CONTRACTS OUTLINE

Prof. Barry Adler Fall 2003 1 THE NATURE AND LIMITS OF CONTRACT.........................................................................................2 2 REMEDIES FOR BREACH OF CONTRACT............................................................................................2

I. Farnsworths Three Damage Interests...............................................................................................2 II. Expe tan y !eas"re.........................................................................................................................2

3 LIMITATIONS ON DAMAGES..................................................................................................................3

I. Foreseea#$l$ty of %arm &remoteness of damages'..............................................................................3 II. (n erta$nty of %arm &spe "lat$)e damages'....................................................................................* III. A)o$da#$l$ty of %arm &m$t$gat$on do tr$ne'....................................................................................+
4 EXPRESS PROVISIONS: LIQUIDATED DAMAGES..............................................................................6

I. ,$-"$dated Damages............................................................................................................................ II. /as the l$-"$dated damages la"se reasona#le0...............................................................................1 III. D$d the l$-"$dated damages la"se pre l"de eff$ $ent #rea h0........................................................1
5 SPECIFIC PERFORMANCE.......................................................................................................................

I. 2eneral 3otes.....................................................................................................................................1 II. 4ontra ts for ,and............................................................................................................................5 III. 4ontra ts for 2oods.........................................................................................................................5 I6. 4ontra ts for Personal 7er)$ es.......................................................................................................5
6 RESTITUTION..............................................................................................................................................!

I. 8n the 4ontra t..................................................................................................................................9 II. :"as$;4ontra t................................................................................................................................<0 III. Impl$ed;$n;fa t 4ontra t................................................................................................................<0
THE DOCTRINE OF CONSIDERATION................................................................................................11

I. 4ons$derat$on...................................................................................................................................<< II. The Preex$st$ng D"ty ="le..............................................................................................................<< III. =el$an e on Prom$ses > 2rat"$to"s Prom$ses &Prom$ssory Estoppel'...........................................<2
" REACHING AN AGREEMENT.................................................................................................................15

I. 4ontra t Format$on..........................................................................................................................<+ II. 8#?e t$)e Theory of Assent............................................................................................................<+ III. Ex$sten e of an 8FFE=.................................................................................................................<. I6. A eptan e....................................................................................................................................<1 a eptan e #y PE=F8=!A34E....................................................................................................<1 a eptan e #y 7I,E34E.................................................................................................................<5
! INTERPRETING ASSENT.........................................................................................................................1"

I. Empty Terms @ Ill"sory Prom$ses.....................................................................................................<5 II. =ole of s"#?e t$)$ty.........................................................................................................................<9 III. (n ons $ona#$l$ty..........................................................................................................................20 I6. 2ood Fa$th.....................................................................................................................................2< 6. /arrant$es.......................................................................................................................................2< 6I. /r$tten !an$festat$on of Assent &wr$t$ngs as e)$den e'...............................................................22
1# CONSTRUCTIVE TERMS.......................................................................................................................24

I. !ater$al Brea h &s"#stant$al performan e'......................................................................................2* II. !"t"al !$staAe...............................................................................................................................2+ III. (n$lateral !$staAe.........................................................................................................................2+ I6. Imposs$#$l$ty @ Impra t$ a#$l$ty.....................................................................................................2.

6. Fr"strat$on.......................................................................................................................................21 BB 483T=A4T7 BB
Barry Adler > Fall 2003

< C T%E 3AT(=E A3D ,I!IT7 8F 483T=A4T

; two approa hes to ontra t law o retrospe t$)e &what these two part$es $ntendedD or sho"ld ha)e $ntended' a h$e)e so $ally des$ra#le res"lts o prospe t$)e &g"$d$ng f"t"re part$es' reate so $ally des$ra#le $n ent$)es ontra t E enfor ea#le prom$se o m"st ha)e an agreed;"pon prom$seD res"lt of a #arga$n l$m$ts to ontra t law &not all prom$ses enfor ea#leD e)en $f the res"lt of a #arga$n' o la A of apa $ty &m$nors or $n ompetents' o d"ress @ fra"d o o#?e t$ona#le s"#?e t matter

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2 C =E!EDIE7 F8= B=EA4% 8F 483T=A4T

I. FARNS$ORTH%S THREE DAMAGE INTERESTS
A. rel$an e &losses $n "rred $n rel$an e on the prom$se #rea hed > $rretr$e)a#le expend$t"res' <. p"ts )$ t$m of #rea h $n no worse a pos$t$on than he wo"ld ha)e #een $n had ontra t ne)er #een formed 2. exF A spends G+00 mo)$ng f"rn$t"re $n preparat$on for B pa$nt$ng h$s ho"seH B #rea hesH B owes A G+00 B. rest$t"t$on &ret"rn$ng all ga$ns prom$sor made as res"lt of prom$se' <. p"ts #rea h$ng party $n no #etter a pos$t$on than he wo"ld ha)e #een $n had ontra t ne)er #een formed 2. exF A g$)es B G+000 down payment to pa$nt h$s ho"seH B #rea hesH B owes A G+000 4. expe tat$on &defa"lt meas"re' <. p"ts )$ t$m of #rea h $n as good a pos$t$on as he wo"ld ha)e #een $n had ontra t #een performed 2. exF A agrees to pay B G<0D000 to pa$nt h$s ho"seH B #rea hesH the #est pr$ e A an get for someone else to pa$nt h$s ho"se $s G<+D000H B owes A G+000

II. EXPECTANC& MEASURE

A. =st I3*1 > expe tat$on $nterest E loss of )al"e of other partys performan e a"sed #y fa$l"re to performD pl"s other losesD m$n"s any losses a)o$ded #y no ha)$ng to perform <. noteF =st $snt law "nless ?"dges@leg adopt $t > ?"st an amalgam of the law as seen #y s holars 2. ontrast U'()*+, C*,,-+.(/0 C*1- 2UCC3 A+4(.0- 2D wh$ h $s law &for sale of goods' a. for the most partD o"t ome of apply$ng (44 $s same as that of apply$ng ommon law B. N5+6- 7. B/+'6 &J agreed to lease m$lls from K for . monthsD pay$ng L<0 for "se of m$llsH m$lls were worth L20@yearH K #rea hed ontra tD destroy$ng L+00s worth of sto A and depr$)$ng J of m$lls' <. example of $n $dental@ onse-"ent$al damages 2. t awarded damages not only for lost rentD #"t also for any spe $al damages &hereD sto A la$d $n to the m$lls'

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4. T*'8(69 7. T9*,/6 &Tong$sh agrees to sell seed to 4oop at G<0@hwtH 4oop agrees to sell seed to Bam#$no at G<0.++@hwtH seeds r$se $n )al"e $n m$ddle of del$)ery per$odH Tong$sh #rea hesD sells rema$nder to Thomas at G20@hwt' <. Tong$sh arg"es to apply (44 I<;<0. &0*64 :+*)(46 > G.++@hwt'H 4oop arg"es to apply I2;1<3 &1())-+-'.- ;-4<--' ,/+=-4 :+(.- /'1 .*'4+/.4 :+(.- > G<0@hwt' a. I2;1<3 was a more specific se t$on of the stat"te 2. t"rns on the resale ontra t #etween 4oop and Bam#$no > terms of 4;B ontra t wo"ldnt allow 4 to renege on T;4 ontra t a. no reasona#le ontra t #etween 4;B o"ld #e read to allow 4 to get seed from T for G<0 and then sell to marAet for G20 and pay B noth$ng #. $f T had del$)ered seedD 4 wo"ld ha)e had two opt$onsF sell to B for G<0.++D or pay B damages of G<0 &s$n e B wo"ld ha)e to get seeds elsewhere for G20' . ass"mpt$on that 4 wo"ldnt #e l$a#le to B $n e)ent of T #rea h 3. hold$ngF t awards d$fferen e #etween marAet damages and ontra t pr$ e a. en o"rages more eff$ $ent marAetD d$s o"rages #rea h of ontra t #. prote ts relat$onsh$p #etween 4 and B $. "nder lost prof$ts > e)ery t$me pr$ e roseD T wo"ld #rea hD B wo"ldnt get any seeds M e)ery t$me pr$ e fellD f$xed pr$ e ontra t wo"ld res"lt $n G+ worth of seeds for G<0 > relat$onsh$p as set "p wo"ld fall apart "nder I<;<0. . at staAe hereF +-0/4(*'69(: ;-4<--' /00 49+-- :/+4(-6 > "pset of e on. arrangementD wh$ h $n $tself may #e eff$ $ent > prote t B or the arrangement w$ll d$sappearH $neff$ $ent to allow T to get away w$th $t d. I2;1<3 $s the more spe $f$ stat"te & anon of stat"tory $nterpretat$on'H also deters strateg$ #eha)$or e. ex ept$onF l$Ae $n Allied Canner & Packers, Inc. v. Victor Packing Co.D where farmers rop destroyed 49+*589 '* )/504 *) 9(6 *<' > an award I<;<0. damages w$tho"t "nderm$n$ng e onom$ relat$onsh$ps D. do tr$ne of eff$ $ent #rea h <. expe tat$on damages w$ll lead a party to #rea h when $t wo"ld #e more e onom$ ally eff$ $ent for h$m to do so > party an #rea h and #enef$t from the #rea h so long as $n do$ng so that party an ompensate the non;#rea h$ng party for any loss res"lt$ng from #rea h 2. seeAs to pre)ent s$t"at$on where there wo"ld #e an e onom$ ally $neff$ $ent h$gh ost of omplet$on

3 C ,I!ITATI837 83 DA!A2E7
B general r"leF t w$ll award expe tat$on damages for #rea h B hereF l$m$tat$ons on th$s general r"le

I. FORESEEABILIT& OF HARM 2REMOTENESS OF DAMAGES3

A. =st I3+< &spe $f$es what $s foreseea#le'H (44 I2;1<+ &$n $dental@ onse-"ent$al damagesF Nhad reason to AnowO B. H/10-> 7. B/?-'1/0- &J m$llers ha)e a #roAen shaftH g$)e shaft to K arr$ers for del$)ery for repa$r &mold@model for a new shaft'H del$)ery delayed d"e to K negl$gen eH J lost #"s$ness and prof$ts as res"lt of delay' <. 6:-.(/0 .(+.5,64/'.-6 of th$s shaft #e$ng the only shaft the m$ll has > "nforeseea#le to Ks that delay $n del$)ery wo"ld a"se ent$re #"s$ness to #e sh"t down for longer 2. r"leF K not l$a#le for damages res"lt$ng from &"nforeseea#le@"nAnown' spe $al $r "mstan es a. damages awarded a ord$ng to what may fa$rly and reasona#ly #e ons$dered e$ther /+(6('8 '/45+/00> )+*, ;+-/.9 or may reasona#ly #e s"pposed to ha)e ;--' (' 49- .*'4-,:0/4(*' *) ;*49 :/+4(-6 3. r"le wo"ld for e part$es w$th spe $al $r "mstan es to d$s lose to the other *. paper ). d$amond example &where all pa Aages are $dent$ alD arr$ers dont Anow ontents'
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a. w$ll l$Ae Hadley r"le $f yo"re a sh$pper of heap th$ngsH wont l$Ae $t so m" h $f yo"re a sh$pper of expens$)e th$ngs #. r"le en o"rages the r$ght amo"nt of are to #e taAen > arr$er w$ll treat all pa Aages as $f theyre paper pa AagesH d$amond sh$ppers to ome o"t and #arga$n for the r$ght amo"nt of $ns"ran e &fewer d$amond sh$ppersH sho"ld maAe r"le for the ma?or$ty' +. h$gh;r$sA sh$ppers ha)e $n ent$)e to $dent$fy themsel)esH pre)ents "nne essary are from #e$ng taAen for low;r$sA pa Aages 4. foreseea#$l$ty r"le $s DEFA(,T > an ontra t aro"nd #y anno"n $ng any strange damages yo" th$nA m$ght o "r D. M*++*< 7. F(+64 N/4(*'/0 &J o$n olle tors ro##ed of )al"a#le o$nsH had had )er#al agreement w$th employee of K #anA for K to let J Anow when safety depos$t #oxes a)a$la#leH #oxes were a)a$la#le a few days #efore the ro##eryD #"t J d$d not f$nd o"t a#o"t a)a$la#$l$ty "nt$l after ro##ery' <. th$s $s more of a N4/.(4 /8+--,-'4O ase than a foreseea#$l$ty one a. to re o)er onse-"ent$al damages for #rea hD J m"st pro)e #oth thatF $. K had AnowledgeD and $$. K at least ta $tly agreed to ass"me respons$#$l$ty 2. t adm$ts there was a #rea h and that $t was foreseea#leD #"t doesnt hold K l$a#le for damages > fo "s on $mpl$ $t prom$se a t"ally made $n the ontra t a. prom$se to all promptly was a prom$se to maAe the phone allD not a prom$se to $ns"re aga$nst )al"e of o$ns > no proof that K was $n effe t agree$ng to an $ns"ran e pol$ y #. s$n e th$s was the reg"lar rental fee &no extra payment to o)er $ns"ran e'D "stomer had no reason to expe t he was gett$ng $ns"ran e $n l"ded $n rental fee 3. "n"s"al terms w$ll not generally #e $mp"ted $nto ontra t "nless they are expl$ $t a. s$mply ontemplat$ng the losses $snt eno"gh $n th$s s$t"at$on

