Eves Super Sexy Spring Contracts Outline Contract Formation: The Objective Theory of Contract and the Problem

of Interpretation. Under the principles of objective contract, the intention of the parties is manifested by all the facts and circumstances, including the words they say. 17. Requirement of a Bargain (1) Except in (2), the formation of a contract requires a bargain where there is manifestation of mutual assent to the exchange AND consideration. (2) Whether or not there is a bargain, the special rules of 82-94 may form a formal contract. 18. Manifestation of Mutual Assent: Manifestation of mutual assent to exchange requires that each party either make a promise or begin to render performance. 19. Conduct as Manifestation of Assent (1) Manifestation of assent may be made completely or partially with written or spoken words, acts, or by failure to act. (2) The conduct of a party is not effective as manifestation of assent unless he intends to engage in the conduct and knows or has reason to know the other party may infer assent from his conduct. (3) Conduct of a party may manifest assent although he does not in fact assent. In these cases the resulting contract may be voidable by fraud, duress, mistake, or other invalidating causes. 24. Offer defined: Manifestation of willingness to enter into a bargain, made to justify another person in understanding that his assent to the bargain is invited and will conclude it. *offer is effective when received by the offeree. *creates power in offeree to accept *intent taken from course of writings *exclude invitation of offers e.g. offering to make an offer 50. Acceptance of offer defined; Acceptance by Performance; Acceptance by Promise: for as long as the offer is in force, the person to whom it is addressed may conclude the bargaincause a contract to come into existenceby accepting the offer. An acceptance is the offerees manifestation of assent to the terms of the offer, made in a manner invited or required by the offer. (1) Acceptance of an offer is a manifestation of assent to the terms by the offeree in the manner

invited or required by the offer.

(2) Acceptance by performance requires that at least part of the offer requests to be

performed or tendered and includes acceptance by a performance which operates as a

return promise.

Eves Super Sexy Spring Contracts Outline (3) Acceptance by promise requires the offeree complete every act essential to the making of

the promise.
*acceptance effective when out of the offerees hands *mirror-image rule=acceptance must be mirror image of offer, no varying, different, or additional terms *if method of acceptance is different than promise or performance than 1) not acceptance; 2) terminates offer; 3) acts as a counter offer 200. Interpretation of Promise or Agreement: Interpretation of a promise or agreement or term is the ascertainment of its meaning. Courts interpret the language of the contract when they ascertain its meaning. Unit 30: The Offer and Acceptance; More Interpretation. 36. Methods of Termination of the Power of Acceptance: (1) An offerees power of acceptance may be terminated by (a) rejection (38) or counter-offer (39) by the offeree, or (b) lapse of time (offeror can set a time limit for acceptance), or (c) revocation by the offeror (42- communicated) (43- indirectly communicated), or (d) death or incapacity of the offeror or offeree. (2) Additionally, an offerees powers of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer. 38. Rejection: If the offeree rejects the offer, her power of acceptance is terminated unless either (1) the offeror indicates that the offer still stands in spite of the rejection; or (2) the offeree states that although she does not now intend to accept the offer, she wishes to consider it further. 39. Counter-Offers (1) a counteroffer is an offer by an offeree to the offeror, relating to the same matter as the

original offer and proposing a different substitute bargain. The counteroffer is therefore
both a rejection of the offer and a new offer by the former offeree for a contract on different terms. It thus terminates the original offer and creates a power of acceptance in the original offeror. (2) A counteroffer does not terminate the power of acceptance if either the offeror or the offeree indicates otherwise. 53. Acceptance by Performance; Manifestation of Intention Not to Accept

Eves Super Sexy Spring Contracts Outline (1) An offer can be accepted by performance only if the offer invites such an acceptance (2) Except in 69, the rendering of performance does NOT constitute acceptance if within a reasonable time the offeree exercises reasonable diligence to notify the offeror of nonacceptance. 54. Acceptance by Performance; Necessity of Notification to Offeror: Although a unilateral contract becomes binding upon performance, the offeree must nonetheless give the offeror notice that he has performed, unless the offeror has reason to know of the performance. Failure to give this notification may discharge the contractual duty of the offeror. This notice requirement protects the offeror from being bound indefinitely by an acceptance of which he is unaware. (1) Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification. (2) If an offeree who accepts by rendering performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless (a) the offeree exercises reasonable diligence to notify the offeror of acceptance, or (b) the offeror learns of the performance within a reasonable time, or (c) the offer indicates that notification of acceptance is not required. 59. Purported Acceptance Which Adds Qualifications: where a reply to an offer purports to accept that offer, but is conditional on the offerors assent to the new terms, the offerees response is not an acceptance, but is a counteroffer. 61. Acceptance Which Requests Change of Terms: An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms. 69. Acceptance by Silence or Exercise of Dominion. (1) Silence is a mode of acceptance when (a) An offeree who silently receives the benefit of services (not goods) will be held to have accepted a contract for them when she had reasonable opportunity to reject them and knew or should have known that the provider of the services expected to be compensated for them (b) Where the offorer has given the offeree reason to understand that silence will constitute acceptance, the silence or inaction of the offeree will operate as an acceptance if she subjectively intends to be bound.

Eves Super Sexy Spring Contracts Outline (c) The prior course of dealings of the parties may make it reasonable that the offerees silence be construed as consent. Unit 31: Technical Rules of Offer and Acceptance: Termination of the Offer. Option Contracts and their Uses. 37. Termination of Power of Acceptance Under Option Contract: if the offer is an option contract (ie., an irrevocable offer), the offerees power to accept it is not terminated by the death or incapacity of either party. Thus if the offeror dies before acceptance, the offeree can by accepting bind the offerors estate; similarly, if the offeree dies before accepting, his estate may choose to exercise the option. Common-law requirement of consideration for an option contract: the only way an option contract could be formed was if the offeree gave the offeror considerationessentially, something of valuein return for the offer. Under the Restatement: does not continue common-law requirement that an option be supported by actual consideration. 40. Time When Rejection or Counter-Offer Terminates the Power of Acceptance: A rejection does not terminate the offerees power of acceptance until it is received, but any acceptance dispatched by the offeree after she has dispatched the rejection is not effective unless the

acceptance is received by the offeror before he receives the rejection. The acceptance has no
effect unless it overtakes the previously-dispatched rejection. * This rule is necessary to protect the offeror. If the acceptance was effective upon dispatch, and the rejection not effective until receipt, then the offeror might receive and rely upon the offerees rejection, not knowing that the offeree had subsequently changed his mind and sent a binding acceptance before the offeror had received the rejection. 42. Revocation by Communication From Offeror Received by Offeree: A revocation by the offeror does not become effective until it is received by the offeree. * a revocation by the offeror is treated essentially like a rejection: the revocation is not effective until it is received by the other party. 43. Indirect Communication of Revocation: Offerees power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to the effect. 63. Time When Acceptance Takes Effect: Unless the offer provides otherwise,

