Contracts - Full Outline

  1. Contract Necessities
    1. Consideration
      1. Requirements of Ks
        1. Bargain (without, can be seen as gratuitous promise)
        2. Manifestation of mutual assent
        3. Consideration (a bargained-for benefit or detriment, does not have to be monetary)
      1. A promise is supported by consideration if there is…
        1. Detriment to the promisee; — This can be either a legal detriment to the promisee or legal benefit to the promisor.
        2. The detriment is bargained-for; — The detriment is bargained-for if the detriment is the thing that induces the promise.
        3. And the promise is bargained-for. — The promise is bargained-for if the promise is the thing that induces the detriment. The promisee must know of the promise and is induced to act because of the promise.
      1. Courts are less strict in requiring consideration; can show implied consideration through good faith or even recital of false consideration (as in options)
      2. Cases
        1. Salt
          1. Aunt promises to provide for her nephew. She writes a note to demonstrate the seriousness of her promise. Court holds that this is not enforceable, because it is a gift.
          2. This promise is extremely formal, however, it is still missing the elements of bargain, mutual assent and consideration.
        1. Hamer
          1. Uncle promises to give nephew $5k if he will cease his problematic behaviors. Nephew ceases, and seeks money. Courts hold that there was consideration present in this agreement, and therefore the contract was enforceable.
          2. Any detriment (restricting autonomy), even if it is for the benefit of the promisee, constitutes consideration. There does not have to be a tangible benefit (peace of mind sufficient, peppercorn theory).
        1. Langer
          1. Company notifies retiring employee that he would be paid 100 every month for the rest of his life granted he did not go work for a competitor. Enforceable.
          2. Forbearance is a valid detriment. The company got a benefit from this transaction; Langer did not work for competition.
        1. Fiege
          1. Woman agrees not to sue man for bastardy if he pays child support. Man stops paying when finds out he isn't the father. Enforceable.
          2. Forbearance of prosecution is valid consideration if the prosecution would have been in good faith and not frivolous.
        1. Professor's Offer
          1. Prof will give student $1k if they promise to give him rights to software they develop in the future. Enforceable even if students have no intention of ever writing software.
          2. Consideration is valid since the professor places value on the possibility of return.
        1. US v. Meadors
          1. Wife signs loan agreement even though her signature wasn't needed and she wasn't a part of the bargain. Not enforceable.
          2. She gained no benefit, gov't suffered no detriment from her signing. No bargained-for exchange and no mutuality.
        1. Tent hypo
          1. Woman will give a bum a tent if he walks to the store to pick it up.
          2. Merely a condition on a gift and not enforceable unless there is additional consideration (he promises to leave her alone.)
    1. Mutuality
      1. In bilateral contracts, one party cannot be bound unless the other party is also bound.
      2. Illusory promises (where one has complete discretion on whether or not to perform) do not satisfy mutuality.
      3. If there is consideration, there is mutuality.
      4. Good faith is used to supply "missing" mutuality in exclusive dealing Ks. This covers these Ks as well…
        1. Requirements Ks - quantity term not set, dictated by amount buyer will need at a given time
        2. Output Ks - quantity is set as all the seller can produce in a given time
      1. Cases
        1. Coal case
          1. Seller says he will ship as many pounds of coal as the buyer might want for a specified price. Not enforceable.
          2. No mutuality since the buyer is not bound to do/not do anything.
        1. McMichael v. Price
          1. Sand case, McMichael agrees to sell Price all the sand that Price can sell at a set price. McMichael fails to provide. Contract enforceable, since both sides were bound.
          2. Price was limited in his autonomy from buying from other sources. Requirements contract.
        1. Wood v. Lucy, Lady Duff Gordon
          1. Gordon gives Wood exclusive rights to sell her name then begins selling herself without splitting profits. Mutuality present through good faith, best efforts.
          2. Wood is bound by the good faith requirement to put in his best efforts to market her name.
          3. UCC 2-306 - "reasonable  diligence required"
  2. Contract Issues
    1. Inadequacy of Consideration
      1. Courts say that they do not inquire into the adequacy of consideration ("peppercorn view"), but they do in some cases.
