Contracts Ii

Front 1

Express Conditions:

Chodoes v. West Publishing Co.

Back 1

• Attorney/ Publisher – West declined to publish the book because it was “inconsistent with what they wanted”
• Tired to sue for Quantum Meriout because finding lost profits would have been hard. QM is sueing for the benefit given to the breacher but this is a problem because there has been no give benefit to West. It would have been better to sue for reliance because of all the time he had put into the book.
• He tried to sue for Illusory contracts. But the court found that the contract had a covenant of good faith.
• Court found that West breach the contract because it did not act in good faith in fair dealing and cooperation.

Front 2

What is the difference between Personal Satisfaction and Commercial Satisfaction?

Back 2

(Problem 139)
Personal Satisfactions- contract deals with something that is esthetic. It is the kind of performance that you can not say objectively. Standard here is one in good faith. Such as painting a portrait of you have judged it subjectively. Did the person in good faith feel that the performance that is not satisfactory. All other are called. Commercial Satisfaction- it can be judged by objective standards, this would be the reasonable person standard.

Exception: Archetic because tho commercial they are artists and deserve a personal choice

Front 3

Pay When Paid Clauses:

Gulf Construction Co. v. Self

Back 3

• It is put in a clause I am not going to pay u unless I get paid. Is this a condition or a promise?
• Contract between Gulf and Good Hope and Gulf heirs a bunch of subcontractors. In the ninth paragraph of each of the subcontractors contracts has a pay when paid language.
• Look to see words of conditions. Look at the contract as a whole. Where it is doubtful where it is a condition or a promise. We are going to make it a promise. As a general principle we find that to avoid a forfeiture look for a promise. It is most strongly against the person who has written the contract.
• If this is a condition, the risk gulf takes. To shift the liability of nonpayment there must be a clear, unequivocal and expressed agreement between the parties to do so. Under these facts there was no intent on the part of the parties to the subcontract to shift the risk on nonpayment.
• Holding: Pay when paid language is a promise unless very clear language is made to make it a condition.

Front 4

For a personal promise are you going to want to say that it was a condition or a promise?

Back 4

(Problem 140)This is a different scenario than Gulf Construction bc this deals with personal promises not commercial. Does it seem fair to make her pay? If he does this would be called a promise. If not it would be a condition. Pay when paid is a condition means that they don’t get paid. Pay when paid is a promise the person gets paid. Alderjohn is going to say “when” is a condition

Front 5

Language that creates a "time is of the essence":

Carter v. Sherborn

Back 5

• The issue would be “Time is of the essence” would we consider this a condition. If you did not get it done in time you get nothing. This would be a forfeiture. If you want this to be time is of the essence you have to be very clear.
• Would a penalty clause indicate that time is of the essence? The inclusion of penalty of forfeiture provisions for non-completion on schedule is strong evidence that time is not of the essence and that performance on time is not a condition of the other party’s duty to accept and pay for the performance rendered.
• Time of the essence equals no money. Now, a penalty clause. You would get the contract price minus the money amount in penalty.

Front 6

How do you make an argument that particular language is a promise and not a condition?

Back 6

Courts do not like to see it be a condition if it is a forfeiture of the parties. Look to the intent of the parties and look to the rules of the interpretation: did the drafter use words of condition? (laundry list of words) hold against the party who drafted the document? (do they know how do make a condition? But in the paragraph under condition it is missing) absent plain language it is a promise and not a condition. Did the parties intent that a failure of the factor or even it would give rise to the right to sue. Look at the contract as a whole. Normally you place the risk of loss on the person who can control the risk. That risk should not be transferred to someone who can not control the risk unless the language is clear. What is the effect of a promise reather than a condition. A promise enforce but deduct damages for not fulfilling the promise. Condition can not enforce K but left with QM.

Front 7

What are the five types of express conditions that we have just discussed?

Back 7

o Progress payments pg 137 normally a construction contract is not divisible. Alternating condition precedents
o Chodoes – good faith and fair dealing and cooperation
o Conditions of satisfaction: personal or commercial
o Pay when paid clauses- today this is normally held to be a promise and not a condition unless you use the clearest of languages.
o Time of the essence today- unless use the clearest of language is not thought to be a condition but merely a promise. But this is especially true when you have a penalty clause. This means when time is not of the essence.

