contract ii short sheets

8/2/2019 Contract II Short Sheets

http://slidepdf.com/reader/full/contract-ii-short-sheets 1/10

Statute of Frauds

Analysis (1) Is it w/in the SOF (2) Are Writing Requirements Met (3) Any Exceptions/Defenses to SOF?

1yr / Lifetime

Real estate

Sale ofGoods($500+)

Suretyship

• By its terms the agreement is not to beperformed within 1 yr from time of making.Klewin (pg. 270)

• Looks prospectively

• ∏ has burden

• If performance can be satisfied w/in 1 yr, not w/inSOF (lifetime issues)

• If death satisfies K - not w/in SOF

• If death breaches - w/in SOF

• Signed by party against whom enforcement is sought

• Essential Terms reqʼd• Detrimental Reliance - R2d §139

• (1) reasonably expect to induce action, does induce,injustice.

• (2) Factors: other remedies avail? (cancel andrestitution), char. of action/forbearance, connection

between action and how relates to promise,reasonableness of action, extent action foreseeable

• Monarco v. Lo Greco (pg. 305)

• Promissory Estoppel - R2d §90

Any transfer of interest in real property • Signed by both parties

• Essential Terms [Price, lot, etc]• Part Performance in Reliance

• Partial performance must unequivocally indicateexistence of oral K.

• Factors considered here: Possession of prop.,improvements of, payment of substantial part ofpurchase price

• Richard v. Richard (pg. 280)

• Sales of Goods of $500+

• UCC §2-201

• Impt. to determine if parties are merchant, w/r/twriting requirements

• Merchant: deals in goods of the kind orholds self out as having know/skill (2-104pg. 229 in Stat. Supp.)

• Terms: Essential not reqʼd

• If quantity listed, but wrong, on good up to that quantity

• Writing: Against whom enforcement is sought BUT

• Between Merchants: A confirmation of sale memo will obviatewriting req if:

• If w/in reasonable time (all relevant circ., incl. custom andpractice of parties) St. Angsar Mills v. Streit (pg. 289)

• Sufficient against sender

• Receiving has reason to know of contents, will satisfywriting requirement:

• Unless: objection by receiver w/in 10 days after receipt.

• Enforceable despite SOF if:

• K admitted in pleadings, testimony or otherwise incourt (Rule of Effrontery abrogated)

• Specially made goods not suitable for sale to others

• if substantially begins to perform or procure beforenotice of repudiation and under circ. reasonablyindicate goods are for buyer

• payment made and accepted or goods received andaccepted

• From 2-201(3)

• R2d §139 may also apply (some say no), Sponsors sayyes

• Promise for A to answer for debts, defaults,miscarriages of B

• Not Guarantee (Guarantee: predicatedupon Bʼs default)

• Suretyship liability in tandem

• Not Novation (Nov. = Creditor releasesobligation of B in xchange for obligation ofA)

• Promise must be given to the creditor Langamv. Alumni Assc. of UVA

• Applies to future obligations

• Signed by party against whom enforcement is sought

•Essential Terms reqʼd

• Main Purpose Rule (likely more a not w/in SOF arg)

•If surety is taken by A, and fair inference is thatpurpose was to secure benefit for itself notpreviously enured

• Essentially, not suretyship b/c there considerationflows one way.

• Here, flows both ways

• Central Ceilings v. National Amusement pg. 302

• Also, R2d §90, §139

Court Preferences — 1 year, suretyship not favored, construed narrowly.Writing Requirement Conflicts: If K falls under 2 or more categories: Majority: Meet both requirements. Minority: Meet only one of the two

Other Defenses: Fraud, Misrepresentation,

Steve Udick — Contracts II — Prof. Rogers — Spring 2010



Defenses To Enforceability

Minority

MentalInfirmity

PreexistingDuty Rule

Defenses on Capacity

Rule: Contract of minor, other than for ne• Emancipated minor not exception Kief• Disaffirmance after Majority: Can disaf

majority (No set rule, but some states p

• Effect of Disaffirmance• May be restitution required each wa• BUT if K for services, not goods, sell

• Right to Disaffirmance strong, may tru

cessaries is void or voidable at minorʼs option.r v. Fred Howe (pg. 312)

firm

within reasonable time after turning age ofrovide statutory—i.e. OK 1yr)

if unjust enrichment exists (basketball kid)

er may be subject to loss for dealing with minop other defenses.

r

Defenses• Necessaries: Food, clothing, health care, education

• Maybe Housing. Not if other housing option exists. Rivera v. ReadingHousing (314n.1)

• Losing Power to Disaffirm• Parental Consent: Brooke Shield Case (was statute in NY, though)• Later Ratification: Minor ratifying K after reaching age of majority is bound.• Judicial Approval: If K is judicially approved at time of making, canʼt disaffirm.

