• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/147

Click to flip

147 Cards in this Set

  • Front
  • Back
Res 1
Contract defined :

Contract = Promise or set of promises for the breach of which the law gives a remedy, or performance of which the law in some way recognizes as a duty
Res 2
Promise, Promisor, Promisee, Beneficiary

- Promise = Manifestation of intention to act or refrain from acting in a specific way, in understanding that a commitment has been made
o May be made orally or written, or inferred from conduct
- Promisor = person making the promise
- Promisee = person to whom the promise is addressed
- Beneficiary = person who will benefit from the promise, if not the promise
Res 3
Agreement and bargain
- Agreement = mutual assent by 2 or more people
- Bargain = agreement to exchange promises or performance
- Consideration = something mutually given up with regard to a K
Res 4
How a promise may be made
- May be stated in words either oral or written, or inferred wholly or partly from conduct
Res 178 and 179
public policy and enforceability
- K is unenforceable if:
o Legislation provides that it is unenforceable
o Interest in enforcement is outweighed by public policy against enforcement
- In balancing the interests, take into account:
o Expectation of the parties
o What would be lost of enforcement was denied
o Public interest in enforcement
o Strength of the public policy restricting K law
o Whether refusing to enforce K would further the public policy
UCC 2-105
Goods
All thigns which are movable at time of K
UCC 1-103
where UCC has not changed common law, common law still applies.

uploading section
Res 17
Requirements of a bargain
o Formation of a K requires manifestation of mutual assent and consideration
Res 18
mutual assent requires each party to make a promise or begin or render performance
Res 19
Required Conduct for Assent
o Assent can be created by written/spoken words, or by acts, or by failure to act
o Conduct ≠ assent, unless the party intends to act and knows or has reason to know that the other party can infer his assent from his conduct
o Conduct can manifest assent, even if the party does not intend to assent
CISG Article 8
- Subjective/Objective Test:
o If one party knows or has reason to know of the other party’s subjective intent, even if that intent is not externally manifested, then the other party is deemed cognizant of such intent and it counts toward manifestation of K. If not applicable, then Reasonable person standard under all relevant circumstances.
Res 24
Offer defined
o Offer is manifestation of willingness to enter into a bargain, made to justify another person in understanding his assent to a bargain is invited
Res 22
Even if you can’t identify the exact moment of offer and acceptance, you can still have a valid K even if no writing exists
Res 26
Preliminary negotiations
- Offer is NOT manifested if the offeree knows or has reason to know that the offeror does not intend to conclude a bargain agreement until he has made further manifestations of assent
- If the offeree knows that the offeror does not yet have the intent  offer FAILS
Res 27
Existence of a K where written memorial is contemplated
- Manifestations of assent are sufficient to conclude a K IF the parties have also manifested an intention to prepare and adopt a written memorial
o A draft document can affirm contractual intent, even if the written memorial is pending.
o Exception: if circumstances show that parties are only in preliminary negotiations and parties wish to only be bound by a formal doc.
Res 33
Certainty.
even though manifestation of intentino is intended to be understood as an offer, it cannot be accepted so as to form a K unless the terms of a K are reason.
(3)The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.
UCC 2-204
Formation in general (opposite of res 33)
 Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy
UCC 2-305
Open price term = reasonable price
UCC 2-308
absence of specified place for delivery= seller's place of business or residence. or if goods are in some other place, that place.
UCC 2-309
absence of specified time/ notice of termination
• If there are no time constraints, reasonable time is used unless terminated under contract rules. Must give reasonable notification if terminating
restatement 36
Methods of termination of power of acceptance:
1. Rejection or counter-offer by offeree
2. Lapse of time
3. Revocation by offeror
4. Death or incapacity of offeror or offeree
5. Offeree doesn’t do anything to accept terms
CISG 16
(same as unidroit 2.1.4) no consideration needed for option K.
- An offer may be revoked if the revocation reaches the offeree before he dispatched an acceptance. But the offer cannot be revoked if:
o Offer indicates a fixed time for acceptance
o The offeree reasonably relies that the offer is irrevocable
Unidroit 2.1.4
same as CISG 16. no consideration needed for option K
- An offer may be revoked if the revocation reaches the offeree before he dispatched an acceptance. But the offer cannot be revoked if:
o Offer indicates a fixed time for acceptance
o The offeree reasonably relies that the offer is irrevocable
Res 25
option K. limits promisor's power to revoke an offer.
