Contracts Outline SPRING CONTRACTS BURNHAM 5.DAMAGES a.Basic Remedial Concepts i. Mitigation: ii.Certainty iii.Causation b.Expectancy damages c.Liquidated Damages: d.Consequential

2013 SPRING CONTRACTS BURNHAM

Contracts Outline Professor: Scott Burnham Text: PDF Version of Burnham’s Introduction to Contract Law

TABLE OF CONTENTS 1. Introduction 2. Bargained For Contract 3. ALTERNATIVE REMEDIES 4. PERFORMANCE OR BREACH

a. MODIFICATION i. Executory Contract ii. Accord & Satisfaction

b. WARRANTY i. Purpose ii. UCC Warranties iii. Express iv. Disclaimer of Warranties v. Limitation of Remedies (UCC § 2719)

c. UNANTICIPATED EVENTS i. Chart ii. How to: iii. Mistake (Restatement § 152) iv. Impracticability v. Frustration vi. Force majeure Clause

d. Good Faith (Restatement 205) i. UCC Good Faith

e. PROMISE AND CONDITION i. Chart ii. Definitions iii. Promise iv. Condition v. Relief from Conditions

f. ANTICIPATORY REPUDIATION i. Generally:

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5. DAMAGES a. Basic Remedial Concepts

i. Mitigation: ii. Certainty iii. Causation

b. Expectancy damages c. Liquidated Damages: d. Consequential Damages UCC Remedies e. Punitive Damages f. Incidental Damages g. UCC Damages HOW TO: h. Specific Performance i. Foreseeability

6. ARBITRATION AND CHOICE OF LAW a. Choice of Law b. Arbitration c. Mediation

7. Rules 8. ISSUE SPOTTING 9. UCC

1. Introduction

a. Terms i. Contracts: a promise or set of promises, enforceable by law. ii. Default Rules: rules that apply in absence of specified terms. First authority is the UCC and

then common law. iii. Regulatory Rules: rules that cannot be changed (mandatory, immutable, must be followed). iv. Immutable Terms: those rules which parties are not free to change in a contract. v. Facilitatory Rules: rules that can be changed by the parties’ mutual agreement (help facilitate

the agreement). vi. Contract of Adhesion: there is no option to negotiate the contract (take it or leave it). vii. Freedom of Contract: the rules governing a contract may be changed by adding terms. viii. Uniform Law Commission (ULC): creators of UCC, a group of contract specialists. ix. Uniform Commercial Code (UCC): a number of articles addressing various aspects of

commercial law. x. American Law Institute (ALI): creators of the restatements and assisted with the UCC. xi. Rule of the Expectancy: the non breaching party is entitled to the amount of money that

would put them where they would have been should the contract have been performed. xii. Goods: means all things (including specially manufactured goods) which are moveable at the

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time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. Goods also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be served from realty. (2107)

xiii. NonGoods: services, intangibles, and real estate xiv. Specific Performance: (remedy in equity) xv. Reliance: If one person relies on another person’s promise, the promise may be enforceable

even in the absence of a bargain. xvi. Tender: offer to perform with the present ability to perform. xvii.“Signed” includes using any symbol executed or adopted with present intention to adopt or

accept a writing. xviii. Void: A contract is void if the affirmative defense provides sufficient evidence that no

contract was formed due to additional facts. xix. Voidable: If an affirmative defense is proven then the contract is voidable. This means that

the contract was valid when it was formed, but a party has the power to avoid or affirm the contract.

xx. Affirm: I waive my defense, and agree that the contract is valid. xxi. Disaffirm: minors can disaffirm their voidable contract while a minor or within a reasonable

time after becoming an adult xxii.Ratify: if the minor does not disaffirm then they have ratified the contract

b. Sources of Law i. UCC Sale of Goods ii. Common Law iii. Restatements iv. Choice of Law

1. Old Rule: Use the laws from the state where the last act of creating the contract occurred

2. New Rule: Use the laws from where there are the most contacts with the transaction c. Types of Rules

i. Freedom of Contract: Made by the parties themselves ii. Facilitatory Rules: default rules that are applied if not changed through freedom of contract iii. Regulatory Rules: rules dictated by the government.

2. Bargained For Contract a. Formation of a Contract Requires:

i. Offer ii. Acceptance iii. Consideration

b. OFFER: a promise to do something conditional on receiving something in return from the promisee. i. Generally: Whether a reasonable person would think that no more than acceptance is

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required to form a contract. ii. Objective manifestations What the parties did, such as their words or their outward

expressions. 1. Would a reasonable person in the position of the offeree have interpreted this as an

offer? 2. Subjective intent is irrelevant 3. No “meeting of the minds!”

iii. Advertisements: An advertisement does not constitute an offer of sale but is solely an invitation to customers to make an offer to purchase. (Pepsi)

1. Reasoning: to protect sellers from being liable for breach when they only have a limited supply.

2. Exception: when the advertisement is clear, definite and explicit and leaves no room for negotiation.

iv. Types of Offers 1. Promise (bilateral): to accept an offer the party must make a promise 2. Performance (unilateral): both parties make a contract.

a. Rewards as Offers Offer to be accepted by performance. 3. Promise or Performance (offeree’s choice): an offer can be accepted by either

promise or performance, and then both parties are bound as if they had made a bilateral contract.

v. Offer Terminates When (Restatement § 36) 1. Nonoccurrence of any condition of acceptance under the terms 2. Rejection or counteroffer by the offeree 3. Death or incapacity of the offeror or offeree. 4. Lapse of time: a reasonable amount of time. 5. Revocation

a. General Rule: offeror may revoke an offer anytime before the acceptance. b. Exceptions:

1. Option contracts: a contract in which the offeree pays the offeror consideration to keep the offer open.

a. Restatement § 25: An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor’s power to revoke an offer

b. May be within the main contract or a collateral offer 2. Firm Offers: (UCC § 2205) applies only to transactions in goods &

if elements are satisfied then the offer is open for a reasonable time not to exceed 3 months.

a. Offer by a merchant b. To buy or sell goods

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c. In a signed writing d. Which by its terms gives assurance that it will be held open is

not revocable, for lack of consideration. 3. Reliance: If one person relies on another person’s promise, the

promise may be enforceable even in the absence of a bargain. a. A clear and unambiguous promise; b. A reasonable and foreseeable reliance by the party to whom

the promise is made c. An injury sustained by the party asserting the estoppel by

reason of his reliance 4. Beginning of performance

6. Damages: “the remedy granted for breach may be limited as justice requires.” (Restatement 90) You are entitled only to the amount of which you relied on.

c. ACCEPTANCE: when the offeree (the one to whom the offer is made) gives the offeror ( the one who made the offer) the thing requested in the offer.

i. Generally: A contract becomes binding once an offer has been accepted. 1. Mailbox Rule: an acceptance is made and cannot be revoked once the offeree has

placed in the mailbox. This is to prevent an offeree by buying time with a slow acceptance medium.

2. Mirror Image Rule: the acceptance must be the mirror image of the offer in order to form a binding contract.

ii. Methods of Acceptance: 1. Performance: binds the offeror not to revoke but does not bind the offeree until

completion of performance. (Run to Vegas) a. Mere preparation to perform is not beginning of performance.

