Contracts

3i. Agreed Remedies

Accord (when you reach a settlement): K where obligee promise to accept a stated performance in satisfaction of obligor's existing duty performance of accord discharges OG duty OG duty suspended until performance of accord unless there is breach of accord by oligor that discharges new duty of obligee to accept new performance if breach by obligor, then obligee can seek to satisfy old or new duty breach by obligee doesn't discharge old duty but obligor can seek specific performance of accord and get damages for partial breach Liquidated damages ok so long as reasonable in light of anticipated or actual loss from breach and difficulties of proving loss (more difficult=easier to show amount is reasonable) =same for UCC unreasonably large liquidated damages unenforceable bc of public policy since penalty (same for UCC) term in bond for penalty if non-occurrence of condition unenforceable bc of public policy to extent that amount exceeds loss caused by non-occurrence party's intentions about whether meant to be penalty or not are irrelevant; look at effect of term can still grant specific performance even though there is provision for liquidated damages but most courts won't grant both if leads to overcompensation employment Ks is opposite: usually won't do specific performance but can have clauses for liquidated damages for employee breach UCC 2-718: see above when seller withholds delivery bc of buyer breach, buyer can get restitution for amount his payment exceeds liquidated damages or if none in K, $500 or 20% of value of total performance under K, whichever is smaller but offset by ability to recover other types of damages and amount of value/benefits received by buyer because of K when seller had received payment in goods, their reasonable value or resale proceeds will be treated as payment 2-719: parties can contract around damages set out in UCC like by limiting buyer's remedy to return of goods and getting money back resort to said remedy is optional unless remedy is expressly agreed upon to be the only remedy if circumstances cause sole remedy to fail its essential purpose or deprives a party of substantial value of bargain, can fall back on other UCC remedies can limit and exclude consequential damages unless exclusion is unconscionable limitation of consequential damages in consumer goods is prima facie unconscionable Parties can settle their dispute after breach/non-performance by agreeing to own remedies but courts not sympathetic to liquidated damages Barrie School v Patch: D sent kid to P's private school and K clause that if withdraw kid and give written notice of withdraw after agreed to withdraw date, liquidated damages of entire year's tuition. D withdrew after date and wanted deposit back and refused to pay rest of year's tuition. No K of adhesion since had choice to go to other school. (Galbraith: even in Ks of adhesion, you have choice to go elsewhere usually). D says P overenrolled so no actual damage and should have mitigated. Liquidated damages clause since tuition was reasonably foreseeable damage from breach so not penalty and impossible to assign value to impact of losing a child from school. No need to mitigate since that goes towards the court's assessment of damages. Dissent: need to look at reasonableness from time of breach as well. Full tuition unreasonable since school suffered no actual harm since filled spot and overenrolled. Must also mitigate when appropriate. liquidated damages: specific sum agreed to by parties for damages when enter K enforceable unless so grossly excessive but if actual damages more than stipulated amount, limited to stipulated amount RC and UCC say if liquidated damages too small or damages too limited compared to actual harm, may be unenforceable bc of unconscionability no mitigation necessary and mitigation not taken into account since that's part of court's assessment of actual damages (liquidated is parties' agreed to damages in order to avoid having to determine actual damage) this is debated; some say still need to mitigate don't need to look at no-actual-harm defense if provision valid (also debated) liquidated damages clause valid if: damages from breach would be hard to prove/determine or uncertain in amount parties intend to have clause be for liquidated damages rather than be a penalty amount must be reasonable forecast of just compensation for harm flowing from breach clear and unambiguous term for a certain sum debate whether just need to judge reasonableness at time of formation (traditional view) or need to look at circumstances surrounding both formation and breach (modern view) can't be altered to correspond to actual damages after breach debate about whether can be upheld if disproportionate to actual harm if reasonable for anticipated harm (or vv) some courts say absence of loss turns clause into penalty so can't uphold if doubt about whether liquidated damages or penalty, interpret as penalty some courts presume clause as valid and shift burden to party to prove it's invalid (based on freedom to contract) Ks of adhesion only unenforceable if unconscionable (not unenforceable per se) unclear whether earnest money deposits (like $1k that Patch paid as deposit) for real estate are liquidated damages clauses (allows judicial scrutiny) or just unrecoverable

2n. Anticipatory Repudiation

Anticipatory repudiation: statement by obligor that will commit breach that would give obligee claim for damages or voluntary affirmative act that renders obligor apparently unable to perform (RC 250) must be sufficiently positive statement and reasonably interpreted as intending breach (expression of doubts of willingness/ability to perform not enough) if reasonable grounds to believe obligor will breach, can demand adequate assurance of due performance that obligee hasn't received compensation for failure to give assurances in reasonable time = repudiation Repudiation: repudiate obligation before commit breach = claim for damages for total breach and discharge other party's duties (RC 253) can retract repudiation if notify other party before they change position bc of reliance oe they indicate that they think repudiation is final if repudiation based on events and injured party knows that events ceased before reliance/indication => valid retraction UCC 2-609: party can demand adequate assurance of due performance if reasonable grounds for insecurity and if commercially reasonable, can also suspend performance for which he hasn't received compensation until get assurance reasonable grounds: look at buyer's words/actions, course of dealing/performance, nature of K, industry can still demand assurances if accept improper delivery/payment if receive adequate assurances, bound to proceed unless further change in circumstances failure to provide reassurances within 30 days is repudiation repudiation and loss will substantially impair value of K, party can wait reasonable time for performance OR remedy for breach AND either way suspend own performance or salvage unfinished goods can retract repudiation unless reliance or indication that think repudiation is final can retract in any way that indicates intent to perform and must provide any asked for assurances CISG 71-73: can suspend performance if obvious other party won't perform substantial part of duties bc of serious deficiency in ability or creditworthiness or conduct in preparing to perform can prevent buyer from getting goods if seller already sent them out can void K if obvious other party will commit fundamental breach but if time allows must notify and allow other party to provide assurances if delivery in installments, K void for that installment but if repetition of this then good grounds to void K in general also can void K in general if installments unusable w/o non-performed installments for purposes contemplated in K Truman Flatt v Schupf: P buy land from D contingent on getting zoning. Unlikely will get zoning so P offer lower price for worse zoning. D rejects. P says willing to proceed with OG K but D doesn't respond and returns P's money. Unclear P wouldn't go forward unless lower price but even if clear repudiation, retracted before D had relied and tried to sell land to anyone else. OG K enforceable. Hornell Brewing v Spry: P enter into distributorship K for Arizona tea with D. D fails to remit payment and checks bounce so P asks D to get line of credit. D send letter about credit but still fail to pay. D gets factoring company on phone with P but never say is factoring company. D's debts cleared up so get $300k line of credit from P but order more than that. P realizes D is running sham operation so ask for confirmation of credit. Even though oral agreement, conduct establishes K. D always behind on payment so P had right to demand reassurances. Further assurances after phone call ok since new insecurities (sham operation and huge order). D not responding to demands was repudiation so P had right to suspend performance and end K.

3e. Exclusions from Damages

Can't recover: for mental/emotional distress unless breach also cause physical injury or serious emotional injury likely to result because of kind of breach (contracts whose main purpose is to protect or further emotional interest like carriers, innkeepers, K's for dealing with dead bodies, family heirlooms) (RC 353) punitive damages unless breach also a tort for which punitive damages are available = need separate claim in torts (RC 355) attorney's fees idea that K law is SL so shouldn't use fault (like intent for bad faith breach) to determine damages CISG 74: Damages are sum equal to loss, including loss of profit as consequence of breach, that breaching party foresaw or should have foreseen at time K made in light of the facts he knew or should have known questions not expressly settled in CISG settled using principles on which it's based or by rules of private international law (CISG 7) UCC Article 2: contention that this permits attorney's fees as incidental/consequential damages but usually this is unsuccessful argument (but UCC affirmatively allows fees if unconscionable terms/conduct in inducing/enforcing consumer leases) Zapata Hermanos v Hearthside Baking: P (Mexico) sued D (US) for breach by non-payment under CISG and was awarded attorney's fees (trial judge's inherent powers) and prejudgment interest at trial. Can't recover attorney's fees even if foreseeable and damages can't be punitive since no tortious conduct. Can't recover attorney's fees under CISG since this is issue of procedure rather than K (ex American rule where everyone pays own costs vs English where loser pays all) some courts have said CAN recover under CISG 74 (but parties can still contract for or around this) usually can't under common law either unless statute or valid/reasonable contractual term expressly says can and usually can only recover attorneys fees under FRCP 11 or 37 American rule is minority view in world so helps CISG goal of uniformity No punitive damages unless tortious misconduct like duress or abuse of fiduciary duty also breach of bad faith and fair dealing in insurances K like bad faith refusal to indemnify or defend (based on idea of special relationship btw insurer and insured) Erlich v Menezes: D contract to build P's dream house but mass leaking and danger or collapse due to serious construction errors. P had heart issue and had to be taken away in ambulance when learned extent of issue but this injury flowed from emotional distress and not from neg constructuction. But D negligently breached K and not tort and only result of breach was property damage (not physical personal injury) Conduct in breach of K only tortious when also violate legal duty (even if harm was foreseeable) breach accompanied by traditional tort like fraud or conversion OR means of breach tortious (deceit or undue coercion) OR intentional breach knowing that breach will cause severe emotional anguish/hardship/other substantial consequential damages foreseeability in light of the breach (ex if house this bad, can foresee emotional distress) foreseeability doesn't take mitigation into account (things you can foresee could happen, then mitigation kicks in to deal with some of the foreseeable stuff) negligent breach of K not enough to justify recovery for emotional damages no emotional distress damages when merely property or economic harms

3c. Foreseeability, Certainty, and Causation

Consequential (special) Damages: harm to person/prop because of breach damages not recoverable is no reason to foresee as probable result of breach at time K made (RC 351) loss foreseeable if in ordinary course of events or if special circumstances that breacher has reason to know can be limited as justice requires because of disproportionate compensation loss must be established with reasonable certainty using evidence in order for recovery (RC 352) Incidental Damages: additional costs from breach and attempt to avoid loss (ex cost of substitution) Hadley v Baxendale: P's mill shaft broke so had to stop mill. Sent D to get shaft fixed which should have taken one day but took 3. P can't recover lost profits since D didn't know mill had stopped so consequences unforeseeable. Florafax v GTE: P contract for D to answer phones but D losing money. P also contract with Bellerose and assign some of their calls to D, which D knew. D didn't provide enough staff for Mother's Day so P lost lots of potential orders. Bellerose terminate K with P bc of this anf P terminate K with D so had to set up own call centers. P got damages for loss of income from collateral K since D knew about it so foreseeable breach would cause issue with other K. Got loss of income for 2 years (remaining time on K with D) rather than 60 days (notice period for termination on collateral K) since collateral K period not binding no D and D couldn't terminate at all. Also, incidental damages for setting up call center.

