DEFENSES to ENFORCEMENT FRAUD: Nondisclosure, Misrepresentation, Concealment *Integration clause is no bar to fraud claim *Remedies: voidable, elect: rescind+rest(X)

or damages (Diff. in Value) *Rsnbl Rel: arg for/agnst , bal. equity for ct. concl; ask sophistic/innocent?* Nondisclosure (Hill termites): (in)action that asserts a fact does not exist (1) Omission + Duty Indirect: (1) Actual knw (2) No actual/constructive knw (*diligence) (3) Material Issue: elastic: choice to enter K, affect on circs, remedy, good faith, basic assum Direct: asks automatic duty (materiality irrel.) (2) Reasonable Reliance: causal link, rsnbly motivated to enter K on (lack) info Misrepresentation: assertion not in accord with the facts (1) Statement: concrete > puffery (2) False/Misleading: half-truth/incomplete thought suffice (3) Intent to deceive (4) Material (5) Rsnbl Rel: causal to enter K Concealment: deliberate conduct hide fact is affirmative, even if not verbal lie (1) Active concealment > silence (2) Material (3) Rsnbl Rel: causal to enter K UNCONSCIONABILITY (Walker Thomas furniture; Higgins tv show) * Unfair bargaining process leading to unreasonable terms * Sliding Scale: balance procedural & substantive; more one, less other Procedural: unfairness in the bargaining process (1) Adhesion: not determ, but suggestive; 3: std form, no neg, uneql brgn (2) *Key: not mere unequal bargaining; abuse of power to impose (3) Others: target, understand/educ, fncl vuln, need/no time to read (4) Factors of unfair surprise or oppression Substantive: unfairness in oppressive terms *context rule (1) Unfairly One-sided: high costs of litig, only one party (2) Shocking as to: (a) industry or (b) s specific circs Remedies: depends severability or rescind+Rest(X) (1) Sever: sever unconscionable, if can preserve intent (Adler) (2) Rescind+Rest(X): void entirety; employer has insidious pattern Other: lux vs. need: legis. det.; slippery slope; no bearing on unconsc. PUBLIC POLICY *Need Statute: society as victim; must void K* Illegal K: in pari delicto; both know illegal, ct. refuse to provide any relief Non-illegal, Offend Public Policy: bal equity; likely Rest(X) or adjustment Consider: nature/gravity viol, goals of law/pub policy, extent permeates K Employer-Employee Agreements (Valley Med v. Farber non-compete) (1) Strict scrut.: (a) against employer, (b) compare to outside policy guide (2) Rsnblty: (a) interest: employer vs. other parties (b) unrsnbl if greater than nec: (i) geography, (ii) duration, (iii) activity restrictions or (iv) pub. Policy (3) Severability blue pencil: sever unreasonable, but cannot rewrite *Tag: FRD/DUR>back-up UNCON; UNI.M>FRD; CHCIRC>othr REPUD; UNI.M>CHCIRC; FRUST+IMPRAC; *PUB POL