2. Promise Only: giving a promise in exchange forms a binding contract. (Sell Pen) 3. Promise or Performance: giving of a promise, beginning of performance acts as a

promise and binds both parties. (Paint the Fence) iii. Medium of Acceptance

1. Generally a. Offeror controls the medium of acceptance b. Medium of Acceptance must be equal to or greater than the Medium of the

Offer 2. Rule: there is no requirement that a contract be in writing, but depending on the

nature and seriousness of the deal it might be that a reasonable person would know that a contract was not completed without a signing or finalization of the deal.(Mississippi v Swift)

a. Is the contract of the class which is normally found to be in writing? b. Whether it is of such nature as to need a formal writing for its full expression

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c. Whether it has few or many details d. Whether the amount involved is large or small e. Whether it is a common or unusual contract f. Whether the negotiations themselves indicate that a written draft is

contemplated as the final conclusion of the negotiations iv. Battle of the Forms (B of Fs)

1. Common Law (Last Shot Rule) a. If the offeree’s form differed in any way, according to the mirror image rule,

it did not qualify as acceptance but as a counteroffer. i. If the parties then shipped goods and paid for them, then their

conduct manifests assent to the terms of the counter offer. 2. UCC § 2204(3): Contract does not fail for indefiniteness 3. UCC § 2206: Formation of Contract

a. Unless otherwise indicated i. An offer invites acceptance by any reasonable manner and ii. An order or offer to buy goods may be accepted by shipping or

promising to ship, 4. UCC § 2207 Step By Step:

a. Was acceptance expressly made conditional on assent to the additional or different terms?

i. Yes, did the other party expressly accept the new & conditional terms?

1. Yes, there is a contract using the new terms. 2. No, did the conduct of both parties recognize the existence

of a contract? a. Yes, there is a contract using terms which the

writings of the parties agree upon and the UCC. b. No, there is no contract.

ii. No, was there a definite and seasonable expression of acceptance within a reasonable time even though it states terms additional to or different from those offered or agreed upon?

1. Yes, are the terms additional? a. Yes, are both parties merchants?

i. Yes, the additional terms become part of the contract UNLESS: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after

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notice of them is received. ii. No, the additional terms are considered

proposals. b. No, are the terms different?

i. Yes, apply one of three rules, depending on jurisdiction: (1) Knockout Rule, (2) Offeror’s Terms, (3) Same as Additional

ii. No, contract meets mirror image rule and is formed.

2. No, there is no contract. 5. UCC 207 Burnham/Tutoring Style

a. Is Acceptance Conditional: If the offeree’s form says there is no deal if the offeror does not agree to the new terms, that form is not an acceptance.

b. Dealing with Additional or Different Terms i. Additional: a term in the offeree’s form that addresses a topic not

addressed in the offeror’s form 1. The offeror has three chances to reject the proposal:

a. “the offer expressly limits acceptance to the terms of the offer”

b. The offeror has a chance to notify the offeree that it rejects the proposed term.

c. The additional terms “materially alter” the contract i. Comment 4: the terms “result in surprise or

hardship if incorporated without express awareness by the other party.”

ii. Different Terms: a term in the offeree’s form that address the same topic addressed in the offeror’s form in a different way

1. Three court based rules: a. Knockout Rule: The court knocks out both terms

that differ and reads in the default rule from the Code or common law.

b. Offeror’s Term Prevails c. Same as Additional Term: Because of the materially

alter rule of (2)(b), only an offeree’s term that doesn’t differ substantially from the offeror’s term becomes part of the contract.

d. CONSIDERATION i. Old Definition: the promisor’s receiving something (benefit) or the promisee’s giving up

something (detriment) is consideration (Hamer v. Sidway)

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ii. New Definition: whether each party promised something in exchange for the promise of the other. (Bargained For) (Restatement of Contracts)

1. Reciprocal Inducement (O.W. Holmes) 2. Promise: A commitment to do or not to do something.

iii. Sufficient and Adequate Consideration 1. Sufficient: satisfies the legal requirement that a bargainedfor exchange exists.

(Necessary) (Wolford v. Powers) 2. Adequate: refers to the equivalency of the exchange; whether each party stood to

receive something reasonably equivalent to what they promised. (Not Necessary) iv. Mutuality

1. McIntire v Hart (Cotton Growers) a. An Unconscionable Contract is one that shocks the conscience and thus not

enforceable. b. A valid contract must have Mutuality where there is consideration on both

sides. It is not necessary for the contract mutuality to be equal. c. UCC Article 2: governs the sale of goods (2302(1), 2102, 2105(1))

v. Detecting Absence of Consideration 1. Nominal Consideration: a phony consideration, no actual bargain, simply the

appearance of bargain 2. Preexisting Duty Rule: consideration is absent if a party promises to do what it is

already legally obligated to do 3. Finding Past Consideration: a benefit that one party already received at the time he

made his promise (past consideration is no consideration) a. Exception: If a legal obligation becomes unenforceable because the statute

of limitations expires, then a promise to pay the obligation becomes enforceable even though the promise to pay is for a benefit previously received and no legal obligation to pay exists under the original agreement.

vi. Illusory Contracts 1. Promises (defense to the enforceability of the contract)

a. Illusory promise: because in reality one party didn’t promise the other anything that’s legally meaningful

b. Lack of commitment: because if a party isn’t committed to doing anything, then he hasn’t made a promise

c. Lack of mutuality: because if one party isn’t bound by the bargain, then neither is the other

2. Satisfaction Clauses a. Satisfaction clauses don’t make a contract or a promise illusory. Both

objective and subjective satisfaction clauses satisfy the consideration requirement.

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b. Wording that makes a party’s promise conditional upon that party’s satisfaction with something

c. Test: i. Objective: measured in terms of mechanical utility or operative fitness

1. Reasonable person ii. Subjective: measured in terms of personal taste, fancy, or judgment

1. Duty to act in good faith 3. Output and Requirements Contracts: UCC § 2306

a. A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

b. A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes, unless otherwise agreed, an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

vii. Misunderstanding: A problem of interpretation that makes the agreement void because each party ascribes a different meaning to an essential term and each meaning is reasonable. (No Contract)

1. Rule: Restatement § 20 a. There is no manifestation of mutual assent to an exchange if the parties attach

materially different meanings to their manifestations and i. neither party knows or has reason to know the meaning attached by

the other; or ii. each party knows or each party has reason to know the meaning

attached by the other. b. The manifestations of the parties are operative in accordance with the

meaning attached to them by one of the parties if i. that party does not know of any different meaning attached by the

other, and the other knows the meaning attached by the first party; or

ii. that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.

2. Objective Method: when there are two objective meanings and one is not better than the other, the contract is thrown out

3. Subjective Method: when one meaning is objectively better than another, the

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contract is interpreted to read the reasonable meaning. 4. Were there two interpretations of a single term?

a. Yes, Are both the interpretations reasonable? (Peerless) i. Yes, Did one party know or have reason to know the meaning

attached by a naive party was different? (Konic v Spokane Computers)

1. Yes, Use the interpretation of the naive party. 2. No, There was no contract formed, parties didn’t actually

agree. ii. No, Use the only reasonable interpretation. (Colfax)

b. No, then there is no misunderstanding e. DAMAGES

i. Breach of Contract 1. Expectancy: the nonbreaching party is entitled to the amount of money that will put

them in the place that they would have been had the contract been performed. a. US Naval Institute v Berkeley

i. Damages for breach of contract are governed by the Rule of Expectancy.

ii. Punitive damages are not available in contract breach cases. ii. Restitution The value of the benefit conferred iii. Reliance The Restatement says you are only entitled to the amount of money to the extent of

the reliance (the amount that you reasonably relied on) f. AFFIRMATIVE DEFENSES

i. Illegal Promises void & unenforceable 1. A contract to do an illegal act or to aid another in violating the law is likewise void

and unenforceable, whether executory or executed. 2. Exceptions

a. Not every agreement that involves illegality is unenforceable. Society is trying to balance two interests. (McConnell)

i. Freedom of contract interest we want to enforce agreements when: 1. Strength of policy is reflected in statutes or case law.

(Fundraising fee or public good?) 2. One party is innocent 3. The illegal is not serious 4. The connection to illegality is tenuous

ii. Public policy we want to discourage undesirable conduct when it 1. Restrains trade 2. Interferes with family relationships 3. Encourages torts

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b. Courts will normally not enforce the agreement but will allow restitution. 3. In Pari Dilecto: only one party is at fault, e.g. insurance company creates policy that

is illegal under state laws and when a claim is made the company uses illegality as a defense, but the court would not find it favorable.