II. UNCERTAINT& OF HARM 2SPECULATIVE DAMAGES3

A. =st I3+2 > damages not re o)era#le #eyond a foreseea#le amo"ntH some types of damages &"s"ally lost prof$ts' are too spe "lat$)e for t to try to d$)$ne $n al "lat$ng damages <. NIt $s lear that whene)er prof$ts are re?e ted as an $tem $n the al "lat$on of damagesD $t $s #e a"se they are s"#?e t to too many ont$ngen $es and are too dependent "pon the fl" t"at$on of marAets and the han es of #"s$ness to onst$t"te a safe r$ter$on for an est$mate of damages.O & Winston Cigarette v. Wells-Whitehead' B. C9(./8* C*0(6-5, C05; 7. D-,:6-> &J promoter s$gned ontra t w$th K #oxerD K agreed not to f$ght any other mat hesH K #rea hedD tra$ned for another mat hH J went to some length to enfor e ontra t' <. J la$med fo"r types of damagesF a. lost prof$ts $. 38F 4** 6:-.50/4(7- > dependent on too many ont$ngen $esD too d$ff$ "lt for t to al "late $$. AdlerF th$s $s tro"#l$ng > doesnt maAe sense to p$ A G0 ?"st #e a"se these damages too hard to al "lateM other examples of ts do$ng #est they anM #. expenses pr$or to ontra t $. 38F these damages dont res"lt from the #rea h $$. ant rely on ontra t #e a"se there was no ontra t at the t$me . expenses after ontra t &"p "nt$l t$me of #rea h' $. PE7F rel$an e damages > t w$ll somet$mes hoose to go w$th rel$an e when expe tat$on meas"re wont worA &hereD expe tat$on damages too spe "lat$)e' d. expenses to ga$n ompl$an e w$th ontra t &expenses after #rea h' $. 38F law doesnt perm$t prom$see to ho"nd prom$sor and harge for ost of ho"nd$ng > a r$sA J tooA on h$mself 4. A'80(/ T-0-7(6(*' 7. R--1 &a tor =eed s$gned ontra t to worA $n (QH #rea hed ontra tH prod" ers had spent a lot $n preparat$on for the T6 show' <. Js s"e for wasted expend$t"re &#efore a t"al s$gn$ng of ontra t' > osts $n preparat$on a. noteF not s"$ng for lost prof$ts &e)en more spe "lat$)e than $n De psey'
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2. hold$ngF Js an re o)er damages for wasted expend$t"re #efore ontra t a. $n part$es ontemplat$on that s" h expend$t"re wo"ld #e wasted $n e)ent of #rea h #. do tr$nal onfl$ t w$th De psey & ant la$m pre; ontra t expend$t"res when "s$ng rel$an e meas"re' #"t $t worAs $f yo" th$nA of $t as expe tan y > see !istletoe D. M(640-4*- E?:+-66 7. L*.=- &K prom$sed J a #"s$ness $f J made expend$t"resH J made expend$t"resH J ne)er made a prof$tH K de $ded to #rea h' <. J s"es on reliance meas"re for :*64@.*'4+/.4 expend$t"res after Ks early term$nat$on of her ontra t > $ss"e of offsett$ng damages a. Ks la$mF remedy sho"ldnt p"t J $n #etter pos$t$on than she wo"ld ha)e #een had ontra t #een performed &J Aept los$ng GH expe tat$on damages wo"ld #e negat$)e' 2. hold$ngF .0/(,6 *) 0*66-6 </6 4** 6:-.50/4(7a. #rea h$ng party ant la$m that there wo"ld ha)e #een losses > too spe "lat$)e #. K #ears #"rden of proof E. soF t w$ll al "late expe tan y ass"m$ng that prof$ts wo"ld ha)e #een AEROD no more and no less <. #"rden on part$es to pro)e otherw$se a. Anglia > non;#rea h$ng party wo"ld ha)e at least made #a A pre;prod" t$on osts &otherw$se $t wo"ld ha)e #een a r$d$ "lo"s )ent"re' > t a epts th$sD ass"mes net prof$ts wo"ld ha)e #een Rero #. !istletoe > t wont pres"me that damages were less than ReroD K m"st pro)e th$s 2. rel$an e damagesD )s. expe tat$on damages w$th a re#"tta#le pres"mpt$on of Rero prof$ts a. rel$an eF $f other party #rea hesD and yo")e made expend$t"res on that prom$seD yo" get those expend$t"res #a A &regardless of prof$ta#$l$ty of performan e of ontra t' #. expe tat$on w$th pres"mpt$on of ReroF $f #rea h$ng party an prove that J wo"ld ha)e wasted expend$t"res anywaysD those damages not awarded &therefore not rel$an e'

III. AVOIDABILIT& OF HARM 2MITIGATION DOCTRINE3

A. =st I3+0 > respons$#$l$ty of J to taAe reasona"le steps to a)o$d wasteD m$n$m$Re ost of #rea h <. damages not re o)era#le for loss that J o"ld ha)e a)o$ded w$tho"t "nd"e r$sA@#"rden 2. $f prom$see fa$ls to m$t$gateD then not all the damage was a"sed #y the #rea h$ng party B. R*.=('89/, C*5'4> 7. L54-' B+(18- C*. &K rep"d$ated ontra t to #"$ld #r$dgeD J ont$n"ed onstr" t$on on the #r$dge anywaysH J s"ed Ks for #rea h of ontra tD asA$ng for f"ll damages' <. J annot hold K l$a#le for damages wh$ h need not ha)e #een $n "rred > J m"stD so far as he an w$tho"t loss to h$mselfD m$t$gate damages a"sed #y Ks wrongf"l a ts a. hereD ,"ten d$dnt ha)e to taAe any aff$rmat$)e a t$on to m$t$gate > ?"st stop #"$ld$ng #. after K #rea hedD J o"ld do noth$ng to $n rease amo"nt of damages owed 2. poss$#le reasons why J needed to Aeep #"$ld$ng &all part of the reasona#leness analys$s' a. worAers that had to #e pa$dM poss$#le tort l$a#$l$ty for lea)$ng #r$dge half;f$n$shedM $f rep"d$at$on wasnt a#sol"tely lear #. J needs a real opport"n$ty to m$t$gate 4. S9(+0-> M/.L/('- P/+=-+ 7. T<-'4(-49@C-'45+> F*? &f$lm orp. rep"d$ated ontra tD offered alternat$)e employmentH !a ,a$ne opted not to taAe alternate ontra tH d$dnt f$nd worA d"r$ng per$od or$g$nal f$lm was to ha)e #een madeH s"ed for f"ll expe tat$on damages' <. hold$ngF employee doesnt need to a ept 1())-+-'4B(')-+(*+ -,:0*>,-'4 a. no real m$t$gat$on opport"n$ty $n s" h a ase #. Aey aspe t of d$fferen e &for th$s ase'F s"#stant$)ely d$fferent type of f$lm $. "p to a tor to de $de $f one ?o# $s a ompara#le s"#st$t"te for another 2. #"tF m$t$gat$on $s a#o"t /7*(1('8 </64-M a. Aey po$ntF Fox was #oth the #rea h$ng party on one ontra t and the offer$ng party $n the m$t$gat$on poss$#$l$tyM 3. alsoF d$ff$ "lt N$mpondera#lesO of ost of taA$ng on an $nfer$or ?o# > t hold$ng reF m$t$gat$on respons$#$l$ty w$th d$fferent@$nfer$or employment maAes $t eas$er for t

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a. Adlers alternat$)e poss$#$l$tyF e)en $f 2nd mo)$e was $nfer$orD $t m$ght not ha)e #een so $nfer$or that she sho"ldnt ha)e taAen $t and s$mply #e g$)en extra ompensat$on > #"t how to determ$ne how m" h extra0 &go o)er notesD 22 7eptem#er > pp. <1;<5' D. N-+( 7. R-4/(0 M/+('- C*+:. &J ontra ted to #"y a #oat from K reta$lerD pa$d depos$tH J o"ldnt maAe f"rther paymentsD so he an eled ontra tH K ref"sed to ret"rn the depos$tH K later resold the #oat for same ontra t pr$ eH J s"ed for re o)ery of depos$tD K o"nters"ed for #rea h of ontra t' <. Aey d$st$n t$on of a reta$ler > e)en tho"gh #oat sold to se ond #"yer for exa t same pr$ eD th$s reta$ler had opport"n$ty to #"y another $dent$ al #oat and sell that one to the se ond #"yer a. #"yers #rea h of ontra t res"lted $n loss of one "n$t of sale #. resale wasnt a s"#st$t"te &m$t$gat$on' #"t a 65::0-,-'4 for the lost prof$ts 2. general note reF expe tat$on damages > always do a ompar$son #etween what wo"ld ha)e happened had ontra t #een performed &prof$tsD preparat$on ostsD $d$osyn rat$ w$shes of se ond #"yerD et .'D and what a t"ally d$d happen as a res"lt of the #rea h of ontra t a. when taA$ng $n $dental osts $nto a o"ntD #e s"re to looA only at wasted expend$t"res and not to do"#le; o"nt any expend$t"res > $.e.D prep osts &not wasted $f the same prep was good for the se ond #"yer'

* C ESP=E77 P=86I7I837F ,I:(IDATED DA!A2E7

I. LIQUIDATED DAMAGES
A. an amo"nt ontra t"ally st$p"lated as a reasona#le est$mat$on of a t"al damages to #e re o)ered #y one party $f the other #rea hes <. (44 I2;1<5 > allows Nreasona#leO ,D &N"nreasona#ly largeO E )o$d as penalty' 2. =st. I3+. > ,D allowed $n Nreasona#leO amtH p"#l$ pol$ y gro"nds for no penalt$es B. $n determ$n$ng $f l$-"$dated damages la"se $s enfor ea#leD looA at whetherF <. l$-"$dated amt $s +-/6*'/;0- -64(,/4- of what damages m$ght #e $n e)ent of #rea hD A3D 2. part$es reasona#ly expe t that al "lat$on of a t"al damages w$ll #e 1())(.504 3. otherw$seD "nenfor ea#le as a :-'/04> 4. ex ante approa h &reasona#leness at t$me of ontra t$ng' $s the law whene)er stated pre $selyD #"t ts somet$mes looA at ex post res"lts to pro)$de e)$den e of ex ante "nreasona#leness <. some ts ?"st looA at ex post res"ltD and $f l$-"$dated damages too h$gh as ompared to a t"al damagesD w$ll not enfor e la"se &penalty' 2. most ts at least pay l$p ser)$ e to ex ante approa hD #"t maAe the ex post mo)e &s$n e we Anow what a t"al ex post damages t"rned o"t to #eD they determ$ne Treasona#leness ex ante' D. when enfor ea#leD l$-"$dated damages log$ ally :+-.051- ,(4(8/4(*' <. l$-"$dated damages la"se E arrangement #etween part$es to allo ate r$sA 2. m$t$gat$on do tr$ne doesnt apply here > waste $snt at $ss"eH m$t$gat$on $s a part of ontra t interpretationD #"t we Anow exa tly what part$es wanted here w$th express damages la"se E. #enef$ts of l$-"$dated damages la"ses <. en o"rage performan e 2. red" t$on $n l$t$gat$on osts 3. en o"rage format$on of ontra ts that m$ght otherw$se not #e formed *. sol"t$on to "n erta$nty pro#lem +. sol)es pro#lem of o)er$n)estment & ons$der part$es $n ent$)es $n $n)est$ng' a. expe tat$on damages an somet$mes lead to Narms ra eO of o)erspend$ngD part$es a t$ng as tho"gh <00U erta$nty of other party e$ther del$)er$ng or pay$ng <00U $n e)ent of #rea h > th$s ant #e eff$ $ent #. l$-"$dated damages la"se sets damagesD maAes s"re part$es Anow that performan e $snt <00U g"aranteedD w$ll maAe part$es a t a ord$ngly F. o)erly h$gh l$-"$dated damages la"ses &penalty la"ses' <. trad$t$onal reasons not to enfor e penalt$esF "n ons $ona#leH lead to e onom$ $neff$ $en y 2. some reasons why part$es m$ght #ant o)erly h$gh l$-"$dated damages la"sesD tho"gh
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a. where #rea h may not #e d$s o)era#le or pro)a#le to a t > set damages h$gh eno"gh to ompensate for the pro#a#$l$ty that )$ t$m of #rea h wont #e a#le to pro)e #rea h #. where th$s ontra t $snt the only $ntera t$on #etween the two part$es > h$gh damages la"se o"ld en o"rage greater $n)estment &o)er$n)estment $f th$s were the only $ntera t$onD #"t wo"ld ha)e #enef$ $al sp$llo)er $nto f"t"re transa t$ons'

II. $AS THE LIQUIDATED DAMAGES CLAUSE REASONABLEC

A. D-,;0- 7. F/++-' &K a tor and J theater s$gned ontra t w$th ,D la"se stat$ng that $f e$ther party #rea hedD #rea h$ng party wo"ld pay to the other L<000H s"m de lared #y part$es not to #e a penaltyH K #rea hedD res"lt$ng $n $n?"ry to J determ$ned &#y ?"ry' to #e L1+0H J s"$ng for f"ll l$-"$dated damages' <. reasona#leness to #e determ$ned spe $f$ to ontext of the #rea h a. s$n e ,D amo"nt was d"e no matter how large or small the #rea hD t held that the ,D la"se was 5'+-/6*'/;0#. re?e ts the ,D la"se #e a"se e)en a L< #rea h wo"ld tr$gger the L<000 f$ne 2. #e a"se th$s ,D la"se wasnt l$m$ted to 5'/6.-+4/('/;0- damagesD $t f"n t$ons as a penalty B. $/66-'//+ 7. T*<'- H*4-0 &#rea h of three;year employment ontra t wh$ h pro)$ded that Towne wo"ld f"lf$ll the ent$re f$nan $al o#l$gat$on $n ase of early term$nat$on' <. test of )al$d$ty $s whether ,D la"se was reasona#le "nder the $r "mstan es a. example of "s$ng ex post damages to de $de ex ante reasona#leness #. th$s la"se met the two;prong test of reasona#lenessF reasona#le fore ast of damages &as ompared to ex post damages'D damages d$ff$ "lt to al "late ex ante 2. when ,D enfor ea#leD $t pre l"des m$t$gat$on > so Js f$nd$ng other employment for the ontra t term d$dnt red" e the ,D amo"nt

III. DID THE LIQUIDATED DAMAGES CLAUSE PRECLUDE EFFICIENT BREACHC

A. L/=- R(7-+ C*+:. 7. C/+;*+5'15, C*. &PosnerF ,D sho"ld #e enfor ed a ross the #oard' <. ref"sal to adhere to ,D la"ses &e)en penalt$es' $s paternal$st$ > sho"ld g$)e part$es what they ontra ted for a. $f part$es st"p$d eno"gh to get $nto a ontra t w$th those termsD sho"ld g$)e $t to them #. "n ons $ona#$l$ty ons$derat$ons > #"t theres a whole do tr$ne to deal w$th $t . penalty la"ses en o"rage performan e 2. penalty la"ses d$s o"rage eff$ $ent #rea hD tho"ghD when #rea h then #e omes more ostly than $neff$ $ent performan e > res"lt of wasted performan e or "nne essary renegot$at$ons

+ C 7PE4IFI4 PE=F8=!A34E
I. GENERAL NOTES A. two $ss"es when determ$n$ng 7P <. ost of expe tan y damages al "lat$on $s part$ "larly d$ff$ "lt where sale $tem $s 5'(E5- &no ompara#le goods on marAetD d$ff$ "lt to al "late $d$osyn rat$ )al"e' 2. tr$)$al $n)estment $n sellers performan e &not worr$ed a#o"t wast$ng reso"r es $n a sales ontra tH eff$ $ent #rea h rarely poss$#le' B. w$th land or "n$-"e goodsD expe tat$on damages wo"ld #e part$ "larly #ad > hard to meas"re $n "n$-"e ases #e a"se hard to e)al"ateD noth$ng to ompare to 4. w$th ser)$ esD tho"gh > when there $s a marAet for pro)$s$on of ser)$ esD there are st$ll other people a)a$la#le to perform ser)$ e expe tat$on damages $n ases of ser)$ es <. $f yo" enfor e 7P for personal ser)$ esD osts too h$ghD d$s o"ragement of eff$ $ent #rea h 2. eff$ $ent #rea h rarely poss$#le for sellers of "n$-"e goods a. only ase wo"ld #e where at t$me of performan eD seller )al"es the good more than the #"yer does &l$Aely to #e rare s$n e seller wanted to sell the th$ng $n the f$rst pla e' D. Aey determ$nat$on for appl$ at$on of 7P > $f ost of repla $ng the goods $s too h$gh
;;1;;

