Predominant purpose v.

gravamen

Dealershipos ror distributorshiposare treated as sales of good contracts usually under the UCC
 Sales aspect predominantes

UCC 1-103 - if the UCC doesn’t address it, CL applies UCC 1-103 - if the UCC doesn’t address
it, CL applies

Offer  CL definition – restatement § 24 manifestation of willingness to enter into a bargain

made as to justify another person in understanding that assent to the bargain is invited and will
conclude it”
 Promise must be sufficiently diefinite in its terms to lead the offeree to understand that a
bargain is being proposed and how the offeree may conclude the bargain
Offers must
 Must be manifested  necessarily, therefore, must be communicated to the person to
whom it is addressed
o Cannot take effect until it is known to the offeree (reward case  Glover v.
Jewish war vet)
o If you don’t know about it, the offer didn’t induce your actions
o §51  if you don’t know about the offer, you can’t accept it
 If learns of offer, during partial completence of requested performance, he
may accept by completing the performance
 Indicate desire to enter into contract
o Specify the performances to be exchanged and the terms that will govern the
relationship
o Offeror is ‘master of the offer’
 Directed at some person or group
o Doesn’t have to be a defined group of persons (question of interpretation for ct 
does it contemplate multiple acceptances or is it just the first person to respond)
 Must invite acceptance
o May or may not indicate how and by what time this acceptance is to be
communicated
o If not was the manner reasonable and the response timely
 Must create the reasonable understanding that upon acceptance a contract will arise w/o
any further approval
o Distinguishes offer from invitation to make offer
o Must convey the REASONABLE understanding that offeror intends a contract to
arise and expects to be COMMITTED UPON ACCEPTANCE
 Offeror confers ‘power of acceptance’ on offeree
o Sufficiently definite in its terms to leas the offeree to understand that a bargain is
being proposed and how the offeree may conclude the bargain § 24
 Objectively reviewed
o Taking into account the entire context of the communication, the addressee was
justified in understanding that the proponent intended to be bound on acceptance
I am willing to sell my farm “bleakacre” to you, but will not accept less than 2 million cash. Let
me have your reply as soon as possible

 Is this an offer or an invitation to make an offer?

o Words used in communication  ‘Primary indicators’
 Terms such as ‘offer’ ‘quote’ or ‘proposal’ can be helpful
 However, if context shows they were not used in their legal sense
thy are not conclusive
o If it lacks ‘significant terms’ its probably not an offer
 Acceptances normally have to be mirrored or modified mirror
 Outside of UCC 2-207
 Comprehensiveness and specificity  clues toward intent
o Relationship of parities
 Previous dealings, prior communications in this transaction, etc
o If members of same community or trade  the parties are or should be aware of
any ‘ COMMON PRACTICES or TRADE USAGES’
 Taken into account
UCC 2-204
 1 Congract may be made in any manner sufficient to show agreement (indluding offer
and acceptance)
o Conduct of parties that recognizes a contracts existence, interaction of electronic
agents, or interaction of electronic agent and an individual
 2 no definite moment of making is req’d for an agreement to be a contract
 3  even if one or more terms are left open, a contract for sale does not fail for
indefiniteness if the parties have intended to make a contract AND reasonably certain
basis for giving appropriate remedy

People v. Braithwaite
 ‘Offer’ was not definite
o Used terms like  If I can get; you want like an ounce or so; you willing to spend
like 800; once I get the rpice; and you know how long I don’t buy a ounce”
o Negate defenant’s ability or intent to complete the transaction for an ounce of
cocaine
 Instead it seems that Δ was trying to feel Dinnall out concerning the
latter’s intent and ability to to buy this quantity of drugs
o However  when the proof indicates a valid offer to sell, and subsequent acts in
furtherance of an implementation of the offer” then the proof is sufficient
 IE giving instructions on where to meet him to buy then those instructions
being followed
 Paying of money
 Delivery of goods

ADVERTISEMENTS
  Their legal effect depends on the ad’s apparent intent as reasonably understood by
the plaintiff
 Lefkowitz
o Words of limitation
 Haris v. time
o Valid offer  open envelope and receive a free watch
 Definite, stipulates exactly what the offeree needs to do in order to get
something
o If advertisement calls for the performance of a specific act without further
communication and leaves nothing for further negotiation
 Analogous to a store offering something to a customer for coming to
the store at a certain time
o However  dismissed on maxim  de minimis non curat lex (law does not
attend to little things)
 Waste of court’s time, lawyer’s time, tax payers money
 Ad did no harm beyond momentary annoyance to the recipients and
concluded that the appropriate respone would be to throw it away rather
than take up the scarce resources of an overburdened judicial system
Terminate an offer
§36
 Offer lapses
o An outstanding offer to settle from an insurance company does not automatically
lapse with the passage of time on the statute of limitations
 To hold every offer contains an implied-at-law lapse date would be to
dictate a term of such offers which the parites themselves CAN and
SHOULD decide
o REASONABLE TENDER  when disputed material issue of fact  should
not be resolved as matter of law  GOES TO A JURY
 Unless routine commercial transaction that recurs so consistently under
same circumstances that a reasonable time can be determined without
question and without recourse
 Rejection
o Once communicated, the offeree cannot recant the rejection and accept –
offer come to an end
o Could constitute new offer
 Counteroffer
 Offerer’s death or Mental Disability
o ONLY APPLIES BEFORE THE OFFER IS ACCEPTED
 Doesn’t matter if offeree knows or doesn’t know about the death or
incapacity of offeror
o If acceptance has already taken place and contract has formed then it is of no
consequence
 Incapacity before contract could also create a contract with an incompetent
 Revocation
o Becomes EFFECTIVE when COMMUNICATED to OFFEREE
 o Direct
o Indirect
 Dickinson v. dodds.
 Heard the offeror had
 Offeree must obtain information from a RELIABLE SOURCE
 Information is of offeror taking action clearly inconsistent with
continued intent to enter contract
 Hendricks v. behee
 Private act of the offeree does not constitute an acceptance
(unless it is allowed within terms of contract)
 Communication acceptance of a contract to an agent of the
offeree is not sufficient and does not bind the offeror
 Absent consideration  offeror may withdraw offer at any time
before acceptance and communication of acceptance to offeror
 Offeror notified agent of offeree of revocation prior to his notification of
acceptance  revocation good
Assent/acceptance

§30 
1)offer may invite or require acceptance to be made by an affirmative answer in words, or by
perfoming or refraining from performing a specified act  or may allow offeree to select terms
of acceptance
2)offer invites acceptance in any manner and by any medium reasonable in the circumstances,
unless otherwise stipulated

§35  duration of offeree’s power of acceptance

1)gives the offeree a continuing power to complete the manifestation of mutual assent by
acceptance  POWER OF ACCEPTANCE
2)K cannot be created by power of acceptance after the power has been terminated (b yone of
ways listed in §36)

UCC 2-206 Offer and acceptance in formation of contract

(1) Unless otherwise unambiguously indicated
a. An offer to make a contract shall be construed as inviting acceptance in any
manner and by any medium reasonable in the circumstances
Bones  House for sale
 Signed by 5pm, agent communicated this at 5:13
 Offer is silent on how and by when assent is to be communicated  only must be signed
by 5pm on date
o Paragraph 4  must be accepted by seller by **date** at 5pm
o Court says two other paragraphs, when read together indicate acceptance means
when the document is signed
o Manner and time, therefore are left to a reasonable standard
 Parties actions show a contract as well
 o Later on, seller asked that buyer back out  buyer refused. Agent, acting under
authority, cashed the earnest check. Several days later, sellers sent buyer a list of
of certain defects on the property
 WHEN A PERSON IS REPRESENTED BY AN AGENT, ANY CONDUCT BY
THE AGENT IN THE SCOPE OF HIS ACTUAL OR APPARENT AUTHORITY
IS BINDING ON THE PERSON HE REPRESENTS

Roth v. Matheson
 Plaintiff inserted express terms (in the changes/amendments box) that required the parties
to the transaction and their agents to analyze whether the terms of the counter-
counteroffer matched up with that of the counteroffer.
o Π did not simply write I accept in the counter offer spot
o Viewing this objectively and in its entirety, counter-counteroffer called for a
response from the seller before a contract would be formed.
 No response, no contract
o No reason to put the parties or courts in position to compare and contrast
terms to see if there is any material variance WHEN response to
counteroffer is on its face presented as a counter-counteroffer
 TC dismisses  potential for game-playing
o Any person who would seek to enforce such an ‘agreement’ (when there was
nothing confusing about the form) in his favor would certainly seek to use
these same actions to avoid purchase if it were not in his favor.
o Form was clear, facts are clear. Π did not absolutely and clearly accept
 Absence of a deadline does clearly make this an acceptance (as opposed to counter
counter offer
 Comes down to  printed form stipulated the manner of acceptance, it was not followed.
o Procedural decision.

Unless manner of acceptance is specifically required, alternative methods are effective if

they perform the same function and serve the same purpose as the authorized method

Date of acceptance 
 Take effect when it is communicated to the offeror
o Offeree’s relinquish of control over the acceptance (reason for the mailbox rule)
 Mailbox rule
o Cantu did not specify mode of acceptance, mail is reasonable and impliedly
authorized under the circumstances
 Tendered resignation shorly before start of year, necessitating immediate
action by district to locate replacement
 Delivered the letter on a Saturday, superintendent was not at work, further
delaying matters until Monday
 Gave an address some 50 miles away for delivery of her final paycheck
 Suggests she was no longer capable of being reached within the
san benito district, and did not intend to return to the school or the
office of the school district
 o Insurance case
 Language saying ‘if we receive payment on or before date’ is not language
strong enough to disallow mailbox rule if use of the mail is reasonable
 Company invited Π’s response by payment through mail, they
addressed the Π originally by letter sent via gthe mail
 By allowing payment by sending of check or money in mail, they
company constituted the postal authorities as its agent
 Late acceptance
o Could be legally meaningless
o Course of dealings b/w parties and language of the late acceptance could create a
new offer
o In some cases where there is doubt about the exact duration of the offer 
 Offeror’s failure to object to a late acceptance may suggest either that it
was not late or that if it was late the offeror acquiesced and made it
effective despite it’s tardiness
 Non conforming response
o Qualified response
 May be outright rejection with an explanation
 May be a request for information or a suggestion for changes
 All made with the intent of reserving the decision to accept until
the offeror reacts to the request
o Seller offers to sell land for 2 mill – offeree replies:
 I accept your offer provided you reduce the price to 1.9
 No doubt this is a counteroffer – causes original offer to lapse and
gives the owner the power of acceptance
 I am interest in the property but not at your price
 Cannot be a counteroffer b/c no new proposal is made as to price
 Rejection with explanation, probably encouraging the offeror to
make a new offer
 I am considering your offer. Do you propose a cash sale, or will you take
a mortgage?
 Just seeking more information – doesn’t want to give up power of
acceptance even if the offeror responds in the negative
Silence as acceptance
 Usual rule  inaction is a rejuection
o Offeror CANNOT write the offer in any way that compels the offeree to
respond to avoid accepting
 §69
o Inaction by offeree only counts as acceptance when
 Offeree takes the benefit of offered services with REASONABLE
OPPORTUNITY to REJECT and REASON TO KNOW they wree
OFFERED with the EXPECTATION of COMPENSATION
 Free trial for Netflix, have to affirmative say no
 Where offeror has made it clear that silence indicates acceptance and
offeree in staying silent intends to accept
 Where previous dealings or otherwise, its reasonable that the offeree
should notify offeror if he doesn’t not intend to accept
o An offeree who does any act inconsistent with the offeror's ownership of
offered property is bound in accordance with the offered terms unless they
are manifestly unreasonable. But if the act is wrongful as against the offeror it is
an acceptance only if ratified by him.

 Objectivity
o Why objective?
 Outward manifestations of assent are observable to the other party
(opposed to internal state of mind of actor)
 Subj test  best serves to insulate a person from unintended obligations,
however, this interest is checked by good policy and practice
 Ob test recognizes that full and perfect assent is not the only
value to be served by contract law. Economic efficiency cannot
be maintained if a person who manifests contractual intent is held
accountable for the reasonable reliance placed on their words and
actions by the party to whom the intent was manifested
 Proof of subj. intent  dependant on self-interested and
unverifiable testimony of person
o Not that the offeree actually intended to accept, but whether a reasonable
person in the offeror’s position would have understood the manifestation as
acceptance
o Evidence
 Kabil – (helicopter case)
 Can permit person to testify to his own sense of the state of the
negotiations, as long as the jury was not misled into treating
this testimony as more than evidence bearing on the behavior
and perceptions of parties to the negotiation
 Jury was instructed on the objective standard
o A manifestation of party’s intention, rather than actual or
real intention, is controlling
o Agreement not determined by the ‘secret intentions’ of the
parties but their EXPRESSED INTENTION
o Reasonable person construct
 What is a reasonable manifestation of assent from the perspective of
the party who observed it
 Accounts for their attributes (experience, training, commercial
sophistication), background info that person possessed,
relationship between parties, context of the transaction
 Appropriate b/c Ob test is aimed at protecting the reasonable
expectations of the particular party involved in the transaction
 Duty to read
o Contests
  General rule, participant in contest must comply witht therms of the
rules in order to form a valid, binding contract w/ promoter
 Promoter’s obligation is limited by the terms of the offer, including the
conditions and rules fo the contest that are made public
 Rules were clearly identified to Π as being part of contest – rules
are axiomatic to contests.
 Can’t claim a valid contract gives you right to a prize, and then
say no contract binds you to the rules
 Contest participant takes the rules in their entirety or not at all
 Deliberately undisclosed intent
o If the words or other acts of one of the parties have but one reasonable meaning,
then that party’s undisclosed intention is immaterial except when the
unreasonable meaning is known to the other party
 Law imputes to a person an intention corresponding to the reasonable
meaning of his words and acts
o IF ONE’S WORDS AND ACTS, judged by a REASONABLE STANDARD,
MANIFEST AND INTENTION TO AGREE, the real but UNEXPRESSED
STATE OF ONE’S MIND is IMMATERIAL
o Zehmer
 If valid – equity can still decline to enforce
 Fraud
 Misrepresentation
 Sharp practice
 Dealing between unequal parties
 None existed  farm bought for 11k, tax-assessed at 6,300 and sold
for 50k. Zehmer even admitted it was a fair price
 Expectation damages
o Give the benefit of the bargain insofar as money can do that
o Compensate the plaintiff for the economic loss resulting from the breach
 Normally  Money paid – K price = expectation damages
 Specific performance
o Remedy available at law is inadequate/wouldn’t properly compensate
 Monedy damages too difficult to prove
 Promised performance so unique tat a money award could no compensate
for loss
o Remedy in equity  have to come to the court with clean hands
o Generally  damages are a more efficient and less burdensome means of
rectifying the harm caused by a breach of contract

