Contracts Ii Final

Front 1

Acevedo Parol Evidence Rule

Back 1

Parol evidence only applies to a written contract; not admissible in oral contract; oral evidence cannot contradict a written term

Front 2

RST 209: Integration

Back 2

Integrated agreement is a final writing constituting a final expression of an agreement; judge determines integration; outside evidence must establish written agreement was not final expression

Front 3

RST 210(1): Complete Integration

Back 3

Complete Integration = agreement adopted by parties as a complete and exclusive statement of the terms of an agreement

Front 4

RST 213(2): Nothing Gets In

Back 4

A completely integrated agreement discharges prior agreements to the extent that they are within its scope

Front 5

RST 210(2): Partial Integration

Back 5

Partial integration is an agreement other than a completely integrated agreement

Front 6

RST 213(1): Consistent Terms Allowed

Back 6

A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them

Front 7

RST 216: Consistent Additional Terms

Back 7

Consistent additional terms are admissible as supplement unless the agreement is completely integrated; an agreement is not completely integrated where the writing omits a term that is (1) agreed for separate consideration or (2) such a term might naturally be omitted from the writing

Front 8

RST 214: Evidence of Prior Negotiations

Back 8

May establish complete or partial integration; the meaning of the writing; fraud, illegality, duress, lack of consideration; specific performance or other remedy

Front 9

Gianni v. R Russell

Back 9

(Rule Later Overturned) A written contract is the only evidence of an agreement; prelim negotiations not allowed unless there is fraud or mistake

Front 10

Masterson v. Sine

Back 10

A fully integrated written agreement supercedes prior versions of a contract and all supplemental terms; a partially integrated may be supplemented through other evidence, but not contradicted

Front 11

MCC Marble v. Ceramica Nuova

Back 11

Parol evidence rule does not apply to the CISG - subjective intent of parties is allowed as evidence

Front 12

Bollinger v. Central PA Quarry

Back 12

Court may reform written evidence to make it correspond to the understanding of the parties where there is a mutual mistake

Front 13

RST 201: Whose Interpretation Prevails

Back 13

Contracts drafted with different meanings to the same word it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made that party did not know of any different meanings, or had no reason to know the meaning

Front 14

Frigalimant v. BNS

Back 14

Trade usage that is long used and notorious may be presumed where parties reference to it; party may accept trade usage by proving that he had actual knowledge of the trade usage or that the trade usage is so generally known that his knowledge is inferred

Front 15

Raffles v. Wichelhaus

Back 15

Where there is a latent ambiguity, parol evidence may be given for the purpose of clarifying an ambiguity or fixing a mistake

Front 16

Oswald v. Allen

Back 16

When terms used to express an agreement are ambivalent, there can't be a contract unless one of them should have been aware of the other's understanding

Front 17

WWW Associates v. Gianconteri
Judge Kaye Approach

Back 17

Four Corners Rule: Where parties set down clear, complete writing, it will be enforced according to its terms; extrinsic parol evidence is not admissible to create an ambiguity in a written contract that is clear and complete

Front 18

Pacific Gas v. GW Thomas
Judge Traynor Approach

Back 18

Consider All Relevant Evidence: Language is susceptible to various interpretations, then evidence relevant to prove the meanings is admissible

Front 19

Delta v. Arioto

Back 19

A clause that spells out the remedy for breach of the contract is allowable as evidence if there is no other term that would provide a meaningful solution

Front 20

Hurst v. WJ Lake

Back 20

Evidence is allowed for a common meaning of a term that is otherwise explicit and unambiguous

Front 21

UCC 2-202: Parol Evidence

Back 21

Additional evidence may not contradict terms of an express written agreement, but may be supplemented with course of performance, trade usage, or consistent additional terms

Front 22

RST 204: Filling Gaps

Back 22

When a contract has not agreed on an essential term that determines the parties' rights and duties, a term that is reasonable in the circumstances is supplied by the court

Front 23

Dalton v. ETS

Back 23

Good faith and fair dealing is implicit in all contracts, that neither party will do anything that will destroy or injure the other party's right to the fruits of the contract

Front 24

Burger King v. Weaver

Back 24

There is no independent cause of action for breach of an implied covenant of good faith and fair dealing, the implied covenant must attach itself to an express contractual provision to be operational

Front 25

UCC 2-103

Back 25

Good Faith = honesty in fact and the observance of reasonable commercial standards of fair dealing

Front 26

UCC 2-306

Back 26

Requirements contract = output that may occur in good faith, except that no quantity unreasonably disproportionate to a stated estimate or in the lack of a stated estimate comparable prior output requirements; a lawful agreement imposes an obligation for the seller to use best efforts to supply the goods by the buyer and use best efforts to promote their sale

Front 27

Market Street Associates v. Frey

Back 27

One party cannot take under advantage of another party's mistake, oversight, or lack of information

Front 28

Best Efforts: General Rule

Back 28

Does not mean absolute effort, everything reasonably possible or comparable by another in the same situation