II. CONTRACTS FOR LAND &always spe $f$ ally enfor ea#le'
A. L*7-0-66 7. D(-90 &D$ehls rented land from ,o)elessD $n)ested $n $mpro)$ngH ontra t had p"r hase opt$on for G2<000H D d$dnt ha)e the money at t$me opt$on exp$rat$onD so agreed to resell to %art for G22000H , #rea hed > land worth G2.000 after $mpro)ementsD d$dnt want to sell for G2<000' <. D re-"ested d$fferen e #etween marAet pr$ e and ontra t pr$ e &G+000'H , wanted to ?"st pay expe tat$on damages &G<000 prof$t from resale deal' > ompare to $ongish a. one way to preser)e relat$onsh$p #etween D and % $s to award G+000 $n damages #. another way $s to reward spe $f$ performan e . noteF spe $f$ performan e E a)a$la#le remedyD not the only &or re-"$red' remedy $. altho"ghF t says 7P to #e awarded Nas a matter of o"rseO for land 2. spe $f$ performan e depends on "n$-"eness of property $n -"est$on > land $s a "n$-"e good

III. CONTRACTS FOR GOODS &spe $f$ ally enfor ea#le $f property $s "n$-"eD or "nder other $r s'
B noteF #"rden of J to pro)e "n$-"eness of the good $n -"est$on A. C5,;-64 7. H/++(6 &4"m#est #ro"ght s"$t for re o)ery of stereo e-"$pment "nder #"y;#a A la"seD arg"$ng that th$s e-"$pment was of sent$mental )al"eD ea h p$e e spe $ally p$ Aed and p"t together' <. general r"leF no 7P when s"#?e t matter $s personal property 2. ex ept$onsF a. no ade-"ate remedy at law #. property $s of pe "l$arD sent$mental or "n$-"e )al"e . hattel $s not read$ly a)a$la#le d"e to s ar $ty &goes to "n$-"eness of the good' B. S.9*00 7. H/+4F-00 & olle tors $tem 4or)ette' <. deemed not "n$-"e 2. spe $f$ performan e sho"ld only #e granted when no ade-"ate remedy at law 4. S-1,/= 7. C9/+0(-%6 C9-7+*0-4 &l$m$ted ed$t$on Pa e ar' <. deemed "n$-"eD spe $f$ performan e grantedH #ased on fa tors of short s"pply and h$gh demandD as well as personal specifications of J &$n des$gn$ng ar' 2. aff$rms Npra t$ al approa hO to determ$n$ng spe $f$ performan e

IV. CONTRACTS FOR PERSONAL SERVICES &ne)er spe $f$ ally enfor ea#le'
A. not perm$tted #e a"se <. $mpra t$ al to enfor e & ts dont want to get $n)ol)ed $n f$g"r$ng o"t $f K really performed as ontra tedH $mposs$#le to pol$ e -"al$ty of ser)$ e when for edH et .' 2. proh$#$t$on on $ndent"red ser)$t"de 3. also d$s o"rages eff$ $ent #rea h > an eas$ly $mag$ne $nstan es of eff$ $ent #rea h w$th ser)$ es &"nl$Ae w$th sale of land or goods' B. M/+> C0/+= &#la A womanH la$m #y employer that she )ol"ntar$ly #o"nd herself to $ndent"red ser)$t"de to h$m' <. -"est$on was whether she o"ld lea)eH had she stayedD employer wo"ld ha)e gotten the performan e he wantedD #@ he wo"ld ha)e treated her l$Ae a sla)e 2. nat"re of $ndent"red ser)$t"de > we dont want so $ety where ppl an #e for ed to apply the$r la#or desp$te the$r des$re to s$mply walA away > allow #rea h and damagesD not 7P a. #es$desD 4onst$t"t$on stra$ght "p #ans sla)ery and $ndent"red ser)$t"de 4. L5,0-> 7. $/8'-+ &opera s$ngers agent agreed to la"se that she wo"ldnt s$ng anywhere elseH s$nger #rea hedD J so"ght $n?"n t$on to stop K from s$ng$ng elsewhere' <. $n?"n t$on "pheld > altho"gh we dont allow 7P for ser)$ esD t w$ll "phold '-8/4(7- :0-18-6 a. Aey d$fferen eF )ery spe $f$ law on o)enant not to ompete > not enfor ea#le $f $ts too #road $n s ope or $n geographyH l$m$ts on garn$shment & red$tor m"st #e sat$sf$ed w$th d$sposa#le $n ome only'H et . 2. m$ddle gro"nd > dont want to perm$t people to ontra t for $ndent"red ser)$t"de &d$re tly or $nd$re tly'D #"t we do want to allow people &to some l$m$ted extent' to omm$t themsel)es to a spe $f$ employerD pay damages $n e)ent of #rea h
;;5;;

a. no enfor ement of aff$rmat$)e o#l$gat$onD #"t some enfor ement of negat$)e pledges D. F*+1 7. G-+,*' &f$rst (7 ase ons$der$ng (Q %& leyH a tress #o"nd herself to a t for Js theatreD and not to a t elsewhereH #rea hH J asAs for enfor ement of negat$)e pledge' <. no $n?"n t$on > $f yo" ant re-"$re 7P d$re tlyD then ant ha)e a r$ght to do so $nd$re tly E. D5)) 7. R566-00 &D"ff entered $nto ontra t w$th r$)al theater d"r$ng per$od of ontra t w$th J theater' <. negat$)e pledge $s only (,:0(-1 hereD #"t t enfor es &"pholds $n?"n t$on' a. la A of expl$ $t negat$)e pledge doesnt matter & ontra t sa$d she was to perform se)en n$ghts a weeA' #. noteF todayD o)enant not to ompete $s generally made $n expl$ $t terms 2. l$m$tat$ons on o)enants not to ompete &see a#o)e l$st' a. ha)e to #e des$gned to prote t employers $nterestD not to #e p"n$t$)e 3. todayD enfor ement of negat$)e pledges doesnt )$olate proh$#$t$on on $ndent"red ser)$t"deF de#tors pr$sons a#ol$shedH l$m$ts on garn$shmentH l$m$ts on o)enants not to ompete

. C =E7TIT(TI83
B "nder appropr$ate $r "mstan esD t w$ll award rest$t"t$on $nstead of defa"lt expe tan y meas"re B spe $f$ ex ept$ons to general r"leD lead$ng to award$ng of rest$t"t$on damages

I. ON THE CONTRACT
A. B569 7. C/')(-01 &4 agrees to sell flo"r to B"sh for G<*000D B pays G+000 depos$tH at t$me of del$)eryD flo"r $s worth G<<000H 4 fa$ls to performD B s"es' <. non;#rea h$ng party seeAs rest$t"t$on &perpetrator wants to "se expe tan y to l$m$t payment' 2. theor$es of the damages a. B"sh wants =E7TIT(TI83 for #rea h > damages of G+000 &down payment' #. 4anf$eld wants ESPE4TA34P > G<<000 &marAet pr$ e' ; G9000 &what B"sh was s"pposed to ha)e pa$dD G<*000 m$n"s G+000' E G2000 $. 8=F B"sh wo"ld ha)e lost G3000 & ontra t > marAet'D already pa$d G+000D so 4 sho"ld g$)e G2000 #a A to B 3. r"leF ;+-/.9('8 :/+4> ./''*4 65- *' 49- .*'4+/.4 &$.e.D ant asA for expe tat$on damages' a. $f a party #rea hesD ant t"rn aro"nd and say ontra t wo"ldnt ha)e #een s" essf"l > ant #rea h and s"e #. arg"ment that ant$;'&sh r"le wo"ld lead to r"sh to #rea h to apt"re the #enef$t $. go o)er '&sh @ ant$;'&sh hypoD pp. 21;30 $n notes $$. '&sh r"le an lead to $neff$ $en $es #e a"se person w$ll stay w$th a ?o# d"e to a ontra t e)en tho"gh so $ety wo"ld #e #etter off $f the person #rea hed and worAed $n a ?o# w$th more #enef$t to so $ety & f. A#el hypo > so $ety #enef$ts $f she -"$ts and worAs for $ntermed$ate wage'H Aey $s marAet ond$t$ons hang$ng #etween t$me of s$gn$ng and #rea hH also employer d$dnt Anow she o"ld m$t$gate and worA as an ele tr$ $an *. m$t$gat$on and the '&sh r"le a. or$g$nal ontra t for !a ,a$neF G110000 w$th m$t$gat$on damages &Fox w$ll only pay d$fferen e #etween ontra t and m$t$gat$on opport"n$ty ontra t' #. !a ,a$nes o"nterofferF only G1+0000D to #e pa$d regardless of m$t$gat$on $n e)ent of #rea h and an ellat$on of mo)$e . "nder ant$;'&shF !a ,a$ne o"ld #rea h and then s"e for the G20000 she sa)ed Fox &w$ll always ha)e $n ent$)e to #rea h' d. "nder '&shF more eff$ $entD !a ,a$ne w$ll always looA for alternat$)e employmentD #@ shell #enef$t from olle t$ng on Foxs #rea h and ha)$ng another ?o# B. B+(44*' 7. T5+'-+ &la#orer agreed to worA f"ll year for G<20H -"$t 3@* $nto term w$tho"t #e$ng pa$d' <. #rea h$ng party seeAs rest$t"t$on &)$ t$m wants to "se expe tan y to l$m$t payment' 2. r"leF la#orerD desp$te #rea hD $s ent$tled to rest$t"t$on &$.e.D to #e pa$d for the worA done' a. a)eat when #rea h$ng la#orer seeAs rest$t"t$onF ontra t pr$ e ant #e ex eeded
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3. hypoF worAer agrees to worA for a year for G30@-"arterH $mmed$ately after s$gn$ngD marAet rate $n reases to G+0@-"arterH la#orer -"$ts after 3 -"arters &w$tho"t ha)$ng #een pa$d' a. damages start w$th f"ll rest$t"t$onF H15# &marAet )al"e of worA onferred' #. f$rst red" t$onF worA st$ll has to #e done > employer wo"ld ha)e to pay someone else G+0 for the last -"arterD wo"ld ha)e pa$d la#orer only G30 > loss of H2# . se ond red" t$on &'ritton red" t$on'F ontra t pr$ e for ser)$ e ant #e ex eeded $. red" t$on of H2#BE5/+4-+ > otherw$seD when marAet sh$ftsD la#orer wo"ld wa$t "nt$l last day to -"$t d. so rest$t"t$on damages wo"ld #e IIH #II *. rest$t"t$on award has noth$ng to do w$th ontra t terms > all we looA at $s $f )$ t$m of #rea h has onferred on #rea h$ng party a #enef$t that he now wants to re la$m a. #"tF a#o)e red" t$ons were all #ased on the ontra tM +. AdlerF th$s $s really expe tat$on damagesD wh$ h happen to flow from )$ t$m to #rea h$ng party &not Nrest$t"t$on red" ed #y two le)elsO' a. hereD we ha)e apparently negat$)e damagesD #"t we dont ha)e #rea h$ng party la$m$ng that he sa)ed the other g"y money #y #rea h$ng &d$st$n t from '&sh'

II. QUASI@CONTRACT
B $.e.D N ontra t $mpl$ed $n lawO > no a t"al ontra t so not a -"est$on of expl$ $t@$mpl$ $t term B $n)erse tort law > J onferred a #enef$tD wants ompensat$on $n ret"rn B -"est$on to asAF what wo"ld part$es ha)e agreed to $f they had the opport"n$ty to #arga$n #eforehand0 A. C*4'/, 7. $(61*, &do tor pro)$des reasona#le med$ al ser)$ es that do no good' <. t held that do tor ent$tled to reasona#le ompensat$on for ser)$ es rendered 2. Ks estate arg"ed for rest$t"t$on > t re?e ts rest$t"t$on meas"re a. from ex post perspe t$)e > no )al"e a t"ally onferred Rero $n rest$t"t$on damages #. from ex ante perspe t$)e > )al"e of chance to live onferred $nf$n$te damages 3. t "ses -"as$; ontra t &no #arga$n$ngD s$n e de edent was "n ons $o"s ent$re t$me' a. +-/6*'/;0- )-- #ased on marAet )al"e of ser)$ es #. not a#o"t a ontra t or a#o"t negot$at$on #etween the two part$es . fa$r th$ng to do $s a reasona#le fee #ased on what do tor wo"ld harge $n a reasona#le ,/+=-4:0/.- &no one;on;one ons$derat$on s$n e theres no a t"al ontra t' *. appl$ at$on of -"as$; ontra t whenF a. opport"n$ty for negot$at$on d$dnt ex$stD and #. so $ety $s reasona#ly onf$dent that the #enef$t wo"ld ha)e #een wanted & learly ser)$ es party wo"ld ha)e agreed to pay for g$)en the opport"n$ty to negot$ate' $. $n ent$)e for people to do th$ngs that pro)$de )al"e to so $ety

III. IMPLIED@IN@FACT CONTRACT

B $.e.D ontra ts w$th #arga$ns that happen not to #e expl$ $t B ontra ts $nferred from part$es a ts $n l$ght of the $r "mstan es &e.g.D $mpl$ed prom$se to pay for ser)$ es rendered when person re-"ests the ser)$ es or when rendered w$th the Anowledge of re $p$ent' A. M/+4(' 7. L(440-J B+*<' &J offered to send K $nfo a#o"t plag$ar$Red #ooA passagesH K $n)$ted J to send the $nfoH J s"ed for ompensat$on for #enef$t onferred' <. had there really #een a ontra tD J wo"ld ha)e made expl$ $t $n-"$ry@agreement reF pr$ e a. J had power@opport"n$ty to w$thhold $nfo "nt$l K agreed expl$ $tly on pr$ e 2. )ol"nteers generally ha)e no r$ght to rest$t"t$on B. ompar$son w$th -"as$; ontra ts <. -"as$; ontra ts &$mpl$ed;$n;law' E o#l$gat$ons $mposed #y lawD a sort of $n)erse tort law 2. $mpl$ed;$n;fa t ontra ts E ?"st ontra ts w$th #arga$ns that happen not to #e expl$ $t

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1 C T%E D84T=I3E 8F 4837IDE=ATI83