Rule R2d §15: Person incurs only voidab• 15(1)(a) unable to understand in rea

• Weak-mindedness is not mental i• 15(1)(b) unable to act in reasonable

• Requires: (1) Medically classified• Ortele v. Teachersʼ Retirement

• Often instance where unequal bargain,terminates to extent K has been perfor

• Will v. Contract: Will can execute durin

le K duties by entering into transaction if by reaonable manner, nature and consequences of tcapacity Cundick v. Broadbent (Cognitive tema

nner in relation to transaction and other partsychosis, (2) other party knew or should haveoard (Non-Cognitive test)and this used as defense. However, see 15(2)ed in whole or in part or circumstances chang

g lucid period, but not K. K binds immediately,

sonransst, buy hakno

, whed swill c

f mental illness or defectction (Old, Cognitive)t outline has hypo on non-cognitive test)reason to know of the condition (New, Non-Cognitive)n, (3) no substantial harm to other party

re if K has fair terms, and other party without knowledge of infirmity, avoidancech that avoidance would be unjust, where court should look in equity.ould be revised in theory. Law favors devising property through will. Freedom from K

Defenses based on bargai ing process: Pre-existing Duty Rule, Undu Infl ence, Duress (Including Economic), and Concealment and Misrepresentation

Common LawRule: Performance of a preexistinglegal duty guaranteed by contract is notsufficient consideration to support apromise. Alaska Packers v.Domenico

• R2d §73: Performance of legalduty owed to promisor which is

neither doubtful nor subject ofhonest dispute is notconsideration; but similarperformance is consideration if itdiffers from what was required bythe duty in a way which reflectsmore than pretense of bargain[Usually applies to coercion orduress]

• Pre-existing duty to 3rd party is stillpre-existing duty. Jockey case

UCC• Rule 2-209(1): An agreement modifying

a contract within this Article needs noconsideration to be binding• Good Faith in modification required• Comment 2: “modifications made

there under must meet the test ofgood faith imposed by this act . . . and

the extortion of a modification withoutlegitimate commercial reason isineffective as violation of a duty ofgood faith

Av•

•

•

•

• •

iding Pre-existing Duty Ruleescission & Modification:Where existing K is terminated by consent of both parties and new one executed inits place, not pre-existing duty rule Schwartzreich v. Bauman-Basch (rippingsignature case)R2d §89 Modification of Executory K:• A promise modifying a duty under a contract not fully performed on either side is

binding

• (1) If modification is fair and equitable in view of circumstances not anticipatedby the parties when K was made; or

• (2) to extent provided by statute; or• to extent justice requires enforcement in view of material change of position in

reliance on the promise.Not insisting on rights, but relinquishing them, then will be held to new agreement.Watkins & Son v. Carrig (Unlike Alaska Packers, could have found someone else todo work and reject the new contract demand by excavator)

ew ConsiderationRule in Pinnelʼs Case: “by no possibility, a lesser sum can be satisfaction to theplaintiff for a greater sum,; but the gift of a horse, hawk, or robe, etc. in satisfaction isgood” Like §73: Basically not partial payment, but substitute consideration that ismore than pretense of bargain. Foakes v. Beer Partial Payment case




Duress (In

bargainingprocess)

UndueInfluence

Concealmentand

misrepresent

Unfairness

Defenses based on bargai ing process: Pre-existing Duty Rule, Undu Infl ence, Duress (Including Economic), and Concealment and Misrepresentation

• Duress: impermissible pressure exertepre-contractual bargaining or attempted

• Standards:• “Restraint or danger, either actually i

severity or apprehension to overcom• Forced to agree by means of a wron

• Objective v. Subjective: Some de

attendant circumstances• But must have reasonable degree of te• Economic Duress Austin Inst v. Loral

• Courts found economic duress whercould not be obtained elsewhere, (3)not adequate given Loralʼs existing cpenalties for breach)

d by one party over another during eitherrenegotiation of existing deal

nflicted or impending, which is sufficient ine mind of person of ordinary firmnessgful threat precluded the exercise of free willate. Recent trend is to take into account

merity in the face of the threat

(1) withheld necessary goods, (2) whichand ordinary remedy based on breach of K

ontract with the Navy (that would result in

• I•••

•••

•(

•

DuressThreats that are criminal or tortiousSome threats to business interestsLegal threats without legal basis for claim may be

ot DuressThreat of lawful action not wrongfulThreat of suit with valid legal basis of suit is not duress

ote: If duress found, contract can be rescinded or is avoidable, and restitution appliesction in Equity)uress Harder to Prove than Pre-existing Duty rule

• Undue influence involves status or relat• “That kind of influence or supremacy of

overborne and he is induced to do or fo• Characteristics of over-persuasion (if

transaction in unusual place; (3) insipersuaders by dominant against sing

• Odorizzi v. Bloomfield School Dist

ionship between parties where two parties notone mind over another by which that other is prbear to do an act which would not do, or woulnumber exist, may be characterized as excestent demand that the business be finished at ole servient; (6) absence of third party advisers.

dealireve

do,ive):nce;to se

ng at armʼs length (Still dealing with bargaining process)n

ted from acting according to own will or judgement, and whereby will of person isif left to act freely(1) Discussion of transaction at unusual place or time; (2) consummation of

(4) extreme emphasis on untoward consequences of delay; (5) use of multiplervient; (7) statements that no time to consult financial or legal advisers.