Res 87
option Ks require extra consideration for the option.
UCC 2-205
Firm offers. Option K. additional consideration is not needed. Must be from merchant with a signed writing. max of 3 months to be held open.
UCC 2-104
Merchant is person who routinely deals in goods question or has skill or knowledge to that particular trade.
Res 43
dickinson v. dodds. Power of acceptance terminates when offeree sees notice from indirect means of offeror's intent not to enter the proposed K.
Res 42
power of acceptance terminated when offeree recieves manifestation of intent not tto enter K by offeror.
Res 69
Acceptance by silence
- When an offeree fails to reply to an offer, his silence = acceptance ONLY WHEN:
o Offeree takes benefit of offered services with reasonable time to reject, and knowing that they were offered with the expectation of compensation
o When the offeror gave offeree reason to understand that silence may = assent
o When it is reasonable that the offeree should notify offeror if he does not intend to accept
Res 39
Counter offers
1. offer made by offeree to offeror relating to same matter, and proposing substituted bargain, differing from proposed original offer.
2. Offeree’s power of acceptance is terminated by counter offer
Res 59
Purported acceptance which adds qualifications (mirror image rule)
Reply to offer which purports to accept it but is conditional on offeror’s assent to additional or diff terms is not an acceptance but counter offer.
Res 61
Acceptance which requests change of terms
If it does that, then offer is not thereby invalidated unless acceptance is made to depend on an assent to the changed or added terms.
Res 30
Form of acceptance invited
1) offer may invite or req acceptance to be made by affirmative answer in words, or by performing or refraining from performing specified act, or may empower offeree to make a selection of terms in his acceptance.
2) unless otherwise indicated by language or circumstances, offer invites acceptance in any manner and by any medium reasonable in circumstances.
Res 32
Invitation of promise or performance. if not clear which one by offer, then offeree can choose either
Res 50
Acceptance of offer defined.

1. Acceptance is a manifestation of assent to terms of offer in a manner invited or required by offer.
2. Can accept by partial performance.
3. Acceptance by promise reqs that offeree complete every act essential to the making of the promise
Res 60
Acceptance of offer which states place, time or manner of acceptance.
if it states these things, then must be complied with. If it merely suggest them, another method is not precluded.
Res 65
default rule for medium. if medium unsepecified. then one used by offeror in original communication or medium used in trade/business.
Res 63
Mailbox rule. acceptance effective when sent. except for option Ks. they are not effective until actually received.
Res 66
proper dispatch rule creates obligation for offeree to accept by dispatching the acceptnace properly.
CISG 18
(2) no mailbox rule. receipt rule. acceptance effective when it reaches offeror.
 If fixed time, acceptance does not reach offeror within that fixed time, or
If no fixed time, acceptance doesn’t reach offeror within a reasonable time.
Res 56
offeree must notify offeror of acceptance with reasonable diligence and seasonably when acceptance by promise.
Res 54
Acceptance by performance
- No notification required when offeror invites offeree to accept by performance
- Exception: If the offeree knows that the offeror would not be aware of the performance, the offeror is cleared of contractual duty, unless:
o Offeree reasonably shows diligence to notify offeror
o Offeror learns of performance within a reasonable time
o Offer indicates that notification of acceptance is not required.
Res 71
Types of consideration –
o Return promise (bilateral)
o Performance (unilateral)
o Forbearance (give something up)
o Creation, modification, or destruction of a legal relationship
Res 79
Courts do not assess adequacy of consideration, only its existence.
o Only have to prove that something was mutually given up and exchanged
o Exception: nominal consideration/pas consideration
 Courts will not enforce sham contracts, and look at value of consideration to determine whether onerous provision should be enforced
 If consideration is too nominal compared to promise, no valid K
 Can’t agree to sell something to someone already K’d with them upon.
Res 74
Party can forbear something worthless if in good faith he believed it to have worth.
Res 86
- Promise made for a benefit that was previously received is binding, unless:
o The benefit was a gift
o The value of the promise is disproportionate to the benefit
Res 89
Pre-existing duty rule.
promise modifiying a duty under a K not fully performed is binding if it is fair and equitable in view of circumstances not anticipated at time of K; or
extent that justice requires enforcement in view of material change of position in reliance on the promise.
