Contracts Cases and Doctrine Outline

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OUTLINE DETAILS:Author: AnonymousSchool: University of Pennsylvania Law SchoolCourse: ContractsYear: Fall, 2003Professor: Kristin MadisonText: Contracts: Cases and Doctrines, 3rd Ed.

Text Authors: Randy E. Barnett

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Contracts Outline

MADISON

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2: Promise (oral, written or inferred from conduct) 6349: Reliance damages 6347: Expectation (compensatory) Damages 7371: Restitution Damages 71-106: Damages 7351: Unforeseeability and other limitations on damages 7

352: Uncertainty of loss limitation on damages 8350: Avoidability limitations on damages 82-706: Sellers Resale 82-712: Substitute goods in good faith without unreasonable delay 92-713: Damages for non-delivery or repudiation 92-708: Sellers damages for non-acceptance or repudiation 92-718: Liquidation or limitation of damages; Deposits 92-719: Contractual modification or Limitation of remedy default rules 92-716: Buyers right to specific performance or replevin 10373: Restitution when other party is in breach 12374: Restitution in favor of party in breach 1217: Requirement of a bargain 1218: Manifestation of mutual assent 1319: Conduct as manifestation of assent 13

22: Mode of assent: offer and acceptance 1342: Revocation by communication from offeror received by offeree 1343: Indirect communication of revocation 1324: Offer defined 1325: Option contracts 1336: Methods of termination of the power of acceptance 1337: Termination of power of acceptance under option contract 142-205: Firm offers 142-206: Offer and acceptance in formation of contract 1426: Preliminary negotiations 1533: Certainty 152-204: Formation in general 152-305: Open price term 15

2-308: Absence of specified place for delivery 152-309: Absence of specific time provisions, notice of termination 1527: Existence of contract where written memorial is contemplated 1563: Time when acceptance takes place

1665: Reasonableness of medium of acceptance 1669: Acceptance by silence or exercise of dominion 1630: Form of acceptance invited 1754: Acceptance by performance, necessity of notification to offeror 1732: Where there is doubt as to acceptance 1845: Option contract created through part-performance or tender (i.e., unilateral promise) 1850: Acceptance defined: by performance/promise 182-204: Formation in general 19

2-305: Price - note that a minimum price will prevent a gap filler from being used - no offer to sell 192-308: Place of delivery 192-309: Timing of delivery and notice of termination 1934: Certainty and choice of terms, effect of performance or reliance 192-306: Output, requirements, exclusive dealings contracts 20201: Whose meaning prevails? 21202: Rules in aid of interpretation 22209: Integrated agreements 23214: Evidence of prior or contemporaneous agreements and negotiations 23215: Contradiction of integrated terms 23

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216: Consistent additional terms 232-202: Final written expression: parol or extrinsic evidence 232-207: Additional terms in acceptance or confirmation 2417: Requirement of a bargain 2618: Manifestation of mutual assent 2671: Requirement of exchange; types of exchange 26

79: Adequacy of consideration, mutuality of obligation 2686: Promise for a benefit received (minority view) 2689: Modification of an executory contract 272-209: Modification, rescission and waiver 2779: Adequacy of consideration (mutuality of obligation) 28364: Effect of unfairness 2995: Requirement for sealed contract or written contract or instrument 292-203: Seals inoperative 2987: Option contract (i.e., bilateral promise) 3090: Promise reasonably inducing action or forbearance 30205: Duty of good faith and fair dealing 332-103(b): Good faith defined 332-314: Implied warranty: Merchantability; Usage of Trade 342-316: Exclusion or modification of warranties

342-714: Buyers damage for breach in regard to accepted goods

352-610: Anticipatory repudiation 352-609: Right to adequate assurance of performance 37241: Circumstances in determining whether a failure is material 382-601: Buyers rights on improper delivery 382-508: Cure by seller of improper tender or delivery, replacement 38348: Alternatives to loss in value of performance 39131: General requisites 40

2-201: Statute of Frauds 40110: Types of contracts which must be in writing

40125: Contract to transfer, buy, or pay for an interest in land 41131: General Requirements of a Memo 41

178: When a term is unenforceable on grounds of public policy 4114: Infants 4215: Mental illness or defect 42164: When a misrepresentation makes a contract voidable 43174: When duress by physical compulsion prevents formation of a contract 44175: When duress by threat makes a contract voidable 44176: When a threat is improper 44

177: When undue influence makes a contract voidable 462-302: Unconscionable contract or clause 47211: Standardized Agreements 48151: Mistake defined 48152: When mistake of both parties makes a contract voidable (Mutual/Bilateral) 48154: When a party bears the risk of a mistake 48153: When mistake of one party makes a contract voidable (Unilateral mistake) 49161: When non-disclosure is equivalent to an assertion 50162: When a misrepresentation is fraudulent or material 50164: When a misrepresentation makes a contract voidable 50

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261: Discharge by supervening impracticability 512-613: Casualty to identified goods 512-615: Excuse for failure of presupposed conditions 51265: Discharge by supervening frustration 52

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Case 1: Shaheen v. Knight, failed vasectomy, unplanned child 6

Case 2: Sullivan v. OConnor, botched nose job on entertainer 6

Case 3: Hawkins v. McGee, hairy hand skin grafting, promise of a 100% perfect hand 7

Case 4: Hadley v. Baxendale, negligently failed to deliver on time shaft that runs mill 7

Case 5: Hector Martinez v. South. Pac. Trans., delay and damage of dragline transportation 8

Case 6: Chicago Coliseum Club v. Dempsey, boxing match contract breach by boxer 8

Case 7: Anglia Television v. Reed, actor breaches contract to appear on television film 8

Case 8: Rockingham County v. Luten Bridge, breach of buyer on construction of bridge 8

Case 9: Neri v. Retail Marine, breach of buyer due to legit reason in purchase of boat 8

Case 10: Kemble v. Farren, actors breach in contract for failure to perform 10

Case 11: Wassenaar v. Towne Hotel, liquid damages in termination of employment contract 10

Case 12: Lake River Corp. v. Carborundum Co., comments on liquidation clauses 10

Case 13: Loveless v. Diehl, specific performance on option to purchase land improved upon 11

Case 14: Cumbest v. Harris, specialized stereo equipment as collateral in loan, sentimental item 11

Case 15: Scholl v. Hartzell, conflict over sale of a 1962 Corvette, SP or no SP on car? 11

Case 16: Sedmak v. Charlies Chevrolet, oral contract for limited edition customized car breached 11

Case 17: The case of Mary Clark, a woman of color, servant by indenture 11

Case 18: Lumley v. Wagner, contracted singer breaches in attempt to sing at competitors theater 11

Case 19: Ford v. Jerman, contracted singer breaches in attempt to sing at competitors theater 11

Case 20: Cotnam v. Wisdom, surgeons attempt to be compensated for accident victim on street 12

Case 21: Dickinson v. Dodds, option contract for sale of property sold to third 13

Case 22: Embry v. Hargadine, McKittrick Dry Goods, re-employment after termination of contract 14

Case 23: Texaco v. Pennzoil, Texaco attempts to interrupt business dealings of Pennzoil & Getty 14

Case 24: Lucy v. Zehmer, drunken sale of land on back of restaurant check 14

Case 25: Nebraska Seed Co. v. Harsh, proposed seed sale given by letter 15

Case 26: Empro Mfring v. Ball-Co Mfring, letter of intent to purchase assets sold to another party 15

Case 27: Pennzoil v. Texaco, Texaco attempts to interrupt business dealings of Pennzoil & Getty 15

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Case 28: Morrison v. Thoelke, sale of land via mail, attempt to repudiate while acceptance in mail 16

Case 29: Lewis v. Browning, mailing with stipulations for method of assent 16

Case 30: Hobbs v. Massasoit Whip, eel skins retained by D w/o acknowledgment, assumed as acceptance 17

Case 31: Carlill v. Carbolic Smoke Ball, advertisement offering reward in use of product 17

Case 32: Leonard v. PepsiCo,product points for fighter jet advertisement 17

Case 33: White v. Corlies & Tifft, contract for building offices, silence deemed no acceptance 17

Case 34: Crook v. Cowan, order for customized carpets accepted without notice to requestor 18

Case 35: Sun Printing & Publishing v. Remington Paper & Power, contract for sale of paper 19

Case 36: Texaco v. Pennzoil, Texaco attempts to interrupt business dealings of Pennzoil & Getty 19