Mode of acceptance
 Acceptance must be MANIFESTED and COMMUNICATED
o Anny manner reasonable under the circumstances
 Offeror can make the mode of acceptance mandatory and exclusive
o Has to be clear/definite
  If suggested or described manner of acceptance does not reasonably appear intended as
exclusive
o Any reasonable method is effective provided that it is CONSISTENT with
the proscribed mode and provides PROTECTION to the offeror EQUAL to
that of the stated mode

Bilateral  both parties have outstanding promises to be performed

Unilateral  doesn’t mean onesided, though both parties have given consideration only one has
given a promise as consideration

Restatement §32 and UCC 2-206 – unless specifically and exclusively mentioned in offer
acceptance can be completed by performance, or vice versa
UCC 2-206 (1)(b) and (2)
(1) Unless otherwise ambiguously indicated by language or circumstances
a.
b. An order or other offer to buy goods (for prompt or current shipment) is construed
as inviting acceptance by 1)prompt promise to ship or by goods or 2)prompt or
current shipment of conforming or nonconforming goods
i. Shipment of nonconforming goods is NOT AN ACCEPTANCE if seller
seasonably notifies the buyer that the shipment is offered only as an
accommodation to the buyer
(2) If beginning of performance is reasonable mode of acceptance, an offferor that is not
notified of acceptance within a reasonable time may treat the offer has having lapsed
before acceptance

 “I offer to sell you blackacre for 2 million. If you wish to buy, you must pay 2 million in
cash at my office on Friday at 2 pm”
o Tells when have to perform by, doesn’t say performance is only available or
allowable acceptance
 Where offer does not clearly indicate ONLY promise as mode of acceptance
o Performance is acceptable if the offer is not for some future performance by
the offeree, which would not be reasonable to believe that the offferor
intended the offer to remain open that long
 Acceptance by a performance that cannot be accomplished instantly
o §65  applies when offer does not mandate acceptance by performance
  Commencement or tender of performance constitutes an IMPLIED
PROMISE to complete the performance (within specified time)
 Creates bilateral contract
o §45  performance is exclusive method of acceptance
 Treats beginning or tender of performance as creating an option in
favor of the offeree
 Offeror loses right to revoke once performance has been tendered
 To exercise option  offeree must complete performance w/in time
required
 If not  offeror does not have to pay (may have to pay so, so
that they’re not unjustly enriched)
 Offeree not bound, though
o For both  neither promise nor option arises when preparation for
performance starts – ACTUAL PERFORMANCE MUST BE BEGUN or
TENDERED (promise or offer to perform)
 Notice when offer is accepted by performance (§54)
o Unless the offer requires notice of performance, offeree usually has no duty to
take action to notify the offeror of acceptance
 There is a duty if the performance in question is NOT RENDERED
DIRECTLY to or IN THE PRESENCE OF the OFFEROR, AND the
offeror has NO REASONABLY PROMOT AND RELIABLE
MEANS OF LEARNING of it.
 Have to exercise REASONABLE DILIGENCE to notify within a
reasonable time after commencing the work IF he knows or should
know she has no means of learning of his acceptance with reasonable
speed and certainty
 Offer can indicate that no notice is req’d
 Offeror can learn from other sources that work has been started
o ASSIDE notice is not acceptance, acceptance took place upon beginning of
performance
 Reverse unilateral
o Offeree accepts promise but offeror’s performance is already rendered

Standard form/ acceptance of unknown terms

 Offeror has drafted standard terms that are not made available to the offeree at the time
that they accept and are only revealed later
 four approaches
o Offer and acceptance occurred at the time of the book or buying the goods or
service
 Terms not divulged to the offeree at that time are not oart of the
contract because the offeror cannot unilaterally impose terms after
contract formation
o Court treats offer/acceptance as occurring during booking/buying ticket
  If transaction of this kind is commonly subject to standard terms then a
reasonable buyer should have known that and should have found out
what they were
 If buyer fails to find out he does not fulfill duty to read
o No offer and acceptance at time of booking  delivery of standard terms (occurs
upon delivery of ticket, policy, or goods that contain notice of terms) is an offer
 Buyer accepts if he does not reject it within a reasonable time by
returning or declining the benefit of the contract
 Here there is a ‘DUTY TO READ’ at thetime of delivery  gives
buyer the opportunity to refuse to contract on the offeror’s standard
terms
o Court doesn’t worry about technicalities of offer and acceptance  operates
under assumption that contract was clearly intended
 Focuses on disputed term itself to decide if the offeree had a
reasonable opportunity to become aware of it, if the term is fair and
within th reange of reasonable expectations
First of the four  bad
 Contemporary law recognizes that this traditional view does not take into account
the realities of modern contracting , in which vendor’s terms are commonly included
in the packaging or otherwise communicated later to the buyer

Rolling contracts
Offer and acceptance do not take place at the point of purchase ( deferred until the buyer has had
a chance to see the standard terms and to reject a contract on those terms

Procd
Shrink wrap licenses are enforceable unless their terms are objectionable
Large analysis on price discrimination and the seller must be able to control arbitrage (practice of
taking advantage of a price difference between two or more markets) to make that work
Anyone can walk into store and buy box ( clerks could not distinguish between commercial or
private users
Box states on outside that there are restrictions stated on an enclosed license
Limits the use of non-commercial users (who were induced to this lesser license by the lower
price)

One cannot agree to HIDDEN terms ( but bought the product on the knowledge that the product
was subject to a license

Standard terms make things cheaper

 Could require a person to sign before buying a concert ticket or an airline ticket
o Vendor as master of offer may invite acceptance by conduct, my propose
limitations on the kind of conduct
o Buyer may accept by performing the act
 Here, ProCD propses buy accept by contract by using the software
after having chance to read the license at their leisure
  Software would not proceed without user indicating that he had read
the license
 Nothing in the UCC requires seller to maximize user’s net gains
 If the user finds the terms of the license to restrict his use and utility
gained to less than the amount he paid, he can simply return it

Licitra
The buyer allegedly purchased a computer with a certificate for a "free" computer or a credit
towards the purchase of one as part of a promotion. The computer cost in excess of the
promotional certificate. The buyer asserted that almost immediately he experienced problems
with the computer and sought to return it and have his money refunded. A replacement was sent
which the buyer alleged still did not operate properly and he again demanded his money back.
The computer company refused to do so but continued to offer to fix or replace the unit. The
court held previous decisions regarding the formation of a contract applied only to price,
the equipment, and time of delivery agreed to, but almost nothing else. (2-204(3))All other
terms of the "agreement" proposed by the computer company were additional terms. The buyer
was not necessarily bound by the additional terms and the arbitration clause of the "agreement"
was not enforceable. In addition, the arbitration clause was against New York public policy for
numerous reasons. Thus, the small claims action could go forward.

OUTCOME: The seller's motion to compel arbitration and for other relief was denied.

Interstate contract formed with price, quipment and time of delivery agreed to almost NOTHING
else
 All other terms of the agreement proposed by the computer company must be subject to
interpretation by the courts as being additional terms b/c might conflict with state laws or
public policy

Why clauses of ‘agreement’ are considered ‘additional’ terms NOT PART OF THE
CONTRACT
Governed by state law ( SD state law ( how is NY res to know SD state law?
 Δcannot by “contract” deny access to small claims court w/o a specific and agreed-to
written waiver by customer
 Δ would have consumer open computer read “agreement” and originally before anything
else contest every clause they don’t agree to Small claims court accomplishes same goals
as aribitration Simple, informal and INEXPENSIVE procedure for the prompt
determination of such claims

Specht
Where consumers are uged to download free software at the immediate click of a button, a
reference to the existence of license terms on a submerged screen is no sufficient to place
consumers on INQUIRY or CONSTRUCTIVE notice of those terms

REASONABLY CONSPICUOUS NOTICE OF THE EXISTENCE OF CONTRACT

TERMS AND UNAMBIGUOUS MANIFESTATION FO ASSENT TO THOSE TERMS
BY CONSUMERS ARE ESSENTIAL IF ELECTRONIC BARGAINING IS TO HAVE
INTEGRITY AND CREDIBILITY

ACRA v. Lexmark
ACRA says conditions on outside of prebate package are deceptive b/c they suggest that it
creates an enforceable agreement with consumers to return used cartridges
 District court found restriction to create a valid agreement with consumers
 Court cites UCC 2204(1)-(2)

Lexmark has presented sufficient unrebutted evidence to show that it has a faciually valid
contract with the consumers who buy and open its cartridges
 Language specifies the terms in which the purchaser may use the item
 Consumer reads and decides whether to accept the terms by buying this item or buy
another cartridge without such restrictions on it
 Consumers have (1) notice of the condition, (2) a chance to reject the contract on that
basis and (3)receive consideration the form of a reduced price in exchange for the
limits placed on reuse of the cartridge

UCC 2-207

DOESN’T DEAL WITH THE OFFER (that’s under common law)

207(1)
 Response to a valid offer is an acceptance IF Seasonable, and definite expression of
acceptance Regardless of additional terms UNLESS there is EXPRESS LANGUAGE
SAYING ACCEPTANCE IS CONDITIONAL ON ASSENT TO THE NEW TERMS

Then it is a counter offer

To sum up, a response is a counter offer or rejection when

 It is after the offer has lapsed
 There is no definite expression of acceptance
 Acceptance is conditioned on the new terms
2-207 gives play even if expressed conditionality of new terms is in the boilerplate
Ironic since the point is to discount the boilerplate stuff

Acceptance with new terms

 Does not apply in situations where response to original offer is deemed to be a
counteroffer
207(2)
 Additional terms are automatically dropped if the parties are not BOTH merchants (if the
additional term is being imposed on a merchant from a non merchant, a court may decide
to let it in, depending on the case)
 If between merchants, the new term becomes part of the contract unless
o The original offer expressly limits acceptance (from offeror)
o The new term materially alters the contract
 Significant element of the exchange bargained for
 Contract must be interpreted in context
  Proposed alteration is material if it would result in surprise or
(and) hardship
 Surprise determined with reference to reasonable expectations
c
 Common trade terms, etc
 Hardship term imposes an unbargained-for burden (financial or
otherwise) on, detracts significantly from, the reasonable expectations
of the other party
 OVER ALL -- if term has more than a minial impact on the exchange
and it is not sufficiently common to be expect
o Notification of objection to them has already been given or is given within a
reasonable time after notice of them is received

Counter offer
Original offeror has not accepted the counteroffer merely by performance
Coffer only accepted if it clear that the offeror WAS AWARE of the alteration in terms
and manifested assent to it by UNAMBIGUOUS WORDS OR ACTIONS

Offer counter offer 

No acceptance, no performance ( no contract
Clear manifestation of acceptance by offeror contract of offeree’s terms
No acceptance but performance contract under 2-207(3)
 Terms that do not agree are dropped, contract is based on terms that agree and
UCC article 2 gap fillers

Confirmations to oral or written agreements

 Contract already exists
 Purpose of confirmations is to confirm what has been agreed (possibly to make ok for
statute of fraud
 Any new terms in them that were not part of the original agreement are proposals
in the same way as proposals in an acceptance

Options / Firm offers

§87
Offer is binding as an option if it
Is in writing and signed by the offeror, recites a purported consideration, and proposes an
exchange on fair terms within a reasonable time; or
Is made irrevocable by statute
An offer which the offeror should reasonably expect to induce action or forbearance of a
substantial character on the part of the offeree before acceptance AND DOES induce such
things ( binding as option contract to extent necessary to avoid IN JUSTICE

UCC2-205
If merchant by ucc 1.104(1)
No consideration needed to hold the offer open until a stipulated time, a reasonable time if no
time mentioned, or a maximum of three months
Only the offeror need be a merchant
If the term of assurance is in a form supplied by the offeree it must be separately signed to by the
offeror
In other words you need two signature lines one to agree and one to agree separately to the offer
 Sometimes, attempts to set up options will look like sham consideration that wouldn’t be
sufficient consideration in other contexts
◊ Common law said that written options didn’t need consideration because they were already
binding and enforceable.
 Once that offer was accepted, it formed a bilateral contract
 Any money consideration that was received for an option was adequate to be binding.
 This ran into problems with the sham consideration rule—seemed contradictory.
◊ If there is actual consideration for the option, no problem
◊ If there is no consideration—go to Rest 87
 Offer is binding if:
 In writing, recites purported consideration, and proposes an exchange
 Made irrevocable by statute

 Recap: Ways to create a binding option

 Begin a return performance on a unilateral contract(Sec 45)
◊ Acceptance is completion of performance
◊ Once begin performing, create binding option—offeror can’t revoke as long as offeree keeps
performing
 By express agreement supported by actual consideration or by purported consideration in
writing (Sec 87(1))
◊ If there’s some consideration, binding even without a writing
◊ If nominal or purported consideration, can be binding if in writing
 Can create nominal consideration by proving a meaningful bargain underlying the
intent to make an option
◊ Firm offer: UCC 2-205
 An offer to buy or sell in writing is not revocable, even if no consideration, during time
stated or for a reasonable time (not longer than three months)
 Equivalent to Sec 87(1), but goes farther—doesn’t even care about consideration