1d. Consideration

Consideration: must be in every K Benefit/detriment: something promised, done forborne, suffered (does not matter if beneficial for promisee so long as give up legal right) Bargained for exchange: not enough that promisee suffered detriment; promise must induce detriment and vv (RC 71) don't have to figure out whether consideration actually benefit/detriment unlike other view=allows for subjective views of contracting parties Past consideration is no consideration since can't induce anything Nominal consideration ok unless relative values exchanged so unbalanced that suggests bargaining defect like lack of capacity) Hamer v Sidway: D promised P $5,000 if P didn't smoke, drink, or gamble until 21st birthday. D's estate refused to pay since argue no consideration if action benefited P. There was consideration since P suffered legal detriment even if it benefitted his health. P wins. Pennsy Supply Inc v American Ash: D gave P Aggrite for free to pave roads. Aggrite was low quality and also hazardous substance. Roads buckled. P suing D for cost of fixing roads and disposing of Aggrite. Does not matter that Aggrite was free and detriment (disposing of Aggrite) not bargained for. D promised free Aggrite to induce P's detriment and vv. P wins. Detriment doesn't have to be specifically be bargained for Dougherty v Salt: P gets formal promissory note from aunt for $3000 for "valued received" because aunt says P always good to her. No consideration since no present detriment to P=> unenforceable gift Conditional gift v consideration: if action induces promise=> consideration. If not, condition (ex. come by my house and I'll give you $10=coming by house is condition) Marshall Durbin Food Corn v Baker: P and D sign early retirement/termination agreement promising 1 year compensation if fired due to death of incapacity of P's president. On form, consideration of $10. P refuses to honor agreement since say illusory promise (didn't give up right to look for other job)=no consideration. Nominal consideration acceptable + sufficient consideration since D performed illusory promise. D wins. Illusory promise=no limitation of future legal freedom/freedom to act=no consideration (RC 77) If party A makes illusory promise, party B makes unilateral contract contingent on illusory promise=>sufficient consideration if party A performs

3b. Expectation Damages

Damages = loss in value to P + other loss (incidental/consequential) - cost P avoided from not having to perform (RC 347) Types of damages (RC 344) Expectation: put P in same position as if whole K had been performed usually expectation damages regardless of whether seller breach in good or bad faith Reliance: reimbursed for loss cost by reliance so put P in same position as if K had never been made Restitution: unjust enrichment so give P back any benefit he has conferred on D or compensate UCC Damages seller's remedies (buyer breached): if buyer breaches (wrongfully reject goods, refuse payment, repudiate), seller can withhold delivery, prevent buyer from getting them, proceed under next section of contract, resell and recover damages, recover damages for non-acceptance or the price, cancel Can elect between Resale: can recover differences in resale price and K price if resale made in good faith and commercially reasonable Market: can recover difference between market price at time and place for tender and K price if this isn't enough to put seller where he would have been if full performance, then damages are profit (including overhead) that seller would have made if full performance Cost of goods: if buyer refuses to pay, seller can recover price of accepted/conforming goods and rest of goods from K if seller isn't able to resell them after reasonable efforts to sell for reasonable price incidental damages: commercially reasonable charges, expenses from stopping delivery, transportation, care/custody of goods buyer's remedies (seller breached): Can elect between Cover: can recover difference between price of substitute goods and K price if cove is made in good faith and made without unreasonable delay failure to cover doesn't bar buyer from other remedies Market: can recover difference between market price at time buyer learned of breach and K price Cost of non-conforming goods: if accept goods, can recover damages for non-conforming goods breach of warranty: difference between value of goods accepted at time and place of acceptance and value they would have had if warranted incidental damages: commercially reasonable charges, expenses from receipt, inspection,transportation, care/custody of goods rightfully rejected consequential damages: loss of value from any particular requirements that seller had reason to know at time of K which could not have been prevented by cover or any injury to person/property from breach Crabby Inc v Hamilton: P selling prop to D. D take possession but then say not closing since some fixtures not there and still liens even tho P fixed this. D bought another cheaper prop and P had to resell for 55k less after 11 months of trying to resell. 11 months reasonable resale time and no compulsion to sell (just really wanting to sell not enough) so must pay 55k and some incidental/consequential damages. If can't determine fair market value at time of breach and seller resells in reasonable amount of time, resale price ev of fair market value fair market value: price property will bring when seller and owner aren't under compulsion to sell/buy Handicapped Children Ed Board v Lukaszewski: P hire D as special ed teacher but D finds better job closer to home so tell P will resign even though contract not over. P refuses and D gets doctor's note saying commute and continuing job will cause serious health effects from high blood pressure. D quits and P has to hire more expensive replacement since only one other qualified teacher in area. D responsible for damages since "benefit" of slightly better teacher not what P bargained for and P took reasonable steps to mitigate damage by hiring equivalent substitute teacher at lowest price possible. damages measured by expectations of parties (what parties bargained for) whether or not substitute more valuable ("better") or not since "benefit" imposed on injured party so not really benefit at all injured party must take reasonable steps to mitigate (equivalent services at lowest possible cost)

2f. Duress and Undue Influence

Duress: wrongful/improper threat that induces assent because victim has no reasonable alternative => voidable K (subjective test rather than look at whether threat would have induces reasonable person) (RC 176) Wrongful/improper threat: threat of crime, tort, criminal prosecution, bad faith threats to sue or breach K, breach of good faith and fair dealing Economic duress: unlawful/wrongful threat by D and P had no choice to agree bc alternative is serious financial hardship and no reasonable alternative (ex. getting goods from another source or pursuing legal action causes irreparable economic harm) does not include using superior bargaining power due to market changes but relative bargaining power may affect whether there was reasonable alternative can't just be that P really needed money Undue Influence: unfair persuasion by more dominant party and relationship between parties means weaker party justified in assuming persuader won't act in manner inconsistent with his welfare = voidable K (RC 177) doesn't have to be special relationship Totem Maine Tug v Aleyska: D terminates K after delays. P asks for payment since need money or go bankrupt. D settles for less than ½ of what was owed. P sues for economic duress and wins since bankruptcy not reasonable alternative, D knew P needed money, and D say payment may take months if don't settle now (improper threat). Odorizzi v Bloomfield School District: P arrested for criminal homosexual activities, questioned overnight, then released. 2 Ds comes to apartment right after, tell P not to get lawyer, and tell him to resign or else would fire him as teacher and publicize charges which could affect future ability to get job. D's say doing this to help P. Undue influence since unfair persuasion (emotionally vulnerable, told not to get lawyer) by dominant party (P's bosses) and relationship meant P thought D was looking out for him. Undue influence/over-persuasion: inappropriate time/place, insist must finish business now, extreme emphasis on consequences of delay, multiple persuaders v 1 victim, no 3rd party advisors/lawyers/financial advisors

2e. Warranties

Express warranty: goods must conform to promise of fact/description of goods/sample or model if said warranty is made the basis of the bargain (UCC 2-213) Don't need intent to make warranty or reliance by buyer Statement of seller's opinion/commendation of goods is puffery, not warranty (objective and capable of being proven) => ex best in class vs fastest in class Implied warranty of merchantability (if seller is merchant): goods would pass w/o objection in trade (and fair average quality if fungible good) and fit for ordinary usage (UCC 2-314) must be within variations allowed for by K and conform to promises of fact on carton/label course of dealing and trade usage can create implied warranties includes serving food or drink on premises Implied warranty of fitness for a particular use: seller had reason to know buyer's particular non-ordinary use and buyer relies on seller's judgment to select suitable good (UCC 2-315) Disclaimers of warranties: must be conspicuous (UCC 2-316) Disclaimer of express warranty allowed unless contradicts K terms but will try to construe disclaimer and warranty as consistent with each other when reasonable Disclaimer of merchantability must say "merchantability" and be conspicuous or "as-is"/"with all faults" No implied warranty if buyer inspected goods and found no issue OR if buyer refuses to examine goods OR if say no other warranties other than ones beyond description on face hereof or "as-is"/"with all faults" can't disclaim implied warranties for consumer goods bc of Magnuson-Moss Act CISG Art 35: goods must follow terms in K and be fit for ordinary use or for particular use if known to seller and buyer relies must conform to sample/model unless otherwise agreed or buyer knew/should have known at time of K conclusion that goods didn't conform no fancy disclaimer requirements Bayliner v Crow: D bought P's boat whose prop matrices said could go 30mph under certain weight/conditions. D's boat has different propeller size and heavier so can't get to 30mph. D says speed important since need to go offshore fishing so if too slow, limit how much time actually spent fishing. No express warranty since matrices for propellers and weight different. No implied warranty since no ev of standard fishing boat speed and fit for ordinary use. No implied warranty of fitness for particular purpose since seller didn't know D buying boat for specific purpose. Speight v Walters Development Co: P bought house form D. Defects in gutter and roof that caused water damage. Breach of implied warranty of workmanlike construction since P didn't know about defects when bought house and defects mean house didn't meet trade standards. Workmanlike construction: reasonably good/workmanlike manner and reasonably fit for intended purpose (trade standards) breach is buyer not aware of defect at time of purchase and unworkmanlike construction 3rd party buyers allowed to sue Habitability: suitable for occupation and reasonably safe place to live w/o fear of injury to person/health/property/safety (may not cover things like patios since not necessary to living in house)

2g. Misrepresentation and Nondisclosure

Fraud: (1) D's reps were false and material and (2) D knew reps false and (3) victim relied on said reps (some courts say reliance must be reasonable) => K voidable (RC 164 ) opinion/puffery (expression of belief without certainty as to existence of fact) not fraud/misrep unless person misrep state of mind (say smth but don't believe it), fiduciary relationship, expert, or advising someone particularly susceptible to misrep bc of age or other factors reckless/negligent misrepresentation: don't know whether true but hold forth as true (failure to exercise reasonable care in obtaining info) and P relies on info which was for the benefit/guidance of P fraud by silence: (1) D knew material facts P didn't know and couldn't have discovered with reasonable examination and (2) D has duty to communicate facts with P and P relied on said duty (3) and D intentionally didn't communicate facts nondisclosure violates good faith and fair dealing and about fact that is basic assumption on which P making K (RC 161) innocent but material misrepresentations => L could be subject to rescission UCC says look at common law Syester v Banta: D selles P, old widow, a ton of dance lessons and tell her she can be professional dancer. D overcharges her, the persuades P to sign release of all claims by telling her she could be super talented pro. P wins since reps weren't just puffery, were material and false, and P relied. Stechschulte v Jennings: D selling house that had water damage that he did temp fix and painted over and didn't answer yes on seller disclosure form when ask if water damage but wrote in section on repairs that water damage repairs complete. Form said buyer wasn't relying on any rep other than those explicitly on form. P bought house after hiring inspectors but didn't find out about water damage until heavy rain floods house. P wins since form only meant to say P not relying on any oral reps but can rely on written reps on form. Fraud since knew water damage and failed to disclose and P relied on reps. Fraud by silence since didn't disclose even though duty to disclose as seller. Neg misrep since D lack of reasonable care in communicating info and form meant to influence buyers.