Case 37: NY Central Iron Works v. US Radiator, extensive need of radiators not provided by D 19

Case 38: Eastern Air Lines v. Gulf Oil Corp., exclusive gas supply contract, issue on $ for renewal 20

Case 39: Wood v. Lucy, Lady Duff-Gordon,P hired to help in endorsements of Ds clothing 20

Case 40: Raffles v. Wichelhaus, mistaken identity of Peerless boat used in delivery of goods 21

Case 41: Oswald v. Allen, Swiss coin collection, mistake of what was for sale 21

Case 42: Thompson v. Libbey, verbal warranty as to quality of purchased logs 23

Case 43: Brown v. Oliver, sale of hotel, fight over furniture 23

Case 44: Union Carbide v. Oscar Mayer Foods, attempt to collect back taxes from contract 24

Case 45: Marvin v. Marvin, live in love, implied contract? 25

Case 46: Morone v. Morone, cohabitation, implied contract? 25

Case 47: Johnson v. Otterbein University,promise to donate $ to Univ to liquidate indebtedness 26

Case 48: Hamer v. Sidway, uncles reward for nephews purging of vices 26

Case 49: Moore v. Elmer, clairvoyant, promise to pay her mortgage if prediction is true 27

Case 50: Mills v. Wyman,promise to pay for nurse's prior care of deceased son. 27

Case 51: Webb v McGowan, sacrifice of self to save bosss life 27

Case 52: Stilk v. Myrick, due to desertion, captain promises to increase wages of existing crew 28

Case 53: Alaska Packers Assn v. Domenico, workers refuse to fish without pay increase, rotten nets 28

Case 54: Brian Construction v. Brighenti, excavation underestimate, recontracted 28

Case 55: Dyer v. National By-Products, lost foot at work, life time employment nixed 29

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Case 56: Aller v. Aller, monetary promise to daughter sealed 29

Case 57: Wagner v. Lectrox, license sealed 29

Case 58: Schnell v. Nell, attempt to make gift enforceable with consideration of one cent. 30

Case 59: Smith v. Wheeler, $1 to reserve right to bid on property at later date 30

Case 60: Rickets(D) v. Scothorn (P), grandfather gives $ so granddaughter doesnt have to work 31

Case 61: Allegheny College v. Natl Chautauqua Cty Bank, endowment for fund in Ds name 31

Case 62: Feinberg v. Pfeiffer Co., retirement pension for life promised 31

Case 63: James Baird v. Gimbel Bros., subcontractor errs in estimate relied on by GC 31

Case 64: Drennan v. Star Paving, misquoted SC estimate, GC wins bid on estimate 32

Case 65: Goodman v. Dicker, dealer franchise to sell radios 32

Case 66: Hoffman v. Red Owl Stores, Inc., supermarket franchise deal costs too much $$ 32

Case 67: Blatt v. USC, nonadmittance into law school legal society 32

Case 68: Ypsilanti v. General Motors, tax abatement for keeping company in town 32

Case 69: Alden v. Vernon Presley,Elvis promise to pay debts of future mother-in-law. 33

Case 70: Goldberg 168-05 v. Levy, minimum profits as threshold in maintaining contract 33

Case 71: Stop and Shop v. Ganem, lot rented to be supermarket was left unused 34

Case 72: Step-Saver Data Syst. v. Wyse Technology, computers purchase incompatible with system 35

Case 73: Royal Business Machines v. Lorraine Corp., copy machines not up to expectations 35

Case 74: Schneider v. Miller, rusty car bought from salesman 35

Case 75: Morris v. Macks Used Cars, deception on part of seller 35

Case 76: Harrel v. Sea Colony, breached condo contract 35

Case 77: Scott v. Crown, bushels of wheat contract rescinded in belief that buyer couldnt pay 36

Case 78: Jacobs & Young v. Kent, stipulation of Reading pipe not followed 37

Case 79: Ramirez v. Autosport,purchase of camper van with lots of problems 38

Case 80: Groves v. John Wunder, lease of land in exchange for removal of gravel and sand 39

Case 81: Peevyhouse v. Garland Coal, strip mine lease, failure to restore land 39

Case 82: Boone v. Coe, move from KY to TX on promise to work in exchange for housing/crops 40

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Case 83: Schwedes v. Romain, agreement for sale of property breached and sold to 3rd party 40

Case 84: In the Matter of Baby M, surrogacy contract, egg from surrogate 41

Case 85: Johnson v. Calvert, surrogacy contract sperm and egg from couple 41

Case 86: Brooke Shields v. Gross, celebrity seeks to void contract made by her mom over pictures 42

Case 87: Orterelere v. Teachers Retirement Board, altered retirement plan, dies early 43

Case 88: Byers v. Federal Land Co.,purchaser of land paid more than land was worth 43

Case 89: Vokes v. Arthur Murray, Inc., bad dancer induced to purchase more dance lessons 44

Case 90: Silsbee v. Webber, threat to tell mental father about sons embezzlement 45

Case 91: Hackley v. Headley, log delivery, settle for less due to economic hardship 45

Case 92: Austin Instrument v. Loral, govt defense contract want of exclusive rights, or else. 45

Case 93: Odorizzi v. Bloomfield School District, homosexual teacher resignation 46

Case 94: Williams v. Walker Furniture I,II,purchase of furniture on installment plan 47

Case 95: Carnival Cruise v. Shute, choice of venue clause on back of ticket 47

Case 96: Baby M case, surrogacy contract, egg from surrogate 48

Case 97:Sherwood v. Walker, mistaken breeding cow for barren cow 48

Case 98: Wood v. Boynton, uncut diamond sold for $1 49

Case99: Lenawee County Board of Health v. Messerly, condo condemned by poop, worthless 49

Case 100: Tyra v. Cheney, subcontractor mistakenly left off amount stated in oral bid in written bid 50

Case 101: Drennan v. Star Paving, misquoted SC estimate, GC wins bid on estimate 50

Case 102: Laidlaw v. Organ, Treaty of Yent, Tobacco investment, S attempts to take tobacco back 50

Case 103: Taylor v. Caldwell,place of rental burned down before use 51

Case 104: Eastern Air Lines v. Gulf Corp., exclusive gas supply contract, issue on $ for renewal 52

Case 105: Krell v. Henry, rented room to watch coronation of king 52

Case 106: Lloyd v. Murphy,property on Wilshire Blvd for sales of cars 53

Case 107: Northern Indian Public Service v. Carbon County Coal, 20-yr exclusive coal contract 53

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A. INTRODUCTION

2 Promise (oral, written or inferred from conduct): a manifestation of intention to act or refrain from acting in aspecified way so made as to justify a promisee in understanding that a commitment has been made.

a. Agreement: manifestation of mutual assent on part of two or more personsb. Bargain: agreement to exchange promises or to exchange a promise for a performance or to

exchange performance

overriding themes in Contracts -economic efficiencyparties intentions about the economic allocation of riskfairnessgame theoretic approach to contracts, esp. default ruleswhom does policy encourage/dissuade/prefer?extra-legal sanctions -- especially reputational damageregarding enforcement (of any type), tradeoff between:

judicial discretion in interpreting and enforcing and

individual freedom to contractasymmetry of informationlopsided bargaining power

Case 1: Shaheen v. Knight failed vasectomy, unplanned child p.9I: does a failed vasectomy operation constitute a breach of contract between Physician and

Patient?R: If patient and doctor contracted for a particular result and result not obtained, patient

has a cause of action for breach of contract in absence of a special contract in writing, healthcare provider is never a warrantor or guaranteer of a cure.

H: No damage done to P, so none rewarded

B. DAMAGES

C.EXPECTATION, RESTITUTION, RELIANCEin general, damages must be determined with certainty

courts dont commonly make parties adhere to contracts, usually makes one party pay other party fordamages causedpunitive damages are notusually given in breach of contract disputes

i. reliance:damages that put promisee in position had he never entered contract at allused in noncommercial settings, puts P back in the status quo ante position

incorporated when

- profits are too uncertain to determine but P can show expenses- no enforceable contract, but P entitled to something under promissory estoppel- failure to perform on land contract and jurisdiction doesnt allow expectation damages

349. reliance = expenditures made in prep. of performance expenses saved in breachp.139

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includes essential and incidental reliance . reliance damages < expectation damages

Case 2: Sullivan v. OConnor, botched nose job on entertainer HOI: What measure of damages should be used?

R: Contracts usually issue expectation damages except here, where the court makes an exceptionfor medical breaches of contracts

ii. expectation(compensatory): damages that put promisee in condition that he would have been iftransaction occurred, the normal damages offered in contract law.