Consideration

§79(a)
If the requirement of consideration is met, there is no ADDITIONAL req’t of loss or
disadvantage to the promise

Giving up smoking?
Because I have the right to smoke, my promise to refrain from smoking (forbearance) is a legal
detriment and can qualify as consideration
Bargain theory
  Detriment to promisee
o Doesn’t have to be a real detriment
 Relinquish of a legal right
 Immediate ACT
 FORBEARANCE
 Or PARTIAL or COMPLETE abandonment of an intangible
right
 Or a promise to do any of these things in the future
 Benefit to primisor
o Doesn’t have to benefit him
o Really just means that that the promisor ‘GOT WHAT HE BARGAINED
FOR”
o Doesn’t need to be shown that the promisor received any tangible or
economically valuable gain

§79 (a) gain or advantage to the promisor is not a requirement for consideration
 Don’t need to ask why the promisor would make a contract for someone else to stop
smoking
o His motive is not the central concern
o True so long as it is apparent that he intended to exchange his promise of x
for the promise of quitting smoking
 If a gain or advantage to promisor can be identified, it bolsters the argument that he
did in fact bargain for detriment suffered or promised by promise

Bargained for/induced detriment v. indicental detriment

Walk over to my car and you can have the skis on the roof
Common experience suggests thtaqt the perties did not see it as the price for the skis but
simply as the act needed to take delivery of the gift

CONDITION OF THE GIFT

What is the purpose of his request -> motivated by some instrinsic desire, doesn’t have to be
economic one and doesn’t matter if it seems stupid (courts don’t consider the adequacy of
consideration ) the conclusion is one that the detriment was bargained for
Benefit to the promisor, measured objectively, is purely the satisfaction of having his
apparent desire fulfilled -- this is sufficient to support a finding of exchange

Detriment or conditional gift

Promise to give 10,000 dollars to school but they must use it for scholarship program
College has made a promise but it’s not consideration
This school has not given up a right
It didn’t already have the money
It cannot forebear from doing something that it doesn’t have the ability to do
yet
Pre existing duty
 One does not suffer a detriment by doing or promising to do something that one is
already obliged to do or by forbearing it do something that is already forbidden
Keeps other party from taking advantage of another’s reliance

§73
If a legal duty owed to the promisor that is neither doubtful nor the subject of honest
dispute it is not consideration
 If a similar performance is consideration if it differs from what was required by the duty
in a way which reflects more than a pretense of bargain
 If ad in any way to performance or obligation as an incentive for other party to pay more,
you’re good

Formal functions
 Evidentiary
o Provide evidence of existence and terms of contract
 Cautionary
o Made parties aware that they have made a serious legal commitment
 Channeling
o Provide an objective basis for a court to determine that the promise is
contractual rather than generous impulse
Reasons for not enforcing promises of gift
 Exchanges enforced as contracts b/c society has a vital interest in the reliability of
commercial exchanges
 Gift promises  sterile and of little commercial utility
o Old
 Modern  equitites between donor and done contrasted with those between parties
to a commercial transaction
o Gifts motivated by affection, gratitude, or altruism and usually have a
stronger emotional impetus than commercial exchanges
o Done given/lost nothing except prospect of gift
 Cautionary echo
o Without consid one is left to think that the promise can be revoked at any
time without legal liability
Not enforcing commercial promises w/o consideration
 Here the altruism, affection, or gratitude is not a motivating factor
o To refuse enforcement of the promise as a contract, the court must be satisfied
that the parties did not intendt it to be such
o Promise was in fac an INFORMANT, NON-BINDING EXPRESSION OF
INTENT, or it was OTHERWISE NOT REASONABLY EXPECTED TO
CREATE LEGAL DUTY

Modification through coercion

 On parties threatens to breach contract unless other promises to increase her payment or
other return performance
 Void unfair modifications
 o Alaska fisherman
o Cabdrivers drives fare through bad part of town, stops and says unless syou pay
me extra hundred I’m kicking you out
 Passenger agrees, but cabdriver given nothing more, already had the duty
to take fare to place
 Promise to pay extra by fare is not met with consideration from the cabby
 Two faults
o Person who knows the rule can add some minor detriment and get around it
o Even increases legitimately entered into are not enforceable should a later party
back out

UCC 2-209
 Good faith test
o Some courts use, others may feel bound by consideration doctrine and will only
uphold modification if new detriments are there
o If court convinced of legitimacy it can make stretches
 Excpetions
 Supervening difficulties – absent consider
 Modification to take account of unexpected burden on promise is
less likely to be coercive

Preexisiting duty t o a third party

 Concern about extorted contract modifications not a concern here
 Some courts (§73) only apply pre-existing where duty is owed to the promisor

Owed to state or public 

 Very very very hesitant to let store promise reward to police officer and then enforce
o P.O. already owes duty to protect the public
o Concerns about bribes , corruption, and favoritism
 Public policy  Member of the public ought not to be able to influence a police officer in
performing his duties

Compromise of existing claim

 Lender agrees to give longer time to pay off debt  no new detriment to lendee
o UNDISPUTED CLAIM
 Can compromise a DISPUTED claim
o Settlements, etc
 §74
o Must be either objectively reasonable (subject to reasonable doubt because of
uncertainty in fact or law); or
o Party asserting claim or defense must have an honest belief in the merit
 Subjectively in good faith
 Allows a court to take account for honest ignorance
Adequacy
  So long as detriment has been suffered in exchange for the promise, the court does not
inquire into the value of detriment in relation to the promise
o §79
 Nor does there have to be an equivalence in the number of promises
 Adequacy will become an issue if disparity in the exchange results from oppressive or
underhand bargaining or justifiable mistake
o Or nomial

Past performance
 Cautionary function
False or nominal consideration
 Make a gift binding  promisor may falsely recite that consideration has been received
(sham consideration) or may provide for some nominal detriment
 No consideration actually needed in an option  just recitation of such
 UCC has even go so far as to dispense with necessity of

Mutuality
 Undertakings on both sides must be real and meaningful
 Restatement 79 (c) disavows
 Illusory promise
o Promisor retains ‘unlimited discretion to perform’
Promise to do best effort
 UCC  2306.2
o Implies that in the promise you promise to do your best
o Therefore a once illusory promise is no longer such

Output/req’t contracts
 2-306 implies exclusive dealing
o At least for that much of the contract
o Also good faith and reasonable expectations test on the party who determines
quantity
 Actual output or requiresments as may occur in good faith
o Also provides that the quantity tendered or demanded may not be disproportionate
to any estimate, or if no estiatme was stated, to any normal or otherwise
comparable output
Good faith –
Merchants held to two-tier object and subject
 Honest in fact (sub)
 Observance of reasonable commercial standars of fiar dealing in the trade
 Reduce for legitimate business reasons
Disproportionality
 Parties’ expectations are based on an estimate or normal or otherwise comparable prior
output or requirement
o The quantity tendered or demanded cannot be unreasonably disproportionate
 Whole purpose of the contract is not to tie the parties to a set number
 o Disproportionality only applies to increases in quantity
 NOT decreases
 For decreases just have to apply good faith test
Conditional promises
 Can serve as consideration provided
o Contingency is genuine  it is an uncertain future event w/in realm of possibility
and outside the complete and discretionary control of promisor
o Detriment of binding oneself to pay or perform on the happening of an uncertain
future even outside of one’s control
 Condition of satisfaction
o Allows one party to reject performance by another (and to refuse to perform own
undertaking) if not satisfied
o Party who determines satisfaction is obliged to exercise jusgement in good faith
or reasonably
 Rule of thumb
 Good faith where performance involves a matter of personal taste
 Reasonable where performance is of a technical, mechanical or
commercial nature
 Promises of alternative performance
o Here it can be to perform or give notice to cancelation of sale
 Req’t of notice is enough of detriment to satisfy court here of adequacy so
long as it was fairly bargained for

Prom estopple

Promissory estoppel
§90 Promise Reasonably Inducing Action or Forbearance
(1) A promise which the promisor should reasonably expect to induce action or forbearance on
the part of the promisee or a third party and which does induce such action is binding if injustice
can be avoided only by the enforcement of the promise. Remedy granted for breach may be
limited as justice requires.
(2) A charitable subscription or a marriage settlement is binding under (1) without proof that the
promise induced action or forbearance.

 Some view as sub for considerations

o Reliance damages could approximate expectation damages
 Stems out of equitable estopple
o Someone makes an incorrect factual assertion that someone relies on to their
detriment
 Primarily used to validate gratuitous promises when first came out
 In commercial contet
o Good contract now non enforceable b/c of some legal formality
 Running of SOF
o Hold a party to a promise during negotiations during an abortive contract
o Reliance on a promise that falls short of becoming contractual because of some
 defect or omission in the agreement formed by the parties
 Elements
o Promise made with REASONABLE EXPECTATION that promise would rely on
it
 Object evaluation of intent
o Promise DID induce the promisee’s action or forebearance and relied to their
detriment
 Must be justified
 Objective
o Enforcement necessary to avoid injustice
 Consequence of reliance
 Harm or loss suffered by promise
o Remedy may be limited as justice requires
 Promise
o Words and conduct must be interpreted in all of the relevant circumstances of the
case
 Determine manifestation of intent to commit to a particular performance
 Objective
 Mean to protect reliance that necessarily is based on a reasonable
perception of exhibited intent rather than on the undisclosed
thoughts and beliefs of the promisor
 Generality and nonspecificity play into whether or not there is apromise
(also comes in under justifiable reliance – was it reasonable to assume
such things)
o Must have been VOLUNTARILY and DELIBERATELY made
o Evidentiary, cautionary, channeling
 None are fulfilled here - lack of exchange
 Court must be careful
 Little or no formality in promises execution
 Circumstances suggest promisor may have acted on impulse or
with rash generosity
 Remedy
o Typically reimbursement
 As JUSTICE REQUIRES
 Actual loss or expense
o Depending on couts thought, as substitute for consideration
 May award equivalent of full expectation damages
o Court has flexibility to avoid an ‘all or nothing’ resolution
 Need not confine itself ot the questiof whether the promise should be
enforced at all
 Partial relief
 Charitable pleges
o Courts often feel that they ought to be good as a matter of public policy
 Banking on money, however, probably still won’t trigger a good prom
estopple action
 o Section 90 says – charities don’t have to rely to their detriment, but few courts
actually follow that
Prom estop in negotiations
 Typically anything pre contract is just a proposal – nothing hammered out, and the
promisee (potential promisee) would be jumping the gun
 Few instances ok (sub contractor’s bid)
 Duty for good faith
o Where promise and reliance is founded on a particular RELATIONSHIP of
TRUST
 Red owl -> franchise case about starting to build store
 Lesor and tenant
 Possible lessor and possible tenant
At will employment
 Problems of both consideration and promissory estop durh the period after the
employment agreement has been made, but before employee begins work
 Before employee begins, no contract b/c consideration is absent (even after start both
parties still have discretion to stop working)
 Many courts hold that at-will precludes reimbursement of loss for actions taken in
reliance on the promise to employ
o Employee must bear risk of reliance b/c he has no assurance in job security
 Other courts
o When do apply it
 Relief will be modest
 CANNOT get damages based on expected salary
 Damages for giving up prior employment also
 PE and the SOF
o §139
 A proimise which the promiseor should reasonably expect to induce action
or forbearance on the part of the promise or a third person and which does
induce the action or forbearance is enforceable notwithstanding the SOF if
injustice can be avoided on by enforcement of the promise
 Remedy granted is limited as justice requires
 Less than full acceptance by the courts
o Indiana  brown v branc
 Has to be unjust and unconscionable injury and loss as a result of reliance
on promise
 Quitting modest job, dropped out of college at the end of the semester,
moved back to indianve from Missouri (where she had been lvign with
parents)
 Inconvenienced, yes
 But not such to remove it from the SOF  this is a house afterall
 Remedies  tour costa
o Restitution  no good , conferred nothing on people
o Reliance  inadequate  majority of harm pplaintiff suffered as not
expenditures it made in realiance on defendant’s promise but rather lost profites
 from the tourts it had scheduled with defendant
 Lost potential profits b/c it failed to pursue other business oppportunitites,
and harm to its reputation
o Other facts
 Π action/inaction were aof a definite and subjtantial character  strongly
corroborate the other’s tesimoney as well as documentary evidence
submitted by plaintiff, regarding the making and terms of promise 
 Plaintiff’s reliance was reasonable
 Plaintiff’s actiona d and inactions were foreseeable by defendant
 Δ expect Π to take spedicifc actions on defendan’s behalf and to designa
dn conduct tours to defedant’s speficiations
 Moreoever, Δ was aware that pp was new company , not much
captialy, and that it was spending much tof that capital preparing
tours for defendant
o Enough evidence to allow jury to decide that expectations were only things good
enough
o Defendant contends that expectations aren’t allowable as a matter of law
 But he didn’t reaise this objection till his postjudgment motion
 Waived that
 Instructions stated that jury could give expectation damages
 Prior to instructions – judge held a conference

SOF
Statute of frauds needs to get over evidentiary bar of statute doesn’t apply
§131
Unless additional requirements are prescribed bythe particular statute, a contract w/in the statue
of fuads is enforceable if it is evidenced by ANY WRITING  signed (§134any symbol made
or adopted with an intention, actual or apparent, to authenticate the writings as that of the
signer,”  initials, thumbprint, or arbitrary code. Made by writing, printing, stamping, other
measn. Now electronic, too) by or on behalf of gthe party to be charged, which:
 Reasonably identifies the subject matter of the contract
 Is sufficient to indicate that a contract with respect thereto has been made between the
aparteies or offered by the signer to the other party, and
 States with reasonable certainty the essential terms of the unperformed promises in the
contract
Three requirements
 Need a writing or record
 Signature of the person to be bound by it
 Content
o Must be enough in the writing to indicate that there is a contract between the
parties