4. The legal system has the power to challenge agreements in three ways: a. Civil: The agreement is void as a matter of law, so nobody can base a

contract claim on it. b. Criminal: Parties may face a penalty for making the agreement. c. Procedural: Using the courts to enforce such agreements is inappropriate.

ii. Unconscionability: a party who adheres to the other party's standard terms does not assent to a term if the other party has reason to believe that the adhering party would not have accepted the agreement if he had known that the agreement contained the particular term. (Williams v WalkerThomas)

1. Test: a. Absence of meaningful choice (Procedural) b. Terms unreasonably favorable to the party (Substantive)

2. Can find term unconscionable as a matter of law and can: a. Throw out the term b. Throw out entire agreement c. Limit application of the term

3. Actual Knowledge: is not relevant. Whether or not a person reads the contract or doesn’t read the contract, if the contract is unconscionable neither one should be held to the unreasonable terms.

4. Conspicuous Requirement: A person can put an unreasonable term in a contract, but if he does, he must make it conspicuous and make sure the other party knows or should know about it. (Reasonable Expectations principle)

5. UCC 2302: The doctrine that a court may use to strike down a contract or a contract term that shocks the conscience of the court

iii. Exculpatory Clauses: one party agrees not to hold the other party liable for negligent acts he commits after they make the agreement

1. Tunkl Factor Test (If these factors are present, the court may rule against the exculpatory clause)

a. Type of business generally thought suitable for public regulation b. Service of great importance to public c. Willing to perform this service for any member of the public d. Seller has advantage of bargaining strength e. Party confronts the public with a standardized adhesion contract of

exculpation f. Is placed under the control of seller subject to the risk of the carelessness of

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the seller or his agents iv. Fraud and Misrepresentation (Voidable)

1. Prove fraud and either: a. Rescind the contract OR b. Affirm the contract and sue in Tort for damages. (Stambovsky)

2. Elements a. D makes a representation (has to be of fact not opinion) b. It is false c. D knows it is false d. D makes it to induce P to enter the transaction e. The representation relates to a material matter f. P enters the transaction g. P relies on the representation h. It is reasonable for P to rely on it i. P is damaged

3. Duty To Inform: No representation is necessary when there was a duty to inform. (Obde)

a. Caveat Emptor: the buyer beware, there is no duty to inform the buyer. 4. Innocent Misrepresentation: not a tort, but is grounds for rescission (AKA

constructive fraud) 5. Fraud in Inducement: voidable (requires all the elements of fraud) 6. Fraud in Factum (in the making, rare): void (when a party is tricked into unknowingly

executing a contract) v. Mistake: a belief that is not in accord with the facts. (Voidable)

1. Elements (Restatement § 152): a. Mistake was made b. Mistake was mutual c. At the time contract is made d. Goes to a basic assumption e. Material effect on the exchange f. UNLESS the party bears the risk under Restatement §154 (Lenawee)

because: i. the risk is allocated to him by agreement of the parties. ii. he acted with limited knowledge to the facts, OR iii. if it is reasonable for the courts to allocate the risk to him.

2. Damages: contract becomes voidable by the party adversely affected 3. Restatement § 151: A contract defense claiming that the contract can be avoided

because one or both parties entered into the agreement based on a belief that was not in accord with the facts.

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4. Restatement § 153: Unilateral Mistake (one party is mistaken) If these elements are present, contract is voidable.

a. Effect on the agreed exchange of performance is adverse to him and he does not bear the risk of loss

b. Result would be unconscionable OR c. Other party had reason to know of the mistake or his fault caused the

mistake vi. Lack of Capacity

1. Mental capacity (Ortelere) a. Generally

i. Void: if lack of capacity is determined as a matter of law, then the law also determines that the contract is void or voidable. If a person has been judicially declared incompetent, the contract is void.

ii. Voidable: if lack of capacity is determined as a matter of fact, then the contract is voidable by the person who lacks capacity. The advantage of this test is that it is an objective test.

b. Cognitive Test: (Do you understand the nature of the transaction?) i. Whether the person understood the nature and consequences of the

transaction at the time. A reasonable person should be able to tell from someone’s outward manifestations whether she has sufficient understanding.

c. Motivational Test i. It looks not only at whether the person understood the transaction,

but whether the person was capable of acting in accordance with that understanding.

ii. Whether the other party knows or has reason to know of the other’s lack of capacity.

2. Minors: as a matter of law, a contract is voidable by a minor a. Timing: A minor may avoid or disaffirm a contract up until the day she turns

18 and for a reasonable time after that b. Ratify: the minor may only ratify or affirm the contract after turning 18

(keeping it for a reasonable time) c. Consideration: all consideration must be returned regardless of the condition,

no restitution for damages. d. EXCEPTIONS (Farnsworth):

i. Necessaries: voidable but they have to make restitution (reasonable value)

1. (food, clothes, shelter) ii. Misrepresentation: convincingly showed they were over 18, minor

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cannot void contract iii. Minor Plaintiff: trying to recover money, cannot void the contract

1. Minor pays cash they don’t get their money back (Minor Plaintiff)

2. Minor uses credit do not have to pay the creditor (Minor Defendant)

3. Duress: use of a threat to person, property, and (sometimes) economic interests so that the party had no reasonable alternative but to enter into the contract. (Voidable)

a. Elements: manifestation of assent is induced by unreasonable threat that leaves no reasonable alternative

i. Use of Threat ii. Threat improper iii. Leaves no Reasonable Alternative

b. The test for determining whether such a “moral compulsion exists is whether the duress is of such severity as to overcome the will of a person of ordinary firmness” (Lomanaco, compulsive gambling is not a defense)

4. Undue Influence: inappropriate method of persuasion that dominant party uses to convince a weaker more vulnerable party to enter into a contract against his better judgment. (Voidable)

a. Generally if the person who acted is in a dominating or trusting relationship with the other person then there will be a claim for undue influence.

b. Persuasion which overcomes the will without convincing the judgment. 5. Intoxication (Restatement§ 16) (voidable)

a. A person incurs only voidable contractual duties by entering into a transaction if the other party has reason to know that by reason of intoxication

i. he is unable to understand in a reasonable manner the nature and consequences of the transaction, or

ii. he is unable to act in a reasonable manner in relation to the transaction.

vii. Statute of Frauds (Restatement §§ 110 & 130) 1. Generally: The general rule is that oral contracts are enforceable. 2. The Statute of Frauds is the collective name for the exceptions, statutes that provide

that certain oral agreements must be evidenced by a writing to be enforceable. 3. Oral agreements that fall within Statute of Frauds:

a. If the agreement can’t be fully performed within a year of making (McIntosh) b. An agreement concerning real estate c. An agreement to rent real property for longer then a year d. An agreement to answer for the duty of another (suretyship)

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e. An agreement for the sale of goods for $500 or more 4. UCC (2201)

a. Applies to contracts for the sales of goods over $500. b. Exceptions

i. Merchant’s Exception: confirmation of an oral agreement that is sent by one party that is binding on the other party if not objected to within 10 days (UCC § 2201(2))

ii. Specially Manufactured Goods: seller makes goods that are unlikely to be bought by another party on reliance of a request for them.

iii. Admitting to Making the Contract: if the party admits in a pleading, testimony, or under oath that a contract was made, no writing is needed. (UCC §2201(3)(b))

iv. Performance of the Contract: if the contract has been performed, parties have given up their right to raise defense.

v. Reliance 5. Writing Satisfies Statute of Frauds when:

a. Sufficiently describes the contract by: i. identifying the parties ii. identifying the subject matter, and iii. including the essential terms of the contract

b. Is signed by the party against whom enforcement is sought (UCC § 1201(b))

c. UCC: Must include quantity sold 6. Restatement § 130

a. Executor of will b. Duty of another c. Consideration of marriage d. Land e. One year contract

7. Conceptual a. Is the oral agreement within the Statute of Frauds?

i. NO, it is enforceable. ii. YES, is the agreement evidenced by a writing?