Eves Super Sexy Spring Contracts Outline (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as so put out of the offerees possession,

without regard to which it ever reaches the offeror ; but

*the general rule that an acceptance is effective upon dispatch is designed to protect the offeree against revocation while his acceptance is in transit. (b) an acceptance under an option contract is not operative until received by the offeror. *Since an offer in an option contract is irrevocable, this protection is not required. Furthermore, business custom dictates that unless otherwise specified, an option is exercised only upon notification to the offeror. 87. Option Contract (1) An offer is binding as an option contract if it (a) is written and signed by the offeror, recites a purported consideration for the making of an irrevocable offer, and proposes an exchange on fair terms within a reasonable time; or (b) is made irrevocable by statute. (2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree, before acceptance, and which does induce, is binding as an option contract to the extent necessary to avoid injustice (Promissory Estoppel). *only applicable to preparations made prior to an acceptance by promise, but also to preparations made prior to an acceptance by performance. *difference between 45 and 62, the offer is irrevocable only to the extent necessary to avoid injustice. Thus in particular situations, a court may find that it is not necessary to hold the offeror to the proposed contract, as long as his is willing to reimburse the offeree for any damages he has suffered by reliance. *most often used in cases with sub-contractors, where a general contractor relies upon it in figuring his own over-all bid; the sub-contractors bid is usually held to be irrevocable for at least the time necessary for the general contractor to obtain and then accept the subcontractors bid. *gets only reliance damages Unit 32: Anti-contracts and Anti-reliance devices. 2-209. Modification, Rescission and Waiver (1) An agreement modifying a contract within this Article need no consideration to be binding. (2) If the original written agreement contains some to the effect of this contract may not be subsequently modified except in writing, that clause will be enforced, and any subsequent oral modification (even if proved beyond a reasonable doubt, and even if benefiting both sides) is not binding. This is usually called a no oral modification clause. However, such a

Eves Super Sexy Spring Contracts Outline no oral modification clause in the original agreement is ineffective if it is contained on a form supplied by a merchant unless either 1) the other party is also a merchant; or 2) the other party as separately signed the no oral modification clause. (3) The requirements of the statute of frauds section of this Article (2-201) must be satisfied if the contract as modified is within its provisions. (4) Although an attempt at modification or rescission does not satisfy the requirements of a valid no-oral-modification clause it can operate as a waiver. *provides that even if that later oral modification is ineffective because the original contract requires written modification, the attempt at oral modification may still operate as a waiver of rights under the general contract. *So if the parties purport to make an oral modification of a sales contract containing a nooral-modification clause, the attempted modification will probably be effective as a waiver, as least where the party claiming waiver has materially changed his position in reliance. *This means that if, following such an ineffective rescission, one party changes his position (as by buying the contracted-for goods elsewhere), the other party will have waived his rights to insist upon enforcement of the original contract. (5) A waiver may be retracted with reasonable notification received by the other party that performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver. *the waiver is generally effective. It can only be retracted in relation to future performance if it has not been detrimentally relied upon by the other party, and it cannot be retracted to the extent that is covers performance that has already been rendered. 2-316. Exclusion or Modification of Warranties (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (2-202) negation or limitation is inoperative to the extent that such construction is unreasonable. *In other words, if the scope of the disclaimer is clear, and the scope of the alleged express warranty is not as clear, the court should construe warranty narrowly, so that it will not conflict with this disclaimer. But if there is no reasonable way to construe the two as consistent with each other, the disclaimer is ineffective (provided that proof of the warranty does not run afoul of the parol evidence rule). (2) Subject to (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states,

Eves Super Sexy Spring Contracts Outline for example, that There are no warranties which extend beyond the description on the face thereof. *A disclaimer of the warranty of merchantability must mention the word merchantability. The disclaimer does not have to be in writing, but if it is in writing, it must be conspicuous (not buried in fine print). *A disclaimer of the warranty of fitness for a particular purpose must be in writing, and also be conspicuous. (3) Notwithstanding (2) there are several ways in which implied warranties may be impliedly excluded or limited. (a) Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like as is, with all faults or other language which in common understanding calls the buyers attention to the exclusion of warranties and makes plain that there is no implied warranty; and (b) When the buyer before entering into the contract has examined the goods or the sample or model as fully as he desires or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and *a buyer will be held to have refused to examine the goods only when the seller makes a demand that the buyer examine the goods fully, and not simply where the goods were made available for inspection. (c) An implied warranty can also be excluded or modified by course of dealing or course of performance or course of trade. *For instance, it has been held that when a cattle buyer inspects cattle and rejects those that he doesnt want there is a usage of trade that the ones he does take he takes irrevocably and without warranties. (4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy. Unit 33: Unilateral Contracts and the Protection of Reliance during Formation. 32. Invitation of Promise or Performance: when it is the case that the offer does not make clear whether acceptance is to occur through a promise or through a performance, whether the offer seeks a unilateral or a bilateral contract, the offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses. *the language of the offer, and the circumstances under which it is made, must be scrutinized in order to determine whether the offeror is really indifferent as to whether the offer is accepted by promise or performance.

Eves Super Sexy Spring Contracts Outline

45. Option Contract Created by Part Performance or Tender (1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it (becomes irrevocable). *if the offer makes it clear that acceptance can occur only through performance, and not through promise (ie., the offer is for a unilateral contract), the beginning of performance by the offeree creates a option contract. That is, once the offeree starts to perform, the offer

becomes irrevocable.
*limited to cases where the offer is for a unilateral contract, where the offer calls for acceptance by performance, rather than by promise. (2) The offerors duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer (have to finish). *Although in this unilateral contract situation, the beginning of performance by the offeree makes the offer irrevocable, the offerors duty under the contract is conditional on the offerees completing performance as specified in the offer. He must not only do whatever is specified in the offer, but he must do it within the time specified in the offer. *only takes effect when the offeree starts the actual performance requested by the offeror. It does not take effect upon preliminary preparations that are not explicitly called for by the offer. *gets full expectation damages 62. Effect of Performance by Offeree Where Offer Invites Either Performance or Promise (1) The offeree may accept either by promising to perform or by performing, at the offerees option. Once the offeree begins to perform, he has accepted the contract (2) and is bound to complete performance. *only takes effect when actual performance has begun, not when preparations for performance are made. Here, again, however, preparations may make the offer temporarily irrevocable under 87(2). Unit 34: The Battle of the Forms. 2-204. Formation in General (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

Eves Super Sexy Spring Contracts Outline (3) 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.

*the court is authorized to fill in a number of terms if the parties have omitted to specify these terms. The terms which may be filled in include price, place for delivery, time for shipment or delivery, time for payment, etc. *presumption of contract formed.