Front 29

Dickey v. Philadelphia Minit-Man

Back 29

A party to a percentage lease contract may in good faith and in the exercise of legitimate business judgment reduce its business obligation

Front 30

Bloor v. Falstaff Brewing

Back 30

Best efforts are those that would be made by a reasonable person of the same kind in the same circumstances; a court will not require that a party bankrupt itself in using best efforts, but must explore any steps that will minimize damages to other party

Front 31

Zilg v. Prentice Hall

Back 31

A party must make a reasonable good faith effort to fulfill his business obligation, then all that is required to terminate is a good faith business judgment

Front 32

Bakalum v. Alcoa

Back 32

Reasonable notice is required to terminate a term in a contract; if one party denies another a reasonable opportunity to recoup his investment, he is liable to compensate that party

Front 33

Lockewill v. US Shoe

Back 33

Where parties agree to an exclusive dealership that is silent to termination, the agreement is construed as terminable at teh will of either party

Front 34

Sheets v. Teddy's Frosted Foods

Back 34

Public policy imposes limits on unbridled discretion to terminate at will employees; whistleblower statute prohibits employers from terminating employees who report a violation or suspected violation of a state or federal law to public body

Front 35

Balla v. Gambro

Back 35

An in house attorney can be terminated at will for disclosing confidential information to federal regulators; a lawyer can only report confidential information that would prevent the client from death or causing death or serious bodily harm

Front 36

UCC 1-205(3)

Back 36

Course of dealing or trade usage may not only give particular meaning terms of an agreement, but also supplement or qualify those terms

Front 37

Nanakuli v. Shell Oil

Back 37

Two or more instances of a particular performance between parties constitute an implied course of duty; A common trade usage or practice need not necessarily be used by every member of a certain trade, if it is used commonly within a particular locality so that the party should be aware of it

Front 38

Columbia Nitrogen v. Royster

Back 38

UCC evidence of trade usage and regular course of dealing should be excluded whenever it cannot be reasonably construed as consistent with the terms of the contract; course of dealing are admissible to supplement terms of any writing, and contracts are to be read on the assumption that these elements were takenf or granted where the document was phrased

Front 39

RST 224: Condition

Back 39

A condition is an event that is not certain to occur, but must occur unless its non-occurrence is excused, before performance under a contract becomes due

Front 40

RST 225: Performance

Back 40

Performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused

Front 41

Luttinger v. Rosen

Back 41

the failure to satisfy a condition excuses performance; the law requires that reasonable efforts are made to satisfy a condition, it does not require the performance of a futile act

Front 42

Internatio-Rotterdam v. River Brand Rice

Back 42

If a condition precedent is not met, performance is excused and non-breaching party may rescind or discharge its duties

Front 43

Peacock v. Modern Air Conditioning

Back 43

Interpretation of a document is question of law to be decided by the judge

Front 44

Gibson v. Cranage

Back 44

Where parties enter into an agreement violating no public policy, and with no fraud or mistake, the courts will hold them bound by it

Front 45

Doubleday v. Curtis

Back 45

A publisher may, in its discretion, terminate a publishing contract pvoided that it is made in god faith and the publisher did not make a bad faith effort to prevent author from submitting satisfactory work; satisfactory performance judged by a party requires that the party terminating the contract do so in good faith

Front 46

RST 229: Avoidance of Forfeiture

Back 46

To the extent that a non occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non occurrence of that condition unless its occurrence was a material part of the agreed exchange

Front 47

McKenna v. Vernon

Back 47

A history of waiver of conditions without a reservation of rights will be treated as a waiver and excuse a condition

Front 48

Hicks v. Bush

Back 48

Evidence of a condition precedent, showing lack of contract formation, is not subject to the parol evidence rule, and is therefore admissible

Front 49

Stewart v. Newbury

Back 49

Where a contract for work is silent to payment agreement, the work must be substantially performed before payment can be demanded; absent an agreement to the contrary, work is to be performed before payment is given

Front 50

Jacobs and Young v. Kent

Back 50

An omission, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be a breach of a condition to be followed by forfeiture

Front 51

Plante v. Jacobs

Back 51

Test of what amounts to performance is whether performance meets the essential purpose of the contract

Front 52

UCC 2-601: The Perfect Tender Rule

Back 52

If the goods or tender in any way fail to conform to the expectations of the buyer, the buyer may:
Reject the whole, accept the whole, accept a commercial unit and reject the rest

Front 53

UCC 2-508; 608; 612: Perfect Tender Exception

Back 53

Seller may cure defective tender if the time for performance has not yet expired; allows buyer who is already accepted to revoke that acceptance only if the nonconformity substantially impairs their value to him; allows buyer to reject if non conformity impairs the value of the contract

Front 54

RST 240: Divisibility

Back 54

If performance can be apportioned into corresponding pairs, the cooresponding duties must meet the part performance as if he had contracted only for that part performance

Front 55

Gill v. Johnstown Lumber

Back 55

If one party's obligations consist of several distinct terms, and the price is apportioned to each item, it will be a severable contract