• Bare non-disclosure does not create lia• But, where enough is said and done

sellerʼs fraudulent description. Basic• Misrepresentation must be material• Misrepresentation must be of fact, not

• But, statement of party with superior• Does not need to be misrep. of fact

presentee does not have equal oppo• Misrepresentation of law usually not en• Remedy is rescission, so damages wo

bility Swinton v. Whitinsville Sav. Bankby seller so that seller is bound to disclose moally, Partial disclosure creates duty for full discl

pinionknowledge may be statement of fact, althoughhere: (1) fiduciary relationship, (2) some artific

rtunity to be appraised of truth or falsity of fact

ough, but if parties have unequal knowledge ald be unjust enrichment

re tolosur

it mae orrepred in

a

void deception of buyer and did not disclose more, buyer may rescind contract for. Kannavos v. Annino

y be opinion among equal partiestrick employed by representer, (3) parties are not dealing at arm ʼs length, (4) wheresented. Vokes v. Arthur Murray (Horrible Dancer Case)unequal position, may be enough

Defenses to Enforcement baseNote: Still underlying these defensd on bargain and performance: Unfairnees is Freedom of Contract and that existence,

ss,

Sot a

tandard form/Adhesive Contracts, Unconscionability, Good Faith, and Public Policyequacy of consideration is important. But some exceptions, especially in equity

Ultimate test is: Whether the contract is r• If action is brought in equity (i.e. for spe

• Most courts look prospectively, and d• Sometimes looks retrospectively, an• Looking at multiple factors: (1) Adeq

• Court may also consider outside issues• If action is for damages, adequacy of c

dealing at armʼs length without fraud wi• Middle-man and profiteering usually is

asonable / faircific performance), adequacy of considerationetermine if consideration is adequate based omeasure consideration against benefit receiv

uacy of consideration, (2) Measure of benefit asuch as alienability of land, etc... in specific pensideration not relevant in unfairness claim.

ll not affect validity of K. Black Industries v. Bot unfairness, but may be subject to statutory

ma

yriskd.

gainrforis bushprovi

be measured to determine fairnesss assumed at formation Tuckwiller v. Tuckwiller

cKinnon v. Benedictt consideration, (3) Oppressive/non-oppressive conditions / unconscionabilityance claimsund by familiar terms that relative values of consideration in K between business men

sions, especially w/r/t governmental dealings.




Standard FormContracts AndContracts of

eson

Unconscionability

Defenses to Enforcement based on bargain and performance: UnfairnessNote: Still underlying these defenses is Freedom of Contract and that existence, no

, Standard form/At adequacy of con

hesiveideratio

ontracts, Unconscionability, Good Faith, and Public Policyn

is important. But some exceptions, especially in equity

Benefits of Standard form K: reduce uncertainty and save time and trouble; they simplifyadministration and make superior drafting skills more widely available; and they make ris[increase] that real security which is the necessary basis of initiative and assumption of fContract of Adhesion: A standardized contract, which, imposed and drafted by the partystrength, relegates to the subscribing party only the opportunity to adhere to the contractBoilerplate v. Dickered Terms

• Dickered Terms — negotiated terms, thus real assent• Boilerplate terms — Usually standard terms by all members of industry• Enforceability of Boilerplate:

• Lack of Notice may imply lack of mutual assent, and thus no K [Like in coat check s• Doctrine of Reasonable Expectations: Reasonable expectations of the party withou

planning andks calculable andreseeable risk

of superior bargainor reject it.

t

ub or valet stub]t the boilerplate sh

ing

ould

Test Graham v. Scissor-Tail Music Performer case• Step 1: Is the contract one of adhesion?

• If Yes, step 2; If no, no defense on this ground• Note: Adhesive K is not per se invalid

• Step 2: Adhesive K is not enforceable if:• Is a contract or provision that does not fall within

reasonable expectation of weaker/adhering party; or• Is unduly oppressive or unconscionable

K may also be unenforceable on statutory grounds• Could be subject to statutory requirements and remedies

if requirements breaches Doe v. Great Expectations

• R2d §211(3): Where one party effectively manifests assent to standardized expresother party has reason to believe that he would not have assented if he had knownparticular term, then that term is not part of the agreement [Also protects parties whterm]

Strict Construction may be way for court to avoid adhesive terms or stipulations SidewalDuty to Read / Duty to Disclose: K is generally binding even if party didnʼt read (Duty to

• But, K must be understandable and meet statutory requirementsRemedies: Usually is rescission of K, thus look to restitution interest.

ion of agreementt

hat it containedo do not understan

k; not lawn caseread)

nd

d K

Examples• Forum selection clause enforceable if reasonable.

Carnival Cruise v. Shute• Exculpatory clause usually not enforceable, but in TX can

if accepted knowingly, voluntarily, and for consideration• Arbitration Clauses - Depends

Unconscionability: No precise definition, but essentially when contract or clause is so onunfair, that could should refuse to enforce as a matter of judicial policy.• Principle is one of the prevention of oppression and unfair surprise and not of disturba

of risks because of superior bargaining powerRules: UCC 2-302 & R2d §208 Essentially the same• Unconscionability is matter of law for court to decide• If finds contract or clause unconscionable, can: (1) refuse to enforce entire K, or (2) re

provision, or (3) reform the provision [including price]• Comments to each section provide examples and explanations

• Procedural Unconscionability: Unfairness in bargaining process• Adhesion Ks usually satisfy, because is oppressive

• Substantive Unconscionability: Unfairness in bargaining outcome (unfairness of terms• Usually need both procedural and substantive, but is on a sliding scale, at least in CA

Foundation Heath• If Price is unconscionable, two routes determine reformed price (relates to damages)

• Common law: Net cost + reasonable profit and charges necessarily incurred + reas• UCC: Focuses on Buyer over Seller: Comparison between what for-credit price and

by price at which similar property or services are readily obtainable in credit transacconsumers.

