CONTRACTS LONG OUTLINE

EDWARDS FALL 2022

I. INTRO TO CONTRACTS 3
A. Contracts 3
B. Remedies 3
C. Kakaes v. GWU 3

II. SALE OF GOODS 3

A. Intro To Article 2 3
B. Scope Of Article 2 3
C. Merchants And Article 2 4

III. INTENT: CONTRACTUAL ASSENT AND THE OBJECTIVE TEST 4

A. The Objective Standard For Determining Assent 4
B. Duty To Read 4
C. Tricky Jokes 5

IV. THE OFFER 5

A. Nature And Qualities Of An Offer 5
B. Advertisements 6

V. ACCEPTANCE 6
C. “Mirror image” rule 6
G. Mailbox Rule 6
H. Silence As Acceptance 6
I. Revocation Of An Offer 7
J. Acceptance By Performance: Unilateral Contracts 7
K. Conflicting Standard Terms 7
3. Common Law Approach 7
4. Battle Of The Forms – UCC §2-207 7
5. Late Notice Of Terms 8

VI. PRELIMINARY, INCOMPLETE, AND INDEFINITE AGREEMENTS 9

A. Preliminary Agreements 9
B. Indefiniteness Or Vagueness In An Agreement 9

VII. STATUTE OF FRAUDS 9

A. Basic Principle 9
B. Requirements Of The SOF 10
C. Contracts At Common Law: Sales, Land, and Contracts Not Performable Within A Year 10
D. SOF Relating To The Sale Of Goods 10

VIII. CONSIDERATION 10
A. “Benefit or Detriment” Test 10
B. Bargain Theory of Consideration 11
C. Consideration v. Conditional Gift 11
D. Generally parties need additional consideration in order to modify a K. 11
E. What Suffices As Consideration? 11
F. Mutuality of Obligation 12
G. Performance as Consideration 12
H. Promises as Consideration 12

IX. PROMISSORY ESTOPPEL 12

X. OPTIONS AND FIRM OFFERS 13

XI. UNJUST ENRICHMENT AND MATERIAL BENEFIT 13

A. Unjust Enrichment 13
B. “Moral Obligation” & “Material Benefit” Doctrines 14

XII. POLICING CONTRACTS FOR IMPROPER BARGAINING 14

A. Fraudulent Misrepresentation 14
2. General Elements Of Fraud 14
 4. Silence As Fraud 14
B. Duress 14
C. Unconscionability 15

XIII. ILLEGALITY, VIOLATION OF PUBLIC POLICY, & LACK OF CONTRACTUAL CAPACITY 15

A. Illegality 15
B. Contracts In Violation Of Public Policy 15
C. Incapacity 16
1. Based On Minority 16
2. Based On Mental Illness Or Defect 16

XIV. CONTRACT INTERPRETATION AND CONSTRUCTION 16

A. Interpretation 16
3. Interpretation of a written agreement involves two stages: 17
4. Two approaches to determining whether the language of a writing is unambiguous: 17
a) “PLAIN MEANING” APPROACH 17
b) “CONTEXTUAL” APPROACH 17
B. Construction Of Contractual Obligations 18
C. The Doctrine Of Misunderstanding 18

XV. THE PAROL EVIDENCE RULE 18

E. Procedure 18
F. Approaches to determining level of integration: 19
H. UCC And Parol Evidence Rule 20

XVI. MISTAKE AND EXCUSE DUE TO CHANGED CIRCUMSTANCES 20

A. Mistake 20
B. Excuse Due To Changed Circumstances 21
4. Impracticability (extension of impossibility) 21
5. Frustration of Purpose 21

XVII. CONDITIONS AND PROMISES 21

5. Pure condition 21
6. Promissory condition 21
7. Pure promise 22
8. Conditions With Ancillary Promise 22
B. Excuse Of Conditions 22
a) Waiver 22
b) Estoppel 22

XVIII. MATERIAL BREACH, SUBSTANTIAL PERFORMANCE, & ANTICIPATORY REPUDIATION 22

E. How To Determine What Is A Material Breach? 22
F. Concept Of Cure 23
G. Breach & Substantial Performance Under The UCC 23
1. The Perfect Tender Rule 23
(2) “Installment contracts” 23
H. Anticipatory Repudiation 23
I. Specific Performance 24
J. Assignment, Delegation, & Novation 24

XIX. CONTRACT DAMAGES AND “BENEFIT OF THE BARGAIN” 24

A. Fundamental Principles Of Contract Damages 24
B. “Benefit Of The Bargain” At Common Law 25
C. Limitations In Recoverable Damages 25
1. Duty To Mitigate Damages 25
c) UNDER UCC 25
2. Foreseeability 25
3. Reasonable Certainty 26

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I. INTRO TO CONTRACTS
A. Contracts
1. Definition: A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way
recognizes a duty
2. Elements:
a) Exchange relationship→ Gives up something (usually money) for something else
(1) Parties commit themselves to each other for a common enterprise
(2) An agreement that lacks any element of exchange (gifts) does not qualify as a contract
b) Created by agreement→ Both sides want to make the exchange, and communicate to one another that they consent to making the exchange
(1) Voluntary nature is fundamental
(2) Freedom of Contract → Includes both the power to choose whether or not to make a contract and the power to assent to its terms,
central policy of contract law
c) Containing a promise or promises
(1) If no future commitment is made, the law of contracts has no role to play in the relationship
d) Enforceable by law→ Is this the “type” of agreement the law protects? Will the law provide a remedy for the failure of the agreement?
(1) Contract obligations→ Contractual promises become the law between parties, binding the party who made them and giving the party
to whom they are made the right to employ the power to the state to enforce them.
(2) Remedy→ What relief an aggrieved party might expect from a court in the event of breach and litigation
B. Remedies
1. Specific performance→ Court ordering the contract breacher to render the promise performance
a) Not the preferred remedy for breach of contract
b) A form of equitable remedy
(1) Not available unless π can show that the legal remedy of damages is inadequate and the equities favor specific enforcement
2. Monetary damages→ More efficient and less burdensome means of rectifying harm caused by breach of contract
a) Purpose is to award a sum of money to the aggrieved party to compensate for the loss of the economic gain that the aggrieved party
reasonably expected from the contract
b) Expectation or “Benefit of the Bargain” damages→ Damages that require the breaching party to pay the other the amount of money
that approximates the financial position the aggrieved party would have been in had the contract been performed as agreed
3. Calculating damages
a) General rule is that damages must be proved with reasonable certainty→ meaning π must provide sufficient evidence of the extent of
loss
b) Substitutionary expectation damages
c) When the π is awarded a sum of money that is equal to the extra cost of entering into a new transaction for similar performance in
substitution of the performance promised by ∆
4. Enforcing damages
a) An award of damages is merely an adjudication that ∆ owes an amount of money to π
b) It is not a court order, and cannot be enforced by contempt
c) If ∆ does not pay, π can go after property
d) Even if π wins, the judgment doesn’t hold much weight if ∆ does not have the money/property to pay the amount awarded
C. Kakaes v. GWU
1. Reminder: Tenure denial seeking specific performance
2. Rule → Equitable relief will not be granted when an adequate remedy under the law exists, personal services cannot be enforced by specific
performance
3. π’s burden to show that monetary damages are not equitable
4. Contract law is about making people “whole” (as they were prior to the breach), not after damages have accrued
II. SALE OF GOODS
A. Intro To Article 2
1. The sale of goods differs from other contracts because they are subject to a statute→ Article 2 of the UCC
2. UCC provides a set of “default rules” that facilitate the creation and performance of contracts across state lines and within states
3. Article 2 binds courts when a sale of goods is involved→ weight is greater than judicial precedent
a) Most sections are written broadly, to leave room for interpretation and reasoning
b) Just because the law relating to sale of goods is governed by statute, doesn’t mean common law doesn’t apply
c) Many rules in the UCC are not much different from common law, because common law has been crafted around them
B. Scope Of Article 2
1. UCC 2-102 lays out the scope of Article 2 → Applies to transactions (sales) in goods
a) Does not apply to a sale of property that is not goods
(1) Must be moveable for Article 2 to apply→ i.e. real property that is not moveable does not apply
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 b) When a contract involves solely the providing of services, Article 2 does not apply
[Link]/hybrid contracts → contracts include both sale of goods and something else (services, real property)
a) When this happens, usually it is up to the court’s discretion on whether or not Article 2 applies
b) Statute of limitations→ varies based on the body of law that governs the type of claim
(1) Requires a plaintiff to file suit on a claim within a certain amount of time, if not the claim is unenforceable by a court and will be
dismissed
c) AVA v. Tanzer→ Home technology system install
(1) Key takeaways: developed 4 factor Predominant Purpose Test (Pass test) to determine if the primary purpose of the contract was for
goods or services
(a) Four factors:
(i) Language of the contract
(ii) Nature of the seller’s business
(iii) Reason/purpose for the transaction
(iv) Amount/allocation of the cost/price
(2) If PPT shows goods>services, UCC applies
d) Pain Center→ Medical billing software
(1) PPT showed contract was for the services of the software = no UCC
(2) Why does this matter? Statute of limitations under UCC is different than common law
e) Predominant purpose test is majority rule
f) Gravamen Test → If complaint deals with problem of goods, UCC applies; if complaint deals with problem of service, common law
applies, minority rule
C. Merchants And Article 2
1. A few provisions in Article 2 that impose special standards on merchants
a) ONLY when a section specifically refers to merchants that there is a different rule for them, beyond this, sometimes only certain types of
merchants
b) Special rule for sales between merchants
2. UCC 2-104(1) defines merchant→ someone who regularly deals with the buying and selling of the goods involved in the transaction
a) OR, someone who gives the reasonable impression of having knowledge peculiar to the goods or practices involved in the transaction
b) Someone can also be a merchant if it is represented in the transaction by an agent or intermediary who, by occupation, holds out such
knowledge or skill
III. INTENT: CONTRACTUAL ASSENT AND THE OBJECTIVE TEST
A. The Objective Standard For Determining Assent
1. Objective = outward manifestations, visible to all, in the eyes of a “reasonable person”
a) Objective Test of Assent →
(1) Contracts are formed by mutual consent
(a) Communication is vital to the formation of a contract
(b) Legal assent to a contract is not determined by trying to decide if the parties believed that they had an agreement, but rather by
their apparent intent shown by their actions and words
(c) Courts rely primarily on this definition when determining the existence and terms of a contract
(2) Morales v. Sun Constructors→ Non-english speaking worker signed contract, does arbitration clause apply
(a) Rule: Acceptance is not measured by the subjective intent of the parties, by rather by their outward expressions of assent, duty to
read what you sign
2. Subjective = inner thoughts, self described state of mind, personal belief
a) Subjective tests best serve to insulate a person from unintended obligations
(1) Completely at odds with the traditional role of contract law
(2) In order for the law to function properly, it must hold parties accountable for the outward manifestation of assent
b) Subjective evidence is not always irrelevant, can be helpful in explaining the meaning of an objective manifestation that is unclear
(1) Only relevant and persuasive to the extent that it is credible and compatible with outward behavior
(2) SR International Business Insurance Co. v. World Trade Center Properties, LLC
(a) 9/11 insurance suit, determined that subjective evidence is not wholly irrelevant and inadmissible when there is an ambiguous or
disputed term in the contract in question
B. Duty To Read
1. The Duty to Read Standard Terms
a) When parties negotiate all the terms of a contract, they are more likely to understand everything
b) When a contract is standard terms, it is more likely that the nondrafting party will not comprehend the terms presented
c) A party’s accountability to assent to unread terms is more likely to arise when the contract is on standard, predrafted terms
2. Arbitration and Forum Selection Provisions in Standard Contracts
a) Arbitration Provisions
(1) Common and often challenged, especially when included in standard agreements