Front 56

RST 370/371: Restitution

Back 56

A party is entitled to restitution to the extent that he has conferred a benefit on the other party by part performance, measured by value to the other party, and the extent to which his property has been increased in value

Front 57

RST 374: Restitution By Breaching Party

Back 57

Breaching party is entitled to restitution in excess of the loss that he has caused by his own breach

Front 58

Britton v. Turner

Back 58

Where a party receives value, takes and uses materials, or has advantage from the labor, he is liable to pay the reasonable worth of what he has received

Front 59

Kirkland v. Archbold

Back 59

Where a builder has supplied work and labor to erect or repair a house, but has departed from the terms of the contract, he can recover for his materials unless his work has no benefit to the owner, or has abandoned it and left it unfinished

Front 60

RST 241: Material Performance

Back 60

Whether injured party is deprived of benefit which he reasonably expected; 2 - whether he can be adequately compensated; 3 - extent to which breaching party will suffer forfeiture; 4 - likelihood that breacing party offering to perform will curehis failure; 5 - extent to which breaching party failing to perform comports with good faith

Front 61

Walker v. Harrison

Back 61

A non breaching party can stop performance in the event of a material breach

Front 62

KG Construction v. Harris

Back 62

Material breach calls for non breaching party to either terminate or continue performance, if he continues to perform he cannot thereafter elect to terminate the contract based on a sole breach

Front 63

Iron Trade v. Wilkoff

Back 63

A party selling goods under a requirements contract cannot excuse performance because buyer made another purchase increasing the scarcity of supply making performance more difficult

Front 64

New England Structures v. Loranger

Back 64

A party is not barred from asserting grounds not mentioned earlier, unless the counter-party relied to its detriment on teh initial allegations

Front 65

RST 250: Repudiation

Back 65

Statement or voluntary affirmative act which renders the obligor unable to perform without a breach

Front 66

RST 251: Failure to Give Assurance is a Repudiation

Back 66

Failure to provide assurance within a reasonable time

Front 67

Hochster v. De La Tour

Back 67

After renunciation is agreed to by the defendant, plaintiff is at liberty to consider himself absolved from any future performance

Front 68

Kanavos v. Hancock Bank

Back 68

When performance is concurrent, one cannot put another in defuult unless he is ready, willing and able to perform

Front 69

McCloskey v. Minweld

Back 69

In order to give rise to renunciation amounting to a breach there must be an abosolute and unequivocal refusal to perform or distinct positive statement of inability to do so

Front 70

CL Maddox v. Coalfield

Back 70

A party is justified in suspending its performance when the wrongdoer gives substantial grounds to the injured party

Front 71

Cosden Oil v. Karl O

Back 71

For anticipatory repudiation, injured party can recover the difference between a contract price and the market price for a commercially reasonable time after the injured party learns of the breach

Front 72

US v. Seacoast Gas

Back 72

Repudiator has the power of retraction prior to any change of position by the other party, but not afterwards

Front 73

RST 243: Assurance

Back 73

When an obligee reasonably believes the obligor will commit a breach he may demand assurance of performance

Front 74

Pitt Steel v. Brookhaven Water

Back 74

A party must have reasonable grounds for demanding assurance form the other party

Front 75

Norcon Power v. Niagara Power

Back 75

When a party repudiates contractual duties, prior to the time designated for performance and before, the repudiation entitles the party to damages for total breach

Front 76

RST 151: Mistake

Back 76

Mistake is a belief not in accord with the facts

Front 77

RST 152: Mistake of both parties

Back 77

Mistake of both parties on a material element makes the contract voidable

Front 78

RST 152: Mistake of both parties

Back 78

Mistake of both parties on a material element makes the contract voidable

Front 79

RST 153: Mistake of one party

Back 79

Contract voidable where mistake is a basic assumption of the contract or has a material effect and makes contract unconsionable or the other party has reason to know of the mistake or it is his fault

Front 80

RST 154: Risk of Mistake

Back 80

Party bears the risk of mistake when it is allocated to him in the contract, he is aware of the risk

Front 81

Stees v. Leonard

Back 81

If a man binds himself to do an act in itself possible he must peform unless prevented by an act of god, the law or another party

Front 82

Renner v. Kehl

Back 82

Contract may be rescinded where there is a mutual mistake of material fact which constitutes an essential part of the contract

Front 83

RST 261: Impracticability

Back 83

A party's performance is made impracticable without his fault by an event which is the basic assumption on which the contract is made

Front 84

Taylor v. Caldwell

Back 84

Where performance depends on the continued existence of a subject matter, a condition is implied that impossibility of performance arising from the perishing of that subject matter shall excuse performance

Front 85

Transatlantic Finance v. US

Back 85

Impracticability
Something unexpected occurred
The risk was not allocated in the agreement
Occurrence of the contingency has rendered performance impracticable

Front 86

Selland Pontiac v. King

Back 86

Seller's performance is excused where a particular source of supply is exclusive under the contract and the source fails to remain available