Expectation measures are preferred because it causes people to breach only when it makes at leastone party better off and no one worse off, i.e. encourages only efficient breaches

expectation =loss in value to him of the other party's performance caused by its failure or deficiency+ any other loss, incidental or consequential, caused by the breach

- any cost or other loss that he has avoided by not having to perform

Case 3: Hawkins v. McGee hairy hand skin grafting, promise of a 100% perfect hand p. 69I: Can oral guarantee of 100% success in operation hold a doctor liable when operation fails? i.e.

when a special contract is made?R: Yes, utterance of words are done with the intention that they would be taken at face value by

patient inducing them to consent to operation. D went beyond offering a medical opinion whenoffering a perfect hand

Expectation damages = value of perfect hand (a+b) value of current hand + incidental cons.

iii. restitution: damages that relinquish benefits provided to promisor derived from promisecovers any benefits conferred by P on D in the performance. NOT available when P has fully performed

371, p. 287: Measure of Restitution Interest If a sum of money is awarded to protect a partys restitutioninterest, it may as justice requires to be measured by either

- the reasonable value to the other party of what he has received in terms of what it would have costhim to obtain it from a person in the claimants position, or

- the extent to which the other partys property has been increased in value or his other interestsadvanced.

p.971-106: damages = expectation damages, notconsequential, special, or penal damages

Limitations on damages

i. Remoteness or unforeseeability of harm351, p. 120: Unforeseeability and other limitations on damages

- not foreseeable by party in breach no damages- foreseeable if:

i. loss follows in ordinary cause of events (consider separation in time and space betweenbreach and consequences, customs of the trade, etc)

ii. party in breach knows of special circumstances- exceptions to forseeability damages:

i. excluding loss of profits, paying only reliance damagesii. if giving damages exults in overcompensation

- damages can be curtailed by excluding recovery for lost profits, by allowing recovery only for loss



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incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order toavoid disproportionate compensation

a test of foreseeability is to determine whether D would have agreed to the contract price had he knownof the extent of his liability

Case 4: Hadley v. Baxendale,Nl failed to deliver on time shaft that runs mill p 102I: is D liable for loss of profits?H: no, damages limited to what was contemplated at the time of contract.R: must be foreseeable. For special situations, damages can be awarded only if P informs D of thespecial situation or if the damages were reasonable foreseeable. Note that this encouragesinformation sharing when deviating from a default rule.

Case 5: Hector Martinez v. South. Pac. Trans., delay and damage of dragline transp. p 116I: Due to delay and damage of Ps machinery, should D be liable for Ps loss profits without andconveyance of special circumstances notice?R: Yes, as long as its foreseeable and not remote to a reasonable person

ii. Uncertainty of harm 352, p.140: Uncertainty of loss limitation on damages

- damages not recoverable for loss beyond an amount that evidence permits to be established withreasonable certainty

Case 6: Chicago Coliseum Club v. Dempsey, boxing match contract breach by boxer p. 125I: What damages to provide when expected profits cannot be determined?

R: Only reliance and restitution expenses that flow from and are the result of the breach

Case 7: Anglia Television v. Reed, actor breaches contract to appear on television film p. 140I: Since D cannot determine lost profits due to breach can they claim wasted expenditures, i.e.reliance damages before contract signed?R: Yes, P can collect damages even prior to contract provided that it was a foreseeable loss due to

breach

iii. Avoidability of harm (mitigation of damages)350, p. 163: Avoidability limitations on damages

- damages not rewarded for loss that injured party could have avoided without undue risk, burden orhumiliation exceptwhen injured party has made reasonable but unsuccessful efforts to avoid loss.

Mitigation forces people to behave in non-wasteful ways

Buyers duty to mitigate is embodied in the duty to cover; i.e. he must attempt to purchase substitute goods

from another supplier no attempt to recover limits damages to recover only the difference between themarket price at the time when the buyer learned of the breach and the contract price

Sellers duty to mitigate is much les than the buyers. If a buyer repudiates before delivery or rejects

delivery, seller has a choice of remedies:o Resell and recover difference between resale price and contract priceo Not resell and recover the difference between market price at the time and place for tender

and the unpaid contract price

o Recover lost profits that do not require mitigation

Case 8: Rockingham County v. Luten Bridge, breach of buyer on construction of bridge p.147I: Should D be liable for damages sustained by Ppostnotification of breach?R: No, it is Ps duty to do nothing to increase the damages flowing from breach



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Damages = expenses incurred prior to breach + expectancy interest (profit expected)

Buyers Breach / Sellers Remedies2-706, p. 168: Sellers Resale

damages = resale price contract price + incidental damages expenses saved in breach

all aspects of resale should be reasonable

Case 9: Neri v. Retail Marine, breach of buyer due to legit reason in purchase of boat p.163I: Should P be awarded loss profits and incidental damages from a breach by a buyer even if iteventually sold said boat to another?R: Yes, since P is a boat dealer it is assumed that breach by buyer prevented the sale of two boatsinstead of one, D may be entitled to restitution damages

Sellers Breach / Buyers Remedies2-712: Substitute goods in good faith without unreasonable delay

damages = cost of substitute cover contract price + incidental/conseq damages expenses saved in breach

2-713: Damages for non-delivery or repudiation

damages = market price @ breach contract price + incidental/conseq damages expenses saved in breach

a. incidental damages: i.e. inspection, receipt, transportation, care, custody of goods rejectedb. consequential damages: any loss resulting from general or particular requirements and needs of which

the seller @ time of contracting had reason to know and which could not be prevented by cover orotherwise, any injury to person or property proximately resulting from any breach of warranty,collectible if parties foresee the possibility of such harm and agree on an estimated amount.

C. Default rules and penalties

2-708,p.169: Sellers damages for non-acceptance or repudiation

damages = market price @ breach + place for tender unpaid contract price + incidental damages expenses saved in breach

or

damages = profit of seller @ full performance + incidental damages + costs incurred proceeds for resale

incidental damages: i.e. commercially reasonable charges, expenses or commissions incurred in stoppingdelivery, in transportation, care and custody of goods after buyers breach, in connection with return, resaleof goods

2-718, p. 169: Liquidation or limitation of damages; Deposits

- a term fixing unreasonably large liquidation damages is void- buyers entitled to restitution damages, stipulations on p. 170

i. Liquidated damages and penalty clauses



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2-719,p. 172: Contractual modification or Limitation of remedy Default Rules parties can contract aroundby inserting expressed clauses to the contrary unless clause is unconscionable

a.warranty clause: limits liability by providing the exclusive remedy for a breach excluding damagesfor other foreseeable losses

b. liquidated damages: can expand or limit damages, expressed explicitly in contract only if they are

reasonable and do not exceed the loss foreseeable by a breach, 356, p.185, applies only whenactual damages cannot be ascertained and must be proportional to actual damages

Liquidated damages are good because they place a limitation on liability and sometimes offer a basis for whentheres no easy method to calculate damages in a breach however penalty liquidation damages are bad because theyhinder efficient breaches.

Reasonableness Test: (look at factors and policies of the time)

1. Did parties intend to provide for damages for a penalty?2. Is injury caused by breach one that is difficult or incapable of accurate estimation @ time of contract?

a.difficult of producing evidence of damageb. difficult in determining what damages will be causedc. difficult indetermining damages contemplated

d. absence of standardized measuree. difficulty in forecasting all damages

3. Are the stipulated damages a reasonable forecast of the harm caused by the breach?

a.time of contractingb. time of breach

Case 10: Kemble v. Farren, actors breach in contract for failure to perform p. 174I: Can court grant damages other than what is stipulated in contract?R: Yes, clause would have been reasonable if actual damages cannot be ascertained, but, in thiscase, actual damages are easily calculated

Case 11: Wassenaar v. Towne Hotel, liquid damages in termin. of employment contract p. 176

I: Does P need to mitigate damages other than what is stipulated in contract? No.R: test of validity: whether clause is reasonable under the totality of circumstances?H: yes, reasonable to foresee conseq. Damages, employer failed to show that P suffered nodamages, if they did, no damages would have been rewarded. D didnt meet B/P, must show:actual damage


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OTHERREMEDIES

D. SPECIFIC PERFORMANCEAwarded when money damages are not adequate, i.e. sentimental value, priceless items, land, special, uniqueitems, items with subjective value, hard to value items, agreements not to compete, transfer controlling block

of shares.