Pg. 515 Easterbrook Analysis-there is not battle of the forms. Rule: A contract need not be read to
be effective; people who accept take the risk that the unread terms may in retrospect prove unwelcome. Terms inside Gateways box stand or fall together. If they constitute the parties contract because the Hills had an opportunity to return the computer after reading them, then all must be enforced. (Ships product is offer-inviting acceptance of consumer, terms of contract is in the box, opens box and gets terms, you agree to these terms if you dont return the product in this many days. There is no battle of the forms. Only applies to rolling contracts.) Only applies after the 30 days have lapsed. (Mirror Image Rule-Common Law-led to 2-207): the offerees response operates as an acceptance if it is a precise mirror image of the offer. If the response conflicts to the slightest extent with the terms on issues not even discussed in the offer (except for terms which the offer explicitly left to the offerees choice, e.g., quantity of goods in many contracts), the reported acceptance is in fact not an acceptance but a rejection and counter-offer. *this strict common-law interpretation frustrated many commercial transactions, and often led to unjust results. Most significantly, the mirror image rule often let one party slip out of the deal for reasons that had nothing to do with the variation between offer and acceptance. *a second disadvantage of the mirror image rule was that, where the parties exchanged written proposals, the rule gave an unwarranted advantage to the party who fired the last shot, that is, the party who sent the last written proposal. 2-206. Offer and Acceptance in Formation of Contract: compare to 32 *unique to shrinkwrapped contracts (1) Unless otherwise unambiguously indicated by the language or circumstances (a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances; (b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-

Eves Super Sexy Spring Contracts Outline conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer *the seller accepts by sending even goods which dont match the order; she thus accepts and breaches by the same action. *the seller can ship what she knows to be nonconforming goods without risking being

found in breach, by accompanying the shipment with a message saying words to the
effect, I know Im sending goods that dont match your order, and Im doing this only to accommodate you. You may keep the goods and pay for them, or you may return them in which case there will be no contract between us. *when the seller makes such an accommodation shipment, the shipment is generally treated not as acceptance, but rather as a counter-offer of the goods that have been shipped as they are. *acceptance of an offer to buy can be by any reasonable manner including shipment *when the buyer receives the nonconforming goods shipped as an accommodation, he has a choice: 1) he can keep the nonconforming goods, in which case there is a contract for the

goods as they are, at the price the seller had indicated she will charge for them; or 2)
the buyer can reject the shipment and thus prevent a contract from coming into existence as all (in which case neither party will be liable for breach of anything). *but, what the buyer cannot do is hold the seller in breach for having shipped nonconforming goods, or demand conforming goodsthats the whole point of the accommodation-shipment of 2-206(1)(b). (2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance. *although a unilateral contract becomes binding upon performance, the offeree must

nonetheless give the offeror notice that he has performed, unless the offeror has reason to
know of the performance. *failure to give this notification may discharge the contractual duty of the offeror. This notice requirement protects the offeror from being bound indefinitely by an acceptance of which he is unaware. 2-207. Additional/Different Terms in Acceptance or Confirmation: 1->3; 1->2 *read comments section! (1) Definite and seasonable expression of acceptance (formal contract) OR a written confirmation which is sent within a reasonable time (evidence of oral agreement) acts as an acceptance even though it states terms additional to (of which the offer is silent) or different from

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Eves Super Sexy Spring Contracts Outline (conflicting) those offered or agreed upon (overturns common-law mirror image rule) UNLESS acceptance is expressly made conditional on offerors assent to the additional or different terms (=counter offer). (2) The additional terms are to be construed as proposals for addition to the contract. Between

merchants such terms automatically become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter (result in surprise or hardship) it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. (3) Conduct (oral evidence) by both parties that displays there is a contract is sufficient to establish a contract for sale, despite writings. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. *knock-out rule: conflicting clauses knock each other out so that neither enters the contract. Instead, fill the gaps with warranties of UCC (most importantly-the Implied Warranty of Merchantability). *the basic idea is that if the parties behave in a way indicating that they think they have an

agreement, that agreement will be enforced even if there never was a formal offer or acceptance, or even a recognizable attempt at making an offer or acceptance.
*one very important way in which the parties conduct can give rise to an agreement without a formal offer and acceptance involves purchases of retail goods whose warranty terms are

contained inside a sealed box and are thus unknown to the buyer until after the purchase. If
the seller gives the buyer the right to cancel the transaction by returning the goods if the buyer unhappy with the term she discovers when opening the box, and the buyer in fact

retains the goods, the court is likely to decide that the buyers retention constitutes agreement to the sellers proposed terms.
Unit 35: Rolling Contract and Electronic Contract Formation & Unit 36: The Standardized Contract; Reasonable Expectations. 211: Standardized Agreements: for when you knock terms out of standardized contract (1) Except in (3), where a party to an agreement signs or otherwise manifests assent to a writing and has reason to believe that like writings are regularly used to embody terms of agreements of the same type, he adopts the writing as an integrated agreement with respect to the terms included in the writing. (2) Such a writing is interpreted wherever reasonable as treating alike all those similarly situated, without regard to their knowledge or understanding of the standard terms of the writing.

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Eves Super Sexy Spring Contracts Outline (3) Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the

agreement.
*the drafting party might have reason to believe that the term would not be assented to if the term is bizarre or oppressive, it eviscerates the non-standard terms explicitly agreed to, orit eliminates the dominant purpose of the transaction. Unit 37: How Does the Objective Theory Allocate the Risk of Miscommunication? 20. Effect of Misunderstanding (1) There is no contract if the parties misunderstanding concerns a material term and (a) neither party knows or has reason to know of the misunderstanding; or (b) each party knows or has reason to know the others misunderstanding (2) The misunderstanding of one of the parties is operative if (a) one party does not know any others understanding, and the other knows the misunderstanding of the first party; or (b) one party has no reason to know the misunderstanding of the other, and the other has reason to know the misunderstanding of the first party. *comparative fault: if one party is more at fault than the other, she is bound by the others understanding. *the buyer would prevail of the two parties, the seller is aware of the potential of mistake and we want sellers to be very clear. *When both parties think they are agreeing to the same terms, and each has a different subjective belief about what the deal is, and if those beliefs are significantly major, it may prevent a contract

from existing at all.

*In the context of ambiguity, the objective theory of contracts does not strictly apply. In order to determine whether or not there is a contract, it is necessary to ascertain whether the subjective

intent of bother parties was the same.

201. Whose Meaning Prevails (1) When both parties interpret a promise or agreement the same, that meaning prevails. (2) When the parties attach different meanings, the meaning of one of them is attached if: a. That party did not know of any different meaning and that other party knew the meaning attached by the first party OR b. That party had no reason to know of any different meaning and the other had reason to know the meaning attached by the first party. (3) Expect in this section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.

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Eves Super Sexy Spring Contracts Outline

Unit 38: Interpretation and Commercial Context under the UCC and at common law. 1-303: Construction of [Uniform Commercial Code] to Promote its Purposes and Policies: (a) Course of performance refers to the way the parties have repeatedly conducted themselves in performing the particular contract at hand. The idea is that the parties own actions in performing the contract supply evidence as to what they intended the contract terms to mean. (b) Course of dealing is also a pattern of performance between two parties to the contract, but it refers to how they have acted with respect to past contracts, not with respect to the contract in question. (c) Usage of trade is any practice or method of dealing having such regularity of observance in a

place, vocation or trade as to justify an expectation that it will be observed with respect to
the transaction in question. (d) Course of performance or usage of trade uses extrinsic evidence to interpret the intended means of the words in the agreement and give particular meaning to specific terms of the agreement and may supplement or qualify (not contradict?) the terms of the agreement.