2c. Implied terms

Implied terms: implicit in words/conduct (implied in fact) vs terms implied in law from statutes, common law, or because court thinks appropriate UCC 2-309 gap-filling: terms implied by law unless parties agree to different terms unless terms mandatory (can't be changed by agreement) time for shipping, indefinite successive performances = imply reasonable time/duration if not explicitly stated notice of termination must be reasonable unless upon occurrence of agreed upon event if agreed that no notice needed, agreement invalid if operation unconscionable UCC 2-306 implied obligation to use reasonable efforts (can help prevent indefinite promise from being illusory) if agreement measure output, output standard must be reasonable amount obtained by good faith effort if exclusive agreement, must use best efforts (unless otherwise agreed) best efforts = reasonable based on abilities of party, expectations of other party, available means, diligence Wood v Lucy, Lady Duff Gordon: D hired P so exclusive agreement to help market/license/sell designs. D say illusory promise in K since D does not bind himself to anything since nothing in K says P need to use reasonable efforts and no no quantifier of efforts. P's promise not illusory since implied obligation of good faith efforts since if not, purpose of the K can't be met (D would not place herself at mercy of P). Leibel v Raynor Manufacturing: P and D have oral agreement to exclusive distributorship agreement for garage doors. D writes P that relationship over. Agreement said nothing about termination but implied term that must give reasonable notice. Notice here unreasonable since need to have reasonable time to sell inventory or find substitute agreements but reasonableness depends on circumstances. Dealer-distributorship K is still mainly about goods (not personal service K or commissioned salesperson) so UCC applies

2j. Impossibility, Impracticability, Frustration of Purpose

Impossibility: something necessary for performance destroyed or objective impossibility of performance (merged with impracticability) Taylor: someone supposed to perform in music hall but music hall burned down Impracticability: not impossible but sufficiently different from what parties contemplated at time of K Event not performer's fault and non-occurrence was basic assumption of K = performance discharged unless language/circumstances suggest otherwise or agree (implicit/explicit) to perform anyway (RC 261) just bc something reasonably foreseeable doesn't mean non-occurrence wasn't basic assumption (but some courts require unforeseeability) must have used reasonable efforts to overcome difficulties => if objectively still can't perform, impracticability not just increase difficulty/expense of performance unless performance would cause extreme and unreasonable difficulty, expense, injury, or loss usually change in market conditions, war, natural disaster not enough death/incapacity of person or destruction/failure to come into existence of thing necessary for performance = impracticability adverse change in law = non-occurrence that's basic assumption parties assume risk of own inability to perform (ex using 3rd party) if event performer's fault (place self in position where can't perform) = breach temporary impracticability: suspends performance while it exists but doesn't discharge performance after it's over unless performance materially more burdensome Mineral Park: gravel extraction 9x more expensive bc run into concrete Frustration of purpose: supervening extrinsic circumstances make performance so different from what was reasonably expected that K lose value or won't receive bargained for exchange principal purpose substantially frustrated and event not party's fault and non-occurrence was basic assumption of K (RC 265) substantial: outside of risks assumed (just loss of profit not enough) if other serviceable use of land/good/performance, may not be frustration of purpose Krell: rented expensive room to with view to watch coronation parade but parade cancelled since king got sick UCC 2-615: if delay in delivery/non-delivery (and notify buyer), not breach of duty if impracticability bc of event whose non-occurrence was basic assumption of K or by good faith compliance with law (whether law later proves to be valid or not) if affect part of performance, can allocate performance amongst customers Waddy v Riggleman: P buying land from D but D's responsibility to make sure land free of all liens. D's lawyer thought would only take a month but took longer so couldn't get releases in time for closing. Not impracticability since lawyer had 2.5 months to get release and D's own fault for never getting back to appraisers which was necessary for release. D also didn't use reasonable efforts to overcome difficulties. vs. if couldn't get releases bc bank suffered cyber attack = impracticability Mel FRank v Di-Chem: D leased building from P to store hazardous chemicals but just told P storing chemicals. New ordinance about building requirements for storing hazardous chemicals = would be too expensive to bring building up to code. D decide to move and try to get out of rest of lease bc of frustration of purpose. Not frustration since D could store their food additives there so still serviceable use.

1g. Electronic K

Layered contracting: unlike traditional K, shifts power of acceptance to buyer so seller is master of offer (seller shipping is offer, buyer keeping is acceptance). Burden on seller to show buyer assented. (Majority view) ProCD: shifts power of acceptance to buyer=> buyer has right to accept or return product in reasonable time and if not returned, accept terms in K (majority view) Step-Saver Data: if no express consent to terms/conditions, not binding since material alterations = conduct (keeping product) not enough for assent (minority view) Klocek v Gateway: buyer is offeror and seller is acceptor. K based on mutual assent so weird to have terms after transaction that buyer didn't agree to. (minority view) Clickwrap: scroll through terms/conditions and click "I agree" before can continue with transaction Must give reasonable notice + clear re: method of acceptance/rejection + opportunity to reject Feldman v Google: P used D's advertising. P had to scroll through and click "I agree" to use D's site and services. P had actual and constructive notice of terms and assented. Terms binding. Specht: user hit download button, which meant they agreed to terms. No actual or constructive notice of terms or assent since terms buried in 3 hyperlinks. Terms not binding. Must have immediately visible notice of terms and unambiguous assent to terms Shrinkwrap: product shipped with paper saying that person agrees to terms/conditions by keeping/using the product or can return product within certain time if don't agree Must give reasonable notice of + clear re: method of acceptance/rejection of terms (not just of product) + opportunity to reject DeFontes v Dell: Terms on website, in invoice sent after purchase, and in packaging but terms only gave method for rejecting product without saying could return if didn't agree with terms. Reasonable person wouldn't have known could return item to reject terms. Terms not binding. Browserwrap: terms of use on webpage but not required to click "I agree". Use of site implies agreement. User must have actual and constructive notice (not hidden) + unambiguous manifestation of assent Hines v Overstock: Terms available through hyperlink at bottom of website. No actual or constructive notice of terms since terms not immediately visible or obvious. Nothing on site says using website means assenting to terms. Terms not binding. Berkson test: 1) reasonable user on notice of terms 2) site design encourages user to read terms 3) link to terms not buried/obscure

3d. Mitigation of Damages

Mitigation of avoidable consequences: can't recover damages that could have been avoided without undue risk, burden, or humiliation UNLESS P has made reasonable but unsuccessful efforts (RC 350) includes finding substitute arrangement or stopping performance if reason to know other party won't perform all within reasonable time (same idea for UCC) some courts say duty to mitigate not applied to real estate leases when renter abandons lease but others follow modern trend so apply costs of trying but failing to mitigate recoverable as incidental damages UCC: no general provision but says that no consequential damages if could have been reasonably prevented by making cover or substitute agreement Rockingham County v Luten Bridge: D contracted to build bridge for P but committee minority takes control and say K not binding so stop building. D keeps building bridge in hope majority regains control. P breached but D had notice of it so should have stopped own performance and sued for breach. D's damages are compensation for work done before learned of repudiation. Maness v Collins: D terminates P's employment K for not fulfilling duties and P files for breach. K had non-compete clause for 5 years covering all of US. P did not look for new job after firing. D showed no ev that similar substitute arrangements available so can't use failure to mitigate as affirmative defense. Burden usually on breaching party to show availability of substantially equivalent/comparable substitute arrangement if no well-established market for the type of performance ex employer usually has burden (vs in well established market like sale of securities) subsequent personal service K after breach usually mitigating K rather than additional (but not always) plaintiff must mitigate as ordinary, reasonable person under similar circumstances would Even if wrongfully terminated, must make effort to mitigate income from new job will be deducted from damages Can include acceptance of unconditional offer of reinstatement when no special reasons to reject = can't just say apprehensions about other party after their breach (Fair v Red Lion) failure to mitigate does not preclude recovery, just reduces amount of recovery only precluded from recovery if amount P would have earned if exercised reasonable diligence was equal or more than what he would have gotten under original K Jetz Service v Salina Properties: D leased property to P and gave P first $300 or 50% profits whichever was greater. D disconnected all P's equipment and replaced with own during lease (breach). P stored all equipment except re-leased 4 units. P suing for lost income from remaining lease time but D says failure to mitigate. P is lost volume seller since continually looking for new places to place equipment and had huge stock left so could have entered into another K at same time and OG K so P has no duty to mitigate by finding other location to use equipment. Lost profits considered in K since K based on profits so damages naturally flow from breach. Lost volume seller: lost volume of business the non-breaching seller incurs because of buyer's breach = seller must resell units but loses chance at securing new buyer = entitled to lost profit from OG K without deduction of income from subsequent K (UCC and RC concept) applied if seller could have entered into substitute K at same time as breached K (mitigating vs additional K) ex A selling B machine for $5. Seller cost per machine $3. B breaches so seller resells to C, regular buyer who would have bought anyway, at $5. Seller lost $2 since originally stood to make $2 selling to B and to C (total $4) but now only make $2 from sale to C. lost volume seller: (1) possessed ability to make additional sale (2) additional sale could have been made profitably (3) probably would have made additional sale if no breach (Rodriguez v Learjet)

1b. Mutual Assent

Mutual assent: outward objective manifestation of assent (rather than meeting of the minds) Duty to read: you are responsible for what you sign even if you didn't read/understand it (absent fraud/duress) No mutual assent if material differences in understanding and they don't know/have no reason to know that they attached different meanings OR both know/should have known different meanings (R2C 20) Valid K on A's terms if B knows/should know A thinking of different meaning but A doesn't know/shouldn't know that B is Ray v Eunice Bros Inc: P and D negotiated but final K had P's specs. D thought was their specs. P wins since duty to read and outward manifestation of assent. Peerless: D bought cotton from P to arrive on ship Peerless from Bombay. P and D thinking of 2 different ships. P wins since time was a material difference.