1. YES, is it signed by whom it is enforced against? ("Signed" includes using any symbol executed or adopted with present intention to adopt or accept a writing.)

a. YES, does it have sufficient details? (Details include quantity) Does it identify the parties, the subject matter, and the essential terms of the contract?

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i. YES, it is enforceable ii. NO, see #2.

2. NO, is there an exception? (Merchant Rule, Specialized manufactured goods, Performance of the K, Admitting making the contract, Reliance, CISGInternational)

i. YES, it is enforceable. ii. NO, it is not enforceable.

8. Voidable Under Statute of Frauds a. Prove no contract was formed b. Returned to precontract positions c. Must provide credible evidence

9. Unenforceable Under Statute of Frauds a. Prove that the party didn’t sign any writing b. Contract is enforceable only against the party who signed

MIDTERM

3. ALTERNATIVE REMEDIES

a. Chart

Obligation Source Remedy

Tort Social Policy Put P back where P was

Contract Voluntary Agreement Put P back where P would have been

Reliance Action induced by promise Put P back where P was

Restitution Unjust Enrichment Make D give to P the value of the benefit

b. RELIANCE (promissory estoppel): bars a party from asserting lack of consideration where reliance was induced by the party asserting there was no requisite consideration. (Drennan v Star Paving)

i. Elements (Restatement § 90) 1. It must include a promise 2. The promisor must reasonably expect the promise to induce action or forbearance 3. The promise must be successful in inducing the expected action or forbearance 4. Enforcement of the promise must be the only way to avoid injustice

ii. Damages: are awarded to the extent of the reliance. iii. Charity Donation: if a charity relies on a promise to give a donation or a pledge then it is

enforceable. Even if the charitable organization doesn’t rely on the promise or gives some type of consideration, some courts would still require performance because it is good policy.

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c. RESTITUTION: a person's interest in having another person restore any benefit that he has conferred on that person. Restitution may be used to achieve equity when there is “unjust enrichment” even though no contract was formed. (a.k.a. implied in law contract, quasi contract). Restitution is a claim, not founded on the contract, but founded on a equitable principle

i. Elements 1. A benefit was conferred 2. It was not a gift 3. It was not officious

ii. Benefit: 1. Benefit conferred by family creates rebuttable presumption of a gift. (Orr)

iii. Gift:a voluntary, immediate transfer of property without consideration from one person (the donor) to another person (the donee).

iv. Officious: forcing a benefit on another, “interference in the affairs of others not justified by the circumstances under which the interference takes place.” (Sidney)

1. NOT Officous When: A reasonable person in the shoes of the defendant would have requested the services if he was in a position to do so, so it would be unjust to allow him to retain the benefit without paying for it. (Quasi Contract)

v. Damages: “the value of the benefit conferred” 1. Quantum Meruit: the plaintiff gets a money judgment for the reasonable value of

services that she conferred on the defendant. 2. Quantum Valebant: the plaintiff gets a money judgment for the fair market value of

goods that defendant received from plaintiff. vi. Restatement § 86:

1. A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. (Hamer v. Sidway)

2. A promise is not binding under Subsection (1) a. if the promisee conferred the benefit as a gift or for other reasons the

promisor has not been unjustly enriched; or b. to the extent that its value is disproportionate to the benefit

4. PERFORMANCE OR BREACH a. MODIFICATION

i. Executory Contract Occurs during the course of performance, neither party has fully performed

1. Restatement § 89: A promise modifying a duty under a contract not fully performed on either side is binding:

a. if modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or

b. to the extent provided by statute (like UCC 2209); or

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c. to the extent that justice requires enforcement in view of material change of position in reliance on the promise

2. Consideration a. PreExisting Duty Rule: a promise is not consideration if the promising party

is already obligated to perform that promise. b. To get around the preexisting duty rule, use these for consideration:

i. agree to do something additional or different (+ a peppercorn); ii. clearly rescind the first contract and form a new contract (mutual

rescission); iii. agreement to the modification was fair and equitable under the

circumstances. (Restatement § 89) 3. No Oral Modification Clause: modifications have to be in writing

a. Usually oral modifications are enforced, especially where they induce reliance by the other party.

b. An oral modification is usually a waiver of the right to enforce the no oral modification clause

c. Almost every contract has a boilerplate provision that has a nooral modification clause that says all modifications have to be in writing.

4. Statute of Frauds:(Restatement § 110) modifications of agreements that fall under the Statute of Frauds must be in writing.

a. If the agreement can’t be fully performed within a year of making (McIntosh) b. An agreement concerning real estate c. An agreement to rent real property for longer then a year d. An agreement to answer for the duty of another (suretyship) e. A marriage provision f. An agreement for the sale of goods for $500 or more

5. To spot a modification issue look for these facts: a. there is an original contract between the parties. b. the contract is wholly executory; that is, it has not been fully performed by

either party. c. the parties agree to change the duties of at least one of the parties.

6. UCC Modifications (UCC § 2209) a. Modifications UCC 2209: no consideration necessary but it is assumed that

the modification must be made in good faith. (Only with sale of goods is no consideration necessary) UCC § (1304)

ii. Accord & Satisfaction Occurs after one party has fully performed, creditordebtor relationship exists.

1. How To: a. Was the creditor given something additional or different as consideration?

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i. YES, the debt is discharged ii. NO, was the obligation liquidated and undisputed?

1. YES, is there a state law that provides a mechanism for settlement?

a. If YES, the obligation is discharged if the mechanism was followed

b. If NO, the obligation is not discharged 2. NO, did the debtor clearly communicate an offer?

a. NO, the obligation is not discharged b. YES, did the creditor knowingly accept the offer?

i. NO, the obligation is not discharged ii. YES, an accord is formed

b. Did the debtor perform the accord (satisfaction)? i. YES, the accord and the original obligation are discharged ii. NO, the creditor may sue on either the accord or the original

obligation 2. Definitions

a. Accord: agreement between creditor and debtor to discharge a debt by the payment of less than is owed

i. Accord If the creditor accepts the debtor's performance in exchange for the discharge

ii. Substituted contract If the creditor accepts the debtor's promise in exchange for the discharge

b. Satisfaction: performance of an accord 3. Restatement § 281:

a. An accord is a Contract under which a creditor promises to accept a stated performance in satisfaction of the debtor’s existing duty. Performance of the accord discharges the original duty.

b. Until performance of the accord, the original duty is suspended unless there is such a breach of the accord by the debtor as discharges the new duty of the creditor to accept the performance in satisfaction. If there is such a breach, the creditor may enforce either the original duty or any duty under the accord.

c. Breach of the accord by the creditor doesn’t discharge the original duty, but the debtor may maintain a suit for specific performance of the accord, in addition to any claim for damages for partial breach.

4. Accord a. Generally: There is no consideration for reducing a debt if it is a liquidated,

undisputed debt.

