Rigging Co. (Thomas) (defendant) entered into a contract with Pacific Gas & Electric Co. (PG&E) to provide labor and equipment necessary to remove and replace the upper cover for PG&E's steam turbine. Thomas agreed to perform the work at its own risk and expense and to indemnify PG&E for any "loss, damage, expense and liability resulting from injury to property" or any other act associated with performance of the contract. During performance, the cover fell and damaged part of the exposed rotor of PG&E's turbine. PG&E brought suit to recover $25,144.51 in damages. The trial court awarded judgment for PG&E on the ground that Thomas' indemnity provision protected PG&E from damage to its own property. The trial court concluded that the "plain meaning" of the indemnity provision in Thomas' contract was to permit indemnification of damage to PG&E's property in addition to the property of third parties. The trial court admitted no extrinsic evidence on this issue. Thomas appealed, arguing that the extrinsic evidence should be admissible to show that the "plain meaning" of the indemnity clause was that it should only apply to damage of the property of third parties, not PG&E. Rule: If a preliminary consideration of all credible evidence offered to prove the intent of the parties still leaves contractual terms fairly susceptible to at least two rational interpretations, extrinsic evidence relevant to prove either of these meanings is admissible. Where is the ambiguity? Indemnity provisions often mean that the contractor will cover any lawsuits against the contracting company from a third party due to the actions of the contractors This is what GWTD is saying they can prove through extrinsic evidence that this was the intent

Hochster v. De La Tour

In April 1852, De la Tour (defendant) entered into a contract to pay Hochster (plaintiff), a courier, to accompany him on a trip. The trip was to begin on June 1, 1852.However, on May 11, 1852, De la Tour wrote to Hochster and informed him that he changed his mind and would no longer need Hochster's services. Hochster brought suit against De la Tour on May 22, 1852 to recover damages in anticipation of the future breach on June 1. Additionally, Hochster obtained employment with another party commencing on July 4, 1852. At trial, the jury found for Hochster, and De la Tour appealed. Rule: 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. - the statement must be made to the party with with which the contract is formed, the statement must be definite intent to breach (not just saying I might not be able to perform) - actions can also indicate an intention to breach - actions must be definite too, not just potentially signifying that breach will occur

Empire Machinery Co. v. Litton Business Telephone Systems

In summer 1973, Empire Machinery Co. (Empire) (plaintiff) became interested in acquiring an "interconnect" telephone system from Litton Business Telephone Systems (Litton) (defendant). Murphy, Litton's National Account Manager, personally contacted Empire and submitted a proposal for the phone system for Empire's consideration. Empire and Litton entered negotiations. On July 30, 1973, Murphy submitted a letter to Empire stating that "upon receipt of a signed order and deposit" from Empire, Litton would install an interconnect telephone system on Empire's property. Following receipt of this letter from Murphy, Whitman, Empire's president, signed an "Equipment Sales Agreement" and delivered to Litton a deposit of $8,546.00 as a down payment. Litton deposited these funds upon receipt. The Equipment Sales Agreement contained a clause stating that the agreement would only become effective and binding after "approval, acceptance, and execution" of the agreement by Litton's home office. Neither Murphy nor any member of Litton's home office signed the Equipment Sales Agreement. On August 9, 1973, Empire was instructed by Murphy to send a form letter to Mountain Bell, the telephone service provider, designating Litton as Empire's representative with authority to act in connection with the installation of the interconnect system on Empire's property. Empire provided a letter stating that it had formed a "contractual relationship" with Litton. On August 30, 1973, Litton sent a similar letter to Mountain Bell stating that it had formed a "contractual relationship" with Empire. Additionally, Empire, at Litton's request, purchased approximately $12,000 worth of electrical equipment to support the interconnect system equipment that would be installed by Litton. Finally, on December 3, 1973, Scott, Litton's service manager, requested a new telephone number for Empire to be put in service as of December 21, 1973. After this date, Litton never shipped nor installed the interconnect system on Empire's property. Empire brought suit in Arizona state court against Litton alleging breach of contract. The trial court granted summary judgment for Litton on the ground that no binding contract was formed between Litton and Empire. Empire appealed. Rule: If an offeree with authority to legally bind its organization takes steps to begin performance of its contractual obligations that would lead a reasonable offeror to believe that the contract has been accepted, such conduct may constitute acceptance of the contract. UCC 2-206(2): (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. *** This is a departure from the common law rule that acceptance must be in the manner specified in the offer

Market Street Associates v. Frey

J.C. Penney entered into a sale-leaseback agreement with General Electric Pension Trust (defendant). J.C. Penney was to sell properties to the trust, which the trust leased back to J.C. Penney for 25-year terms. Paragraph 34 of the lease entitled the lessee to request the lessor to finance the costs of construction of improvements to the property, and the lessor agreed to reasonably consider providing the financing and to negotiate in good faith. If negotiations failed, the lease permitted the lessee to repurchase the property. J.C. Penney assigned a lease to Market Street Associates Limited Partnership (Market Street) (plaintiff). Market Street received an inquiry from a drugstore chain that wanted to open a store in the property, provided Market Street could construct the building. Market Street initially sought other financing for the project but was denied because it was only the lessee of the property. Market Street thus tried to buy the property back from the trust. The trust expressed interest in selling the property for $3 million, which Market Street considered too high. Market Street subsequently requested financing from the trust for $2 million. Market Street's financing request did not mention the lease. Market Street sent a second letter to the trust requesting the financing, again without specific reference to paragraph 34. The trust responded that it was only interested in financing loans of over $7 million, and Market Street responded that it would seek financing elsewhere. When unable to do so, Market Street tried to exercise its option to purchase the property under paragraph 34, but the trust refused to sell. Market Street brought suit to compel specific performance. Rule: The duty of good faith prevents a party from taking opportunistic advantage of another party in a way that was not resolved explicitly by the parties at the time of drafting and that undermines the parties' cooperative venture.

Angel v. Murray (Restatement Approach --> RS89)

James L. Maher (defendant) has operated a refuse-collection service in the City of Newport since 1946 under a series of five-year contracts. Maher originally entered into these contracts with the expectation that refuse-producing dwelling units would steadily increase at a rate of twenty to twenty-five per year. However, after Maher signed a five-year contract in July 1964, the city experienced a substantial and unanticipated increase of four hundred new dwelling units. In 1967, Maher asked the city council for an additional $10,000 per year to cover the cost of these new units. The city council agreed to pay him $10,000 per year for both 1968 and 1969, for a total of $20,000 beyond the original contract. Alfred L. Angel (plaintiff) brought suit against Maher, the city, and Murray, the Director of Finance on the ground that the payment of $20,000 to Maher was illegal and asking that Maher be ordered to repay that sum to the city. The trial court held the payment illegal and ordered Maher to repay the $20,000. Maher appealed. § 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 (duh! Common law never supersedes statute) This tips us off that there are relevant statutes UCC NYS general obligations law Don't need consideration for various modifications provided that the modification is in writing and signed by the parties (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise. This is saying --> Promissory estoppel may also be a basis for contract modification Rule: Rule: When unexpected or unanticipated difficulties arise during the course of performance of a contract, the parties may modify the initial contract even without additional consideration for the modification as long as (1) the parties voluntarily agree and the promise modifying the initial contract is made before the contract is fully performed on either side; (2) the underlying circumstances prompting the modification are unanticipated by the parties; and (3) the modification is fair and equitable.