Front 8

Problem 141

Back 8

this is a promise and not a promissory condition

Front 9

Constructive Conditions:

Back 9

Ordering performance. You argue the doctrine of SP. If successful the remedy is enforce the contract minus damages for not performing 100 percent correctly.
If not successful. Meaning no doctrine of substantial performance. The remedy is QM.

Front 10

Examples of Constructive Conditions:

Kelly v. Preston

Shaw v. Mobil

Back 10

Kingston v. Preston
• We have a promise that I will surrender my business if you Mr. P come up with the security and you work for me for 15 months.
• That law to do justice the law constructs justice that one party should perform before the other.

Shaw v. Mobil
• The dealer is supposed to pay rent for 1.4 cents a gallon for 470 dollar per month. Mobil was supposed to deliver the correct amount of gas.
• They do not say who has to go first. They just have two promises. Now, what goes wrong?
• Look at the intent of the parties. They decide that that they are conditional. That the delivery of the gasoline must come first. The court constructs a condition precedent that mobil must go first.
• Mobil excused and the dealer is not obligated to pay.
• Bottom of 687- Corbin:

Front 11

What is Substantial Performance?

Back 11

Parties do not like to impose a condition precedent. But conditions must be fulfilled otherwise the parties can not fulfill the contract. Law creates a doctrine of substantial performance as a way to reduce the effect that might occur if you have constructive conditions. It does not apply to express conditions. We are only concerned with one kind of constructive conditions. On exam he had three express conditions but no ordering. Which led to constructive conditions, Substantial performance does apply.

The doctrine of substantial performance was developed in order to deal with the potentially harsh effect of constructive conditions. Even the breaching party can still recover under the K if that party’s performance is substantial, with any remaining defects in performance recompensed by a setoff for the damages caused.

Front 12

Examples of substantial performance:

Jacob and Yong v. Kent

Back 12

• Cardozo feels that the contractor has to do this house 100 percent correctly and if they do not they will not get paid.
• Now, we come up with the doctrine of substantial performance. You can still enforce the contract. What allows you to enforce the contract? It was not willful and it was not fraudulent. We will allow you to recover under the doctrine of substantial performance if you actions are not willful, fraudulent, or material.
• There might be a material issue. Cardozo gives you for factors with the purpose to be served to regard to material. There are four factors. We must weight the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence.
• When we have a constructive condition ordering performance eventhough you haven’t done it correctly if first you have substantially completed the house and you have used the doctrine of substantial performance.

Front 13

What do you need to know on the EXAM for Sub Performance?

Back 13

EXAM SUBSTANTIAL PEFORMANCE- USE CARDOZO 4 factors. Do not apply the fact. Just drop the four factors in. You get 5 points if you put them time. Don’t apply facts because it would be too time consuming.


(1)We must weight the purpose to be served
(2)the desire to be gratified,
(3) the excuse for deviation from the letter,
(4)the cruelty of enforced adherence

Front 14

Key Lay Out for the Exam...

Back 14

A constructive condition that orders performance. Than the courts would construct a condition that the courts would have to say who would go first. Has it been substantially completed? Yes. Then apply doctrine? If willful fraudulent or material? Then stick in cardozo’s four factors.
If doctrine of substantial pefromance applies. Enforce the contract minus damages for not 100 percent correct. If doctrine of substantial performance does not apply. You can not enforce the contract and that leads you to QM.

Front 15

Doctrine of Sub Peformance Example:

Grun vs. Cope

Back 15

• She is going to have to pay more to get a new roof that satisfies her.
• It is not willful, fraudulent but it might be material. Using the same factors as Cardozo. They find that it was material.
• Being material. Can he use the SP doctrine to enforce the doctrine? No. But he can still get QM. The court says he can not get QM because there is no benefit to her.
• If the parties don’t order performance the courts will do so. The courts may try to use the doctrine of substantial performance? If the the project is complete you can use SP.

Also look at problems 146, 148, 149

Front 16

What is the parallel between express and constructive condidtions?

Back 16

Express-
If the language would lead to a forfeiture. Argue that it was a promise. If you have success and the courts agree. The remedy is to enforce the K minus damages for breach of promise.
If not successful meaning that the language is a condition. The remedy is that you get nothing. You might be able to recover for QM.
Constructive –
Ordering performance. You argue the doctrine of SP. If successful the remedy is enforce the contract minus damages for not performing 100 percent correctly.
If not successful. Meaning no doctrine of substantial performance. The remedy is QM.