UCC 2-209
Modification. (more permissive than common law). No requirements for additional consideration for agreemetns that modify an existing contracts.
if under SOF must be modified in writing.
Res 352
expectation interest must be calculated with reasonable certainty
Res 347
Expectation damages (the normal rule).
UCC 2-713
Market value rule - Damages = (market value price at time of breach – contract price)
- Special buyers remedy under the UCC
o Instead of expected profit, we calculate using the market value at time of breach

o Difference b/w Market price at time buyer learned of breach and K price PLUS consequential and incidental damages LESS expenses saved in consequence of the breach.
UCC 2-712
Cover. basically mitigation and can recover price difference b/w cost of cover and K price together with any incidental or consequential damages but less expenses saved in consequence of seller’s breach. Failure to cover by buyer doesn’t bar other remedy.
UCC 2-715
Incidental vs. Consequential Damages
- Consequential
o Incurred when non-breaching party is worse off as result of breach
- Incidental
o Expenses reasonably incurred in inspection, receipt, transportation and care of goods in connection with the breach
Res 349
Reliance interest.
- Protects what the non-breaching party did, spent or gave up in reliance on the K.
- EXCEPTION: losing contracts
o recovery is limited by loss that breaching party can prove with reasonable certainty would have occurred
 if they can prove that the non-breaching party would have sustained a loss from the K, then that amount is reduced from reliance recovery
Res 371
Measure of restitution interest.
benefit conferred to the other party.
Res 351
o Damages not recoverable for loss that the party in breach did not have reason to foresee as a probable result of breach when K was made.
o Loss is foreseeable as a probable result of breach if:
 Loss follows in ordinary course of events
 Loss is result of special circumstances that breaching party had reason to know about
o Court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance if justice reqs.
CISG 74
Damages cannot exceed what the breaching party ought to have foreseen as a POSSIBLE result of breach. lower threshold than common law. more permissible approach to damages.
UNIDROIT 7.4.4
o Damages cannot exceed what the breaching party could have reasonably foreseen as a likely result of the breach (more akin to “probable” under Res 351)
Res 350
Mitigation.. Non-breaching party cannot recover for damages that he could have avoided without undue risk, burden, or humiliation
o But non-breaching party can still collect if his attempts to mitigate were reasonable, but unsuccessful.
UCC 2-708
Lost Volume Rule. - UCC Exception to Mitigation Rule for high volume players
- Even if a seller mitigates and sells to someone else, he has still lost a sale and can collect his expectancy interest
o Treats players as high volume retailers who will always be able to mitigate
UCC 2-710
Seller's incidental damages.
- Seller’s incidental damages include any commercially reasonable charges, expenses or commissions incurred by the breach
- In Neri, Δ could collect incidental damages incurred from the boat’s storage
UCC 2-719
Limits of express limitations
o Cannot agree to an unconscionable limitation on liability or damages
o Limits of consq dmgs for injury to person in consumer goods is unconscionable
o Limit of dmgs where loss is commercial is not.
Res 356
Liquidated damage clause validity.
 Amount must be reasonable in light of anticipated or actual loss
 Amount of damages must be difficult to prove
UCC 2-718
For liquidated damages clause to be valid:
 Amount must be reasonable in light of anticipated or actual loss
 Amount of damages must be difficult to prove
 AND, must show inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.
UCC 2-302
Unconscionable arbitration
- If a K is unconscionable, then courts do not have to enforce it
o Likewise, if arbitration award is unconscionable, courts do not have to enforce it
o Consider cost of arbitration relative to amount in controversy
UCC 2-716
Specific performance and replevin.
- may be decreed where goods are unique
- buyer has right to replevin for goods identified to K if after reasonable effort he is unable to effect cover or circumstances show cover is unavailable.
CISG 46
Permits buyer to demand specific performance from seller
o No requirement to show uniqueness
CISG 28
Deference to national law on specific performance
o If a party’s national court would not enforce specific performance, then breaching party cannot be held to specific performance under the CISG.
Unidroit 7.2.2
presumption of specific performance
o Non-breaching party can compel specific performance, unless:
 Performance is impossible or burdensome
 non-breaching party can reasonably find cover
 performance is for personal service
 non-breaching party does not ask for specific performance within reasonable time after he is aware of the breach
Unidroit 7.2.3
right to specific perf can include: repair, replacement or other cure of defective performance
Unidroit 7.2.4
If ct orders to perform, can impose penalty to be paid to other party if don’t comply.