Usage of trade based on place is applicable to determine utilization of performance of the agreement.
(e) Express terms->course of performance->course of dealing->used of trade (f) Course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance. (g) Evidence of a usage of trade cannot be used by one party unless they had given notice to the other party that the court finds sufficient to prevent an unfair surprise to the other party. 1-205: Reasonable time; Seasonableness: (a) reasonable depends on nature, purpose or circumstances (b) seasonably is within the time agreed; or if no time is agreed, within a reasonable time 2-202: Seals Inoperative: If a writing is a final expression of the parties agreement (an integration), it may not be contradicted by evidence of any prior agreement, whether written or oral, nor of any oral agreement that is contemporaneous with the writing. Even a final expression may, however, be explained or supplemented (as opposed to contradicted) by (a) evidence of course of dealing, trade usage, and course of performance; and by (b) evidence of consistent additional terms, unless the court concludes that the writing was intended not only as a final statement, but also as a complete and exclusive statement of the terms of the agreement (complete or total integration).

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Eves Super Sexy Spring Contracts Outline 201: Whose Meaning Prevails: (4) when both parties interpret a promise or agreement the same, that meaning prevails. (5) When the parties attach different meanings, the meaning of one of them is attached if: a. That party did not know of any different meaning and that other party knew the meaning attached by the first party OR b. That party had no reason to know of any different meaning and the other had reason to know the meaning attached by the first party. (6) Expect in this section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent. 202: Rules in Aid of Interpretation: (1) if the primary purpose of the parties in making the contract can be ascertained, that purpose is given great weight. (2) A writing is interpreted as a whole, and all writings that are part of creating the contract are interpreted together (3) Unless a different intention is manifested a. When language has a generally prevailing meaning, it is interpreted in accordance with that meaning b. Technical terms and words of art are given their technical meaning when used in a transaction within their technical field. (4) Repeated occasions of course of performance that is accepted without objection, when given the opportunity, is given great weight in the interpretation of the agreement. (5) Whenever reasonable and the intention of the parties are consistent with each other, the agreement is interpreted as such along with any relevant course of performance, course of dealing, or usage of trade. 203: Standards of Preference in Interpretation: when interpreting a promise or agreement or a term, the following preferences are applicable: (a) an interpretation that provides a reasonable, lawful and effective meaning to all the terms is preferable to an interpretation which leaves a part unreasonable, unlawful, or of no effect; (b) Express terms are given greater weight than course of performance, course of performance is given greater weight than course of dealing, course of dealing is given greater weight than usage of trade; (c) Specific and exact terms are given greater weight than general language; (d) Separately negotiated or added terms are given greater weight than standardized terms or other terms that are not separately negotiated.

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Eves Super Sexy Spring Contracts Outline Unit 39: Designing Workable Flexibility: Good Faith and Contractual Discretion. 1-201(20): Good Faith means honesty in fact and the observance of reasonable commercial standards of fair dealing. 1-304 & 205: Every contract or duty imposes an obligation of good faith in its performance and enforcement. 2-103(1)(b): Good faith in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. 2-306: Output, Requirements and Exclusive Dealings (1) Implicitly recognizes the exclusive dealing obligation and imposes both a good faith and reasonable expectations test on the party who determines quantity. It states that when a contract measures quantity by the sellers output or the buyers requirements, this means the

actual output or requirements as may occur in good faith.

(2) To apply, the contract must in fact be intended by the parties to be a requirements contract. If the buyer does not agree to buy its requirements only from the seller, leaving the buyer free to buy from other parties, there is no restriction on the buyers discretion and its promise is illusory. *requirement and output contracts to not lack mutuality of obligation since the party who will demonstrate quantity is required to operate his plant or conduct his business in good faith and according to commercial standards of fair dealing in the trade so that his output or requirements will approximate a reasonably foreseeable figure. *good faith standard permits an honest discontinuance of requirements resulting from lack of demand. *elimination of its requirements must be measured with the good faith standard.

Unit 40: Designing Reliable Inflexibility: Parol Evidence Rule. The parol evidence rule is based on the principle that when the parties reduce their agreement to writing, they often intend the written record to be the final version of what as agreed. If this is so, the final draft must have been intended to supersede earlier negotiations and communications to the extent that its terms depart from or do not include what was formally agreed. As a result, evidence of

any earlier agreement is irrelevant and misleading, and should be kept from the factfinder.
213: Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule) (1) An integrated agreement discharges any prior agreements to the extent they are inconsistent with it.

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Eves Super Sexy Spring Contracts Outline (2) An integrated agreement discharges prior agreements to the extent they are within its scope. (3) A non-binding integrated insurance does not discharge prior agreements, but may render inoperative terms that would have been part of the agreement if it had not been integrated. 2-202: Final Written Expression: Parol or Extrinsic Evidence Terms the parties agree to which are otherwise set forth in a writing intended as a final expression of their agreement may not be contradicted by evidence of any prior or oral agreement but may be explained or supplemented (even if it is intended as a final expression) (a) by course of dealing or usage of trade or by course of performance (b) by evidence of consistent additional terms unless the court finds the writing to have been intended as a complete and exclusive statement of the terms of agreement *both versions of the rule provide that to the extent that the parties execute a writing that is and is

intended to be a final expression of their agreement, no parol evidence may be admitted to

supplement, explain, or contradict it. However, to the extent that the writing is not a final and complete expression of agreement, consistent, but not contradictory parol evidence may be admitted to supplement or explain those parts of it that have not been finally expressed. *parol evidence covers alleged terms not incorporated into the written memorial of agreement, but claimed by one of the parties to have been agreed to, either in writing or orally, or some time before its execution. *written evidence of contemporaneous agreement: some courts say that parol evidence does not apply to a contemporaneous writing (two writings executed at approximately the same time). *parol evidence rule does not affect evidence of either oral or written agreements claimed to have been made after the execution of the writing. *POLICY: the rue serves a useful role in permitting the exclusion of evidence that is probably unreliable or dishonest, but it also has the potential of producing injustice by preventing a party from proving what was actually agreed. *PURPOSE: shield the jury from apparently unreliable or irrelevant matter, efficient use of court time, encourage more efficient transacting. 209: Integrated Agreements (1) An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. (2) Whether there is an integrated agreement is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.

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Eves Super Sexy Spring Contracts Outline (3) Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression. *if the writing is full, complete, unambiguous, and clear, the rule excludes all parol evidence. However, the parol evidence cannot contradict what has been written or add to those aspects of the agreement that have been fully dealt with in the writing. *if the written memorandum is a complete and final and certain record of the parties agreement, is it totally or completely integrated. It follows, then, that neither party should be allowed to offer parol evidence. *even if totally integrated, if the language used is unclear or ambiguous, parol evidence will be necessary and admissible to resolve such ambiguity or to explain what was meant by unclear language. *if the writing is not a complete or final record of the agreement it is said to be partially integrated, or unintegrated. If one or more terms of the agreement have been fully, finally and clearly expressed in the writing, is it a partial integration. However, if the writing does not set out any term in full, final and certain form, it is unitegrated. *parol evidence is admissible to supplement or explain the writing, provided that it does not

contradict or vary anything that has been recorded in the writing. *Parol Evidence determination: 1. is the writing a full, final, and certain record of the agreement as a whole (complete integration) or
of he particular term in use (partial integration). If so, parol evidence may not be admitted.