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 (2) Common challenge is that the parties never assented → usually boils down to whether the arbitration clause was reasonably
brought to the notice of the party who signed it
(3) James v. McDonald’s Corp. → McDonald’s prize winner + arbitration, McMillions
(a) Parties are bound to an arbitration provision even if they didn’t read it “A contract need not be read to be effective”
(b) Π’s responsibility (duty) to read
b) Barring Class Actions
(1) Easy way for corporations to avoid class actions is by including a provision in a standard contracts that precludes class actions in
conjunction with requiring arbitration
(a) The waiver of a right to institute a class action is binding only if it was validly assented to
c) Forum Selection
(1) Often found in contracts where a corporation engages in many contracts across the country→ requires claim to be litigated in
courts of state of home office
(a) By doing this, the burden on a plaintiff can be substantial
3. Boxtop Terms→ When standard terms are printed on the exterior of a product’s packaging and discernable before opening the package
4. Shrinkwrap Terms→ When standard terms of a product are not apparent on the external packing but are seen only when the package is
open (e.g., printed insert, user manual, electronic form on software)
[Link] terms – “I have read and agree to the terms and conditions” box before purchasing anything online
[Link] terms – When an online site makes terms available to a buyer through a link but does not actually require the buyer to take any
affirmative steps to indicate assent
C. Tricky Jokes
1. Generally, offers made in jest are not considered valid offers.
a) Even if the offeree renders performance, the offeror will not be bound.
b) However, if the offeree does not know or have reason to know that the offer is in jest, the offeror may be legally bound once the offeree
accepts the offer.
2. Cases
a) Lucy v. Zehmer
(1) Offers to sell farm on a signed napkin case
(2) Key takeaways:
(a) Emphasizes the strength of the objective test.
b) Leonard v. PepsiCo, Inc.
(1) Pepsi-points Harriet fighter jet case
IV. THE OFFER
A. Nature And Qualities Of An Offer
1. An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that
bargain is invited and will conclude it.
2. An offer typically has two components:
a) “I offer to sell you my house for $400,000. To accept this offer, you must deliver your written, signed acceptance to me by 6 p.m. on Friday,
June 3”
(1) Substantive component – consists of the actual terms of the K proposed in the offer (must exist in order to qualify as an offer)
(2) Procedural component – sets out any instructions that the offeror may wish to give the offeree on how to go about accepting the offer
(optional, but if it is included, they must be complied with for the acceptance to be effective)
3. What makes communication an offer?
a) Plain language used in the communication (e.g., “This is an offer”)
(1) Express language is by far the most important
(2) Objective assent to be bound.
(3) The more detailed, the more it suggests it’s an offer (price, quantity, identity, dates for delivery/install, etc.)
b) Legal Precedent or Default Rules
(1) “Advertisements . . . are not ordinarily intended or understood as offers.”
c) Course of Dealing
(1) Do negotiations stop or continue? What have these parties typically done if repeat players?
d) Trade Usage / Industry Custom
(1) Do people in this industry usually set the price later, etc.?
4. Cases
a) Fletcher-Harlee Corp. v. Pote Concrete Contractors
(1) Key takeaways:
(a) Express terms (plain language) > usage of trade
(b) Courts use relevant commercial practice as an aid while interpreting Ks. However, even if (in this case, for instance) a
subcontractor’s bid would typically be a firm offer per industry custom, the court cannot hold that it is one if it specifically states
that it is not.

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 (i) Court further finds that the bid, if anything, was a counteroffer because its terms were materially different from those in
the solicitation letter and could not be enforceable
(ii) Court also wasn’t convinced that the general contractor’s solicitation letter was even an offer
(c) No offer and no acceptance = no K
b) Babcock & Wilcox Company v. Hitachi
(1) Key takeaways:
(a) Had two candidates for the offer. The price quotation was not an offer, because it invited further negotiation instead of
acceptance.
B. Advertisements
1. Generally, advertisements are not considered offers; but rather, an invitation to make one.
2. However, an advertisement could be an offer if, interpreted in context, it would lead a reasonable prospective buyer to understand that an offer was
intended.
a) Courts have looked for “whether the facts show that some performance was promised in positive terms in return for something requested”
and “where the offer is clear, definite, and explicit, and leaves nothing open for negotiation, it constitutes an offer”
3. Cases
a) Sateriale v. R.J. Reynolds Tobacco Company→ cigarette tickets for rewards case
V. ACCEPTANCE
A. Assent is measured by an objective standard.
B. Offeror has considerable control over the manner in which an offer may be effectively accepted.
C. “Mirror image” rule
1. If the response sought to alter the terms of the proposed K in any way, it was not an acceptance.
D. Once an offer is rejected (counteroffers included), it is no longer effective and the offeree cannot thereafter accept it, even if the time period specified in
the offer for acceptance has not ended.
E. When an offeree loses the power to accept an offer:
1. Time lapses (either by a stated time or, if there is none, after a reasonable
time)
2. Offeror communicates revocation the offer before acceptance is
communicated
3. Offeree rejects/ makes a counteroffer
4. Offeror dies
F. Cases
1. Roth v. Malson → Guy signs K in wrong place by mistake case
a) Key takeaways:
(1) Using the objective test, P’s response presented itself as a
counteroffer.
(2) It goes beyond the fact that he signed the wrong line (headed
“Counter to Counteroffer”), he didn’t just write “I accept”,
he inserted express terms which made his argument pretty
weak
b) Court points out the potential consequences of permitting P’s
response to qualify as acceptance
G. Mailbox Rule
1. Provides that where the mail is an expressly or impliedly authorized or reasonable medium of acceptance, an acceptance takes effect when
deposited in the mail.
2. The “mailbox” rule is a default rule, an offeror who does not want it to apply can simply avoid it by specifying in the offer that acceptance will
only be effective upon receipt.
3. Concerning the applicability of the mailbox rule through electronic means of communication, courts have considered whether the form of
communication is more analogous to an instantaneous face-to-face discussion or to correspondence by mail.
4. Cases
a) Trinity Homes, LLC v. Fang → Old fax machine case
(1) Key takeaways:
(a) Court provided a two-pronged test for determining if the form of communication is instantaneous:
(i) Communication must be “substantially instantaneous” – the transmission must occur within a few seconds or, at most,
within a minute or two
(ii) Communication must be two-way – one party must be able to “determine readily whether the other party is aware of the
first party’s communications, through immediate verbal response, or when communication is face-to-face, through
nonverbal cues”
(b) Although court determined that the mailbox rule would be applicable to this case (fax machines not instantaneous), it cannot
apply here merely because there is no record, and P could not say with certainty if the fax went through other than claiming that
he placed the agreement in the machine, pushed a button, and walked away before viewing or verifying its transmission