Three qursions
 Is the contract subject ot the statute of frauds? 
o If no then no need to go on
  Is there a signed writing ina form sufficient to satisfy the statute
o If yes, good contract, if not got to go on to the third
 Is there a recognized exception to thte statute of frauds that will allow enforcement of this
contract even though it is subject to the statute and there is no writing sufficient to
comply with it
Is the contract subject to the statute
 Answer for the debt or obligation of another
 Executors or administrators to answer for the duty of their decedents
 Contracts made upon consideration of marriage
o Not a contract to marry but a prenup
 Promise of a dowery
 Transfer of an interes in land or sale of land
 Cantracts that cannot be performed w/in a year of execution
o More important the contract, the more we want a writing to exist so that we can
feel more comfortable in enforcing it
 Contracts for the sale of goods for the price of 5,000 dollars or more
o Pre-revision UCC only requires 500
o Aggregate amount
o The cash requirement means a service or something else we can give a value
o Price is something that if you care about it you would say so a reasonable would
be assigned
 But the quantity is essential  can be inferred from other things
 Say the writing states 10 dollars per item and a check for 10000 dollars
 Together this supports 1000 and no more than 1000

Part performance exception at common law

 However  while it is sufficient to satisfy evidentiary purpose of the stateute in real
estate by proving that the parties must have made the contract, intial performance of a
multi-year contract is ambiguous and does not necessarily establish a contract for an
ONGoing relationship
UCC 2-201
 (1)Also – have to have some record sufficient to indicate contract for sale has been made
and signed the party against whom enforcement is sough (or their agent)
o If parties agreed on purchase of sale of 10,000 widgets but the figure that made it
into the writing was 1000 widgets, that’s the quantity which will be enforced
 Will not correct and incorrect quantity term
 (2) between merchants  UCC merchant  someone who knows a lot about the product
that they’re dealing in
o Do both of the parties qualify as merchants
o If the party receiving it has reason to know of its contents, then we will read from
the party’s silence as acceptance unless rejection notified within 10 days
 (3)
o A – with specialty goods – only fit for the buyer that the seller has to procure or
manufacture
  If you start to manufacture or take steps to procure and can identify those
goods with the buy  this counts as evidence
 Statute of frauds is a way of providing evidence that the contract actually
exists and what the terms of it are
o C–
Bazak
Plaintiff claimed the parties had a contract and that defendant breached the agreement when it
sold the merchandise to another buyer. Defendant raised the Statute of Frauds. It argued both that
an e-mail did not fulfill the Uniform Commercial Code's "merchant's exception" requirements
and that the "Exhibit 3 letter" could not be admitted as evidence of an alternative writing.
Second, defendant maintained that the contract alleged was unenforceable because it lacked
essential prerequisites, such as possibility of performance and mutual assent. The court
concluded that defendant failed to demonstrate the absence of genuine issues of material fact.
The e-mail was a legally cognizable "confirmatory writing" under the merchant's exception. The
remaining N.Y. U.C.C. Law § 2-201(2) elements of receipt and objection were questions of fact
as to which plaintiff put forth sufficient evidence for a fact-finder to conclude in its favor. In
addition, plaintiff provided adequate proof of mutual assent for a reasonable jury to find its
existence. Finally, its submission of Exhibit 3 was supported by enough evidence of its relevance
and authenticity to be sent to the jury for final determination.

Intended beneficiaries can enforce this

Unjust enrichment/moral obligation

UE
 Cause of action that gives rise to the remedy  resititution
o Recipient has been unjustly enriched at the expense of the grantor
 No legal justificiation for retention of the benefit without pay
 Restitution of benefit imposed
 DISTINCT – INDEPENDENT BASIS OF OBLIGATION

Quasi-contract  contract implied in law

 Benefit has been conferred on someone, and circumstances not make it unfair to permit
that person to retain it without payment
 Cause of action is unjust enrichment
o The court implies that the benefit was contracted for
o NOT A REAL CONTRACT, there is NO CONTRACT
o If not a contract implied in fact or contract but the situation is one that left
unhandled would produce unfair results
 Court will find contract in law
Implied in fact
 Actual contract here
 Only difference from an express contract here is manner is and evidence of contract
formation
o Whereas other contracts articulate their agreement with written and oral words,
contracts implied in fact articulate them through action.
 REASONABLE INTERPRETATION OF THEIR CONDUCT
o Where parties have a contract but do not stipulate price
 Commonly taken to have agreed to the market price uless there is evidence
to the contrary
 Quantum merit
 MARKET RATE (if not stipulated)
Elements of UE
 Enrichment  economic benefit. When a person receive and retains money or property,
easy to see that the recipient has been enriched to the extent of the payment or the vvalue
of the property
 Occurs whenever something of value is received, even if it does not directly enlarge the
recipients net worth

When is enrichment unjust?

 Justice is only offended if the conferral of the enrichment meets two criteria
o Claimant must have intended to charge for it
o Must not have been imposed it on the recipient
 Intent to charge
o Volunteer
 Not only that something was done or given by free choice, but also with
intent not to seek scompensation
o Objective test used
 Recipient’ts reasonable expectations should be protected
o Determined by inference of the circumstances
 Dr. who rushes to save someone’s life most likely not thinking about the
fact that he can earn money
 Large consideration  relationship of the benefit to the trade or profession
of the conferrer
 Reasonableness much stronger if dr. is in er and not just a passer
by (though there gonna get it too)
o We normally think of amateur emergency intervention as public spirited and
gratuitous
o Sometimes intent may not have been to charge recipient
 Guy buys flowers on credit
 Later fails to pay florist
 Florist can’t seek restitution from the girl the flowers went to
 Never intended to charge her
 Imposition
o Officious intermeddler
  Did not intend to confer gratuitously, they were not justified in imposing a
benefit on someone without asking first
 Not entitled to restitution
o When is a conferred benefit not officious?
 Requested by recipient
 Absent request, a good reason to confer benefit category
 Emergency  threats to life or heath
 Harm to property
o Even if imposed on recipient  resititution is appropriate if, being able to reject it
and return the benefit, the recipient accepts it
Measurement of benefit
 Remedial aim of restitution
o Focus here is to return the recipients unjustified gain to the conferrer
 Alternative methods for measuring enrichment
o Market value
 Tends to be
o Net gain
 Used if market value recovery would be excessive or inadequate
 Market value
o Quantum meruit/valebant
o Most reliably determined by testimony of an expert who is familiar witht eh
market and can provide objective information about customary pricing
 Prima facie  showing of value by providing evidence of your own usual
price
 Absent values on both of these things, the plaintiff’s costs in
providing the benefit may be accepted as the best evidence of
value
 Assumes plaintiff acted EFFICIENTLY and that the COSTS were
not HIGHER than they should be
 Not as attractive  MP usually consists of cost plus profit
 Recipient’s net gain
o Could be, in some instances, speculative or difficult to apply
 Dr. hlping unconscious
 Net gain of victim is value of life  if live b/c of dr.s help what does that
equate to?
 If die, owe nothing
o Also difficult b/c has two possible interpretations
 Subjective
 Measured with reference to actual recipient, takinginto account the
recipient’s needs, circumstances, and intentions
 Objective
 Based on worth of the benefit in market terms
 Different from market value in that it is the ultimate gain that is
measured by market standard
o Build a patio
  Cost of work – 1,000 (market value)
 Increases worth of house (400)
 Objective net gain
 Owner of home hates being outside and never is out there
 Subjective net gain (0)
 Valuations
o MV
 Preferred measure of recovery b/c it is likely to be the fairest and most
balanced basis of compensating the conferrer at a rate that could
reasonably be expected by the beneficiary
 Qm and QV approximates what the k price would have been for
had the parties made a contract for the services or property
o Most consistent with underlying theory of quasi-contracts
 Particularly appropriate when benefit was requested or would have
been requested had the opportunity been there to request it
o Fault or impropriety in conduct of conferrer that is not serious enough to preclude
relief  lowest measure of relief
o If one measure is DISPROPORTIONATELY LARGE OR SMALL
 Fairness or reasonable community expectatitons may require it not be
selected
o RECIPIENT guilty of dishonest or improper conduct
 HIGHEST measure to be used
o BENEFIT REQUESTED
 Any price agreed to by parties is probative evidence of value and may be
used in preference over other measures
o Court can use its discretion to create a remedy based on the plaintff’s post-benefit
medical expenditure
 Resolution may be fair if the medical expenses are not too high
 If they are substantial, concern is raised about imposing massive liability
on the ‘benefitee’
Moral obligation – MATERIAL BENEFIT
 Blends resitutionary concepts and promise
 Promise to do something from feeling of moral obligation
o Runs into ‘past consideration’ problem
o Not exchanged for, but preceded the promise
 Sequence of action followed by promise precludes promissory estoppels
relief b/c action was not INDUCED by promise
o Does the prior benefit plus the later promise create greound for enforcing the
primes independent of consideration, restitution, and promissory estoppel
 Originally  only applied to small number of cases where a debtor makes a promise to
pay an earlier unenforceable debt.
o Running of statute of limitations
o Bankruptcy
 Now heavily regulated by statutes
o Voidable debt
  If the contract is voidable, and promissory reaffirms contract after learning
of debt, this is a binding promise
 Broad material benefit rule
o Guy got hurt saving another guy
o Guy that was saved made a promise
 Paid for several years till death – estate didn’t honor
o Court avoided past performance problem with legal fiction
 Deemed the detriment to have been contemporaneous with the promise
 Analogies to restitution cases and to established situation in which courts
had enforced promises to pay prior unenforceable legal obligations
 §86  NOT employed in webb
o Pprimisor has been unjustly enriched by a benefit previously received from the
promise
o Benefit was not given as a gift
 Recipient bears burden of SHOWING GRATUITOUS INTENT
o Promissor makes a PROMISE IN RECOGNITION afterwards
 BINDING TO EXTENT NECESSARY TO PREVENT INJUSTICE
o Clear, well considered, and uncoercied
o Relief
 If have a price but not a market value don’t know if price is
disproportionate the value of the benefit
 If it is the court may reduce recovery
 Although a valuation issue arises here, as it does in resitutionary
claim based on UE, the existence of a promise changes the
dynamics of the valuation issue
 Promise is at least evidence of what promisor considered the worth of the
benefit to be – evidence of market value is relegated to a subsidiary role of
policing the promise to ensure that it is not too generous
o Proportionality
 Congruent with goal of restoring only the enrichment gained by promisor
 Also related to the cautionary function of consideration doctrine
 Protects promisor from a promise that is too generous or rash
o Court has broad discretion
 Evaluates all the circumstances
 Degree to which promise satisfied EVIDENTIARY and CAUTIONARY
functions of legal formality is relevant here
 Must take into account danger of reinforcing meddlesome behavior
o

§19

§ 86 Promise for Benefit Received

(1) A promise made in recognition of benefit previously received by promisor from promisee is
binding to extent necessary to prevent injustice
(2) A promise is not binding under (1)
(a) if promisee conferred benefit as gift or for other reasons promisor has not been unjustly
enriched
(b) to extent that its value is disproportionate to the benefit.

Interpretation and construction

Indefinite agreements
 A material aspect of their agreement vague or ambiguous, or have failed to resolve it or
provide for it at all
 General rule
o No contract comes into being if a material aspect of the agreement is left
indefinite by the parties and the uncertainty cannot be resolved by the process of
interpretation or construction
 For a K to fail for indefiniteness
o Incurable uncertainty about what the parties agreed to thus INTENT to ENTER
K IN DOUBT
o Uncertainty MUST relate to MATERIAL ASPECT of K
 Dundamental basis of the bargain
 Reasonable expectations of the party  as based on facts of the case
 Appropriate judicial response to problems of indefiniteness
UCC 2-204(3)
3 ( even if one or more terms are left open, a contract for sale does not fail for indefiniteness if
the parties have intended to make a contract AND reasonably certain basis for giving appropriate
remedy

§33(2)
Terms of contract are reasonably certain if they provide a basis for determining the existence of a
breach and for giving an appropriate remedy.

Idea is that terms should be determined by parties, and not courts. Remedies have to have basis
in agreement of the parties.