Jungmann and co., Inc. v. Atterbury Brothers

Jungmann & Co., Inc. (Jungmann) (plaintiff) contracted to sell thirty tons of casein to Atterbury Brothers, Inc. (Atterbury) (defendant). The casein was to be delivered in two shipments of 15 tons each via ship to Atterbury. Immediately upon shipment of goods, the contract required Jungmann to provide notice of the shipment to Atterbury via cable. Jungmann made its first shipment of casein to Atterbury on June 9, 1923. Jungmann did not provide any notice of the shipment to Atterbury. Atterbury refused to accept this shipment on June 20, 1923. On June 23rd, Jungmann informed Atterbury via letter that it was planning to ship the 30 tons of casein on a ship that would sail on June 26th. Jungmann did not provide notice of the shipment to Atterbury via cable. When the 30 tons of casein arrived, Atterbury refused to accept the delivery or to pay Jungmann. Jungmann brought suit in New York state court against Atterbury seeking to enforce the contract. Rule: A plaintiff may not recover upon its contract without proof that it has performed all conditions precedent required of it. ***this is a departure from us saying that remedy=harm... The point of Jungmann is that conditions are different than covenants (promises)! Failure of a condition means that you do not have to go through with a purchase - Even if the failure of the plaintiff to comply with the conditions precedent results in no actual harm to the defendant, the plaintiff still may not recover on the contract without performing all conditions precedent in the contract exactly as they are written. Under the express terms of its contract with Atterbury, Jungmann was required to provide notice via cable of every shipment of casein to Atterbury. This notice requirement was a condition precedent of the contract. When Jungmann failed to provide any notice of its first shipment, it did not comply with the express terms of the contract

Klocek v. Gateway (Battle of the forms 2-207) (tracht likes this approach not Hill v Gateway)

Klocek (plaintiff) ordered a computer from Gateway (defendant). Gateway included its Standard Terms in every shipment of a new computer. At the top of the first page of those terms Gateway informed the purchaser that keeping the computer beyond five days constituted acceptance of the terms and conditions. Included in the Standard Terms was an arbitration clause. Klocek and others filed suit in the United States District Court against Gateway and others regarding the purchase of Gateway computers. Gateway moved to dismiss, requesting that the arbitration clause be enforced. UCC 2-207, In transactions btwn a vendor & buyer (not a merchant) terms added after a sale & not expressly agreed won't be part of k - 2-207 (battle of the forms does not actually require two forms --> can be a conversation and a form) - "The official comment thereto states that this section will apply where an oral agreement is reached and one or both of the parties sends a form memorializing the agreement and adds additional or different terms. The buyer is typically the offeror in a sales transaction. An acceptance will be deemed a counter-offer only when the acceptance is made conditional upon the offeror's consent to the additional or different terms. When the offeror is not a merchant, section 2-207 provides that additional terms in the acceptance do not become part of the agreement unless the offeror expressly agrees to them"

Greer Properties, Inc. v. LaSalle National Bank

LaSalle National Bank and Old Orchard West Venture (the Sellers) (defendants) owned a piece of commercial real estate. The property was partially contaminated by environmental waste. The Sellers offered to sell the property to Searle. Searle performed an environmental assessment on the property and determined that the cost of cleaning up the waste would be $500,000.00. Searle requested that the Sellers reduce the purchase price, but the Sellers refused. Searle terminated negotiations for the purchase of the property. The Sellers next entered into negotiations to sell the property to Greer Properties, Inc. (Greer). The resulting contract between the Sellers and Greer provided that the Sellers would clean up the property at their own expense, but could terminate the contract if they believed the clean-up costs were "economically impracticable." Greer agreed to this arrangement. The Sellers conducted a new environmental assessment of the property and determined that the clean-up costs were between $190,000.00 and $240,000. The Sellers determined this cost was economically impracticable, but did not inform Greer of this determination. Shortly after the Sellers completed their assessment, Searle made a second offer to purchase the property at a much higher price than was offered by Greer. One day after receiving this offer from Searle, the Sellers informed Greer that they were terminating the contract to sell the property to Greer. Greer brought suit in federal district court against the Sellers on the ground that the Sellers breached their implied obligation to terminate the contract only by acting with good faith and fair dealing. Rule: An implied obligation of good faith and fair dealing exists in the performance of every contract and acts as a limit on the discretion possessed by the parties. Explanation: An implied obligation of good faith and fair dealing exists in the performance of every contract and acts as a limit on the discretion possessed by the parties. The obligation of good faith prohibits a party from exercising discretion in an arbitrary or capricious manner. If a party exercises its discretion in bad faith, a breach of contract occurs and the court must grant relief to the aggrieved party. In the present case, the terms of the contract provided broad discretion to the Sellers to terminate the agreement with Greer based on any cost that the Sellers determined was "economically impracticable." The Sellers thus incurred an implied obligation to act in good faith when exercising this discretion. The Sellers notified Greer that they were terminating the agreement one day after receiving an offer from Searle to pay a higher purchase price for the property. If the Sellers terminated the contract with Greer solely because they received a better offer, they acted in bad faith and their exercise of discretion was improper. Restatement 205: § 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. UCC Sect. 1-302, 1-201b)(20), 2-103(1)(b): § 1-302. Variation by Agreement. (a) Except as otherwise provided in subsection (b) or elsewhere in [the Uniform Commercial Code], the effect of provisions of [the Uniform Commercial Code] may be varied by agreement. (b) The obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever [the Uniform Commercial Code] requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement. (c) The presence in certain provisions of [the Uniform Commercial Code] of the phrase "unless otherwise agreed", or words of similar import, does not imply that the effect of other provisions may not be varied by agreement under this section. § 1-201. General Definitions. (b) Subject to definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof: (20) "Good faith," except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing. § 2-103. Definitions and Index of Definitions. (1) In this Article unless the context otherwise requires (b) "Good faith" in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

Ardente v. Horan

Letter of acceptance along with check and signed documents to buy house states that buyers need certain furniture to be included with purchase - Because this was a conditional acceptance, that letter acts as a rejection and a counteroffer - Acceptance must be definite and unequivocal, so the sender of the letter that created the ambiguity as to whether the letter was a conditional acceptance or unconditional with request for info must live with the seller's interpretation (RS 57) Mirror image rule: A valid acceptance that is capable of forming a valid contract must be definite and unequivocal and must not impose additional conditions or limitations on the offer, unless such conditional language is clearly independent of the actual acceptance.