1i. Restitution (unjust enrichment)

No promise Restitution absent promise if D (1) knowingly (2) accepted and received benefits from services => D must be compensated unless officious (services forced on D) Don't need consent/acceptance if necessary to prevent serious bodily harm or impossible to consent due to youth or mental impairment Credit Bureau Enterprise Inc v Pelo: D involuntarily hospitalized after threaten to commit suicide and diagnosed with BPD. D refused to sign release until threatened that he wouldn't get his stuff back if don't sign. D refuses to pay P for services. D mental incapacity so incapable of consent. D received benefit since diagnosed with BPD and prevented self-harm. D must pay. Watts v Watts: D promised P that if she quit her job and moved in with him, he would take care of her financially. D and P acted as married couple for decade and P cooked, cleaned, and took care of kids. Relationship broke down and D refused to give P anything even though promised her equal share of wealth. Breach of implied K with consideration (uncompensated services) and D unjustly enriched by P's services. P wins. Promise (like restitution but promise suggests wasn't gratuitous) Promise for benefit that promisor received from promisee is binding if necessary to prevent injustice UNLESS benefit was gift/gratuitous (no intent to charge), promisor not unjustly enriched, or value disproportionate to benefit (RC 86) If A supposed to paint B's house for $100 but accidentally paints C's house, C not unjustly enriched since officious but, if C says looks great and promises to pay A $1000, not enforceable since value disproportionate to benefit if C says will pay $50, then only bound to pay $50 since more officious Mills v Wyman: D's adult son sick and P took care of him. D found out and wrote letter promising to pay then reneged. No consideration from P since past consideration so no enforcement. D wins. Past consideration is no consideration Moral obligation not sufficient for enforcement of promise unless founded on previous existing legal obligation Statute of limitations on debt passed or bankruptcy but promise to pay=revival of prev legal duty=binding (RC 82, 83) Promise to perform voidable/valid duty in previous K = revival of prev legal duty = binding (RC 85) Benefit not directly to promisor (v in Webb) Webb v McGowen: P saves D's life by preventing D from being hit by log P threw. D promised to compensate for rest of P's life. D received material benefit so promise binding despite past consideration.

1c. Offer and Acceptance

Offer: manifestation of willingness to enter bargain + made in way that justifies other person thinking assent is necessary and will conclude bargain (RC 22) vs prelim negotiation (offeror has to give further assent)=usually includes ads and price quotes If "offer" can be withdrawn after acceptance, then actually just invitation to make offer rather than actual offer Seriousness of offer = look at circumstance (setting/past interactions etc) and if reasonable person would believe offer/acceptance was serious, binding K No offer if person knows or should know other party didn't mean promise/manifestation of intent as expression of fixed purpose OR further assent needed from offeror (RC 25) Acceptance: manifestation of assent to terms (promise) or at least part of action/tender delivered (performance) (RC 50) Must comply with place/manner/time set forth by offeror (if none specified, reasonable place/manner/time) Acceptance of offer must be timely Mailbox/deposit rule (common law and UCC): acceptance effective as soon as dispatched UNLESS offeror explicitly said need to receive acceptance in order to be effective CISG: offer cannot be revoked after acceptance deposited but offer must arrive in order to be effective (can't say lost in mail) Usually acceptance by silence not ok unless prev interactions offeree takes benefit of services after given reasonable time to reject services and know compensation expected Termination of power of acceptance: rejection/counteroffer, lapse in time, revocation, death/incapacity (RC 36) Rejection terminates power unless manifest contrary intent Counteroffer: substitute bargain so OG offer is rejected and ceases to exist unless parties expressly agree otherwise (terms like closing date don't carry over automatically) (RC 39) Qualified acceptance (accept but changes) is counteroffer if acceptance expressly conditioned on changes if not expressly conditioned, then just inquiries into alternative terms Revocation: before acceptance and offeree finds out from reliable source (can be 3rd party) (RC 36) Bilateral K: exchange of promises of future obligation on both sides Lonergan v Schenk: P answers ad in paper re: land and asks questions ("if i should wish to buy land..."). D responds and says need to act fast since other buyer. P waited week to say would buy but D already sold land. Ad and letters from D not offer since said had other buyers, open material terms/needed further assent. D wins. Izadi v Machado: P tried to trade in car for $3000 towards new car as per D's ad. D's ad had fine print saying had to be specific car to trade in but P thought was any car. Ad binding based on how reasonable person would understand. P wins. If issue, K interpreted based on reasonable person's understanding of terms (not subjective understanding by one of parties) Ads usually not offer unless explicit language (ex. 1st come 1st serve) or bait and switch (deceptive language) If deceptive language in ad or bait and switch, ad can be binding based on reasonable person understanding (even tho ads not usually binding) if objective reading of ad can be construed as offer, it is offer Normile v Miller: P prepared purchase offer with closing date but D made changes. P didn't accept or reject. D sold house and P found out from broker. P tries to accept D's offer since before OG closing date on form. D's changes were counteroffer so closing date didn't automatically carry over and no option K since no consideration. D revoked before P accepted. D wins. Unilateral K: A offers to commit to performance if and only if B accepts it by first rendering their performance (B's performance both consideration and acceptance=>if not performance by B, no K or liability) Unilateral K => option K if offeree begin performance. Offeror performance conditional on completion of offeree's performance (RC 45) If offer ambiguous, should interpret as allowing either performance or promise (RC 32) Cook v Coldwell Banker: D instituted tiered bonus program. P sold enough for 1st round of bonuses and received. P qualified for 2nd round of bonuses but quit before 2nd round handed out. P completed substantive performance=unilateral K binding. P wins. Satierele v RJ Reynolds Tobacco: D create Camel Cash program (trade in "cash" for prizes from catalog) but announced end. P tried to redeem points but D stops printing catalog and says no more prizes available. D made offer since invite acceptance by performance (registration/trade in cash) so unilateral K. P wins. Ad not offer unless specific language, reward, redeem coupon=> if offer, unilateral K Ad = offer if invite specific performance w/o further communication and leave nothing for negotiation (unilateral K) Kolodzy v Mason: $1 million to prove me wrong => no reasonable person would understand as offer

2b. Parol Evidence

Parol Evidence Rule: evidence of particular prior negotiations Is there written agreement? Is writing fully or partially integrated? Expression of one or more terms of agreement = on its face, completeness, specificity, ev of complete integration like merger clause = fully integrated unless evidence to contrary (RC 209) RC and UCC say can use parol ev to establish whether partial, full, or no integration but courts split (some use four corners rule) Full integration: complete and exclusive statement of agreement (otherwise partial) (RC 210) partial integration if omit specific term agreed to w/ separate consideration or if term that would naturally omitted in circumstances (reasonable people would have included term in full K) (RC 216) If fully, no contradictory or supplementary evidence from negotiations (RC 216) if partially, no contradictory evidence from negotiations but can supplement (RC 216) BUT can supplement if UCC (UCC 2-202) can use course of dealing/performance/trade usage or evidence of consent to additional terms unless ev that writing fully integrated Exceptions interpret ambiguous terms or ones with special meanings 4 corners approach: look at patent ambiguity Corbin: can use parol ev to decide ambiguity too look at all ev relevant to integration, interpretation, parties' intent (enforce K as parties intended rather than from judge's understanding) parol ev to exclude ev that contradicts or varies meaning of agreement (ev for interpretation but not for contradiction) interpret (if judge finds K is reasonably susceptible to parties' interpretations then ev admitted to explain K can admit extrinsic ev conditionally to see if interpretation reasonable, then rule that it violates parol ev if unreasonable evidence from course of dealing/performance or trade usage later modifications oral conditions precedent, collateral agreement, reformation (scrivener's error) evidence about invalidity or unenforceability (but some courts only allow for fraud of execution and not for fraud of inducement) ex no consideration CISG Art 8 (rejects parole ev rule): interpret by intent if other party know/should know intent otherwise reasonable person standard considering all relevant extrinsic evidence Thompson v Libby: P and D made K about logs and D says warranty on quality on logs even though nothing in K. K seemed complete on face so can't introduce terms to supplement or contradict K and not collateral agreement (not distinct subject) for warranty so no parole ev. Taylor v State Farm: D settled P's claim for way over policy limit so P sues for bad faith settlement. P signed release of contractual claims in exchange for benefits but did release apply to just bad faith claims? Consider all evidence relative to interpretation so look at fact that bad faith claim sounds in torts so susceptible to P's interpretation that release not for bad faith claims => Can admit extrinsic evidence to support susceptibility so look at fact that parties purposely left "bad faith" out of K and K made after bad faith tort recognized so if D had meant to include bad faith in release would/should have used broader language than contractual claims. Parol ev ok since didn't show separate agreement (like Thompson v Libby) but rather helped interpret

2m. Material Breach

Performance If performances can be rendered simultaneously, they are unless K or circumstances say otherwise (RC 234) performance that takes longer due before shorter one Full performance discharges duty; non-performance is breach Breach immaterial: actual damages good faith trivial and innocent omission= damages but not always breach with forfeiture look at significance of change vs how much forfeiture/cost to fix purpose served, desire to be gratified, excuse of deviation, cruelty of enforced adherence material: suspend performance and actual damages extent injured party will obtain substantial benefit he could have reasonably anticipated extent injured party can be compensated for lack of full performance extent breaching party made prep to perform/partially performed hardship on breaching party if terminate K breaching party's willful/neg behavior in failing to perform (un)certainty other party will perform remainder of K total: performance discharged and damages uncured material breach+ further delay affects substitute arrangements by injured party + degree of importance K attached to performance w/o delay Constructive/implicit condition: A's performance sufficiently dependent on B's performance that B's failure to perform justifies A not having to perform each party's performance implicitly conditioned on other's performance having no uncured material fault minor/immaterial deviation does not mean failure of condition (other party must still perform but right to damages) UCC Perfect Tender Rule: if goods don't conform to K for any reason, buyer can reject all, accept all, or accept some and reject some rejection of goods and notification of rejection must be w/i reasonable time if rejected and still time for performance, seller can notify buyer of intention to cure and make conforming delivery within time of K seller can have further reasonable time to substitute if buyer reject something seller had reason to believe conformed buyer can revoke acceptance if non-conformity substantially impairs value to him if he accepted on assumption nonconformity would be cured and it isn't OR w/o discovery of nonconformity if defect hard to discover before acceptance OR seller assured him of conformity CISG: no perfect tender rule (follows common law) Jacob and Youngs Inc v Kent: D wanted Reading pipes of certain specs and P put in some Reading and some Cohoes of same specs bc failed to inspect later batches of pipes. D refuse last part of payment since P refuse to tear down and replace since too expensive. Immaterial breach since change insignificant (exact same pipe and function except for name) and cost to fix disproportionate to benefit obtained by fixing. Sackett v Spindler: P to buy newspaper stocks from D and paid first installment but kept not being able to come up with money. D said didn't want to sell anymore but P offers to pay cash. D says ok but P never pays. Newspaper price falls dramatically during K. Total breach since extreme uncertainty P would perform due to previous failure to pay and delay affected substitute arrangement since paper losing money => D's initial repudiation lawful (even tho doesn't matter since later retracted).