Res 371
Party’s restitution interest may be measured by either
o reasonable value to other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant’s position.
o extent to which other party’s property has been increased in value
 value other party received, NOT value of what was given up
Res 373
restitution for NBP
o non-breaching party can recover benefits conferred by partial performance
o no restitution if performed all duties and other party has nothing left to do but pay him.
Res 374
o Breaching party entitled to restitution for benefit he conferred on non-breaching party by partial performance, less any loss/damages his breach created (Neri)
o 374(2): BUT – parties can contract around 374(1) through liq. damages clause
CISG 81
A party who has performed K either wholly or in part may claim restitution for whatever was conferred during performance
o if both parties owe restitution to each other, it must be done concurrently
Res 90
Promissory estoppel
- If a promisor makes a promise and induces the promisee to reasonably rely on that promise (in terms of action or forbearance), and the promise changes the promisee’s position to her substantial detriment, the promise is binding only if injustice can be avoided by enforcement.
 Loss suffered in reliance must be substantial, and action in reliance must be reasonable
Res 766 of torts
- It is a tort to interfere with the performance of a contract
- Must show 3 things:
1. Intentional and improper interference (intent and impropriety)
2. With the performance of an existing contract (existence of K)
3. And the interference induced/caused the other party to breach (causal relationship)
Res 201
Court ascribe's one party's meaning to term:
- Where parties have attached different meanings to a term, courts do NOT invent meaning
- Instead, courts will give term the meaning attached by one of the parties (Party A) if:
o The other party (Party B) knew of that meaning, and
o If Party A had no reason to know that B had a different meaning
Res 202
Guidelines for Ambiguous Terms
- Provides guidelines for courts to follow (not hierarchical)
o Meaning of words in light of circumstances
o Place disputed term within the framework of the contract as a whole
o Give language is generally prevailing meaning
o Prior performance
o Prior business relationships and dealings, usages of trade, industry norms
UCC 1-303
Course of performance. Clarifies 1-208/1-205 Hierarchy
- 1. Express terms, if neither ambiguous or vague, plain meaning governs
- 2. Course of performance. (conduct of parties after K has been formed)
- 3. Course of dealing. (what parties did in previous transactions)
- 4. Usage of trade: (practices or methods of dealing that have regularity in industry)
 Common Law (Res 202) only gives guidelines, whereas UCC gives hierarchy!
Res 34
Certainty and choice of terms; effect of performance or reliance
- 1. Terms of K may be reasonably certain even though it empowers one or both selection of terms in course of performance
- 2. Part perf under agreement may remove uncertainty and establish that bargain has been formed
- 3. Action in reliance on agreement may make K appropriate even though uncertainty not removed.
Res 204
Supplying an omitted essential term
- Term which is reasonable in the circumstances is supplied by the court.
UCC 2-306(1)
Requirements Ks
- Contracts that do not stipulate quantity can still be valid as long as:
1. The quantity is based on the buyer’s requirements or the seller’s output
2. The quantity is made in good faith and with reasonable estimates
UCC 2-306(2)
- When a party for a specified period of time agrees to provide services or sell goods from only one other party.
- One person can be legally bound in an exclusive dealing contract, so long as both parties are acting in best efforts (similar to “good faith”)
Res 211
Standardized agreements
- When a party agrees to a K he believes to be standardizes, he accepts the terms
o The K is reasonable without regard to knowledge or understanding of terms
- Exception: When one party knows that the other party would not have signed the agreement if he knew of the term that he now disputes
UCC 2-207(1)/(2)
Additional terms
- (1)definite seasonable acceptance operates as an acceptance even though it states terms additional to or different from those offered or agreed upon,
o unless acceptance is expressly made conditional on assent to those terms
- Additional terms are construed as mere proposals for additional to the contract
o Determining if the proposals are binding depends on course of dealing, course of performance, usage of trade, etc.