consideration for contract modification, modification v waiver v estoppel

Levine v Blumenthal, Gross Valentino Printing Co v Clarke, Angel v Murray, Truhe v Turnac Group, Nassau trust company v montrose Concrete § 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. Comment: a. Rationale. A claim that the performance of a legal duty furnished consideration for a promise often raises a suspicion that the transaction was gratuitous or mistaken or unconscionable. If the performance was not in fact bargained for and given in exchange for the promise, the case is not within this Section: in such cases there is no consideration under the rule stated in § 71(1). Mistake, misrepresentation, duress, undue influence, or public policy may invalidate the transaction even though there is consideration. See Chapters 6-8. But the rule of this Section renders unnecessary any inquiry into the existence of such an invalidating cause, and denies enforcement to some promises which would otherwise be valid. Because of the likelihood that the promise was obtained by an express or implied threat to withhold performance of a legal duty, the promise does not have the presumptive social utility normally found in a bargain. Enforcement must therefore rest on some substantive or formal basis other than the mere fact of bargain. See Comments b and c to § 72. As to such bases, see Topics 2 and 3, and particularly Angel v Murray --> RESTATEMENT APPROACH - S 89 Facts: James L. Maher (defendant) has operated a refuse-collection service in the City of Newport since 1946 under a series of five-year contracts. Maher originally entered into these contracts with the expectation that refuse-producing dwelling units would steadily increase at a rate of twenty to twenty-five per year. However, after Maher signed a five-year contract in July 1964, the city experienced a substantial and unanticipated increase of four hundred new dwelling units. In 1967, Maher asked the city council for an additional $10,000 per year to cover the cost of these new units. The city council agreed to pay him $10,000 per year for both 1968 and 1969, for a total of $20,000 beyond the original contract. Alfred L. Angel (plaintiff) brought suit against Maher, the city, and Murray, the Director of Finance on the ground that the payment of $20,000 to Maher was illegal and asking that Maher be ordered to repay that sum to the city. The trial court held the payment illegal and ordered Maher to repay the $20,000. Maher appealed. Issue: Whether unexpected or unanticipated difficulties arising during the course of performance of a contract permit the voluntary modification of the initial contract by the parties even without additional consideration for the modification. Rule: When unexpected or unanticipated difficulties arise during the course of performance of a contract, the parties may modify the initial contract even without additional consideration for the modification as long as (1) the parties voluntarily agree and the promise modifying the initial contract is made before the contract is fully performed on either side; (2) the underlying circumstances prompting the modification are unanticipated by the parties; and (3) the modification is fair and equitable. Holding/Reasoning: Yes. The payment of $20,000 to Maher after the unexpected and substantial increase in refuse-producing dwellings is a legal and enforceable modification of Maher's initial contract with the city. When unexpected or unanticipated difficulties arise during the course of performance of a contract, the parties may modify the initial contract even without additional consideration for the modification as long as the parties voluntarily agree and the promise modifying the initial contract is made before the contract is fully performed on either side, the underlying circumstances prompting the modification are unanticipated by the parties, and the modification is fair and equitable. This rule is reflected by Section 89(a) of the American Law Institute's Restatement, Second, Law of Contracts, and replaces the more traditional preexisting duty rule, providing that an initial contract cannot be modified unless additional consideration is provided beyond the preexisting duties assigned to both parties under the initial contract. The agreement made by the city council was completely voluntary based on the nature and manner of Maher's request for the additional $10,000 per year. Maher presented a detailed explanation of his need for additional funding at a public meeting of the city council. The city council then had the opportunity to vote to amend Maher's contract. The record shows no evidence of duress in Maher's request. Additionally, Maher's request was made in June of 1968 at a time when the five-year contract entered into in 1964 had not been performed by either party. Also, although the contract required Maher to collect all refuse within the city limits, these contractual terms were based on the assumption that refuse-producing dwellings would only grow at a rate of twenty to twenty-five per year. Finally, based on the substantial growth of four hundred dwellings in a few years, Maher's request for $10,000 per year is fair and equitable. The payment of $20,000 to Maher after the unexpected and substantial increase in refuse-producing dwellings is a legal and enforceable modification of Maher's initial contract with the city. The decision of the trial court is reversed. § 71. Requirement Of Exchange; Types Of Exchange (1) To constitute consideration, a performance or a return promise must be bargained for. UCC 1-201(B)(20) - (20) "Good faith," except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing. UCC § 1-304. Obligation of Good Faith. Every contract or duty within the Uniform Commercial Code imposes an obligation of good faith in its performance and enforcement. § 2-209. Modification, Rescission and Waiver. (1) An agreement modifying a contractwithin 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 contractas 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. § 175. When Duress By Threat Makes A Contract Voidable (1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim. (2) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction. § 176. When A Threat Is Improper (1) A threat is improper if (a) what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property, (b) what is threatened is a criminal prosecution, (c) what is threatened is the use of civil process and the threat is made in bad faith, or (d) the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient. (2) A threat is improper if the resulting exchange is not on fair terms, and (a) the threatened act would harm the recipient and would not significantly benefit the party making the threat, (b) the effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat, or (c) what is threatened is otherwise a use of power for illegitimate ends.

Intent of the parties

Lucy v Zehmer; Embry v Hargadine (McKittrick dry goods); Oswald v Allen RES 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 that fact; or b. that party had no reason to know of any different meaning attached by the other, and the other had reason to know that fact; or (3) Neither party is bound by the meaning attached by the other, even though the result may be failed mutual assent (with exceptions stated in 201(2)) basically it is saying that if there are differences in meaning neither party will be bound by the meaning of the other unless that misunderstanding was done with negligence or intent of one of the parties, and in that case the victims meaning will prevail Notes on Intent and Res 201: - Words are used as conventional symbols of mental states, with standardized meanings based on habitual or customary practice. Unless a different intention is shown, language is interpreted in accordance with its generally prevailing meaning - In cases of differing meaning/intent, the party who could have prevented the mix-up at the lowest cost should be the one to remedy - Restatement 17 o Manifestations of mutual assent can come about even if two parties are not bound and vice versa o Don't need a meeting of the minds for this but rather words and actions that signify a meeting of the minds § Williston: Objective theory (as opposed to subjective) of mutual assent is prominent: expression of mutual assent, and not the assent itself is the essential element of contractual liability

Mcallister v Patton (specific performance) (know facts of this case!)

McCallister (plaintiff) entered into a contract to purchase a Ford super deluxe tudor sedan automobile from Patton (defendant). Patton, an automobile dealer, received many orders for this particular automobile. Patton did not have sufficient automobiles in stock to fulfill all the orders at once. Thus, as he received more inventory, Patton agreed to fulfill the orders according to the order in which they were received. McCallister's order number was 37. McCallister alleged that even after Patton obtained more than 37 automobiles in stock, he still refused to sell an automobile to McCallister and thus breached their contract. McCallister brought suit in Arkansas state court against Patton. McCallister sought the equitable remedy of specific performance of the contract. Patton demurred to the complaint on the ground that McCallister did not state facts sufficient to entitle him to specific performance. The trial court sustained Patton's demurrer and dismissed McCallister's complaint. McCallister appealed. Specific performance of a contract for the sale of personal property is only available as an equitable remedy if the property has a peculiar, unique, or sentimental value to the buyer such that money damages in an action at law would not afford a complete and adequate remedy. § 2-715. Buyer's Incidental and Consequential Damages. (2) Consequential damages resulting from the seller's breach include (a) any loss resulting from general or particular requirements and needs of which the seller at 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.

offer

Mesaros v U.S; Chicago Academy Publishers v Cheever Restatement § 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. Notes: Offer as Promise. In the normal case of an offer of an exchange of promises, or in the case of an offer of a promise for an act, the offer itself is a promise, revocable until accepted. Proposal of contingent gift. A proposal of a gift is not an offer within the present definition; there must be an element of exchange. Whether or not a proposal is a promise, it is not an offer unless it specifies a promise or performance by the offeree as the price or consideration to be given by him. It is not enough that there is a promise performable on a certain contingency. Offer as contract. A promise made by the offeror as part of his offer may itself be a contract. Such a contract is commonly called an "option". See § 25

Mills v Wyman

Mills (plaintiff), a Hartford, Connecticut resident, came upon Levi Wyman, the son of Wyman (defendant). Levi was twenty-five years old and had just returned from a voyage at sea. He was extremely ill, and was taken in and cared for by Mills, a stranger, for fifteen days. Levi then died. His father, Wyman, lived in Massachusetts and wrote to Mills upon hearing of Levi's death. Wyman promised to pay Mills for the expenses he incurred while taking care of Levi. However, Wyman later refused to pay and Mills brought suit to enforce Wyman's promise. Rule: A promise based on a moral obligation but made without legal consideration does not constitute an enforceable contract unless it is tied to a preexisting legal obligation. - all the help was administered pre promise and as such constitutes past consideration

Mesaros v. US

Mint advertised that "If my order is received by December 31st, I will be entitled to purchase the coins at the Pre-Issue Discount price shown." Mint ran out of coins. But it acted in good faith, and so those who didn't get coins couldn't sue because this was not an offer, just an invitation to bargain. - Section 24 of the second restatement of contracts states that 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 --> in this case the offer made by the Mint mailing card is an invitation to bargain rather than an offer to be accepted. - Notice that on the order form mailed to Mesaros it says "Please accept my offer"!!! - - It is stated in Williston, a treatise on the law of contracts section 27: if goods are advertised for sale at a certain price it is not an offer and no contract is formed by the statement of an intending purchaser that he will take a specified quantity of the goods in that price it is an invitation to enter into a bargain rather than an offer - A basic rule of contracts holds that whether an offer has been made depends on the objective reasonableness of the alleged offeree's believe that the advertisement or solicitation was intended as an offer. Generally, it is considered unreasonable for a person to believe that advertisements and solicitations are offers that bind the advertiser. Otherwise, the advertiser could be found by an excessive number of contracts requiring delivery of goods for an excess of amount available (Corbin, Contracts 25, 28) Restatement § 26. Preliminary Negotiations 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. Notes: Ads...Business enterprises commonly secure general publicity for the goods or services they supply or purchase. Advertisements of goods by display, sign, handbill, newspaper, radio or television are not ordinarily intended or understood as offers to sell Quotes... Quotation of price. A "quotation" of price is usually a statement of price per unit of q it may omit the quantity to be sold, time and place of delivery, terms of payment, and other terms. It is sometimes associated with a price list or circular, but the word "quote" is commonly understood as inviting an offer rather than as making one, even when directed to a particular customer. But just as the word "offer" does not necessarily mean that an offer is intended, so the word "quote" may be used in an offer.