2. if the writing is neither a complete integration nor a partial integration covering the term in issue
(whether it simply does not address the term at all, or its treatment is ambiguous or unclear), consistent supplementary parol evidence is admitted. The judges inquiry then turns to whether the proffered parol evidence is in fact consistent with and not contradictory to what has been written. If it contradicts the writing, it may not be admitted. If it is consistent with what has been written, the judge rules the evidence admissible. *Tests:

Four Corners test (Wiliston): decided on face of document. courts emphasize the objective test of
assent and place great importance on the reasonable meaning of the language. if the document appeared complete and there was no obvious ambiguity or lack of clarity in the language pertaining to the matter in issue, this intent was establied and no parol evidence was admissible to add to or alter its reasonable meaning.

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Eves Super Sexy Spring Contracts Outline

Contextual (Corbin): parol evidence is considered by judge to determine integration. Contemporary

courts is likely to go beyond the face value of the writing, and to entertain extrinsic evidence that may be helpful in revealing that an apparently integrated writing was in fact no intended as such, or contains an ambiguity that is not otherwise obvious. *a merger clause is used when parties intend the writing to reflect their entire agreement. It merges all the terms into the writing. The apparent intent to integrate the agreement in the writing carries considerable weight with the four corners test, and although a merger clause is not given quite as much deference under the contextual approach, it still carries great weight as an articulation of the parties intention to execute an exclusive writing. 216(2)(b): might naturally be omitted test 2-202: certainly would be included test 210: Completely and Partially Integrated Agreements (1) A completely integrated agreement is adopted by the parties as a complete and exclusive statement of the terms of an agreement. (2) Anything other than a completely integrated agreement is a partially integrated agreement. (3) A court determines whether an agreement is completely or partially integrated before questioning the interpretation of or application to the parol evidence rule.

211: Standardized Agreements (1) A document binds a party only if she signs or otherwise manifests assent to it, and furthermore has reason to believe that like writings are regularly used to embody terms of agreements of the same type. (2) The document is interpreted by treating alike all those similarly situated, without regard to their knowledge or understanding of the terms. (3) If the drafting party has reason to believe that the party manifesting assent would not do so if he knew that the writing contained a particular term, the term is not part of the

agreement.
212: Interpretation of Integrated Agreement (1) An interpretation of an integrated agreement is directed to the meaning of the terms of the writings in the light of the circumstances.

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Eves Super Sexy Spring Contracts Outline (2) A question of interpretation of an integrated agreement is to be determined by the trier of fact if it depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence. Otherwise a question of interpretation of an integrated agreement is to be determined as a question of law. 214: Evidence of Prior or Contemporaneous Agreements and Negotiations (Exceptions to Parol Evidence Rule): Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish (a) That the writing is or is not an integrated agreement; (b) That the integrated agreement, if any, is completely or partially integrated; (c) The meaning of the writing, whether or not integrated; (d) Illegality, fraud, duress, mistake, lack of consideration, or other invalidating clause; (e) Ground for granting or denying recission, reformation, specific performance, or other remedy. 215: Contradiction of Integrated Terms Other than the exceptions listed above, where there is a binding completely or partially integrated agreement, no evidence is admissible that contradicts a term of the writing. 216: Consistent Additional Terms (1) Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court find that the agreement was completely integrated. (2) An agreement is not completely integrated if the writing omits a consistent additional agreed term which is (a) agreed to for separate consideration, or (b) such a term as in the circumstances might naturally be omitted from the writing. *an oral agreement that is collateral to the main agreement, and that is supported by separate

consideration, may be demonstrated, even though it occurred prior to what seems to be a

completely integrated writing. *based on the determination that the collateral agreement is sufficiently distinct from the scope of

the writing that it was not integrated into it, and that the subject matter of the collateral agreement
is consistent with the writing. *the parol evidence rule never bars evidence (written or oral) that after the signing of the contract , the parties orally or in writing agreed to modify it or rescind it. The parol evidence rule bars only evidence of transactions that occurred before (or sometimes contemporaneously with) the writing.

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Eves Super Sexy Spring Contracts Outline 217: Integrated Agreement Subject to Oral Requirement of a Condition Where the parties to a written oral agreement agree orally that performance of the agreement is subject to the occurrence of a stated condition, the agreement is not integrated with respect to the oral condition. *the parties may orally agree that the contract shall not come into existence until a particular event occurs. Or, they may agree that performance by one or both of them will not become due until a particular event occurs. In either case, they have imposed a condition; in the first case they have made the contract conditional, and in the second, they have made the duty of performance conditional. If the parties sign a writing which does not include the condition that was orally agreed to, almost all courts allow proof of this condition despite the parol evidence rule. *many courts justify this position on the grounds that the very existence of the condition shows that the writing was not completely integrated, and the condition only supplements, rather than contradicts, the writing. *if, however, the written contract contained a statement that no approval of any third person shall be necessary for the activation of any duty under this contract, evidence of the oral agreement would probably not be admissible (except to show fraud or mistake). 218: Untrue Recitals; Evidence of Consideration (1) A recital of a fact in an integrated agreement may be shown to be untrue. (2) Evidence is admissible to prove whether or not there is consideration for a promise, even though the parties have reduced their agreement to a writing which appears to be a completely integrated agreement. Unit 42: The Parol Evidence Rule and the Duty to Read; The Remedy of Reformation. 155: When Mistake of Both Parties as to Written Expression Justifies Reformation When both parties orally agree on a deal, but by mistake prepare and execute a document with incorrectly reflects the oral agreement, either party may obtain reformation from a court of the written document, so that it correctly reflects the prior agreement. 157: Effect of Fault or Party Seeking Relief (Duty to Read) If a party fails to review the writing, and neglects to notice that it contains a provision on which there was no prior understanding, he will not be able to have the contract reformed so that the new term is dropped, or to avoid the contract entirely; he is charged with knowledge of writing. Unit 43: Duress and Bad Faith in Contract Modification. 175: When Duress by Threat makes a Contract Voidable

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Eves Super Sexy Spring Contracts Outline (1) If a partys manifestation of assent is induced by any wrongful act or threat that overcomes the free will of the party, the contract is voidable by the victim. (2) If a partys manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable unless the other party to the transaction is acting in good faith, gives value or relies materially on the transaction *the state of mind of the victim does not matter. modern law looks first at the culpability of the s state of mind. 176: When a Threat is Improper (1) A threat is improper if (a) it is a crime or a tort (b) what is threatened is criminal prosecution (c) what is threatened is the use of civil process and is made in bad faith (d) it is breach of duty of good faith and fair dealing *most frequently alleged, one party threatens to breach the contract unless it is modified in his favor or a new one is drawn up. There will be duress in this situation if the threatened breach would result in irreparable injury that could not be avoided by lawsuit or other means. (2) A threat is improper if the resulting exchange is not on fair terms, and (a) the threatened act would harm the recipient and would not significantly benefit the party making the threat (b) effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat, or (c) what is threatened is otherwise a use of power for illegitimate ends. 1-201(20): Good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing. 2-209: Modification, Rescission and Waiver (1) removes the consideration requirement for modifications of existing contracts (2) provides that if the original written agreement states something to the effect of this contract may not be subsequently modified except in writing, that clause will be inforced and any subsequent oral modification is not binding (whether proved without a doubt, and benefiting both sides). This is called a no oral modification clause. Except, a no oral modification clause in the original agreement is ineffective if it is contained on a form supplied by a merchant unless (1) the other party is also a merchant or (2) the other party, i.e. consumer, has separately signed the no oral modification clause.