Unconscionable as to Public Policy / Exculpatory ClausesClass action waiver substantively unconscionable because defeats/frustrates public policlegislation. Court said no need to find procedural unconscionability [diff?] Scott v. CingExculpatory Clause unconscionable, as is class action on grounds that severely handicavindicate consumer rights. Scott v. Cingular WirelessGateway Case: arbitration clause not unconscionable where customers had 30 days toreturn/reject product. Court finds not K of adhesion. Not unconscionable. Was duty to r

e-sided, so

n

ce of allocation

fuse to enforce

) Armendariz v.

onable financevalue measured

tion by like

y embodied inular Wireless

s ability to

read terms andad.

CaseWillia• Sub.

pay• ProcJones• Sub.

$14• Proc

custFrancTerm a• She

• S• P

• Con• S• P

Graha• Sub

esse• Proc

UniArmen

• S• P

xampless v. Walker Thomas (Dragnet Clause)

. UnCon — dragnet clause keeping balance on all, despiteents.

. UnCon — If ∏ wanted stereo, was only way to obtainv. Star Credit (Really Expensive Freezer). UnCon — Price term unfair, agrmnt was for freezer for9.69 after credit charges, yet max retail price was $300. UnCon — Not highly focused on, but merchants preying onomers w/ high pressure sales tacticsise Agreements

t issue is termination clausell Oil Casebstantive — 10 day notice for termination

rocedural — “gross disparity in bargain power”tra Zapathas v. Dairy Martbstantive — Not uncon, had 90 day notice for term

rocedural — Not procedural, was dickered term.m v. Scissor Tailtantive — Arbitration mandated, and appointed byntially opposing side.edural — Oppression - to book performer, required to usenʼs contractdariz v. Foundation Healthbstantive — Arbitration clause, no modicum of bilaterality

rocedural — Employment Ks adhesive, no bargaining power




Performing inGood Faith

Void as AgainstPublic Policy

Defenses to Enforcement based on bargain and performance: UnfairnessNote: Still underlying these defenses is Freedom of Contract and that existence, no

, Standard form/At adequacy of con

hesiveideratio

ontracts, Unconscionability, Good Faith, and Public Policyn

is important. But some exceptions, especially in equity

Common Law and UCC both require good faith• R2d § 205: Every contract imposes on each party a duty of good faith and fair dealing• UCC 1-304: Every K or duty within UCC imposes a good faith effort in its performance• In UCC — Good faith not independent cause of action, must be tied to something• Good Faith in Common Law: Acting with superior knowledge, still good faith | Sharp D• Contract Can Define good faith standard Bloor v. Falstaff

• Good faith: Reasonable commercial Standard, less exacting than best efforts• Best efforts: More exacting standards than good faith. Measured by focusing on pe

• Best Efforts implied in UCC where Exclusive Dealing (when good faith is implied,• Best Efforts also implied on Percentage leases, unless there is a minimum rent s

• Good Faith in Termination• Often in at-will agreements, notice is implied for termination, and serves as the barg• Notice must be reasonable: I.e. usually time to recoup reasonable outlay in relianc• Notice need not be written, if is actual Lockwell v. US Shoes • If contract expresses K of indefinite duration, then no notice is required, not termina• Measure of Damages for failure of good faith notice is reliance. Since at will, would

• If contract expressly states terminable w/o liability to the other, then likely that is g

in its performanceand enforcement

ealing is not good

rformance of targenot expressed)t. Reason is leas

ained-for detrimen.

b

le at will: I.e. whelikely be a R2d §9 iven effect and no

and its

faith. Is

ted part

s are e

t.

re langu0 Promi§90 rec

enforcement

matter of fact for fact finder Market Street v. Frey pg. 42

(subjective)

clusive dealings, so may also be implied under common law

age has “to heirs, executors and assigns” Listerine Casesory Estoppel remedy.ver.

Illegal ContractsContracts in violation of specific laws: Courts look to code to find clear legislative

expression of policy.R2d § 178 Balancing Test For Void As Against Public Policy• promise or term unenforceable on public policy if legislation says so or in interest of

its enforcement is clearly outweighed in circumstances by public policy againstenforcement of such terms

• In weighing interests in enforcement of term: (a) parties justified expectation, (b) anyforfeiture result if enforcement denied, (c) special public interest in enforcement

• In weighing public policy against enforcement: (a) strength of policy as manifestedby legislation or judicial decisions, (b) likelihood refusal to enforce would further thatpolicy, (c) seriousness of misconduct involved and extent it is deliberate, (d) directness of connection between misconduct and that term

Burden to show Kʼs enforcement is violation of settled public policy of state, orinjurious to morals of its people on defendant Bovard v. American Horse Bong CaseUnclean Hands: He who comes in equity must come with hands clear

• But, misconduct must bear relations to subject matter of suitIn Pari Delicto: In circumstances of equal fault, position of ∆ is more compelling

• Whether the enforcement of K would make courts party to carrying out what isforbidden by law XLO Concrete v. Rivergate “The Club” Case

• Equities of both parties important: Forfeiture, relative culpability, bargainingpower, and knowledge of parties considered in assessing possibility of unjustenrichment.