Nelson v. Elway

Nelson (plaintiff) owned two automobile dealerships. General Motors Acceptance Corporation (GMAC) provided all the financing for both dealerships. The dealerships were having financial difficulties. In July of 1990, Nelson hired Pico to represent him in selling or refinancing one or both of the dealerships. Pico entered into negotiations to sell the dealerships to Elway (defendant). Elway could not afford Nelson's asking price. Pico proposed a "service agreement" under which Nelson would sell Elway the dealerships at a greatly reduced price in exchange for Elway's agreement to pay Nelson $50.00 for every vehicle sold by the dealerships for seven years. Nelson and Elway orally agreed to this arrangement, but did not reduce it to a signed writing. Nelson and Elway did, however, execute a written "buy-sell agreement" outlining the terms of the sale of the dealerships by Nelson to Elway. When Nelson and Elway met to sign the agreement, GMAC informed Elway that it would pull all financing for the dealerships if Nelson received any proceeds from the sale of the dealerships. After receiving this information from GMAC, Elway informed Nelson that he would not sign the service agreement after all. Thus, the buy-sell agreement did not contain the terms of the service agreement. The buy-sell agreement did, however, contain a merger clause stating that the written agreement constituted the final agreement of Nelson and Elway and represented all previous discussions of the parties. After the sale of the property was finalized, Elway refused to abide by the terms of the oral service agreement. Nelson brought suit in Colorado state court against Elway, seeking damages for breach of contract. The trial court held for Elway, and the appellate court affirmed. Nelson appealed. Rule: When the parties intend the terms of a contract to represent a final and complete integration of the agreement between the parties, those terms are enforceable and extrinsic evidence offered to prove the existence of prior agreements is inadmissible This court rules in line with Gianni, but doesnt go as far, they say because these parties had counsel and are sophisticated business parties, any writing is meant to be integrated. "When sophisticated business parties have fully negotiated the terms of a contract and reduced those terms to a final writing, a court will not step into a commercial transaction after the fact and attempt to ascertain the intent of the parties when that intent is clearly manifested by an express term in a written document. A merger clause in a contract is generally sufficient evidence that the parties intended the writing to be final. The buy-sell agreement between Nelson and Elway contained a merger clause stating that it was a final and complete integration of the parties' agreement. The buy-sell agreement was the product of significant negotiations between Nelson and Elway, two sophisticated business parties."

identifying and interpreting express contract terms

Nelson v Elway, Pacific Gas and Electric Co v GW Thomas drayage and Rigging, WWW Associates v Giacontieri, Brinderson-Newberg Joint Venture v Pacific Erectors § 200. Interpretation Of Promise Or Agreement Interpretation of a promise or agreement or a term thereof is the ascertainment of its meaning. § 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. § 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. § 203. Standards Of Preference In Interpretation In the interpretation of a promise or agreement or a term thereof, the following standards of preference are generally applicable: (a) an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect; (b) express terms are given greater weight than course of performance, course of dealing, and usage of trade, course of performance is given greater weight than course of dealing or usage of trade, and course of dealing is given greater weight than usage of trade; (c) specific terms and exact terms are given greater weight than general language; (d) separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated. § 206. Interpretation Against The Draftsman In choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds. § 207. Interpretation Favoring The Public In choosing among the reasonable meanings of a promise or agreement or a term thereof, a meaning that serves the public interest is generally preferred. § 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. § 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.

Peacock Construction Co. v. Modern Air Conditioning, Inc.

Peacock Construction Co. (Peacock) (defendant), as general contractor for a condominium project, entered into subcontracts with Modern Air Conditioning, Inc. (Modern Air) (plaintiff) and Overly Manufacturing (Overly) (plaintiff). Both subcontracts contained an identical clause requiring final payment by Peacock to Modern Air and Overly within 30 days after "completion of the work...written acceptance by the Architect and full payment therefor by the Owner." Upon completion of their work, Modern Air and Overly requested final payment and Peacock refused. When Modern Air and Overly brought actions for breach of contract, Peacock defended that full payment had not been received from the owner and such payment was a condition precedent to its obligation to pay on the subcontracts. The trial courts ruled in favor of Modern Air and Overly on their motions for summary judgment. On appeal, the Second District Court of Appeal affirmed the trial courts' decisions and held that the contractual provision at issue was not a condition precedent. Instead, the Court of Appeal interpreted the provision as an absolute promise to pay that fixed payment by the owner as a reasonable time when payment should be made to the subcontractors. Certiorari was granted and the cases were consolidated for appeal to the Supreme Court of Florida Rule: A provision in a subcontract, which provides for final payment of the subcontractors by the general contractor when full payment is made by the owner to the general contractor, does not create a condition precedent to the general contractor's performance. In the majority of jurisdictions, such provisions have been interpreted as fixing a reasonable time for payment by the general contractor to its subcontractors. Here, the provision is amenable to two interpretations and the question is whether the court or a jury must interpret the ambiguous language. Contrary to the holding in Gerrits that ambiguous contract provisions must be interpreted by the fact finder, the intention of the parties in disputes between a general contractor and small subcontractors can be determined from the written contract as a matter of law. In such contracts it is not the intent of the parties that payment by the owner to the general contractor be a condition precedent since small subcontractors, who must have prompt payment to remain in business, would not ordinarily assume the risk of the owner's failure to pay. Therefore, it can be assumed, unless the contract expressly shifts the risk, that such provisions merely establish the timeframe for payment.

Peterson v. Pattberg

Petterson owned a property upon which the defendant owned a bond secured by a mortgage. The mortgage was payable to the defendant in quarterly installments, but the defendant offered to grant Petterson a $780 reprieve on the total mortgage if he paid it off in full by a certain date. Petterson went to defendant's house with cash prepared to pay off the entire mortgage before the date. Before Peterson tendered any money, the defendant informed him that he had sold the mortgage to a third party and thus revoked his offer. Consequently, Petterson had to pay the third party the full price of the mortgage. The executrix of Petterson's will (plaintiff) brought suit against the defendant for the $780 lost. Rule: Any offer to enter into a unilateral contract may be withdrawn before the act requested to be done has been performed. (even if the offeror knows of the offeree's intention to accept and revokes at the very last second before acceptance.) - Unilateral contract can only be accepted by performance - Usually, unilateral contracts are incentives or bets because the offeror does not think something is possible (probable)

Pittsburgh-Des Moines Steel Co. v. Brookhaven Manor Water Co.