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Eves Super Sexy Spring Contracts Outline

Unit 44: Unconscionability. 2-302 & 208: Unconscionable Contract or Clause (1) Once the court has found a particular clause or contract to be unconscionable, the court, in its discretion, may refuse to enforce the contract as a whole if it is permeated by the unconscionability, or it may strike any single clause or group of clauses which are so tainted or which are contrary to the essential purpose of the agreement, or it may simply limit unconscionable clauses so as to avoid unconscionable results. (2) Parties shall be afforded a reasonable opportunity to present evidence to aid the court in making the determination. *test: whether, in light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of making the contract. *fraud is always better get. duress is nearly unconscionability and duress would knock out an issue.

Unit 45: Illegal Contracts and Contracts that Contravene Public Policy. 178. When A Term Is Unenforceable On Grounds Of Public Policy (1) A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms. (2) In weighing the interest in the enforcement of a term, account is taken of (a) The parties justified expectations, (b) Any forfeiture that would result if enforcement were denied, and (c) Any special public interest in the enforcement of the particular term. (3) In weighing a public policy against enforcement of a term, account is taken of (a) The strength of that policy as manifested by legislation or judicial decisions, (b) The likelihood that a refusal to enforce the term will further that policy, (c) The seriousness of any misconduct involved an the extent to which it was deliberate, and (d) The directness of the connection between that misconduct and the term. * A court must make two findings before invalidating a contract on public policy grounds: that a valuable societal interest exists and that enforcement of this contract will materially harm that interest, directly or indirectly.

Parente: The agreement's purpose was to violate the liquor control laws, contrary to public policy, so
it was improper to enforce it.

Takeuchi: The court was of the view that although the transfer was not actually consummated
because the bank was unwilling to participate in the transaction which so strongly appeared to be

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Eves Super Sexy Spring Contracts Outline tainted with illegality, a presumption of intent to evade the law arose where the transferee was ineligible to own real property, the payment of the deposit on account of the purchase price was made by an ineligible alien, and the balance of the price was also to be paid by the alien.

Sanango & Balbuena: Despite its ruling that Sanango and Balbuena are not entitled to recover lost
earnings damages based on the wages they may have earned in the U.S, the appellate court also held that the IRCA did not require a total bar to recovery of lost wages for the two plaintiffs. It based this finding on the theory that an award based on a prevailing foreign wage would not offend any federal policy. Balbuena, 2004 N.Y. App. Div. LEXIS 15627 *2. The court therefore remanded both cases to afford plaintiffs an opportunity to prove the wages that, but for their injuries, they would have been able to earn in their home countries. Unit 46: Introduction to Conditions: Terminology and Basic Concepts. *Conditions precedent must occur before a duty to perform a contract promise arises *Conditions subsequent discharge or suspend contractual duties of performance that have already arisen *Conditions can be seen as ways of shifting the risks of uncertainty away from the promisor to the other party. *Conditions can also be seen as ways of giving incentives to the promisee to fulfill its half of the bargain. *Courts will imply or infer conditions, such as the substantial performance of promises. Unit 47: Express Conditions and Their Excused Non-occurrence. 229. Excuse of a Condition to Avoid Forfeiture. To the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was material part of the agreed exchange. *a forfeiture would occur when one party has relied on the bargain, and insistence on strict compliance with the condition would cause him to fail to receive the expected benefits. *where one partys duty is made expressly conditional on the performance of some act by the other, and that latters performance, while deviating slightly from the terms of the condition, nonetheless renders a benefit to the former, the court will often simply refuse to strictly enforce the condition, and will hold that it is met by substantial performance of a condition. Otherwise, extreme hardship to the party who has defectively performed (forfeiture) will result. *alternatively, rather than finding that an express condition has been fulfilled through substantial performance a court may instead find that the fulfillment of the condition is excused where extreme forfeiture would occur. *however, even if forfeiture would result from enforcement of the condition, the condition will

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Eves Super Sexy Spring Contracts Outline generally be excused only if such excuse would not cause material prejudice to the interests of the party for whose benefit the condition existed. The court will not excuse a condition if its occurrence was a material part of the agreed exchange. 2-601: Buyers Rights on Improper Delivery (Perfect Tender Rule) As long as a contract does not involve installments (multiple deliveries), unless otherwise agreed, if the goods tender of delivery fail in any respect to conform to the contract, the buyer may (a) Reject the whole; or (b) Accept the whole; or (c) Accept any commercial unit or units and reject the rest. *however, courts have generally allowed buyers to reject the sellers tender only if the defect was a substantial one. *courts look at trade usage, course of dealing, and course of performance in determining whether the tender was defective at all. For example, if the custom in a trade is that 19 or 21 items are equivalent to 20, a buyer who receives 19 under a contract calling for 20 will not be able to reject the goods. *court may find the buyer failed to follow the procedures for rejecting a tender. *the seller generally has the right to cure the defect, and the court may hold that the seller cured, or could have cured had the buyer not wrongfully deprived her of the chance to do so. 2-508: Cure by Seller of Improper Tender or Delivery; Replacement (1) A seller has a right to cure within the remaining time for performance, no matter how great the breach is. (2) If the seller reasonably thought that either: (1) the goods, though nonconforming, would be acceptable to the buyer; or (2) the buyer would be satisfied with a money allowance, the seller gets additional time to cure after the time under the contract has passed.

Promise a manifestation of intention to act or refrain from acting in a specified way so made as to
justify a promisee in understanding that that a commitment has been made.

Condition an event, not certain to occur, which must occur, unless its non-occurrence is excused,
before performance under a contract becomes due. *breach of promise and a fail of a condition to occur: if i breach a promise then i am liable for damages, if a condition that occurs then rescission of the contract is the relief.

Howard-tobacco case: When it is doubtful whether words create a promise or a condition precedent,
they will be construed as creating a promise. Provisions of a contract will not be construed as conditions precedent in the absence of language plainly requiring such construction.

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Eves Super Sexy Spring Contracts Outline Unit 48: The Big Deal: From Letter of Intent to Closing.

Empro-Intent in contract law is evaluated under an objective rather than a subjective standard. A
party who makes a deal subject to a later definitive agreement has manifested an objective intent not to be bound. Under the parol evidence rule this becomes the definitive intent even if one party later claims that its true subjective intent at the time was different. *Empros letter states twice that it was subject to a later definitive agreement. It also states twice that it contains general terms and conditions but that each side retains the right to make additional demands. Empro insulated itself further from the transaction by making the deal subject to board approval. *The letter was not a one sided commitment to buy Ball-Co because from the beginning Ball-Co assumed it could negotiate terms different from those contained in the letter. While approaching agreement in stages is a valuable method of doing business, in this case there was no binding agreement.

*both of the cases involve failures in that both cases ended up in court deciding the letter of intent whether the letter was a done deal. the s where able to get to jury. there are 3-4 basic letters. 1) both parties fully agree to be bound and that there are nonmaterial things left to be negotiate (contract) 2) we have definitely not agreed to be bound, this is just a memo to record what we have talked about (no contract), 2.5) the negotiators have fully agreed on points but these are subject to approval from shareholders or executives (no contract) 3) we are well along the way and hope and believe we are doing a deal, and we hereby promise to negotiate in good faith to complete this deal (no contract and cannot be compelled, if you withdraw from this deal you owe the other side reliance damages). Unit 49: Implied Conditions and Substantial Performance; Material Breach. 2-507: Effect of Sellers Tender; Delivery on Condition (1) Tender of delivery is a condition to the buyers duty to accept the goods and, unless otherwise agreed, to his duty to pay for them. Tender entitles the seller to acceptance of the goods and to payment according to the contract. (2) Where payment is due and demanded on the delivery to the buyer of goods or documents of title, his right as against the seller to retain or dispose of them is conditional upon his making the payment due.