Inducing official action: Inducing by persuasion OK, by payment is not.Commercial Bribery:• K procured by illegal means, likely unenforceable as PP Sirken v. 14th St. Stores• K formed legally, but performed il legally probably not against PP, unless nature

essentially required illegal performance. McConnell v. Commonweath Pictures• Licensing Laws: LIcense for health/safety - unenforce | for revenue - enforceable

Generally: Court

so on grounds thRestraint of Trad• R2d §§186-18

than required femployee, and• Enforcemen

• Rule of Rare reaso

• Blue Pen:enforcedremains a

• All or notTermination of At-• Underlying iss

the generally f• If choice is onl

termination ma• If up against ju• No wrongful te

a general counmust report co

Family Issues• Courts wary to• Pre-nup: Parti

need not be ex• Best interest o

as freedom of

detect

t betterCoven

7

: Coveor prote(3) is n

t Approaeason:nably ne: Unreato extentfter woring: EitWill Exie is tha

vored ay betwey exist.dicial porminatiosel andnduct.

step intes treatact, thof 3rd parcontract.

Judicially Created Public Policyr derive policy from judicial or social norms, or refuse to do

left for legislatureants not to Compete Hopper v. All Pet Animal Clinic

nant not to compete is only valid if restraint is (1) no greatertion of employer, (2) does not impose undue hardship ont injurious to the public.chesbsent bad faith of employer, court will enforce to extent they

cessary to protect employerʼs interestonable restriction against competition can be modified andthat grammatically meaningful, reasonable restrictions making the restriction are stricken

h

er reasonable and enforceable in total, or not at alltence of Hobsonʼs Choice may be outcome determinative

t to imply any general standard for termination messes with

nd protected at-will employmentn reporting and violating statute then claim for wrongfulHobsonʼs Choice Sheets v. Teddy Frosted Foodslicy instead of statute, case is weakern for lawyer, b/c effect on atty-client relationship. True in bothfirm situation. PR rules eliminate Hobsonʼs Choice. Attorneyalla v. Gambro

familial issues

d equally; must be full fair disclosure of financial position,gh. Simeone v. Simeone

ty to litigation (child) may trump a lot of other policies, such. Surrogacy selling void against PP In the Matter of Baby M




Mutual Mistake, Impracticability/Impossibility, and Frustration of Purpose

Mutual Mistake Impossibility, Commercial Impracticability Frustration of Purpose

Mutual Mistake: Both parties are mistaken to some basicassumption underlying the contract.For mutual mistake to be effective, must overcome pacta sunt

servanda — “Agreements must be observed”

R2d § 152 Mutual Mistake• Where a mistake of both parties at time of contract was made

as to basic assumption on which K was made mas a materialeffect on the agreed exchanges of performances, the contractis voidable by adversely affected party unless he bears risk ofmistake under §154. (2) In determining whether mistake hasmaterial effect on the agreed exchange of performances,account is taken any relief by way of reformation, restitution orotherwise.

R2d § 154 Allocation of Risk of Mistake• A party bears the risk of mistake when

• the risk is allocated to him by agreement of parties; or• he is aware, at the time the contract is made, that he has

only limited knowledge with respect to the facts to which

the mistake relates but treats his limited knowledge assufficient.

Courts will often find assumption of risk by a party, thusrescission by mutual mistake very difficult• Because of pacta sunt servanda , mere undue hardships are

not sufficient for mutual mistake. Stees v. Leonard Collapsing building case.

• Remedy for mutual mistake is rescission. Each party shouldbe granted restitution. (i.e. benefits conferred either way suchas improvements or fair rental value while occupying land, aswell as payments) Renner v. Kehl jojoba case

• But, if one party gets more than bargained for, may not bemutual mistake (i.e. Renner, but find water and oil)

Mutual Mistake in Sale of Goods

• No Art 2 provision, so common law applies• Conscious ignorance bars mutual mistake Wood v. Boynton

(Diamond Case)• But, barren cow substantially different than breeding one

Sherwood v. Walker Rose 2d of Aberlone• Both cases above, difference is at most who bore the risk

Impossibility: Where performance depends on the existence ofa given thing, and such existence was assumed as basis of theagreement, performance is excused to the extent that the thingceases to exist or turns out to be nonexistent• Courts may use constructive conditions to excuse

performance if there is impossibility. Taylor v. CaldwellTheatre Burnt Down

• Performing by more than ordinary means may be impossibilitydepending. Mineral Park v. Howard Gravel under water

Impracticability: A thing is impossible in legal contemplationwhen it is not practicable; and a thing in impracticable when itcan only be done at an excessive and unreasonable cost.Existing impracticability — impracticable because of conditionsexisting at time of K, but without parties knowledge MineralPark v. Howard is exampleSupervening Impracticability — impracticable because ofconditions after K is formed.Force Majeure Clause: Given effect unless too broadCommercial Impracticability Test UCC 2-615 Transatlantic v.