Pittsburgh-Des Moines Steel Co. (PMD) (plaintiff) is a manufacturer of steel and steel structures. PMD submitted a proposal to construct a steel tank for Brookhaven Manor Water Co. (Brookhaven) (defendant) for a price of $175,000. PMD requested progress payments throughout construction, with the final purchase price due from Brookhaven before PMD completed construction of the tank. Brookhaven rejected this proposal. Brookhaven and PMD ultimately agreed that the purchase price would be due from Brookhaven to PMD within 30 days of PMD's completion of the tank. After beginning performance, PMD sought written assurances from Brookhaven that it had the entire $175,000 available and waiting in escrow to be paid to PMD. Brookhaven did not have this money available, but was not obligated under the contract to tender the money to PMD until 30 days after PMD completed the tank. When PMD failed to obtain written assurances that Brookhaven presently possessed and was holding the $175,000, PMD terminated performance of the tank construction project. PMD brought suit in federal district court against Brookhaven, claiming that Brookhaven improperly repudiated the contract by failing to provide written assurances to PMD. Brookhaven counterclaimed for damages from PMD's repudiation. The trial court awarded damages to Brookhaven, and PMD appealed. Rule: Under Uniform Commercial Code (UCC) Section 2-609, a party may demand written assurance of performance and suspend its own performance until after receiving such assurance only if reasonable grounds for insecurity exist as to the other party's performance. Section 2-609 of the UCC does not permit a party to rewrite a contract or imply obligations in the contract for the other party when the evidence does not support the inference that the other party's performance may be in jeopardy. By demanding that Brookhaven obtain a loan for the entire purchase price and hold those funds in escrow for months before the contract actually requires Brookhaven to tender the funds, PMD is imposing an obligation on Brookhaven that is beyond its rights in the contract. The evidence does not suggest that PMD had any reasonable grounds for insecurity over Brookhaven's ability to pay for the tank when the purchase price was actually due under the contract. Thus, PMD may not use UCC Section 2-609 to impose new obligations on Brookhaven. Does it matter that the UCC was applied??? § 251. When A Failure To Give Assurance May Be Treated As A Repudiation (1) Where reasonable grounds arise to believe that the obligor will commit a breach by non-performance that would of itself give the obligee a claim for damages for total breach under § 243, the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance. (2) The obligee may treat as a repudiation the obligor's failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case. - almost identical language in restatement

Kingston v Preston

Preston (defendant) was a silk merchant. Kingston (plaintiff) agreed to serve as Preston's apprentice. At the end of that time, Preston was to sell the business to Kingston and a partner, who would continue to operate out of Preston's home. Kingston promised to provide Preston with "sufficient security" and pay fair value for the business (250 pounds a month). Kingston sued for breach of contract, arguing that he was willing to perform his obligations under the contract but that Preston refused to sell the business. Preston argued that Kingston never provided the promised security. Kingston demurred. Kingston asserted that Preston was still obligated to transfer the business as agreed, because the parties' mutual promises were independent of one another. Consequently, Preston could not rely on Kingston's breach to avoid his obligations under the contract. Kingston argued that his non-performance merely provided a basis for Preston to bring a separate action against Kingston for breach. Conversely, Preston argued that the mutual promises made in their agreement were dependent on one another, and that Kingston's failure to perform relieved Preston of his obligation to perform. Rule: When one party's performance under a contract is dependent on the prior performance of the other party, the other party's performance is a condition precedent and performance will be excused unless the condition is satisfied. There are three types of covenants. First, "mutual and independent covenants" require each party to perform his or her obligation, irrespective of whether the other party has performed. The other party's breach will not excuse performance. Second, conditional and dependent covenants, in contrast, condition the performance of one party on the prior performance of the other. Thus, a party's performance will be excused if the other party fails to perform the prior condition. Third, mutual conditions have to be performed concurrently. If both parties are obligated to perform at the same time, a party who is ready, willing, and able to perform may be able to sue if the other party refuses. It is unclear whether the willing party must first perform. The intent of the parties controls the type of covenant at issue.

excuses for nonperformance

RESTATEMENT 261-272 § 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. § 262. Death Or Incapacity Of Person Necessary For Performance If the existence of a particular person is necessary for the performance of a duty, his death or such incapacity as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made. § 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. § 264. Prevention By Governmental Regulation Or Order If the performance of a duty is made impracticable by having to comply with a domestic or foreign governmental regulation or order, that regulation or order is an event the non-occurrence of which was a basic assumption on which the contract was made. § 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. § 266. Existing Impracticability Or Frustration (1) Where, at the time a contract is made, a party's performance under it is impracticable without his fault because of a fact of which he has no reason to know and the non-existence of which is a basic assumption on which the contract is made, no duty to render that performance arises, unless the language or circumstances indicate the contrary. (2) Where, at the time a contract is made, a party's principal purpose is substantially frustrated without his fault by a fact of which he has no reason to know and the non-existence of which is a basic assumption on which the contract is made, no duty of that party to render performance arises, unless the language or circumstances indicate the contrary. § 267. Effect On Other Party's Duties Of A Failure Justified By Impracticability Or Frustration (1) A party's failure to render or to offer performance may, except as stated in Subsection (2), affect the other party's duties under the rules stated in §§ 237 and 238 even though the failure is justified under the rules stated in this Chapter. (2) The rule stated in Subsection (1) does not apply if the other party assumed the risk that he would have to perform despite such a failure. § 268. Effect On Other Party's Duties Of A Prospective Failure Justified By Impracticability Or Frustration Link to Case Citations (1) A party's prospective failure of performance may, except as stated in Subsection (2), discharge the other party's duties or allow him to suspend performance under the rules stated in §§ 251(1) and 253(2) even though the failure would be justified under the rules stated in this Chapter. (2) The rule stated in Subsection (1) does not apply if the other party assumed the risk that he would have to perform in spite of such a failure. § 269. Temporary Impracticability Or Frustration Impracticability of performance or frustration of purpose that is only temporary suspends the obligor's duty to perform while the impracticability or frustration exists but does not discharge his duty or prevent it from arising unless his performance after the cessation of the impracticability or frustration would be materially more burdensome than had there been no impracticability or frustration. § 270. Partial Impracticability Link to Case Citations Where only part of an obligor's performance is impracticable, his duty to render the remaining part is unaffected if (a) it is still practicable for him to render performance that is substantial, taking account of any reasonable substitute performance that he is under a duty to render; or (b) the obligee, within a reasonable time, agrees to render any remaining performance in full and to allow the obligor to retain any performance that has already been rendered. § 271. Impracticability As Excuse For Non-Occurrence Of A Condition Link to Case Citations Impracticability excuses the non-occurrence of a condition if the occurrence of the condition is not a material part of the agreed exchange and forfeiture would otherwise result. § 272. Relief Including Restitution Link to Case Citations (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 377. (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. Force mejuer clause ... force majeure Force majeure is a provision in a contract that frees both parties from obligation if an extraordinary event directly prevents one or both parties from performing. A non-performing party may use a force majeure clause as excuse for non-performance for circumstances beyond the party's control and not due to any fault or negligence by the non-performing party. However, mere impracticality or unanticipated difficulty is not enough to excuse performance. Indeed, courts generally do not recognize economic downturn as a force majeure event. This is because economic hardships occur regularly in business, and as a result, may be appropriately and preemptively dealt with by allocating its risk through the terms of the contract. As such, force majeure events are often labeled as "acts of god" and include both natural and man-made events like fires, floods, storms, war, and labor disputes.

implication of terms

Recall: main goal of the chapter thus far is to learn how to ascertain the rights and duties of the parties under a contract, understood as a legally enforceable agreement In general, begin by IDENTIFYING THE EXPRESS TERMS of the contract Parol evidence rule controls the identification of contract terms when there is a writing that is at least in part the final expression of the agreement Then we must INTERPRET THE EXPRESS TERMS --> where terms are unambiguous the court uses plain meaning, but where there is ambiguity the court and jury will try to interpret the shared meaning of the parties Now we turn to a third technique --> IDENTIFYING AND INTERPRETING IMPLIED TERMS Terms implied for two main reasons: Parties felt the term was understood and so obvious as to not demand going through the trouble of stating it Parties never intended any specific resolution to the dispute over a term and had no reasonable expectation as to the solution Law's function in providing final and peaceful settlements of disputes then may justify implying a term to resolve the controversy, whether or not it impinges on party autonomy (courts will imply a term on occasion to prevent unjust enrichment, forfeiture, or to protect important public policy) Restatement 204: § 204. Supplying An Omitted Essential Term When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.