      2. Gross inadequacy of consideration could be a red flag if it "shocks the conscience", could show fraud, mutual mistake, concealment, nondisclosure, misrepresentation, etc.
      3. Cases
        1. Jackson v. Seymour
          1. Brother bought land for sister as favor, made lots of money off of it. Constructive fraud, brother liable.
          2. Gross inadequacy of consideration can point to lack of consideration or fraud.
        1. Jennifer's Mom
          1. Girl pays $2k for an issue of Time magazine. Enforceable depending on the circumstances.
          2. Court should inquire here because of the gross inadequacy. (Duress? Mutual mistake? Infirm?) If everything seems fine, let it fly (freedom of contract).
        1. Batsakis v. Demotsis
          1. Greek folks during WWII, agrees to pay $2k American for $25 worth of Greek money. Contract enforceable.
          2. Mere inadequacy of consideration will not void a contract, context surrounding exchange made sense.
    1. Personal Satisfaction and Termination Clauses
      1. The performance of some types of contracts depends on one party's satisfaction.
        1. Courts usually constrain the discretion of this party through good faith/reasonable person standard to prevent their promise from being illusory.
      1. Omni
        1. Omni agrees to buy as long as they are reasonably satisfied by a feasibility report by architect. Contract valid.
        2. Omni is bound by their obligation to act in good faith, constitutes valid consideration. Feasibility contracts are standard in the industry.
    1. Contract Modification
      1. Second Restatement S89
        1. The contract cannot be fully performed by either party.
        2. The modification must be made in light of circumstances that were unanticipated at the time the contract was made.
        3. The terms of the modification have to be fair and equitable (good faith).
      1. UCC S2-209 (only applies to sale of goods)
        1. No consideration is required to have a modification of a contract.
        2. Will be enforced only if the modifications are made in good faith by the parties.
        3. Directly addresses question of overreaching and extortion. Cannot be made in bad faith.
      1. Common law
        1. Modification of contracts will be enforceable only if there is additional consideration present in the modification.
        2. Levine v. Blumenthal
          1. Lease of building, promisee asked for decrease in rent, court found the modified contract was not enforceable
          2. There was not an additional detriment for promisor and no consideration for the new contract.
    1. Unrequested Benefits
      1. Restitution is rarely given in cases where there was an unrequested benefit. Public policy reason.
      2. S116 says entitled if action was to save life. S117 says entitled if to save property if savior meant to charge for efforts from start
      3. Cases
        1. Glenn v. Savage
          1. Lumber fell into river, P saved it from washing away. Court said act of courtesy, not required to pay.
          2. Would be contrary to public policy of personal autonomy
        1. Cotnam v. Wisdom
          1. Dr tried to save injured man who later died. Court ruled there was an implied contract, remedy valid.
          2. Life saving/rescue situations are covered by the restatement.
    1. Past Consideration
      1. Promise was made to pay for a benefit conferred upon the promisor in the past.
      2. S86 covers this, these are binding because of "moral obligation"
        1. Exceptions-- not enforceable when promisor is not justly enriched, promisee conferred the promise as a gift, value of promise is disproportionate to the value
      1. Cases
        1. Mills v. Wyman
          1. P cared for D's sick son prior to his death. Father promised to compensate P. Not enforceable.
          2. No consideration since care of son was offered gratuitously. Son not minor.
        1. Webb v. McGowin
          1. Falling block case. D promised P $15/week. Enforceable.
          2. This is covered under S86. Promisor benefitted (life saved) even though act was unrequested.
    1. Promissory Estoppel
      1. S90 makes relied upon promises enforceable if…
        1. the promise induces reliance,
        2. the reliance was foreseeable,
        3. and enforcement of the promise is necessary to avoid injustice.
      1. Only available when there is no contract! Damages should not put the promisee in a better position than the promise would.
      2. Cases
        1. Ricketts v. Scothorn
          1. Grandfather promised to give granddaughter money per year so she wouldn't have to work. She quit work. Promise enforceable.
          2. Granddaughter put herself in a worse position in response to the promise.
        1. Forrer v. Sears
          1. Sears induced P to sell his farm in exchange for "permanent employment." P was fired. Contract was valid but was already enforced.