I. CONSIDERATION
A. ons$derat$on E #arga$ned;for ex hange &see =st. II <1D 2*D 1<' <. $f no #arga$nD then prom$se $snt enfor ea#le &?"st a grat"$to"s prom$seD or a sham' 2. ex. of no ons$derat$onF A prom$ses B NIll g$)e yo" G<000@weeAO > not enfor ea#leH to maAe $t enfor ea#leD A says Nyo" ha)e to prom$se $n ex hange to g$)e me G<00O > not a real ex hange &th$s $s ?"st A prom$s$ng to g$)e B G900@weeA' > no #arga$ned;for ex hange B. G*9'6*' 7. O44-+;-(' U'(7-+6(4> &V prom$sed a g$ft ond$t$on on 8( "s$ng g$ft to repay a de#tH 8( a epted these termsD later s"ed to enfor e the note' <. 8(s arg"ment that there was a #arga$ned;for ex hange > agreement to pay off de#t a. #"tF 8(s de#t pre)$o"sly ex$sted #. no -"$d pro -"o #@ 8( prom$ses to do what theyre /0+-/1> 0-8/00> *;0(8/4-1 4* 1* > no real extra t$on $n th$s ase 2. sham ons$derat$on > part$es try$ng to get a grat"$to"s prom$se aro"nd the ons$derat$on r"le a. e.g.F V prom$ses to g$)e 8( G<+0 $f 8( prom$ses to g$)e G+0 #a A $n p"rple en)elope #. not e)$dent that V $s extra t$ng anyth$ng from 8( $n th$s ase . Np"rple en)elopeO la"se $s ?"st an art$f$ $al way to meet ons$derat$on re-"$rement $. attempt to maAe a #$nd$ng grat"$to"s prom$se > t w$ll r"le no ons$derat$on 3. o"ld ha)e #een ons$derat$on $f V extra ted prom$se to pay off part$ "lar de#t > $f V sees 8( do someth$ng else w$th moneyD V #e omes red$tor $n h$s own r$ghtD a#le to s"e 8( for m$s"se $n reas$ng $n ent$)e for 8( to pay off de#tH donor extra t$ng real prom$se for .9/'8- (' ;-9/7(*+D to do someth$ng he wants to happen 4. H/,-+ 7. S(1</> &"n le prom$sed to g$)e nephew G+000 $f nephew stra$ghtened "p' <. s"pported #y ons$derat$on on e nephew a epted #y performan e &"n$lateral ontra t' a. tr"e #arga$n > nephew had to a t$)ely hange #eha)$orD worAD to meet re-"$rements #. eno"gh to show that #oth part$es extra ted someth$ng from the #arga$n &dont need to show that "n le re e$)ed some pe "n$ary #enef$t'

II. THE PREEXISTING DUT& RULE 2$AS THE MODIFICATION SUPPORTED B& CONSIDERATIONC3
A. ommon law r"le > ad?"stment of ontra t"al o#l$gat$ons d"r$ng the performan e phase of the ontra t $s not enfor ea#le &nless the mod$f$ at$on $s s"pported #y ons$derat$on B. S4(0= 7. M>+(.= &after two sa$lors desertedD the rema$nder renegot$ated for a h$gher wage' <. no ons$derat$on > sa$lors agreed to do only what they were /0+-/1> *;0(8/4-1 4* 1* a. had or$g$nal ontra t had sa$d that ea h sa$lor only re-"$red to do h$s share #ased on the n"m#er of the or$g$nal rewD o"t ome may ha)e #een d$fferent 2. AdlerF doesnt agree w$th no; ons$derat$on arg"ment > sa$lors agreed to g$)e "p Nr$ghtO to #rea h and pay damages &the$r s$de of the -"$d pro -"oM' a. pretty lear that were not $n the world of grat"$to"s prom$se > not a sham 3. t st$ll d$dnt #el$e)e extra worA enfor ement of mod$f$ at$on > (,:0(.(4 ;/+8/(' $n or$g$nal ontra t incl&ded worA$ng thro"gh emergen $es a. r$sA that some of the$r oworAers wo"ld wash o)er#oard or de $de to lea)e E r$sA they signed on to take $n or$g$nal ontra t #. o"t ome wo"ld ha)e #een d$fferent $f the hange $n $r "mstan es had #een eng$neered #y the apta$n &sa$lors d$dnt s$gn on to taAe that r$sA@#"rden' 4. A0/6=/ P/.=-+6 7. D*,-'(.* &f$shermen demand$ng h$gher pay on ontra tD la$m$ng nets werent ser)$ ea#le &were gett$ng pa$d per f$sh'H s"per)$sor ga)e $n #@ no repla ements were a)a$la#le' <. same o"t ome as (tilk #@ fa t;f$nder fo"nd the nets ser)$ ea#leD so f$shermen o#l$gated to perform on or$g$nal ontra t a. $f t #el$e)ed nets were #ad &$n ons$stent w$th what employer had agreed to pro)$de'D then there wo"ld ha)e #een ons$derat$on for the mod$f$ at$on
;;<<;;

D.

E.

F. 2.

#. t fo"nd noth$ng wrong w$th nets > merely a pretext for f$shermen to str$Ae . on ern a#o"t .*-+.(*' 2. looA at ontra t > $f t #el$e)es the strateg$ ma h$nat$ons were on the s$de of the employer &po Aet$ng prof$t #y g$)$ng f$shermen "nser)$ ea#le nets'D t w$ll r"le $n fa)or of f$shermen B+(/' C*'64+5.4(*' 7. B+(89-'4( & ontra t for ex a)at$on worAH ons$dera#ly more r"##le than ant$ $patedH oral agreement for add$t$onal ompensat$on' <. d$fferent o"t omeD #@ fa t;f$nder fo"nd the r"##le Nadd$t$onal worAO ompensated for $n the mod$f$ at$on #y Nadd$t$onal ompensat$onO a. extra r"##le E ex "se not to perform on the or$g$nal ontra t #. $mpl$ $t terms of th$s ontra t d$d 38T $n l"de ontra tors o#l$gat$on to ex a)ate the add$t$onal r"##le &not $n l"ded $n ontra t termsD ontra t pr$ e' 2. de $d$ng whether hange $n $r "mstan es was an $mpl$ $t term $n or$g$nal ontra t > not an exa t s $en eH ts ha)e d$s ret$on to de $de ase e$ther way =st I59 > ex ept$ons to ommon law r"le that mod$f$ at$on re-"$res ons$derat$on <. .9/'8-1 .(+.5,64/'.-6 &$n l"desD #"t may not #e l$m$ted toD hanges that onst$t"te ex "se' 2. to extent pro)$ded #y 64/4543. when ?"st d"e to mater$al hange $n pos$t$on $n +-0(/'.- on the ontra t &prom$ssory estoppel' (44 I2;.09&<' > an agreement mod$fy$ng a ontra t needs no ons$derat$on <. fo "s on whether on ess$on was .*-+.-1 E4838!I47 !8DE, &to determ$ne how to exer $se d$s ret$on $n f$nd$ng ons$derat$on or not' <. prom$sor &f$sherman' w$ll perform w$tho"t renegot$at$on where C K P L ,('MAJLN a. ost of performan e W ontra t pr$ e X wh$ he)er $s heaperD assets or l$a#$l$ty &p.*<' #. when f$shermen performD then net P O CH when #rea hD they lose ,('MAJLN . where 4E+D PE<D AE<0D ,E<00F perform;*D #rea h;<0D lost prof$ts<00 $. w$ll performD altho"gh theyre Nlos$ngO > wo"ld lose more w$th #rea h > EFFI4IE3T d. where 4E<+D PE<D AE<0D ,;<00F perform;<*D #rea h;<0D lost prof$ts<00 $. w$ll not performD s$n e they lose less #y #rea h$ng > I3EFFI4IE3T &h$gh lost prof$ts' $$. "nder str$ t ons$derat$onD no renegot$at$on allowedH f$sh wont get a"ght $$$. relax ons$derat$on r"leD f$shermen an treat renegot$at$on as enfor ea#leD and most eff$ $ent o"t ome w$ll res"lt 2. ts tend to ha)e more sympathy towards $nsol)ent part$es fa $ng a h$gh ost of pr$ e of non; performan eH no sympathy towards potent$ally oer $)e part$es a. danger that f$shermen m$ght renegot$ateD e)en $f they wo"ld ha)e eff$ $ently performed a#sent the mod$f$ at$on &danger "nder (44' > thereforeD need for r"le that mod$f$ at$on not N oer edO 3. soF +50- *) .*'6(1-+/4(*' )*+ ,*1()(./4(*' (' 6(45/4(*'6 <9-+- )(69-+,/' <*501 :-+)*+, /'></>6 Ywhere 4 W P X m$nYAD,Z > so where $ne-"al$ty worAs o"tD ons$derat$on #r$ngs a#o"t good res"lts .*'6(1-+/4(*' +-E5(+-1 .*'6(1-+/4(*' '*4 +-E5(+-1 0*< :+*,(6*+ .*64 288D BAD 9(89 :+*,(6*+ .*64 BAD 288D

III. RELIANCE ON PROMISES O GRATUITOUS PROMISES 2PROMISSOR& ESTOPPEL3

A. real prom$ssory estoppel E grat"$to"s prom$se <. where prom$sees rel$an e on prom$sors grat"$to"s prom$se E $ndependent and s"ff$ $ent #as$s for enfor ement a. damages are generally rel$an e damagesD not expe tan y &no; ons$derat$on prom$sesM' 2. =st I90 > a prom$se wh$ h the prom$sor sho"ld reasona#ly expe t toD and doesD $nd" e a t$on or for#earan e on the part of the prom$see $s #$nd$ng $f $n?"st$ e an #e a)o$ded #y enfor ement 3. Adlers r$t$-"e of th$s do tr$ne > o)erextens$on of ons$derat$on do tr$ne
;;<2;;

B.

4.

D.

E.

ts try$ng to apply ons$derat$on &grat"$to"s prom$se' analys$s to ases that ha)e noth$ng to do w$th grat"$to"s prom$ses G/,-6 B/(+1 C. 7. G(,;-0 B+*6. &K s"# ontra tor sends o"t a pr$ e for l$nole"mH J ontra tor #ases $ts #$d on Ks pr$ eD w$ns #$dH pr$or to any omm"n$ at$on #@t J and KD K res $nds &#efore J off$ $ally a epts Ks #$d'' <. s"# la$med m$staAeH #"t ontra tor rel$ed on s"#s pr$ e $n maA$ng h$s #$d 2. 38 prom$ssory estoppel $n th$s ase > s"# wo"ld ha)e prom$sed to perform only $f h$s offer was a epted &res $nd$ng of offer happened "efore a eptan eD therefore no prom$se for J to rely on' a. offer for an ex hange $snt meant to #e ome a prom$se "nt$l a ons$derat$on has #een re e$)edD e$ther a o"nter;prom$se or whate)er else $s st$p"lated #. any reasona#le ontra t wo"ld re-"$re an expl$ $t agreement > s$n e $ts so tr$)$al for ontra tor to tell s"#s that theyll #e "sedD hard to #el$e)e s"# wo"ld agree to #e so #o"nd w$tho"t not$ e 3. analyRed as a relat$)ely stra$ghtforward ontra ts ase a. d$dnt #el$e)e th$s was the "stom of the $nd"stry &to not $nform s"#s' #. d$dnt #el$e)e part$es $ntended to form ontra t at moment ontra tor "sed s"#s #$d &d$dnt th$nA the terms of the offer so st$p"lated' . was poss$#le for part$es to ha)e $ntended $tD #"t they d$dnt $n th$s aseD so no ontra t D+-''/' 7. S4/+ P/7('8 C*. &K s"# sent J ontra tor s"# ontra t$ng offer for pa)$ngH ontra tor "sed pr$ e $n #$dH s"# orre ted m$staAe after #$d had #een a epted' <. no ons$derat$on #e a"se no #arga$ned;for ex hange &no offer and a eptan e'D so t goes to PE a. s"# was #o"nd to real$Re s"#stant$al poss$#$l$ty that ontra tor wo"ld rely on h$s #$d #. t fo "sed myop$ ally on #ords > no ontra t formed #y wordsD yesD #"t ontra t )$a actions 2. AdlerF sho"ld ha)e #een treated as a ontra ts ase > no need to go to prom$ssory estoppel a. $n real PE asesF only prom$sor $s #o"ndD prom$see $s p"re )$ t$m &no ontra tD no o#l$gat$on r"nn$ng $n #oth d$re t$ons' > ontra tor wo"ld #e free to get a #etter pr$ e $. #"t here > ontra tor $s #o"nd as well #e a"se th$s was a ontra t[ #. referen e to =st I*+ &opt$on ontra t reated #y part performan e' . damages refle t d$fferen e #etween offer pr$ e and s"#st$t"te performan e pr$ e &expe tan y damagesD not rel$an e' 3. ts try$ng to "se PE $n tort"red waysD when $t wo"ld #e s$mpler@#etter to see them as ontra t ases G**1,/' 7. D(.=-+ &D$str$#"tors NrepresentedO that =eta$ler had re e$)ed an Emerson fran h$seH th$s pro)ed falseH = la$med rel$an e damages and lost prof$ts' <. Ds stat"s as Emerson d$str$#"tor &e)en tho"gh not an agent of Emerson' made $t pla"s$#le that Ds representat$on was a pro ise > reasona#le for t to on l"de that D told = not to wa$tD w$ll$ng to #arranty that = has the fran h$se &not yet a ontra tD ?"st a prom$seM' 2. #"t ?"st as easy to hara ter$Re $t as a ontra ts ase &#arga$ned;for ex hangeM' a. =s expend$t"re $n rel$an e E a eptan e of Ds offerD g$)en Ds en o"ragement of s" h expend$t"reH $mpl$ $t warranty for those expend$t"res &not for lost prof$ts' #. all that D e)er agreed to repay was rel$an e > ts "nfam$l$ar w$th term$nology l$Ae th$s0 ord$nary ontra ts ase where damages happened to o$n $de w$th rel$an e meas"reM 3. $n order to maAe $t f$t w$th PED t has to maAe "p a Nprom$seO a. Adlers r"le of th"m#F $f yo" dont ha)e a grat"$to"s prom$se and the ts enfor e $tD then there $s almost always go$ng to #e a #arga$ned;for ex hange #. "se PE only when there $s a grat&ito&s prom$se[ H*)),/' 7. R-1 O<0 S4*+-6 &=8 prom$sed % a fran h$se $f % wo"ld $n)est G<5000D wh$ h % omm$tted to doH $n rel$an e =8s prom$se &and $n part on =8s "rg$ng'D % sold h$s #aAery@gro eryD p"r hased a #"$ld$ng s$te for new fran h$seD and relo ated h$s fam$ly' <. t doesnt analyRe as a ontra t s"pported #y ons$derat$on > doesnt #el$e)e all the ne essary elements are thereH "n omforta#le w$th f$ll$ng $n $mpl$ $t terms

a.