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H. Silence As Acceptance
1. Generally, silence is not considered to be an acceptance of an offer.
2. There are four exceptions:
a) The offeree receives the benefit of the offered services, despite reasonable opportunity to reject those services, as well as reason to know that
compensation is expected;
b) The offeree exercises dominion over offered property by acting inconsistently with the offeror’s ownership of that property;
c) There are prior dealings that make it reasonable for the offeror to expect to be notified of a rejection and, in the absence of a rejection, to
conclude acceptance; or
d) The offeror and offeree intend for the offeree’s silence or nonverbal conduct to constitute an acceptance.
3. Cases
a) Pride v. Lewis → Homeowners changed the closing date and buyer never responded case
(1) Key takeaways:
(a) Generally, an offeree doesn’t have a duty to formally reject or respond to an offer.
(b) There are exceptions (listed above), but this case didn’t fall under any of them.
I. Revocation Of An Offer
1. Unless an offer qualifies as an option, the offeror is free to revoke it at any time before it is effectively accepted.
2. Mailbox rule can skew this concept a bit – (assuming offeror didn’t specify otherwise, and mailbox rule applies) revocation isn’t effective until it is
received.
a) So, under the mailbox rule, if an offeror mails their revocation on the 3rd, and the offeree sends their acceptance on the 4th, but doesn’t
receive the revocation until the 5th, there is still a K.
3. Cases
a) Hendricks v. Beehee → Notifying the realtor of withdrawal case
(1) Key takeaways:
(a) There is no K until acceptance of an offer is communicated to the offeror.
(b) Notice to the agent, within the scope of the agent’s authority, is notice to the principal, and the agent’s knowledge is binding on
the principal.
(c) Before D was notified that the Smith’s had accepted his offer, D notified the agent of the Ps of his revocation.
b) Dickinson v. Dodds → P.S. I want time to decide case
(1) Key takeaways:
(a) Indirect revocation – if the offeree discovers the offeror’s revocation from another (reliable) source the revocation is essentially
effective.
(b) Somewhat of an exception to the general rule that revocation must be communicated; it is argued here that revocation was
communicated, just not directly.
(c) Irrelevant that parties signed the postscript promising to keep the offer open, there was no consideration.
(d) Before there was any attempt of acceptance by P, he was perfectly aware that D had changed his mind, and had, in fact, agreed to
sell the property to another.
J. Acceptance By Performance: Unilateral Contracts
1. Difference between unilateral and bilateral Ks
a) Unilateral – offeror prescribes that performance of the K is the exclusive manner of acceptance
b) Bilateral – offeror prescribes that a reciprocal promise is the exclusive manner of acceptance
2. Keep in mind that acceptance can be communicated by conduct, but this doesn’t mean said conduct is the performance of the K.
a) Example: “To accept my offer, you must tap dance on my front porch by 5p.m.” – these are just conditions to accept a bilateral K
3. Cases
a) Carlill v. Carbolic Smoke Ball Co. → Influenza ad case
(1) Issue: Did the ad qualify as an offer calling for a unilateral K? = Yes.
(2) Key takeaways:
(a) The Court acknowledges that in the case of vague advertisements, language regarding payment of a reward is generally a puff,
which carries no enforceability.
(b) In this case, however, D went to extensive length to signify that this was a sincere offer (noted the deposit of £1000 in their
advertisement, as a show of their sincerity) calling for performance, which P did.
K. Conflicting Standard Terms
1. “Boilerplate terms” → standard terms usually contained and the beginning or end of a contract
2. Common law and UCC have very different approaches to handling this issue.
3. Common Law Approach
a) Traditional common law requires the acceptance to be a “mirror image” of the offer. Thus, a conflicting standard term would make a
response a counteroffer.
b) “Last shot” rule gives precedence to the terms in the last communication before performance begins.
c) If performance begins, the other party’s passive acceptance would be treated as assent to the counteroffer and a K is formed according to the
terms of the last communication.
4. Battle Of The Forms – UCC §2-207
a) UCC §2-207 is referred to as the “Battle of the Forms”
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b) Shifted away from common law’s mirror image rule and “last shot” rule to create a more liberal approach to resolving conflicting standard
terms pertaining to the sale of goods.
c) Unlike common law, UCC §2-207 provides that if there is a definite expression of acceptance, a K is formed even if the acceptance doesn’t
match the offer exactly due to additional or conflicting terms.
(1) Any conflicting or additional boilerplate terms are considered proposals to add terms.
d) When both parties are merchants, however, the additional or nonmatching terms become part of the K unless:
(1) The offer expressly limits acceptance to the terms of the offer,
(2) The nonmatching terms materially alter the contract, or
(3) The other party timely notifies the responding party that the nonmatching terms are unacceptable.
e) General rule is that significant additional or different terms contained in an acceptance seldom become part of the K. As a result, the K is
usually on the terms set out in the offer.
f) Some courts depart from the general rule (mainly because it favors the offeror) and use the “knockout rule”.
(1) Knockout rule – all conflicting terms of the K, both in the offer and acceptance, cancel each other out, and the resulting gap is filled
by “gap fillers” – statutory default terms supplied by the UCC – or, if the UCC doesn’t have a default term on that issue, by any
applicable default rule provided by common law
g) UCC §2-207(3) applies where no K was formed through the communications exchanged by the parties, but they went ahead and performed
anyway.
(1) In this case, K should be based on the terms on which the communications agree, conflicting terms in the writings are discarded, and
any gaps are filled by statutory gap fillers supplied by Article 2.
h) Cases
(1) Lively v. IJAM, Inc.
(a) Guy buys laptop over the phone -- written confirmation (that included additional terms including forum selection clause) arrived
later with the delivery of the laptop (shrink-wrap terms) case
(b) Issue: Whether additional terms should be considered proposed terms that are part of the K if the additional terms are
introduced after the K is formed? = Yes.
(c) Key takeaways:
(i) There is evidence that P could be considered a merchant; however, the court determined that the forum selection clause
materially altered the K so even if he was a merchant the clause could not be in K given it would fail the second
requirement of §2-207(2).

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 [Link] Notice Of Terms
a) Rolling contract – when circumstances indicate that parties didn’t intend offer and acceptance to be complete at the time of their initial
interaction, so that the offer is made later by the drafter of the standard terms, and acceptance occurs only when the non-drafting party
accepts those terms either expressly, or by failure to reject them.
(1) What distinguishes them from cases like Lively?? (not sure, maybe disclosure of ability to return within a matter of days or notice that
you accept terms by using it)
b) Cases
(1) ProCD, Inc. v. Zeidenberg
(a) Key takeaways:
(i) Where software on a disk is sold subject to the buyer’s right to return it after taking it home, the K is formed not at the
time of the it is bought at the store, but when the buyer fails to exercise the right not to keep the software.
(ii) Under UCC §2-204(1), a vendor may invite acceptance by its conduct, This is considered a “rolling contract”
(iii) ProCD, a vendor, invited acceptance through its conduct of placing its software products for sale. Additionally, ProCD
limited the types of conduct that would constitute acceptance in the license placed within the software’s packaging. Under
this license, ProCD proposed that buyers could accept its K by using the software after having read the license agreement.
D read the license agreement on his screen, and continued to use the software. He thus accepted ProCD’s offer, and a
binding K was formed.
VI. PRELIMINARY, INCOMPLETE, AND INDEFINITE AGREEMENTS
A. Preliminary Agreements
1. Types of preliminary agreements:
a) Type I: “complete” – an actual, binding K
(1) Enforceable contract as to the “ultimate objective”
b) Type II: “binding to a certain degree” – an agreement to negotiate in good faith
(1) Not an enforceable contract as to the ultimate objective, but an obligation to negotiate toward that end
c) Type III: an agreement that defers a contract for later consideration
(1) Has no binding legal effect at all
(2) Cannot qualify as a K until that term is settled
(3) Unenforceable not because of reserving assent, but because of a provision to defer contract negotiation until later
d) “Agreement to agree”
(1) Example: Lease payment on a lease extension
(2) Enforceable to a certain degree
(3) Cannot qualify as a K until that term is settled
(4) Unenforceable not because of reserving assent, but because of a provision to negotiate/agree on a point later
2. Cases
a) Brown v. Cara: Develop NYC property case
(1) Key Takeaways: Four factor test to determine if Type I agreement
(a) Whether there is a an expressed reservation of the right not to be bound in the absence of a writing
(b) Whether there has been partial performance of the contract
(c) Whether all of the terms of the alleged contract have been agreed upon
(d) Whether the agreement at issue is the type of contract that is usually committed to writing
B. Indefiniteness Or Vagueness In An Agreement
1. If the indefinite terms are material, then the court will likely conclude that the parties never intended to make a K. However, if the indefinite terms
are minor and the parties clearly intended to make a K, then the court may fill in definite terms based on what is customary or reasonable (certainly
true for UCC., much more flexible).
2. Cases
a) Baer v. Chase→ The Sopranos case
(1) Issue: Was this agreement too indefinite/vague to be an enforceable K? = Yes.
(2) Key takeaways:
(a) Parties had an oral agreement, allegedly, that D would “take care of” P when the show became a success, compensation him for
the “true value” of his services
(b) Nothing on the record indicated that the parties agreed on how, how much, where, or for what period D would compensate P. Nor
did it discuss who would determine the “true value” of P’s services, when the “true value” would be calculated, and what
variables would go into such a calculation.
(c) The oral agreement was so vague, indefinite, and uncertain that it lacked sufficient terms to constitute an enforceable K
VII. STATUTE OF FRAUDS
A. Basic Principle
1. Most contracts do not have to be in writing to be legally enforceable; however, certain types of contract, covered under the Statute of Frauds
(SOF), are exceptions to this general rule.
2. Purpose of the SOF is to prevent nonexistent agreements between two parties being “proved” by fraud or perjury.
3. Courts are sensitive to the reality that barring the enforcement of oral contracts could just as easily be used to prevent the enforcement of a genuine
oral contract by a dishonest person who later wishes to evade it. Thus, courts are wary of applying the statute rigidly.
4. Six types of contract covered by SOF (MY LEGS):
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 a) M – contracts made upon the consideration of marriage
b) Y – contracts that cannot be performed within a year of execution (1 year rule)
c) L – contracts for the sale of land
d) E – contracts of executors or administrators to answer for the duty of their decedents
e) G – contracts for the sale of goods $500 or more
f) S – contracts to answer for the debt or obligation of another (suretyship)
5. A SOF defense is often raised at the beginning of the case by means of MTD or MSJ.
6. This is one of the benefits of the SOF. If P loses at this stage, his case is over, saving the use of judicial resources and the costs of trial.
7. However, even if P survives a SOF defense, this is just a preliminary victory.
B. Requirements Of The SOF
1. A writing (or record)
a) Not required to be in a particular form. Is the contract the
b) Doesn’t have to be in a single document, and can be pieced
together from several related documents.
2. A signature of the party against whom the K is being enforced
a) Doesn’t have to be signed by both parties as long as the person YES NO. K doesn’t have to be
who is denying the K has signed it.
b) The concept of “signature” extends beyond just handwritten
signatures, it may include “any symbol executed or adopted with
present intention to adopt or accept in writing”. Is there a signed
c) If the record consists of more than one document, the signature
does not have to appear on everyone as long as the documents
can be tied together.
YES. K is NO. K is not
3. Sufficient content to evidence the K
a) The record is not required to be full and complete, provided that
it has enough content to show that a K was made, it identifies
the subject matter, and sets out its material unperformed terms.
Is there a recognized
b) However, this flexibility does not extend to the quantity term if
relating to a sale of goods. If the quantity of goods sold cannot
be ascertained from the record, it does not satisfy the statute.
C. Contracts At Common Law: Sales, Land, and Contracts Not Performable Within A Year
1. SOF requires Ks that require that performance cannot be performed within one year from the date the K was made.
a) Doesn’t matter how long the actual performance itself will take (could be all of 2 minutes) nor does it matter that the date of performance
isn’t set to start/occur for a prolonged period of time. The clock starts at the date the K was made.
b) What matters is that, per the terms of the agreement, it is impossible for the K to be performed within one year of the time the K was created.
(1) If there is even the slightest possibility (regardless of how unlikely or unreasonable) that the K could be performed within that one
year’s time, the SOF doesn’t apply.
(2) Focus on the language (think Mackay v. Four Rivers Packing Co. “until retirement”)
2. Cases
a) Mackay v. Four Rivers Packing Co. → Employee fired despite agreement to work “until retirement” case
(1) Specific issue: Did the district court err when it held the alleged oral K between Mackay and Four Rivers fell within the state’s SOF? =
Yes.
(2) Although it is unlikely, the mere possibility that Mackay could have retired within a year of the agreement barred their agreement from
falling under the SOF.
(3) General issue: Does the SOF’s 1-year rule require Ks to be in writing if there is any possibility (even if it’s highly unlikely) that
such K could be completed within a year? = No.
(4) Key takeaways:
(a) Ks of uncertain duration are excluded from the 1-year rule.
(b) The question isn’t what the probable, or expected, or actual, performance of the K was, but whether the K, according to the
reasonable interpretation of its terms, required that it could not be performed within the year.
D. SOF Relating To The Sale Of Goods
1. Sales of goods over $500 are subject to the SOF under Article 2 of the UCC.
a) Can be incorrect or less complete on terms, but quantity is usually essential (can be inferred)
2. Exceptions:
a) If the party against whom enforcement is sought admits in court that a K for sale was made.
b) If the sale is for specially manufactured goods and where the seller has already made a substantial beginning in manufacturing the goods at
the time the seller receives the buyer’s notice of repudiation.
c) Payment has already been made and accepted, or the goods have already been received and accepted.
d) If both parties are merchants:

10
 (1) Between merchants if within a reasonable time a writing in confirmation of the K and sufficient against the sender is received and the
party receiving it has reason to know its contents, it satisfies the requirements of SOF against such party unless written notice of
objection to its contents is given within 10 days after it is received.
VIII. CONSIDERATION
- Consideration – Something (such as an act, a forbearance, or a return promise) bargained for and received by a promisor from a promisee; that which
motivates a person to do something.
- NEVER FORGET THE EASY EXAMPLE: I contract to sell my car for $15,000 to B. I “give up” my car (detriment) and B “gives up” the
money. Benefits conferred upon each other, detriments incurred, each inducing the other (to the exchange) → most common way consideration
works
A. “Benefit or Detriment” Test
a. If nothing is given or received in exchange for a promise, traditional contract doctrine refuses to enforce the promise on the grounds of lack of
consideration.
b. Good application of this test is in the context of gifts – Any promise to make a gift is not supported by consideration.
c. Cases
i. Congregation Kadimah v. DeLeo → Man dies before paying a promised $25,000 to the congregation case
1. General issue: Was this oral promise for a charitable gift enforceable in the absence of consideration or reliance on the
contract? = No.
ii. Hamer v. Sidway → Uncle dies before paying $5,000 to his nephew for not smoking, drinking, and gambling until 21 case
1. General issue: Can forbearance from activities (e.g., smoking, drinking, and gambling) that would seemingly be to one’s
benefit constitute as a detriment for consideration? = Yes.
2. Key takeaways:
a. “Benefit” and “detriment” in this context refer to a legal gain or loss.
Refraining from an activity you have a legal right to do is a legal detriment, even if such restraint is considered beneficial to the person in a general sense.
c. Doctrine of consideration in this case is outdated. Significance is only for establishing the concept
of a legal “benefit” or “detriment”
B. Bargain Theory of Consideration
a. Suggests that a return promise or performance must be bargained for to constitute consideration.
b. Bargain theory differs from benefit-detriment test in that it requires further that the benefit or
detriment serving as consideration be given in exchange for the promise to be enforced.
c. Crucial question is whether each party suffered a detriment in exchange for the detriment of the
other.
d. What does “bargained for” mean in this context?
i. Courts do not require that the parties actually haggle over the terms – parties don’t have
to expressly state that the promise is given for the promisee’s legal detriment or that the
legal detriment is given in turn for the promise.
ii. Rather, courts are willing to infer what the parties intended from the context of their dealings
iii. This reflects the objective standard – not what the parties subjectively intended, but rather what would be objectively reasonable to
expect under the circumstances.
e. Cases
i. Pennsy Supply, Inc. v. American Ash Recycling Corp. → Subcontractor must dispose of “gifted” hazardous AggRite case
1. Specific issue: Whether Pennsy’s relief of American Ash’s legal obligation to dispose of a classified hazardous waste, such
that American Ash avoided the costs associated is sufficient consideration given that this was never a part of any
bargaining process between the parties. = It is.
2. D argues that this was merely a condition gift, but the court disagrees.
3. Held it was fair to interpret that D’s promise to supply AggRite free of charge induced P to undertake the detriment of
collecting and taking title to the material; and, critically, that it was this very detriment which induced American Ash to
make the promise.
4. General issue: Can there be sufficient consideration to form an enforceable K even if parties have not bargained for
the specific terms of the agreement? = Yes.
C. Consideration v. Conditional Gift
a. Consideration doctrine doesn’t require the promisor to receive a benefit. However, this rule often causes some confusion in distinguishing
consideration and conditional gifts.
b. If the promisor merely intends to make a gift to the promisee upon the performance of a condition, the promise is gratuitous and lacks
consideration.
c. The promise must induce the detriment and the detriment must induce the promise.
i. In other words, if the promisor made the promise for the purpose of inducing the detriment, then the detriment induced the promise.
ii. If, however, the promisor made the promise with no particular interest in the detriment that the promisee had to suffer to take
advantage of the promised gift, the detriment suffered was incidental or conditional to the promisee’s receiving of the benefit.
iii. For further clarification – even if a promisee suffered a detriment induced by a promise, if the purpose of the promisor was not to
have the promisee suffer such detriment, the detriment was merely conditional to receiving the gift and is not construed as
consideration.
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D. Generally parties need additional consideration in order to modify a K.
a. Example from Q&A: “In the modified agreement, Betty did not promise to do anything that she was not already bound to do, so there was no
consideration for Sam’s agreement to pay $600 more.”
b. K for sale of goods is an exception because UCC did away with this rule.
E. What Suffices As Consideration?
a. Insufficient “consideration”
i. Pre-existing legal duty
1. You cannot promise to perform/refrain from something you are already legally obligated to do or not do.
ii. Past consideration
1. Promises made in return for acts/events that have already taken place.
2. Lacks consideration because there was no bargain for exchange.
3. In very rare situations, the only exception to this rule is the “moral obligation” doctrine
iii. Illusory promises
1. Promises that lack of mutuality or indefiniteness where only one party is bound to perform. An illusory promise is based on
deception or parameters that are indefinite, making it unclear what must be done or if performance is optional.
2. A K is illusory if one of the parties has an alternative that will result in the other party getting nothing. But if a party has a
choice between two alternatives, either of which standing alone would be consideration, then there is consideration for the
exchange.
iv. Sham consideration
1. If it seems apparent that the supposed consideration was fabricated to provide a formal way for courts to discern proof that
the parties really wanted to make/accept some sort of promise, courts could conclude it was just a gratuitous promise
supported by “sham” consideration.
b. Adequacy→ once the court determines that there is consideration, they will not inquire into its adequacy unless it “shocks the
conscience”
c. Settlements→ a legal claim may be surrendered for money, but the claim must either be questionable on law/fact or the person alleging
the claim must be doing so with a good faith belief that the claim is valid
F. Mutuality of Obligation
a. Mutuality of obligation→ both parties to a contract must give something of legal value in order to get something in exchange
i. If one of the parties has neither contributed nor promised to contribute anything that is meaningful in the eyes of the law, there cannot
be said to be a contract
ii. If a promisee seeks to enforce a promise as a contractual obligation, the promisee will have to demonstrate that it provided a return
promise or performance
iii. Unless the promisee has made a binding commitment, it will not be able to hold the other party contractually accountable
1. If the alleged contract is not binding on one party due to lack of consideration, it will not be binding on the other party
either
G. Performance as Consideration
a. Return performance→ can serve as consideration
i. Carbolic Smoke Ball→ Where a party forms a contract by actually performing the bargained for consideration, rather than promising
to do so
b. Restatement § 71 → a performance need not be an act; it may also consist of a forbearance
i. Hamer v. Sidway→ illustrates forbearance as consideration
c.
Consideration doctrine doesn’t demand a return promise in all cases, return promise can suffice
i. Not all contracts require mutuality of obligation
d. The legal sufficiency of forbearance as consideration poses some challenges
i. Courts have divided on the legal sufficiency of forbearance as consideration in employment
ii. Many states consider employment to be “at will”
iii. So long as the employer doesn’t discriminate or otherwise violate the law, it can fire an employee for any reason or no reason “right
to hire, right to fire”
H. Promises as Consideration
a. No universal requirement that both parties be bound to the contract at the same time, to the same extent, or under the same circumstances
b. Discussions of mutuality arise where there is some question as to the legal significance of the undertaking of one of the parties to an alleged
contract
i. If the parties are exchanging promises, each promise serves as consideration for the other only if both promises are meaningful in the
eyes of the law
ii. If either of the promises does not meet this standard, it cannot serve as consideration for the other, and absent consideration, there can
be no contract
iii. When a court says that an alleged contract is not enforceable for lack of mutuality, it may really be conclusion that one or both of the
alleged promises comprising an exchange is not legally sufficient consideration for the other
c. Illusory promise→ one that courts consider to have no legal significance for purposes of consideration

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 i. Although the promisor appeared to make a promise in positive terms, it has not really assumed any real legal detriment in doing so
(i.e. no consideration to promisee)
ii. When a promise is gratuitous, it is not supported by consideration and would not be enforceable as a contractual obligation
d. Cases
i. Wood v. Lucy, Lady Duff-Gordon → clothing designer endorsement case
1. Issue: Can a contract be enforced when there is no evidence of a promise, exchanged as consideration, in the explicit terms
of the contract? = Yes
2. Key Takeaway: A promise may be lacking within a contract, and yet the whole writing may be instinct with an obligation,
imperfectly expressed. If that is so, there is a contract.
IX. PROMISSORY ESTOPPEL
A. Promissory estoppel → principle that a promise made without consideration may nonetheless be enforced to prevent injustice if the promisor
should have reasonably expected the promisee to rely on the promise and if the promisee did actually rely on the promise to his or her detriment.
1. Purpose: To try to recover money or property when someone backs out of a promise
B. Elements of promissory estoppel:
1. A clear and definite promise.
2. Promisor intended or should have reasonably expected the promise to induce reliance on
part of the promisee
3. The promise does induce such reliance, resulting in the promisee’s detriment; and
4. Injustice would follow if the promise is not enforced.
C. Relief is limited to damages measured by the promisee’s reliance.
1. Meaning the party’s out of pocket expenses made in reliance on the promise.
2. For instance, in Conrad v. Fields (law school), court awarded P the cost of tuition plus
books minus the payment made by D.
D. Promissory estoppel is essentially a variation of theory.
1. Generally, litigants are bound on appeal by the theor(y/ies) upon which the case was
tried. However, courts have allowed parties to proceed under a new theory of promissory
estoppel if they raised contract theory at trial. The evidence received at trial is as relevant
to promissory estoppel as it is to K.
E. Cases
1. Cohen v. Cowles → Newspaper reveals confidential source case
a) Key takeaways:
(1) Promissory estoppel is a variation of K theory, so even though P only raised breach of K, he is not barred from later pursuing the
theory of promissory estoppel on appeal. (Generally litigants are bound on appeal by the theory upon which the case was tired)
2. Conrad v. Fields→ Rich neighbor offers to pay for law school case
X. OPTIONS AND FIRM OFFERS
A. An offeree has the opportunity to reserve (by providing consideration) the right, but not the obligation, to accept an offer through an option contract,
which keeps the offer open for a stated period of time.
B. Firm offer - an offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable,
for lack of consideration,
1. During the time stated; or
2. If no time is stated → for a reasonable time, (but in no event may such period of irrevocability exceed 3 months).
XI. UNJUST ENRICHMENT AND MATERIAL BENEFIT
A. Unjust Enrichment
1. Unjust enrichment is a cause of action that arises where the claimant has conferred a benefit on the recipient under circumstances that make it
unjust for the recipient to keep the benefit without paying for it.
2. Elements:
a) One party must have been enriched by obtaining property, services, or some other economic benefit from the other; and
b) The circumstances must be such that it would be unjust for the beneficiary to keep the benefit without compensating the other party.
3. Does not have a promissory basis; rather, it focuses on whether it is fair to require the beneficiary to pay for the benefit conferred.
a) Reason for conferring the benefit may have been a contractual relationship that terminated as a result of breach or for some other reason, but
sometimes the circumstances have nothing to do with a K at all.
4. Example: principle of unjust enrichment provides hospitals a basis for claiming that patients pay the cost of medical services they may not have
been able to contract to in an emergency situation while unconscious.
5. “Quasi-contract” and “contract implied in law” also refer to the concept of unjust enrichment.
a) Old terminology but it still shows up occasionally.
(1) Not actual Ks
(2) If an actual K can be established, it is not necessary to use the alternative theory of unjust enrichment.
6. Remedy granted is restitution ( may consist of an order for the return of the benefit itself (if tangible and recipient still has it) or a money judgment
for its value).
a) If money judgment → court must determine the value of a benefit