Relationship between remedy and definiteness should be considered

 If p sues for enforcement of clear obligation by D and the D’s defense is that P obligation
is vague 
o Court does not need to establish the P’s obligation with as much certainty as it
would have to do if that was the
 P sues for damages for breach of unclear obligation  court just needs enough info to
determine money award
 o However if plaint was seeking specfici performance of obligation  court would
need greater degree of certainty to grant order b/c court must be able to define the
obligation clearly if it is going to order performance
Unclear terms
 Vague
o If term is state so obscurely or in such general language that one cannot
reasonably determine what it means
 Wording fails to convey certain concrete meaning
 Ambiguous
o Capable of more than one meaning
 Word itself or the sentence structure
 Lease for bookmaking
 Printing and shipping out books
 Betting
 ‘shall be entitled to ten percent of lesse’s profits from all gambling
activities that shall be lawfully conducted on the premsis
 Only lawful activies allowed to be performed and we shall have 10
percent of profit from all of it
 Both legal and illegal allowed
o We’re only taking 10 % of the legal
 Curing ambiguity with contextual evidence
o Evidence of what parties said or did in negotiations, correspondence, or dealings
prior to the agreement or during the period following it may help to clarify what
they meant by the language used
o Trade usage
 Establishing ambiguity by contextual evidence
o Some courts insist on four-corners/plain meaning without recourse to contextual
evidence
 If terms are clear on their face
o Many courts find this approach too restrictive
 Extrinsic evidence is available, they are reluctant to make a judgment on
the clarity of language based purely
 Even where words seem clear, they may not have a single, fixed meaning,
and contextual evidence could show that the parties intended their
language to mean something other than what the court may think
 ADMIT and EVALUATE contex evicdence relating to meaning
even though the language appears clear on its face
Judge or jury
 Judge
o No factual dispute that requires assessment of credibility
o Interpretation merely involves establishing ordinary grammatical meaning of
words
 Jury
o Evaluation of oral testimony concerning what the parties expressed, or relating to
the context from which meaning must be derived
  Fact finder
 No pertinent evidence  clearly job for judge
Evidence
 Contract expresses the diuputed term in clear and unambiguous language, extrinsict
evidence to meaning is treated with caution
 Contract – four corners
o Context  usage, negotiations
o CP, subsequent conduct
o CD, prior relationship
 Greatest weight to  expressed words of parties
o CP
 Relevance based on the assumption that the actual performance tendered
and accepted w/o objection is a strong indicator of what must have been
intended
 Dogs cats other animals not allowed. Guy has a duck. Land lord
seen, never complained, infer that other animals doesn’t include
ducks
 To be included
 MUST BE PERTINENT TO MEANING of term in controversy
 Party PERFORMED OR ACCEPTED performance without
PROTEST or RESERVATION of RIGHTS
 Conduct not known and acquiesced in by one party does not show
what that party thought – does show what other party (performing
party) thought
 More extensive and repetitious the conduct, the strong ther inferese
that it does relect
o CD
 Only pertinent if the earlier relationship is COMPARABLE or
ANALOGOUS
 Repetition strengthens inference

o TU
 Parties usual deal with e/o in the context of a larger community
 Particularlized market (international, nationa, local)
 Specific trade
 Both UCC and REST recognize any regular practice or method of
dealing in a place, vocation, or trade
o UCC test --?> currently observed by the great majority of
decent dealers
 To use must show 4 things
 Define the trade or market
o Show that BOTH parties are sufficiently connected
 Party insisting on use must show that it is pertinent
 Party insisting use must prove that the usage actually exists
o Exper testimony
  Cannot be inconsistent with the expressed terms of the agreement
o Parties are free to contract
 Plaintiff has the onus of proving that the word is used in whatever capacity he thinks it
ought to be used
General rules of interpretation
 If possible, court should try to give effect to all terms
 Words ought to be given ordinary general or lay meaning (unless otherwise specified)
 FAVOR THE MEANING THAT VALIDATES CONTRACT
o If one interpretation validates it and the other would invalidate it, keep the
contract
 Specific provisions have more weight than general ones
o Ducks must be on leash
o No cats, dogs, or other animals on premises
o Ducks allowed on premises in leash, not considered other animals
 Negotiated or handwritten terms have greater weight than standardized terms
 General words are limited by specific ones
o Skateboards, rollerblades, rollersakes, other means of locomotion prohibited in
hallways
o Wheelchairs allowed, anything with wheels on feet is not
 Lists of specific things without being followed by general term is exhaustive
o No cats, dogs, or pigs … (assume other animals ok)
 When one party has drafted the language or selected the language of an unclear
provision, the meaning id preferred that favors the other party
MISUNDERSTANDING
 When objective approach cannot resolve the misunderstanding
o Each party reasonable in believing that the agreement referred to a particular item
o Have no reason to know of the other’s contrary understanding
o NO way to decide whose meaning should be preferred
 No object criterion for deciding which understanding is right and which is
wrong
o If misunderstanding is about material term  no contract was ever entered
 Restatement  precludes contract formation when parties
o EQUALLY INNOCENT in not reasonably realizing the misunderstanding or
(EQUALLY GUILTY in realizing and saying nothing)
o However, if on balancing othe degree f fault of parties, it appears that one is more
accountable than the other for knowing the misunderstanding a contract must be
found to exist on the terms understood by the more innocent part

 Parol Evidence Rule

 Idea is that a writing intended as a final agreement should be protected from efforts to prove
inconsistent terms.
 Integrated agreements discharge inconsistent and supplemental terms (Rest 209)
 Helps us decide what terms of contract are
 Not limited to oral agreements
 Gives special effects to writings in cases where parties intended it to be final and complete
statement of agreement.
◊ Courts should presume writing complete integration
 Only admit evidence that it’s not if there is substantial evidence that parties didn’t intend
to embody the entire agreement.

 Asking whether the fact that they wrote something necessarily precludes all negotiations
leading up to it if they weren’t included in the writing.
 If have 2 clearly distinct contracts with separate considerations, not a problem.
 If have a promise that isn’t its own deal but is significantly related to the original deal and
made for essentially the same consideration and it’s not in the writing, claim is that you didn’t
reflect it as a part of the writing in the deal so you can’t argue it now.

 Only applies to aspects of the bargain that the parties wanted to put in writing
 If don’t intend them to be in the final agreement, can’t use the rule

 Oral agreements can vary a written contract if

 Agreement is collateral
◊ When an agreement entered into in consideration of the simultaneous agreement to enter
into another, the transactions are necessarily bound together—we have to determine if the
bond is close enough to prevent proof of oral argument.
◊ The oral agreement has to be distinct but related to original contract
 If agreement is part of the writing, hard to think another deal is involved

 Must not contradict express or implied provisions of the written contract

◊ If arguing that the writing encapsulates only some aspect of the deal, the bigger deal can’t
contradict aspects of the written agreement.
 Must be one that parties would not ordinarily be expected to embody in writing. The oral
agreement could naturally be made as separate agreement by parties situated like the
parties to the written contract (Hatley v. Stafford—buyout wheat farm case)
◊ If the other deal isn’t necessarily something that would ordinarily be in writing of that
nature, then the writing shouldn’t preclude arguing that it’s a part of the deal.
◊ 2 ways to determine whether the term is something that would naturally have been
omitted
 4 corners approach: Look at terms of the contract (Mitchill v. Laith—ice house case)
 Reading written contract can’t indicate that the writing contains the entire
engagement between the parties
* If it’s not obvious that a separate contract would be necessary (like for the ice house
in Mitchill v. Lath), then oral agreement can’t control. Mitchill majority thinks that
it’s not obvious that the ice house would be included in the written deal.
 Mitchill dissent points out that you can only exclude the oral agreement if it’s clear
that the written contract was intended to cover all the negotiations.
  Even if this was a complete deal, have to consider whether you’d expect the ice
house deal to be in the contract
 Doesn’t think the ice house deal would be in a writing—just assumed to tag along.
 Contemporary approach: consider contextual info
 Hatley court depended on the unsophisticated nature of the parties and the written
contract to hold that the written agreement was only partial integration
* Allowed additional terms not inconsistent with the contract
 A complete integration would have broad preclusive effect over all additional
terms.

 Rule does NOT apply to collateral contracts that are distinct and independent of written
agreements
 Does not exclude evidence offered for purpose of interpretation

 PER Questions [See Rest section]

 Is there an integrated agreement?
◊ Court decides
◊ Will be integration if:
 Writing reasonably appears complete
 Prior agreements or negotiations establish
 4 corners rule: looked at document
 Modern: present evidence as to whether the intent was to be a final expression.
 Is the integration partial or complete?
◊ If partial: discharges inconsistent prior agreements
◊ If complete: discharges inconsistent AND supplemental agreements
◊ Merger clause helps determine this
 If 4 corners approach, might be conclusive
 But under modern approach, can give evidence of negotiations and agreements
 Remember Idaho Power: the explicit effort to say it was completely integrated failed
to do just that.
 Much more likely that the merger clause won’t be as operative.
 Is prior agreement a completely separate deal based on separate consideration? [216(a)
(2)]
◊ Trickiest part!
◊ Even if it looks like it’s a completely integrated agreement, if the side deal is separate and
has its own consideration, it will be upheld. No PER issue
 Is prior agreement one that might naturally be omitted from an otherwise complete
integration?
◊ If yes—agreement not discharged
 UNLESS agreement expressly forecloses this
 If there’s a prior agreement that could be omitted, then the agreement isn’t discharged
unless we think the contract really specifies it.
 Unless there’s something clear, a side deal that might naturally be omitted from writing
can be upheld.
◊ Parties can use same contextual info used in the partial/complete determination to
determine if the prior agreement is one that would naturally be omitted.
  Can’t claim that an implied rule in a contract is in conflict with a default rule
 Only makes sense to discharge terms that are inconsistent with terms implied from the
contract
◊ Otherwise, we would have no contracts
 Hayden court got it wrong—said that silence on time provision implied that work had to be
done in reasonable amount of time.
◊ This was the old-school view
 Can claim that an implied rule in the contract is in conflict with an implied fact from the
term of the deal
◊ Example: hire a deliveryman with requirements about caring for a company car and then
write in contract that have to supply own car. Implied from contract that providing the car.
 Courts are split as to whether promissory estoppel can be used to run around PER
 Good policy reasons to have PER
◊ Rationales
 Commercial certainty
 Less chance of perjury
 Ensure juries don’t decide case based on equities
Parol Evidence Rule

If Partial:
Discharges inconsistent
agreement

If Yes:
Partial or Complete? If complete: discharges
inconsistent and supplement
agreements
Integrated? UNLESS:
-Separate consideration
If No: -Naturally be omitted.
No Contract

Modern approaches
Yocca
PROCEDURAL POSTURE: Appellant football franchise sought review from an order of the
Commonwealth Court (Pennsylvania), which reversed the trial court's order with respect to the
trial court's dismissal of class action complaint claims of breach of contract, declaratory relief,
and violation of the Unfair Trade Practices and Consumer Protection Law (UTPCPL), Pa. Stat.
Ann. tit. 73, § 201-1 et seq., which were asserted by appellee stadium builder licensees.

OVERVIEW: The licensees received an SBL brochure and thereafter entered into an SBL
agreement to buy season tickets at the franchise's new stadium. However, the licensees' assigned
seats allegedly varied from the diagram that they had been given with the SBL brochure. The
licensees filed a class action, alleging that the franchise breached its contract, as well as claims
for fraud, negligent misrepresentation, violation of the UTPCPL, and for declaratory relief. The
trial court sustained the franchise's preliminary objections and dismissed the entire complaint. On
appeal, the commonwealth court reversed dismissal as to the breach of contract, UPTCPL
violation, and declaratory relief claims, and further review was sought. The court held that the
parol evidence rule barred any consideration of the SBL brochure, as that document was similar
to an option contract. The SBL agreement's integration clause made reliance on any term in the
brochure unreasonable, and no ambiguity as to seat location was found. Accordingly, a claim
was not stated under the UPTCPL, even if the SBL was found to constitute a good or a service.
The declaratory relief claim failed, as the agreement superceded the brochure.

OUTCOME: The court reversed the order of the commonwealth court with respect to its reversal
of the trial court's dismissal of the claims for breach of contract, violation of the UTPCPL, and
declaratory relief, finding that dismissal was proper. In all other respects, the commonwealth
court's order was affirmed.

PROCEDURAL POSTURE: Plaintiff, a tennis player, sued defendants, a publishing company,

the company's magazine, a photographer, and the photographer's studio, alleging violations
of N.Y. Civ. Rights Law §§ 50 and 51, misappropriation, unjust enrichment, negligence, and
breach of contract arising out of the alleged unauthorized dissemination of photographs taken of
her. The company, magazine, photographer, and studio moved to dismiss or for summary
judgment.

OVERVIEW: The company, magazine, photographer, and studio claimed, inter alia, that the
tennis player consented in writing to their unrestricted editorial use of her photographs. The court
initially held that it would treat the motion to dismiss as one for summary judgment. The court
then held that the tennis player's claims under N.Y. Civ. Rights Law §§ 50 and 51 failed because
she signed a release allowing the unrestricted editorial use of her photographs by the company,
magazine, photographer, and studio, and the alleged oral agreement limiting the tennis player's
consent to publication of her photographs was barred by the parol evidence rule. The court
further held that the photographer's syndication of the photographs to another magazine fell
under the newsworthiness and public interest exceptions to N.Y. Civ. Rights Law §§ 50 and 51.
The court finally held that the tennis player's breach of contract claim failed due to the signed
release, that her misappropriation, unjust enrichment, negligence claims were subsumed byN.Y.
Civ. Rights Law §§ 50 and 51, and that she was not entitled to amend her complaint to assert a
breach of contract claim against the photographer due to its futility.

OUTCOME: Summary judgment was granted for the company, magazine, photographer, and
studio.

Misrepresentation
§159  assertion not in accordation with fact
 Fraudulent  made with scienter (knowledge not true) and intent to mislead the other
party
 Reckless indifferent to truth
 162 When Misrepresentation is Fraudulent or Material
(1) A misrepresentation is fraudulent if the maker intends his assertion to induce a party to
manifest his assent and the maker
(a) knows or believes that the assertion is not in accord with the facts, or
(b) does not have the confidence that he states or implies in the truth of the assertion, or
(c) knows that he does not have the basis that he states or implies for the assertion.
(2) A misrepresentation is material if it would be likely to induce a reasonable person to manifest
his assent, or if the maker knows that it would be likely to induce the recipient to do so.
164 When Misrepresentation Makes Contract Voidable
(1) If a party’s manifestation of assent is induced by either a fraudulent or a material
misrepresentation by the other party upon which the recipient is justified in relying, the contract is
voidable by the recipient.
(2) If a party’s manifestation of assent is induced by either a fraudulent or a material
misrepresentation by one who is not a party to the transaction upon which the recipient is justified
in relying, the contract is voidable by the recipient, unless the other party to the transaction in good
faith and without reason to know of the misrepresentation either gives value or relies materially on
the transaction.

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

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

(d) where the other person is entitled to know the fact because of a relation of trust and
confidence between them.