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b. One party is a creditor and the other is a debtor i. One party has fully performed in a contract and the other has not ii. One party has a tort claim against another (release) iii. One party has loaned money to another

c. Accord: an agreement (O + A + C) between creditor and debtor to discharge the debt by payment of less than is owed.

i. Offer must manifest intention that it is part payment in full satisfaction of the debt

ii. Acceptance creditor can’t accept as part payment and then cash it because that would be changing the terms of the offer. Creditor has two options (Con Edison v. Arroll):

1. Accept the partial payment and discharge the debt OR 2. Reject the payment, get nothing and sue for full payment

iii. Consideration Accomplished If: 1. Paying something additional or different (not less) 2. Liquidating an unliquidated price: parties never specified the

amount to be paid (Kibler v Garrett) 3. Resolving a disputed debt (dispute must be in good faith)

(Con Edison) iv. UCC doesn’t require consideration for an accord

5. Satisfaction: performance of the agreement of accord. a. If debtor fails to perform, he’s breached the accord, and the creditor may

sue either on the accord or on the underlying debt. b. By Check: jurisdictions are split on whether fine print on a check constitutes

an accord (see UCC § 3311 for use of instruments) 6. UCC Accord & Satisfaction (UCC § 3311)

a. No consideration required for accord b. How To:

i. Debt is discharged if 1. Good faith payment in full satisfaction of debt, 2. Unliquidated/bona fide claim, and 3. Payment received

ii. Unless 1. Creditor is organization that:

a. Within reasonable time notified debtor that disputed debt payments must be sent to a designated place, AND

b. The instrument was NOT received by the designated place

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2. Creditor is anyone that: a. Gives refund within 90 days of the payment, AND b. Does not designate a place for disputed debts

7. Issue spotting: a. in an accord issue, look for these facts:

i. There is a duty arising either from a tort or from a contract that is partially executed; that is, it has been performed by one of the parties. The party who has performed is a creditor.

ii. 2. The parties enter into a contract that discharges the duty of the debtor.

iii. 3. The debtor agrees to give the creditor some performance (or promise).

b. WARRANTY i. Purpose: “to determine what it is that the seller has agreed to sell.” (Official Comment 4 to

UCC § 2313) ii. UCC Warranties

1. Title (UCC § 2312): a. Warranty of Title:

i. Seller warrants that they have title/ownership to sell ii. Seller warrants that there are no unknown liens/infringements

b. Exclusion or modification of this warranty is only by clear language. c. Merchants are not liable if a title claim arises out of compliance with buyer’s

specifications. 2. Merchantability (Implied) (UCC § 2314)

a. Goods are fit for ordinary purposes for which such goods are used when the seller is a merchant of that kind of good

b. Merchantability: fit for the ordinary purposes 3. Fit For a Particular Purpose (Implied) (UCC § 2315)

a. Goods shall be fit for a particular purpose where: i. Seller has reason to know any particular purpose for which the

goods are required AND ii. Buyer is relying on the seller’s skill or judgment to select goods

iii. Express: an affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain. (UCC § 2313)

a. Affirmation/Promise: fact or promise made by seller i. Usually difficult to determine if the fact can be objectively measured.

b. Relation: the warranty must relate to the goods c. Bargain: the warranty must be part of the basis of the bargain, there are two

interpretation of how to determine this:

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i. buyer relied on the warranty as part of the deal ii. whether warranty is part of the basis of the bargain is a matter of

timing. d. Sample: any sample or model creates an express warranty

iv. Disclaimer of Warranties 1. Exclusion or Modification of Warranties (UCC § 2316)

a. Express (UCC § 2316(1)) i. Warranties may be disclaimed orally or through a written statement.

(e.g. “there are no express warranties”) ii. HOWEVER, when express warranties are both given and

disclaimed, the warranty is interpreted as given. b. Implied Specific (UCC § 2316(2))

i. Merchantability: disclaimer of implied warranty must be conspicuous and mention “merchantability.”

ii. Title: To disclaim implied title warranty: specific language iii. Fitness: disclaimer must be conspicuous and in writing. Sufficient:

“There are no warranties which extend beyond the description on the face hereof.”

c. Implied General (UCC § 2316(3)) i. The seller may disclaim implied warranties by using the phrases “as

is” “with all faults” “as is, where is” or similar language. ii. No conspicuous requirement from statute but it is required by courts.

v. Limitation of Remedies (UCC § 2719) 1. Limitation of Remedies: a seller may limit remedies and offer a warranty, instead of

disclaiming all warranties. (e.g. promising to repair or replace) a. Limit the amount the buyer may recover for direct damages b. Limit the consequential damages to particular number c. Limit the duration of the promised remedy

2. Parties can contract different remedies a. Where circumstances cause an exclusive or limited remedy to fail of its

essential purpose, remedy may be had as provided in this Act. (code lemon law) (Murray)

b. Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.

i. Personal Injury: limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but (consumer)

ii. Commercial: limitation of damages where the loss is commercial is not unconscionable.

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3. Damages a. Consequential Damages: default rule is that there are consequential damages

for breach of warranty. i. Methods for interpretation when the remedy fails and consequential

damages are disclaimed (e.g. when repairing or replacing the vehicle will not help the consumer) (Murray):

1. Throw out consequential damage limitation with the remedy 2. Keep consequential damage limitation but throw out remedy 3. Throw out consequential damages limitation when in the

same paragraph as the remedy b. Buyer’s Incidental and Consequential Damages (UCC § 2715)

i. Incidental: direct result of the breach, usually the good itself ii. Consequential: any damages

1. “which the seller had reason to know which, and could not reasonably be prevented

2. injury to person or property property proximately resulting from breach

c. Revocation of Acceptance in Whole or in Part (UCC § 2608) i. (1) The buyer may revoke his acceptance of a lot or commercial unit

whose nonconformity substantially impairs its value to him if he has accepted it

c. UNANTICIPATED EVENTS i. Chart What about the doctrine of impossibility?

Claim Mistake Impracticability Frustration

[See Restatement § 152]



When At time K was made After K is made After K is made

What happens Mutual mistake was made (belief not in accord with the

facts)

Performance is impracticable because

of an event

Principal purpose is frustrated because of an

event

What it goes to Belief was a basic assumption

Nonoccurrence of event was a basic

assumption

Nonoccurrence of event was a basic assumption

How much Material [material—how [material—how

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impracticable?] substantial?]

Relief K is voidable Duty is discharged Duty is discharged

Exception Bears the risk—language or circumstances

Bears the risk—language or circumstances

Bears the risk—language orcircumstances

ii. How to:

1. Did the event occur after contract formation? a. Yes, did performance become impracticable?

i. Yes, was nonoccurrence of the event a basic assumption (i.e. Whether reasonable parties at the time they entered the K would’ve expected performance if the event occurred (foreseeability))?

1. Yes. Did the party seeking to discharge carry the risk? a. Yes, not out of K. ( b. No, performance excused (may still be liable for

reliance and restitution) 2. No,

ii. No, not party gets out of K. b. No, then try for mistake, and avoid the contract.

iii. Mistake (Restatement § 152) 1. Mistake: a belief that is not in accord with the facts 2. IF

a. At the time the contract was made b. There is a mistake of both parties c. As to their basic assumption d. That is material

3. Then a. The contract is voidable b. Unless one of the parties bears the risk

i. Look to language & circumstances for risk assumption iv. Impracticability

1. Definition: event that makes performance difficult without seller assuming risk (Alcoa) 2. Existing Impracticability (Restatement § 266)

a. IF i. At Formation: At the time the K was made ii. Impracticable: a party’s performance is impracticable

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1. the contingency is a hardship on the party. (i.e., which greatly increases the cost, difficulty, or risk of the party’s performance) (Alcoa)

iii. No Fault: Without his fault iv. Unforeseen: because of a fact he had no reason to know v. Basic Assumption: the nonexistence of which is a basic assumption

b. THEN i. The duty is discharged ii. Unless the party bears the risk

1. Look to the language and the circumstances 3. Supervening Impracticability (Restatement § 261)

a. IF i. During Performance: after the K was made ii. Impracticable: a party’s performance is impracticable

1. the contingency is a hardship on the party. (i.e., which greatly increases the cost, difficulty, or risk of the party’s performance) (Alcoa)

iii. No Fault: without his fault iv. Event: because of an event v. Basic Assumption: the nonoccurrence of which is a basic

assumption b. Then

i. The duty is discharged ii. Unless the party bears the risk

1. Look to the language and the circumstances 4. UCC Impracticability (UCC 2615)

a. Delay or failure to deliver is not breach when i. Impracticable: nonoccurrence of an event which was a basic

assumption on which the contract was made. ii. Allocation: when part performance is impracticable, reasonable

allocation must be made iii. Seasonable notice of the failure and allocation, if any, must be made. iv. Official comment 4 Increased cost alone does not excuse

performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance.

v. Test whether any objective, reasonable party would be able to perform

b. Allocating the loss when a performance is partially excused i. 2615(b) may allocate in any manner which is fair and reasonable

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ii. 2616 Seller must notify buyer of allocation 1.

v. Frustration 1. Definition: event that makes buyers performance not worth it. (Alcoa) vi. Restatement 266 Existing Impracticability or Frustration vii. Same elements as impracticability

1. Exception is that the party seeking to be discharged from the contractual obligations must prove that a certain event frustrated the principal purpose of the contract

a. The party is able to perform, but the performance no longer holds any value for him. Money is usually not enough to qualify for “frustration.”