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 b) Most common standard used is the market value of the goods or services.
c) Quantum meruit - “as much as deserved”
d) Quantum valebant - “as much as they are worth”
7. It is not always unjust for a person to keep a benefit without payment.
a) If the benefit was gratuitous, there would be no injustice.
(1) Volunteer – a person who confers a benefit with gratuitous intent.
(2) Did the person act with intent to be compensated?
(3) Note: the usual assumption is that, in the absence of clear agreement to the contrary, services rendered by a family member or close
friends are intended to be gratuitous.
(4) Officious intermeddler – one that imposes an unasked-for benefit on the recipient under circumstances that did not justify imposition
(a) Not an officious intermeddler if there is a good justification for conferring the benefit without asking first
(b) The person confers (imposes) the benefit without asking and/or presenting to the beneficiary the opportunity as a contract, under
circumstances where the person would expect to be paid or in the types of situations where the person would be paid
b) Hypo about softball team budget spent on horse racing
(1) Benefit “self conferred”, restitution and disgorgement of profits
(2) Highly unlikely to happen in this case, but sometimes the skill of the embezzler is relevant to the availability or amount of
disgorgement
B. “Moral Obligation” & “Material Benefit” Doctrines
1. In very rare situations, courts have recognized the “moral obligation” doctrine as an exception to the “past consideration” rule.
2. Only applied in situations where a person makes a promise in recognition of otherwise unenforceable past legal obligations or benefits incurred
3. Common example is situations where the promisor promises to pay a debt that has become unenforceable because of SOL.
4. Courts have also applied this doctrine to a minor’s voidable K where the minor ratifies the K after reaching age of maturity.
XII. POLICING CONTRACTS FOR IMPROPER BARGAINING
A. Fraudulent Misrepresentation
1. A material misrepresentation of fact, made with knowledge of its falsity and intent to induce the K, which does in fact justifiably induce the
other party to enter the K.
2. General Elements Of Fraud
a) A false representation that a fact is true
(1) May take the form of an affirmative statement or could be a deliberate concealment of a fact.
(2) Termite in the house hypo
(3) A mere expression of opinion or a prediction of the future generally does not qualify as a fact.
b) Knowledge of falsity and intent to mislead (scienter)
c) Materiality
(1) A misrepresentation is material if:
(a) It would be likely to induce a reasonable person, or
(b) The maker knows that it would be likely to induce the recipient.
d) Justifiable inducement
(1) Victims of fraud must also show that the misrepresentation induced him to enter the K and that he was justified in relying on the
misrepresentation.
(2) Look at the reasonableness combined with subjective elements.
3. The defense of misrepresentation requires that the defendant justifiably relied on the other party’s untrue factual assertion that induced the
defendant’s assent to the contract, and reliance on the other party’s mere opinion is generally not justified. However, there are three situations in
which reliance on the other party’s opinion regarding a material fact may be justified:
a) Where the party has a relationship of trust and confidence with the other party, such that it is reasonable to rely on the other party’s opinion;
b) Where the party reasonably believes that the other party has special skill, judgment, or objectivity regarding the subject matter; or
c) Where the party is particularly susceptible to the misrepresentation, due to reasons such as illiteracy or unusual gullibility.
4. Silence As Fraud
a) Harder to prove than affirmative fraud, but still possible
b) Omission does not necessarily equate to fraud, must establish a duty
c) RST provides situations where nondisclosure of a fact known to him is equivalent to an assertion that the fact does not exist:
(1) 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.
(2) 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 K and if non-disclosure of that fact amounts to a failure to act in good faith and in accordance with the reasonable
standards of fair dealing.
(3) 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.
(4) Where the other person is entitled to know the fact because of a relation of trust and confidence between them.
5. Fraud in the factum (less common than the general fraud in the inducement) is a misrepresentation that causes one party to enter into a transaction
without clearly understanding the duties, obligations, or risks incurred.
a) Remedy is typically that the K is void.
6. Remedies
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 a) Avoidance – (K is rendered voidable) allows the victim to rescind the K and obtain restitution for any performance that has been rendered.
b) Damages – permits the victim to keep the K in force and sue for any loss in value of the performance as a result of the fraud.
(1) Note: damages arise from tort law, but since fraud is also a tort, this remedy is available to victims of K fraud.
[Link]
a) Hodge v. Craig
(1) Mom lies about no possibility of son being anyone else’s case
(2) Key takeaways:
(a) Court found that woman committed fraud by intentionally misrepresenting a material fact
B. Duress
1. Inducing the victim to manifest assent by using an improper threat.
2. Can be threat of physical violence (to the party or someone the party cares about) or of economic harm/loss (referred to as “economic duress”)
3. Usual consequence of duress is that the K is voidable.
a) However, where the duress amounts to physical coercion, the court might declare that the K is void on the basis that if “assent” is physically
compelled by duress, the conduct is not effective as a manifestation of assent.
4. Cases
a) Germantown Manufacturing Co. v. Rawlinson
(1) Wife signs papers after husband embezzled money case
(2) Key takeaways:
(a) Representative of D’s insurer fraudulently misrepresented to wife that liability was only $160,000
(b) He knew, or should’ve known that he had deceived her
(c) Ms. testified she wouldn’t have signed had she known the terms of the second note, thus the representation may be said to have
induced her to sign.
C. Unconscionability
1. When the transaction is so unfair that it would offend the conscience of the court to enforce it.
2. There are two components of unconscionability:
a) The procedural element relates to the in which the K was formed
(1) A contract is procedurally unconscionable if it results from unequal bargaining power between the parties.
(2) Key is whether the party had a meaningful choice.
b) The substantive element relates to the terms of the resulting K
(1) A contract is substantively unconscionable where it contains terms that are overly harsh or one-sided against one of the parties.
c) Many courts require a finding of both to be satisfied at least to some degree in order to find unconscionability.
3. Contracts of adhesion
a) Used to describe any K in which one of the parties has enough bargaining power to be able to dictate the terms of the K to the other on a
take-it-or-leave-it basis, and the weaker party has no choice but to “adhere” to the terms.
b) Adhesion becomes unconscionable and is actionable if the abuse of bargaining dominance imposes unfair terms.
4. Cases
a) Zumer v. Airtouch Communications
(1) Woman claims she was fired due to her disability and wants out of arbitration case
(2) Key takeaways:
(a) The fact that an agreement is an adhesion K does not necessarily render it procedural unconscionable.
(b) Key inquiry for finding procedural unconscionability is meaningful choice
(i) Court determined P had a meaningful choice.
XIII. ILLEGALITY, VIOLATION OF PUBLIC POLICY, & LACK OF CONTRACTUAL CAPACITY
A. Illegality
1. Courts will not enforce illegal bargains.
2. However, the court will sometimes fashion a remedy after balancing inter alia, the fault of the parties.
3. Cases
a) Danzig v. Danzig
(1) Atty hires cousin to be runner case
(2) Key takeaways:
(a) As a general rule, Ks that are illegal will not be enforced by the courts.
(b) Limited exception – if the court finds that the parties were not in pari delicto (not equally culpable), it may enforce the K despite
its illegality.
(c) Requires more than just a weighing of fault and requires consideration of public policy
(d) Even in the absence of the criminal statute, given the policy reflected in the ethical rules, this might also be against public policy.
Of course, anything that has been made illegal is made so due to some policy interest.
(e) The majority seems to think the lawyer was more at fault. The statute and rules were directed at lawyer conduct. The court also
observed that the illegal stuff had already happened, and denying the runner the money would not necessarily further any harm to
the public from this course of conduct.
B. Contracts In Violation Of Public Policy
1. Ks that do not violate the law, but are so contrary to public interest that the court concludes that it should not be enforced.