Duress
175 When Duress by Threat Makes a Contract Voidable
 (1) If party’s manifestation of assent is induced by an improper threat by the other party that
leaves the victim no reasonable alternative, the contract is voidable by the victim.

176 when threat is improper

1 improper if
A – crime or tort OR thre would be a crime or tort if it resulted in obtaining property
b- criminal prosecution (Germantown
c - use of civil process and threat is made in bad faith
2 impropert if resulting exchange not fair on terms and
A – threated act would harm the recipient and would not significantly benefit the party
making the treat
B – effective ness of threat in inducing manifestation of assent is isignificatnly increased
by prior unfair dealing by party mking threat
C – what is throated is otherwise use of power for illegitimate ends

Inducement  subjective attributes of victim  duress, under all circumantaces, substantially

overcame the free will of this party leaving no reasonavle alternative but to acquiesce
 Inducement considered in light of victims needs, personality and circumstance
 No assent – some courts treat as void – others as voidable and up to the victim to
continue
o Abide by or avoiud it and claim restitution of any benefit conferred and tender
restoration of any benefit received

Contract modification  duress and bad faith

 Needs consideration to be valid
 Agreement, including one to amend, can be avoided if it is induced by duress
o Alaska fisherman – pre existing duty
 No practical choice
 New consideration can be trivial in contract modification
o Courtd don’t typoical inquire into adequacy of consideration unless possibility the
added detriment is found to be nomal or sham
 Parties seeking to ensure good mod  performance obligations of each party ought to be
changed to extablish a bargained for echange at time of mod
o Consideration doc is useful here to refuse enforcement of a modification that was
ccoerced or otherwise not fairly bargain
o But only if one party failed to alter performance
 Supervening difficulty  gets around pre-existing duty
o 1 after contract made – become apparent that perfoamcne is subject o substantial
and burdensome difficulties not anticipated – nor within contemplation of parties
at time contract made
 Need not be so severe that they would give the aprty benefitting from the
mod grounds to be excused entirely from eperformance
 But cant be simply attributed to error of judgment
o Party benefiting from mod must conform to standards of honesty and fair dealing
 Not trying to take advantage of necessitites of other party or coerce
 o Change in perform of party who assume incraed obligations must be reasonable
and manifestly fair in light of changed conditions
 New England rock v. empire pav
o Empire paving contracted Rock to do dirllin and blasting
 Problem with water seepage

2-209 Modification, Rescission and Waiver
(1) An agreement modifying a contract within this article needs no consideration to be binding
(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be
otherwise modified or rescindned, but except as between merchants such a requirement on a form
supplied by the merchant must be separately signed by the other part

.Take a look at UCC 2-209 on page 452.  Modifications do not have to be in writing, regardless of who the
parties are, unless the agreement being modified, itself in writing, limits modifications except by a signed
record.  If one of the parties is a nonmerchant, that provision of the agreement (the no oral modifications
provision) is enforceable against him only if he separately signs it.

Undue influence narrower than unconscionabilty

§177 -> relationship of depence and trust

 Most JD doctrine not extened to unfair persuasion in arms-length

Two things
 Relation of dependency and trust with other arty that gave other party dominance of him
and justified him in believeing that the dominant party would not act contrary to vic’s
interests
 Dominat party imperoerly abused this position of trust and psychological advantage by
unfairly persuading the victim to endter the contract adverse to his interst

Unconcsionability’
 Determined by judge
o Unconscionable if the unreasonably excessive, unscrupulous, egregious
o Transaction so unfair that it would offend the conscious for court to enforce
 §208  stemed from uc 2-302
o If a contract or term thereof is unconscionable at the time fcontract is made a
court may refuse to enforce contract without unconscionable term or may so limit
the application of ther term as to avoid any unconscionable result
 Germantown (duress case) also would have allowed unconsionabilty
defense
 Generally reqcozinced to include an absence of meaningful choice on part
of one of the parties together ith contract terms wwhich are unreasonably
favorable to the other praty
 Unfair surprise
 Contract terms not typically expected by party who is being asked
to agree (often in boiler plate)
o Either not read or not understood
  Unusual or not reasonably expect term that imposes a material
burden  term shouldn’t be enforced
 Substantive and procedurel unconscionablity
o Procedural bargaining unfairness
o Substantive  unfair or oppressive terms
 Most courts require both  some just one
o Most of those that require both still do it in equity
o If one is highly unconscionable then the other may only have to tip the scale
slightly
 Remedies  avoidance or restitution
o If it so profoundly affects the quality of the victim’s assent that she no longer
desires the contract and should not be held to it
 Avoidance and resitituon
o Altering
 Sever the term
 Chance the term to make it less one sided
 Courts want to change the contract least possible
 Arbitration term unfair
 Could cut it
 Could change the arbitration to make it more good for both
o When term cant be severed w/o doing sig harm to the basis of the bargain,
alteration of the term may be less intrusive
o Neither severance nor altercan can cure the term or change the terms recission is
probably best bet
Adhesion becomes unconscionable and is actionable is the abuse of argaining dominance impses
unfair terms
 Signifies there was OPRESSION in its formation - normally big company able to exert
its will on smaller ones
o Where a company is able to, through superior bargaining power, dictate terms of
contract to other party on take it or leave it basis – the other party has no choice
but to adhere
While size and power oftern go hand in hand, not necessarily true
 Even a small consumer may have considerable bargaining power (adaqueately
informed/assertive she may use the leverage to resist

Illegal/public policy/freedom to contract

Here society is the victim

 Where one harms to society is serious enough or directly violates roule of law, a court
will not enforce – void as opposed to voidable
 But when one party is more to blame than the other
o The other is a member of a class the law sought to protect
o Contract does not involve serious illegality, contract accurately described as
voidable
Illegality
 Scalping tickets
o In par delicto  both at fault, leave ‘em where they are
o But the interest in upholding statute overrides general equitable principles
 Both at fault  normally not only gonna refuse to recongnize contract but may even
leave it at the status quo
 Generall court will not enforce a contract that is illegal even if the parties voluntarily
entered
Public policy
 =right to chose a lawyer
 Rule of reason
o Outside of attorneys  rule of reason
 Non competition clause will be upheld to the extent that it is reasonable as
to its duration, the geographic area that it covers, and the scope and exten
to fte activity it restrains
o Totality of the circumstances  degree to which it is needed to
 Protect legitmate interest of party in whose favor it operates
 Any unde hardship that it will impose of restrained party and
 General public interest
 Part of a contract to sell a business (given gratest degree of ference)
 Less def  partnership agreements
 Even less  employment contracts
 Assuming no problem with assents
o Enfocing tows the line of enforcing contracts and/or other public policy
o If harm to public interest outweigs the benefit of the enforcement tot the public
and the parties, enforcement must be refused
 Most courts cautious about identifying a pp not having a firm base in statue or precedent
o Disclaimers  tunkel test
 In pari delicto
o Even if person claiming that contract is illegal and want restitution
 This is what the court wants to do
 Wants to say no contract
 However if they’re both equally at fault. The court should leave the
parties as they stand
o When just in violation of public policy
 Same rules, different foice
 Not illegal  greater flexibility to in tailoring relief
 Enforcement on adjusted terms
o Equities favor party seeking enforcement
o Harm to public can be minimized by eliminating the
offensive terms
Surrogate contracts
 Surrogate doesn’t want to give up the baby  have to determine how we go about
enforcing a contract
 Parties seeking specific performance
 o Don’t want money damages
 Abhorrence with baby buying
o Courts use adoption as an analogy
o What is the policy on surrogacy contracts as far as baby buying
 The best interest for the child
 Interest of the mother
o Area where technology has outpaced our conventional/romanticized notions of
motherhood
 Req’t to relinquish control or claim before the fact
o Seems to suggest
Buying baby  adoption
 If you can pick
o Market might dry up
o People who have the money will get ‘em
o Ends up becoming hugely expensive
 Favors the rich

Incapacity
 Voidable
 When of age may dissafirm
 Reaches majority may ratify
o Material benefit
o If breach  unjust
Minority
 Strict, objective test
o Law doesn’t care that you were dealing with a mature 16 year old
o If the other party is a minor, in the vast majority of cases has the option to avoid
the contract
 Minor can avoid the transaction  contract goes away, restitution
 Or once the minor comes of age, two options
 Disaffirm or void the contract
 Ratify it
o Word  make a statement or a promise
 Moral obligation
 In recognition of receiving something as a minor
you promise to ratify once becoming of age
 No new consideration to ratify
 Just a basis of the moral obligation to make
good on your promise
 Have a reasonable time to do this
o Minor entitled to get everything back they paid for the service
 Nothing the underage is req’d to give back b/c you can’t give back a
service
 Say if you rented a room underage
  Want the minor to get out
 And want to discourage adults from making contracts with a minor
o Willing to allow these unfair results cuz we’re really really
worried about the adult taking advantage of the adult
o Do have to return goods
 Return money paid minus for diminution of value
 Fraudulent misrepresentation of age
o Might not be able to recover full restitution
 Doctrine of necessaries
o If someone had to have a car or a job, then its not voidable
o Emancipated minor, living on their own  work contract would a necessary

Douglass v. pfluger hawai’i, inc.

 Underage  wants to bring in state court
o Contract says arbitration
 Wants to void the contract
 Legislatively  Hawai’i said tha tit was in the interest of 16-17 year old to work and
therefore could, with consent of parents, enter into these contracts

14.2 (pg. 511)

 Kid wants out
 What judgment here
o Court says car is necessary
 Paid 5,000 cash. Car really only worth 4500 at time of sale
 Car now worth 4000 due to added miles
 Enforce as a contract
o Screwed
 Quasi-contract
o Remedy  restitution
o Buyer gives back the car  paid 4500
o Amount paid – diminution

Minor
 Necessary
o Don’t want the law to be a disincentive to providing that necessary thing
o Treat it as a contract
 Act as though the kid is an adult
 No getting out
 If there is a breach by the minor then the other party’s remedies are
standard remedies in any contracts
o Treat it as a quasi contract
 Restitution
 Acknowledgement on both parties that there may have been agreement
and some reliance and maybe some property exchanging hands which
would lead to unjust enrichment if left where it is
  Court can craft remedy to the unique nature of the problems
 Suffering from cognitive disability
o No clue that you’re selling your house
o Don’t have the capacity to appreciate the nature of the transaction
 Suffering from motivational inacapacity
o Requires knowledge or reason to know on the part of the buying party
15
Voidable contract duties if by mental defect of illness
I – he is unable to understand in a reasonable manner the nature and consequences of the
transaction; or
II - He is unable to act in a reasonable manner in realation to the transaction and the other
party has reason to know of his condition
2) where ontract made of fair terms and party has no reason to know of his condition – pwer of
termination under ‘1’ is gone as to already performed parts or the circuamstances have so
changed tha avoidance would be unjust
 Remedy as justice requires

Avoided ONLY
If at time of contracting --. Party was unable to understand the nature and consequences of the
transactions
 COGNITIVE TEST  confines to times where party is so disable he has no clue what
he’s doing
o Likely to be apparent to other praty b/c lack of capacity is so serious
 Some disability affect a person’ judgment, self-control, and motivation
o So incapable of genuine assent but not necessarily cognitively disabled
o Not just cognitive disorder but anything that affect a perty’s ability to transact in
a reasonable manner
 Motivation, affect or volitional
 Other party has to know or should have known for it to be voidabe
 Farnum
o Knew the guy what was on and out of it
o Old guy trusted the buyer
o Buyer knew price was well below markt
 Warned by nephew of seller
o After closeing (lawyer provided to seller by buyer, also lawyer fro the bank giving
loan to buer)
 At closing she was lucid, aware of what was going on,
 Cheerful, engaged in pleasantries, made instand coffee for those
present
 After closing, she insisted to several people (family, sister, nephew) that
she still owned the house
o Not unusual for her toe be perfectly coherent, and then two minutes later be
confused
 This is ok for entering into a will
  But contract presupposes something more than ‘transient surge of
lucidity.’
 Not just comprehension of what’s going on but ability to
comprehend the nature and quality fo trhe transaction, together
with an understanding of its significance and condsequences

Misunderstanding
 Parties attach materially different meanings to important contract terms, and neither
knows nor has reason to know of the misunderstanding, no contract results
 Today, more often than not, interpretation advanced by one party is held to be more
better than the other
 §20
o No manifestation of mutual assent to an exchange if the parties attach materially
different meanings to their manifestations and
 Neither knows nor has reason to know of the oterh
o Comment c
 Even though parties manifest mutual assent to same words, there may be
no contract b/c of a material difference of understanding as to the terms of
the exchange
 three principles
o only when parties have differnte understandings of their expression of agreement
o does not apply when on party’s understanding, b/c of that party’s own fault is less
reasonable than the other
o parol evidence is admissible to establish the facts necessary to apply the rule
 computer
o both parties had differente meaninings
 No meeting of the minds
o Price difference of 100 fold  material
o Material term expressed ambiguously, formed two meanings, both reasonable

Mistake
 Error of fact
o Things or event that actually occurred or existed and can be ascertained by object
evidence
o Error in judgement is not a mistake
 Value and authorship of a work of art, based on expert opinion, is more a
matter of judgment than of fact
o Incorrect prediction of future events not a mistake
 If a buyer of oranges buys them b/c he thinks the market will rise he
cannot void the contract b/c he was wrong
 Speculative
 Mutual mistake
o Relates to facts in existence at time of contract
o Shared by both parties
o Relates to a basic assumption on which contract made
 o Material effect on the agreed echange
o Complaining party did not bear risk of mistake
 Unilateral
o Relates to facts in existence at time of contract
o May be by one party only
o Relates to basic assumption on which mistaken party made the contract
o Mistake has a material effect on the agreed exchange of performances that is
adverse to the mistaken party
o Mistaken party did not bear the risk of mistake
o Either
 Effect of mistake makes enforcement unconscionable
 Other praty had reason to know of the mistake or his fault caused the
mistake
 When does a party bear risk