Reilly Foam Corp. v. Rubbermaid Corp.

Reilly Foam Corp. (Reilly) (plaintiff) was a manufacturer of sponges. Rubbermaid Corp. (defendant) contacted Reilly to determine whether Reilly could fulfill Rubbermaid's need for sponges for Rubbermaid's new mop product. The two parties discussed a long-term relationship. On March 26, Reilly sent a letter to Rubbermaid detailing a proposal. On March 30, Rubbermaid responded to Reilly's letter. Most of the terms in Rubbermaid's response mirrored the terms in Reilly's letter. However, Rubbermaid's response was silent on several terms, such as the two-year time frame proposed by Reilly. Additionally, the two letters differed as to the scope of the agreement. Reilly's letter indicated that Rubbermaid would purchase all of its sponges for its mop product from Reilly. Rubbermaid's letter stated that it would purchase sponges only for mop products produced by a particular assembling contractor. Following the exchange of letters, Rubbermaid instructed its assembling contractor to purchase sponges solely from Reilly. However, Rubbermaid also continued to purchase sponges from other suppliers. Reilly alleged that Rubbermaid violated the contract by obtaining sponges from another supplier, and failing to make required minimum purchases from Reilly. Rubbermaid denied that Reilly's letter was an offer whose terms should be read into its agreement with Reilly. Rubbermaid also argued that its follow-up letter demonstrated that Rubbermaid did not accept all of the terms in Reilly's letter. The case was heard by the United States District Court for the Eastern District of Pennsylvania. Rule: · Knockout Rule--- UCC Sec. 2-207 comment 6) o the knockout rule requires that conflicting terms in both parties' documents negate one another and do not become part of the contract, whether the terms are in confirmation notices or in the offer and acceptance themselves. The conflicting terms are to be removed and supplemented by terms from UCC provisions.

Embry v. Hargadine, McKittrick Dry Goods Co.

Renewal of work contract ambiguity Rule: Regardless of the parties' subjective or actual intent, if a reasonable man could infer from their conduct intent to enter into a binding and enforceable contract, a binding and enforceable contract is presumed to exist. (Restatement 201(2))

Burger King Corp v Family Dining

Restatement Contracts 302: A condition of performance in a contract may be excused without reason if its requirement will involve extreme forfeiture or penalty, and its existence or occurrence forms no essential part of the exchange for the promisor's performance. Where words in a contract raise no duty in and of themselves but rather modify or limit the promisee's right to enforce the promise, such words are considered to be a condition. Whether words constitute a condition or a promise depends on the intent of the parties as determined by the language of the contract considered in light of the surrounding circumstances. When a contract contains a condition that literal performance of every term shall be required but in practice, the promisor does not actually require literal performance by the promisee, the promisor may not begin demanding literal performance later without notice to the promisee and a reasonable time.

Hill v Gateway 2000

Rich and Enza Hill (plaintiffs) ordered a computer from Gateway 2000, Inc. (Gateway) (defendant) by phone. Gateway shipped the computer and included in the box a written agreement which the Hills could reject by returning the computer in 30 days. The agreement also contained an arbitration clause. The Hills kept the computer for more than 30 days without returning it, and later filed suit in federal court alleging RICO violations against Gateway on behalf of themselves and a class of purchasers. Gateway sought to compel arbitration and the district court denied Gateway's request. Under the Uniform Commercial Code, a purchaser may be bound to terms included in product packaging if the purchaser has an opportunity to review the agreement and reject it by returning the product.

Schnell v Nell

Schnell (defendant) entered into an agreement with his heirs including Nell (plaintiffs) to give them each $200. Schnell stated that his late wife had had such a gift in her will but did not have enough money to make the bequest. The agreement stated that as consideration Nell et. al. would each pay Schnell one cent. Nell et. al. brought suit when Schnell refused to make the payment. The court struck Schnell's defense that the agreement was void for lack of consideration. Schnell appealed. Rule: A promise to make a gift for nominal consideration or out of moral obligation is unenforceable for lack of consideration - While courts generally do not look to adequacy of consideration, the purported consideration in this case was merely one cent, which is merely nominal consideration. - A contract for exchange of two hundred dollars for one cent is unconscionable and it is not enforceable.

Stambovsky v. Ackley

Seller failed to disclose that property was notoriously haunted; buyer sued for rescission; New York adhered to caveat emptor in action at law, but required some disclosure by seller at equity Holding: judgment for buyer Rule: if condition has been created by seller and materially impairs the value of property and is only known to seller or unlikely to be discovered by reasonable inspection, nondisclosure constitutes a basis for rescission as a matter of equity Ackley created and perpetuated the notion to the public that her home was haunted, which greatly impaired the value of the home and its resale potential. Stambovsky inspected the premises and conducted the appropriate title-record searches, but he was unaware of the home's reputation and was unlikely to inquire about whether the house was possessed. - We don't have a false assertion,,, here we have a non-disclosure that is equivalent to a false assertion (R 161) § 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 B--> GIVEN THAT THE SELLER HAD TALKED ABOUT THE HOUSE AND PUBLICALLY PROMOTED IT, THEY SHOULD HAVE A LEGAL DUTY TO ALSO DISCLOSE TO THE BUYER (GOOD FAITH AND FAIR DEALING) C --> This isn't about the house that I'm selling you, it's a misunderstanding about what the legal agreement contains... if you misunderstand what is in the contract and I know that then I have a duty to correct you Recission is equitable relief... not claiming fraud so there is no chance for damages, but there was definitely dishonesty in formation so recission is fair in this case What's going on here in part has to do with the restatement definition of misrepresentation... not talking about tort law (fraud) or criminal law... generally the award for misrepresentation is the equitable allowance of recission What a court could have done is say we are not permitted to enforce specific performance but we also wont protect the seller... but they didn't? why? --> Restatement 161 Only if you can show 161 a, b, c or d does non-disc count as misrepresentation

Carnival Cruise Lines v. Shute

Someone got hurt, sued in Washington where bought ticket Improper jurisdiction because ticket says suits must be in FL Forum selection clause are prima facie valid, must be good evidence on why it's not valid Doesn't need bargaining, keeps tickets cheaper

unjust enrichment

Sparks v Gustafson, Mills v Wyman, Webb v Mcgowin, § 86. Promise For Benefit Received (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.

misrepresentation and mistake

Stambovsky v Ackley, Eisenberg v Hall, Danann Realty v Harris Two ground for invalidating a contract Misrepresentation --> what would be considered fraud in tort law Recession of the contract is available to the victim Example: a party makes an affirmative misstatement of material fact (lies to the other party about a fact crucial to the deal) Cases of failure to disclose like Stambovsky are more difficult Mutual mistake Parties make a mistake when they act on beliefs that are not in accord with the facts existing at the time of contracting Recission available to both parties Important to distinguish mistake from regret --> courts do not relieve parties of their contractual obligation due to hindsight (agree to pay market price at time of contract and then market price drops a day later) § 159. Misrepresentation Defined A misrepresentation is an assertion that is not in accord with the facts. § 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. § 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. § 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. § 163. When A Misrepresentation Prevents Formation Of A Contract If a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent. § 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. § 151. Mistake Defined A mistake is a belief that is not in accord with the facts. § 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. § 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. § 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. The Unidroit Principles of International Commercial Contracts ARTICLE 3.2.2 (Relevant mistake) (1) A party may only avoid the contract for mistake if, when the contract was concluded, the mistake was of such importance that a reasonable person in the same situation as the party in error would only have concluded the contract on materially different terms or would not have concluded it at all if the true state of affairs had been known, and (a) the other party made the same mistake, or caused the mistake, or knew or ought to have known of the mistake and it was contrary to reasonable commercial standards of fair dealing to leave the mistaken party in error; or (b) the other party had not at the time of avoidance reasonably acted in reliance on the contract. (2) However, a party may not avoid the contract if (a) it was grossly negligent in committing the mistake; or (b) the mistake relates to a matter in regard to which the risk of mistake was assumed or, having regard to the circumstances, should be borne by the mistaken party. § 196. Term Exempting From Consequences Of Misrepresentation A term unreasonably exempting a party from the legal consequences of a misrepresentation is unenforceable on grounds of public policy.

incomplete agreements

Sun Printing and Publishing Ass'n v Remington Paper and Power Co., Arnold Palmer Golf v Fuqua Industries, Copeland v Baskin Robbins USA § 2-204(3). Formation in General. (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. § 2-305(1). Open Price Term. (1) The parties if they so intend can conclude a contract for sale even 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. § 2-309. Absence of Specific Time Provisions; Notice of Termination. (1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.