15
 2. However, if the K was entered into voluntarily by both parties who desired the K and neither was subjected to unfair bargaining, the public policy
of freedom of K pulls strongly in the direction of enforcement.
3. Non-competition provisions
a) Public policy of freedom of K vs. that of competitive markets
b) In evaluating the validity of a noncompetition clause, courts usually follow an approach known as the “rule of reason”.
c) A court applying the rule of reason will uphold a noncompetition clause to the extent that it is reasonable as to its duration, the geographic
area that it covers, and the scope and extent of the activity that it restrains.
4. Cases
a) Woodman v. Kera LLC
(1) Father signs waiver of liability on behalf of son at bounce house case
(2) Key takeaways:
(a) Under Michigan common law had firmly established for over a century that a minor cannot be bound in K by a parent or
guardian.
(b) Legislature has better means for gathering information and assessing the will of the public. The judiciary is limited to the narrow
set of facts coming from two parties who seek to advance private interests.
(c) While the court recognizes both sides have compelling arguments, they prefer to stick with the existing common law that
consistently protects children over “making an uneducated guess” if changing the law would result in a net benefit to society.
C. Incapacity
1. Based On Minority
a) To contract, one must have “capacity” to assent.
b) Being a “minor” or “infant” means one lacks capacity.
(1) The K is voidable at the instance of a minor.
(2) Minor who wishes to keep the K may simply refrain from disaffirming it. However, the right to avoid the K remains until he or she
reaches the age of majority.
c) Public
d) Exceptions to the general rule:
(1) Necessaries→ Goods or services essential for the minor’s health and sustenance or reasonably necessary for the preservation or
enjoyment of life, such as food, medical needs, clothes, or shelter.
(2) Emancipation → A minor becomes emancipated when his parents’ duty to support terminates.
(a) This may occur where the minor moves out of his parent’s home and lives independently of them.
(b) However, some courts see emancipation more narrowly and confine it to specific situations such as marriage or enlisting in the
military.
(3) Misrepresentation → Some courts (in contrast to Foss) to entertain a claim for damages arising from a misrepresentation or even
enforcing the K by estopping the minor from asserting the right to disaffirm the K
(a) However, even when the court may be willing to hold a minor accountable for fraudulent misrepresentation, the major party must
establish the elements of fraud (Topheavy)
e) Restitution
(1) In a non-minority “typical” case, a cancellation leaves anyone who has rendered any performance a restitution remedy.
(a) Full restitution is the full “value of the benefit each party received must be given back to the other in restitution.
(2) For a minor avoidance, restitution can be:
(a) Only what property the minor still has, regardless of whether its value has been greatly diminished. Or nothing at all if the
minor has destroyed it.
(b) Sometimes, courts will “soften” this where you have a minor that is close to the age of majority and a “fair transaction.
(i) For example: 16 y/o bought truck, avoided K, was ordered restitution of cash paid, but only to the extent to the current
value of the truck.
f) Cases
(1) Topheavy Studios, Inc. v. Doe
(a) Underage girl uses fake I.D. to partake in filmed porno video game case
(b) Key takeaways:
(i) Doe was a minor and sought to avoid the K. However, there is an exception where the minor misrepresents her age.
(ii) Establishing misrepresentation is similar to establishing fraud. While Topheavy established a misrepresentation, made
with knowledge and intent, it failed to show it justifiably relied.
2. Based On Mental Illness Or Defect
a) An adult is presumed to have contractual capacity, but this presumption is rebuttable – a mentally incompetent party may overturn the
presumption by providing evidence that establishes that s/he lacked contractual capacity at the time of entering the transaction.
b) Court will usually take into account not only the degree/seriousness of the mental incompetence, but also whether the vulnerability of the
incompetent party attracted exploitation by the other.
(1) I.e., was the other party aware of the person’s mental incompetence?
(2) Because an adult is presumed to be competent as opposed to a minor, the state of mind and reasonable expectations of the other party
plays a greater role in mental incapacity disputes than they do when minority is at issue.
c) Two tests used by courts to determine contractual capacity due to mental illness :
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 (1) “Cognitive test”
(a) At the time of contracting, the party must have had such a severe mental illness that she was unable to understand the nature and
consequences of the transaction.
(b) Older, more rigid approach
(2) “Motivational test” (or “volitional test”)
(a) Many courts have now broadened the test to include
cases in which the party may have understood the
transaction, but the mental illness affected her ability
to act rationally in relation to the transaction.
XIV. CONTRACT INTERPRETATION AND CONSTRUCTION
A. Interpretation
1. Both parties may agree that a written agreement expresses their
intentions but may dispute what specific words or phrases mean in the
agreement.
2. When faced with this dispute, most courts consider unambiguous
language of the agreement to be conclusive of the parties’ reasonable expectations.
3. Interpretation of a written agreement involves two stages:
a) First stage: The judge decides whether the written is unambiguous
(1) If unambiguous → the judge interprets the parties’ agreement to consist of the unambiguous meaning expressed in the writing.
(2) If ambiguous → proceed to stage two.
b) Second stage: the jury (or sometimes judge) will hear extrinsic evidence and determine which of the possible meanings is the most
reasonable in context
4. Two approaches to determining whether the language of a writing is unambiguous:
a) “PLAIN MEANING” APPROACH
(1) Traditional approach
(2) Courts attempt to discern the usual sense of the words used in the writing as
understood by a reasonable person.
(3) Facts and circumstances surrounding the transaction do not inform the
decision at all.

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 b) “CONTEXTUAL” APPROACH
(1) Some courts began to replace the plain meaning approach with the contextual approach, allowing judges to consider circumstances
outside the written agreement, even if the language at first glance appeared to be clear.
(2) Relevant contextual evidence (referred to as “extrinsic” or “parol” evidence) might be drawn from a course of dealings between
parties. relevant usages of trade, oral or written communications before the written agreement was adopted, etc.
5. So in short, it is the function of the judge to determine whether the language contained in the written agreement is unambiguous. Depending on the
jurisdiction, the judge may or may not consider evidence extrinsic to the writing to make this determination (contextual/plain meaning). The fact-
finder hears extrinsic evidence of meaning only if the court finds the written agreement to be ambiguous.
6. Cases
a) Right Field Rooftops, LLC v. Chicago Baseball Holdings, LLC → Wrigley Field jumbotron blocking rooftop businesses case
(1) Key takeaways:
(a) Illustrates the “plain meaning approach”
b) Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.
(1) Key takeaways:
(a) Illustrates the “contextual approach”
(b) The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and
unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably
susceptible.
(c) Although extrinsic evidence is not admissible to add to, detract from, or vary the terms of a written K, these terms must first be determined before it
can be decided whether or not extrinsic evidence is being offered for a prohibited purpose.
(d) The meaning of particular words or groups of words varies with the verbal context and surrounding circumstances and purposes in view of the
linguistic education and experience of their users and their hearers or readers (not excluding judges). A word has no meaning apart from these
factors; much less does it have an objective meaning, one true meaning.

7. Output and requirements Ks

a) Output – one party promises to sell all the
[whatever] it produces to the other
b) Requirements – one party promises to buy all
the [whatever] it requires from the other
c) Exclusive dealings – obligates everyone to use
their “best efforts”
B. Construction Of Contractual Obligations
1. Interpretation is about the meaning of terms that
exist, construction involves supplying needed terms
that were left out.
2. For the purposes of this course don’t stress about
explicating the differences between the two
3. Gap fillers
a) There are certain fact patterns that have come
up so frequently over the years that the law
recognizes standard presumptions that can be
used to fill out the parties’ intent. Because of
their function, these standard presumptions are
often referred to as “gap fillers”. Some of
them have been developed by common law
courts; others are found in statutes like the
UCC.
b) Such a gap filler will not be used if the parties
have explicitly agreed to a different K term, or
the circumstances indicate that they
reasonably intended something else
c) People being in Ks is a good thing – don’t want to “wipe out” a good K just because these parties didn’t think of everything.
d) Remember, the UCC allows “open price term” Ks, so it has to have rules for how prices are to be set and what limits there are on parties
setting them.

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 4. Relevant gap fillers:
a) Output and requirement Ks can be used to measure quantity in a K for sale of goods.
b) Exclusive dealings
(1) Lucy v. Lady Duff Gordon
c) Duty of good faith and fair dealing:
(1) The obligation to perform contractual obligations in good faith is a general one that applies to all Ks – not just to those that are unclear
or incomplete. This idea has been enshrined in both the RST and the UCC
(2) All of the gap fillers revolve around this, in a way
5. Cases
a) United Airlines, Inc. v. Good Taste, Inc.
(1) Saucy Sisters and the no-cause termination provision case
C. The Doctrine Of Misunderstanding
1. This doctrine may apply in rare situations where the parties manifested apparent assent to the same language but have materially different
understandings of what the language means, and the court cannot resolve the dispute through the process of interpretation and construction.
2. In these cases, a court may find that there is no enforceable K.
3. Similar to incomplete/indefinite agreements but has its differences.
a) Incomplete/indefinite concerns material terms that are left open or uncertain in a K.
b) Here, the terms are included in the K, the parties just have materially different (and reasonable) understandings of what the terms mean.
4. Cases
a) Konic International Corp. v. Spokane Computer Services, Inc.
(1) $25 or $2500 projector case
XV. THE PAROL EVIDENCE RULE
A. The parol evidence rule is based on the assumption that when parties record their agreement in writing, they often intend the writing to incorporate the
final and complete version of what they agreed to.
B. Any evidence of the parties’ expectations that is not reflected in the agreement are referred to as “extrinsic” or “parol” evidence.
C. The terms of a “final” writing may not be contradicted with oral or documentary evidence from before or contemporaneous with the execution of an
agreement.
1. Terms of a “final” and “comprehensive” writing also cannot be supplemented with previous agreements or contemporaneous oral agreements
2. Courts use the term “integrated” to refer to a writing that expresses the final agreement of the parties as to the matters discussed in that writing:
a) “Fully integrated” – writing that is reasonably intended to be final and comprehensive
b) “Partially integrated” – writing that is not reasonably intended to be comprehensive
c) Cannot be contradicted, but may be supplemented to resolve matters silent in the writing
D. The question is usually about the existence of a contractual obligation
1. “One writing” in this context refers to all separate agreements that comprehensively memorialize the terms of the parties’ agreement. (Doesn’t
literally have to be one writing, may be a series of writings)
2. Note: “Parol” evidence is a type of “extrinsic” evidence so courts sometimes use them interchangeably. However, parol evidence is a specific rule
and not all extrinsic evidence is “parol evidence” barred by the parol evidence rule.
E. Procedure
1. Determine whether the writing constitutes a total integration, partial integration, or no integration
a) Did the parties intended the writing to be the final expression of their agreement
b) Determine whether the parties intended the writing to be complete expression
c) Majority Rule
(1) Plain meaning → Four corners of the writing
(2) No extrinsic evidence

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 d) If still ambiguous:
(1) Judge may consider all the surrounding facts and circumstances to determine whether a writing is integrated. The presence of a merger
clause creates a strong presumption of integration but is not dispositive.
(2) Factors:
(a) Merger clause
(b) The amount of detail in the writing
(c) The nature of the writing
(d) Type of transaction and business practices
(e) Relationship of parties and past dealings
(f) The nature of the parol evidence
2. Determine the admissibility of evidence
F. Approaches to determining level of integration:
1. “Naturally” test suggests a writing is not integrated with respect to a term if the parties “naturally” would have excluded the relevant terms
(and put it in a separate agreement). → CL
2. “Certainly” test suggests a writing is integrated with respect to the dispute term only if such a term “certainly” would have been included in
the writing. → UCC
3. “Contextual” approach looks at all surrounding circumstances (and perhaps even the parol evidence itself) to determine whether the writing is
integrated and, therefore, whether the parol evidence should be admitted
4. “Four corners” approach starts with whether the document on its face appears to be fully integrated (i.e., the entire expression) of the parties’
agreement (conceptually similar to plain meaning in K interpretation)
G. Cases
1. Masterson v. Sine
a) Bankrupt brother wants to keep property in family name case

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 (1) Key takeaways:
(a) Example of contextual approach to the parol evidence rule (books says similar to Pacific Gas & Electric)
(b) Notable exception – Extrinsic evidence that would successfully demonstrate that an alleged K is either void or voidable is
admissible, even in the face of the parol evidence rule.
(c) The purpose for which the evidence is being offered is to avoid the K