US Suez case• First, must be a contingency — something unexpected by

both parties must have occurred• Second — Risk of the unexpected occurrence must not have

been allocated either by agreement or custom• Foreseeability may impact risk allocation, but isnʼt

dispositive Transatlantic v. US• Third — Occurrence of the contingency must have rendered

performance commercially impracticable• Looking for costs incredibly disproportionate

• 34k additional cost on 300k Not C/I Transatlantic• Not going to get C/I on loss of profits Eastern v. Gulf

• Note: Court must find all three | This is application of UCC aspersuasive authority

Casualty to GoodsAvoidance by buyer only when risk has not passed

Subjective v. Objective Impracticability:Objective - thing cannot be done (where C/I usually allowed)Subjective - I cannot do the thing (i.e. pay)(C/I likely not allowed)

Stranded SellersSelland v. Kind Contracts specified source for middle manCanadian Intʼl Maybe risk assumed that output by singleproducer would be consistent, or maybe perishable goods.

If K is “personal” death or illness may by C/I Buccini v. Paterno

Frustration of Purpose: Similar to C/I, but the performance isstill possible, but happening of contingency makes performancecommercially valueless.• Where essential purpose of K is frustrated

• I.e. renting flat to watch coronation, where buyer and seller

were aware coronation was why rental occurred, and Kinggot sick, no coronation on that date. Krell v. Henry

• Not mutual mistake, because mutual mistake must havefundamental misunderstand as to material facts before and atformation

Test: Same as C/I, mostlyStep 1: Was there a contingency — something unexpected byboth partiesStep 2: Risk not allocated or assumed by one partyStep 3: Occurrence of condition renders performancecommercially valuelessUCC 2-615 Of no more avail to buyer than common law

Govt. restrictions may not be frustration, if seller can divert orship elsewhere Swift Canadian v. Banet

Chase Precast v. Paonessa: K to make concrete barriers• Contingency — Public protests against barriers• Risk Allocation — Both parties had dealt with govt., thus were

aware of clause allowing deletion of terms/reduction ofquantity

• Frustration: Chase could still make, and Paonessa could stillreceive the barriers, but Paonessa had nothing to do withthem because K for them was gone. Thus, frustration ofpurpose.




Determining Contractual Obligations: What the K requires

aro v enceRule

ContractInterpretation

• Whether parol evidence admissible to showprior or contemporaneous agreement are part ofwritten contract.

• Collateral vs. Part of K: Whether oralagreement in question relate to same subjectmatter, so interrelated that would be executed atsame time in same K, then scope of subsidiarymust be taken to be covered by the writing.

Gianni v. R. Russell & Co• Matter of Law• Exceptions

• PER is strict, Court may find way to getaround. Some courts, no such thing as“ ”

Restatement Approach R2d §§ 209, 210, 215, 216 • Defeating/Avoiding PER• I f you can̓ t get evidence in via PER, attempt

Mutual Mistake, but it is difficult. Bollinger v.Central PA Quarry Stripping & Construction

• Also, check to see if collateral agreement, backedby new or different consideration — This is notexcluded by PER. Look at Gianni rule

• Try to make issue interpretive.

• Merger Clause: Usually effective, and is clauseattempting to show K is wholly integrated

• UCC Notes:• COD, COP, UOT ALWAYS comes in, even if K is

wholly integrated. Reading K in context of those.• -

should be allowed, unless fact finder wouldbe mislead. Masterson v. Sine

• PER does not bar evidence to establish:• (1) whether writing is integrated, (2)

whether integrated writing is completely orpartially integrated, (3) meaning of writing(whether or not integrated), (4) illegality,fraud, duress, mistake, lack of

consideration, or other invalidating clause,or (5) ground for granting or denyingrescission, reformation, specificperformance, or other remedy R2d §214

• PER and Conditions PER does not barevidence to show proof of conditions— Such Kis not “integrated” w/r/t that condition. R2d§217

UCC ApproachTerms with respect to which theparties agree or which are otherintended by parties as final exprer/t such terms are included thereiby evidence of any prior oral agrcontemporaneous oral agreemesupplemented

• (a) By course of dealing, usperformance

• (b) by evidence of consistecourt finds writing to be a cstatement of terms of agree

UCC 2-202onfirmatory memo ofise set forth in writingssion of their agreement w/ n may not be contradictedement or of at but may be explained or

age of trade, or course of

t additional terms, unless mplete and exclusivement

• Agreements after K is made, not PER technically• Common Law likely not enforce• UCC 2-209(2) “Signed agreement which excludes

rescission or modification except by signedwriting cannot otherwise be rescinded, but asexcept by merchants such requirement on formsupplied by merchant must be separately signedby other party” - Seems to give effect to NOM

• But: (4) Attempt at rescission or modificationmay not satisfy (2) [or SOF], it may operate aswaiver. So UCC likely as liberal as C/L

• Interplay between PER and PED: If the additionalagreement is prior to or contemporaneous with, thenPER, but if additional agreement is after formation,then PED/Rescission, Modification apply

Interpreting the Contr• Plain Meaning Rule

• Step 1: Whether the language in the written agdispute in question, admits of only one plausibleIf not ambiguous, extrinsic evidence cannot co

whether there is ambiguity.• 4 Corners Rule (Majority): Look to the 4 corn

determine if the language is ambiguous.• Silence is not ambiguity Greenfield v. Phil