Family Relations Agreements (RR v. MH) (1) ID source of pub.policy: (a) id interest, (b) actual/comp. statute as guide (2) Analyze wrt statute: (a) no pmts beyond hosp. care, (b) services, not baby: (i) staggered pmt, (ii) final pmt, (iii) refund triggered by condns (3) Adequate Decisional Moment: time to relinquish connection (4) Other: (i) surrog husband consent, (ii) adult surrog prev. preg., (iii) adopt parents evaluated, (iv) adopt wife barren, (v) all have advice of counsel JUSTIFICATIONS for NONPERFORMANCE MISTAKE (M: Lenawee income house sewage; U: Wil-Fred low-ball SC bid) *not mistake: judgment, future prediction, law (1) Mutual (2) Fact (exists, not jdgmt) (3) Basic Assumption: essence motivation not collateral (value, qlty), barren cow (4) Materially Affects Bargain (bal of exch/deprivation) (5) AOR: K or construct (*art/paint = jdgmt risk w/ mistaken prty) Remedies: (a) rescind+Rest(X) at ct. discretion or (b) two innocts *AOR: (i) as is clause, (ii) best position to know, (iii) context rule (1) Unilateral (2) Fact (exists, not jdgmt) (3) Basic Assumption (4) Materially Affects Barg (5) Occurred Even w/ Rsnbl Care: (i) good faith and (ii) notice: immed act to rmdy or other shd have notcd (6) Bal Eq=Rescind (chk*AOR; back status quo) Remedies: rescind if (i) enforce = grave conseq. (ii) non-rescind= no status quo CHANGED CIRCUMSTANCES (3 Types) *basic assumption: not foreseen by parties okay to be foreseeable by others Unforeseen: war, act of god, strike, change in law; foreseen: market shift (*dep size) 1. Impossibility: literally impossible (classic = death; not look to fault) (1) After K (2) Event (3) Basic assumption is non-occ. (4) Literally impossible 2. Impracticability (Karl Wendt farm eqp; mkt shift insuff.) supervening event (1) After K (2) Event (3) Basic assumption non-occurrence (4) Imprac (undue) (4) No fault: nthr nor flowing fro m (5) *AOR: foreseen/explic/implic/indus/equity 3. Frustration of Purpose: not incapable, but main purpose disappeared (1) After K (2) Event (3) Frustrates Purpose: (i) prncpl/shared purpose (ii) substntl: not w/i foreseen risks (iii) basic assumption is non-occ (4) No fault: nthr nor flowing from; extra precaution avoid? (5) *AOR: foreseen/explic/implic/indus/equity Remedies: Rescind: relieve perf. due or if part perform Rest(X) MODIFICATIONS *Remedies: voidable, elect: rescind+Rest(X) or (2) damg (Diff. in Value) Economic Duress (Galtaco overcharging for bearings factory) (1) Improper Threat: not nec. illegal, threat breach, reputatn, embarrass (2) No Rsnbl Alt: amt, reputatn, undue burden/risk, not cure threat conseq (3) Some Protest (*low) Oral Modification (Mama Rizzo breach oral mods of basil orders) SOF: UCC 2-201: sale of goods, > $500, writing, signed by , quantity Exceptions: (1) Classic Estoppel: provides assurance no need/would provide/already made writing; relies on promise to reduce oral to writing (2) 2-201(3): Statutory Exception: (i) special manuf. (ii) admission not enforceable beyond qty admit (iii) part perf: pmt made/acc, goods rcvd/acc 1

Breach: Expr/Impl; AnticipRepud; Matrl/Total/Partl: what IS it, how treat it; : Mat+Total/Partial; : Partial+Cure, AnticipRepud; Damages? (see Damages)