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Eves Super Sexy Spring Contracts Outline 2-612: Installment Contract; Breach (1) An installment contract is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause each delivery is a separate contract or its equivalent. (2) The buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured or if the nonconformity is a defect in the required documents; but if the non-conformity does not fall within subsection (3) and the seller gives adequate assurance of its cure the buyer must accept that installment. (3) Whenever non-conformity of default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole. But the aggrieved party reinstates the contract if he accepts a non-conforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments. * A party who is in "material breach" of contract has not "substantially performed." A party who has "substantially performed" is not in "material breach." THE BREACH-O-METER: (1) Perfect performance: the seller's duty is discharged and buyer must pay at the contract price because all conditions precedent to her performance have occurred. This includes any permissible non-breach variation in seller's performance, as where the alleged defect is so trivial that the law will not take note of it (De minimis non curat lex.) The buyer must pay at the contract price. 235 comment a. (2) Non-material breach (substantial performance): Buyer must pay the contract price but may deduct damages for any loss caused by the breach. She will sue in such a case for partial breach. 236. A non-material breach does not permit the other party to suspend performance and if she does suspend performance, that party is herself in breach. (3) Curable Material breach (no substantial performance): Seller is not entitled to the contract price and the buyer may suspend any of her own performance that would otherwise be due (including payment) until the breach is cured. 237. Buyer's duty is not discharged but suspended. Buyer must give seller a reasonable time in which to cure unless the parties have agreed that time is of the essence. UCC 2-508. If seller cures, he is entitled to payment of the contract price less damage caused by delay. If seller fails to cure, he has no claim under the contract but may be entitled to restitution for the value of any benefit conferred. (4) Incurable material breach (total breach): Seller is not entitled to the contract price and if the buyer elects to declare total breach all further duties of both parties are discharged. Seller is liable

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Eves Super Sexy Spring Contracts Outline for direct and consequential damages for breach of the entire contract. 243. Seller may have a claim in restitution for benefits conferred. A buyer facing incurable material breach may elect instead to treat the breach as partial. Unit 50: Repudiation, Cure, and Cancellation. 2-106(3): Termination occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On termination all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives. 2-106(4): Cancellation occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of termination except that the cancelling party also retains any remedy for breach of the whole contract or any unperformed promise. 2-609: Right to Adequate Assurance of Performance (1) A contract for sale imposes an obligation on each party that the others expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance ad until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. (2) Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards. (3) Acceptance of any improper delivery or payment does not prejudice the aggrieved partys right to demand assurance of future performance. (4) After receipt of a justified demand failure to provide within a reasonable time not exceeding 30 days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract. *requires that reasonable grounds for insecurity must arise; the reasonable grounds must be based on facts not known to the insecure party at the time of contracting. *grounds for insecurity: 1) the buyer has fallen behind in payment of her account with the seller, even though the items for which she already owes are part of contracts completely separate from the one now in question; 2) the seller under a contract for precision parts makes defective deliveries of the same kinds of parts to other customers, and the buyer finds out about these defective shipments; 3) contract that allows 2% off for payment within 10 days, a buyer in the habit of taking advantage of a discount fails to pay within 10 days and the seller heard rumors, although false, that the buyers financial condition was shaky

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Eves Super Sexy Spring Contracts Outline *the aggrieved party is permitted to suspend his own performance and any preparation therefore, with excuse for any resulting necessary delay, until the situation has been clarified * the aggrieved party is given the right to require adequate assurance that the other partys performance will be duly forthcoming *aggrieved party may treat the contract as broken if his reasonable grounds for insecurity are not cleared up within 30 days *reasonable grounds for adequate assurance is defined by commercial rather than legal standards. *a failure to provide adequate assurance of performance and thereby to re-establish the security of expectation, results in breach only by repudiation. 2-610: Anticipatory Repudiation When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may (a) For a commercially reasonable time await performance by the repudiating party; or *if the repudiatee awaits performance beyond a commercially reasonable time he cannot recover resulting damages which he should have avoided. (b) Resort to any remedy for breach, even though he has notified the repudiating party that he would await the latters performance and has urged retraction; and *the repudiatees insistance on performance does not constitute a waiver of his right to sue for breach. (c) In either case suspend his own performance or proceed in accordance with the provisions of this Article on the sellers right to identify goods to the contract notwithstanding breach or to salvage unfinished goods. Unit 51: Excused Nonperformance: Impossibility and Impracticability. 261. Discharge by Supervening Impracticability. Where, after a contract is made, a partys performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary. *Typically, the test U.S. courts use for impracticability is as follows (with a few variations between jurisdictions): 1. 2. 3. There must be an occurrence of a condition, the nonoccurence of which was a basic assumption of the contract, The occurrence must make performance extremely expensive or difficult This difficulty was not anticipated by the parties to the contract

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Eves Super Sexy Spring Contracts Outline *Iit is a fairly subjective and fact-intensive test for the courts. Generally, courts typically do not consider events such as an increase in price or costs beyond a normal range to allow for discharge of duties on grounds of impracticability, as such events are normally foreseeable risks of fixed-price contracts.

2-613. Casualty to Identified Goods. Where the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer, or in a proper case under a "no arrival, no sale" term (Section 2-324) then (a) if the loss is total the contract is avoided; andResort to any remedy for breach, even though he has notified the repudiating party that he would await the latters performance and has urged retraction; and (b) if the loss is partial or the goods have so deteriorated as no longer to conform to the contract the buyer may nevertheless demand inspection and at his option either treat the contract as avoided or accept the goods with due allowance from the contract price for the deterioration or the deficiency in quantity but without further right against the seller. 2-615. Excuse by Failure of Presupposed Conditions. Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance: (a) Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid. (b) Where the causes mentioned in paragraph (a) affect only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable. (c) The seller must notify the buyer seasonably that there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer. *Scope: even though a party, in assuming the duty, has not qualified the language of his undertaking, a court may relieve him of that duty if performance has unexpectedly become impracticable as a result of a supervening event such as supervening death or incapacity of a person

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Eves Super Sexy Spring Contracts Outline necessary for performance, supervening destruction of a specific thing necessary for performance,

supervening prohibition or prevention by law.