1f. Battle of the forms

Princess Cruises Inc v GE: P ship inspected by D => D unbalanced and damaged ship when trying to remove rust. P sends purchase order with price and services=offer. D replies with price quote on own form with limited liability clause=counteroffer. P says can proceed and no objections re: terms=acceptance. D sends letter of intent to perform. P accepts services (further acceptance). Sale of services is predominant purpose of K=common law. D's reply not mirror image of offer so counteroffer. Binding offer is last form/offer sent out. K on D's terms so limited liability clause in. D wins. Mirror Image Rule (common law): when there is purported acceptance but there are additional or changed terms, purported acceptance is actually rejection and counteroffer. Last Shot Rule (common law): whoever sent last form is offeror since no objection from offeree so implied assent. Predominant Purpose test: if mix of services and goods, UCC applies if predominant purpose of K is sale of goods with incidental services (look at text of the K, nature of the business, cost of goods vs services) If under UCC: D's price quote could be acceptance with proposed modified terms Brown Machine v Hercules Inc: P sends proposal with liability clause. D prepares purchase order w/ magic words but refuse to pay deposit. P gives work order based on verbal agreement. D sends final purchase order with no liability clause but P does not sign. P doesn't issues new work order and sends invoice for deposit. D sends separate acknowledgement w/o liability clause and other changes. D never pays deposit but pays agreed upon price. D's employee sued P for injuries and D says P must pay since no liability clause. D wins. D's purchase order is offer. P's acceptance not expressly conditional on liability clause. Both parties are merchants but magic words so D wins. Paul Gottlieb v Alps South Corp: P changed fabric in product for D without notifying D. P did not know what fabric was used for. Previously, D had rejected samples and requested fixes when this happened. D's substitution led to recall. Limited liability clause in standardized "finished goods K" for P on back of goods. D didn't read K. P wins. Offer was D's purchase order. Acceptance was in P's standardized form. Both parties are merchants. Limited liability clause did not materially alter K since no unreasonable surprise or hardship to P. P never asked D to reimburse for damages in past, just fix mistake + P didn't know extent of possible consequences since never told use of fabric=no hardship. Did not matter that D unaware of clause since duty to read + manifested assent=no surprise. Material alteration of K: must cause unreasonable surprise or hardship (as result of said surprise)

2a. Interpretation

Principles of interpretation Noscitur a solis: meaning of a word affected by context/circumstances (RC 202) If multiple meanings, common meaning or technical meaning preferred but can look at previous interactions, course of performance when possible, manifestations of both parties interpreted as consistent with each other trade usage observed if proof of regular usage, written trade code etc qualifies/supplements agreement (RC 223) course of dealing qualifies/supplements agreement (RC 223) Express terms > course of performance (under/after K) > course of dealing (before K) > usage of trade (UCC 1-303) Ejusdem generis: general term + specific term = include only things in same category as specific term (ex hogs, horse, and other animals includes sheep but not pet dog) Expressio unius exclusio alterius: specific terms w/o general terms exclude other similar items Ut magis valeat quam pereat: interpretation that makes K valid preferred to one that doesn't Omnia praesumuntur contra proferentum: interpret against drafter or one with less bargaining power when multiple possible meanings (RC 206) Interpret K as a whole: look at context Interpret every word as having meaning: nothing in K for no reason Principle purpose of parties: can be used to determine meaning of manifestations of intention (RC 202) Specific provisions exceptions to general ones (RC 203) Handwritten/typed provision scontrol printed ones: more recent and specifically negotiated/added terms preferred (RC 203) Public interest preferred (RC 207) Interpret K in way that makes it lawful/reasonable/effective (RC 203) Prefer express terms over course of performance/trade usage etc but can supply reasonable term if material term omitted but bargain definite enough to be a K (RC 204) Reasonable expectation in standardized agreements: term not in K if one party has reason to know other wouldn't assent if knew about term = can admit parol ev (RC 211) interpret standardized agreements as treating all who signed in same manner when reasonable Frigaliment v BNS: P ordered "chicken" and meant young chicken but D sends half young and half stewed (fowl). P asks "any kind of chicken ok" and D assents. P gets first shipment, protests, and D stops second shipment. Chicken by itself ambiguous but price for heavier chickens way lower than market price and unreasonable to think D would operate at loss. Also, no established trade usage regarding fowl vs chicken. Even though P complained (says D responsible for cost of any chicken not pursuant to K) accepted two shipments. Not enough evidence to show narrow use so D wins. Analysis Is word ambiguous? Plain meaning usually governs but can be overcome by trade usage Does context clarify? Did parties ascribe same meaning or did one know/have reason to know difference in meanings? (Peerless) if other party not member of trade circle, must establish knowledge of usage or usage so common that should have known Was transaction far along enough that courts need to find K? CJ Fertilizer v Allied Mutual Insurance: D insured P's building against burglary but needed to show visible damage to exterior to prove not inside job. P robbed but only tire marks outside since door forced open with no marks. Reasonable expectation from K is can recover unless inside job. Visible terms mark not reasonably foreseeable and not dickered for/expressly agreed to. P wins. Objective reasonable expectation induced by promise can be honored even in light of policy concerns or express terms (customers not bound to unknown terms outside of reasonable expectations) for reasonable expectations, can look at prior negotiations/circumstances, terms bizarre/oppressive, opposes non standard terms expressly agreed to (dickered for terms), eliminated predominant purpose of transaction

2i. Public Policy

Public policy: limited to specific areas where externalities huge, morality issues (ex. surrogacy), historical issues (non-compete/restraint on trade), or when K interacts with criminal illegality or regulated activity for criminal purposes Valley Medical Specialists v Farber: D signed non-compete agreement to not practice for 3 years in 5 mi radius around P's hospital. Can't enforce bc public policy. D didn't acquire skills from P and doctor-patient relationship special and needs to be protected (right to choose doctor). Even though protecting referral sources, distance/duration unreasonable since only takes replacement about 6 months to meet all of D's old patients and establish relationship since D's patients had to see D every 6 months. Non-compete agreement valid if restraint reasonable (fair protection w/o interfering with public interest) and restraint needed to protect legitimate interest (not just desire to reduce competition) legit interest: prevent competitive of info/relationships that pertain particularly to employer and acquired in course of employment Blue pencil rule: if agreement severable and no ev of bad faith/overreach, court can ignore unreasonable/unlawful part and enforce the rest In re Baby: Intended parents had artificially inseminated (gestational) surrogate sign K and get consent order releasing all legal/parental rights/duties to child upon birth and stating that surrogate isn't biologically surrogate's. Surrogate had second thoughts and sues. Can't enforce K due to public policy. Can't terminate biological right to child before child born and must be done through legal channels like surrender, K must take into account best interest of child, and can't condition compensation upon surrender of child (buying baby).

1a. Governing Rules

R2C: (1) promises (excludes transactions where only obligations are imposed by laws) where (2) if breach, there is remedy and (3) performance recognized by law as duty Voidable contract: K that can be revoked if party cancels or revokes it Requirements of bargain: (1) mutual assent to exchange (outward manifestation) (2) consideration (3) special rules for formal contract (notarized= "under seal") UCC (for goods=movable things)=common law and equity can supplement UCC but not supplant Agreement=bargain made by parties through words/actions Contract=legal obligations resulting from agreement CISG: (sale of goods btw parties in different countries that aren't for personal use) Only applies to K formation

2l. Express Conditions

RC 235: breach = unjustified/unexcused non-performance justified non-performance = ex. conditional performance and condition never occurred Conditional event: event not certain to occur which must occur before performance under K becomes due (by agreement of parties or term supplied by court) (RC 224) express conditions must be stated in unambiguous language courts prefer not to interpret term as express condition of obligor's duty (bc want to reduce risk of forfeiture) unless event under obligees control or show obligee assumes risk supposedly immateriality doesn't matter but most courts look at breach of immaterial express conditions under other theory prevention of condition by other party excuses non-occurrence waiver of express condition: promise to perform duty in spite of non-occurrence of condition binding whether made before or after time event supposed to occur UNLESS condition material part of bargain and promisee under no duty that condition occurs OR uncertainty of occurrence was part of risk promisor assumed (ex promise to insure house against fire) if promise made before condition occurs and condition w/i control of promisee, promisor can make duty subject to condition again if notice received while reasonable time for condition to occur under OG terms or new extension and no reliance on waiver and promise not binding obligor's acceptance/retention of performance by obligee for unreasonable time w/ reason to know of non-occurrence = promise to perform despite non-occurrence estoppel: obligor expressed intention to not insist on condition and obligee relies on this strict enforcement: condition occurs or doesn't (substantial performance not enough) but if just promise and not condition, substantial performance ok (breach of promise doesn't discharge duty) neither condition nor promise: ex. payment when paid (subcontractors) is just calling for payment in reasonable time (or else too much risk on subcontractor) forfeiture: denial of compensation bc obligee lost right to agreed-upon exchange after substantially relied (preparation of performance one expectation of exchange) aka give up money/prop w/o compensation bc of non-performance or breach (RC 229) disproportionate: look at extent of forfeiture, importance to obligor of risk for which he sought protection, how much protection lost if non-occurrence excused to extent required to avoid forfeiture can excuse non-occurrence for disproportionate forfeiture unless condition was material part of bargain forfeiture may be appropriate if consistent with notions of fairness and justice forfeiture may be appropriate if sophisticated parties represented by lawyers or when express termination clause in K there is no forfeiture is party keeps ownership of all assets composing K Enexco v Northern States Power: P and D enter into K about wind energy conditioned on P getting environmental certificates by stop date (or else can terminate). P started to try for certificates 2 years into K but delays so couldn't get certificate by stop date. D terminates at stop date but P gets permit 2 months after. Market drop so D would lose money if enforce K and P stuck with depreciated assets that can't sell. No temporary impracticability since P's own fault in waiting to apply. Express condition enforced (rightful termination) since no disproportionate forfeiture (P kept all assets in K). D wins. JNA v Cross Bay Chelsea: P lease prop to someone with renewal option w/ 60 days notice and and they assign lease to D w/ 24 year renewal option. P sent D reminders about obligations but didn't send about renewal. D didn't give notice within required period so P end lease. D made substantial improvements after notice period passed and mistake due to inattention so gravity of loss outweighs gravity of fault. If no reliance by P on D not renewing, equitable relief ok. Default on option (like renewal) usually not forfeiture since no rights accrue until actual notice that exercising option (even if option paid for since paying for right to exercise) UNLESS valuable improvements made in good faith to renew lease and lack of notice hasn't prejudiced landlord and was result of honest mistake/excusable fault (sometimes neg ok too) only deny equitable relief if willful or gross neglect (gravity of loss vs gravity of fault