          2. Sears kept up their end by hiring him. Employment is terminable at will "permanent" or not.
        1. Grouse
          1. D offered Grouse employment. He gave up two jobs. D then took back their offer. Contract enforceable.
          2. Employee must be given a good faith opportunity to work. He relied on promise, was foreseeable.
        1. Hoffman v. Red Owl
          1. P relied on promise to give him a franchise, sold his store and moved. P entitled to reliance damages.
          2. Reliance can be induced during the negotiation stage. Some commercial risks are outside the scope of damages.
    1. Illegal/Huge Public Policy Concern Contracts
      1. Contracts that violate US law or rules and regulations of 3rd parties are not enforceable.
        1. Holland
          1. Contract was working without license (illegally). Did not get paid. Contract not enforceable.
          2. Law prevents unlicensed workers from seeking compensation. Don't want to encourage this behavior.
      1. Contracts with minors are not enforceable (rule should be changed?)
        1. Halbman
          1. Minor entered into K to buy car. Car broke, took it back. Court says no contract, entitled to his money back.
          2. Minors cannot be held liable in contracts.
      1. Issues too important to be governed by K law
        1. Kass, AZ v. BZ
          1. IVF cases, embryos were not given to mothers.
          2. Public policy, courts will not force people into parenthood.
    1. Subjective/Objective Intent in Ks
      1. Courts tend to enforce the objective intent of the parties since it is near impossible to know their subjective intent
      2. If both parties were reasonably able to extract two different meanings from the terms, contract could be void for lack of mutual assent.
        1. Peerless
          1. One party means Peerless-October. One party means Peerless-December. No contract.
          2. Parties did not have the responsibility to inquire into which ship. Were not referring to the same, material thing
      1. Trade Usage - courts will usually enforce trade usage terms if both parties should reasonably know them
        1. 100% Fescue vignette
      1. Standard of reasonability -- what would a reasonable person have taken the actions to mean?
        1. Lucy v. Zehmer
          1. P offers D $50k for farm, both drinking. D thinks it's a joke but signs contract.
          2. Reasonable person could have though this was a serious K. Law imputes to a person an intention corresponding to the reasonable reaming of his words and acts; outward manifestation controls
        1. Embry
          1. Salesman asked about K extension, manager told him not to worry about it and get back to work. K renewed.
          2. Court held that a reasonable person could have held that the K was renewed based upon the conversation.
    1. Fraud/Misrepresentation
      1. Fraud requires (1) a misrepresentation (2) of fact (3) that is material to the transaction (4) which is made with an intent to deceive the other party (5) and which does in fact mislead that other person (6) and which results in an injury.
        1. Only innocent misrepresentation if there is no intent to decieve.
      1. Cases
        1. Vokes
          1. Dance studio fed old woman lies about her improvement to get her to buy more lessons. K rescinded.
          2. When one party has superior information, opinions can be taken as fact by the other party.
        1. Norton v. Poplos
          1. M-1 zoning, knew about necessities of buyer and did not inform of extra hurdles. K rescinded.
          2. Not fraud, misrepresentation is grounds for rescission.
    1. Disclosure
      1. Courts are moving away from caveat emptor and moving towards requiring more disclosure.
      2. S161 says nondisclosure is equivalent to assertion that something doesn't exist when
        1. Disclosure is necessary to prevent a pervious assertion from being a misrepresentation or from being fraudulent or material
        2. Disclosure would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if nondisclosure amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.
        3. Disclosure 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.
      1. The party who can gather the information at the lowest cost should be the one required to get it/disclose it if necessary.
      2. Cases
        1. Laidlaw v. Organ
          1. Tobacco sale after War 1812 blockade ended. Seller asked buyer if anything happened that changed price of tobacco, buyer remained silent. No duty to disclose.
        1. Hill v. Jones
          1. Termite infestation house sale, evidence hidden, not disclosed. K rescinded.
          2. Buyers were relying on a false material fact that the sellers had a good faith duty to correct. Cannot K out of fraud.