Front 87

Canadian Alcohol v. Dunbar Molasses

Back 87

Courts will not excuse the performance of a seller who fails to take reasonable steps of preparation

Front 88

Eastern Air Lines v. Gulf

Back 88

Party alleging commercial impracticability has burden of proof in establishing costs

Front 89

Mineral Park v. Howard

Back 89

A party's performance is excused if he must take extraordinary means and incur prohibited cost in rendering performance

Front 90

RST 265: Frustration of Purpose

Back 90

After contract's principal purpose is substantially frustrated without his fault duties are discharged

Front 91

Krell v. Henry

Back 91

A court will excuse performance of a contract where the subject matter of the contract is so utterly destroyed as to render its performance useless

Front 92

Swift Canadian v. Benet

Back 92

a. In order to invoke the doctrine of frustration, the event must occur before performance is completed

Front 93

Chase Precast v. John Paonessa

Back 93

a. Whether or not a party can invoke the defense of frustration depends on whether the risk was allocated by contract

Front 94

Northern IN Public Service v. Carbon County Coal

Back 94

a. Where the parties for a contract have allocated a risk, they are prevented from invoking the doctrine of impossibility or frustration when the risk contemplated is realized

Front 95

Young v. City of Chicopee

Back 95

a. There is an implied contract upon the owner of the structure that continues to exist, and if it is destroyed without his fault, he still must be regarded as in default and liable to pay for what has been done

Front 96

RST 344(a) Expectation interests

Back 96

interest in having the benefit of his bargain by being put in a good position as he would have been in had the contract been performed

Front 97

RST 344b Reliance Interest

Back 97

interest in being reimbursed for loss cause by reliance on the contract by being put in as good a position as he would have been in had the contract not been made

Front 98

RST 344c Restitution Interest

Back 98

interest having restored to him any benefit that he has conferred on another party

Front 99

RST 347 Measuring Expectation Interest

Back 99

i. Loss in value based on other party’s performance
ii. Incidental or consequential losses caused by breach
iii. Any cost that he has avoided by not having to perform

Front 100

RST 349 Damages for Reliance Interests

Back 100

i. Expenditures made in preparation for performance less any loss that the party in breach can prove with reasonable certainty that the injured party would have suffered had the contract been performed

Front 101

RST 357: Specific Performance/Injunctive Relief

Back 101

Specific performance will be granted in discretion of the court against a party who has committed or is threatening to commit a breach of the duty
(2) Injunctive Relief = An injunction against breach of a contract duty will be granted in the discretion of the court against a party who has committed or is threatening to commit a breach of the duty if:
a – the duty is one of forebearance
b – the duty is one to act and specific performance would be denied only for reasons that are inapplicable to an injunction

Front 102

Klein v. Pepsi

Back 102

e) Specific performance is an appropriate remedy if the goods sought are unique, or in other proper circumstances, it is inappropriate where damages are recoverable and adequate

Front 103

Laclede v. Amoco

Back 103

f) Specific performance will not be ordered when the party claiming breach has an adequate remedy at law

Front 104

N Delaware Industrial v. Bliss

Back 104

g) Court should not order specific performance of a building contract where it would be impractical to carry out such an order unless it would be impractical or the public interest is directly involved
h) Performance of a contract, for personal services, even of a unique nature, will not be affirmatively and directly enforced

Front 105

N Delaware Industrial v. Bliss

Back 105

g) Court should not order specific performance of a building contract where it would be impractical to carry out such an order unless it would be impractical or the public interest is directly involved
h) Performance of a contract, for personal services, even of a unique nature, will not be affirmatively and directly enforced

Front 106

Walgreen v. Sara Creek Property

Back 106

i) Injunctions are granted only when damage remedy is inadequate
i. Injunction benefit: market determines costs more effectively than courts; force them to work it out with money
ii. Injunction problem: costs moved on third parties, creates bilateral monopoly

Front 107

RST 346: Nominal Damages

Back 107

= Injured party has a right to damages for a breach unless the claim for damages has been suspended or discharged; if the breach caused no loss, small sum is fixed without regard to the amount of loss rewarded as nominal damages

Front 108

RST 359: Adequacy of Damages

Back 108

specific performance will not be ordered if damages would be adequate to protect the expectation interest; (2) the adequacy of damages do not preclude specific performance or injunction as to the contract as a whole (3); specific performance or injunction will not be refused merely because there is a remedy for breach other than damages, but must be considered in exercising discretion under RST 357

Front 109

RST 364: Specific Performance Refused

Back 109

Specific performance will be refused if such relief would be unfair because
(1) the contract was induced by mistake or unfair practices
(2) the relief would cause unreasonable hardship or loss to the party in breach or third persons, or
(3) the exchange is grossly inadequate or the terms of the agreement are otherwise unfair

Front 110

Vitex v. Carbitex

Back 110

UCC 2-708: measure of damages is profit of production level that the seller would have made from full performance for the buyer