2-716, p233: Buyers Right to Specific Performance or Replevin

- SP when goods are unique or in other proper circumstances (no adequate compensation available)- SP may include terms and conditions regarding payment of price, damages, or other relief court deems

just (damages too speculative and uncertain to be calculable)

- SP if, after reasonable effort, claimant cannot effect cover or circumstances reasonably indicate thatsuch effort will be unavailing or if the goods have been shipped under reservation and satisfaction ofthe security interest in them has been made or tendered. (non-recoverable)

SP is not allowed if:

- adequate damage compensation is available

- indefinite contract terms, i.e. indefinite time- difficulty in enforcement and supervision

i. Land & goodsfor cases brought in equity, will be used primarily in real estate deals or other personal property that is tough or

impossible to value or otherwise replace

a. LandCase 13: Loveless v. Diehl, specific performance on option to purchase land improved upon p. 217

I: should SP be upheld in sale of land promised to one party and sold to third?R: yes, land is special , damages are clear and Ds would be unjustly enriched otherwise, P hadinvested improvements in land.PP: if no SP, people would not want to enter purchasing deals

b. GoodCase 14: Cumbest v. Harris, specialized stereo equipment as collateral in loan, sentimental item p. 223

I: does personal property of unique or sentimental value allow for specific performance?R: SP will not be enforced if the subject matter of the contract sought to be enforced is personality.Exceptions:

- no adequate remedy at law/damages hard to determine- where the specific articles or property are of peculiar, sentimental or unique value- where due to scarcity, the chattel in not readily obtainable

H: SP, because stereo is unique

Case 15: Scholl v. Hartzell, conflict over sale of a 1962 Corvette, SP or no SP on car? P. 226

I: should P receive SP on a car he put a small down payment on to D?R: Replevin lies wherever one person claims personal property in the possession of another,provided the claimant has the exclusive and immediate right to possession of the goods inquestion, SP when item is unique or in other proper circumstancesR: inability to cover is an exception to non-SP rule, but does not apply hereH: car not unique and P can likely cover

Case 16: Sedmak v. Charlies Chevrolet, oral contract for limited edition customized car breached P. 229I: Should SP be granted in the case of a purchase from a dealer of a limited edition car customizedfor the Ps who had put a down payment on car?



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R: Yes, since car is limited edition, it is unique and hard to obtain

ii. Personal servicesCase 17: The case of Mary Clark, a woman of color, servant by indenture P. 235

I: whether Ps service, although involuntary in fact, shall not be considered voluntary by operationof law, being performed under an indenture voluntarily executed? SP?

R: State of servitude produced by direct or permissive coercion will not be considered voluntaryeither in fact or in law, therefore, no SP.

Case 18: Lumley v. Wagner, contracted singer breaches in attempt to sing at competitors theater P. 240I: Can injunction be awarded preventing D from performing elsewhere if SP can not be awardedforcing D to perform at Ps theater against her will?R: Since court can not order specific performance, will attempt to bind parties to contract bypreventing her from doing something she bound herself not to do injunction allowed due tonegative stipulation specifically written into contract. - 1852

Case 19: Ford v. Jerman, contracted singer breaches in attempt to sing at competitors theater P. 245I: Can injunction be awarded preventing D from performing elsewhere if SP can not be awarded?R1: No SP, harsh to compel obedience by imprisonment

R2: No, injunction would be more injurious to D and less beneficial to P than SP, cannot beenforced even with a negative stipulation implanted in contract (overrules Lumley) 1865**R3: NO SP for personal services in the case of those whose business is to amuse as well asentrust and whose labors are worth nothing if given grudgingly, without the spirit that shouldparade and give life to art.

Restitution RevisitedRestitution generally pertains to situations where one person has without intending to make a gift conferreda benefit on another.Quantum meruit: Restitution can also provide an independent cause of action when there is no contract at all.

373, p. 287: Restitution when other party is in breach injured party has no right to restitution if he hasperformed all his duties under the contract and no performance by the other party remains due other than

payment of a definite sum of money for that performance.

374, p. 298: Restitution in favor of party in breach in justifiable breaches, party in breach is entitled torestitution for any benefit in excess of the loss that he has cause by his own breach. Party is NOT entitled torestitution if the value of the performance as liquidated damages is reasonable in the light of the anticipatedor actual loss cause by breach and the difficulties of proof.

Case 20: Cotnam v. Wisdom, Surgeons attempt to be compensated for accident victim on street p. 298I: Is there an implied contract when surgeons fetched to the scene of an accident seek to help theaccident victim who later dies from injuries? Can Ps take into account victims financial condition?R1: implied contract : an insane person, idiot, or a person completely devoid of senses at the time andreason by sudden stroke of an accident or disease may be held liable for necessaries furnished to him ingood faith while in that unfortunate and helpless condition.R2: Because surgical operation is conceived to be performed with due skill and care, the price to bepaid does not depend on the resultR3; financial condition of patient cannot be considered where there is no contract and recovery issustained on an implied contract unless trade custom proves otherwiseexcept in situations ofemergencies when implied contracts require only reasonable compensation.

MUTUAL ASSENT



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There was must mutuality for an agreement to be enforceable

Offer and Acceptancei. Introductiontraditionally mutual assent is conceived in terms of offers and acceptances.

a. manifestation of assent17, p331: requirement of a bargain

formation of a bargain requires manifestation of mutual assent.

what you must have for a contract:1 - bargain2 - manifestation of mutual assent3 - exchange4 - consideration

things to consider in determining the manifestation of intent:1 - the words used2 - surrounding circumstances3 - to whom the words are conveyed4 - definiteness of terms

5 - whether a written contract is intended

18: manifestation of mutual assentmanifestation of mutual assent means that each party either makes a promise or renders a performance

19, p.351: Conduct as manifestation of assent

(1) manifestation of assent may be made wholly or partly by written or spoken words or by other acts orby failure to act.

(2) Conduct is not effective as manifestation unless he intends to engage in the conduct and knows or hasreason to know that other party may infer assent from his conduct

(3) Conduct of party may manifest assent even though he does not in fact assent. In such cases a resultingcontract may be voidable because of fraud, duress, mistake, or other invalidating cause.

22, p 331: mode of assent: offer and acceptance(1) manifestation of mutual assent is usually in form of offer/acceptance.(2) but, there may be a manifestation of mutual assent even if neither offer nor acceptance can be identified

and even if the moment of formations cannot be determined (eg., in complex negotiations).

Case 21: Dickinson v. Dodds, Options contract for sale of property sold to third party P. 325I: Should SP be given to an options contract whereby the D gave P till 9am the following day todetermine whether he wanted to purchase the property and then D sold property to third party withinthat time which P knew about before deciding to accept offer?Lower Ct: According to 42, revocation by D must be conveyed to P explicitlyR1: no need for express or actual withdrawal from offer, can be inferred from Ds intent to sell to thirdpartyR2: no meeting of the minds at time P chose to accept offer (D already intend to sell to another),therefore no contractR3: Promise to hold till 9am is a promise without consideration, therefore its not binding

42, p332: revocation by communication from offeror received by offereean offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of

an intention not to enter into the proposed contract.



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43, p332: indirect communication of revocationpower of acceptance is terminated when the offeror takes definitive action inconsistent with anintention to enter into the proposed contract and the offeree acquires reliable information to that effect

24, p. 331: Offer defined manifestation of willingness to enter into a bargain, so made as to justify anotherperson n understanding that his assent to that bargain is invited and will conclude it.

25, p. 331: Options contract promise which meets the requirements for the formation of a contract and limitsthe promisors power to revoke an offer.

b. revocationrequirements of an effective revocation:

1 - words or conduct must be clear2 - must be communicated to offeree3 - effective when received (minority rule is w\then dispatched)

36, p332: methods of termination of the power of acceptance(1) an offerees power of acceptance may be terminated by

(1) rejection or counter-offer by offeree;

(2) lapse of time;(3) revocation by the offerer;(4) death or incapacity of the offeror or offeree.

(2) also by the nonoccurrence of any condition of acceptance under the terms of the offer

37, p. 332: termination of power of acceptance under option contractNotwithstanding 38-49, the power of acceptance under option contract is not terminated by rejection orcounter-offer, by revocation, or by death or incapacity of the offeror, unless the requirements are met for thedischarge of a contractual duty.enter into the proposed contract and the offeree acquires reliable information to that effect.