*Yeilds to a contrary agreement by which a party may assume a greater as well as a lesser obligation. *Basic Assumption: in order for a supervening event to discharge a duty under this section, the nonoccurrence of that event must have been a basic assumption on which both parties made the contract. Death and destruction effects a discharge, however, mere market shifts or financial inability do not usually effect discharge under the rule stated in this section. The fact that the event was foreseeable, or even foreseen, does not necessarily compel a conclusion that its non-occurrence was not a basic assumption. *Contrary Indication: a party may, by appropriate language, agree to perform in spite of impracticability that would otherwise justify his non-performance under the rule stated in this section. He can be held liable for damages although he cannot perform. Even absent an express agreement, a court may decide, after considering all the circumstances, that a party impliedly assumed such a greater obligation. Circumstances relevant in deciding whether a party has assumed a greater obligation include his ability to have inserted a provision in the contract expressly shifting the risk of impracticability to the other party. If the supervening event was not reasonably foreseeable when the contract was made, the party claiming discharge can hardly be expected to have provided against its occurrence. Factors such as the practical difficulty of reaching agreement on the myriad of conceivable terms of a complex agreement may excuse a failure to deal with improbable contingencies. *Impracticability: events that come within the rule stated in this section are generally due either to acts of God or to acts of third parties. If the event that prevents the obligors performance is caused by the obligee, it will ordinarily amount to a breach by the later and will be governed without regard to this section ( 237). If the event is due to the fault of the obligor himself, this section does not apply. Although the rule stated in this section is sometimes phrased in terms on impossibility, it has long been recognized that it may operate to discharge a partys duty even though the event has not made performance absolutely impossible. This section, therefore, uses impracticable (see 2-615(a)) to describe the required extent of the impediment to performance. However, impracticability means more than impracticability. A mere change in the degree of difficulty or expense does not amount to impracticability since it is this sort of risk that a fixed-price contract is intended o cover. A party is expected to use reasonable efforts to surmount obstacles to performance, and a performance is impracticable only if it is so in spite of such efforts. *Alternative performance: where the duty is to render such an alternative performance, the fact that

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Eves Super Sexy Spring Contracts Outline one or more of the alternative has become impracticable will not discharge the partys duty to perform if at least one of them remains practicable. *IMPOSSIBILITY AND RELATED DOCTRINES IN CONTRACT LAW: AN ECONOMIC ANALYSIS From the standpoint of economics discharge should be allowed where the promisee is the superior risk bearer; if the promisor is the superior risk bearer, non performance should be treated as a breach of contract. (of course, if the parties have expressly assigned the risk to one of them, there is no occasion to inquire who is the superior risk bearer). A party can be a superior risk bearer for one of two reasons first, he may be in a better position to

prevent the risk from materializing (discharge would be inefficient in any case where the promisor
could prevent the risk from materializing at a lower cost than the expected cost of the risk event). second he may be the superior insurer (prevention is one way of dealing with risk; the other is insurance. it does not necessarily follow from the fact that the promisor could not at any reasonable cost have prevented the risk from materializing that he should he discharged from his contractual obligations). Unit 52: Excused Nonperformance: Frustration of Purpose. 265. Discharge by Supervening Frustration. Where, after a contract is made, a partys principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary. *deals with the problem that arises when a change in circumstances makes one partys performance virtually worthless to the other. *Requirements for discharge: 1) The purpose that is frustrated must have been a principal purpose of that party in making a contract. The object must be so completely the basis of the contract that, as both parties understand, without it the transaction would make little sense; 2) The frustration must be substantial, not just less profitable, it must be so severe that it is not fairly to be regarded as within the risks that he assumed under the contract; 3) the non-occurrence of the frustrating event must have been a basic assumption on which the contract was made. *Several factors are considered in determining whether the defense of frustration of purpose should be allowed: 1) the extent to which the event that thwarted the promisors object was foreseeable (and foreseen) by the parties when the contract was madethe less foreseeable the event, the more likely the court is to excuse performance under the frustration doctrine.

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Eves Super Sexy Spring Contracts Outline 2) the extent to which the parties did or did not implicitly allocate the risk of the event to the promisorif the parties implicitly allocated the risk to the promisor, the court will not excuse performance 3) the extent to which the event deprived the promise of all of his anticipated benefit from the contractthe more complete the thwarting of the benefit, the more likely the court is to excuse performance 4) whether the party seeking discharge was at fault in bringing about (or failing to guard against) the eventmajor fault on that partys part will normally block use of the defense. *if the parties foresaw the possibility of the event in question, the contracts failure to explicitly excuse the promisor if the event should occur probably indicated that the parties intended that the

promisor bear the risk of that event. Conversely, if the event was on that was hard to foresee, then
the contracts failure to excuse the promisor in such an event does not justify the inference that he parties intended to allocate the risk of the event to the promisor. Unit 53: The Law and Mathematics of Settlement. 1-306: Waiver or Renunciation of Claim or Right After Breach. A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in an authenticated record. (provision must be read in conjunction with the section imposing obligation of good faith). 1-207: Performance or Acceptance Under Reservation of Rights (1) A party who with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as without prejudice, under protest or the like are sufficient (2) Subsection (1) does not apply to an accord and satisfaction. 2-209: Modification, Rescission and Waiver. (1) An agreement modifying a contract within in this Article needs no consideration to be binding. 281. Accord and Satisfaction. (1) An accord is a contract under which an obligee promises to accept a stated performance in satisfaction of the obligors existing duty. Performance of the accord discharges the duty. (2) Until performance of the accord, the original duty is suspended unless there is such a breach of the accord by the obligor as discharges the new duty of the obligee to accept the

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Eves Super Sexy Spring Contracts Outline performance in satisfaction. If there is such a breach, the obligee may enforce either the original duty or any duty under the accord. (3) Breach of the accord by the obligee does not discharge the original duty, but the obligor may maintain a suit for specific performance of the accord, in addition to any claim for damages for partial breach. * Validity of accord. The enforceability of an accord is governed by the rules applicable to the enforceability of contracts in general. The obligees promise to accept the substituted performance in satisfaction of the original duty may be supported by consideration because that performance differs significantly from that required by the original duty ( 73) or because the original duty is in fact doubtful or is believed by the obligor to be so ( 74). It may also be supported by the obligors reliance even in the absence of consideration ( 90). 3-311. Accord and Satisfaction By Use of Instrument. (a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply. (b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. (c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies: (1) The claimant, if an organization, proves that (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place. (2) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This paragraph does not apply if the claimant is an organization that sent a statement complying with paragraph (1)(i). (d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an

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Eves Super Sexy Spring Contracts Outline agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim. *most of the time, the creditor who cashes a check marked in full settlement or the like will lose, if three conditions are met: 1) the check or accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim 2) the claim was either unliquidated or was subjected to bona fide dispute and 3) the debtor acted in good faith *the basic idea behind (d) is to make sure that the creditor will be found to have waived its rights only when an employee of the creditor with knowledge of the underlying transaction knew that the debtor was proposing an accord and satisfaction * if you are an institutional creditor and worried about payment checks then you must alert your debtors that they have to send their checks to a special place, and if you dont and you accidentally cash a check you have 90 days, but you dont have the 90 days if you knew the check was to satisfy a full amount *when an insurance company sends a check to an insured in a settlement of a cliam, and the insured cashes the check after writing under protest on it, the insured will be found to have accepted an accord and satisfaction. 73: Performance of a Legal Duty. Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain. 74: Settlement of Claims. (1) Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless (a) the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or (b) the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid. (2) The execution of a written instrument surrendering a claim or defense by one who is under no duty to execute it is consideration if the execution of the written instrument is bargained for even though he is not asserting the claim or defense and believes that no valid claim or defense exists. Unit 54: Dont Be a Bad Lawyer.

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