2. Supervening Frustration (Restatement § 265) a. IF

i. When: after the K was made ii. Frustration: a party’s principal purpose is frustrated iii. Fault: without his fault iv. Event: because of an event v. Basic Assumption: the nonoccurrence of which is a basic

assumption b. Then

i. the duty is discharged ii. unless the party bears the risk

1. Look to the language and the circumstances viii. Force majeure Clause force majeure clauses in a contract typically excuse party obligations

in named extraordinary circumstances such as war, strike, riot, crime or Acts of God. d. Good Faith (Restatement 205)

1. Definition a. Bad Faith(lack of diligence, willful rendering of imperfect performance)

i. Summers and the Restatement – like unconscionability, it emerges in a context, so you can’t define it.

ii. Burton – it arises when a party tries to recapture “foregone opportunities.”

iii. Williamson – it arises when a party engages in “opportunism” – behavior which is contrary to the other party’s understanding but not necessarily contrary to the express terms of the agreement.

b. Good Faith: (an immutable rule that requires parties to act honestly and reasonably)

c. Being Honest: subjective duty of good faith (need evidence that proves the

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person had ulterior motives for her actions) d. Being Reasonable

i. objective duty of good faith 1. Duty to observe reasonable commercial standards of fair

dealing 2. Testimony from someone in that business could be proof of

those standards 2. Required When

a. Every Covenant has an implied covenant of good faith and fair dealing. b. Satisfaction Clause: when a party reserves discretion it must exercise its

discretion in good faith. (Omni Group) c. Consideration: there is consideration for the settlement of the claim, even if

the claim is not valid, as long as the claim was brought in good faith (Fige v Boehm)

d. Conditions: there may be an implied covenant of good faith to bring about an event that conditions performance or not to hinder the event. (Billman v Hensel)

e. Output Requirement: in an output requirements contract, the quantity supplied or purchased is constricted by a good faith requirement. (Feld v Levy) (UCC 2306)

3. Good Faith is always accompanied by something a. Reid recall the loan in good faith b. Neumiller accept potatoes c. Dalton examine the evidence in good faith

ii. UCC Good Faith 1. Good Faith: except as otherwise provided in Article 5, means (UCC 1201(b)(20)):

a. honesty in fact AND b. the observance of reasonable commercial standards of fair dealing.

2. Using freedom of contract to refine the definition of good faith (UCC 1302(b)) a. Cannot disclaim duties of “diligence, reasonableness, and care” b. May define duties if you use standards that are not “manifestly unreasonable”

e. PROMISE AND CONDITION i. Chart

Term Definition Consequence

Promise Manifestation of intention to act Restatement § 2

Other Party must still perform and sue for Damages

Condition Event that must occur before some The performance is not due.

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performance is due. Restatement §224 Express Implied

Both Promissory condition

Both

Both Restatement § 227

1. HYPOTHETICAL

a. If Gonzaga makes the final 4 I give you car for $5,000. i. Performance was subject to some condition ii. Event did not occur so the performances are not due iii. Express: the condition of GU going to final four iv. Implied: performance of giving car is conditioned upon giving 5k

b. Now lets say they make the final four. I say where’s the 5K, you say where’s the car? The exchange is the constructive condition of exchange.

c. You can put in a clause that they can pay 30 days later. If the 5K doesn’t come in 30 days, you sue for breach, but you don’t get the car back, unless you put in a repossession clause in the K.

d. escrow agent e. progress payments construction contracts f. The rule is that if you can exchange at the same time, then you do it.

2. How To a. Did a party fail to perform an obligation?

i. Yes, was there an unanticipated event? 1. Yes, then the failure to perform is excused. 2. No, Did some event have to occur before performance was

due? a. Yes, did that event occur?

i. Yes, there is breach. ii. No, then failure to perform is excused.

b. No, there is breach. ii. No, then there is no breach.

ii. Definitions 1. Promise: A commitment to do or not to do something. (right to seek damages)

a. Manifestation of intention to act (Restatement § 2). 2. Condition: An event that must occur before some contract performance is due.

(performance is excused) (Restatement § 224) a. Ambiguity: if the provision is ambiguous, it is interpreted to be a promise.

This reduces the risk of causing a forfeiture.

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3. Promissory Condition: A commitment to do something that’s also an event that must occur before the other party’s performance is due. (right to seek damages and performance is excused)

iii. Promise 1. Common Law

a. Independent promises: promises that are not conditions of each other have to be performed whether or not the other party performs.

b. Dependent promises: iv. Condition

1. Damages: failure to meet a condition excuses the performance of the other party. a. NonBreaching Party (Kreyer)

i. Expectancy Damages = K Price Damages b. Breaching Party (Britton)

i. Restitution = Benefit Conferred Damages to Other Party 1. BUT the breaching party can never get more than the portion

of the contract performed 2. Express Condition: a condition that the parties include in their contract by stating that

some performance is conditional upon the occurrence of one or more events. (Look for words like “if,”, “provided that” or “it is a condition precedent that”

a. Good Faith: a party may not prevent the condition from occurring in order to avoid performance (Billman v Hensel)

b. No Substantial Performance: the extent to which the condition was not met is irrelevant (Dove)

3. Implied Conditions: (found by court) each party’s performance is impliedly conditional on the other party’s performance. (Constructive conditions of exchange Lord Mansfield)

a. Even with no express conditions, failure to perform promises can create implied conditions. (United Campground)

b. Order of Performance (Restatement 234) i. If the exchanges can occur simultaneously then they must. ii. When one of the promises takes a long time then it is performed first iii. Parties are free to change default order by agreement (e.g. retainer

fee) c. Exception: does not apply to independent promises (e.g. visitation & child

support) d. Subject to substantial performance defense

v. Relief from Conditions 1. Substantial Performance

a. Scope (Jacob):

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i. Applies To: implied or promissory conditions ii. Does Not Apply To: Express Conditions (No “close enough” for

express conditions) b. Immaterial Breach (substantial performance)

i. Nonbreaching party’s performance is still required; but can seek damages for breach

ii. If a breach is immaterial, then the party has substantially performed, and we’ll pretend that performance was sufficient to satisfy the implied condition that one party has to before the other party’s performance is due.

c. Material Breach (did not substantially perform) i. Damages: Nonbreaching party’s performance is excused ii. Testing Methods

1. Mathematical Test: calculate performance by percentage. a. This test is not good at evaluating quality or other

subjective factors. 2. Purpose Served (Grun Roofing Cardozo): Considers

a. the purpose to be served b. the desire to be gratified c. the excuse for deviating from the letter of the

contract d. the cruelty of enforcing strict adherence or of

compelling the promisee to receive something less than bargained for

3. Restatement Test (§ 241) a. Deprivation of the promised benefit b. Adequacy of compensation by damages c. Forfeiture: suffering an out of pocket loss d. The likelihood that the breaching party will cure his

failure e. The extent to which the breaching party failed to act

in good faith iii. Timing as Material Breach

1. Generally: express time provisions create promises not conditions and so failure to perform on time is an immaterial breach.

2. Damages are available for late performance but performance is not excused

3. EXCEPTION: in some circumstances a short delay in

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performance is material. (E.g Green beer delivered for St. Patty’s Day)

iv. Breach how to: v. What were the promises in the contract?