1c. Postponed Bargaining

RC 33: K must have reasonably certain terms (can determine when breach and basis for remedy) but some nonmaterial terms can be left open If parties intend for it to be binding, court can try to attach sufficiently definite meaning to bargain Terms can be supplied by factual implication or history/course of dealings Contemplation of future formal K: if only with terms of prior agreements, prior agreements not just mere negotiation if parties intend for them to be binding (manifestation of assent) UNLESS party knows or should know other party means negotiations to be non-binding until formal K (RC 27) UCC: if parties intend to be bound + reasonably certain basis for remedy= ok for terms to be left open w/o K failing for indefiniteness (the more terms open and more important they are=less likely to be K) UCC Open Price Term: can leave price open or leave up to one party to determine price in future so long a s both parties intended for K to be binding Court can fix reasonable price if failure to agree Walter v Keith: P leased lot from D and renewal option with price TBD later based on comparison of rental values. P and D couldn't agree on rent. Rent is material term=> No K. Reluctance to enforce K w/o price or formula to determine price since material term Minority view that if no terms in renewal option, imply reasonable rent/duration (since these are terms that court can determine looking at market value) (Cassinari v Mapes) => this more likely now Quake Construction Inc v American Airlines: P made bid on D's construction project. D said P got bid and sent letter of intent specifying location, duration, price, and necessary actions. P made some changes and D said would send final K soon. D announced P as general manager for project then sent letter of termination same day. Letter of intent was meant to be binding since specific and cancellation clause so is enforceable K. P wins.

2k. Modification

RC 73: Must have consideration for modification performance of pre-existing duty that's not doubtful or in dispute = insufficient consideration but similar performance that differs enough to reflect more than pretense of a bargain is consideration Modification binding (RC 89) if fair/equitable in view of circumstances not anticipated when K made to extent allowed by statute justice requires enforcement bc reliance induced material change in position don't want to incentivize coerced modification Supercedeing K (about same subject matter) rescinds previous K unless duress (basically mutual rescission) UCC 2-209: no consideration necessary, just need good faith and no duress for modification must have legit commercial reason to modify (ex unforeseen commercial contingencies) objective reasonableness and subjective honesty (can't just extort) if merchant K says no mod/recession, can modify/recession using separate form signed by other party modification/rescission can act as waiver of rights/benefits but but can retracted (unless reliance on waiver) must satisfy SoF if claim economic duress as defense to modification, must show you put up some protest that put seller on notice that modification not made freely CISG 29: no consideration necessary for modification/termination if K says no mod/recession, then no mod or recession but party's conduct that causes reliance may bar him from asserting said provision Alaska Packers v Domenico: D hired P to fish in Alaska but P refuse to do work without higher pay when get to Alaska bc claim defective nets. K changed to reflect higher wage. Modification illegitimate since no consideration (P doing exactly what they promised to do to begin with) and secretary P spoke to didn't have authority to modify. important precedent to help employers get around labor strikes Kelsey-Hayes v Galtaco: D discontinue making brake assemblies bc losing money but say will keep making for several months at 30% price increase so customers have time to find alternative arrangements. 3 months later everyone but P has alternative arrangements so P raises price another 30% over P's protests. P pays for all except $2 mil (about what price raises cost). Economic duress since threat to go out of business improper and lest P with no reasonable alternative (no one else had castings and couldn't sue since then D would stop giving them castings). P objected to prices so D on notice of duress = illegitimate modification.

1h. Promissory Estoppel (reliance)

RC 90 Promissory estoppel: Promisor (1) reasonably expects promise to induce action/forbearance and (2) promise does induce said action/forbearance, then promise is binding (3) is unjust to not enforce promise (UCC doesn't deal with formation so common law slots in; CISG only recognizes reliance for option Ks) (1) Reasonably expect: promises actions reasonably foreseeable Promise doesn't have to be express = can be implied through conduct Reasonableness and degree of reliance Can depend on formality/seriousness of agreement Boutin: didn't matter that P lawyer, reliance reasonable and foreseeable bc of family context (2) Induce action: definite and substantial change in position that wouldn't have happened without promise (3) Justice: remedy limited as justice requires (usually recover less than for breach of K) other ways to remedy besides enforcing promise (like monetary compensation rather than specific performance) look at circumstances like promisor's ability to remedy (illness, bankruptcy etc) Harvey v Dow: P's parents (D) told P when younger would give her piece of land. P starts building home with D's help. P paid 2k and paying taxes on house but D never hand over deed. Yes promissory estoppel (1) since general promise about land and acquiescence meant promise implied through conduct (2) which induced P's change in position in paying 2k and (3) unjust not to enforce promise since P has 2k asset on land. Tozier: promise for gift of land enforces if promisee made substantial improvements to land on reliance of promise Greiner: promise for inheritance of land enforceable since P moved from another part of state and started living there. King v Trustees of Boston University: MLK in letter gave papers to D and promised to transfer title upon death. D indexed and cared for papers. P says no consideration from D. MLK's letter clear about intent to transfer title and actually did begin to transfer (implied through conduct). Sufficient consideration/reliance since indexed, cared for papers, trained archivists. RT 90(2): Don't need to show reliance to enforce charitable subscription but rest of promissory estoppel applies (but a lot of courts reject this) if will of donor sufficiently clear, will try to enforce as much as possible without abandoning contractual principles like consideration Condition (money used for specific project) vs consideration/reliance (name on building) Promises in Commercial Contexts Katz v Danny Dare Inc: D convince P to retire with pension. If P hadn't retired, D would have fired P. After 3 years, D stop sending checks bc thought P, 70 years old, healthy enough to work full time so say either work full time for D again or cut pension. D gave up higher salary for promise of pension (even though would have otherwise been fired). P can't work full-time at 70 so injustice avoided only by enforcing promise. P wins. Legal detriment not necessary for reliance (that's consideration) but if P ends up better off bc of reliance, that might factor into whether injustice can be avoided only if enforce promise Different if P had retired then D said company would give him pension or if P told he was being retired with pension since then no consideration Aceves v US Bank: P told if don't convert to bankruptcy (if do, can keep home) D will "work with her" to refinance but D foreclose and sell P's home one day after negotiator says take harsh new terms or leave it. Promise to work with P (negotiate) if P doesn't file for bankruptcy and P didn't file because thought D would held her refinance. Yes promissory estoppel. Option K: offer that offeree can delay accepting for specific or reasonable amount time w/o losing power of acceptance even if offeror tries to revoke (need consideration for option) RC 87: Option K valid if (1) written and signed by offeror (2) gives purported consideration (nominal ok) (3) exchange on fair terms within reasonable time or made irrevocable by statute (sale of goods) or if offer induces reasonably foreseeable reliance and must be enforced to prevent injustice UCC 2-205: Option K if (1) written and signed by merchant (2) terms say offer will be held open for reasonable amount for time less than 3 months (3) even if NO consideration CISG 16: Offer can be revoked if offeree notified of revocation before accept UNLESS K says can't revoke for fixed time or reasonable reliance on fact that offer irrevocable Berryman v Kmoch: D (developer) had option K to buy land from P for $10 and other "valuable consideration" but D never paid $10. D says consideration was time and effort trying to get others to buy into land. P asks to be released from K but D refuses. P sells land so when D later exercises option at bank, find out land sold. No consideration since K just to sell land to D not to others (so D's efforts not bargained for) and no reliance since P's actions not asked for or foreseeable. D found out from reliable source that P sold land (inconsistent with offer/K) so notified of revocation before exercise option so no power of acceptance anymore. P wins. If this under CISG, would not have been able to revoke.