2-205, p.333: firm offersan offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it

will be held open is not revocable, for lack of consideration, during the time stated or if no time isstated for a reasonable time, but in no event may such period exceed three months.

2-206, p. 333: Offer and acceptance in formation of contract

(1) unless otherwise unambiguously indicateda. an offer to make a contract should be construed as inviting acceptance in any manner by any

medium reasonable

b. order or offer to buy goods for prompt/current shipment invites acceptance by prompt promiseto ship or prompt/current shipment. Nonconforming goods do not constitute an acceptance ifthe seller seasonably notifies the buyer that shipment is offered as an accommodation to buyer

(2) where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is

not notified of acceptance within a reasonable time may treat the offer as having lapsed beforeacceptance.

Case 22: Embry v. Hargadine, McKittrick Dry Goods, re-employment after termination of contract p. 334I: Was what was said between employee and employer as interpreted by P constitute a contract forreemployment on the previous terms irrespective of the intention or purpose of D employer?H: objective standard applied: what Ds intentions were were totally irrelevant in deciding if a contractis formed if what he says would have been taken by a reasonable person to be a contract as P sounderstood it, it constituted a valid contract.



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Case 23: Texaco v. Pennzoil, Texaco attempts to interrupt business dealings of Pennzoil & Getty p. 341F: Pennzoil wanted to do a deal with Getty Oil, and thought it had a deal done. Gettys Board voted15-1 for it, memorandum signed by almost all parties, binding letter signed by Chairman of Getty,press release announced tentative deal, etc. Then Texaco came in and stole the dealI: should manifestations of intent be considered only between parties and not to third parties?

R1: objective manifestations of intent of parties and expressed by words and deeds that determinewhether that parties have actually entered into a contract.R2: conduct not effective as manifestation unless he knows other party may infer assent from conduct.

Case 24: Lucy v. Zehmer, drunken sale of land on back of restaurant check p 342F: P and D were old acquaintances and out drinking one night. P offered to buy Ds farm, D said Pcouldnt raise the money for it, P said he could. D wrote out a contract for sale, signed it, and got hiswife to sign it too. P offered an immediate down payment, whereupon D said he was only joking. Dsecretly told wife it was a jokeI: is a written contract enforceable even if D was drunk, joking, and had no intention to actually sell?H: yes, his actions as objectively observed indicated he was serious. We look to the outwardexpression of acts and words terms discussed for a long time, joke was not expressed to PR: look to the outward expressions only, prefer objective to subjective manifestation becausesubjective manifestation would result in an increase in broken contracts increases chance of exitstrategy, i.e. fraud.

ii. Offerrequirements for a valid offer:

1 - manifestation of present contractual intent2 - certainty and definiteness of terms3 - communication to the offeree

24: offer definedoffer is manifestation of willingness to enter into a bargain, so made as to justify another person in

understanding that his assent to that bargain is invited and will conclude it.

26, p.359: preliminary negotiationsa manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed

knows or has reason to know that the person making it does not intend to conclude a bargain until hehas made a further manifestation of assent.

33, p.359: Certainty

(1) Manifestation of intent cannot be accepted as to form a contract unless the terms of the contract arereasonably certain

(2) Reasonably certain if they provide a basis for determining the existence of a breach and or giving anappropriate remedy

(3) The fact that terms are left open or uncertain may show that manifestation of intent is not intended tobe an offer or an acceptance

2-204, p. 360: Formation in General(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if theparties have intended to make a contract and there is reasonably certain basis for giving and appropriateremedy.

2-305, p. 360: Open Price Term- avoid by setting price based on an external standard or specifically contractwhat would happen if agreement cannot be made in terms of price

2-308, p.361: Absence of specified place for delivery



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2-309, p.361: Absence of specific time provisions, notice of termination

Case 25: Nebraska Seed Co. v. Harsh, Proposed seed sale given by letter P. 356I: Does a letter inviting a purchase of Ds seeds constitute an offer or just an advertisement?R1: 26, not an offer . letter was an invitation requesting bids.R2: 33 - language in letter is general, it is an invitation to make an offer, does not fix a time for

delivery, did not fix a definite and certain amount. Factors to consider trade customs, # of personscommunication was addressed to, completeness of terms in supposed offer

Case 26: Empro Mfring v. Ball-Co Mfring, Letter of intent to purchase assets sold to another party P. 362I: Does a letter of intent bar D from selling assets to a third party based on a subjective manifestationof intent?R1: no, intent is an objective manifestation, determined solely from the language used when noambiguity in terms exist.R2: Wording of letter indicates considerations were necessary before letter becomes a contract, letter ofintent just sets the stage of negotiation preliminary negotiations 26

27, p. 365:Existence of contract where written memorial is contemplatedJust because parties intend to prepare and a adopt a written memorial doesnt mean a manifestation of

assent itself isnt sufficient to form a contract unless circumstances show that the agreements arepreliminary negotiations.

Case 27:Pennzoil v. Texaco P. 366. I: Did parties intend to be bound to the terms of the memorandum of agreement even if parties

contemplated a more formal document to memorialize the agreement later?R1: 27 applies unless either party communicates the intent not to be bound before a final formaldocument is executedR2: the emphasis in deciding when a binding contract exists is on intent rather than on form,based on an objective standard:

ATTEMPT AT FINAL CONTRACTR - determine manifest intent to be bound by

1 - is there an explicit no agreement until signing clause?2 - is there acceptance of partial performance?3 - is there literally nothing left to negotiate?4 - what is the transactional/industry norm - does complexity require writing?

H: At the time, some terms were still open (timing of payments) and industry practices supportedTexaco (after all, in this $10 billion deal there was no final signature).The Texas jury found for a hand-shake deal for Pennzoil.

iii. Acceptance (by mail, silence, or performance)

Offer may only be accepted by a person in whom the offeror intended to create a power of acceptanceDetermination of intent of offeror is based only on the objective theory.Generally an acceptance is only valid if the offeree knows of the offer at the time of his alleged acceptance.If method no established, offeree can accept in a manner reasonable in the circumstancesIn some circumstances, prior business deadlines, silence can constitute an acceptance.

a. Mailbox Rule63, p. 381: acceptance is operative as soon as its out of the offerees possession except options contractswhich are not operative until received by offeror



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Case 28: Morrison v. Thoelke, sale of land via mail, attempt to repudiate while acceptance in mail p.372I: whether a contract is complete and binding when a latter of acceptance is mailed, thus barringrepudiation prior to delivery to the offeror, or when the letter of acceptance is received, thus permittingrepudiation prior to receipt.R: mailbox rule 63a, contract is set upon mailing out assent meeting of the minds is setH: mailbox rule is better because is closes deals more quickly and enables prompt performance

Case 29: Lewis v. Browning, mailing with stipulations for method of assent P. 379R: person making the offer may always make the formation of the contract which he proposesdependent upon the actual communication to himself of the acceptance, telegraph me yes or noH: offer dependant upon an actual communication to P of Ds acceptance (option clause)

65, p.381: Reasonableness of medium of acceptanceUnless circumstances indicate otherwise, a medium of acceptance is reasonable if it is the one used by theofferor or one customary in similar transactions at the time and place the offer is received.

b. Silence69, p.383: acceptance by silence or exercise of dominion

(1) where offeree fails to reply to an offer, his silence and inaction operate as an acceptance only where:(a) he has taken a benefit or offered service with reasonable opportunity to reject it with reason to

know that compensation was expected;(b) offeror relates that acceptance by silence is ok, and the offeree in remaining silent intents to accept;(c) because of previous dealings or otherwise, it is reasonable that the offeree should notify the offerorif he does not intend to accept.

Case 30: Hobbs v. Massasoit Whip, eel skins retained by D w/o acknow. assumed as acceptance p.382I: whether P reasonably presumed acceptance based on silence on the part of D in receipt of eel skinsR1: Similar eel skins were frequently sent to D in this manner, duty on D to act upon receipt of eelskins and silence on its part coupled with retention of skins for an unreasonable time gave P goodreason to assume D accepted goods.

R2: D did not have a duty to notify of acceptance butD had duty to negate acceptance by notifying P.

c. Performance30, p.405: form of acceptance invited

(1) an offer may invite or require acceptance to be made by an affirmative answer in words, or byperforming or refraining from performing a specified act...(unilateral contract).;

(3) unless otherwise indicated by language or circumstances, an offer invites acceptance in any mannerand by any medium that is reasonable in the circumstances

Case 31: Carlill v. Carbolic Smoke Ball, advertisement offering reward in use of product p.385I: Was an advertisement offering a reward to no one in particular who, during use of product, developed



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influenza a unilateral contract subject to be bound by performance on part of participant without prioracceptance?R: Yes, this was not mere puff based on fact that money was actually set aside for this reward by D.Advertisement was a unilateral offer in which acceptance takes the form of performance. Analogous tolost dog reward.