;;<3;;

a. #"tF part$es a ted l$Ae they had a ontra tH $f yo" ha)e eno"gh to say rel$an e was reasona#leD yo" ha)e eno"gh to say ontra t was )al$d > may ha)e to f$ll $n gapsD #"t th$s $s someth$ng ts an and do do #. th$s $snt a real PE ase > learly a #arga$ned;for ex hange &=8 Aept asA$ng for th$ngsD % Aept del$)er$ng'H may not #e an NofferO #@ of )ag"e termsD #"t learly #arga$n$ng 2. a . to AdlerF t got laRy@ onf"sedD lapsed to PED and then got the damages wrong a. % sho"ld ha)e #een a#le to get lost prof$ts from the #"s$ness he sh"t down $n rel$an e on =8s prom$se > the only lost prof$ts that wo"ld #e expe tat$on damages &and not a)a$la#le "nder rel$an e meas"re' wo"ld #e prof$ts lost from the fran h$se =8 d$dnt ome thro"gh w$th F. "n$lateral ontra t )s. prom$ssory estoppel <. #efore prom$sor an olle tD m"st show that Y(4Z offer was to #e a epted #y performan eD or that YPEZ prom$see demonstrates rel$an e #y perform$ng 2. #oth m"st st$ll #e analyRed a ord$ng to ord$nary means of $nterpretat$on

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5 C =EA4%I32 A3 A2=EE!E3T
B try$ng to f$g"re o"t what the prom$se wasD what part$es agreed toD how to $nterpret what was sa$dD et . B general r"leF s"#?e t$)e $ntent does not matter $n ontra t format$on B omponents of assentF offerD &re)o at$on'D a eptan e to #e determ$ned o")ectively

I. CONTRACT FORMATION &re-"$rements for a ontra t to #e formed'

A. m"st ha)e *))-+ and /..-:4/'.- s"pported #y .*'6(1-+/4(*' & f. (44 I20.' <. =st I<1F $n generalD Nthe format$on of a ontra t re-"$res a #arga$n $n wh$ h there $s a anifestation of m"t"al assent to the ex hange and a ons$derat$onO 2. =st I<5F man$festat$on of m"t"al assent E ea h party e$ther maAes a prom$se or #eg$ns performan e B. m"st ha)e #as$s for determ$n$ng -?(64-'.- *) ;+-/.9 and g$)$ng appropr$ate +-,-1> <. terms m"st #e Nreasona#ly erta$nO &=st I33'H Nreasona#ly erta$n #as$s for M remedyO &(44 I2; 20*' 2. "nder (44D an $mp"te pr$ e &I2;30+'D pla e for del$)ery &I2;305'D t$me for performan e &I2;309' 3. t w$ll 38T f$ll $n E5/'4(4> &dont need set -"ant$tyD #"t do need ontextD e.g.D re-"$rements and o"tp"t ontra ts'

II. OBGECTIVE THEOR& OF ASSENT &m"t"al assent'

PE7D there was m"t"al assent > o#?e t$)e theory of assent A. E,;+> 7. H/+8/1('- &employee approa hed employerD sa$d Nrenew my ontra t or I -"$tDO employer sent employee #a A to worA > onf"s$on o)er whether th$s was a renewal or not' <. $f a partys <*+16 *+ /.46D ?"dged #y a +-/6*'/;0- 64/'1/+1D man$fest an ('4-'4(*' 4* /8+-- reF matter $n -"est$onD the agreement $s esta#l$shedH "nexpressed s"#?e t$)e state of m$nd $s $mmater$al 2. t f$nds for the employee > o#?e t$)e assent ex$sted a. oppos$te r"le &re-"$r$ng lar$ty@formal$sm $n agreements' wo"ld ha)e s$gn$f$ ant ost when part$es $n)ol)ed dont Anow the r"les > "nsoph$st$ ated employee $n th$s ase #. ts tend to prefer the na\)e o)er the $nformedD g$)$ng the $nformed $n ent$)e to d$s lose 3. reasona#leness standard $s ontext;spe $f$ > looA at the part$es yo"re deal$ng w$th $n ea h s$t"at$on B. L5.> 7. A-9,-+ &alleged ontra t for sale of farm #ritten and signed &#y #oth K and h$s w$fe' on the #a A of a #ar he A at a 4hr$stmas partyH K la$m of $ntox$ at$on@?estH J s"ed for spe $f$ performan e' <. t f$nds for #"yer > o#?e t$)e assent ex$sted a. s"#?e t$)e $ntent doesnt matter > #"yer +-/6*'/;0> $nterpreted sellers a t$ons as assent 2. $f yo" go to the tro"#le of not only #e$ng -?:0(.(4D #"t also to do $t $n <+(4('8 and 6(8' (4D yo" ha)e an agreement &fl$p s$de of * "ry' a. reasona#le person wo"ld deem $t ser$o"sD w$th ons$derat$on > s$gned wr$t$ngs ha)e a d$fferent pla e $n peoples m$nds than any other r"le &l$Ae expl$ $t terms' #. want to treat a wr$ttenD s$gned do "ment as a )al$d ontra t . when yo" ha)e a s$gned do "mentD yo" need m" h more pers"as$)e e)$den e to pro)e that $t wasnt a )al$d ontra t agreed "pon #y the part$es 38 m"t"al assent > offer was re)oAed #efore o#?e t$)e man$festat$on of assent 4. D(.=('6*' 7. D*116 &Dodds offers to sell property to D$ A$nson for L500D w$th set amo"nt of t$me for offeree to a eptH #efore t$me $s "pD D$ A$nson hears that Dodds has #een offer$ng to sell to a th$rd partyH D$ A$nson attempts to maAe h$s formal a eptan e lear to DoddsD #efore t$me $s "pH fo"nd seller #efore deadl$ne #"t after other sale ompleted' <. no ons$derat$on for lea)$ng the opt$on open a. ?"st ra$s$ng the offer pr$ e &$nd" $ng #"yer to ons$der the offer' $snt eno"gh for ons$derat$on for an opt$on > opt$ons are )al"a#le ?"st to the person who holds $tD no matter what the pr$ e &opt$on w$ll #e exer $sed when "rrent marAet pr$ e $s h$gher than opt$on pr$ eH h$gher opt$on pr$ e g$)es noth$ng to sellerD no ons$derat$on'
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2. no o#?e t$)e man$festat$on of assent &pr$or to *;P-.4(7- ,/'()-64/4(*' *) +-7*./4(*'' a. t fo"nd o#?e t$)e man$festat$on of re)o at$onD s$n e D$ A$nson was r"nn$ng aro"nd l$Ae raRy try$ng to get to Dodds > kne# that Dodds was re)oA$ng offer

III. EXISTENCE OF AN OFFER

A. ontra t re-"$res someone to maAe an *))-+ 4* ;- ;*5'1 <. =st I2*F offer E ,/'()-64/4(*' of w$ll$ngness to enter $nto a #arga$n so made as to ?"st$fy another person $n "nderstand$ng that h$s assent to that #arga$n $s $n)$ted and w$ll on l"de $t a. all a#o"t o#?e t$)e man$festat$on &reasona#le man standard' > s"#?e t$)e $ntent doesnt matter 2. offer m"st onta$n terms that $f a epted wo"ld g$)e a t eno"gh to de $de what happens $n e)ent of #rea h &=st I33D (44 I2;20*' a. few terms are tr"ly essent$al for an enfor ea#le ontra t 3. =st I2.F prel$m$nary negot$at$ons > adsD pr$ e -"otesD $n)$tat$ons for #$dsF /8+--,-'4 4* /8+--

38 offer to #e #o"nd > ?"st ad &$n)$tat$on to maAe offer' @ agreement to agree B. N-;+/6=/ S--1 C*. 7. H/+69 &% anno"n es he has N<500 #"shels or therea#o"tsO of seedD wants G2.2+@ wtH 37 responds #y a ept$ng N<500 #"shelsO and re-"est$ng del$)ery as soon as poss$#le' <. t de $ded that the letter was more l$Ae an ad than an offer > ('7(4/4(*' 4* ,/=- /' *))-+ 2. Aey fa torF $f orp. o"ld reasona#ly #el$e)e $t was the only one re e$)$ng the letter a. w$th$n the $nd"stry > pres"mpt$on that statements l$Ae these that go o"t to lots of people are ?"st adsD sol$ $tat$ons for offers #. $f were go$ng to errD err on s$de of maA$ng statement not an offer > pres"mpt$on of no offer 3. hereF pr$ eD -"ant$tyD date not f$xed a. m$ss$ng terms an #e s"ppl$ed $f offer $s $ntendedD #"t the a#sen e of terms may st$ll #e e)$den e that 38 offer was $ntended > t wont f$ll $n terms $f $t th$nAs theres no ontra t 4. L-*'/+1 7. P-:6(.* &$nfamo"s Peps$ Po$nts ase ' <. 38 offer > pres"mpt$on aga$nst an offer a#sent learD def$n$teD and expl$ $t terms > ?"st an ad a. alsoD ad refers to atalog > only lear terms were $n atalogH %arr$er Vet not $n atalog #. andD ad &and pr$ e' were a V8QE > G100D000 learly not eno"gh for a f$ghter ?et . Peps$ o learly d$dnt $ntend to maAe s" h an offer 2. Adlers taAeF $f part$es ha)e reasona#ly man$fested an $ntent$on to #e #o"nd to ea h otherD and they)e "sed lang"age or taAen a t$ons s"ff$ $ent to allow a t to remedy "p on #rea hD then theres a ontra t D. E,:+* M/'5)/.45+('8 7. B/00@C* M/'5)/.45+('8 & ompan$es s$gn an Nagreement $n pr$n $pleO letter of $ntentH d$sagreement o)er a term ar$sesD deal d$ssol)esH one ompany la$ms prel$m$nary do "ment was legally #$nd$ng' <. 38 #$nd$ng agreement > looA to o#?e t$)e man$festat$ons of $ntent &s"#?e t$)e $ntent doesnt matter' a. part$es who maAe the$r pa t Ns"#?e t toO a later def$n$t$)e agreement ha)e man$fested an o#?e t$)e $ntent not to #e #o"nd #. letters of $ntent and agreements $n pr$n $ple only set the stage for f"rther negot$at$ons 2. part$es allowed to approa h agreement $n stages PE7D offer to #e #o"nd > enfor ea#le e)en tho"gh gaps E. T-?/.* 7. P-''F*(0 &-"est$on of Texa os tort$o"s $nterferen e w$th ontra t #etween 2etty and PennRo$lH Texa os ontent$on that no #$nd$ng agreement ex$sted #etween 2etty and PennRo$l' <. t fo"nd eno"gh $nformat$on to s"ggest ex$sten e of enfor ea#le ontra t a. th$s op$n$on allows gap;f$ll$ng a#sent expl$ $t termsD e)en $f s" h terms were ontemplated to #e $n l"ded $n the expe ted m" h longer memor$al$Rat$on &fo "s on $ntent o)er form' #. "se of external e)$den e &e.g.D press release' as s"pport for ex$sten e of ontra t &esta#l$shed s"#?e t$)e $ntent of one of the part$es' 2. sAet hy op$n$onF h"ge amo"nts of money $n)ol)edD omplex$ty of the transa t$onH hedg$ng phrases $n the agreement &e.g.D Ns"#?e t toO'
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IV. ACCEPTANCE
A. general notes <. =st I.3D (44 I2;20. > "nless offer pro)$des otherw$seD an a eptan e made $n the manner and #y a med$"m $n)$ted #y an offer $s operat$)e and ompletes the man$festat$on of m"t"al assent as soon as p"t o"t of the offerees possess$on 2. offeror an determ$ne what means are proper for a eptan e &offeror $s master of h$s offer' 3. defa"lt !a$l#ox ="le &Nas soon as p"t o"t of offerees possess$onO E as soon as wr$tten a eptan e $s dropped $n the ma$l' > not as m" h at staAe these daysD g$)en $nstantaneo"s ele tron$ transa t$ons a. remem#erF re)o at$on has to reach the offereeH opt$ons not a epted "nt$l offeror re e$)es the a eptan e & r$t$ al role of t$m$ng $n opt$ons ontra t' *. =st I.< > an a eptan e that re-"ests a hange@add$t$on to terms of the offer $s not $n)al$dated "nless assent $s sa$d to #e depend on the hange@add$t$on a. (44 I2;201 &#attle of the forms > d$s repan $es on forms sent #etween part$es' > offeror wont #e #o"nd #y offerees add$t$onal terms "nless offeree an show that offeror $mpl$ $tly agreed to the terms &mere send$ng of the form and s$len e on part of offeror w$ll #e less l$Aely to o"nt as assent' a eptan e #y PE=F8=!A34E &"n$lateral ontra ts' A. where performan e that reates a eptan e also s$m"ltaneo"sly ompletes the ontra t <. lass$ exampleF reward for f$nd$ng lost dog a. no ompensat$on for effortD part$al performan e #. ontra t $s ne)er exe "tory on #oth s$des &th"s "n$lateral' 2. where offerors Anowledge of performan e $s "n erta$nD offeree r$sAs $na#$l$ty to enfor e "nless he taAes reasona#le steps to not$fy offeror of performan e@a eptan e &"nless offer otherw$se spe $f$es' B. C/+0(00 7. C/+;*0(. S,*=- B/00 C*. & ontra t for sale of smoAe #allD ad)ert$sement prom$s$ng $t wo"ld pre)ent the fl"H #"yer ontra ted fl"D s"ed' <. t held that type of offer made $n)$ted a eptan e #y performan e a. offeror p"t on not$ e as soon as smoAe #all p"r hasedH not$f$ed of a eptan e at t$me offeree Tperformed and got s$ A 2. AdlerF th$s $s 38T a "n$lateral ontra ts ase[ a. 47B not gett$ng anyth$ng o"t of ontra t &not that 47B really wants ppl to get s$ AD w$ll$ng to ontra t to pay for s$ Aness as performan e' 3. th$s $s a t"ally a /A==A3TP ase > t ?"st onf"sed #@ warranty p"t $n terms of an offer a. rest of ase matters ?"st $n de $d$ng whether warranty was a ser$o"s ontra t term 4. $9(4- 7. C*+0(-6 Q T())4 &agreement to rede orate off$ eH #"$lder #o"ght mater$als after re e$)$ng note N"pon an agreement M yo" an #eg$n at on eOH -"est$on of $f th$s onst$t"ted a eptan e' <. t says th$s wasnt a eptan e #y performan e > no o#?e t$)e man$festat$on of assent a. #"$lder o"ld ha)e #o"ght mater$als for any other pro?e tD o"ld ?"st #e a t$ng strateg$ ally to for e owner to #e #o"nd to th$s ontra t $. $f #"$lder wonD t wo"ld essent$ally #e g$)$ng h$m an *:4(*' > o"ld la$m h$s #"y$ng s"ppl$es was N#eg$nn$ngO performan e $f marAet ond$t$ons fa)ora#leD o"ld la$m $t was ?"st ord$nary s"ppl$es for other pro?e ts $f ond$t$ons not fa)ora#le $$. not reasona#le to pres"me owner wanted to g$)e #"$lder th$s opt$on &wo"ld #e )al"a#le to offeree #"t not to offeror > not "s"ally what offerors want to do' #. No#?e t$)eO > has to #e a man$festat$on that wo"ld $n d"e o"rse #e noted #y the offeror 2. AdlerF 38T really a "n$lateral ontra t ase > $n most (4sD not poss$#le for offeree to a ept w$tho"t $t #e$ng Anowa#le that offeree has a eptedH White s$t"at$on not l$Aely to ar$se a. th$s ase $s $nterest$ng #e a"se ontra t $s poss$#le to #e a epted #y :/+4 :-+)*+,/'.#. wo"ld ha)e #een ;(0/4-+/0 .*,,(4,-'4 had there #een o#?e t$)e man$festat$on of assent &offeror omm$tted to pay$ng offereeD offeree omm$tted to f$n$sh$ng w$th f"ll performan e' D. =st I*+ > an offeree who "egins perfor ance has an *:4(*' to omplete performan e a ord$ng to the terms of the offer &"nless offer omm"n$ ates d$fferent terms of a eptan e'
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<. noteF not an "n$ntended opt$on #ased on one partys a#$l$ty to d$ssem#le o)er whether performan e has #eg"n 2. offer for "n$lateral ontra t > offeree doesnt get one ent "nt$l f"ll performan e a. #"tF #y #eg$nn$ng performan eD offeree has pro)$ded .*'6(1-+/4(*' )*+ /' *:4(*' 4* .*,:0-4- :-+)*+,/'.- w$th$n terms of the offer #. offeree st$ll needs to g$)e an o#?e t$)e man$festat$on of assentD not$ ea#le $n d"e o"rse &$f not $mmed$ately'D $n order to exer $se th$s opt$on 3. reason for th$s opt$onF when offerees +-0(/'.- on the offer $s ostly E. P-44-+6*' 7. P/44;-+8 &offer from lender that J o"ld pay G150 less on mortgage $f he pays $t off $n ase on a spe $f$ dateD #efore mortgage a t"ally d"eH J goes to lender and tr$es to pay $t offH K $nforms J that K has sold mortgage to someone else' <. 38 performan e > assent wo"ld ha)e to taAe form of a t"al paymentH money d$dnt a t"ally hange hands #efore offeror re)oAed the offerD so no performan e and no a eptan e of offer a. offeror may w$thdraw offer pr$or to performan e #. gather$ng money $snt "nam#$g"o"s performan eD merely preparat$on 2. AdlerF ase $s wrongly de $dedD & f. =st I*+' > J #egan to performD sho"ld ha)e opt$on to omplete a eptan e #y 7I,E34E A. =st I.9 > general r"leF ant $mpose an o#l$gat$on on another to respond to yo"r offer <. ex ept$ons a. offeree taAes #enef$ts of the ser)$ es &e.g.D Aeeps the free 4D' #. offeror g$)es offeree reason to "nderstand that s$len e $s assent and offeree $n rema$n$ng s$lent $ntends to a ept &AdlerF d$ff$ "lt@$mposs$#le to pro)e th$s' . where reasona#le $n l$ght of pre)$o"s deal$ngs &see Ho""s' d. offeree does any a t $n ons$stent w$th offerors ownersh$p of offered property 2. see notes p. .* &4D@#ooA l"#sD red$t ard teaser rates' B. H*;;6 7. M/66/6*(4 $9(: C*. &%o##s sent eelsA$ns to !/4 on a reg"lar #as$sH sent another set of sA$nsD sA$ns reta$ned for se)eral months w$tho"t not$fy$ng J whether a epted or not' <. offerees :+(*+ .*'15.4 an esta#l$sh $mpl$ $t assent to a eptan e #y s$len e a. $mportan e of repeat relat$onsh$p > seller had reasona#le #el$ef that #"yer was w$ll$ng to stay $n th$s relat$onsh$p #. #"yer had e)ery opport"n$ty to tell seller that $f he d$dnt l$Ae the termsD he wo"ld ?"st throw away the sA$ns