CONSEQUENCES of NONPERFORMANCE EXPRESS CONDITIONS 1. Breach of Condition (Oppenheimer office bldg lease) (1) Condn Precedent?: (a) magic lang: if and only if/unless and until or (b) rsnblty test: would parties condn perf on completn; *spec = condn? (2) Express or Implied?: (a) express: literal compliance (b) implied: subst. performance/compliance suff; *ambiguous = implied (3) Express Std. of Adherence: (a) obj: industry (b) subj: art, good faith * subst. perf. insuff. to excuse non-occurrence of express condn. (4) Excuse?: (a) Forfeiture: unfair depriv to recip of perf, unfair benefit to party subject to condn, not matrl part of K (b) Waiver: express or implied (pattern) Practical Result: excuse = condn has been performed; return perf is due 2. Option Renewal (JNA v. Cross Bay failed lease renewal) (1) Given within time: yes valid; no invalid (2) Exception: Forfeiture balancing loss vs. minimal harm: (i) subst improvmts (ii) good faith mistake (iii) no harm (iv) subst. harm DETERMINING BREACH Step 1: Material or Immaterial Material: (1) Express Condn: magic lang or rsnblty test; gray area: spec = condn (house vs. pipes); (2) loss of bargain/basic assumption; (3) some: willfulness Immaterial: subst perf/compliance - *insuff. to fulfill express condn Limit: (i) excuse (ii) condn not arisen: preced, subseq (unless hinder = condn arise) Step 2: Material: Incurable or Curable: *Key: extent of ve impact on reasonable expectations; context rule Incurable: material-immediate, irreparable harm that nothing can be done Curable: material but partial-breacher can cure deficiency = subst. perf. Step 3: Damages *if total: has option to treat as partial; offer chance cure Material and Total: w/hold perf, terminate, claim full damages (past/future) Material and Partial: suspend perf, await cure, claim past damages *cure not arrive: partial = total, claim full damages (past/future) Immaterial (subst. perf.): past damages (cost completion); cannot w/hold perf *Remember: breacher can still claim Rest(X); return of benefit conferred on ANTICIPATORY REPUDIATION Actual Anticipatory Repud (Schupf cont. ltrs to buy land; not repud.) Step 1 Repud?: (1) After K (2) clear manifestation of intent: (a) not to perform or (b) only perform on condn beyond agreed K; Limit: ambig/equivocal/mere conduct Step 2 Retract?: Anytime before perf is due; Limit: aggrieved party (a) reliance: mat. changes posn due to repud. (b) notice: indicates believe final Results: (1) clear, not retracted, term. or treat final = breach; (2) ambiguous, terminate: (a) not retract, fails to perf = breach or (b) arg retract/not repud = breach; (3) ambiguous, not terminate: (a) fails to perf = ct. claim failed mitig

Insecurity Anticipatory Repudiation (Hornell failed iced tea in canada) Step 1 Insecurity: (1) After K (2) commlly rsnbl insecurity: words or actions, course of dealing/perf., nature of sales K, industry; Internal: non-pmt, failure to fix defects, shortage of supplies, cont. late deliveries; External: only major act of god or financial collapse; Rumors: not flimsy; (3) Impair expectation of due perf: (a) material decline or (b) threatened with subst. loss Step 2 Adeq. Assur.: context: commlly rsnbl request, time to fulfill Step 3 Results: Assurances provided w/i time? Yes: No Antic Repud; No: (Step 4) *Exception: further changed circs/insecurity require addnl assurances Step 4 or further Liable?: : unrsnbl insecurity or demands, or adds new demands after provides assurances, or demands unrel to K; gray area: provides modest but not exact assurances b/c belief demands unrsnbl WARRANTIES (Bayliner) Express Warranties: 3 Bases: wrt specific good (1) representation (picture = gray area); (2) description must match exactly; (3) display sample/model; (F) must be the basis for entering bargain Limit: puffery/talk ask: verifiable/factual?; gray area: Im no expert Disclaimer: must be consistent w/ express wty or inoperative Implied Wty Merchantability: (1) a merchant (2) regularly sells goods of kind (3) 2 Tests *require evid. of industry stds.*: (a) pass w/o objection in the trade (b) fit for the ordinary purposes for which such goods are used; Fail 1 = liable Suff.: actual use relative to objective average suggests fitness (Bayliner) Insuff: signif. segment of buying public wd object need wide discrep. in perf. Disclaimer: must mention merchantability, clear, unambiguous, oral/written Implied Wty of Fitness for Partic. Purp.: (1) buyer reasonably relies on seller skill gray area: Im no expert; (2) indicates special purpose but if special purpose is industry standard then no claim (3) seller has reason to know of reliance req. communication of need Note: goods need not be defective; not limited to merchants Disclaimer: *easier to waive, less specific than merch., only writing Other Disclaimer: as is, best if conspicuous/obvious Implied Wty of Habitability (Caceci latent defect 4 years later) General: that home has no major defects; not higher, same reasonable expectation; Merger clause will not bar an implied warranty of habitability; Builder knowledge is irrelevant implied regardless Reason: unequal brgng, imposs. to inspect new-build home, least cost avoider Disclaimer: viewed suspiciously; must be narrowly tailored; not effective wrt to latent defects; oral waiver without specificity may not count Liability: never owners; yes against builder-developer (even after-mkt can sue)