1. Did a party fail to do what it promised to do? a. If YES, then that party is in breach. Calculate the

damages for breach using the principles of expectancy damages.

i. Ask whether the breach is material, using the guidelines from Cardozo or from the Restatement.7.

ii. If YES, the breach is material, then the other party's performance is discharged.

iii. If NO, the breach is not material, then the other party must perform but may deduct damages.

2. If the breach is material and the breaching party has partially performed, ask whether there is any relief for the party who performed. Under the UCC, this relief is found in § 2607. Under the common law, it may be found in principles of restitution.

2. Waiver a. Definition: a knowing relinquishment of a legal right (Margolin) b. Generally: If an express condition is for a party’s benefit, then that party may

waive the condition. c. Implied Waiver: behavior that shows a relinquishing of a right may waive the

condition. i. Example: a lender waives an express condition that borrower must

pay on a specific date by accepting late payments d. Notice: a party may retract a waiver by giving the other party proper notice. e. NOT MODIFICATION: waiver arises from conduct and NOT agreement

3. Divisible Contract (Used in jurisdictions where breacher isn’t awarded restitution) a. Divisible Contract: a contract where both parties have divided their

performance into portions, that can be apportioned into corresponding pairs of part performances that are agreed upon equivalents. (Restatement § 240)

i. We imagine parties have agreed to a bunch of minicontracts. ii. Typically each party agrees to a separatelyquoted amount for each

part performance. iii. However, a payment plan doesn’t create a divisible contract.

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iv. Provides a way for courts to provide relief to contract breakers in nonrestitution jurisdictions.

4. AntiForfeiture (Excuse of a Condition) a. Forfeiture: out of pocket loss b. Courts apply excuse of a condition to avoid forfeiture.

i. Most common in insurance situations (e.g. notified insurer 1 day late and so insurance won’t cover the building destroyed by fire)

ii. Courts consider justice and intention (Kent Reading Pipe) c. Asking the court to excuse the condition to avoid disproportionate forfeiture

(Restatement § 229) d. Expectancy Damages are still available

5. UCC on Promises and Conditions a. Implied Conditions

i. Perfect Tender Rule (UCC § 2601) 1. If the goods or tender of delivery fail in respect to conform

to the contract buyer may: a. reject the whole b. accept the whole c. accept any commercial unit or units and reject the

rest 2. EXCEPTION for installment contracts (UCC § 2612)

a. Buyer may reject any nonconforming installment IF i. the nonconformity substantially impairs the

value of that installment, AND ii. cannot be cured.

ii. Payment (UCC § 2511) 1. tender of payment is a condition to the seller’s duty to tender

and complete any delivery 2. payment is sufficient when made by any means or in any

manner current in the ordinary course of business; if demand legal tender (cash) must give reasonable time to procure it

3. payment by check is conditional b. Restitution Obsolete: The buyer must pay at the contract rate for any goods

accepted.(UCC § 2607) i. Example If a store orders 100 shirts at $20 each and the seller

delivers only 80 shirts, the buyer is free to accept or reject the shirts or a portion of them, but it has to pay for any shirts it accepts under the contract at a price of $20 per shirt.

c. Assurances: one way to help the buyer determine when it is a breach is to

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demand assurances from seller. (UCC § 2609) d. Installment Contracts (UCC § 2612)

i. a contract which requires or authorizes the delivery of goods in separate lots to be separately accepted.

ii. Buyer must determine whether the breach with respect to one installment “substantially impairs the value of the whole contract.”

iii. Graulich Caterer It depends on whether the nonconformity substantially impairs the value of the whole contract, and not on whether it indicates an intent or likelihood that the future deliveries also will be defective.

f. ANTICIPATORY REPUDIATION i. Generally: a party’s breach of contract by express or implied refusal to fully perform before

the contract’s performance is due. (Taylor v Johnston, AMF v. McDonalds) 1. Express repudiation

a. One party must verbally (in speech or writing) inform the other party that he “clearly and unequivocally” refuses to perform.

b. The repudiation must be material. 2. Implied repudiation

a. General: arises when a party does something that puts that the power to perform out of his control, even if he doesn’t say anything. (the seller of a house you contracted to buy, sells the house to another)

3. Reasonable demand for explanation of: a. the circumstances that gave rise to the insecurity, b. how the circumstances have changed, c. how the party plans on making good on its promise.

4. How to: Anticipatory Repudiation (UCC § 2609) (Restatements § 250256) a. Is a party insecure about performance?

i. Yes, are the grounds for insecurity “reasonable”? 1. Yes, then the insecure party may demand written assurances

from the other party. Did the insecure party receive adequate assurances?

a. Yes, then the K is still in effect. b. No, then the K is repudiated and K is cancelled.

2. No, the party is not allowed to demand assurances. ii. No, not anticipatory repudiation.

b. Responses of Repudiation (Restatement § 251 & UCC § 2609) i. The repudiating party retracts the repudiation.

1. The repudiation can be retracted unless the other party has a. Made clear that they accept the repudiation

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i. Can be giving notice that they are canceling contract.

b. Relied on the repudiation 2. Retraction is available until the repudiating party’s next

performance is due (§ 2611) ii. The injured party accepts the repudiation and seeks remedies for the

breach (2703, 2711) iii. The injured party ignores the repudiation

1. Consequences a. Breaching party can revoke repudiation b. Nonbreaching party’s damage can be limited to

those if they had acted promptly

5. DAMAGES a. Basic Remedial Concepts

i. Overview: contract law is interested in compensating the party who lost something because of breach. It’s not interested in punishing a party for breaching a contract.

ii. Mitigation: 1. What to do if the nonbreaching party has a “duty” to mitigate

a. The nonbreaching party has the burden of proving its damages. The breaching party can then rebut that proof of damages by showing that the nonbreaching party did not mitigate.

b. to encourage parties to mitigate their losses, parties may recover as damages any reasonable expenses incurred for mitigating losses

i. a party has duty to mitigate only if the breach freed the party to use that time to earn money.

ii. UCC § 2704(2): reasonable efforts to mitigate. c. If you can “cover” by buying the goods from someone else then you have to

if you want to be able to recover those damages d. Restatement § 350 The nonbreaching party may not recover for losses that

it could reasonably prevented or avoided e. You don’t have to accept an inferior job in mitigation (Parker) f. Party only has to take reasonable steps

i. Doesn’t have to spend more than they would save. 2. If party chooses not to mitigate they can only receive the amount of damages if they

had mitigated (Rockingham County) 3. If a person gets fired from day job, and accepts a night job, those earnings aren’t

deducted from expectancy bc he could have earned that even with his previous job. iii. Certainty

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1. Common Law: Damages must be proven to a reasonable certainty. (Freund) (Restatement § 352)

a. Official Comment 1 to 1305(a) (Only Persuasive) i. Damages have to be proved with whatever definiteness and

accuracy the facts permit. 2. Nominal Damages

a. Where a party can prove a breach but can not prove damages to a reasonable certainty.

b. Provides a winner, so a party can collect attorney’s fees and costs if contract allows for it.

3. Calculating monetary value for damages: a. Must prove:

i. Breach was substantial cause of loss ii. amount of the loss caused with reasonable certainty

b. provable losses caused by breach must have been reasonably foreseeable to the defendant at the time of contracting and

c. duty to mitigate damages (see mitigation) iv. Causation

1. Common Law: Damages must be proven to a reasonable certainty. (Freund) (Restatement § 352)

2. Causation in the UCC a. Official Comment 1 to 1305(a) (Only Persuasive)

i. Damages have to be proved with whatever definiteness and accuracy the facts permit.

3. Nominal Damages a. Where a party can prove a breach but can not prove damages to a

reasonable certainty. b. Provides a winner, so a party can collect attorney’s fees and costs if contract

allows for it. 4. Efficient breach:

a. An efficient, or Paretooptimal, breach is one that leaves at least one party better off and no party worse off than they were before breaching.

b. This situation arises when a party breaches to take advantage of a better opportunity and uses some of the gains to pay damages to the nonbreaching party.