9 C I3TE=P=ETI32 A77E3T
I. EMPT& TERMS B ILLUSOR& PROMISES
B empty terms E terms that appear to #e expl$ $t on the$r fa eD #"t on loser looA lang"age $s so am#$g"o"s that there $s no reasona#ly erta$n #as$s for $nterpret$ng the term B $ll"sory prom$se E prom$se so $ns"#stant$al that $t $mposes no o#l$gat$on on the prom$sor &looAs l$Ae a prom$seD #"t $n fa t onta$ns no omm$tment #y the prom$sor' A. arg #y one of the part$es that what appears to #e an ag $s $n fa t $n)al$d > no reasona#le $nterpretat$on of what appears to #e the ag that leads yo" to #el$e)e that $ts the prod" t of a #arga$ned;for ex hange <. not a no; ons$derat$on aseF ts here try$ng to prote t a party from a #arga$n that they $n fa t rea hed a. $rrat$onal$tyD "nfa$rness > related to "n ons $ona#$l$ty #. no reasona#le person o"ld ha)e entered $nto th$s agreementD so t w$ll ass"me that no one d$d enter $nto s" h an agreement 2. ons$der whether present expl$ $t terms sho"ld #e $nterpreted to ha)e ontentD or $nstead #e deemed empty so as to pre)ent ontra t format$on

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B. N-< &*+= C-'4+/0 I+*' $*+=6 7. US R/1(/4*+ C*. &seller agrees to f"rn$sh #"yers re-"$rements of $ron for a f$xed pr$ eH #"yer to "se the $ron $n rad$ator man"fa t"r$ngH marAet )al"e of $ron goes way "pD #"yer Nre-"$resO s$gn$f$ antly h$gher amo"nt than e)er #efore' re+&ire ents contract <. ?"dgment for #"yer > re-"$rements ontra t enfor ea#le s$n e #"yer $snt ?"st a reseller of $ron a. had #"yer #een mere reseller > re-"$rements ontra t wo"ld #e s" h that #"yer ant lose moneyD seller ant maAe moneyD #"yer an maAe moneyD and seller an lose money #. when )al"e of $ron goes "pD #"yer w$ll re-"$re e)eryth$ng seller hasH when )al"e goes downD #"yer w$ll re-"$re noth$ng > spe "lat$onD #ad fa$th . no reasona#le seller wo"ld enter $nto th$s ontra t > #"yer made mere (0056*+> :+*,(62. s$n e #"yer $snt a reseller > "stomers for rad$ators onstra$n #"yers a#$l$ty to ramp "p or sh"t down man"fa t"r$ng a. not "nreasona#le for seller to r"n th$s A$nd of r$sA w$th fl" t"at$on of marAetD so onstra$ned 4. E/64-+' A(+ L('-6 7. G50) O(0 &long;stand$ng relat$onsh$p for 2"lf to s"pply all Easterns f"el re-"$rementsH $n 8PE4 r$s$sD 2"lf demanded h$gher pr$ es' re+&ire ents contract <. (44 I2;30.&<' > good;fa$th re-"$rement spe $f$ ally for o"tp"t@re-"$rements ontra tsH re-"$res that -"ant$ty not #e d$sproport$onate to an est$mate or &a#sent an est$mate' to exper$en e a. sh"t;down for la A of orders m$ght #e perm$ss$#leD #"t a sh"t;down to "rta$l losses on the #"yers part wo"ld not #e $. #"tF #"yer an get aro"nd #y lea)$ng pr$ es h$gh when marAet pr$ e pl"mmetsD dr$)$ng "stomers away > )o$laD no ordersD so sh"t;down to a)o$d lossesM #. s$m$larlyD Ns"ddenO expans$on $snt oAayD #"t NnormalO expans$on $s 2. fo"nd to #e a #$nd$ng ontra t #e a"se of $nternal l$m$ts on how m" h o$l o"ld #e "sed #y Eastern 3. doesnt pro)$de m" h g"$dan e reF good fa$th re-"$rement for o"tp"t@re-"$rements ontra tsM D. $**1 7. L5.>J L/1> D5))@G*+1*' &,D2 agreed to g$)e / r$ght to "se her nameH / to g$)e her +0U of prof$tsH ,D2 #rea hedD la$med no ons$derat$on &$ll"sory prom$se'' e,cl&sive dealings contract <. t $mp"tes 154> *) +-/6*'/;0- -))*+46 to sa)e ontra t from #e$ng an agreement where one party pla ed at the mer y of the other &/ had d"ty to expend reasona#le effort $n endors$ng prod" ts' a. "se of good;fa$th re-"$rement to remo)e th$s ase from the reseller hypo $n -. Central Iron #. #arga$ned;for ex hange E ex l"s$)e r$ghts $n ex hange for #est@reasona#le efforts $. prom$se wasnt $ll"soryH t enfor ed ontra t 2. AdlerF r$ght res"ltD #"t m$s hara ter$Red > sho"ld enfor e ontra t e)en $f no s" h $mpl$ $t term a. good;fa$th d"ty arg"a#ly not ne essary > expl$ $t terms pro)$de / an $n ent$)e to expend efforts &only way he an prof$t from arrangement' $. not ne essary that there #e an $mpl$ $t term of reasona#le effortsD #@ $t may ha)e #een $n the part$es #est $nterests for there not to #e &remem#er pr$ eF ,D2 may ha)e had to #arga$n to g$)e / .0U $n ret"rn for #est efforts re-"$rementM' #. m$ght #e "n ons $ona#le for ,D2 to pla e herself $n th$s agreementD #"t m$ght not #e > not ne essar$ly l"d$ ro"s for th$s ontra t to #e s$gned

II. ROLE OF SUBGECTIVIT&

am#$g"o"s terms &m"lt$ple mean$ngsD -"est$on of wh$ h mean$ng was $ntended #y part$es' A. =st I20< <. $f theres an a t"al meet$ng of the m$ndsD th$s ontrols &where part$es atta h same mean$ng' 2. mean$ng of party ignorant of disagree ent or do&"t ontrolsD o)er mean$ng of Anowledgea#le party a. for es d$s los"re of $nformat$on #oth part$es wo"ld f$nd $mportant 3. s"#?e t$)e mean$ng does not otherw$se matter &preser)at$on of o#?e t$)e theory of assent' B. R/))0-6 7. $(.9-09/56 & ontra t for sale of otton Nto arr$)e ex TPeerless from Bom#ayOH onf"s$on o)er wh$ h TPeerless otton was to arr$)e on > #"yer tho"ght 8 tD seller tho"ght De H pr$ e fell' <. 38 ontra t > no meet$ng of the m$ndsH #oth s"#?e t$)e mean$ngs were pla"s$#le 2. noteF $f '&sh r"le wasnt $n effe t > seller o"ld ha)e a epted that ontra t was for 8 tD adm$t to #rea hD and then s"e for negat$)e l$a#$l$ty &#"yers sa)$ngs d"e to sellers #rea h' a. #"t #e a"se of '&shD th$s ase maAes $t $nto the ase#ooA
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4. O6</01 7. A00-' & ontro)ersy o)er whether N7w$ss o$n olle t$onO $n sale ontra t referred to one or #oth olle t$ons of owner' <. 38 ontra t > t held that there was no sens$#le #as$s for hoos$ng #@t onfl$ t$ng "nderstand$ngs 2. spe $al $r "mstan eF lang"age #arr$er &may ha)e made on)ersat$on reF ex l"ded o$ns d$ff$ "lt' )ag"e terms &where "n lear whether term was meant to apply #eyond $ts pla$n mean$ng' A. h$erar hy of ontext & f. (44 I<;20+' <. express terms 2. o"rse of performan e &#@t part$es on th$s part$ "lar ontra t' 3. o"rse of deal$ng &#@t part$esD $n other $ntera t$ons' *. "sage of trade &what $nd"stry "s"ally does' a. AdlerF "sage of trade $s the only "sef"l aspe t of th$s analys$s > express terms wo"ld mean no ontro)ersy $n f$rst pla eH o"rse of performan e and o"rse of deal$ng an #e $n)al$dated #y arg"ment that term $n -"est$on was a wa$)er of "s"al pra t$ es B. $-(';-+8 7. E1-064-(' &lease ontra t w$th la"se agree$ng to not sell NdressesOH -"est$on of whether sA$rt; #lo"se om#$nat$ons )$olate th$s agreement' <. ontro)ersy #@t Js mean$ng &Ntwo;p$e e dressesO' and Ks mean$ng &Nm$x and mat h separatesO' 2. t f$nds for K #ased on 56/8- *) 4+/1- > m$x;and;mat h separatesD #ased on pra t$ es of fash$on $nd"stryD pr$ $ngD how women wear dresses )s. how they wear two;p$e e separatesD et . a. does grant J an $n?"n t$on aga$nst K to not sell the two;p$e es together as one "n$t 3. no r$ght answer $n these s$t"at$onsM 4. F+(8/0(,-'4 I,:*+4('8 C*. V. B.N.S. I'4%0 S/0-6 C*+:. & ontro)ersy o)er mean$ng of N h$ AenO' <. o#?e t$)e mean$ng and trade "sage perm$t e$ther $nterpretat$onM t o"ld ha)e sa$d no ontra t &l$Ae $n /affles or 0s#ald'M a. #"t t $nstead holds that J d$dnt s"sta$n #"rden of show$ng N h$ AenO was "sed $n narrower rather than #roader sense #. K seller was new to #"s$nessH th"sD #"rden on J #"yer &Anowledgea#le party' 2. when yo" ha)e a #road mean$ng of a termD then the party who wants the narrower $nterpretat$on m"st speaA "p early and learlyD get an expl$ $t term $n the agreement a. terms of art $n a trade m"st #e made expl$ $tlyD e)en when #oth part$es soph$st$ ated D. noteF $f there are 4<* (8'*+/'4 :-*:0-D w$th d$fferent s"#?e t$)e $nterpretat$ons of the mean$ng of a ontra t or a ontra t termD t w$ll generally throw the ontra t o"t <. an honestly held s"#?e t$)e d$fferen e of op$n$on m"st $mply that there $s no generally a epted o#?e t$)e mean$ng