H. UCC And Parol Evidence Rule

1. Under the UCC, you still cannot contradict the final terms set forth in the writing by evidence of any prior agreement or of a contemporaneous oral
agreement. However, the terms may be explained or supplemented:
a) By course of performance, course of dealing, or usage of trade and
b) By evidence of consistent additional terms.
2. So in essence, under the UCC, so long as the parol/extrinsic evidence isn’t contradictory, the court will consider it.
3. Most similar to the contextual approach.
XVI. MISTAKE AND EXCUSE DUE TO CHANGED CIRCUMSTANCES
A. Mistake
1. Referring to a mistake as to a central fact that existed at the time of the K, and where it would be unjust for the adversely affected party to suffer
the loss.
2. The doctrine of mistake focuses on facts in existence when the parties enter the K.
3. Two categories of mistake:
a) Mutual mistake – mistake is shared by both parties
b) Unilateral mistake – mistake may be by one party only→
mistaken party can void as long as they did not bear the risk
of the mistake
4. If a mutual mistake relating to a basic assumption of the K is made,
the adversely affected party may avoid performing the K as long as:
a) The mistake had a material effect on the exchange; and
b) The party seeking to avoid performance did not bear the risk of
the mistake.
5. If a unilateral mistake relating to a basic assumption of the K is
made, the mistaken party may avoid performing the K as long as:
a) The mistake had a material effect on the agreed upon exchange;
b) Mistaken party does not bear the risk of the mistake; and
either
(1) The effect of the mistake is such that enforcement of the K
would be unconscionable;
(2) The other party had reason to know of the mistake; or
(3) The other party’s fault caused the mistake.
6. Under common law, a party bears the risk of a mistake of fact if :
a) The terms of the K expressly allocate the risk to the party;
b) The court allocates the risk to the party upon finding that it is reasonable under the circumstances to do so; or
c) The party entered into the contract despite conscious ignorance of the relevant facts
7. “Conscious ignorance”
a) A party bears the risk of mistake when he is aware, at the time the K was made, that he has only limited knowledge with respect to the facts
to which the mistake relates but treats his limited knowledge as sufficient
(1) Even though the mistaken party did not agree to bear the risk, he may have been aware when he made the K that his knowledge with
respect to the facts which the mistake relates to is limited. If he was not only so aware that his knowledge was limited but undertook to
perform in the face of that awareness, he bears the risk of the mistake.
b) This is subjective – concerns only what a party to the K actually knows and does, not what a reasonable person would do in the same
circumstances.
8. Cases
9. Estate of Nelson v. Rice

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 a) Guy buys famous paintings at estate sale case
b) Key takeaways:
(1) Court determined estate salespeople were consciously ignorant, therefore it could not be a mutual mistake
B. Excuse Due To Changed Circumstances
1. Excuse due to changed circumstances may be available under one of two
closely related doctrines: (1) impracticability (sometimes called
impossibility) or (2) frustration of purpose.
2. While the doctrine of mistake applies to errors of fact made at the time of
contracting, the doctrines of impracticability and frustration of purpose
look to events subsequent to K formation.
3. Where a party asserts that its K performance has become impracticable or
where it argues that its purpose in performing the K has been frustrated, it
is saying that a profound change of circumstances has defeated its
legitimate expectations under the K.
a) As a result, it asks the court to avoid the K altogether or to adjust the
performances required under the K to take account of the changed
circumstances.
4. Impracticability (extension of impossibility)
a) Where, after a contract is made, a party’s performance is made
impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was
made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.
b) Cases
(1) CNA International Reinsurance Co, v. Phoenix → K for movie and actor died
5. Frustration of Purpose
a) Where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-
occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged,
unless the language or the circumstances indicate the contrary.
b) Elton John concert hypo
XVII. CONDITIONS AND PROMISES
1. In a K, the parties’ obligations to perform their promises are often subject to several conditions; that is, their promises are contingent upon the
occurrence of a number of uncertain events.
a) A promise is a commitment to act or refrain from acting in a specific way in the future.
b) A condition is an event, not certain to occur, which must occur before performance under a K becomes due.
(1) “Event” in this context could be a happening or non-happening.
(2) The uncertainty requirement is one of just common sense – if an events is certain to occur, there is little purpose in making a promise
conditional upon it.
2. Condition precedent – where a condition must be satisfied before the performance subject to that condition will become due.
3. Concurrent conditions – A set of promises that are dependent on each other and must be performed simultaneously.
4. Conditions may be expressed, implied, or construed
a) A condition is expressed if the parties use language in the K (such as “on condition that”, “contingent upon”, “subject to”, “provided that”,
etc.) that makes it clear that the stated event is intended to be a condition.
b) However, if the language is unclear or absent (but it seems parties might have intended for a term to be a condition), sometimes courts have
to use interpretation (implied) or construction (construed) to determine if a condition exists.
(1) A condition is implied where it is not expressly stated but can be inferred as a matter of evidence from the language in the context.
(2) A condition is construed where there is not enough evidence to draw a factual inference, but either a rule of law recognizes a
condition under the circumstances or the court concludes as a matter of law that it is reasonable and fair, given the nature of the
relationship and the usual expectations of the type of K, to find that a condition exists.
(3) If found to exist, a condition has the same ultimate legal effect whether it was expressly stated or determined by implication or
construction. The one significant consequence between the two, however, is that if the parties have expressed a condition, a court will
strictly enforce it to give to the parties’ manifested intent (think “plain meaning”) and should not find that the condition can be
satisfied by substantial compliance. Whereas if an unexpressed condition is to be construed, a court has more flexibility and may grant
some leeway for substantial compliance.
5. Pure condition
a) Term that is only a condition, and neither party makes
any promise that it will be fulfilled and the nonfulfillment
of the condition excuses the performance that was
contingent on it.
b) Would not be a breach of K if the uncertain event did not
occur.
c) If Braves win the WS, I’ll give you $100
6. Promissory condition
a) Where a term is both a promise and a condition.
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 b) If a promissory condition is not fulfilled, the consequences of both a failure of a condition and a breach of K follow → the person
responsible for not fulfilling the condition will be liable for damages or some other remedy, and the other party is relieved of the
obligation to render the performance contingent on the condition.
c) Signed rental agreement. Pay 1st month's rent and you get keys. Event isn’t certain, but if you don’t pay 1st months rent, you don’t get keys
and you are in breach of K
7. Pure promise
a) An unconditional promise→ final stop
(1) Doesn’t cause any other promises or conditions
b) If I pay you $1 million, you build my house
8. Conditions With Ancillary Promise
a) A promissory condition is a condition that is also a promise to do
something within someone’s control, and a pure condition is one where
neither party has any control over it. However, there also exists a
condition with an ancillary promise to use “good faith efforts” to bring
about the occurrence underlying the condition.
(1) For instance, if a tenant makes subleasing a lot conditional upon
the landlord’s authorization, while this is still a pure condition (bc
ultimately neither party has any control over whether the landlord
will provide the authorization), the nature of the condition gives
rise to the implication that the tenant must make reasonable efforts
(such as requesting authorization in good time) to get the
landlord’s authorization.
(2) Such ancillary promise does not have to be expressly stated, the
nature of the condition gives rise to this implication.
9. Cases
a) Jacob & Youngs, Inc. v. Kent → Builder used pipe from a different manufacturer case
B. Excuse Of Conditions
1. Courts, as a general rule, enforce express conditions strictly. However, there are certain situations in which courts have felt justified in excusing a
condition, even though it was legitimately and expressly agreed by parties.
2. Most common:
a) Waiver
(1) A waiver is a knowing and voluntary abandonment of a right
(2) Must show “knowing and voluntary conduct” illustrating an intent to waive the condition and that the condition was not “material” to
the K
(3) Two situations in which waiver will arise:
(a) Waiver by the protected party because that party wants to go through with it anyway.
(b) Waiver by the protected party and the other party wants to go through it.
(4) UCC says you can withdraw on notice.
b) Estoppel
(1) Estoppel operates in this context where the beneficiary of a condition indicates by words or conduct that he will perform the
contingent promise despite nonfulfillment of the condition.
(2) As is true generally with estoppel, the party to be estopped must have known or had reason to know that his words or conduct were
likely to have been relied on by the other party, and they must in fact have been relied on by that party to her detriment.
XVIII. MATERIAL BREACH, SUBSTANTIAL PERFORMANCE, & ANTICIPATORY REPUDIATION
A. Where a breach is so serious that it allows the other party to decline his performance, terminate the K, and sue for full expectation damages, it's called a
material and total breach.
B. Where the breach is not of this gravity, it is called a partial breach, and the performance of the breaching party, even though it falls short of what is
required by the K, is called substantial performance.
1. Thus, if the breach is not material → the other party cannot terminate the K and refuse to pay anything.
C. Where the party has substantially performed, it is entitled to payment of the K price, which is offset by the damages suffered by the other party as a
result of the nonmaterial breach.
D. Generally, these damages are the cost of rectifying the deficiency in
performance.
However, if that cost is excessive and disproportionate, the owner
could be confined to a lesser amount of damages, such as the reduction
of the market value of the performance.
1. Jacob & Youngs Inc. v. Kent→ price to replace pipe was substantial, so
damages awarded was market value of difference in pipes
E. How To Determine What Is A Material Breach?
1. RST provides the following considerations:

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 a) The extent to which the injured party will be deprived of the benefit which he reasonably expected. (Prob most notable)
b) The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived.
c) The extent to which the party failing to perform will suffer forfeiture.
d) The likelihood that the party failing to perform will cure his failure.
e) The extent to which the behavior of the party failing to perform comports with standards of good faith and fair dealing.
F. Concept Of Cure
1. In some circumstances, a breach may be material but not yet total because the time for the breaching party to perform under the K hasn’t yet
expired. If the breaching party offers to cure the breach, the non-breaching party may be required to provide it the opportunity to do so.
a) If one party’s performance is deficient (materially or not), the party may still have a right to raise that level or performance to the standard of
the contract or to a level of substantial performance
b) EXAMPLE: B does materially deficient work, A communicates that work is deficient, and B cures the work without losing the right to A’s
performance (payment) AND w/o wasting court resources by BOK case
2. The proper time for cure depends on the terms of the K
a) If the completion date is a material term of the K → the breaching party must complete the cure by that time’
b) If the completion date is not material → the breaching party may have a reasonable period beyond the time to cure the breach
G. Breach & Substantial Performance Under The UCC
1. The Perfect Tender Rule
a) Seller’s principle obligation under a K for the sale of goods is to tender delivery of the goods at the time and place provided in the K.
b) Upon delivery, the buyer has the right to inspect the goods. If the tender of delivery conforms to the K, s/he must accept them and pay for
them in the manner specified in the K.
c) However, if the seller breaches the K by making a “nonconforming” delivery, the buyer may, regardless of materiality:
(1) Reject the whole;
(2) Accept the whole; or
(3) Accept any commercial unit or units and reject the rest.
d) This is called the “perfect tender rule” set out in the UCC.
e) Exceptions to the perfect tender rule:
(1) Seller’s right to cure
(a) If the tender of goods and rejection occurs within the time for
performance → the seller has the right to substitute a conforming
tender.
(b) If the seller seeks to cure a nonconforming tender after the agreed
upon time for delivery has passed but the seller reasonably believed
the tender would be accepted → the seller gets further reasonable
time.
(2) “Installment contracts”
(a) Where a K qualifies as an “installment contract”, UCC adopts a
substantial performance doctrine – not the perfect tender rule.
(b) An installment k is defined as “one which requires or authorizes the
delivery of goods in separate lots to be separately accepted”
(i) For instance: Buyer bought 50 boxes of glasses from the
seller to be delivered in 5 equal batches of 10 boxes at
different dates over a two-month period.
(c) If the K is an installment K→
(i) UCC allows the buyer to reject any nonconforming installment of goods only if the nonconformity “substantially impairs
the value of the installment and cannot be cured.”
(ii) For instance: Returning to the example above, if, after inspecting the first installment of boxes of glasses, the buyer
discovers that some of the glasses have flaws, the buyer can reject this only if the nonconformity substantially impairs the
value of the installment and cannot be cured. (This is in essence a substantial performance standard).
f) A buyer may reject acceptance of a delivery that fails to conform to the K in any way, no matter how trivial or immaterial. But once a buyer
has accepted a delivery, the buyer cannot reject the goods later.
(1) However, a buyer can revoke acceptance in limited circumstances. Revocation is available only if the goods are substantially impaired
by their nonconformity and one of the following three circumstances exists:
(a) The buyer reasonably assumed the seller would cure the nonconformity but the seller did not do so,
(b) The buyer discovered the nonconformity after acceptance due to the difficulty of detection, or
(c) The buyer discovered the nonconformity after acceptance due to the seller’s assurances.
H. Anticipatory Repudiation
1. A party cannot breach until the date for performance under the K arrives.
2. However, it sometimes happens that before the date for performance, the party who has promised a performance makes it clear by words or
conduct that s/he will not perform when the time comes due.
3. This advance notification of breach is called an “anticipatory repudiation”.

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 4. The requirement of material breach applies to repudiations as it does to breaches.
a) Therefore, to be treated as a repudiation (allowing a party to declare advance breach of K) the indication of intent not to perform must relate
to a material term to the K.
b) UCC follows the same approach.
(1) For instance: If landscaper and homeowner are under K and the landscaper informs the homeowner that he is running behind schedule
and will not be able to perform until 3 days after the date of performance, whether or not the homeowner will be able to cancel the K
or sue for expectation damages in response to this repudiation will depend on if the delay is material to terms of the K.
(a) If the K contained language such as “time is of the essence” court would likely find that this delay was material.
5. If a party repudiates, the other party does not have to cancel the K or immediately sue for anticipatory damages, rather, s/he can do nothing and
wait to see if the promisor will still perform at the appointed time.
a) A repudiating promisor may retract his repudiation as long as the retraction precedes the other party indicates that s/he considers the
repudiation to be final.
b) The other party is entitled, but not required to, urge the repudiating party to retract his repudiation.
I. Specific Performance
1. Damages are adequate where the loss is best thought of as an economic one that can be reduced to a dollar figure
a) But if you can’t buy another one (property, etc), then damages might not be adequate
b) Court will rarely compel specific performance of personal services, but perhaps will more often compel performance of an agreement to
convey real property
2. Specific performance is only permitted when:
a) Damages (remedy at law) would be inadequate to compensate the non-breaching party
b) Equity so requires
(1) Court believes, in light of the circumstances, that the equitable remedy is appropriate
3. Equitable considerations
a) Unclean hands→ If Π got the deal under questionable circumstances (bad but not bad enough for formation defense), court may
decline to grant specific performance
J. Assignment, Delegation, & Novation
1. Assignment→ someone possessing a right under a contract transfers (assigns) that right to someone else
a) More liberal than delegations
(1) Simple settlement agreement where a person injured in an accident agrees to settle for $1000 per month for 10 years. The person has a
right to the payment, every month. If the person, for example, “needs cash now.” She might assign to J.G. Wentworth her settlement
payments – i.e., her right to receive money every month.
(a) An assignment is a right under a contract.
(b) Generally, assignments are easier to effect because the payor doesn’t care whom she has to pay, as long as she can discharge the
obligation to pay.
(c) Also, generally, the assignor of the right no longer has any right to the money once it’s been assigned.
b) An effective assignment typically extinguishes the assignor’s right to go after the obligor for payment
2. Delegation→ someone owing a duty under a contract transfers (delegates) that duty to someone else
a) Simple lawn mowing contract→ Yard Guy is obligated to mow my lawn every week for the whole summer. If Yard Guy wants to
substitute Yard Lady, then he would delegate his duty to mow to her. Because I might have an interest in making sure I get equal
performance, delegations are not as easy as assignments to effect.
(1) Even if the delegation is effective (either because I approve or the court concludes I didn’t have a substantial enough interest in
performance by Yard Guy himself), Yard Guy is still liable to me to ensure my yard is mowed.
(2) UNLESS I agree to a novation of the entire contract to Yard Lady, where I am agreeing to substitute Yard Lady for Yard Guy in the
contract and he is off the hook.
3. Novation→ essentially a permanent delegation
a) Requires the obligee to clearly and expressly manifest intent to accept the novation
XIX. CONTRACT DAMAGES AND “BENEFIT OF THE BARGAIN”
A. Fundamental Principles Of Contract Damages
1. K damages seek to make the aggrieved party whole – makes the party as well off as if the K had been performed (but no better off – their objective
is not to deter or punish).
2. RST states the purpose of remedies in K law is to protect the following interests of a promisee:
a) Expectation interest – interest in having the benefit of the bargain by being put in as good a position as he would have been in had the K
been performed.
b) Reliance interest – interest in being reimbursed for loss caused by reliance on the K by being put in as good a position as he would have
been in had the K not been made. (promissory estoppel)
c) Restitution interest – interest in having restored to him any benefit he has conferred on the other party. (unjust enrichment)
3. Expectation damages (“benefit of the bargain”) are the standard K remedy.
4. Cases
a) Hawkins v. McGee→ Hairy-hand case
(1) Key takeaways:
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 (a) Introduces the “benefit of the bargain” and K damages generally.
(b) Court held that the true measure of the P’s damage is the difference in value between what the P expected get from the K and
what the P actually received
(i) In this case: the difference between the value to the P of a perfect/good hand (such as the D promised him) and the value
of his hand in its present condition, including any incidental consequences fairly within the contemplation of the parties
when the K was made.
(c) Losses are limited to those that the parties must have had in mind when the K was made or such that they either knew or ought to
have known would probably result from a failure to comply with its terms.
B. “Benefit Of The Bargain” At Common Law
1. The loss to the P of the value of the K is the fundamental component of expectation damages.
a) This loss is referred to as the P’s “direct” damages
(1) Where there is a complete lack of performance → this amounts to the value of the entire K from the P’s point of view (minus any
expenses avoided by not having to perform).
(2) Where D has partially performed → this amounts to the difference in value between what the P expected to get from the K and
what the P actually received.
2. Expectation damages = direct loss/loss in value + incidental/consequential loss – costs avoided
a) Direct loss – damages from the failure of the breaching party to deliver the full performance
b) Consequential damages – lost profits in other transactions, other downstream costs that would not have arisen if not for the breach
c) Incidental damages – Costs of dealing with the breach itself (inspecting the work, etc.)
3. Three ways to measure expectation damages:
a) Measurement by reference to market value
(1) Compares the K price to the market value of the performance promised under the K
(2) Tend to use when you don’t have a substitute transaction
b) Measurement by reference to substitute transaction/value
(1) Measures the value of the lost K performance by referring to the cost of a substitute performance.
(2) Substitution must be reasonable, have to mitigate damages/try to find something comparable.
c) Measurement by reference to lost profits
(1) In some situations, court will look at the profit P would have earned under the K at issue.
(2) Anna Accountant hypo in book
(a) The profit to be earned from performing the services was certain and the fees themselves are central to the K. Finding a
“substitute client” who might pay more might not happen, so she gets a $1,000 fee if Ed breaches.
(b) If she did find a substitute, then Ed might argue that her substitution was perfect ($1,000 for $1,000) or that the market value was
not greater than the K price. Anna would argue that she missed out on “volume” (?)
4. Cases
a) Handicapped Children’s Education Bd. v. Lukaszewski → Speech therapist leaves for higher-paying job based on doctor’s note
(1) Key takeaways:
(a) This illustrates the substitute value measure of damages:
$11,786 (salary of more qualified replacement) - $10,760 (D’s salary under K) = $1,026 (damages)
(b) The fact that the school obtained a more qualified speech therapist was not a valid argument that they did not experience loss.
(c) Damages for breach of K are measured by the expectations of the parties. The school expected to receive the services of a speech
therapist with D’s education and experience at the salary agreed upon. Any additional value the school may have received from
the replacement’s greater experience was imposed upon it and thus cannot be characterized as a benefit.
C. Limitations In Recoverable Damages
1. Duty To Mitigate Damages
a) The law will not allow the non-breaching party to recover for damages that could have been reasonably avoided even if the breaching party
has to take some affirmative steps to avoid the loss. The non-breaching party need only make a reasonable effort and does not have to
mitigate if it would cause undue risk, burden, or humiliation.
b) Consistent with the principle of making someone whole, but not better than whole
(1) Compensating the aggrieved party without punishing the breaching party
c) UNDER UCC
(1) Not really a separate category but UCC recognizes impact
(2) Don’t have to cover, but if you don’t→ may not get incidental and consequential damages
2. Foreseeability
a) Hawkins v. McGee
(1) Losses are limited to those that the parties must have had in mind when the K was made or such that they either knew or ought to have
known would probably result from a failure to comply with its terms.
b) Loss arises:
(1) In the ordinary course of events, OR
(2) As a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know
(a) Special circumstances in damages→ something that isn’t readily foreseeable as a damage.

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 (b) Hadley v. Baxendale (case about shaft)
(i) Damages have to arise naturally from the occurrence or from a special circumstance- if special circumstance it has to be
communicated to the other party so they know the damage is possible.
3. Reasonable Certainty
a) Loss of future profits may be awarded if evidence is available to furnish a reasonably certain factual basis for the computation of probable
losses
b) Rancho Pescado, Inc. v. Northwestern Mutual Life Insurance Co.
(1) Aspiring catfish farmer case
(2) Key takeaways:
(a) Reasonable certainty concept of limiting damages.
(b) Future profits are available for new businesses, as long as the future profits are established with reasonable certainty.

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