Front 111

Laredo Hides v. Meat Products

Back 111

Injured party may recover damages the difference between cost of cover and the contract price; difference between market price at the time when buyer learned of the breach and contract price together with any incidental and consequential damages

Front 112

UCC 2-712/713: Damages

Back 112

UCC 2-712: (1) if seller wrongfully repudiates or fails to deliver, buyer may cover by making a good faith purchase to buy goods in substitution for those due from seller
(2) Buyer may recover damages as difference between cover and contract price together with any incidental or consequential damages, less expenses saved in consequence of seller’s breach
UCC 2-713: Damages = market price – contract price + incidental expenses

Front 113

RE Davis v. Diasonics

Back 113

Plaintiff must prove that he has the capacity to supply breached unit, and that it would have been profitable for seller to produce both units, and that measure of damages in 2-708 is not sufficient to make them whole

Front 114

UCC 2-708: Damages

Back 114

measure of damages is profit, including reasonable overhead, which the seller would have made from full performance by the buyer, together with incidental damages provided in this article

Front 115

US v. Algernon Blair

Back 115

Promisee upon breach has the option to forego any suit on the contract and claim only the reasonable value of his performance
Measure of recovery for quantum meruit is the reasonable value of performance

Front 116

RST 350: Limitations on Damages

Back 116

RST §350: (1) Damages are not recoverable for loss that he injured party could have avoided without undue risk, burden, or humiliation
(2) The injured party is not precluded from recovery in section 1 to the extent that he has made reasonable but unsuccessful efforts to avoid loss

Front 117

Rockingham County v. Luten Bridge

Back 117

After an absolute repudiation or refusal to perform by one party to a contract, the other party cannot continue to perform and recover damages based on full performance
An injured party has an obligation to mitigate damages caused by the defendant’s wrongful act

Front 118

UCC 2-740(2)

Back 118

manufacturer may continue production instead of halting manufacture in exercise reasonable judgement for the purpose of avoiding loss and of effective realization

Front 119

Tongish v. Thomas

Back 119

– market price doubled for sunflower seed sale, seller demanded more money before delivery; buyer sued for lost profits
If the seller knows that the buyer has a resale contract and the seller breaches the contract in bad faith, then the buyer’s damages are determined under UCC 2-713 (contract price – actual price)
If the seller knows that the buyer has a resale contract and the seller did not breach in bad faith, the buyer is limited to damages under UCC 1-106 (actual loss theory = whatever will make the party whole)

Front 120

Parker v. Fox

Back 120

contracted to play lead role in a musical for 750K, the play fell through and she was given a role in a country western for the same price to compensate
Recovery for wrongful discharge is salary less amount the employer proves employee has earned or with reasonable effort might have earned from other employment
In order to qualify for mitigation on the part of the employee, the employer must show that the substitute employment was comparable or substantially similar to the employer’s original position

Front 121

RST 348(2): Defective Performance

Back 121

): if a breach results in defective or unfinished construction and the loss in value to the injured party is not proved, he can recover damages based on
- diminution in market price or
- reasonable cost of completing performance or remedying defects if that cost is not clearly disproportionate to the probable loss in value to him

Front 122

Jacobs and Young v. Kent

Back 122

pipe case, wrong pipe brand was used but pipes were the same quality – judge ruled for contractor
Measure of damages is not cost of replacement, which would be great, but the difference in value, which is nominal or next to nothing
Substantial performance is only available when breached provision is trivial and innocent

Front 123

Groves v. john Wunder

Back 123

contract to remove gravel at a uniform grade from property, party breached and removed only the best soil and left the property a mess, not uniform – judge ruled for property owner
Where a contractor willfully and fraudulently varies from the terms of the contract, he cannot sue thereon and have the benefit of substantial performance
In event of a willful breach, cost of remedying defect is cost of performance

Front 124

Peevyhouse v. Garland Coal

Back 124

contracted to use land for coal mining and at the end they would make improvements costing 29K that would improve the land by $300 – judge ruled to use cost of value rule and awarded them only $300 instead of 29K
Cost of Performance Rule: when lessee agrees to perform remedial work on the premises at the end of the lease period, and he performs and at the end of the lease work is not done, the measure of damages is the cost of performance of the work
Value Rule: Where the provision breached is merely incidental to the main purpose, and the economic benefit is grossly disproportionate to the performance, the damages are limited to the diminution in value because of the non-performance

Front 125

RST 351: Unforeseeability

Back 125

Damages are not recoverable for loss that a breaching party does not have reason to foresee and is not a probable result of the breach of contract
2.Loss may be foreseeable as a probable result of a breach when it follows
a – in the ordinary course of events, or
b – as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know
3.A court may limit damages for foreseeable loss by excluding recovery for loss of profits by allowing recovery only for loss incurred in reliance or if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation

Front 126

Hadley v. Baxendale

Back 126

hired a company to make a new steam engine to repair a broken one in the plant, the delivery came 5 days after it was supposed to, plant owner tried to sue for lost profits due to the delay – judge ruled that the lost profits weren’t foreseeable and thus can’t be calculated for damages
Damages for breach of contract are those that are fairly considered arising naturally from the breach, according to the usual course of things, or are in contemplation of both parties at the time they made the contract, and is the probable result of the breach of it

Front 127

Delchi Carrier v. Rotorex

Back 127

air conditioner company sued after non-conforming shipment came through in quality of air conditioning power – judge ruled that foreseeable damages included shipping, storage expense, and cost of materials

Front 128

Kenford v. County of Erie

Back 128

County backed out of project after they found out that it would cost more money than they budgeted for to implement – judged ruled that lost profits for damages were not in contemplation of the parties and did not grant them to Kenford
In order to impose unusual or extraordinary damages on the defaulting party, such damages must have been brought within the contemplation of the counter-party as a probable result of the breach prior to contracting
Consequential damages allowed only when there are foreseeable; referred to in communications between parties, or would generally be taken into account in assessing the proposed contract

Front 129

RST 353: Emotional Distress

Back 129

Emotional disturbance damages are not awarded in contract law unless the breach also caused bodily harm or was of such a kind that serious emotional disturbance was a particular likely result
When contract is predominantly personal in nature and no substantial pecuniary loss would follow its breach

Front 130

RST 352: Certainty

Back 130

Damages are not recoverable for loss beyond an amount that evidence permits to establish with reasonable certainty

Front 131

Fera v. Village Plaza

Back 131

plaza failed to grant a contracted lease to fera for a store, fera sued for lost profits from the store that they would have received – judge overturned jury award for future lost profits
In order to be eligible for future lost profit damages, plaintiff must lay a basis for his recovery in reasonable estimate as to the extent of his harm, measured in money; the jury is not allowed to speculate or guess upon an amount for lost profits
Future profits are allowed as an element of damages when they can be reasonably established

Front 132

RST 356: Liquidated Damages and Penalties

Back 132

Damages may be liquidated in an agreement only in an amount that is reasonable in the light of anticipated or actual loss caused by the breach and difficulties of proof of loss; a term fixing unreasonably large amounts for damages is unenforceable on grounds of public policy and as penalty

Front 133

Wasserman's v. Middleton Township

Back 133

Judge shot down damage calculation adding reimbursement for gross receipts for what would have been a general store
Three Elements to Liquidated Damages
(1) Projected amount must reasonably estimate the foreseeable loss
(2) Actual amount must be difficult to calculate
(3) Clause must be tailored to fit the facts and circumstances

Front 134

Gustafson v. State

Back 134

state withheld damages for 67 day delay on highway repavement; judge allowed damages on each day late to stand

Front 135

RST 302: Beneficiary

Back 135

1) a beneficiary of a promise is an intended beneficiary if recognition of a right of performance is appropriate to effectuate the intention of the parties and either
(a) Performance will satisfy an obligation to pay money to the promisee, or
(b) The circumstances indicate that promisee intends to give beneficiary the benefit of the promised performance
(2) An incidental beneficiary is one who is not an intended beneficiary (no enforceable rights in the contract)

Front 136

RST 304: Intended Beneficiary

Back 136

A promise in a contract creates a duty in promisor to any intended beneficiary to perform the promise and intended beneficiary may enforce the duty

Front 137

RST 315: Incidental Beneficiary

Back 137

An incidental beneficiary acquires no right against the promisor or promisee

Front 138

Lawrence v. Fox

Back 138

Fox agreed to pay Lawrence $300 that Holly owed him if Holly would loan him $300, said he would pay Lawrence the next day – Judge ruled that Lawrence was a third party beneficiary and thus a binding obligation for Fox to pay Lawrence even though Lawrence never contracted to pay Fox
An intended beneficiary can enforce a contract intended for her benefit
You don’t need a trust in order to have a third party beneficiary
You don’t need privity of contract with a third party beneficiary
RST 302(1)(a) rules this case

Front 139

Seaver v. Ransom

Back 139

Husband promised wife on her death bed to give their house to her niece, he didn’t put it in the will and niece sued for value of property – judge ruled that as executor he created a trust in niece when wife died
A donee beneficiary has a right to enforce a contract intended for her benefit
You don’t need consideration to create a third party beneficiary

Front 140

Grigerik v. Sharpe

Back 140

property sale contingent on land being able to acquire a building permit, Sharpe contracted to improve land to make it able to obtain a building permit, after sale land was denied building permit license – judge ruled that land improver was not a third party beneficiary, relieved them from paying damages
The intent of both parties to a contract determines whether a third party has contract rights as a third party beneficiary

Front 141

Septembertide Publishing v. Stein and Day

Back 141

third party imputed in an agreement where there was an existing contract to pay them from Stein and New Library knew that they were assisting Stein
Evidence imputing third party beneficiary can be either direct or indirect