54, p.400: acceptance by performance, necessity of notification to offeror(1) when offer invites acceptance by performance, notice is not necessary unless the offer requests such anotification;

(2) when offer does not explicitly invite acceptance by performance and offeree knows offeror has noadequate means of learning of the performance/acceptance, offeror is released from obligation unless:(a) offeree exercise reasonable diligence to notify offeror; or(b) offeror learns of the performance/acceptance in a reasonable time; or(c) offer indicates that notification of acceptance is not required.

(note that w/unilateral promise - no duty to notify)

Case 32: Leonard v. PepsiCo,product points for fighter jet advertisement H.O.I: Did a television commercial by D constitute an offer when it showed a fighter jet as a reward forcollecting Pepsi product points at a value much less than its true worth?

R1: advertisements are generally viewed to be mere requests to consider and examine and negotiate here would be no enforceable contract until defendant accepted the Order Form and cashed the check exceptions to advertisement rule only in cases of clear, definite, and explicit advertisements ex.Lefkowitz and fur coat. Present case isnt explicit reserves details to separate writing.R2: objective standard no reasonable person would have concluded that the commercial actuallyoffered consumers a fighting jet as a prizeH: P loses because commercial is an advertisement not a unilateral offer, jestful nature of commercialwould not cause a reasonable person to take offer seriously, and there is no writing between the partiessufficient to satisfy the Statute of Frauds.

Case 33: White v. Corlies & Tifft, Contract for building offices, silence deemed no acceptance P.401F: D contracted P to build a suite of offices for him. D changed specifications which were assented toby P. D sent note to P which was not replied to and D then retracted contract. P, upon receipt of first

note had begun performing on contract.I: Upon receipt of note from D, did P have a duty to give notice of assent to D before commencingwork? i.e. was there a binding contract between parties as based on wording of note?H: Yes, note was a proposition and must have been accepted by P before either party was bound bycontract.R: if manifestation is not put in a proper way to be in the usual course of events in a reasonable amountof time there is no binding contract. Mental determination not indicated by speech or put in course ofindication by act to the other party is not an acceptance which will bind the parties.

32, p405: where there is doubt as to acceptancein cases of doubt, offeree may accept by performing what the offer requests or by promising to perform, asthe offeree chooses.

Case 34: Crook v. Cowan, order for customized carpets accepted without notice to requestor P.405F: D ordered two customized carpets from P. Without notification of acceptance, P performed on

contract. D claimed that without notification of acceptance, there was no contract.I: Because Ds order was explicit in terms of carpets wanted and method of deliver and method, did P

need to notify of acceptance of order before performing on order?R: Requirement of giving notice of acceptance by mail must depend on circumstances:

- if the order requires it- if order is not sufficiently specific- if considerable time must pass in the manufacture of article



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- if route or means of transportation is not known- if voyage is long and dangerous

H: order here was unconditional and specific and was complied with to the letter, therefore it was acontract accepted by performance to the terms of the letter.Dissent: this was an offer to purchase goods, an order, duration of time of keeping D in dark isunreasonable

45, p422: option contract created through part-performance or tender (i.e., unilateral promise)(1) where an offer invites acceptance through performance only, an option contract is created when the

offeree begins performance;(2) in such a case the offeror's duty of performance is conditional on completion of the offeree's

performance.

50, p.422: acceptance defined: by performance/promise(1) acceptance by terms specified by the offeror, or;(2) by part performance (which operates as a return promise), or;(3) by a promise by completing every act essential to making the promise.

Interpreting the agreement

i. Filling gapsImplied-in-fact terms terms that parties actually, albeit implicitly, have agreed toImplied-in-law terms imposed on parties without their consentDefault rules legal rules that the parties can avoid or vary by means of an express clause that differs from the

term a court will otherwise supply by defaultImmutable rules may not be varied by consent and will override any express clause to the contrarya. indefinitenessoverall themes:

must have reasonableness and good faithdamages are usually expectancyspecific performance in real estate deals is almost never usedhow the law has changed: at CL, any indefiniteness makes a contract not binding

at UCC, R2d, enforceability depends on intentessential terms:

parties to the contractsubject mattertime for performanceprice

2-204: formation in general(1) a contract may be made in any manner sufficient to show agreement;(2) a contract may be found even though the moment of making is undetermined;(3) even though one or more terms are left open, a contract does not fail for indefiniteness if the parties

have intended to make a contract and there is a reasonably certain basis for giving an appropriateremedy;

note that 33 takes this position with respect to all contracts, not only goods of saleappropriate gap fillers - 2-305, p360: price - note that a minimum price will prevent a gap filler from being used - no offer to sell 2-308, p361: place of delivery 2-309, p361: timing of delivery and notice of termination

Case 35: Sun Printing & Publishing v. Remington Paper & Power, Contract for sale of paper P.427



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F: P agreed to buy paper supply from D, future price of paper and length of time which price shouldapply were to be agreed upon by parties at a later date. Max on price set by external standard. Timegap was left unfulfilled.I: Is there a legal contract binding parties when a term left open in the contract cannot be agreed uponby the parties?R1: no, the time element is essential to the formation of the contract, inability to agree upon this

element causes the failure of the contract and neither party is bound.H: there is no basis to determine what time element should be, therefore no contract.R2: to avoid in the future, set price based on an external standard or specifically contract actions totake when no agreement can be reached by parties

34, p.433: Certainty and choice of terms, effect of performance or reliance

(1) there is stipulation for selection of terms in course of performance(2) part performance may remove uncertainty and establish an enforceable contract (bargain has been

formed)

(3) reliance on agreement may make a contractual remedy appropriate even though uncertainty is notremoved.

Case 36: Texaco v. Pennzoil, P. 434

I: can a contract be binding even if the terms intended to be included into an agreement are too vagueand incomplete?R1: terms in contract must be sufficiently complete so that parties in good faith can find in theagreement words that will fairly define their respective duties and liabilities.R2: parties intent not conclusively discernible from their writings alone, extrinsic evidence of relevantevents is consideredH: there was a breach

b. illusory and alternative promisesillusory leaves complete discretion to perform or not in the hands of the purported promisor

if the promisor reserves alternatives such that she can escape performance, there is no promise and this isnot valid consideration -- therefore, no contract(note that a conditional promise is still okay because this represents a legal detriment in that the promisor is

bound should the condition occur)

Case 37: NY Central Iron Works v. US Radiator, extensive need of radiators not provided by D P.436F: Contract between D and P where D was to supply P with entire radiator needs, quantity was an openterm of contract. P sought an increased amount of radiation than previous orders and D refused tofulfill orders.I: Was there a mutual mistake in framing contract since the intention was to limit the quantity of goodsto be delivered to an amount such as had been ordered in previous years? Should contract be reformedto reflect this intention?R: No sign of bad faith or unfair dealings on part of P, therefore D breached contract.

Case 38: Eastern Air Lines v. Gulf Oil Corp. , exclusive gas supply contract, issue on $ for renewal p.437F: P and D dealt with one another for decades. In 1972 they signed a 5-year renewal at a set price forall of the oil that Eastern would need in certain airports. The oil shock came and a government price

control resulted in the pricing mechanism of the contract being pegged to an artificially controlled verylow price.I: did Eastern violate the contract even if it freighted? Was contract void for indefiniteness in terms ofmutuality of obligation and subjects Gulf to the whims of Eastern?H: no, the freighting was standard business practice for years. The real issue is to look at the intent ofthe parties and to see if there is good faith. At all times, Eastern acted with the good faith of amerchant. Lack of mutuality and indefiniteness of contract resolved by court with reference toobjective evidence of volume of goods required to run business.