- (2) Terms are not included in the K, unless the acceptance is expressly made conditional on approval of the new terms
o If this condition is made, then the acceptance w/ new terms = counteroffer
UCC 2-207(3)
- (3) If the contract is between merchants, the new terms are automatically integrated unless:
o The original offer says nothing can be added, or
o Additions materially alter the original offer, or
o If the offeror objects to the changes within a reasonable time
UCC 2-606
what constitutes acceptance of goods.
you accept the goods and reasonable opportunity to inspect goods. fail to make effect rejection
Revised 2-207
- Responds to some of the confusion of the old 2-207, and is simpler in generality
- When acceptance includes additional terms, the binding terms of the K those that are:
o Terms that appear in the records of both parties
o Terms to which both parties agree whether in a record or not
o Default provisions of the UCC
- Terms that bind parties are the terms that both parties agree to!
CISG 19
Additional terms
- Additional or different terms that materially alter the original terms = counteroffer
o Material alterations include price, payment, quality, time/place of delivery
- But if the terms do not materially alter original terms, then they = acceptance
o Stricter than the UCC
Res 209
Integrated agreements
Res 210
CIA's and PIA's
Res 213
Effect of integrated agreement on prior agreements (Parol evidence rule)
- (1) binding IA discharges prior agreements to the extent that it’s inconsistent with them
- (2) binding CIA discharges prior agreements to extent they are within its scope
- (3) IA that is not binding or that is voidable and avoided doesn’t discharge prior agreement. But IA even though not binding, may be effective to render inoperative a term which would have been part of agreement if it had not been integrated.
Res 214
Evidence of prior or contemporaneous agrmnts and negotiations

Agrmnts and nogtiations prior to or contemporaneous with the adoption of writing are admissible in evidence to establish :
a. That writing is or isn't IA.
b. That IA, if any, is completely or partially integrated
c. Meaning of writing, whether or not integrated
d. Illegality, fraud, duress, mistake, lack of consdieration, or other invalidating cause
e. Ground for granting or denyting rescission, reformation, spec perf or other remedy.
Res 216
Consistent additional terms
1. evidence of consistent additional term is admissible to supplement an IA unless ct finds that agrmnt was completely integrated.
2. Agrmnt is not completely integrated if writing omits a consistent additional agreed term which is
a. Agreed to for separate consideration; or
b. Such a term as in circumstances might naturally be omitted from writing.
UCC 2-202
Parol evidence rule.
- Parole evidence cannot contradict the writing  heavy favoritism to written word.
o It can only explain or supplement
- Only evidence that can be used as parole evidence is that which relates to:
o Course of performance
o Course of dealing
o Usage of trade
CISG 8(3)
NO PAROL EVIDENCE RULE
To det intent of party or understanding a reasonable person would have had, due consideration is given all relevant circumstances of the case, including negotiations, practices which parties have established b/w selves, usages and any subsequent conduct of the parties.
UNIDROIT 1.2
No form required.
o Nothing in principles requires K, statement or any other act to be made in or evidenced by a particular form. It may be proved by any means, including witnesses.
UNIDROIT 3.2
Validity of mere agreement
o K is concluded, modified or terminated by mere agreement of the parties, without any further reqs.
Res 110
SOF
The following classes are subject to statute of frauds, so that enforcement is forbidden unless there is a written document:
o K for the sale of land (d)
o K of Executor-administrator to answer for decedent.
o K for which performance isn’t to be completed within a year of K formation (e)
o Several others, including marriage, debts, and time considerations
Res 125:
Leases are covered under the statute of frauds only when the lease is for 1 year or longer
UCC 2-201
SOF
Contracts for the sale of goods for $500 or more are subject to S of F
• must be signed by the party against whom the enforcement is sought.
 (3) except, if goods are specially manufactured for buyer and not suitable for sale to others in ordinary course of seller’s business, and seller, before notice of repudiation has made either a substantial beginning of their manufacture or commitments for their procurement.
 Or If party against whom enforcement is sought admits in pleading,etc. that that a K for sale was made, but K isn’t enforceable under this provision beyond quantity of goods admitted
 Or with respect to gods for which payment has been made and accepted or which have been received and accepted.
CISG 11
NO SOF.
UNIDROIT 7.2.3
right to performance includes repair, replacement or other cure
UNIDROIT 7.2.4
if ct orders to perform, may order penalty to aggrieved party if party doesn't comply with that order.
RES 131
WRITING REQS FOR SOF Ks
- Contracts must be signed and must:
o Reasonably identify subject matter of the K
o Provide subjective manifestation of K
o State with reasonable certainty the promises so that a court can determine what remains unperformed
Res 205
Duty of good faith when performance starts
UCC 1-304/1-203
Duty of good faith when performance starts
good faith= honest in fact and observance of reasonable commercial standards of fair dealing in trade.