• Reasonable Susceptibility (CA Rule): Not ab

act

reement, with respect to themeaning, or if it is ambiguous.e in. Diff. Rules on determining

ers of the document only to

lles Recordsout whether is plain or

Inter• Under UCC, Seems no a• Express Terms > Course

• UCC 2-202(a): COP, C• Even if unambiguous

case)• But: Party seeking t

burden to show, ANDUOT as method of intacceptance of the tra

preting In Commercial Settingbiguity needed to bring in extrinsic evidence to interpretf Performance > Course of Dealing > Usage of Trade

D, UOT always allowed in to explainon face. Hurst v. W. J. Lake (Horse Meat Scraps 50%

interpret term narrower than everyday use bearswhen party is new to trade, and other party claimingerpretation, that party must show new partyʼsde term in use. Frigaliment v. BNS Chicken Case

,• Can use evidence to show there is ambigu• Can use evidence to create ambiguity. Tri

• Step 2: If language is ambiguous, extrinsic evidadmitted to inform courtʼs determination of the

• Interpretation is matter of law WWW Assoc. v. Gi• Courts want to control (guard against jury influe• Predictability — Court interpretation promotes p

.ity. PG&E v. GW Thomas

ent v. Conn. Gen. Lifeence as to its meaning will belanguage

nconteirenceredictability, efficiency in K law

• Ambiguous v. Vague: Am

sure how applies in margi• More Precision needed in

• Performance: agreed to• contra proferentem — Int

vague favored against dra

General Notes And Policyiguity: susceptib le to 2 different meanings. Vague: Notal situations

Formation than performancebe bound | Formation: Freedom from K. intent at issue

erpreting meaning as against drafter (ambiguity offter)


Is K Integrated - is a final expression of agreement

made in writing?

PER bars contradictoryand additional terms

R2d § 216

Is K wholly Integrated -adopted as complete and

exclusive of terms?Merger Clause?

PER not apply

YesNo

Partially Integrated:Contradict-No, additional,

yes. R2d §§ 209, 215

No

Yes



Supplementingor Qualifying

the Agreement

ObjectiveInterpretation

And Limits

Extrinsic Evidence to SupplemUCC 1-303: Course of Performance, Course of Deali• Course of Performance: sequence of conduct btw

exists if: (1) agrmt of parties w/r/t transaction involperformance by parties and (2) other party, with kperformance and opportunity to object to it, acceptw/out objection.

• Course of Dealing: sequence of conduct concerniparties to particular transaction fairly regarded as

understanding for interpreting their expressions an• Usage of Trade: any practice or method of dealinobservance in a place, vocation, or trade as to justobserved w/r/t the transaction in question. Existenas facts. If established that usage is embodies ininterpretation of such is matter of law.• Can imply either as established member of the t

have known of trade usage. Nanakuli v. Rock• Waiver: Subject to 2-209, course of performance i

modification of any term inconsistent with course• In COP or Waiver, waiver is preferred, but only

ambiguous. Nanakuli v. Rock• COP, COD, UOT will supplement unless cannot b

consistent with express terms. Nanakuli v. Rock,

• Merger Clause does not effect, this is about interp• Under UCC, assumed that parties take into accou

becoming elements of the meaning of the words.negates use of COD & UOT that this assumption iindication of what parties intended K to mean. Co

nt or Qualify ng, Usage of Trade

n parties to transaction thates repeated occasions forowledge of nature ofs or acquiesces in performance

ng previous transactions btwnstablishing common basis for

d other conducthaving such regularity ofify an expectation that it will bece and Scope must be proved

trade code or similar record,

rade, or party know or should

is relevant to show waiver orf performancehere acts in question are

reasonably construed asUCC 2-202

retation. Columbia v. Roystert COD and UOT in K, thusOnly when K itself expressly

s negated. COP also is bestlumbia v. Royster

Article 2 Gap Filler• Price: Reasonable price a• Good Faith: Honesty in fa

• Supplied, mandatory:faith requires.

• Warranties• Implied Warranty of Me

Two steps for breach:• Was good used for o

burden to show)• Was good fit for purp• Must be reasonabl

expectation. Expe• Koken v. Black &

• Implied Warranty of Fitn• Seller must have rea• that the buyer relies• that the seller knows

• Exclusion of Implied Wa• “as-is” is term of art f• Otherwise, To exclud

“merchantability” andpurpose, something li

sufficient, and is con• Conspicuous if in con

• Express Warranties UC• Affirmation of fact or

bargain creates expr

s Gap fillers, Warranties, & Mandatory Termsccording to market at the timect in conduct or transaction 1-201(b)(19)anʼt be negotiated away, but can negotiate what good

rchantability UCC 2-314(2) Seller Must Be Merchant

rdinary purpose for which the goods are used (∏ has

ose vel non

le expectation of ordinary user, not subjectivert Testimony may be required. ∏ has burden to show.eatchess for Particular Purpose UCC 2-315on to know of use for which goods are purchased andn sellerʼs expertise in supplying proper product, andbuyer is relying on it.rranties UCC 2-316r no implied warranties if conspicuous

e merchantability, must generally use wordmake it conspicuous. To exclude fitness particular

ike ʻno warranties other than in this documentʼ is

picuous and in writing.trast in print or color So. Car. E&G v. Combustion

C 2-313promise relating to goods, and becomes basis ofss warranty to affirmation or promise. Same with