Drennan v. Star Paving Co.

The case in which the California Court of Appeals affirmed the judgment of the trial court that defendant subcontractor is liable for damages arising from his breach of a promise made in the form of a bid to complete certain paving work for $7,131.60. Defendant refused to do the work because his estimator made a mistake in calculating what it would cost to do the work. He refused to do it for less than $15,000. Plaintiff found an another subcontractor to do the work for $10,948.60. Both the trial court and the court of appeals agreed the subcontractor was obligated to pay $3,817 to the plaintiff general contractor under the doctrine of promissory estoppel. Rule: An offer which the offeror should reasonably expect to induce definite and substantial reliance by the offeree, and which does induce such reliance is binding on the offeror and enforceable even without consideration if enforcement is necessary to prevent injustice to the offeree.

Sun Printing v. Remington Paper

The parties entered into a 16-month contract in which the plaintiff agreed to buy from the defendant 1,000 tons of paper per month at a specific price for the first four months. At the conclusion of the four months, the price of the paper and the length of time that price was to apply was to be agreed upon by the parties for the remaining 12 months on the contract. The new price was not to be higher than the price charged by Canadian Export Paper, a third party paper company. Both parties performed their parts of the contract during the first four months, however, no new price or time period for the new price was ever agreed upon. As a result, the defendant did not deliver any more paper. The plaintiff brought suit, alleging that Canadian Export Paper's price automatically applied if no agreement was reached. To constitute a binding contract, the terms of each element of the contract must be sufficiently specific. Two parties did not guard against the contingency of failing to come together as to time This creates nothing more than an "agreement to agree" --> an agreement to agree is not sufficient as to key terms of a contract No escape from the conclusion that agreement in respect of time is as essential to a completed product as agreement on respect of price. --> the agreement was not reached --> defendant is not bound assuming that the parties agreed on Canadian Export Paper's price as the price of its contract going forward, there was still no agreement reached on the length of time that price would apply. Due to possible fluctuation of Canadian Export Paper's price, the defendant would never know the price for which it is selling the paper. Nothing in the contract "discloses the intention of the seller to place itself to that extent at the mercy of the buyer." Quite simply, the signed agreement between the parties—the agreement to agree—called for a future agreement as to the length of time the agreed upon price of paper would apply. Because no subsequent agreement on that issue was reached, the contract was not binding for the last 12 months.

Webb v. McGowin

The plaintiff saved the life of the late D, and in doing so was severely and permanently injured. In gratitude, D promised to pay the plaintiff money for the rest of (P) life. "[A] moral obligation is sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit". Rule: When a promisee confers upon a deceased promisor a benefit that is material and substantial, and is conveyed upon the person of the promisor and not merely his estate, the promisee is entitled to recognition and compensation from the promisor's estate either by an executed payment or an executory promise to pay. In this case, McGowin received a material benefit when Webb saved McGowin from grievous harm, likely serious injury or death. McGowin acknowledged this benefit, promise to pay Webb for the remainder of his life, and did so until his death eight years later. Webb suffered severe bodily injuries from his actions undertaken to save McGowin's life. Thus, McGowin's promise to pay bi-weekly payments to Webb is a valid, enforceable contract and is not barred by the statute of frauds.

Kass v Kass

This is an excerpt about in vitro... the court does not choose to weigh a persons right to not be a parent v a persons right to have children, instead they say the entire dispute is not a matter for the court Contracts can be ruled unenforceable due to subject matter (public policy) such as those to commit a tort or crime

AZ v BZ

Under Massachusetts law, an agreement compelling a person to become a parent in the future against his or her will is not enforceable. This falls under equitable relief (you are not entitled to remedy, but you can ask the court if they'll grant it anyway

Unconscionability in consumer contracts

Williams v Walker-Thomas Furniture Co., Brower v Gateway, Carnival Cruise Lines v Shute, Washington Mutual Fund v Bailey

Chicago Academy Publishers v Cheever

Woman enters contract to sell her husbands short stories after her death, decides she doesn't want to anymore, the publisher sues for specific performance but the court says the contract is not enforceable in the first place The principles of contract state that in order for a valid contract be formed an offer must be so definite as to its material terms or acquire such a definite terms and acceptance that the promises and performances to be rendered by each party are reasonably certain (Williston contracts S38-48) Although the parties may have had and manifested the intent to make a contract if the contents of their agreement is unduly certain an indefinite no contract is formed (Williston 37, 1 Corbin 95) Pertinent language of disagreement lacks the definite and certain essential terms required for the formation of enforceable contract a contract is sufficiently definite and certain to be oven enforceable if the court is enabled from the terms and provisions thereof under proper rules of construction and applicable principles of equity to ascertain with the parties have agreed to do (Morey v. Hoffman) If the essential terms are so uncertain that there is no basis for deciding whether the agreement has been capped or broken there is no contract (restatement second of contracts section 33) Restatement § 33. Certainty --> more a rule of common sense than legal rule (see Cheever Notes) (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.

Wood v. Lucy, Lady Duff-Gordon

Wood (plaintiff) entered into a contract with Lucy, Lady Duff-Gordon (Lady Duff-Gordon) (defendant), whereby Lady Duff-Gordon agreed to grant Wood the exclusive right to place her endorsement on others' clothing designs. She also granted Wood the exclusive right to market her designs and sell them. In return, Lady Duff-Gordon would receive 50 percent of the profits from Wood's efforts with regard to her endorsements and designs. Wood agreed to keep records of all accounts and to take out all patents, copyrights, and trademarks necessary to protect Lady Duff-Gordon's designs. Lady Duff-Gordon later entered into a contract with another company whereby she placed her endorsement on others' clothing designs. Wood filed suit, claiming breach of contract. Lady Duff-Gordon filed a motion for demurrer, arguing that there was no enforceable contract for lack of consideration. The trial court denied the motion. Lady Duff-Gordon appealed. The Appellate Division reversed and entered judgment for Lady Duff-Gordon. Wood appealed to the Court of Appeals of New York. Rule: (1) A contract may be enforced when there is no evidence of a promise, exchanged as consideration, in the explicit terms of the contract. (2) A promise to use reasonable efforts may be implied from the entire circumstances of a contract. 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. - A promise, exchanged as consideration, may be implied and enforceable, even though it is not provided in the explicit terms of the contract. In the current matter, the facts reveal that Wood made a promise to use reasonable efforts to place endorsements and market Lady Duff-Gordon's designs. Because Lady Duff-Gordon gave an exclusive privilege, Wood's acceptance of the privilege assumed its duties, one of which was to use sufficient reasonable efforts (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. - The agreement between Wood and Lucy contains an implied promise by Wood to use reasonable efforts, and thus constitutes sufficient consideration by Wood to form a valid and enforceable contract. A promise to use reasonable efforts may be implied from the entire circumstances of a contract.