CISG article 7
scope of good faith is broad but thin.
duty is not implied and is not required only recommended. extends broadly to pre-contractual negotiations and performance
Unidroit 1.7
good faith and fair dealing is mandatory and applies to precontractual period.
Unidroit 2.1.15
party who negotiates in bad faith is liable for losses caused to other party.
CISG
4 leaves it to common law to determine K defenses. same as ucc 1-103.
Res 12
Capacity to K.
- Not bound if no capacity. Capacity may be partial and existence may depend upon nature of transaction or upon other circumstances
- Have capacity if not: 1) under guardianship; or 2) an infant; 3) mentally ill; 4) intoxicated
Res 15
- If an individual enters into a contract incompetently by
o Being unable to reasonably understand the nature of the K, OR
o Is unable to act in a reasonable manner in relation to the transaction,
AND this inability is known to the other party,
THEN the K is voidable at the election of the incompetent party.
-K will not be voided if the other side can prove that the contract was:
o On fair terms AND
o He was not aware, and should not have been aware, of the incompetency if there was partial performance to the point where rescission would be unjust
Res 14
infants. 18th birthday.
Res 159
Definition of Misrepresentation
assertion that is not in accord with the facts. Remedy = rescission
o Exception: assertions of opinion: false assertion that expresses only a belief or judgment as to quality, authenticity or value ≠ misrepresentation
- Exception to the Exception: Assertions of Opinion CAN = misrepresentation IF:
o If the parties stand in relationship of trust and confidence
o If the person to whom the opinion is made believes that the stating party has special skill, judgment or objectivity
o If person to whom the opinion is made is particularly vulnerable
UCC 2-313
SAMPLES
o When offered, creates a basis of bargain and express warranty that all other goods will have same quality and standard as the sample.
UCC 2-316
DUTY TO INSPECT

- When there is an opportunity to inspect, there is an obligation to do so
o If they are any defects, inspection ought to reveal them, and buyer is precluded from complaining about goods post-inspection
o No warranty anymore with regards to defects that warranty itself ought to have revealed.
Res 162
When misrep is fraudulent or material
- 1) fraudulent if
o Knows its wrongs,
o doesn’t have confidence that he states or implies truth of assertion
o Or knows he doesn’t have basis that he states or implies for assertion
- 2) material if it would be likely to induce a RP to manifest assent
Res 160
when action is equivalent to an assertion (concealment)
- action intended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exist
Res 161
when non disclosure is equivalent to an assertion:
- non-disclosure is not actionable unless under certain circumstances:
o (a) knows that disclosure of the fact is nec to prevent some previous assertion from being misrepresentation or from being fraudulent or material.
o (b) knows that disclosure would correct mistake of other party as to basic assumption on which party is making the K and if non-disclosure of fact amts to a failure to act in good faith and in accordance with reasonable standards of fair dealing
o (c) correct mistake regarding the writing
o (d) if relationship of trust and confidence b/w 2 parties
Res 164
When misrep makes a K voidable
- if fraudulent or material misrep induces assent, which recipient is justified in relying
Res 169
When reliance on assertion of opinion is not justified
- Not justified unless:
o Stands in scuh a relation of trust and confidence to person whose opinion is asserted that the recipient is reasonable in relying on it, or
o Reasonably believes that, as compared with himself, the person whose opinion is asserted has special skill, judgment or objectivity with respect to the subject matter, or
o Is for some other special reason particularly suscpetible to a misrep of the type involved
Res 174
Physical duress
- Manifestation of assent compelled by physical duress is invalid.
Res 175
Duress by threat
- Manifestation of assent is void when compelled by improper threats that leave the victim no reasonable alternative other than assenting.
o Two Requirements for threat to void assent:
1. Impropriety of the threat
2. Victim of the threat has no reasonable alternative but to make the contract
- This rule extends to threats from third parties
Res 176
Definition of improper threat
1. Threats to commit crime or torts
2. Threat of a criminal prosecution
3. Bad faith lawsuits
4. Threat is a breach of duty of good faith and fair dealing

- If threat does not fall within one of these categories, must show that the effects on the recipient were unfair by showing 1 of 3 things:
1. Threat is harmful and of little use to person making threat
2. Pattern of prior unfair dealing
3. What is threatened is a use of power for illegitimate ends (most important
Res 177
Unfair persuasion (undue influence)
makes K voidable when:
o Unfair persuasion of a party under the dominion of the persuading party
o Unfair persuasion of a party by another party who, by virtue of relationship is assumed to act in the victim party’s best interest (fiduciary)
- Undue influence can be establish based on:
o Relationship between the parties, OR
o Unfair persuasion by the dominant party over the other party
Res 208
Unconscionable contract:
may refuse to enforce K, may enforce remainder of K without unconscionable term or may limit application of any unconscionable term as to avoid any unconscionable result.