 154
o Party bears risk when
 Allocated to him by agreement of the parties; or
 He is aware, at time of contract made, that he has only limited knowledge
with respect ot the fact to which the mistake relates but treates his limited
knowledge as sufficient
 Allocated to him by the court on the grounds that it is reasonable in the
circumstances to do so

Excuse due to changed circumstance

Impracticability

§261
 If after contract formed a party performance becomes impracticable, not his fault, b/c of
some shitn that the contract assumed wouldn’t happen – his duty to render is discharged
o Unless language or circumstances indicate the contrary
2-615
 Seller  dely or nonperformance is not breach if performance as agreed has been made
impractible by the occurrence of a contingency which the contract formation basically
assumed

Frustration of purpose
§ 265
 After contract is made, a party’s principal purpose is substantially frustrated without his
fault by the occurance of an een the non-occurrence of which was a basic assumption on
which the contract was made, his reaminig duties to render are discharged absent
language or circumstances to indicate the contrary
Ucc doesn’t have
 Brought int by 1-103(b)

Material breach
 Most promises exhcaged by partes are interpreted as dependent, even if not expressly
state
o Breat by one party of his promise to perform, before or concurrently with the
performance of tht other will no nonly be a breach of proimise but alos
nonoccurrence of condition
 Where a breach is so serious that it allows the other party to decline his performance,
terminiate the contract, and sue for full expectation damges it is called a material/total
breach
o Fall short of that it’s a partial prerach
 Still have substantial performance
o Where breacher has substantially performed he is entired to payment of contract
price, which is offset against eh damages suffered by the other party as a result of
the non-materal breach
 Damages are normally the cost of rectifying the deficiency in performance
 Where this is excessive and disproportionate  could get
reduction in market value of the performance
 Cure  if breach is material but finishes performance before the stipulated time.
o Breaching party has opportunity to cure, it does not become a total breach until
the lapsing of the time when performance is to be completed

Recovery of breaching party – Unjust Enrich (go back to page 250)

 Material breach? No recov
 Partial breach  unjust enrichment  restitution damages
o Full contract price less any allowance to other party for rectifying the defect or, in
a proper case, for compensating the loss in value of the perfmance
 May be contract where the it is itemized /unitized and the court can break it up so that
beach in one area does not affect other areas of the contract
 Divisibility of the contract depends on parties’ intent
o AS REVEALVED BVY THELANGUAGE AND STRUCTURE OF THE
OCNTRACT, ITS PURPOSE, AND THE CIRCUMSTANCES OF ITS
EXCECUTION AND PERFOMRANCE
 Residential neighborhood contract to build 50 houses, stop after 35
 Each house was a contract
 Al;located a portion of the price and the conturction to financing each
house
 Specific houses to specific lots
 Provided for separate completeion schedule of and payment
schedule for each house
Divisible?  contract is entire when consideration moving from promisor is considtioned upon
the complete performance by the promissee of his promise
Itemization does not signify divisibility automatically
 Is value of received performance equivalent to itemized price of does value diminish due
to lack of complete performance?
 This contract is not so severable as to allow deductions in amount owed if the funeral
home iddnt deliver dead body, embalm, supply coffin ordered by family
 Emotional damages may be awared where the VERY BASIS OF THE OCNTRACT IS
TO FURNISH services that are designed to bring cmfort to a party or to alleviate his
emotional distress

Perfect tender
Ucc 2-601 buyers right on improper delivery
If the goods or tender of delivery fail in any respct to conform to the contract, buyer may
 Reject the whole
 Accept the whole; or
 Accept any commercial unit or units and reject the rest

2-313 (1)c if seller provided a sample to buyer, usual understanding is that he seller warrants that
the goods will conform to the sample

2-106  good conform to the contract if they are “in accordance with the obligations under the
contract”
 Court must determine whether tendered goods are conforming
o Language of contract
o Entire context
o Cod tu, cp
 If evidence shows any nonconformity in the goods or their manner of delivery, the buyer
is entitled to reject
 Subject to good faith

Limitations
 Can cause hardhip to seller where nonconformity is inor and readily curable
o Obligation of good faith where the defect in the tender is trivial and buyer uses its
rejection right as a pretext for evading
 Sellers right to cure
o Ucc 2-508
 1 applies if seller tenders goods and the buer rejects them before the
agreed date
 Seller has a broader right to cure by substituting a conforming
tender before the expiry fo the agreed time for delivery
 Seller must act in good faith in making the nonconforming tender
 Must give buyer timely notice of intent to cure
  Must pay expenses of curing and compensate the buyer for any
loss caused by breach
o Buyer is obliged to accept the cure and proceed with own
performance is seller acts in good faith and follows steps
 2 seller seeks to cure after agreed time for delivery past
 Must meet earlier req’ts and now new shipment must be
appropriate and timely
 Delivery in installments doesn’t follow perfect tend rule  has substantial perform
o 2-612 installments contract
 One that requires or authoreizes the delivery of goods in separate lots to
be sepeated accepted
o 2
 Allows buyer to rejct non conforming installment only if nonconformity
‘substantially impairs the value of the installment to the buyer and it
cannot be cured
 Seller fails to cure, and breach becomes material, buyer can reject
the goods
 Immaterial  right to price reduction
o 3 one installment non conforms  wants to avoid contract now
 If Non confom or default with respect to one or more installments
substantially impairs the value of the whole contract -- buyer can treat the
breach in an installment as a breach of the whole
Anticipatory repudiation

§ 250
 A repudiation is
o A statemeby obligor to oblige indication that obligor will commit a breach and
that would of itself give the oblige a claim for damages for total breach; or
o A voluntary affirmative act which renders the obligor unable or apparently
unable to perform
253
 When repudiate a duty before he has committed breach by non-performance and
before he has received all the agreed exchange for it (hurt party already performed
couldn’t sue for breach until the end of the term historically), repudiaton alone gives
rise to a claim for dmages for total breach
 Performance exhcnaged under an exchange of promises, on party’s repudiation of a
 duty to render performance dischange the other party’s remaining duties to render

 2-610 Anticipatory Repudiation

o Seller or buyer can pursue remedies if the counter party repudiates contract
before performance is due
o Seems like UCC envisioning that you’ll give people a commercially reasonable time
after repudiation to fix the problem.
 Consistent w/ common law
Reaction to repudiation

256 a statement constitution a repudiation is nulidfied by retraction if notification gets to injured

party before he materially changes his position in reliance on the repudiation or indicates to other
party that he considers repudiation final
(2)treats it as retracted if, to the knowledge of the injured party, the event constituting the
repudiation ceases to exist before he materially changes his position in reliance on the
repudiation or indicates to the repudiator that he considers the repudiation final

UCC 2-611 dos same

Prospective inability to perform

§251 failure to give assurance may be treated as a repudiation
1) Where reasonable grpounds arise to believe that the obligor will commit a breach by non-
performance that would itself give the obligeea claim for total breach damages – oblige
may demand adequate assurance of the due performance and may, if reasonable, suspend
any performance for which he has not already received the agreed exchange until he
receives such assurance
2) Oblige may treat as repudiation the obligor’s failure to provide assurance w/in a
reasonable time as is adequate in the particular circumstances of the case
Based on 2-609
Only real difference is UCC demands that request of assurance be in writing

Promises/ conditions
 Conditions  if broken party doesn’t have to perform promise contingent upon the
condition
o Can be for non-events (if you abuse alcohol or drugs, we have no obligation)
 The promise to ensure is conditioned on the non-use of alcohol
o Can be for past events
 If both parties are unsure if an event has happened, but want to make their
contract conditional upon it, the can write it so that it doesn’t take effect if
something already happened
 Suits the party leaving on vacation to go ahead and buy the insurance now
 But that party doesn’t want travel insurance if current medical plan
covers out of country injury
 Neither party knows, make it conditional on past event
o Expressed conditions
 Words such as “on condition that” “contingeng upon” provided that”
“subject to” or equivi words --.l make it clear an event is intended to be a
condition, it qualifies as an express condition.
 Just cuz a term is expressed doenst make it a condition
 Buyer undertakes to make a down payment of 10 k within a week
of the executiuon of this agreement
o Promise is express but it is not expressed as a condition
 o Court have to determine the intended or reasonably
apparent meaning of the term within context of contract
and surrounding circumstances
 Even where a terms is not expressed as a condition,
parties could actually or reasonably have intended it
boe so
 Intent may be ascertainable from interpretation of the language of
the agreement in context, -- implied condition
 Even where evidence is not clear enough to give rise factual
implication and does not indicate that the aprites actually thgouth
aboutr this issue  court may conlude that parties must reasonably
and firly be taken tot have intended the term to be a condition
o Constructive condition of exchange  construing promise
as condition
 Where parties clearly and unambiguously express a condition,
court should strictly enforce it to get effect to their manifested
intent
o Not expressely stated – cour t has more flex
Oppenhimer
 If unless and until
o No doubht parties intended express condition not promise
 PROCEDURAL POSTURE: Defendant obligor challenged the order of the Appellate
Division of the Supreme Court (New York), which held that plaintiff obligee had
substantially performed the terms of a sublease agreement. The obligor moved for
judgment notwithstanding the verdict.

OVERVIEW: Obligor and obligee entered a sublease agreement. The agreement

provided that there would be no sublease until the obligee delivered to the obligor the
prime landlord's written consent to perform certain tenant work. The obligee provided
timely oral notice, but not the written notice that was required by the terms of the lease
agreement. When the obligor failed to perform according to the lease terms, the obligee
filed a complaint for breach of contract and alleged that it had substantially performed its
part of the bargain. The trial court held in favor of the obligee. The court reversed the
judgment, granted summary judgment in favor of the obligor, and dismissed the
complaint. The court found that substantial performance had no application to the
dispute. The parties' letter of agreement unambiguously established an express condition
precedent rather than a promise. The sophisticated parties dealt at arm's length and there
was no reason to relieve the consequences of their bargain. The court further held that the
issue of whether there had been substantial performance was not for the jury but the
judges of the law.

OUTCOME: The court reversed the judgment and dismissed the complaint.

Clearly a condition  letter of agreement provides language that parties did not intend to forma
a contract ‘unless and until; defendant received written notice of lanlord’s consent on or before
feb 25
 Defendant would lease 33rd floor from Π only on condition that landlord consent in
writing to a telephone com link system between said flord
Suffieiiently important to Δ that it would not have entered tinto sublease unless and until
condition was satisfied
 Freed of contract prevails in an arm’s length transaction between sophisticated parties
uch as these and in absence of countervailing public policy concern that there is not
reason tote relieve them of consequences of their bargain
Jack and youngs, inc
PROCEDURAL POSTURE: Defendant appealed the decision of the Appellate Division of the
Supreme Court in the First Judicial Department (New York) reversing a directed verdict in
favor of defendant and granting a new trial regarding plaintiff's claim for payment due
pursuant to a contract to build a home for defendant.

OVERVIEW: Plaintiff was under contract with defendant to build a home using a specific
type of pipe for all of the plumbing. Plaintiff did not use the pipe that was specified, but
defendant did not complain about defective performance until the pipe was almost
completely encased in the walls of the home. To replace the pipe, plaintiff would have had
to tear down substantial parts of the completed structure. The plaintiff did not replace the
pipe, and sought final payment. The trial court found in favor of defendant, and the
appellate court reversed. The supreme court affirmed and directed verdict in favor of
plaintiff because the plaintiff's omission of the specified pipe was neither fraudulent nor
willful, and the plaintiff was ready to present evidence proving that the pipe used was
essentially identical to the specified pipe. Thus, plaintiff was due payment for substantial
performance with compensation for the trivial defect.

OUTCOME: Reversal affirmed, and directed verdict entered in favor of plaintiff because

plaintiff's omission of specified pipe was neither fraudulent nor willful and the pipe used was
essentially identical to the specified pipe. Thus, plaintiff was due payment for substantial
performance with compensation for the trivial defect.