        1. Richey v. Patrick
          1. Sludge water house, sellers included as-is clause if house not inspected, buyer did not inspect. K not rescinded.
          2. No inspection, didn't turn on a faucet, sellers did not lie, no relationship of dependence.
    1. Good Faith
      1. Each party will not do anything to undermine the other party's access to the benefits of the agreement.
      2. Cases
        1. Carmichael v. Adirondack
          1. Adirondack was terrible to Carmichael after death of her husband, tried to shut her down. Breached good faith.
          2. Even after a K ends, parties are still engaged in a relationship governed by good faith.
        1. Market Street Associates
          1. Lessee found loophole to buy property they were leasing. Possible good faith violation.
          2. Duty of good faith is greater in the performance stage than in the formation stage. In formation stage, party can use greater knowledge to get a better bargain. Sharp dealing provides no economic benefit to society.
        1. Fortune v. NCR
          1. Fortune made a huge sale and was fired before he received all of his commission. Fortune gets his commission.
          2. Court found NCR was possibly acting in bad faith. Employers cannot fire someone so they will not have to pay them a commission. Cannot prevent one party from access to the fruits of the contract.
    1. Mutual Mistake
      1. S152 Where a mistake at the time a K was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange, the contract is voidable by the adversely affected party unless he bears the risk of the mistake.
      2. Cases
        1. Beachcomber Coins
          1. BC bought what both parties though was a rare dime. It turned out to be counterfeit. K rescinded.
          2. Mutual mistake , both were convinced it was a real coin, also could be breach of express warranty
        1. Lenawee v. Messerly
          1. Messerly sold land to Pickles, it was full of sewage, neither knew. As-is clause, K not rescinded.
          2. Risk had been shifted to Pickles through the as-is clause
    1. Changed Circumstances
      1. Cases
        1. Taylor v. Caldwell
          1. P rented concert hall, hall burned down. K rescinded.
          2. Parties contracted on the basis of the continued existence of a particular object. When the object ceases to exist, the contract is void, must be unforeseeable at the time K is formed.
        1. Canadian Industrial
          1. D agreed to supply molasses but couldn't when its supplier cut production. D is liable.
          2. Circumstances were not unforeseeable. D could have taken steps to cover.
        1. Krell v. Henry
          1. D agreed to rent a chamber to see coronation of king. King got sick, coronation didn't happen. K rescinded.
          2. D rented the room for purposes of seeing something that wasn't going to happen; it was advertised as that too.
        1. Stranded vignette (same reasoning for catering)
          1. Musician books venue but cannot get there due to bad weather, flight cancelled. K still enforceable.
          2. The K is still possible, venue can still be provided, performer can still pay; could have taken steps to get there early
  3. Offer and Acceptance
    1. Defined
      1. Restatement
        1. R50 - Acceptance is a manifestation of assent to the terms made by the offeree in a manner invited by the offer. Acceptance by performance is possible (beginning performance forms an option K). Mere preparation to perform is not valid acceptance.
        2. R51 - An offeree who learns of an offer after he has rendered part performance may accept by completing the requested performance. Offeree must know of offer before end of performance or is not entitled to reward.
        3. R63, 66 - An acceptance made in a manner invited by the offer is operative as soon as it is out of the offeree's possession (mailbox rule), whether it reaches the offeror or not.
        4. R32 - In case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform or by rendering the performance.
        5. R53 - The rendering of the performance does not constitute an acceptance if within reasonable time the offeree exercises reasonable diligence to notify the offeror of non-acceptance. In performance only Ks, must make non-acceptance before performance.
        6. R54 - In performance only Ks, no notification is needed unless the offer requests it. If offeree knows offeror cannot find out about the performance, offeror is not bound unless the offeree informs him, the offeror learns about it in a reasonable time, or the offer indicates notification of acceptance is not required.
        7. R56 - In acceptance by promise Ks, offeree must exercise reasonable diligence in notifying offeror of acceptance
        8. R58 - An acceptance must comply with the requirements of the offer. Offeror is the master of his offer.
        9. R59 - A reply to an offer which purports to accept but is conditional on offeror's assent to terms additional to or different than those offered is not an acceptance but a counter-offer.
        10. R61 - An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on assent to the changed or added terms.
        11. R62 - In acceptance by performance or promise Ks, partial performance is acceptance, offeree is bound to complete.
        12. R63 - Revocation of an offer is not operative if received after an acceptance is dispatched. Retrieving an acceptance before it reaches its destination is ineffective.