RIGHTS AND DUTIES OF THIRD PARTIES 3P CONTRACT BENEFICIARIES: At the time of K (Vogan 3P homeowner beneficiary of SC completion reports) Parties: intended beneficiary: receives benefit; promisor: agrees to provide benefit; promisee: confers their right to receive perf. on beneficiary 4 Factors for Valid Standing or Right to Performance: (1) Intent: (a) intent of promisee to confer ben; (b) rsnbl knw of promisor agree to assume obligation; express or implied (lang/terms of K, bkgrnd, practicality) (2) Rel Prom-Ben: (a) creditor beneficiary or (b) donee beneficiary (3) Causal Link: promisor breached/caused damage enabling 3PB right to sue (4) Foreseeability: within contemplation that suit is liability for breach Practical Result: 3PB can sue: as (a) creditor: promisor and promisee; (b) donee: only promisor 3PB subject to any limits inherent in K: promisor can raise valid defenses Limit: 3PB not assume personal liab. for promisee; only for liab. on the K ASSIGNMENT/DELEGATION of RIGHTS/DUTIES to 3P: After K Assignment (Herzog attnys liable for paying proceeds to assignee-doctor) Parties: assignor: voluntarily assign their K right; assignee: recipient of K right; obligor: party with duty to perform to assignee Factors for Parties: Assignor: (1) voluntarily manifest intent to assign (2) right in existence (3) transfers immediately (4) complete relinquishment Obligor: (1) receives notice of assgmt: (a) rsnbl awareness (delivery, attn), (b) not nec party to assignment transxn, (c) if insecure, can ask assurances; (2) holds performance for assignee: (a) right of assignor extinguished, (b) failure to perform liable to assignee, (c) assignor cant unilateral modify/retract assgmt Limit: (1) matrly impair obligor rights: matrl change in duty, inc burden/risk, impair prospects return perf, subst. reduce value of perf; (2) prohib by K; (3) prohibited by statute; (4) against public policy *invalid assgmt = anticip repud if assignr no retract No Assignment Clause: *must be extremely explicit Not Explicit: only no assignment Prohibits delegation; assignments are effective; assignor held in breach; obligor entitled to damages from breach but must fulfill for assignee Explicit: any transfer of rights shall be void Forbids assignment without consent: K cannot absolutely forbid assgmt; req good faith refusal that might be judged by objective rsnblty: others in situatn wud consent - Judge objectively: which consent shall not be unreasonably withheld - No objective jdgmt: where consent shall be given for reason or no reason at all - Absence of clause assumes allowing of assignment Assignee: subj. to any condns/defenses obligor has against assignor on the K

Delegation (assgmt of K usually entails assgmt of rights and delegation of duties) (Sally Beauty invalid deleg. of distributor duties to direct competitor) Parties: delegator: assigns a K duty; obligee: party who is to receive perf; delegate: party with duty to perform Practical Result Delegate: perf discharges delegators K duties - obligee refusal of proper delegation = refusal of delegators performance = breach Incomplete Sub: delegator remains obligated; obligee can still sue delegator for defective perf; delegator cannot unilaterally release himself from liab Delegate Liab: not liable to obligee unless intend obligee as 3PB: (a) promise to delegator (b) promise directly to obligee then both delegator/gate liable to obligee Insecurity: obligee entitled to adequate assurances *analyze: anticip repud Limit: prohibit by K/statute/public policy or impair obligee rsnbl expectations: Substantial Interest in Original Obligor Performing: (1) K dependent on personal attributes or skills; (2) K requires best efforts in excl distributorship (Sally Beauty) Personal Services: need specific language allowing review if change personnel No Assignment Clause Not Explicit: only no assignment Prohibits delegation; assignments are effective; assignor held in breach; obligee entitled to damages from breach Impermissible delegation = repudiation of K = retract or anticip repud