3h. Specific Performance

RC: No specific performance or injunction if damages adequate to protect expectation interest but adequacy of damages to remedy one part of K doesn't preclude specific performance for K as whole can consider whether there is remedy for breach other than damages but not dispositive damages adequate depending on: difficulty of proving damages with reasonable certainty if suffer loss but can't prove damages with reasonable certainty, nominal damages things incapable of being valued in money like family heirlooms difficulty of procuring a suitable substitute performance by means of money awarded in damages ex contracts for forbearance like not covenants not to compete or sale of land likelihood that award of damages could not be collected idea that only equitable relief if damages inadequate terms must be sufficiently certain to provide basis for appropriate order specific performance can be granted in spite of K term denying it if refusal to grant would cause unreasonable hardship to non-breaching party or 3rd persons can be refused if substantial part of the agreed exchange for the performance to be compelled is unperformed and performance is not secured to the satisfaction of the court K compelled by unfair practices or mistake relief would cause unreasonable hardship or loss to breaching party of 3rd parties exchange is grossly inadequate or terms of K are unfair (doesn't have to reach level of unconscionability) performance/forbearance or compulsion of performance/forbearance contrary to public policy burden on court to supervise performance (nature/magnitude) disproportionate to benefit gained from enforcement of harm caused by denial contract to render personal services (employment Ks, actors, singers wtc) if exclusivity clause, won't allow specific performance if allowing would compel employee to return to undesirable continued personal relations or leave employee without other reasonable way to make living UCC 2-716: specific performance if goods unique or in other proper circumstances can include terms about payment of price, damages or other relief that court deems just seller's version aka buyer must take goods and pay if seller can't reasonably resell them to others inability to cover suggests other proper circumstances buyer right to replevin (get goods in K) if can't get cover with reasonable efforts, if circumstances indicate won't be able to get cover, if goods made under reservation and security interest made if goods for family/personal use, replevin if about acquisition of special property CISG: specific performance only if court would have to do so under own laws (injunctive relief easy and available unless not available in country aka US and some common law countries) buyer can request specific performance unless resorted to remedy inconsistent with this if non-conforming goods and this is material breach, can request shipment of substitute goods or repair when give notice or within reasonable time seller can require buyer to pay price, take delivery, perform other obligations unless resorted to remedy inconsistent with this City Stores v Ammerman: D promised P lease for property in mall but D had issues getting necessary zoning before even promised P. P sent letter of interest showing preference over D's competitors who were also trying to get zoning for a mall in the area which D used before the zoning board (no other stores would do this) = sufficient consideration/performance to make unilateral K. D says letter written to get permission from tenants of another mall for P to be there but P says D requested letter in exchange for promising P spot in mall. Another tenant in mall objected to P bring in mall but D had sent letter to P promising to give them spot in mall if could get zoning. P says this is option K allowing P to accept or reject lease but D says no option K. Option K with conditions precedent: D needed to secure zoning and did, so should have then offered P lease even though still open terms about actual lease to negotiate so question of whether K specific enough for specific performance. Rent and sq ft can be determined since supposed to be on same terms as other mall leases. Here, other legal remedies inadequate since can't compensate for opportunity to participate in mall. D says hardship greater than benefit to P since if give lease to P, then can't negotiate with Sear which would give them more money but this hardship not substantial enough (not financial ruin or impracticability) to prevent specific performance and P shouldn't have to suffer bc of something that's not their fault. Other damages not adequate since can't price out opportunity of being in the mall and hard to get substitute. P didn't sleep on rights since needed other leases to come through before can determine terms of their lease and promptly sued as soon as leases came through. some jurisdictions say that option Ks involving further negotiations on construction and building (aka still some open terms) can't be enforced w/ specifically performance open price term (to be later agreed on) meant D would accept reasonable price specific performance depending on inadequacy (subject of K is special matter so damages inadequate substitute for subject) or impracticability (impossible to arrive at legal measure of damages ) of other remedies ex for land (usually buyers rather than sellers) or unique chattels courts can use this for construction of buildings unless cost of court supervising said construction outweighs importance of specific performance to P (ex construction done on D's land) usually not used though since high cost of supervision may be ok even if some terms left open but obligations imposed by K must be sufficiently certain and definite BUT failure to agree on material terms may be cause to deny specific performance no specific performance if hardship/loss to D unreasonable and greater than potential benefit to P (ex impossibility or financial ruin) release of contractual right (vs waiver of condition) must be supported by consideration Reier Broadcasting v Kramer: P contract to have exclusive broadcasting rights for D on weekly program and ads. K said D can't let his name be used in connection with other stations or et jobs that conflict with performance to P. P wants to renew K for MSU athletic broadcast K but that proposal wants to use D in some segments, which conflicts with P and D's contract so MSU rejects P's bid and gave K to Clear Channel. P seeking injunction to prevent D from appearing on Clear Channel. Damages seem hard since can't really separate out profits from Katchat from profits from having all broadcasting rights. Injunction denied since this would indirectly enforce affirmative part of K (D performing for P). No specific performance for personal service K's (Ks where can't get substitute for said service and K requires human contact) whether using injunction to enforce affirmative (must perform for us) some courts allow for negative parts (exclusivity clause) CA: also allows when Ks for personal service of unique/extraordinary character or when person holds unique position of extraordinary skills/quality (not easily replaceable)

efficient breach

Rationale for expectation damages hidden reliance even if no essential (perform or prep to perform) or incidental reliance (rely on K for collateral K) since opportunity costs (ex doctors charge for cancelled appointment since lost opportunity for another patient there) incentivize reliance on K and agreements efficient breach don't want to compel completion of K bc of choice and inefficiency issues so look to damages = give injured part profit from transaction incentive to breach only when efficient ex A to sell B 10 widgets but B breaches after receive 1 since no market for the machine the widgets going into = inefficient to have A make widgets that no one wants and A doesn't care so long as he gets his profits same except A breached but B gets profits from K, B no longer cares whether A performs or not if breaching more profitable than performance, damages won't deter breach K for A to sell B widgets fro $11 and A sends half before C offers A $12 so A sells to C and causes B to lose $10 profit, efficient to breach since everyone better off in end (A makes $2 more, B gets $10 back so made whole, C gets widgets too) counterargument that ignore post-breach transaction costs like litigation fees and relational costs (reputational issues) undercompensation since expectation damages limit to foreseeable ones contractual rights like property rights=people shouldn't be deprived of them without consent

3g. Restitutionary Damages

Restitution damages available only to extent that P has conferred benefit on other party bc of party performance or reliance/forbearance = often easiest to elect/prove this (RT 370) costs of preparing to perform aren't included (ex A contracts to sell B machine and spends money building machine but B repudiates before completion = no benefit to B so no restitution) doesn't matter if benefit later lost/squandered (ex A promised to put money in bank in exchange for B's services but bank loses money. A still gets restitution since benefit conferred but lost) as justice requires, may be measured by reasonable value of benefit (usually market price = price it would cost to engage similar person to perform benefit) OR increased value of property or other interests (discretion of courts) ex. in Watts, what would have cost to hire someone else to take care of kids vs promised that would split profits or if hire someone to paint house awful color, prob no increase to prop value but can measure cost to hire someone else to do it if money paid, just get money back recovery for benefit conferred by performance usually more generous than one conferred by reliance If other party in total breach or repudiated, right to restitution damages unless you have performed all of duties and other party has no performance due except payment for performance (then recovery limited to contract price) vs if not full performance yet, can elect btw expectation, reliance, and restitution damages applies when K divisible (ex A contract to work for B of $50k + $200 for use of A's own car. A can recover $50k but not $200) If you are in breach, can recover restitution damages for benefits from part performance or reliance minus any loss caused by breach if parties manifest assent to retaining performance despite breach no restitution to breaching party if value of performance reasonable as liquidated damages in light of anticipated/actual loss caused by breach (aka parties can contract around restitutionary damages using liquidated damages) No restitution for officicious benefits or avoidable damages (ex continue to perform after repudiation) party that intentionally furnishes services or builds a building that ois materially different from what he promised is acting officiously so no restitution even if performance provided some benefit to other party UNLESS other party has accepted or agreed to accept substitute performance (still need consideration or substituted contract) Restitution available even if enforcement barred by SoF unless SoF provides otherwise or purpose of SoF would be frustrated by allowing restitution limited to instances where could get restitution if K were enforceable Restitution available when K voidable for capacity, mistake, misrepresentation, duress, undue influence or abuse of a fiduciary relation Restitution available when duty discharged because of impracticability, frustration of purpose, non-occurrence of a condition, disclaimer of a beneficiary US Ex Rel Coastal Steel Erectors v Algernon Blair: D subcontracted to P to supply equipment and erect steel for hospital. P supplied crane but D said no required to pay for crane maintenance under K so P terminated after completing 28% work and D completes work using other subcontractor. P suing for cost of labor and equipment. D was unjustly enriched since got benefit of labor and equipment and hadn't paid. restitution =don't need to look at any loss that would have been incurred from complete performance) technically K no longer exists so don't need to look at potential loss if full performance already, recovery limited to contract price Lancellotti v Thomas: P buy D's business and rent land that business was on conditioned on P building addition in exchange for no rent until Aug. P paid $25k, started operating business, but issues with building addition (P say couldn't get permit, D say got permit but P refused to construct) andd D found out P didn't want to operated business anymore. P suing for $25k back plus interest and D counterclaimed for $6k rent and other damages modern rule: breaching party can recover any benefit - any loss created by breach (whether breach willful or not) can also reward reliance damages when K discharged for reasons like impracticability common law: breaching party cannot recover (only NY and Mass do this still) Ventura v Titan Sports: P wrestler for D on oral K but injured. P then worked on oral K as commentator for D but no discussion of video license royalties before acting for a while. P hired Bloom, agent, to negotiate new written deal but fell apart do first show of new season aired without P. D said policy of only giving royalties to feature performers and P didn't make fuss since wanted to continue working for D. Benefits not limited to services delineated in K since P also created IP benefits to D but only unjustly enriched if D not entitled to use performance w/o P's consent and infringe on right of publicity. Pre-Bloom K's silent on video royalties so restitution ok. Express post-Bloom K waiving royalties but K fraudulently induced since D made royalty payments to non-featured performers even though told P they didn't do that so rescind agreements and allow restitution. Damages awarded in lower court reasonable since looked at other substantially similar licenses/royalties and applied rate to video sales total. Dissent: Pre-Bloom enrichment not unjust since P already paid weekly salary to be commentator, knowingly and willingly gave up rights to royalties, and tapes were made and created by D. Also, no right of publicity in MN. Also, K to broadcast wrestling, which could be reasonably understood to include possible sale of videos. unjust enrichment can be based on failure of consideration, fraud, mistake, situations where morally wrong for one party to enrich himself at expense of other (unjust: illegally or unlawfully) if express contract waiving compensation for service, cannot use restitution but can use if contract and K silent on the benefit can also be based on the performance of duties not specified in K or benefit conferred unknowingly or unwillingly Hypo: K price is $100k, actual cost if $200k. After 25% performance, non-breaching party spent $50k but paid $25k. Expectation: $0 (losing K since down $100k if fully perform) Reliance: $0 (since capped at expectation) Restitution: $25k ($50k-$25k)

3f. Reliance Damages

Right to damages based on reliance (costs of expenditures in preparing to perform or performing, etc) minus loss injured party would have suffered if contract performed (D has burden to prove losing K) (RC 349) can do this if can't prove anticipated profit to reasonable certainty can't recover more essential reliance damages than full contract price promised by defendant (CAPPED AT EXPECTATION DAMAGES) but this doesn't limit incidental reliance damages foreseeability, causation, certainty, and mitigation still apply can't recover for pre-contract reliance may be able to recover for forgone opportunities (ex forgone wages if quit jobs on reliance of promise) puts you back at place you would have been if you had never made the K Wartzman v Hightower Productions: D company that tried to have someone be pole sitting world champion so hired P as lawyer to incorporate them. P failed to make required disclosures so D wasn't in compliance with Fed Securities Act and couldn't keep selling stocks or showing off their pole sitter. D stops ventrue and sues and gets reliance damages for development costs (investments by company heads, liability to talent consultants, unpaid salaries). P's services necessary to D's venture and should have known could have affected success of venture. No duty to mitigate since D didn't have the money to consult securities lawyer and P could have also mitigated by hiring securities lawyer on their own bill. Didn't ask for expectation damages since hard to prove with certainty what new/risky business would have made can't recover for reliance interest if full performance would have resulted in net loss don't have to mitigate if mitigation would expend large amounts of money or incur substantial obligations avoidable consequences doctrine doesn't apply if both parties have equal opportunity to mitigate Walser v Toyota: P said interested in being dealership for D's Lexus. D's process for dealership is fill out application/plan and if this accepted, D issue letter of intent which P need to sign and meet conditions of and once conditions met, formal dealership agreement signed. P applied and D told P letter of intent soon approved, then told P they were dealers before saying mistake made and need more financial info. P had bought property for dealership by then so sue under promissory estoppel and appeal bc damages limited to out of pocket expenses (no lost profits considered). Promissory estoppel damages may be limited a justice requires so here limit to out of pocket expenses ok since discretionary decision based on fact that negotiations still preliminary (no promise of actual dealership since still needed to meet conditions) and Ps would have hard time meeting financial requirements. Out of pocket expenses limited to difference between actual value of property and amount paid. Promissory estoppel damages may be limited a justice requires but can be reliance, expectation, restitution damages, or specific performance some promissory estoppel cases limit to just reliance damages even when expectation damages can be proved to reasonable certainty (Wheeler) reliance damages (like foregone opportunities) may often be hard to prove = some argue should use expectation damages