 Promissory condition
o Insured’s promise to pay the insurer
 It is conditional in that if the party doesn’t pay, the insurer doesn’t insure
 Pure promise
o No futher performance under the contract contingent on it
 Excuse of conditions
o Courts usually enforce expressed conditions strictly
 Outside of couts power to police
 Several ways to get out
o Waiver
 Knowing and voluntary abandonment of right
 Expressly or by implication from words or conduct
 Buyer to a house
 Condition that buyer have architect review for strucual soundness
 Architect reviews and doesn’t issue pass
o Buyer still wants to buy and tells the seller that she wants
to buy  waived
o Implied waiver
  With knowledge of defect, buyer puts money into
escrow and proceeds to preparte for closing and put
money down and get a loan
Defense
o Only the person who the condition benefits may raise
counted that the condition was material and since there was
no consideration this was not a valid waiver
 Can only be used on non material terms
 If want to get rid of material condition  modification
o Estoppels
 A party may be stopped on the basis of careless action not deliberatedly
intended to give up a right
 Party to be stopped must have know or had reason to know that his words
or conduct were likely to have been relied on by the other party
 Other party seeking estoppels must have relied to detriment
 Beneficiary of condition PROMISES to perform despite
nonfullfilment, promissory estopple probably better
 This can depart with a material term
 Failing to provide an ‘enclosed agreement’ that must be signed as a
condition is a justifiable showing of intent to waive
o Obstructive or uncooperative conduct
 Implicit in contract that a party will not attempt to obstruct or hinder the
other party’s ability to perform a condition
 Good faith normally implicit here
 Not always the case
 May be clear from the language or circumstances of a contract that
the party
 Lady denied access to house and party was not able to
o Unfair forfeiture
 Not based on some conduct of promisor after contract execute
 Based on COURTS”S DETERMINATION THAT ENFORCEMENT of
the condition would result in undue and unfair hardship to party whom the
performance is due
 Enforcement of condition will allow the promisor to benefit from a
technicality that will deprive the promise of valuable rights and give the
promisor a windfall
 Tenat loosing renual right not enough for court to exercise equity
 Need make valuable improvements
 Failure to exercise option was inadvertent
 Other party wasn’t harmed by delay in notice
Remedies
§344 –purpose of remedies
Judicial rememdies serve to protect one or more of the following interest of a promise
A)expectation interest – interest in having the benefit of his bargain by beig put in as
good a position as he would have been had the contract been performed
 b)reliance – interest in being reimbursed for loss caused by reliance on the contract by
being put in good a position as he would have been in had the contract not been made
c)restitution – his interest in having restored to him any benefit that the conferred on the
other party

court should protect the benefit of the bargain, subject to the limitations that the injury was
foreseeable, and the amount of damages claimed by measureable with a reasonable degree of
certainty and adequately proven

SHOULD NOT recover more from breach than if contract were performed

Limitations on recover of expected damages

Reasonable certainty of damages

 Up to injured party to prove the fact and amount of damages suffered
o Courts focus on econ losses measured from an object POV rather than personal or
eccentric losses as seen from a purely subject POV
 Breach caused injury
o Now A court may be willing to indulge in inferences, particaully when it is
convinced that the defendant has breached the contract knowingly or willfully
 Some courts say that while damages much be proven with reasonable certainty, the
amount need not be established with precision
 Others require all
Binding K reasonably certain as to its terms and requires. Sufficiently certain if it provides a
basis for determining the existence of a breach and for giving an appropriate remedy
 Law disfavors distruction for uncertainty
 Contract has three prizes
o Ambigious contract can be made certain by subsequent actions or declorations
o Wsa told later that won mrecedes
 She testified to be facetious in telling hium he won the cars no intent to
make good
 Π thought she was serious – so did others around who heard
 Went to jury  jury sided with plaintiff
o 60,000 isnt speculative
 Didn’t get the two bottom of the line cars he was promised (evidence
shows least expensive Mercedes going for about 31k )
 Nationwide didn’t offer any evidence on the price of such cars

Foreseeability of damages
 Damages, to be recoverable, must be foreseeable at the time the contract is entered

Calculation
 Aim to put the party in the position they would have been absent a breach
o Comparison must be made from what she had right to expect and what she got
  Two essential elements to any formula
o Count up the plaintiffs losses caused by breach
o Account for any gains or recoupments that plaint has made as a result of
termination
 §347 damages =
o Plaintiff’s loss in value caused by the defendan’t non performance
 Determined by deducting the contractual value of what the Π received
from what she was promised
o PLUS
 Any other losses (including consequential and incidental damages)
o Minus
 Any cost or loss the plaintiff avoided by not having to perform

Substitute transaction made by plaintiff  damages based on loss incureed as result of having to
make the substitute contract
 Services  I would have gotten 10 hours of instruction for 1500 under contract
o Due to breach I had to get 10 hours of instruction for 1800
 Damages due  300
 Same with goods
o Car was for 1,500. Had a contract
 Breach
 Had to buy equiv substitute for 1800
o 300 dollars damage
o UCC 2-712
 Buyer’s damages as difference between the repurchase price and the
contract price
 I breached
o Weren’t able to find a student that needed such advance instruction  could only
get 700 for 10 hours
o I’d owe them 800 bucks
 Goods
o UCC 2-706
 Buyers breach  seller is due the difference between contrace price and te
lower resale price
PP could have made a substitute transaction but did not or failed to do so reasonable
 Measured by comparison between eh K price and market value of substitute
o UCC and CL  injured party sue for loss based on a HYPOTHETICAL SUB
 Valued at MARKET RATE
 Estab by testimony of expert witness
o 2-713  buyer gets Market price – K price = damages
o 2-708  seller gets K price – market = damages
 Use this here where cost of substitution was higher than it needed to be
o Market price rising and waited too long to mitigate
o Chose and unnecessarily expensive sub
 I found a teacher for 10 hours for 1800
  Market rate – 1600
 If I could have reasonably found one for 1600 I get 1600-1500
o 2-706 and 712 require resale or cover to be without unreasonable delay and on
reasonable terms
 When using market value  PLACE AND TIME must be determined
o Parties live in same place/and performance to occure there  that’s the locality
o Most sensible approach  time and place that reasonably reflects original deal

Contract for services  breach resultin lost income that cannot be recouped
 Damages may be equivalent to the full value of the expected performance
 Sometimes may not be possible to find sub
o Employee whose only performance is her job and cannot find other work
 Student renigs on teacher
 Teacher can’t find new student
 Assuming that teacher would have taught at her house (and
therefore incurred no cost to teach student) she’s out the full
contract amount
 Puts her in better position than contract  doesn’t have to work for it, not
accounted for
Breach causes P to lose income but also save costs
 Lost income minus saved costs
o Teacher would have had to hire extra help during lessons (cost of 600  direct or
variable cost) (distinguished from fixed cost or overhead)
 Teacher gets 900
o This assumes teacher can get out of contract
 If not
 Before breach
o Performed Work + costs (600)
o Earned 1500 total
 900 profit
 After breach
o No work + costs
 Lost 600
 Add expected profit pre breach and losses incurred due to breach
 Here her expectation is profit + reimbursement of wasted expenditure that
she incurred (or was committed to pay) in reliance
o Formula
 Gross profit (including overhead) = K price – direct costs
 + Reliance expenditure
 Fixed costs (rent for office, and other expenses she had to incur in the course of her
business, whether she taught student or not) not incorporated because they are not saved
by the breach. She is going to have to pay them regardless
If received part payment

 Gross profit (k price – direct costs if k was completed)

  + reliance
 + other loss (consequential or incidental)
 - previous payments or proceeds
 - salvage (selling off of materials that would have been used)

Difference between Direct and consequential damages

 Direct costs are those encured as a direct result of the breach

o The payment of damages therefor acts as direct equivalent for ethe expected
performance and thereby fully cures the disappointed expectation
 Sometimes cost reach outside this
o Cuases further losses in other transactions or endeavors that were dependent upon
the contract
o When teacher renig just a few days before lessons supposed to start (1 week’s
worth) 1 week before a competition and she cannot find sub (seems to just get
expectation damages of Market price – K price)
 Bunch of vocal experts get together and say that her ability is amazing and
one week of training would have put her so far beyond anyone else at
competiton
 If this can be shown  cost of a new sub doesn’t alleviate all her damages
 Hard to get though
o Teacher could bring just as many experts saying the exact opposite
o Also have to prove that her lack of tutoring was the only reason she didn’t win
 Teacher should have reasonably understood that this consequence was
likely
 And that student could not herself have taken som reasonable action to
prevent it
o Finally  credible showing of actual harm suffered
 Opportunites lost, and be able to place plausible money value o ninjury
o UCC allow for all these recoveries as well
 UCC requires consequential damages to be provided for expressly in UCC or another rule
of law
o Only buyers are covered by UCC
o Few courts have ever allowed sellers to recover these

Nature and goals of limitations

 Extent and scope
o Consistent with what was reasonably contemplated by parties at time of
contracting (foreseeability)
 If plaintiff unreasonably or dishonestly worsens the loss following breach – damages will
not include compensation for such
o Mitigation
 Danages meant teo compensate for losses resulting from breach  plaintiff can claim onl
those damages caused by the breach
o Causation
  Concerned with economic loss  not enough to prove that a breach occurred
o MUST SHOW BREACH RESULTED IN FINANCIAL Loss
o Reasonable certainty
 Unfair forfeiture
o Don’t want damages available on strict interpretation of doctrine to unfairly or
unjustifiably effect on party whom being asserted
Foreseeability
 Damages must be foreseeable at TIME OF MAKING K
o Party who breached REAONABLY SHOLD HAVE REALIZED these damages
would be a LIKELY CONSEQUENCE of BREACH
 Reasonably conceived losses as a PROBABLE result of breach
o Depends on extent of information available to party
o If party doesn’t have access to information at time of K nothing alerts her to
probable result of breach
 Not really an issue as direct damages are concerned
o Really kick in with consequential – could be a million different individualized
damages that were unforeseeable
 Hadley v. Bax
o Declined to award lost profits from inactive mill against the carrier b/c of a delay
in shipping
o Shipper was not told this was the only shaft had no way of knowing that the delay
would idle the mill
 Loss must be considered to arise IN THE ORDINARY COUSRSE OF THINGs from
breach or
o REASONABLY BE SUPPOSED TO HAVE BEEN CONTEMPLATED BY
THE PARTIES AT THE TIME OF K as REASONABLE CONSEQUENCE OF
brech

Objective standard to breaching party and foreseeability

o General damages
 All those arising in the course of things and consequential damages that
should be obvious to breacher w/o special or particular knowledge of the
other party’s circumstances or affairs
 NORMAL AND WELL-ACCEPTED LIKELY HOOD
 Roofer promises to fix hole in roof same day
o Doesn’t  obviously gonna get direct damages difference
in cost of another roofer
o Also damnages for rain or infestation ro w/e else
 First category of Hadley ‘naturally arising’
o Special damages
 Below the hole is a special piece of electronic equip  cant be moved or
protected
 Unless roofer was told about this, he is not liable
 NO BASIS FOR EXPECTING
 Protect roofer from unforeseen damages
  Also incentive for home owner to provide all necessary
information
 Efficient transcation increased
 REASONABLE CONTEMPLATION
 Breacher only has to contemplate probable losses (not all possible
losses) based on info
 Tacit agreement test no more
 Too restrictive
o Rejected both by UCC and Rest
o Today focus on relationship between the information
available to the breacher and the loss, and less on
relationship of loss to the extent of risk and the
consideration received
 Likely damages brought to her attention and at time of K and
assumed by her
o Value of consideration given to breacher relevant through §
351
o Court can always consider equities
Mitigation
 Take action to minialize loss
 If plaintiff through bad faith or unreasonable action (or inaction) aggravated her damages,
defendant is not responsible for increase in loss
o Bad faith and unreasonable indicate an element of fault
 Losses aren’t recoverable if Πcould have avoided without UNDUE RISK BURDEN or
HUMILIARY
 Rule making injured party control loss is efficient and sensible
o Congruent with other limitation principles
 LOSS CAUSED BY Π not FORESEEABLE
 And Π conduct breaks chain of CAUSATION
 Reasonableness test for violation of duty
o Object standar
 Reasonable for a person in this position to act as they did
o Again not required to take action that is UNDULY RISKY, BURDENSOME, or
HUMILIATING
o Π must prove damages – if she does and Δ raises defsne of mitigation
 Δ must prove Π’s actions weren’t reasonable
 Substitute transaction
o Choice still subject to reasonable ness test (objective)
 Doesn’t mean cheapest sub
 nor does it mean exhaust all options
 just reasonable diligence
o If only available option is better than the contract performance, courts ok with this
 Wouldn’t have had to do this but for the breachers breach
o Also where sub can reduce Π’s loss
 Teacher – student breaches
  Have to show that if she didn’t find new employment for that time
she put reasonable efforts
 If she did find new employment – she has to show that she
reasonably tried to reduce her losses to the greatest extent
 Take pt job at burger joint?
 No  as victim of breach she is not expected to take every
conceivable stgep to avoid loss
 Allowed REASONABLE DISCRETION in declining to pursue
ALTERNATIVES that are UNSUITABLE
 Shouldn’t be deprived of compensation because of it
o Outside of anyother reason
 Refusing employment by your previous employer is not reasonable
 It is reasonable to turn down a lesser role in a play that is not the lead
 Different from and inferior to
 A substitute for breach is only in the event that the substitute could not
have been involved with out the breach
 If the teacher had already booked all other hours and then sara
breached, only time to be filled was hers
 However if other times open, and sara breaches, it is not
necessarily the case that the new student is a substitute even if the
new student fulfills the same time slot
 Effected a lower volume of sales
 Fridge seller
 I’ve got a bunch of the same model fridge
o One person breaches and I sell same unit to another person
o Not sub
o Sold one where I cpould have easily sold two
 INDEPENDENT TRANSACTIONS
 Three checks
 Be able to [make and] sell more
 Additional sale would have been profitable
 Probably would have made subsequent sale regardless
o One court even allowed
 Unused capacity anc could have produced more units than it was able to
sell
Causation
 Link between breach and the loss
 Not problem with direct but is with consequential

Reasonable certainty
 Does the preponderance of the evidence show the fact and extent of loss
 Two inquiries here
o Threshold question  has P proved injury
o If injury shown, has enough evidence been produced to allow factfinder to
determine amount of loss
  More clearly P can demonstrate first element (fact that some injury was suffered) the
greater effort the court (or jury) will make to come up with some kind of
COMPENSATION FIGURE
o 355  though damages cannot be recovered for loss beyond the amount
established with reasonale certainty, the policy of holding the breacher accountale
for wrongful act requires that doubts should generally be resolved against her
once it is established that a significant injury has occurred
 Cost projection by a firm in contract work
o Is sufficient, if it is reasonably accurate and reliable, evidence to establish loss on
preponderance of evidence
 Once loss has been adequately shown, plaintiff need not show exact amount of loss
o Evidence allowing fact finder to make a reasonable estimate suffices
o Here it was a future estimate
 Some degree of speculation but ok so long as accountant or creator of
estimate can explain their methodology and the estimate is realistic
 Consequential
o Yes, where apparent that breach did cause a loss the court will do what it can,
however you have to have some foundation for making a reasonable estimate
 Lost profits
o Been in business for a long time and can show long history of profits prior to
breach and sudden drop in profits during/right after breach  good enough for
court
Unfair forfeiture
 Where substantially performed (not materially breached) if cost of rectifying the non-
material non-willful breach is disproportionately large in relation to the value of the
benefit that full performance will confer on the plaintiff , dimunition of ultimate value of
performance may be a more appropriate measure of damages

ggggg