DAMAGES E(X): posn would have been in had K been fully performed o Economic loss provable; not provable or unique goods - see Alternatives o 3 Factors Causation: flows from the breach Foreseeability: w/i contemplation of parties at time K Certainty: rsnbly certain fact and amount; not math precision (ESPN) o New Venture/Entertainment: issue is certainty; likely Rel(X), out-of-pocket

Counter rsnblty claims of : efforts, alternatives, price inc. losses: irrational (Luten Bridge), bad faith, unfair, fault (dishonest) o Nonrecoverable: Exception agreed in K terms, provided by statute/court order Attny Fees: not litigation; but see Westhaven (relet), Wartzman (replacement) Emotional: not comml K; no foresee (contempl) or causatn (econ), (Erlich) Legal Duty: insurer-insured, special rel, fiduciary, public interest Tortious: Ask: negligent, fraud, deceit, coercion, intent+know anguish Personal K: express object of K is emotional, sentimental, psychic benefit Punitive Damages: standard no; ask: willful+tortious

Increasing Damages: *applies to both partial and total breach Alternatives o + DIRECT: loss in value o Still 3 Factors: causation, foreseeability, certainty Real Estate: K FMV; at time K (slr: K>FMV; byr K<FMV); (Roesch) Services: o Rel(X): restore status quo; refund out-of-pocket; component of E(X) Employer: K-equiv replace srvcs (see Mitig); *seasonability/certainty Timing: after K, before breach; Rsnbl: case-by-case wrt this K, nature/amt Employee: K-suitable alt employ; back+front pay; *spec: vaca/bonus/raise Mitigation: as before rsnbl subs, Limit: no self-injurious Construc: K-Total Dir Costs; Profit + Expenses upto Breach (Luten Bridge) *Less: any loss that would have been suffered if K completed - burden General: K expectation received (Cost in Completion Am.Std v. Schectman) Catch 22: Rel(X) b/c unable to prove economic profit, how prove loss Exception: Diminution in Value (Jacob & Youngs) o 3 Factors: incidental, unintentional, economic waste strict* o Rest(X): return value of benefit conferred both / *cannot be complete perf o + INCIDENTAL: reliance exps rsnbly incurred to deal w/ breach/avoid loss Nonbreaching: rsnbl value svc; not capped on K undim by loss on K out-of-pocket: on the K, ship, store, admin. costs obtain sub, cancel fees Breaching: return benefit/expense in excess of loss caused capped by K o + CONSEQUENTIAL: conseq of breach; depend on K; collateral K (Florafax) Dist: intentional not preclude rcvry; intentional+defective will preclude rcvry Decreasing Damages: *applies to only total breach o COST AVOIDED: costs saved by not cont. K; dir/variable on the K Lim: OH o Specific Performance: bal dmge insuff vs hardship (/3P) + ct suprvsn burdn o MITIGATION (Loss Avoided): rsnbl axn to avoid/not aggravate losses special/peculiar value; damages inadequate; no undue hardship /3P/court Obj Std: reasonable effort, equivalent substitute, economic price Result: after spec. perf, return performance is due * inaction may not harm, unless satisfies burden Personal Svcs K: No = invol svtude; No neg injunction = spec perf (Reier) Limit: diff. ct supervsn, hardship to or 3P reliance on (more profit insuff) Equiv Replace Svcs: least cost, equally qualified (Lukaszewski) o less/eql $+same svc=no dmg; higher cost+better svc = yes dmg, if rsnbl o Agreed Remedies: stipulated = specified; liquidated = stipulated that rsnbl o never have to accept less/inferior skill 3 Factors: Suitable Alt Emplmt: different is suff.; inferior is insuff. Not penalty: actually est to avoid difficulty/confusion in future o Equiv given bkgrd/experience; only b/c of unique char/skills (famous) o Alt K only acceptable because of breach Anticipation: rsnbl est. at time of K; diff to est, cts defer more to parties o Alt income stream: rsnbly increase hours; age: older maybe not rsnbl o New vent: loss uncertain, lenient; Est vent: more certain, firmly Limit: Actuality: accurate est at time of breach; less accurate ct may deem unrsnbl Self-injurious: undue brdn/cost, personal risk, loss rep, inferior svc/goods o New vent: loss uncertaint, less impt; Est vent: more certain, highly rel o Ct discretion: Agreed > Actual maybe unrsnbl, not award or maybe both Some: eql opp to mitigate and does not accept (Wartzman) Exception: non-mitigating Accept better/more expensive sub, if only rsnbly avail (Lukaszewski) Decline commlly unrsnbl alt (i.e., goods, job offer, venue that impair ) Lost Volume (goods/svcs): 3 Factors: capacity, profitability, probability burden to prove failure to mitigate 4