Front 142

RST 311: Duties to Beneficiaries

Back 142

(1) Discharge or modification of a duty to an intended beneficiary is ineffective if a term of the promise creating the duty so provides;
(2) in the absence of a term, the parties retain power to discharge or modify the duty by subsequent agreement;
(3) this power terminates when the beneficiary materially changes his position in justifiable reliance on the promise or brings suit on it or manifests assent to it;
(4) if the promisee receives consideration for an attempted discharge or modification which is ineffective against the beneficiary, the beneficiary can assert the right to consideration so received. The promisor’s duty is discharged to the extent of the amount received by the beneficiary

Front 143

Olsen v. Etheridge

Back 143

Olsen sold business to Etheridge, Etheridge sold to Engel, Engel ruled third party beneficiary, Etheridge still liable to Olsen due to delegation
When a duty is delegated, the delegated party continues to remain liable for performance
A promisor may assert against a third party beneficiary any defense that the promisor can assert against the promisee

Front 144

RST 317: Assignment

Back 144

Assignment = manifestation of assignor’s intent to transfer his rights, and extinguish his rights in whole or in part and assignee acquires a right to performance
(2) Contractual right can be assigned unless:
(a) the substitution of a right would materially change the duty of the obligor, or materially increase the burden or risk imposed on him by his contract, or materially impart his change of obtaining return performance, or reduce its value to him
(b) the assignment is forbidden by statute or otherwise inoperative on grounds of public policy, or
© assignment is validly precluded by contract

Front 145

RST 333: Assignor's warranty

Back 145

Warranties of an assignor
One who assigns a right under seal or for value warrants to the assignee:
a) that he will do nothing to defeat or impair the value of the assignment and has no knowledge of any fact which would do so
b) that the right actually exists and is subject to no limitations or defenses good against the assignor other than those stated or apparent at the time of the assignment
c) any writing evidencing the right which is delivered to the assignee or exhibited to him to induce him to accept the assignment is genuine and what it purports to be
2 – an assignment does not of itself operate as a warranty that the obligor is solvent or that he will perform his obligation

Front 146

Macke v. Pizza of Gaithersburg

Back 146

Virginia contracted to operate vending machines for Pizza shops, then was bought out by Macke, Pizza tried to rescind – contracts were not for skill and are materially the same and can be assigned
Rare genius and extraordinary skill are not transferable, and contracts for their employment are therefore personal and cannot be assigned

Front 147

Herzog v. Irace

Back 147

Jones had his lawyer sign agreement to pay his doctor upon a settlement award, after he received settlement he told his lawyer to give the money to him instead – judge ruled that lawyer was liable to pay doctor even though his client gave him different directions
Assignment = act or manifestation indicating intent to transfer rights to another person
For assignment to be valid and enforceable against creditor, the assignor must make clear his intent to relinquish the right to the assignee and must not retain any control over the right assigned or any power of revocation
Once an obligor has notice of an assignment the fund is impressed with a trust; it is impounded in the obligor’s hands, and must be beheld by him for the assignee

Front 148

Cheney v. Jemmett

Back 148

real estate seller wouldn’t allow assignment of his property after sale – judge ruled that the non-assignment clause is unreasonable
When a contract grants the purchaser the right to assign his interest in the contract, or in the property issue, conditioned upon obtaining consent of the seller, the seller must act reasonably and in good faith in withholding his consent to a proposed assignment

Front 149

Ford Motor v. Morgan

Back 149

Man sued that car sale was premised on an unfair and deceptive acts to induce purchase justifying his default on payments – judge denied his argument
A consumer can defend a creditor suit for payment of an obligation by raising a valid claim against a creditor seller, and maintain an affirmative action against a creditor who has received payments for a return monies paid on account; however, the latter alternative will only be available if a seller’s breach is so substantial that a court is persuaded that rescission and restitution are justified

Front 150

Seattle Nat'l v. Oregon Pacific

Back 150

Rights of an assignee are subject to
(a) all terms of the contract between the account debtor and assignor and any defense or claim arising therefrom, and
* Can be raised at any time
(b) any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives notification of the assignment
* Can only be raised before the assignment is formed

Front 151

RST 318: Delegation

Back 151

1) Delegation is proper unless it is contrary to public policy or the terms of the promise
(2) Delegation requires performance only to the extent that the obligee has a substantial interest in having that person perform or control the acts promised
(3) Unless the obligee agrees otherwise, neither delegation of performance nor a contract to assume the duty made with the obligor by the person delegated discharges any duty or liability of the delegating obligor

Front 152

Langel v. Betz

Back 152

Contract for property sale assigned to third party; party did not make payment for the property on time – held that there is no inferred acceptance of duties to a contract, judgment for assignee
A mere assignment of a bilateral executory contract may not be interpreted as a promise by the assignee to the assignor to assume the performance of the assignee’s duties
No promise of the assignee to assume the assignor’s duties is to be inferred from the acceptance of an assignment of a bilateral contract – the assignee must expressly accept the assignor’s duties

Front 153

Rouse v. US

Back 153

Winston sells house to Rouse, and guarantees payment with the Federal Housing Administration; Rouse defaults – held cleared due to fraud on the part of Winston
A party who promises to make payment to a promisee’s creditor may assert any defense against the creditor that the promisor could assert against his promisee