UCC 2-302
Unconscionable K or term
may refuse to enforce K, may enforce remainder of K without unconscionable term or may limit application of any unconscionable term as to avoid any unconscionable result.
Unidroit 2.1.20
Suprising terms

- No unusual term is effective unless it has been expressly accepted by the other party
To determine unusualness, look at content, language and presentation
- Codification of Tilden in international law
Unidroit 3.10
may avoid K if term gives someone unfair advantage
Unidroit 7.1.6
exemption clause
- exemption clauses can't be invoked if it would be grossly unfair to do so. lower standard than unconscionability.
Res 151
Mistake defined: belief that is not in accord with the facts
(different than misrepresentation. which is an assertion not in accord with the facts.)
Res 153
when unilateral mistake makes K voidable
- Where there is a mistake by 1 party to a K as to a basic assumption that has material effect on the agreed exchange of performances, K is voidable by him if he does not bear the risk of mistake under Res154, AND
o The effect of the mistake is such that enforcement would be unconscionable, or
o The other party had reason to know of the mistake or his fault caused the mistake
Res 152
Mutual mistake
makes K voidable if it involves:
o Basic assumption on which the K was made
o Mistake has a material effect on performance
Res 154
When a party bears the risk of a mistake
o Risk is allocated to him under the contract (“as is” in Messerley)
o Party is consciously ignorant
 Aware of limited information of risk, but don’t pursue learning more
o If it is reasonable for the party to bear the burden of risk
Res 155
when mistake of both parties as to written expression justifies reformation
- K is integrated or restructured by judge so as to erase mistake (ucc-2-302 strike offensive clause)
UCC 2-613
Impossibility is permitted defense to K if the goods suffer destruction before they pass to the buyer (“casualty”)
CISG 79
impossibility = “impediment”
o Failure to perform can be excused if that failure is due to an impediment that is beyond control of the non-performing party and that is unforeseeable and unavoidable.
 (industrial disputes, embargos, energy crises)
 Impediment can be faced by 3rd party.
UNIDROIT 7.1.7
Force majeure
o impossibility = “impediment”
o non-performance is excused if failure is due to an unforeseen and unavoidable impediment beyond party’s control at time of K formation
 if impediment is only temporary, excuse from performance is only temp
Res 261
discharge by supervening impracticability
o Party’s perf made impracticable without his fault by occurrence of an event the non=occurrence of which was a basic assumption on which K was made, his duty to render that perf is discharged , unless language or circumstances indicate contrary
Res 263
destruction deterioration or failure to come into existence of thing necessary for performance
o If existence of specific thing is nec for perf of a duty, its failure to come into existence, destruction, or such deterioration as makes perf impracticable is an event the non-occurrence which was a basic assumption on which K was made
UCC 2-615
Impracticability
Nonperformance is allowed if performance has been made impracticable by the occurrence of an event whose non-occurrence was a basic assumption of the K
Unidroit 6.2.2
Hardship = fundamental change of circumstances that is deemed to alter the equilibrium of a contract, either because the cost of performance has increased or because the value of performance has diminished (frustration sense)
o Requirements for hardship:
 Events become known after K formation
 Events were unforeseen
 Events are beyond parties’ control
 Party claiming hardship defense did not assume risk of events
o More assertive approach to impracticability than UCC 6-215
Unidroit 6.2.3
Party seeking hardship defense must first request negotiations w/ other party
o Only if those negotiations are unsuccessful can party seek rescission
o Making half as much as you thought you would (50%) then gives rise to this
Res 265
DISCHARGE BY SUPERVENING FRUSTRATION
- Contractual duties can be discharged when a party’s purpose for entering into the K is substantially destroyed by an event that is unforeseeable at the time of making the K, and the other side knew of the party’s specific purpose at the time of K formation