        13. R67 - If acceptance is sent in a manner not prescribed by the offer, it is treated as operative on dispatch if received within the time in which a properly dispatched acceptance would have arrived.
        14. R69 - Silence is acceptance only when offeree takes benefits with reasonable opportunity to reject them, when offeror has stated or offeree has reason to understand that assent may be manifested by silence and offeree intends to accept, previous dealings prescribe this method.
        15. UCC 2-206 - An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable.
        16. Offer comes to an end upon revoking before acceptance, counteroffer, lapse of time, death, non-occurrence of condition
      1. Cases
        1. Lonergan
          1. D told P he needed to act fast to buy land. D sold it to someone else. P then tried to purchase land. No K.
          2. There was never an offer. Advertisements for property are invitations for offers.
        1. Shaky thing vignette - ad was invitation for offers, even if price guaranteed for 90 days or if they take credit card number
        2. Dickinson v. Dodds
          1. D made an offer to sell land to P that expired at a later time. P decided to accept after he heard that D sold it to someone else. No K.
          2. No meeting of the minds, one intended to be bound, the other didn’t; P knew D didn't mean the offer to be binding
        1. Morrison v. Theolke - mailbox rule
    1. Unilateral/Option Contracts
      1. Formed when a promise for future performance (offer) is exchanged for actual performance (acceptance).
      2. Restatement
        1. R45 - Performance only Ks, option contract formed when offeree tenders or begins performance. Option cannot be revoked by the offeror.
        2. R87 - Option contracts don't require real consideration. $1 for an option for 10 years.
        3. UCC 2-205 - Consideration not required for an option. If no time stated, 3 months max.
      1. Cases
        1. Petterson v. Pattberg
          1. D agreed to give P discount on mortgage if he paid it back early. P tried to tender, D refused it. No K.
          2. This is too formalistic, overruled by R45. Court said there was no way P could have made an acceptance.
        1. Carbolic Smoke Ball
          1. D put out ad saying they'd pay $100 to anyone who used product and got the flu. P did so, got flu. K enforceable.
          2. Completion of performance was sufficient to bind the offeror. Company didn't require notice of acceptance. Move away from formalism.
        1. Glover
          1. Man murdered, group offered reward for info leading to conviction. P gave info, didn't find out about offer until after information was given. P not entitled to reward.
          2. Reward was not learned about until post-performance. Not mutual assent, consideration.
        1. Industrial America
          1. P saw ad by D saying they wanted a merger and would pay brokers fees. P set it up. Enforceable contract.
          2. It does not matter what the motive of the person is when they render performance. Unjust enrichment.


    1. Qualified Acceptance
      1. Mirror Image Rule - in order to have a K, the terms of acceptance must directly mirror the terms of the offer. (less so now because of SFK)
      2. UCC 2-207 - An expression of acceptance operates as an acceptance even if it states terms additional to or different from those agreed upon unless acceptance is expressly made conditional on assent to the additional/different terms.
        1. The additional terms are construed as proposals for addition to the K and become part of the K unless they materially alter it, the offer expressly limits acceptance to the terms of the offer, or notification of objection is given reasonably.
      1. Common law
        1. Are the missing points so important that they indicate there is no mutual assent between the parties? If so, no K. (different terms constitute a rejection and counteroffer)
        2. If not, are there reasonable external standards/references that the court can use to resolve the terms?
        3. Poel v. Brunswick
          1. Letters exchanged between parties about sale of rubber, kept adding terms. No K.
          2. SFK with different terms sent by P constituted a counter-offer. More flexibility now with UCC.
    1. Incomplete Agreements
      1. R33/UCC 2-204 - Even though a manifestation of intent is intended to be understood as an offer, it cannot be accepted as so unless the terms of the K are reasonably certain (provide basis for determining if breach occurs and remedies for that breach). Open terms may show that the writing is not intended to be understood as an offer or acceptance.
      2. UCC 2-305 - Party can conclude a K even if the price isn't agreed upon. Price will be reasonable price at the time of delivery if nothing is said of the price, price is left to be agreed upon and they fail to agree, or the price is to be fixed in terms of some agreed market or other standard and it is not set as so.
      3. Common law - a K is not enforceable with an open price term when the item dealt with is truly unique (no market price) or when the K states that the price must be determined on agreement of the parties.