Front 154

Lumley v. Gye

Back 154

woman was coerced into abandoning her contract to participate in a play; theatre company sued woman who coerced their employee to break the contract for tortious interference with her contract
Tortious interference with contracts: An action may lie where defendant maliciously procures a party who is under contract to give exclusive personal services to plaintiff, and plaintiff is injured for refusal of such services

Front 155

Penna v. Toyota

Back 155

oyota imported Lexus cars to car dealership with provision that they could not be sold outside the United States, Penna sued that they were tortiously interfering with their prospective economic relations
(1) an economic relationship between the plaintiff and another, (2) defendant’s knowledge of the existence of a relationship, (3) that defendant intentionally engaged in acts or conduct designed to interfere with or disrupt the relationship (4) actual disruption, and (5) damage to the plaintiff as a result of defendant’s acts

Front 156

JD Edwards v. Podany

Back 156

If a consultant’s advice is given honestly and within the scope of his employment his private motives are irrelevant

Front 157

RST 209(1) Integrated Agreement

Back 157

An agreement is a writing or writings constituting a final expression of one or more terms of an agreement

Front 158

RST 216(1) Consistent Additional Terms

Back 158

Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated

Front 159

RST 227 Standards of Conditions

Back 159

In deciding whether an event is a condition or a duty, the court interprets the contract to reduce the obligee’s risk of forefeiture
(2) A duty is preferred over a condition unless the contract is generally one where only one party undertakes duties
(3) A condition is preferred interpretation over forefeiture of the contract

Front 160

RST 228 Obligor as a Condition

Back 160

Satisfaction of the obligor as a condition: When satisfaction of the obligee’s performance is a condition, the court interprets the satisfaction as that which would satisfy a reasonable person in the obligor’s position

Front 161

RST 263 Destruction of a Necessary Thing for Performance

Back 161

The existence of a specific thing necessary for the performance of a duty, its failure to come into existence, destruction, or deterioration making impracticable is an event that the non-occurrence of which was a basic assumption on which the contract was made

Front 162

RST 345 Judicial Remedies Available

Back 162

A – awarding sum of money as damages
B – specific performance
C – Restoration of a specific thing to prevent unjust enrichment
D – Awarding sum of money to prevent unjust enrichment
E – Declaring the rights of the parties
F – Arbitration award

Front 163

RST 355 Puny Damages

Back 163

Punitive Damages not recoverable unless the breach is also a tort

Front 164

UCC 2-709 Seller's Action for the Price

Back 164

§ 2-709. Action for the Price.

(1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price

(a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and

(b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.

Front 165

UCC 2-713 Buyer's Damage for Non Delivery

Back 165

§ 2-713. Buyer's Damages for Non-delivery or Repudiation.

(1) Subject to Section 2-723, if the seller wrongfully fails to deliver or repudiates or the buyer rightfully rejects or justifiably revokes acceptance:

(a) the measure of damages in the case of wrongful failure to deliver by the seller or rightful rejection or justifiable revocation of acceptance by the buyer is the difference between the market price at the time for tender under the contract and the contract price together with any incidental or consequential damages under Section 2-715, but less expenses saved in consequence of the seller's breach; and

(b) the measure of damages for repudiation by the seller is the difference between the market price at the expiration of a commercially reasonable time after the buyer learned of the repudiation, but no later than the time stated in paragraph (a), and the contract price together with any incidental or consequential damages provided in this Article (Section 2--715), less expenses saved in conseque

Front 166

UCC 2-711 Buyer's Remedies in General

Back 166

§ 2-711. Buyer's Remedies in General; Buyer's Security Interest in Rejected Goods.

(1) A breach of contract by the seller includes the seller's wrongful failure to deliver or to perform a contractual obligation, making of a nonconforming tender of delivery or performance, and repudiation.

(2) If the seller is in breach of contract under subsection (1), the buyer, to the extent provided for by this Act or other law, may:

(a) in the case of rightful cancellation, rightful rejection, or justifiable revocation of acceptance, recover so much of the price as has been paid;

Front 167

RST 309 Defenses Against the Beneficiary

Back 167

A promise creates no duty to a beneficiary unless a contract is created, and if the contract is voidable and unenforceable then the beneficiary has no rights

(2) If a contract ceases to be binding in whole or in part, the right of the beneficiary is discharged or modified

(3) A beneficiary’s right against the promisor is subject to any claim or defense arising from his own conduct or agreement

Front 168

RST 336 Defenses Against an Assignee

Back 168

Assignee acquires a right against the obligor only to the extent that the obligor has a duty to the assignor, and if it would be voidable against the assignor is voidable to the assignee

The right of an assignee is subject to any defense or claim of the obligor which accrues before the obligor receives notification, but not to defenses or claims which accrue thereafter

Where the assignor’s right is subject to discharge or modification, the right of the assignee is subject to discharge or modification as well