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Case 39: Wood v. Lucy, Lady Duff-Gordon,P hired to help in endorsements of Ds clothing P. 441F: agent agreement made between a fashion designer and her agent. In exchange for exclusivemarketing rights, agent was to be paid a percentage of sales he scared up. He does noting, she sells herown stuff, he sues. She claims illusory promise should make contract void.I: Because P did not specifically promise anything, is a contract void?R: no, a promise may be lacking and yet the whole writing may be instinct with an obligation

imperfectly expressed 2-306H: Because D gave an exclusive privilege, which, acceptance by P constitutes assumption of duties toincrease profits (since Ps own profits are tied to his endeavor) promise has value reasonable effortstandard

c. output and requirement contractsoverall themes -

inequitable bargaining power output - seller has enormous discretionrequirements - buyer does

availability of alternatives

2-306, p.449: output, requirements, exclusive dealings contracts(1) a term which measures the quantity by the output of the seller or the requirements of the buyer means

such actual output or requirements as may occur in good faith, except that no quantity unreasonablydisproportionate to any stated estimate or in the absence of a stated estimate to any normal orotherwise comparableprior outputor requirements may be tendered or demanded.

(2) a contract giving exclusive dealings means an obligation by seller to use best efforts to sell the goods;and an obligation by buyer to use best efforts to promote their sale.

comments parties are held to have impliedly bound themselves to use reasonable diligence as well asgood faith in their performance of the contract. An exclusive dealing agreement brings into play all ofthe good faith aspects of the output and requirement problems of subsection (1).

Is the seller obligated to supply what the buyer demands?

1) Is demand by good faith?YES NO no obligation

2) Was there an established estimate in contract?YES NO 3b) Is buyers demand disproportionate to past

requirements? YES NO3a) Was buyers demand disproportionate?

YES NO maybe obligatedobligateddepending on

no obligation obligated circumstances

ii. Subjective v. ObjectiveSubjective theory- Mutual assent requires the meeting of the minds, i.e. same subjective intent on minds of both parties- Used in subculture or trade where language is used differently than it would be understood by a

reasonable person

- Problem indeterminacy and invitation for fraud

objective theory of assent - this places the risk on the low-cost bearer/best evaluator

- interpretation based on the reasonable meaning of the actions of the two parties



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- theory is subjectivized to the extent that circumstances are taken into consideration when determiningthe objective meaning of the partys actions

- encourages clarity- Problems cannot be as clear as one may want, reasonableness can differ with different levels of

sophistication, so the objective theory also subjectivizes in this department as well

reasons that favor objective over subjective:

- demands for security in business transactions,- protecting reasonable expectations- encouraging exchange of information

Case 40: Raffles v. Wichelhaus, mistaken identity of Peerless boat used in delivery of goods P. 451F: D purchased goods from P to be shipped from a boat called Peerless from Bombay. Apparently twoboats were named Peerless leaving from Bombay and each party thought of different boats in themaking of contract. Since goods came later than D expected, D refused to purchase goodsI: Is it material to contract that each party identified a different ship named Peerless that was to deliverthe goods?R: Because there was conflict as to which boat was meant in contract, court deemed there was no

mutual assent, no meeting of the minds(subjective test) and ambiguity effects a material term of thecontract because under conditions of wildly fluctuating prices arrival date is important (objective test)and therefore, no contract.MUTUAL MISTAKE AS TO CONTRACT SUBSTANCE VOIDS CONTRACT

Note: difference between latent ambiguity (each interprets the same term differently) and patentambiguity (a term is undefinable), parol evidence pointed to the meaning of a term is allowed by theUCC, this includes usage of trade and prior dealings between the parties

Case 41: Oswald v. Allen, Swiss coin collection, mistake of what was for sale P. 463F: P thought two collections for price, D thought one collection for priceI: Was there a valid contract even though both parties had different views of what was being sold?R1: when terms used in agreement are ambiguous and parties understand it in different ways, there

cannot be a contract unless one party had reason to be aware of others understanding.R2: Although mental assent of parties is usually not a requisite to formation of contract this cause is anexception because there is no sensible basis for choosing between conflicting understandings.(Applies Raffles)

201, p. 465: Whose meaning prevails?

(1) if same meaning attached, interpreted with that meaning(2) if different meanings attached, interpreted in accordance with the meaning attached by one of them if

at the time the agreement was made

a. that party did not know of any different meaning attached by other, and other knew meaningattached by first, or

b. that party had no reason to know any different meaning attached by other, and other had

reason to know the meaning attached by first,c. Except as stated in this section, neither party is bound by the meaning attached by the other,

even though the result may be a failure of mutual assent.

202, p. 466: Rules in aid of interpretation

(1) words interpreted in light of circumstances, intention of parties is given much weight(2) writing interpreted as a whole(3) unless different intention manifested

a. language interpreted with general meaning



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b. technical terms given technical meaning when interpreted in technical field(4) when agreement calls for repeated performance with opportunity for objection, any course of

performance/negotiations accepted without objection will be given great weight in interpretation

(5) wherever reasonable, manifestation of intention are interpreted as consistent with each other and withany relevant course of performance, course of dealing, or usage of trade. (Weinberg v. Edelstein, p.468,definition of a dress determined by trade usage and background research done by court.)

Interpreting Assent:1. Do parties subjectively attach the same meaning to terms in the contract? (consider words in contract,

course of negotiations, performance, past dealings)

NO(there is a misunderstanding YES there is an agreement and term is enforced 201(1)

2. Does one party know/ have reason to know that other party (x) has attached a partic. meaning to term?

NO YES if x is clueless, there is an agreement subject tothe meaning of the term as believed by party x

3. Can objective meaning of term be determined? (consider course of performance, course of deal, usage

of trade 202, 1-205, 2-208

NO YES there is an agreement subject to the objective meaning of theparty whose objective meaning matches its subjective meaning

no agreement, only seemedto be mutual assent

Parol evidence ruleit is generally agreed that the rule applies only to prior or contemporaneous oral agreementsUsually in contract law a subsequent agreement trumps a prior agreement exceptwhen the prior agreement is inwriting and is fully integrated under the parol evidence rule.Document is fully integrated when it represents the final expression of the parties agreement.

Oral and written agreement made prior to an integrated written contract will be inadmissible as terms of thecontract unless the agreement:

- is collateral to the integrated contract- doesnt contradict the terms of the integrated contract, and- is one the parties wouldnt ordinarily expect to be included in the integrated contract

Parol evidence will always be allowed to show fraud, duress, or mistake during formation of the contract

a way to get around the parol evidence rule is to argue that you are seeking to introduce evidence about a

subsequent agreement or modification

If a document is only partially integrated, parol evidence is allowed in so long as it does not contradict thewritings. If it is fully integrated, even non-contradictory parol evidence is barred if it adds anything new to thecontract.

issues to consider -is the dispute over a widely used term of trade?is there a difference between a general and a specific meaning?have the parties dealt with one another previously?

strict parol evidence rule - will have channeling effect, eliminate fraud, and have consistent adjudicationbroad parol evidence rule - will more accurately reflect intent of parties



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209, p.487: Integrated agreementsa final expression

214: allows admission of evidence to determine whether or not agreement is integratedeffect - allows evidence to determine whether evidence should be heard, undermines parol evidence rule

215: contradiction of integrated termsevidence that contradicts any integrated term will not be allowed

216: consistent additional terms(1) evidence of a consistent additional term is admissible to supplement an integrated agreement unless the

court finds that the agreement was completely integrated;(2) an agreement is not completely integrated if the writing omits a consistent additional agreed term which

is(a) agreed to for separate consideration;(b) such a term as in the circumstances might naturally be omitted from the writing.

2-202(U): final written expression: parol or extrinsic evidence...[terms of contract] may not be contradicted by evidence of any prior agreement or of a contemporaneous

oral agreement but may be explained or supplemented:(a) by course of dealing or usage of trade (1-205) or by performance (2-208), and(b) by evidence of consistent additional terms unless the court finds the writing to have been intended

also as a complete and exclusive statement of the terms and agreement

comment 3 - if additional evidence would certainly have been included, then inadmissible.( effect - makes it very difficult to find a totally integrated document)

comment 2 - terms should be read with assumption that course of dealing and usage of trade are assumed bythe contract unless specifically negated (effect - lets everything in)

UCC is more permissive than Restatement

Determining applicability of Parol evidence1. Is the written agreement between parties intended to be final?

YES PE inadmissible No PE admissible

2. Is agreement is complete or exclusive?YES PE inadmissible NO PE can be used that does not go against written agreement

3. If parties intended to at least partially integrate/finalize the agreement no contradictory PE admissible4. If parties fully integrated no PE of any additional terms

Case 42: Thompson v. Libbey, verbal warranty as to quality of purchased logs P. 482

I: can a verbal warranty be admissible as evidence when whole of contract is in writing?R: No, PE not allowed because the written contract seems complete fully integrated therefore anyPE evidence that alters or adds to contract is inadmissible.