        1. Empro v. Ball
          1. Empro sent letter of intent to Ball. Both signed but then negotiations broke down. No K.
          2. The parties did not have the intent to be bound. "Subject to" satisfaction of certain things. This was signed too early in the negotiation stage. Negotiating a sale is a multi-stage process. Terms left open can be a sign that the parties do no have the objective intent of being bound. Subjective intent is bad for business/efficiency.
        1. Joseph Martin Deli v. Schumacher
          1. Lease where tenant could renew lease at annual rentals to be agreed upon. Landlord asked for much higher price than appraisal. No K.
          2. Price terms were open, not possible for a third-party to set a fair price (prof disagrees). Landlord did not agree to be bound by fair market value and parties did not agree for a third party to interpret the K. An agreement to agree is not enforceable.
    1. Bargaining and Power
      1. The responsibility of due diligence is generally put on the signing party granted they possess the basic intelligence and resources necessary to understand the terms of the K. This burden may shift if…
        1. Bad faith practices are used by the other party to induce assent
        2. The K is substantively unconscionable (raise the presumption of fraud in their inception)
        3. There should be reasonable reliance on material industry standards, however, the K precludes these standards in a non-conspicuous manner.
        4. The signors justifiably relies on the other party's representations although their representations may be negated in the K.
      1. UCC 2-302 - If a K in unconscionable, court may refuse to enforce it in whole or just omit the unconscionable portion.
      2. Cases
        1. Merit Music
          1. D got a loan from MM. Terms were very favorable to MM. D never read K. K enforceable.
          2. No presence of fraud, duress, mistake. D was of reasonable intelligence and is bound. Court not going to bail out.
        1. Skagit Bank v. Rasmussen
          1. Loan required signatures of all property owners, even one not benefitting from the loan. Friend innocently misrepresented to him that his property was safe. It wasn't, bank took it on default. K enforceable.
          2. K language was clear, D had experience with RE transactions, friend was not an agent of the bank, no misrep
        1. Cate v. Dover
          1. Lifts never worked, sued for breach of implied warranty of merchantability. It was disclaimed in the express warranty inconspicuously. Disclaimer not valid. 
          2. Implied warranties can be excluded or modified in a K, but must be done conspicuously.
        1. Williams v. Walker-Thomas Furniture
          1. Rent to own furniture, each secured by the rest of furniture rented. Fail to pay on one, all taken. K unconscionable
          2. Unconscionability involves the evaluation of four factors…The relative harshness of the term in question, including the importance of the legal right that is affected, the manner of presentation of the term in the K, the relative bargaining power of the party against whom the term is asserted, the commercial justification for the term, risk-shifting to the weaker bargaining party. "substantive" - unreasonably favorable terms for one party; "procedural" - absence of meaningful choice (both at the time of contract formation)
        1. Jones v. Star Credit
          1. Welfare folks paid $1200 for $300 freezer. K unconscionable.
          2. Poor and illiterate have terrible bargaining power. Even worse when home sales call. 3x market value rule.
  4. SOF and PER
    1. SOF
      1. UCC  2-201 - For a  sale of goods above $500, must be in writing.
      2. SOF (requirement of writing) traditionally applies to MYLEGS: marriage promises, performances longer than a year, land/RE sales, executor agreements, goods over $500, suretyship promises. Now insurance Ks, loans.
    1. PER
      1. Forbids the admission of evidence concerning prior or contemporaneous agreements for the purpose of varying or contradicting a later writing. If a K expresses all or part of a K, PER limits the court to examining only that document.
      2. If a document is not a total integration, parole evidence is fine. Also, evidence of side agreements is fine.
      3. PER does not bar interpretation. The question of PE should be examined after we figure out what the words in the K mean.
    1. Comparisons
      1. Both requires exclusion of extrinsic evidence which would add to or contradict the terms of the written K.
      2. Both permit extrinsic evidence which would explain ambiguous, abstruse, or technical expressions, and assist in interpreting the intentions of the parties.
      3. Courts are moving away from the formalism of these rules. Traynor view (PGE) - look at events surrounding the formation of the K. Words don't have meaning without the context.