UCC Remedies BUYER REMEDIES: SELLER REMEDIES Seller Breach: Failure to conform: defective, breach of implied/express wty of quality Failed perfect tender: late, not deliver, too few/many o Fail deliver or Buyer rejects: recover price, cover dmg, market dmg, spec perf o Accept w/ nonconformity o plus Incidental + Consequential Repudiates K Buyer Response: Rejection: rsnbl time/notice; Lim: seller rsnbl time cure, good faith, not trivial Acceptance: (1) inspect+not care about non-conformity; (2) fail to notify: silence = acceptance; (3) act in manner of ownership Revoking Acceptance: (i) substantially impaired goods (ii) seller induced acceptance (iii) notice w/i rsnbl time (iv) before subst change to goods Buyer Breach: Wrongfully rejects goods: bad faith, no notice, no payment, repudiation If no acceptance: o Resale dmg, Market dmg, Lost Profit, K price o plus Incidental + Consequential Remedies for No Acceptance Resale Damages: K resale price 3 Factors: identify goods as same, provide notice to buyer of intent to sell, good faith and commlly rsnbl manner of sale Market Damages: K Mkt Price Limit: choose one of either Resale or Market damages

Lost Profits: when market damages inadeq to put seller in position as if K complete Remedies for Failed Perfect Tender Lost Volume Seller: capacity, profitability, probability Cover Damages: (K Replacement) + (incid+conseq) Good faith, not unrsnbl delay, not nec. identical commlly rsnbl sub, self cover ok Profits for Process of Production: Action for profits; K less Cost of Production Lim: suprior/signif diff goods; fail cover and rsnblty=no conseq; one of mkt/cover Contract Price: 3 types in 2 situations Buyer has effectively accepted and should pay Market Damages: (K Mkt Price at time of Breach) + (incid+conseq) o Goods accepted Mkt Price dep on place of tender: place of shipment or destination o Goods damaged ; risk of loss passed to buyer Good faith, not unrsnbl delay, not nec. identical commlly rsnbl sub, self cover ok Goods not rsnbly subject to resale Wrt Anticip Repud: time of breach learn of repudiation + commlly rsnbl time o Force goods onto buyer bc unable to sell with rsnbl effort Limit: one of mkt/cover Damages for Accepted Goods: (Value Wrntd less Accepted) + (incid+ conseq) Must give seller notice in rsnbl time Specific Performance Money damage inadequate, unique goods, substitute K not available Incidental: out-of-pocket expenses incurred to deal with consequences of breach Consequential: as a consequence of breach Incidental: out-of-pocket expenses incurred to deal with breach; ship, storage Consequential: as a consequence of breach not much for seller