lucy v zehmer

Zehmer owned a piece of property that Lucy wanted to buy. One night at Zehmer's bar, Lucy made an offer which Zehmer allegedly accepted. He and Lucy both signed a napkin which had specific details concerning the price and title of the land. Zehmer also had his wife sign it. Zehmer later contended that he was joking and that he didn't really want to sell. Doesn't matter. Mental reservations that aren't manifested don't impair obligations he purports to take. Rule: 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. [RES 201(2)] Subjective mental assent of all parties is not necessarily required to form a valid, enforceable contract when his objective, outward expressions demonstrate his willingness to be bound in an agreement "A person cannot set up that he was merely jesting when his conduct and words would warrant a reasonable person in believing that he intended a real agreement." (pp.14)

Eisenberg v. Hall

an art collector with knowledge of the field bought art on multiple occasions from an art dealer. THe art turned out to be fake. The Buyer (Eisenberg) argued that the two contracts of sale should be rescinded. Rule: A party may not rescind a contract for a mutual mistake of fact if the party knew that the fact might not be true at the time the contract was formed. The general rule is that a contract may be rescinded if the parties made a substantial mutual mistake in the contract at the time the contract was formed (Restatement 152) . However, a party may not rely on the mutual-mistake doctrine if the mistake was due to the party's own negligence. For example, if a party: (1) knows that there is uncertainty about a fact in the contract at the time the contract is being formed, and (2) could have exercised reasonable care to determine the correct fact (e.g., through the party's own efforts or by hiring an expert), then the party is deemed to have consciously accepted the party's ignorance of the truth and any resulting risk from that uncertainty. This is known as the conscious-ignorance exception. § 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.

Krell v Henry

aul Krell (plaintiff) owned a suite of rooms at 56A Pall Mall. Krell left the country for a period of time and left instructions with his solicitor to sublease his rooms however he saw fit. On June 17, 1902, C.S. Henry (defendant) noticed a sign advertising Krell's rooms for rent during the upcoming coronation of the King of England on June 26 and 27. Henry requested to rent the rooms from Krell for these two days for the sum of seventy-five pounds. Henry sent a letter to Krell with a deposit of twenty-five pounds and a promise to pay the remaining fifty pounds on June 24. Krell agreed to rent the rooms to Henry. However, the King became very ill before the coronation and the coronation ceremonies were canceled. Henry refused to pay the remaining fifty pounds to Krell because the coronation did not occur, which he claimed was a condition precedent in the contract. Henry also brought a counterclaim for return of the twenty-five pounds paid as a deposit, but he later withdrew this counterclaim. The trial court held there was an implied condition in the contract, the nonoccurrence of which made the contract unenforceable. The trial court entered judgment for Henry, and Krell appealed When a condition that is not expressly mentioned in a contract can nevertheless be implied from extrinsic evidence as being understood by both parties to be the subject matter of the contract, the nonoccurrence of the condition may excuse nonperformance of the contract by both parties. § 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.

promises and conditions

§ 224. Condition Defined A condition is an event, not certain to occur, which must occur, unless its nonoccurrence is excused, before performance under a contract becomes due. § 225. Effects Of The Non-Occurrence Of A Condition (1) Performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused. (2) Unless it has been excused, the non-occurrence of a condition discharges the duty when the condition can no longer occur. (3) Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur. § 226. How An Event May Be Made A Condition An event may be made a condition either by the agreement of the parties or by a term supplied by the court. § 227. Standards Of Preference With Regard To Conditions (1) In resolving doubts as to whether an event is made a condition of an obligor's duty, and as to the nature of such an event, an interpretation is preferred that will reduce the obligee's risk of forfeiture, unless the event is within the obligee's control or the circumstances indicate that he has assumed the risk. (2) Unless the contract is of a type under which only one party generally undertakes duties, when it is doubtful whether (a) a duty is imposed on an obligee that an event occur, or (b) the event is made a condition of the obligor's duty, or (c) the event is made a condition of the obligor's duty and a duty is imposed on the obligee that the event occur, the first interpretation is preferred if the event is within the obligee's control. (3) In case of doubt, an interpretation under which an event is a condition of an obligor's duty is preferred over an interpretation under which the non-occurrence of the event is a ground for discharge of that duty after it has become a duty to perform. § 229. Excuse Of A Condition To Avoid Forfeiture To the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange.

interests impaired by a breach, cancellation in response to a breach

§ 234. Order Of Performances (1) Where all or part of the performances to be exchanged under an exchange of promises can be rendered simultaneously, they are to that extent due simultaneously, unless the language or the circumstances indicate the contrary. (2) Except to the extent stated in Subsection (1), where the performance of only one party under such an exchange requires a period of time, his performance is due at an earlier time than that of the other party, unless the language or the circumstances indicate the contrary Restatement 238 § 238. Effect On Other Party's Duties Of A Failure To Offer Performance Where all or part of the performances to be exchanged under an exchange of promises are due simultaneously, it is a condition of each party's duties to render such performance that the other party either render or, with manifested present ability to do so, offer performance of his part of the simultaneous exchange. Restatement 250-257 § 250. When A Statement Or An Act Is A Repudiation A repudiation is (a) a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach under § 243, or (b) a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach. § 251. When A Failure To Give Assurance May Be Treated As A Repudiation (1) Where reasonable grounds arise to believe that the obligor will commit a breach by non-performance that would of itself give the obligee a claim for damages for total breach under § 243, the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance. (2) The obligee may treat as a repudiation the obligor's failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case. § 252. Effect Of Insolvency (1) Where the obligor's insolvency gives the obligee reasonable grounds to believe that the obligor will commit a breach under the rule stated in § 251, the obligee may suspend any performance for which he has not already received the agreed exchange until he receives assurance in the form of performance itself, an offer of performance, or adequate security. (2) A person is insolvent who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law. § 253. Effect Of A Repudiation As A Breach And On Other Party's Duties Link to Case Citations (1) Where an obligor repudiates a duty before he has committed a breach by non-performance and before he has received all of the agreed exchange for it, his repudiation alone gives rise to a claim for damages for total breach. (2) Where performances are to be exchanged under an exchange of promises, one party's repudiation of a duty to render performance discharges the other party's remaining duties to render performance. § 254. Effect Of Subsequent Events On Duty To Pay Damages Link to Case Citations (1) A party's duty to pay damages for total breach by repudiation is discharged if it appears after the breach that there would have been a total failure by the injured party to perform his return promise. (2) A party's duty to pay damages for total breach by repudiation is discharged if it appears after the breach that the duty that he repudiated would have been discharged by impracticability or frustration before any breach by non-performance. § 255. Effect Of A Repudiation As Excusing The Non-Occurrence Of A Condition Link to Case Citations Where a party's repudiation contributes materially to the non-occurrence of a condition of one of his duties, the non-occurrence is excused. § 256. Nullification Of Repudiation Or Basis For Repudiation Link to Case Citations (1) The effect of a statement as constituting a repudiation under § 250 or the basis for a repudiation under § 251 is nullified by a retraction of the statement if notification of the retraction comes to the attention of the injured party before he materially changes his position in reliance on the repudiation or indicates to the other party that he considers the repudiation to be final. (2) The effect of events other than a statement as constituting a repudiation under § 250 or the basis for a repudiation under § 251 is nullified if, to the knowledge of the injured party, those events have ceased to exist before he materially changes his position in reliance on the repudiation or indicates to the other party that he considers the repudiation to be final. § 257. Effect Of Urging Performance In Spite Of Repudiation Link to Case Citations The injured party does not change the effect of a repudiation by urging the repudiator to perform in spite of his repudiation or to retract his repudiation. UCC 2-609 TO 2-611 § 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. § 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 contractnotwithstanding breach or to salvage unfinished goods (Section 2-704). § 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.