    1. Cases
      1. Klewin v. Flagship (SOF)
        1. Oral agreement to put P in charge of construction project that should take 10 years. Fired him. K enforceable.
        2. Court found a way around 1 year SOF rule since K did not say that performance could not be done within 1 year.
      1. Mitchill v. Lath (PER)
        1. Icehouse case, said there was an oral agreement to remove icehouse, not reflected in final writing. Not enforceable.
        2. Admissible oral evidence must be collateral in form, must not contradict the implied or express provisions of the K, and must be info that the parties would not ordinarily expect to be put in writing (this test failed here, found it material).
      1. Masterson v. Sine (PER)
        1. Masterson sold land to Sine with an option to repurchase. Bankrupt, creditors tried to exercise option. They said that there was an understanding that the property would be kept in the family though not expressed in the option. Evidence admissible.
        2. If K is integrated, PE should be introduced to prove elements of the agreement which were not reduced to writing, especially if the parties did not intend for the writing to be an exclusive embodiment of the agreement (family K). In order to determine if a writing is a total integration, the context needs to be consulted.
      1. PGE v. Drayage(PER for interp)
        1. D agreed to incur all risk associated with project. Work injured P's property. P seeks compensation. D says that the agreement was only meant to cover damages to third-parties. PE admissible.
        2. PE admitted to discover what it was that the parties actually assented to. No words have meaning outside of context. PE should be introduced when the interpretation of a K is under dispute since mutual assent requires high standards.
      1. Trident Center (PER for interp)
        1. Loan between sophisticated parties. No pre-pay available. P argued language ambiguous, should be a 10% prepay fee. PE valid to interpret the K.
        2. Court strongly against it but allows because of PGE. Words were abundantly clear and precise.
      1. Frigaliment (PER for interp)
        1. Chickens. P wanted young, D delivered old. P felt young was implied by the language. PE allowed for interpretation of trade terms.
        2. Definition of chicken was ambiguous. Experts brought in. Chicken was broad, P should have made it narrow.


  5. Contract Breach and Remedies (Market price at time and place of tender - unpaid K price + cons. Damages - expenses saved)
    1. Cases
      1. Hochster - can sue for breach at any time after the breach, don't have to wait for date of performance. 
      2. Peevyhouse
        1. P leased land to coal mine. D promised to move dirt around after. They didn't. Would cost $25k, only increase property value by $300. Damages limited to $300.
        2. It is unlikely that P would pay $25k for something that would only increase the value by $300. When economic benefit which would result by full performance is grossly disproportionate to the cost of performance, the damages are limited to diminution in value from the non-performance.
      1. Locks v. Wade
        1. P leased jukebox to D. D repudiated before it was installed. P leased it somewhere else. P is entitled to lost profits.
        2. Volume loss case. P could have leased to the other customer anyway and gotten two benefits.
      1. Hadley v. Baxendale
        1. P contracted with D to ship a shaft for repair. Negligence delayed the return of the shaft and P lost profits. P not entitled.
        2. Consequential damages cannot be given unless the loss was foreseeable by the D at the time K was formed (part of K).
      1. Wasserman v. Middletown
        1. D breached lease, liquidated damages set at 25% of gross profits. Clause not enforceable.
        2. Liquidated damages clauses only enforceable when they are a reasonable forecast for harm caused by the breach. Penalty clauses are not enforceable.
      1. Security Stove
        1. Stove contracted with D to ship stove to a show. D failed to deliver a part. P sued. Reliance damages awarded.
        2. Damages measured by loss in profits is too difficult to calculate, so entitled to reliance damages.
      1. Van Wagner
        1. Billboard outside building, lease lost after sale of building. Sued for specific performance. Damages given instead.
        2. Specific performance requires that the uniqueness of the subject matter makes valuation near impossible. Remedy at law must be inadequate.
      1. Lumley v. Wagner (singer) - An injunction can be granted to enforce a negative covenant of a K, but not a positive covenant (public policy)
      2. Hopper v. All Pet
        1. Non-compete clause in K. Court shortened time period to 1 year from 3.
        2. In order to be enforceable, a non-compete clause must be in writing, part of a contract of employment, based on reasonable consideration, reasonable in durational and geographic limitations, not against public policy