III. UNCONSCIONABILIT& &o"ts$de of the $nterpretat$)e parad$gm'

A. two types of "n ons $ona#$l$ty <. pro ess > $f pro ess of negot$at$on $s defe t$)eD and one party $s fooled $nto ontra t as a res"ltD $ts almost "n ontro)ers$al that th$s $s "n ons $ona#le > dont allow Anowledgea#le person to get a ontra t on terms fa)ora#le to h$m a. $n ent$)e for Anowledgea#le party to e$ther a ept other partys "nderstand$ng or to d$s lose 2. s"#stan e > terms of ontra tH )ery ontro)ers$al B. (44 I2;302D =st I205 > pr$n $ple of a)o$d$ng Noppress$onO &s"#stan e' and N"nfa$r s"rpr$seO &pro ed"re' <. noteF "n ons $ona#$l$ty ases are almost always a#o"t ontextD $ss"es deal$ng w$th p"#l$ pol$ y 2. example of ar rental agreements > form ontra ts a. a la"se omm$tt$ng <0U of $n ome for rest of areer wo"ld #e "nexpe ted > expe tat$on that s" h a la"se wo"ld #e "nenfor ea#le &see notes p.11;5 for rest of analys$s' #. relat$)ely "n ontro)ers$al > deal$ng w$th "nfa$r s"rpr$seD pro ed"ral on erns s"#stant$)e "n ons $ona#$l$ty &m" h more ontro)ers$al' A. $(00(/,6 7. $/0=-+@T9*,/6 F5+'(45+- &$nstallment plan for f"rn$t"reH "stomer agrees to #road se "r$ty $nterest en ompass$ng all pre)$o"s p"r hases from seller > $n e)ent of #rea hD seller w$ll resell other p"r hasesD apply pro eeds to amo"nt of de#tD ex ess ret"rned to "stomer > $nterest as means of le)erage'
;;20;;

<.

t held that tr$al t m"st at least ons$der arg"ment that th$s la"se was "n ons $ona#le &too m" h press"re on part of seller' a. arg"ment aga$nst enfor $ng ontra t &"n ons $ona#le' #ased on :/+-'4/0(6, > want e)eryone who enters a ontra t to #e f"lly $nformed #. t arg"es that $ts not reasona#le to taAe away someones refr$gerator #e a"se they defa"lted on a stereoM 2. pro#lem w$th parental$sm arg"ment for "n ons $ona#$l$ty > goes aga$nst ons"mer a"tonomy $n de $d$ng what to r$sA money on

IV. GOOD FAITH

B seems to #e related to "n ons $ona#$l$tyD #"t Adler says the two ha)e noth$ng to do w$th ea h other A. =st I20+D (44 I<;203 > e)ery ontra t $n l"des an $mm"ta#le $mpl$ $t d"ty of good fa$th and fa$r deal$ng <. d$ff$ "lty $s $n determ$n$ng good fa$th $n ontext 2. one way of def$n$ng good fa$thF do$ng what the ontra t re-"$res yo" to do a. looA$ng to (,:0(.(4 4-+,6 of ontra t &$ntent of part$es' 3. so were #a A to interpretation of the ontra t &not a -"est$on of ex$sten e of ontra t' B. ommer $al lease ases > often d$ff$ "lt to determ$ne when self;$nterest $s good fa$thD #"t an almost always tell when $ts #ad fa$th &p"re strateg$ mane")er$ng' <. f. 7 hw$nn;%"ffy;TreA hypo &notes p.50' > #ad fa$th when a party a ts $n a way that red" es the o)erall wealth of the enterpr$se &$dea of P*('4 <-0)/+- ,/?(,(F/4(*' as arg"a#ly good fa$th' a. learly #ad fa$th when yo" a t to #enef$t self at expense of ?o$nt welfareH less lear when self;$nterested hange $n #eha)$or $n reases ?o$nt welfare #"t a"ses other party to ga$n less than he wo"ld ha)e #efore hange $n #eha)$or 2. G*01;-+8 7. L-7> & ontra tF $f gross sales W G<0<QD tenant an term$nate lease and not ha)e to pay landlord a per entage of gross re e$pts' a. tenant annot depress ann"al gross re e$pts $n order to an el a lease #. #ad fa$th #e a"se $t was a p"rely strateg$ mo)e > no e onom$ ?"st$f$ at$on for do$ng so . wastef"l to $ntent$onally s"ppress #"s$nessH wo"ld ha)e #een more eff$ $ent to renegot$ate to get o"t of lease 3. M545/0 L()- I'65+/'.- 7. T/(0*+-1 $*,/' &f$rst ontra t for ma$n storeF f$xed rental pl"s per entage of gross re e$ptsH se ond ontra t for +th floorF f$xed rental only' a. $ntegrat$on $ss"es as$deD tenant $n need of more spa e an d$)ert sales away from lease o#l$gat$on $. good fa$th #e a"se $t $n reases ?o$nt welfare of the enterpr$se #. only those f"r sales that ame d$re tly from #"s$ness $n the ma$n store to #e o"nted as part of re)en"e for per entage rentD e)en tho"gh all f"rs were or$g$nally $n ma$n store *. S4*: /'1 S9*: 7. G/'-, &per entage rental at store <H K lessee opened "p stores $n other near#y lo at$onsH eased operat$ons at "nprof$ta#le store <' a. tenant an d$s ont$n"e an "nprof$ta#le #"s$nessD e)en $f $t had stores elsewhere that wo"ld arg"a#ly s "ttle that #"s$ness $. o"t ome may ha)e #een d$fferent had K opened "p store r$ght next door > no poss$#le so"nd #"s$ness reasons for do$ng soD wo"ld #e a p"rely strateg$ mo)e +. F**1 F/(+ S4*+-6 7. B05,;-+8 a. tenant an expand #"s$nesses elsewhere 4. d$)$d$ng rat$onaleF whether $t maAes 8**1 ;56('-66 6-'6- to maAe the hangeD or whether $ts p"re strategy

V. $ARRANTIES
B related to good fa$th $n that theyre also terms that part$es $mpl$ $tly ass"me go w$th the dealD and $ts reasona#le for them to so ass"me A. (,:0(-1 </++/'4> *) ,-+.9/'4/;(0(4> > when a seller sells a good that $s "s"ally "sed $n a part$ "lar wayD seller warrant$es that $ts good for that p"rpose &general warranty'

;;2<;;

<. wo"ld #e #ad fa$th for seller to la$m that sale $n)ol)ed only NrollersAates w$th wheelsDO w$th no expl$ $t term of wheels rema$n$ng atta hed wh$le $n "se > e)eryone kno#s that wheels are s"pposed to stay onD seller $mpl$ $tly warrants that they w$llH see (44 I2;3<* B. (,:0(-1 </++/'4> *) )(4'-66 > $f seller Anew a#o"t part$ "lar p"rpose for wh$ h "ser was #"y$ng prod" tD and Anew that "ser was rely$ng on prod" t for th$s p"rposeD w$ll #e l$a#le &spe $f$ and l$m$ted warranty' <. see (44 I2;3<+D (tep-(aver v. Wyse 4. role of -?:0(.(4 </++/'4(-6 an #e -"est$oned on gro"nds that an #e hara ter$Red as matters of good fa$thD s" h as whether #"yer an rely $n good fa$th on a warranty she Anows to #e false <. #"tF a warranty ant #e tr"e or false > $ts a prom$se that an #e #roAenD not a statement 2. #"yer st$ll pre)a$ls > treat warranty as $ns"ran e pol$ y 3. noteF somet$mes a warrantyD $n ontext of ompl$ ated arrangementD an $nstead ?"st #e an ex "se for the other g"y to get o"t of the ontra t > all depends on .*'4-?4

VI. $RITTEN MANIFESTATION OF ASSENT 2$RITINGS AS EVIDENCE3

B -"est$on of $nterpret$ng a wr$tten agreement when ontrad$ ted #y other agreements &oral or wr$tten' A. P/+*0- E7(1-'.- R50- &Nextr$ns$ e)$den e r"leO' > where a wr$t$ng represents a f$nal agreementD PE= proh$#$ts the $ntrod" t$on of e)$den e on pr$orD or ontemporaneo"s oralD agreements w$th respe t to terms that ontrad$ t the wr$t$ng or ome w$th$n the s ope of a omprehens$)e port$on of the wr$t$ng <. all a#o"t de $d$ng whether or not we ha)e a wr$t$ng that $s $ntend$ng to ex l"de pr$or agreements 2. N omprehens$)e port$onO .*,:0-4-0> ('4-8+/4-1 agreement &expl$ $tly adopted #y part$es as a omplete and ex l"s$)e statement of the terms of the agreement > f$nal express$on' a. see =st II 209D 2<0D 2<3D 2<*D 2<. &pp. *1<;*13 of ase#ooA' #. (44 I2;202F wr$tten agreementD $ntended to #e )('/0 -?:+-66(*' of agreementD may not #e ontrad$ ted #y e)$den e of pr$or or ontemporary oral agreementsH may #e s"pplemented... B. T9*,:6*' 7. L(;;-> &wr$tten agreement reF sale of logsH #"yer la$med warranty of the -"al$ty of the logs was made orally at t$me of saleD wanted to $ntrod" e oral test$mony to s"pport th$s la$m' <. parole e)$den e ('/1,(66(;0- when the wr$tten $nstr"ment $s the f"ll agreement & omplete legal o#l$gat$on' a. analyRe wr$t$ng to de $de whether $t sho"ld #e ons$dered the ent$rety of an agreement #. wr$t$ng d$dnt ment$on warrantyH t held that $f there was an agreement reF warrantyD $t wo"ld ha)e #een $n the ontra t $tself 4. B+*<' 7. O0(7-+ &wr$tten agreement reF sale of hotelH d$sp"te as to whether f"rn$t"re was $n l"dedH #"yer la$med pr$or oral agreement $n l"d$ng f"rn$t"reD wants to $ntrod" e e)$den e to s"pport th$s la$m' <. t held that PE= d$dnt apply hereD allowed extr$ns$ e)$den e 2. AdlerF s"rpr$s$ng@wrong res"lt > wo"ld $mag$ne that $f part$es had tr"ly agreed on the sale of the f"rn$t"reD $t wo"ld ha)e #een $n l"ded $n the wr$t$ng a. yo"d th$nA #"yer wo"ld ha)e #een aref"l to get th$s term $n l"ded > hereD Adler $s pretty s"re #"yer $s ly$ngD try$ng to get more than what he ontra ted for #. #"yer wants to get hotel and f"rn$t"re for the 6('80- pr$ e $n the wr$t$ng > what are the odds that part$es wo"ld agree to #oth sales and not $tem$Red the pr$ es $n the ontra t0 $. wo"ld perhaps #e a d$fferent ase $f #"yer were arg"$ng that there was a separate agreement where #"yer wo"ld also #"y f"rn$t"re for add$t$onal ons$derat$on 3. strange res"lt for t to ome to > reason for PE= $s to pre)ent fa#r$ at$ons l$Ae th$sM D. ts w$ll ons$der extr$ns$ e)$den e on whether a wr$t$ng $s $ntended as f"lly $ntegrated @ ex l"s$)e <. an ha)e the $mpa t of d$l"t$ng PE=H some ?"dges wont looA #eyond the fa e of so e wr$t$ngs E. Traynor &Pacific 1as' )s. QoR$nRA$ &$rident Center' <. Traynor > Npla$n mean$ngO only refle ts ?"dges own personal l$ng"$st$ @ed" at$onal #a Agro"ndH m"st allow o"ts$de e)$den e s$n e words ha)e '* ,-/'('8 *546(1- *) .*'4-?4 2. QoR$nRA$ > ts ha)e gone too far $n allow$ng e)$den e on th$ngs that are .0-/+0> .0-/+D to detr$ment of ommer $al arrangements > anyth$ng that weaAens PE= weaAens erta$nty that part$es an ha)e $n the ommer $al arrangements 3. re on $l$at$on of Traynor and QoR$nRA$ > $n l"de e,plicit $ntegrat$on la"seD Nwe really mean $tO lang"ageD to g"ard aga$nst PE= atta As
;;22;;

F. S4/454- *) F+/516 > erta$n ontra ts "nenfor ea#le "nless e)$den ed w$th a #riting s$gned #y the person aga$nst whom enfor ement $s so"ght a. =st I<<0F sale of $nterest $n landH sale of ser)$ es that w$ll last longer than a yearH sale of goods worth G+00 or more &(44 I2;20<' 2. general ex ept$onF prom$se may "eco e enfor ea#le $f person has ('15.-1 +-/6*'/;0- +-0(/'.a. note that rel$an e;#ased pro)$s$ons tend to lead to rel$an e;#ased remed$es

;;23;;

<0 C 4837T=(4TI6E TE=!7

B "lt$matelyD th$s $s a#o"t $nterpretat$on as well > what the $mpl$ $t terms of the ontra t were