Common law Gap fillers, Warranties,Two approaches: Subjective v. Objective

• Subjective: Filling gap by what common expector canʼt ascertain, court will look to what questihave done

• Objective: Fair and Reasonable Man Standard• Note: Law and economics beginning to influen• Also, implies Good Faith

Mandatory Terms

tion was. If not contemplatedn is what would the parties

R2d §204.e

• Words “warranty” or “• Sales puffing is not a

• Exclusions of Warrantieespecially on adhesive

• Note: Warranties can befor implied and express

guarantee” not required, nor is intent by sellerwarranty UCC 2-313(2)s may be subject to public policy considerations,Ks. Henningsen v. Bloomfield Motorsispositive to show breach of performance, thus lookd warranties.

Patent v. Latent ambiguities: Patent: An ambiguity tR2d §201 Whose Meaning Prevails• When K is not integrated, standard for interpretati

expectation• Exceptions: Where there is an ambiguity of a mat

• If both parties attach same meaning, meaning h• Patent: Where one party has reason to know of

• In patent ambiguity, extremely hard time for• Latent: If both parties attach different meanings,

• Especially if latent ambiguity Oswald v. Alle • If no contract on lack of mutual assent, then contr• Look for this especially in entirely oral agreements

hat parties knew or should have k

n is meaning that party making m

erial term:olds and contract existsambiguity and other does not, so ito win, as will bear burden. Also

, and neither is aware of the other ʼ (Swiss Coin Case), Raffles v. Wi ct is rescinded, and proceed to lo

own was ambiguous. Latent

anifestation should reasonabl

it will bear meaning given to it, has burden on usage of trads meaning, there is lack of muichelhaus Peerless. If not quiok for unjust enrichment by eit

: Not aware term in question is ambiguous

expect other party to give it (standard of reasonable

be latter, that is the party who is without fault. Colfax v. Local No. 458-3M Printer casetual assent and no contractte this case, also look for mutual mistake as alternativeher party — Set parties back to before K.




SuspendingPerformance

andTerminating

Contract,AnticipatoryRepudiation

Material Breach: R2d § 241: In determining whether a failure to render or to offer performa• extent to which injured party will be deprived of benefit which he reasonably expected• extent to which injured party can be adequately compensated for part of that benefit of wh• extent to which party failing to perform or to offer to perform will suffer forfeiture• likelihood that party failing to perform or to offer to perform will cure his failure, taking into• extent to which behavior of party failing to perform or to offer to perform comports with staSuspending and Terminating Performance Test (R2d apprch)• First: Whether there is uncured breach by other party.• Second: Whether it is a breach of duty of performance that was exchanged under an exc

partyʼs promise does not depend)• It is presumed that this is the case, unless “a contrary intention is clearly manifested.”• Did the breach go to a performance that was to be rendered at earlier time than that of th• Is the breach material R2d § 241

• If no, then breach is a partial breach, and aggrieved party must continue performance.• If yes, then aggrieved party has choice

• Treat breach as partial breach and continue performance, later sue for damages• Treat breach as material breach, and stop performing “fraught with peril”

• A party may have to give breaching party opportunity to cure, if circumstances app• Right to Cure exists in both UCC and CL

• With total breach, it discharges injured partyʼs remaining duties and it gives rise toHinderance and Prevention• There is a good faith duty not to interfere, and good faith duty to cooperate.• If one party makes performance by other party impossible, non-performance is justified.

• But, mere difficulty of performance will not excuse breach. Prevention justifies non-perfor• Nature of motive may not be relevant, but still under good faith and fair dealing - so inte

Evidence to Prove Material Breach• Parties may bring in evidence to prove existence of material breach, even if new claims b

termination• BUT if there is reliance on reasons for terminating/suspending, then other claims estop

Anticipatory Repudiation: The affirmative statement that a party will not perform made pri• Gives right for the non-repudiating party to bring lawsuit immediately, even prior to date c

• But, duty to mitigate damages will exist• Exception: Installment contracts, there is no anticipatory repudiation to each [true for a

• For Non-repudiating party to recover, must show that constructive condition that was read• Burden is on ∏ to show he was ready, willing and able to perform

• Repudiation must be unequivocal McCloskey v. Minweld

ce is material, the following conditions are significant

ich he will be deprived

account all circumstances including any reasonable assurancesndards of good faith and fair dealing

hange of promises (as opposed to duty under a promise on which injured

omment a, R2d § 232aggrieved party? R2d § 237

Gives right to damages, but not suspension or termination

ropriate [i.e. not time of essence, or otherwise expressly negated] § 241

claim for damages for total breach.

nited States v. Peck

mance, hinderance doesnʼt. Iron Trade Product v. Wilkoff Rails casentional or malicious hinderance may be breach.

ing made, beyond the reason performance was terminated at time of

ed. New England Structures v. Loranger

r to the time for commencement of performancemmencement of performance was to occur. Hochster v. De La Tour

ll divisible?] But, acceleration clause can counter this.y, willing, and able to perform. Kanavos v. Hancock


contract ii short sheets

Documents