1j. Statute of Frauds

Statute of Frauds: (1) Is K in scope of SoF? (2) Is statute satisfied (written statement of promise)? (3) If not, is there exception to statute? reliance performance RC 110: SoF applies to Ks about executor of will/estate, debt of another, consideration of marriage, sale of interest in land, or K not to be performed within 1 year 1 year rule: if CAN be performed within one year even if unlikely K with no duration or indefinite duration not under SoF courts usually say lifetime employment K's not under SoF either (since technically could die anytime) Memo (1) is signed by person it's being enforced against (D) (2) reasonably identifies subject of K (3) sufficient to indicate subject of K (4) essential terms stated with reasonable certainty (RC 131) can be several writings that are pieced together if at least one signed and all clearly relate to same transaction (RC 132) writing doesn't have to have been made as a memo of the contract (RC 133) signature can be any symbol made with actual or apparent intention to authenticate writing (letterhead, initial etc) (RC 134) Exceptions to SoF reliance (RC 139) = must enforce to avoid injustice depending on availability of other remedies character of reliance extent action corroborates terms/existence of promise reasonableness and foreseeability of reliance based on promise part performance on reliance of transfer of land and unjust to not enforce promise (RC 129) all juris do RC 129 part performance for land transfer but not all do RC 139 general reliance Crabtree v Elizabeth Arden Sales Co: P and D negotiate for 3 year K with annual raises. D has secretary make memo of offer and later P got roll card with terms of payment. D refuse to give raise after 2nd year and say no agreement and SoF bar enforcement. Satisfies SoF since clear D's memo and roll card refer to same transaction and together have all essential terms and unlikely D's memo fraudulent since made by personal secratary. P wins Beaver v Brumlow: D negotiate to buy land from employer P. No formal K since P said would work it out but D start possessing land with P's consent and made some improvements. D tells P quitting to work for competitor. P tries to restructure agreement as rental through written document and has D pay monthly. D thought paying for land at fair market price since no price in written or oral K. Possession and improvement of the land sufficient part performance on reliance of transfer of land so outside SoF. Even though no price term, can imply reasonable market price. D wins. Part performance (ex taking possession, making improvements) must be in reliance upon promise and have to be able to conclude that K existed on alleged terms after knowing all circumstances K doesn't have to be only possible explanation for the part performance (softens previous language that K had to be only possible explanation) Alaska Democratic Party v Rice: Wakefield says will hire D so D moved to Alaska and rejected other similar job offer. P tells Wakefield he can't hire D but he tells D she has the job. Wakefield later tells D she can't have job. D's reasonable reliance on Wakefield's promise and D rejecting other job and moving to Alaska means must enforce promise to avoid injustice. D wins. UCC 2-201: SoF for sale of goods over $500 Memo must (1) be sufficient to show K made (2) be signed by person being enforced against (3) state a quantity (but not insufficient if some terms wrong/lacking even if material) initials, symbol, e-sig ok for signature between merchants: must confirm K within (1) reasonable time (2) be sufficient against sender (3) party receiving has reason to know contents and (4) no objection within 10 days of receipt writing that's binding on one merchant is binding on another even if no signature so long as other merchant didn't make timely objection Exceptions to SoF (UCC 2-201) specially manufactured goods that can't be sold to anyone else and seller has made substantial start to manufacturing/procuring D admits K made part or whole payment made/accepted OR goods receives/accepted explicit or inferred from conduct (ex taking possession or part or whole) Buffaloe v Hart: P buy tobacco barns from D based on oral agreement (handshake deal like all previous transactions) and give deposit. P resold barns and tell D and D says ok with her. P pays first installment for barns but D rips up check for 5 barns and tells P she doesn't want him to sell barns. D returns shredded check 4 days later then sells barns to same people P sold them to. Check not memo since not signed by D even though state quantity. Part performance since D received deposit and didn't return check until 4 days later and P accepted goods by talking to people to sell barn. P wins. CISG 11: K doesn't need to be written (no SoF)

2d. Good faith

UCC, RC, CISG: every K imposes duty of good faith UCC 1-304: good faith = honesty (and reasonable commercial standards of fair dealing) some states only apply latter to merchants can't alter obligation of good faith but can establish what standards it will be measured with so long as standards reasonable RC 1-205: neither party will do anything that would destroy/injure right of other party to receive the fruits of K or undermines spirit of K subterfuge, evasion, lack of diligence, purposeful imperfect performance, interference, failure to cooperate = bad faith ex requirement and output Ks: indefinite quantities so seller cannot increase demand in way that exceeds bounds of good faith (same for buyer increasing production) RC 228: (if can be determined) if reasonable person in buyer's situation would be satisfied, then buyer can't reject performance (only applies to commercial/mechanical quality, operative fitness=reasonably ascertainable standards) Personal taste Ks use bad faith standard (same for if can't determine reasonable person standard) Satisfaction of clauses: use reasonable person standards when can be determined and honest dissatisfaction when can't (latter likelier for personal service K) not unlimited power to reject or else illusory promise Morin Building Products v Bayston Construction: D hired P to build car plant with aluminum walls subject to final approval of GM. P does according to K but GM rejects since at certain angle wall finish looks uneven. Evidence that impossible to get even finish with aluminum and when other company redoes walls, same issue. Not personal taste K since car plant not mainly about aesthetics and reasonable person would be satisfied since aluminum had reasonable evenness for commercial quality. Even if minority view, parties would have probably adopted reasonable person standard since P wouldn't agree to impossible standard. Locke v Warner Bros: P broke up with Clint Eastwood so first-look and pay-or-play producer deal with D as part of settlement. D never used any of P's scripts or played her (but did pay) and ev this bc of back alley deal with Eastwood. Personal taste K so need honest dissatisfaction = implied good faith rejection (must actually read scripts and reject on merits).

1e. UCC Art 2 K Formation

UCC: agreement by parties (express or conduct that recognizes existence of K) (UCC 2-204) UCC more liberal than common law re: offer/acceptance and certainty of terms Doesn't matter if can't determine moment agreement made K doesn't fail for indefiniteness if intent to enter K and basis for remedy (usually more open terms indicate intent not to be bound UNLESS conduct shows otherwise) Price can be left open=> assume reasonable price at time of delivery (unlike CISG=time of K) (UCC 2-305) CISG Art 14: sufficiently definite offer that shows intent to be bound if offeree accepts + addressed to specific persons If no price, assumed to be reasonable price at time K made Jannusch v Naffziger: P sold food truck to D. D operated truck as if owners (pay taxes, change parts). D tried to return truck at end of season and claimed thought was a trial run before buying. D also say can't remember when oral agreement made. D did not reject goods and used as owner would=conduct shows existence of K. Predominant Purpose test: if mix of services and goods, UCC applies if predominant purpose of K is sale of goods with incidental services. EC Stysberg Engineering Co v Eaton Corp: P trying to sell D brakes, which D had tested out before (old K). P offers quote but D wants lower min order (13,000) but P can't do any lower. Parties agree P would get quote for 13,000. P sends production schedule. D orders 240 units, accepted, and paid. D orders another 240 but cancels request and never pays. P never made offer since quotes are invitations for offer. No new K since no assent on essential terms like price and quantity. D's orders based on old K. D wins. Quotes are invitation for offer, not offer itself. Buyer's purchase order is usually offer.

2h. Unconscionability

Unconscionability: most courts require both procedural and substantive => courts can choose not to enforce K, enforce w/o unconscionable term, limit term, or award damages as equitable (but some courts won't do damages since say it's shield not sword) (UCC 2-302) Procedural: absence of meaningful choice (disparity in bargaining power/ K of adhesion, no reasonable opportunity to understand terms, inconspicuous/unintelligible clauses etc) surprise: disappointed reasonable expectations of weaker party Substantive: term unreasonably favorable to D D can introduce ev of commercial setting/purpose/effect of term Gross difference in value of consideration exchanged may be basis for unconscionability or at least show defects in bargaining process (ev of unconscionability) (RC 208) Possible bad incentives since just put unconscionable stuff in and if it comes to litigation, court just won't enforce Common law mirrors UCC Williams v Walker Thomas Furniture: P bought radio from D. K had clause saying payment prorated over all items bought so if default, can repossess all items where balance still due (aka everything). Term unconscionable since no meaningful choice (K of adhesion) and terms unreasonably favorable to D. Higgins v Superior Court of LA: P, orphans, put on Extreme Makeover Home Edition but people P living with kicked P out after show. P wrote to EMHE for help but EMHE did nothing, then re-aired episode on Easter. P sue but arbitration clause in K so D try to compel arbitration. P wins since procedural unconscionability (Ps young and vulnerable, were told had to sign K to be on show and not given time by people they were living with to read K, clause hidden, untitled, didn't require initials) and substantive (only P's required to submit to arbitration since only P had to agree in K and excessive cost of arbitration) Procedural and substantive = inverse so more of one means less of the other necessary lots of state courts use unconscionability to get around arbitration clauses even tho SCOTUS say this is contrary to intent of congress so must let arbitrator decide if unconscionable (but states still doing this) Quickenloans v Brown: P said if D take loan would help refinance later to get cheaper rate but gave her loan with harsher terms than what they quoted her and added balloon payment. Notary told D to sign all papers, didn't give time to read, wouldn't answer questions. P refuse to refinance. Fraud since no disclosure of balloon payment or different terms to P. Unconscionable since fraud, loans terms incredibly harsh, and D had no little power and no time to read K.

3a. Intro to Damages

alternative to loss in value for expectation damages: reasonable cost of performance/fixing unless cost grossly disproportional to benefit obtained to P (subjective) => then, use diminution in market value (RC 348) or can recover rental value/interest on value/prop or if breach conditioned on fortuitous event, can recover based on value of conditional right at time of breach Peevyhouse: D enter K to stripmine P's farmland but promise to do remedial work to get P to agree. D doesn't do remedial work so P sue for cost of performance (25k) but this is 9x cost of farm and performance only adds $300 to land. Damages are diminution of value ($300) since cost of performance disproportionate to benefit.