I. MATERIAL BREACH 2SUBSTANTIAL PERFORMANCE3

A. general do tr$ne <. where there has #een no Nmater$al #rea hDO and there th"s has #een Ns"#stant$al performan eDO the re $p$ent of the performan e annot walA away from the ontra t > m"st perform h$s end of the deal and a ept damages ?"st for fa$l"re of omplete performan e a. someth$ng of a mod$f$ at$on of '&sh r"leF a 65;64/'4(/0 #rea her of a ontra t ant s"e on the ontra tH as long as #rea h $snt aterialD #rea h$ng party an s"e on ontra t 2. =st I3*5F where the .*64 *) .*,:0-4(*' $s d$sproport$onal to the 1(,('54(*' (' ,/+=-4 7/05&when there $s s"#stant$al performan e' then the damages w$ll #e d$m$n"t$on $n marAet )al"e a. mater$al #rea h ost of omplet$on damages #. s"#stant$al performan e d$m$n"t$on $n marAet )al"e damages 3. hypoF A s"pposed to reno)ate Bs tra$ler for G2+QH a $dentally le)eled $t $nsteadD a"s$ng G+0Q of worA to restore and maAe ontra ted;for reno)at$ons a. A hasnt s"#stant$ally performedD so w$ll ha)e to pay G+0Q &G1+Q less G2+Q ontra t pr$ e' #. doesnt matter $f destr" t$on of tra$ler has $n reased )al"e of Bs o eanfront property > m"st looA at (1(*6>'.+/4(. 7/05- of tra$ler to B &o#)$o"sly wants to Aeep $tD or else wo"ld ha)e ontra ted for le)el$ng $nstead of reno)at$on' *. hypoF A agrees to lands ape 2A a to plans for G2+QD plans $n l"de re-"$rement for N<0.+ reta$n$ng wallOH A a $dentally #"$lds <0 wall $nsteadD a"s$ng G+0Q of worA to orre t error and omplete $mpro)ementsD on wh$ h the marAet wo"ld pla e only tr$)$al )al"e &d$ff #@t <0 and <0.+' a. d$fferen e from hypo <F magn$t"de of d$fferen e #@t perf and what was ontra ted for #. m" h harder for B to maAe $d$osyn rat$ )al"e arg"ment for the m$ss$ng .O $. $n order for $d$osyn rat$ )al"e arg to worAD m"st ha)e a s&"stantial d$fferen e that the rest of the marAet doesnt are a#o"t &w$th ex ante e)$den e to s"pport' $$. ass"m$ng we dont #el$e)e BD there has #een s"#stant$al performan eD so t w$ll award d$m$n"t$on of marAet )al"e award &)ery small damages' +. $mportan e of .-'4+/0(4> of the term a. relat$)ely entral term $s more l$Aely the #as$s for $d$osyn rat$ )al"at$on #y non;#rea h$ng partyD rather than ex post opport"n$ty for hold;"p #. goal to fa $l$tate only eff$ $ent #rea hD $nd" e proper $n ent$)es for $n)estment $. fa$l$ng to award damages #ased on $d$osyn rat$ )al"e "nder$n)estment $$. award$ng damages for hold;"p o)er$n)estment B. G/.*; Q &*5'8 7. D-'4 &=ead$ng p$pes ase' <. t awards d$fferen e $n marAet )al"e a. Ntr$)$al and $nno entO om$ss$on $n $nad)ertently "s$ng wrong #rand of p$pes #. owner ent$tled to ost of omplet$on "nless grossly and "nfa$rly o"t of proport$on to the good to #e atta$ned > hereD r$pp$ng "p walls and p"tt$ng $n new p$pes not worth $t 4. G+*7-6 7. G*9' $5'1-+ C*. &K d$dnt remo)e to le)el land' <. K s$mply doesnt perform > large d$s repan y #@t ost of omplet$on and marAet )al"e &K arg"ed that ost to K wo"ld #e m" h larger than )al"e onferred to J' 2. t r"les $n fa)or of non#rea h$ng party a. #rea h was ('4-'4(*'/0H grad$ng land $snt Nwastef"lO #. AdlerF t maAes m$staAe of not taA$ng $nto a o"nt opport"n$ty ostM D. P--7>9*56- 7. G/+0/'1 &fa t pattern s$m$lar to 1roves' <. t fo "ses on whether or not the determ$n$ng -"est$on was .-'4+/0 4* 49- .*'4+/.4 a. $f entral to ontra tD more l$Aely that owner had $d$osyn rat$ taste to get worA done #. remarAa#le a#o"t th$s aseF no way to read $t other than that term #as entralD #"t t de $des otherw$se
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2. #"t the r"le $s goodH f"t"re &more enl$ghtened' ?"dges w$ll apply properly E. these ases depend on -?:-.4/'.> 1/,/8-6 > how to maAe non#rea h$ng party whole <. Adlers sol"t$onF maAe J hoose at t$me of s"$t #@t marAet d$m$n"t$on damages or spe $f$ performan eD wh$ h he annot ref"se to a ept later > taAes away strateg$ #eha)$or 2. $f yo" tell J hes go$ng to ha)e to spend that award on what he la$ms he )al"esD $f J tell$ng the tr"thD yo" get the r$ght res"lt

II. MUTUAL MISTADE

B #est "nderstood as merely an attempt to $dent$fy $mpl$ $t terms perhaps om#$ned w$th a -"est$on of whether to $mp"te terms that m$ght not $n fa t #e part of &e)en an $mpl$ $t' agreement B expl$ $t terms are learH part$es arg"$ng o)er whether there was an $mpl$ $t ond$t$on $n the ontra t ex "s$ng one party $f a erta$n ont$ngen y arose A. S9-+<**1 7. $/0=-+ & ontra t o)er sale owH ow t"rns o"t to #e fert$leH seller wants ontra t )o$ded' <. t )o$ds ontra t > m"t"al m$staAe goes to essential s&"stance of the ontra t &not arg"$ng o)er $nterpretat$on of lang"age' a. part$es wo"ldnt ha)e made the ontra t ex ept for th$s m$staAen "nderstand$ngH therefore no ontra t ex$sts &now that tr"th $s Anown' 2. AdlerF $nfert$l$ty wasnt ne essar$ly an $mpl$ $t ond$t$onH part$es d$dnt $ntend ex ante for ontra t to #e off $f ow was fert$le > statement that ow was Npro#a#lyO $nfert$le &all ontra ts are "ets' 3. $n order to determ$ne what term sho"ld #e $mp"tedD three stepsF a. g"ess at #est defa"lt r"le for m"t"al ontemplat$on &for f"t"re part$es' #. d$s o"rage strateg$ #eha)$or &$n ase one party did ontemplate the ont$ngen y' . en o"rage eff$ $ent ex post #eha)$or &r$ght $n ent$)es for party more l$Aely to d$s o)er tr"th #etween t$me of ontra t and t$me of sale to #eha)e properly > $.e.D taAe are of fert$le ow' *. noteF d$st$n t$on from 0s#ald > not f$ght$ng o)er mean$ng of N owDO f$ght$ng o)er whether or not part$es had rea hed an agreement on an $mpl$ $t term &whether there was an ex "se' B. N-64-+ 7. M(.9(8/' L/'1 &p"r hase of t$m#er r$ghtsH -"al$ty@-"ant$ty less than expe tedD #"yer wants to a)o$d pay$ng ontra t pr$ e > la$m that $mpl$ $t warranty was #rea hed' <. seller w$ns &yes ontra t' > part$es ontemplated r$sAD and gam#le was $n l"ded $n the ontra t pr$ e a. any warranty &reF -"ant$ty@-"al$ty' wo"ld ha)e #een -?:+-66 2. pro#lemF "nsoph$st$ ated part$es may maAe ontra ts w$tho"t terms of art a. hereD tho"ghD #oth part$es soph$st$ ated > wo"ld ha)e made any warranty express 4. $**1 7. B*>'4*' &seller m$staAenly sells a d$amond for a dollar' <. #"yer w$ns &yes ontra t' > ont$ngen y not ontemplatedH t reads s$len e as non; ond$t$on a. #est defa"lt r"le for f"t"re part$es > s$len e $n ontra t E #"yer gets to Aeep d$amond #. $n ent$)e for people to a -"$re leg$t $nformat$on 2. B(TF $f #"yer s"spe ted ro A was a d$amond > $n that aseD "n$lateral m$staAeH $gnorant J may w$n D. L-'/<-- C*5'4> B*/+1 *) H-/049 7. M-66-+0> &#"yer m$staAenly agrees to p"r hase worthless land' <. seller w$ns &yes ontra t' > part$es ontemplated r$sAD $n general sense > general r$sA of land not #e$ng worth what yo" th$nA $t m$ght #e worthD always the ase $n land sales 2. ontra t e,plicitly ass$gned r$sA to the #"yer $n an Nas $sO la"se 3. Nas $sO r"le as$deD #est defa"lt r"le may #e to read s$len e as a non; ond$t$on E. =st II<+<D <+2D <+*D <+1D <+5 > t "lt$mately left to do what $s Nreasona#le "nder the $r "mstan esO <. no g"$dan e $n the hard ases &where ass"mpt$on of r$sA $snt lear' 2. "lt$matelyD these -"est$ons are a#o"t $mpl$ $t terms 3. g$)en sellers #etter Anowledge &$n most@many ases'D Adler wo"ld r"le for #"yer > pre edent d$s o"rag$ng f"t"re sellers from play$ng game and later la$m$ng they d$dnt Anow

III. UNILATERAL MISTADE

B =st I<+3F m$staAe of a N#as$ ass"mpt$onO #y one party releases her of her o#l$gat$ons "nder ontra t onlyD $n essen eD $f the other party sho&ld have corrected the ass"mpt$on A. T>+/ 7. C9-'-> &m$staAe $n ontra t #$d > left o"t ost of an $temH owner kne# m$staAe' <. not really a "n$lateral m$staAe ase > m$staAe was a#o"t ontra t termsD not a#o"t a fa t of the world
;;2+;;

t r"les that yo" ant s$mply gra# a #$d that yo" Anow $s $n error > where one party attempts to taAe ad)antage of another partys "n$lateral m$staAeD ontra t $s not enfor ed 3. 3BF t doesnt enfor e the h$gher ontra t #$d &as $t wo"ld "nder =st I20<D where mean$ng of $gnorant party ontrols' > $nsteadD negates the ontra t a. ontra t =st I<+3 &"n$lateral m$staAe' w$th =st I20< &role of s"#?e t$)$ty $n assent' B. L/(10/< 7. O+8/' & ontra t for sale of to#a o where #"yer Anew of Treaty of 2hent end$ng /ar of <5<2 #"t seller d$dnt > #"yer Anew pr$ e of to#a o wo"ld shoot "p' <. generallyD ts wont re-"$re people to share $nformat$on that re-"$red -))*+4 to ome #y &resear hD #"s$ness a "menD et .'D and that $s a)a$la#le to #oth part$es a. mot$)ate part$es to o#ta$n $nfo 4%A32ED 4I=4(!7TA34E7

2.

IV. IMPOSSIBILIT& B IMPRACTICABILIT&

B do tr$nally d$fferent from m$staAe > the false ass"mpt$on $s a#o"t an e)ent $n the )545+- at t$me of ontra t B #"t de $s$on on how to treat s$len e $s essent$ally $dent$ al &?"st another $mpl$ $t terms do tr$ne' > d$s ern $mpl$ $t termD or $mp"te #est poss$#le term B =st II2.<D 2.3H (44 I2;.<3D I2;.<+ A. P/+/1('- 7. G/'- &land lease aseH lessee la$med $mposs$#$l$ty after royal army $n)adedD depr$)ed h$m of #enef$t of the land' <. where la# reates a d"tyD party $s ex "sed when ant perform d"e to no fa"lt of h$s ownH #"t where contract reates a d"ty &party reated d"ty "pon h$mself'D he $s #o"nd to perform e)en $f a $dent o "rs & o"ld and sho"ld ha)e wr$tten ex "se $nto ontra t' 2. more of a )+564+/4(*' ase > d$fferen e #etween $mposs$#$l$ty of performan e and $mposs$#$l$ty of payment &lessee was st$ll a#le to pay the rent > performan e wasnt $mposs$#le' 3. s$len e on th$s ont$ngen y doesnt ex "se lessee from pay$ng rentH t de $ded #est defa"lt r"le wo"ld #e to maAe lessee l$a#le for th$s r$sA B. T/>0*+ 7. C/01<-00 &rental of m"s$ hallH m"s$ hall #"rns down after exe "t$ng ontra tD #efore lease term' <. $n ontra t where performan e depends on the ont$n"ed ex$sten e of g$)en person@th$ngD a ond$t$on $s i plied that the $mposs$#$l$ty of performan e ar$s$ng from the per$sh$ng of person@th$ng shall ex "se the performan e a. th$s t gets 483F(7ED #@t $mposs$#$l$ty of performan e and $mposs$#$l$ty of payment 2. AdlerF m"s$ hall owner sho"ld pay > $n #est pos$t$on to taAe pre a"t$on aga$nst the a $dent $n the f$rst pla e or to exer $se pre a"t$on to p"t $t o"t -"$ Aly &lessor to $nternal$Re osts of r$sAD wo"ld then ha)e r$ght $n ent$)es to taAe r$ght amo"nt of pre a"t$on' a. alsoD l$Aely that th$s $s the agreement part$es rea hed ex ante &amo"nt that lessor wo"ld lose $n lower rent wo"ld #e greater than amo"nt lessor wo"ld lose $n greater $ns"ran eD so th$s $s pro#a#ly the agreement the part$es ame to' 4. CAN 7. P9*-'(? &a tor d$ed of dr"g o)erdose #efore he o"ld perform on ontra t for two mo)$es' <. a tors death &pres"ma#ly a $dental' pro)$ded $mposs$#$l$ty ex "se a. #e$ng al$)e E ond$t$on to performan e 2. -"est$on $snt whether or not Phoen$x had to performD #"t who sho"ld #ear the loss of h$s fa$l"re to perform > t r$ghtly de $des that loss sho"ld #e #orne #y employer a. sens$#le s$n e s"$ $de $s rareD and $n ent$)es to stay al$)e are s"ff$ $ent for prom$see D. E/64-+' A(+ L('-6 7. G50) &h$gher f"el pr$ e d"e to 8PE4 r$s$s' <. 2"lf arg"ed that ontra t was ommer $ally $mpra t$ al "nder (44 I2;.<+ > m"st #e "nforeseea#le fa$l"re of an "nderly$ng ass"mpt$on of the ontra t wh$ h r$sA was not spe $f$ ally allo ated to the ompla$n$ng party 2. e)en $f 2"lf had esta#l$shed ommer $al $mpra t$ a#$l$tyD st$ll wo"ldnt pre)a$l > e)ents asso $ated w$th energy r$s$s were reasona#ly )*+-6--/;0- at t$me ontra t was exe "tedH 2"lf m$ght ha)e prote ted self $n ontra t a. when someth$ng $s foreseea#leD part$es often f$x pr$ e $n e)ent of s" h marAet fl" t"at$on
;;2.;;

#. to allow ex "se for fl" t"at$on wo"ld go aga$nst )ery p"rpose of the ontra t

V. FRUSTRATION
B performan e not d$ff$ "lt@$mposs$#leD ?"st less )al"a#le B -"est$onF $s the hanged $r "mstan e s" h that the part$esD as an $mpl$ $t termD wanted there to #e an ex "se0 A. D+-00 7. H-'+> &spa e rented to see oronat$onH oronat$on d$dnt o "r' <. ne$ther party had ontrol o)er r$sA of oronat$on not o "rr$ng > who sho"ld #ear the loss0 2. t re hara ter$Red ontra t as Nl$ ense to "se rooms for a part$ "lar p"rposeO > thereforeD s$n e the p"rpose was fr"stratedD no ontra t B. L0*>1 7. M5+:9> &lease to ar dealerD allegedly fr"strated #y //II restr$ t$ons on sale of new ars' <. fr"strat$on re-"$res 4*4/0 2*+ '-/+ 4*4/03 1-64+5.4(*' *) 49- :5+:*6- for wh$ hD $n ontemplat$on of #oth part$esD the transa t$on was entered $nto > performan e poss$#leD #"t expe ted val&e of perfor ance has #een destroyed 2. no defense $fF a. ont$ngen y was )*+-6--/;0- or .*'4+*00/;0- &go)t restr$ t$ons were'D or #. o"nterperforman e rema$ns )al"a#le &here $t was )al"a#le > lessor wa$)ed "se and s"#leas$ng restr$ t$ons and offered to red" e rent' 3. t held that r$sA was ontemplated and $mpl$ $tly allo ated to lessee 4. =st I2.+ > offers l$ttle helpD aga$n d$s la$m$ng any r"le $f lang"age or $r "mstan es $nd$ ate the ontrary <. drafters of =st ha)e to p"t s" h a la"se $n > no hard and fast r"les when the -"est$on $s s$mply Nwhat are the $mpl$ $t terms of the ontra tO > depends on ontext 2. all a#o"t $nterpretat$on

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