Case 43: Brown v. Oliver, sale of hotel, fight over furniture P. 484F: Parties discussed sale of hotel to include furniture but final contract did not include it.I: Should furniture term be considered part of the agreement even though it was not written into actualcontract?R: PE admissible based on Wigmore treatise:



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1. was writing intended to cover all subjects or just some subjects? (depends wholly on partiesintent

2. intent of parties determined from conduct and language of parties and surroundingcircumstances

3. in deciding upon intent, see if particular element of the alleged extrinsic negotiation is dealtwith at all in writing

Battle of the forms

- rejection of the mirror image rule

2-207, p516: additional terms in acceptance or confirmation

(1) acceptance creates a contract even if it varies in terms of the offer unless acceptance is contingent onassent to the new terms

(2) In the case of contradictions between terms of offer and acceptance, offer terms govern unless theacceptance is expressly conditioned on assent to the new terms

(3) Different terms only become part of contract if they do not materially change contract. Terms thatmaterially change the contract are deemed mere suggestions for future negotiation.

(4) If acceptance is expressly conditioned on assent and the original offeror performs, then there is a

contract, the terms of which are those that are not in contradiction. Where there is a contradiction, theabove rules govern

- UCC approach makes things easier by allowing parties to agree on the core and letting the courts fill in thedetails later if necessary

- Gives more power to the offeror

Case 44: Union Carbide v. Oscar Mayer Foods, attempt to collect back taxes from contract HOF: Contract by P to D over products purposely avoiding sales tax. Caught by tax authorities, P sought

to collect back taxes from D.I: Can P collect back taxes from D when it knowingly omitted taxes from contract to begin with?R: NO, addition of terms would materially alter existing contract, since consent cannot be presumed.

Terms inserted by offeree are ineffectual:

1. if offer expressly limits acceptance to the terms of the offer, or2. if the new term

a. makes a material alteration, in the sense that consent to it cannot be presumed,and

b. there is no showing that the offeror in fact consented to the alteration whetheri. expressly, or

ii. by silence against the background of a course of dealings

ENFORCEABILITY

E. PRINCIPLESOFENFORCEABILITYi. Will principle parties consent to be bound voluntarily meeting of the minds, therefore enforceable

exception: objective manifestation of consent unless subjective intent can be proven to be contrary

ii. Reliance principle liable for harm caused by verbal behavior (oral or written)iii. Restitution principle to prevent unjust enrichment of promisor (one of benefited and now wants out)iv. Economic efficiency if benefits of enforcement exceed benefit of unenforcement (max. of social wealth)v. Substantive fairness only enforce contracts that are fair just prices and terms

vi. Bargain principle mutuality of inducement (also look at fairness of bargain, look for consideration)



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exception: I promise to take out the trash no bargain, not enforceable

Expressed Contracts promise said in words, acceptance by oral, silent, written acceptanceImplied Contracts contract inferred from acts in light of surrounding circumstances (fear: holding people toagreements they never agreed to make)

Case 45: Marvin v. Marvin, live in love, implied contract?P. 637

I: What principles should govern distribution of property acquired in a non-marital relationship?R1: Courts shall enforce express contracts between non-marital partners except if its founded on sex

R2: Courts inquire into conduct to determine if there is an implied contract there is when a man and awoman live together and agree to pool their earnings and share equally in their joint accumulation,equity will protect the interests of each in such property.

R3: Quantum meruit (not a contract at all, but a method to collect damages, applied when courts believenot applying would result in unjust enrichment) recoverable for the reasonable value of householdservices rendered less the reasonable value of support received if he can show that he rendered serviceswith the expectation of monetary reward

H: looks at will and reliance principles, theory of quantum meruit, and implied contracts

Dissent: decision would result in cases inundating court, hard to collect damages

Case 46: Morone v. Morone, cohabitation, implied contract? P.645R: there is no implied contractH: in living together you provide services without an expectation of payment it is hard to determine in

retrospect which services were gratuitous and which were not

Consideration

- Consideration is something that motivates an act- Most contracts must be supported by consideration to be binding- Two basic aspects of consideration:

(1) Promisee must suffer a legal detriment, i.e. promises must give up something of value, or

circumscribe his liberty in some way;(2) Promise must be bargained for, i.e. promise motivated by the legal detriment suffered by the

promisee

- Detriment for purposes of consideration means giving up anything you have a legal right to doregardless of its moral or health implications

- Consideration can also be benefit to the promisor that motivated the bargain (consideration need onlybe benefit or detriment, it need not be both. Usually there is a detriment and it is arguable whetherthere is a benefit)

- Courts may be willing to find consideration in a commercial setting than in an interpersonal setting.Court involvement is more necessary in the context of commercial transactions because there is lesstrust

- Consideration has two chief functions:

(1) Evidentiary existence of consideration provides objective evidence that the parties intendedto be legally bound by the agreement they made

(2) Cautionary requirement of consideration also affords parties the opportunity to consider thefull implications of their actions before binding themselves because statements and promisesmade without the support of consideration are not binding

vii. Bargains v. gratuitous promises- for promises to be enforceable, detriment must have been bargained for



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- chief reason for this criteria is to distinguish between a bargain reciprocal nature of thing promisedand a gratuitous promise getting something for nothing no consideration

- Gifts are generally unenforceable because the promise if not bargained for and the promisee suffersno detriment

- Courts generally refuse to police promises to give gifts because of(1) Judicial administration, i.e. people make promises all the time that they break; and(2) Personal context gives you more trust and because trust is lacking in commercial arena need

more formal mechanisms

exchange contextthe distinguishing test is how the parties view the condition (of the exchange)the only standard is whether the parties act in good faith

17: requirement of a bargain(1) formation of a contract requires a bargain in which there is a manifestation of mutual assent to theexchange and a consideration, except for(2) special conditions in 82-94

18: manifestation of mutual assentmanifestation of mutual assent means that each party either makes a promise or renders a performance

71: requirement of exchange; types of exchange(1) consideration must be bargained for;(2) must take place in exchange context;(3) may consist of:

(a) an act or(b) forbearance, or;(c) the creation, modification or destruction of a legal relation.

Case 47: Johnson v. Otterbein University,promise to donate $ to Univ to liquidate indebtedness P. 655I: By promising to give money to the University to help liquidate its indebtedness and thereby

retracting offer, did D breach a contract to P?R: No, since Univ is not doing anything to benefit D or detriment itself, there was no bargain forconsideration and therefore no contract

Case 48: Hamer v. Sidway, uncles reward for nephews purging of vices p 658F: P received from his uncle a promise for $5,000 if he gave up smoking and drinking, which he did.U wrote a promise to pay, but died before paying.I: was there consideration even if U received nothing tangible?R: forbearance of legal right to vice is consideration.H: yes, it is enough that something is promised, done, forborne, or suffered by the party to whom thepromise is made as consideration for the promise made to him.Detriment/Benefit need not be economic

79: adequacy of consideration, mutuality of obligationif consideration is met, there is no additional requirement of(a) a gain, advantage or benefit to promisor or a loss, disadvantage or detriment to promisee, or(b) equivalence in values exchanged, or(c) mutuality of obligation

consideration must have: exchange + benefit + mutuality (79).

viii. Contract modifications and the preexisting duty rulea. Past consideration



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- Where the detriment has been suffered before the promise is made, it is not bargained for andtherefore it is not consideration

- There are instances in which courts will enforce without finding consideration based on a moralobligation

- There are exceptions to the notion that past consideration is no consideration at all when a benefit hasbeen conferred in the past

- Other exceptions to the notion that past consideration is no consideration are in cases of statutelimitations, infancy, or bankruptcy

86: promise for a benefit received (minority view)(1) a promise made in recognition of a benefit previously received by the promisor from the promisee is

binding to the extent necessary to prevent injustice;(2) a promise is not binding if:

(a) the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustlyenriched;

(b) to the extent that its value is disproportionate to the benefit.

Case 49: Moore v. Elmer, clairvoyant, promise to pay her mortgage if prediction is true P. 669I: Can clairvoyant request D to pay for services rendered during reading session?R: No, no consideration since there was no bargain before he sat down for reading, he only promised topay post reading. If there was a contract he didnt receive any benefit from it since service wasrendered prior to making of contract. Past consideration not binding except in certain situations86

Case 50: Mills v. Wyman,promise to pay for nurse's prior care of deceased son. p 671F: P found and cared for Ds son, V, who returned from sea and fell

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Contracts Cases and Doctrine Outline

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