5. Definitions a. market price b. cover price c. expenses saved

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b. Expectancy damages

i. The principal remedy is to award the nonbreaching party money damages that give him the financial equivalent of what he would have gotten had both parties performed no more no less.

1. Expectancy in Restatement § 347 a. the loss in value to him of the other party’s performance cause by its failure

or deficiency, plus b. any other loss, including incidental or consequential loss, caused by the

breach, less c. any cost or other loss that he was avoided by not having to perform.

2. How to calculate Expectancy Damages: a. Describe what the nonbreaching party would’ve had if both parties had

performed the contract. b. Describe where the nonbreaching party stands now. c. Figure out what it would take to bring the nonbreaching party from where

she stands now to where she would’ve been had both parties performed. 3. Can not recover a greater amount of damages then would have been gained by full

performance (Rashid v. Jolly)

c. Liquidated Damages: i. liquidated damages are determining what the damages will be in case of breach

1. To have liquidated damages: a. the damages must be difficult to foresee and calculate b. the parties must make reasonable efforts to calculate the actual damages.

Cannot be arbitrary to avoid having damages that aren’t punitive because courts disfavor punitive damages

c. (Minority Rule) cannot exceed actual damages. 2. Courts use three different thoughts to resolve liquidated damages concerns:

a. the economist view: each party took a risk that the actual damages may be more or less than the actual damages.

b. the hindsight rule: courts refuse to enforce a liquidated damages clause if the actual damages turn out to be nonexistent or minimal.

c. the middle road: allow liquidated damages unless the difference between the liquidated damages and the actual damages is so great to be unconscionable.

3. The Restatement of Contracts § 356 a. If the restatement governs, a liquidated damages clause must satisfy two

elements : i. the amount is reasonable in light of the anticipated or actual loss or

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ii. the amount is reasonable in light of the difficulties or proof of loss. b. “A term fixing unreasonably large liquidated damages is unenforceable on

grounds of public policy as a penalty.” 4. The UCC § 2718

a. same as the restatement § 356, except the amount must be reasonable in light of the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.

d. Consequential Damages UCC Remedies

i. Normally consequential damages may be limited or excluded by parties unless the limitation or exclusion is unconscionable (UCC § 2719(3).

e. Punitive Damages

i. Punitive Damages Fuhgeddaboudit! 1. rarely used because it would discourage efficient breach

a. may be awarded in badfaith insurance claim. b. make a claim for tort thats independent of the contract.

2. Not looking to punish a contract breacher

f. Incidental Damages i. Consequential (Special): would a reasonable person, in the position of the breaching party,

know that such damages would likely result from the breach at the time of entering the contract.

a. Has to be plead in detail b. Parties can limit these in the contract

g. UCC Damages HOW TO:

i. Buyer in breach, Buyer has goods → Seller may recover: 1. 2709: K price + incidentals

ii. Buyer in Breach, Seller has goods → Seller may recover: 1. 2709(1)(b): K price in rare circumstances 2. 2706(1): K price – resale price + incidentals – savings 3. 2708(1): K price – market price + incidentals – savings 4. 2708(2): Lost profits [lost volume seller] 5. 2718(2): Where buyer has made payment:

a. If liquidated damages, Seller may keep it b. If down payment, Seller may keep the small of $500 OR 20% of K price

iii. Seller in breach, Buyer has goods [breach of warranty] → Buyer may recover: 1. 2714(1): Nonconformity in tender → Resulting losses reasonably determined

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+incidentals + consequentials 2. 2714(2): Breach of Warranty → Value as warranted – value as accepted +

incidentals + consequentials iv. Seller in breach, Seller has goods → Buyer may recover:

1. 2712(1): Cover price – K price + incidentals + consequentials – savings 2. 2713(1): Market price – K price + incidentals + consequentials – savings

v. Terms for UCC how to: 1. Cover price: what the buyer had to pay another supplier to buy the same goods

elsewhere 2. Market price: price that the goods can be sold for at the time and place for tender

(tender means offering the performance) (when seller is in breach at time of repudiation)

3. Contract price: price named in contract 4. Incidental damages: expenses related to actual damages such as storage and

shipping costs to return defective goods. (exempt from foreseeability rule – assume knowledge of seller)

5. Consequential damages: losses that result from no receiving what was promised, such as lost sales because a party failed to deliver supplies needed in the manufacturing process.

6. Expenses saved by breach: any savings that resulted from the breach; for instance, a lower shipping expense from one supplier.

h. Specific Performance

1. Requires the defendant to perform the contract rather than paying money damages (equitable remedy)

2. Need to prove that damages would not be adequate a. Can be when the good are unique or in other proper circumstances (UCC

2716) i. Usually arises in real estate contracts ii. Even though the commodity is not unique, in some situations, the

contract is, because it will be difficult to replace. b. Reasons why courts don’t like to award specific performance

i. Could send debtors to prison which courts don’t want to do 3. Courts don’t want to have to supervise the performance

i. Foreseeability

i. General: (Hadley v Boxendale) damages should fairly and reasonably be considered either 1. Arising Under: arising naturally, i.e., according to the usual course of things, from

such breach of contract itself, or

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2. Reasonably Contemplated (consequential damages): such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

6. ARBITRATION AND CHOICE OF LAW

a. Choice of Law i. If the parties stipulate a choice of law then it must have some contact. ii. if the parties do not stipulate then the courts

1. Old rule: a. the law that applies is the law of the place where the last act occurred that

resulted in contract formation. Like last person who signed the contract. 2. Modern Rule

a. the law that has the most significant contacts with the transaction. b. Arbitration

i. The Federal Arbitration Act provides that arbitration clauses “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

ii. in which the parties refer the case to a presumably impartial third party who acts like a judge and decides the case.

1. two kinds: a. binding (most common)

i. the parties agree that upfront that the arbitrator’s decision can be entered and enforced just like a judgement in court.

b. nonbinding (less common) i. party can opt out after the arbitrator presents her decision.

2. benefits a. less expensive b. faster c. more flexible d. less formal

i. Rules of evidence and procedure do not apply e. less controversial f. private

i. Arbitrator does not write an opinion so there is no precedent g. Can choose someone knowledgeable in a particular field

c. Mediation i. nonbinding decision that tries to get the parties to reach a settlement of their dispute that

satisfies both parties’ interest. 1. benefits

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a. personal empowerment b. more conducive to peacemaking c. moredurable solutions d. fewer unresolved issues

7. Rules a. Certainty Principle: a person is only entitled to damages that they can prove with reasonable

certainty. Nonmonetary damages may be difficult to prove in compliance with the Certainty Principle.

b. Mailbox Rule: Acceptance is effective on dispatch – that is, when it leaves the offeree’s hands, not when the offeror receives it.

c. Mirror Image Rule: The offeror is the master of the offer, so the offeree’s acceptance must be the mirror image of the offer, matching it in every respect. Any attempted acceptance that fails to adhere to the mirror image rule is a rejection of the offer and is considered to be a counter offer.

d. Predominant Purpose Test: For the predominant purpose test, ask, "Was the predominant purpose of the transaction to buy goods with the services incidentally attached or to buy services with the goods incidentally attached?"(Bonebrake)

e. Last Shot Rule: the last form or terms submitted form the controlling contract when the receiver accepts by conduct.

8. ISSUE SPOTTING 1. Was a contract formed? (offer, acceptance, consideration) 2. If there is not a contract, is there a promise that is enforceable without a contract? (reliance,

restitution) 3. Does a Party have a defense to the contract? (illegality, unconscionability, capacity, fraud, duress,

undue influence, mistake, is it within statute of frauds) 4. Did the parties agree to things before the contract was written? (parole evidence rule) 5. Is the contract in writing? (statute of frauds) 6. Are there boilerplate? (battle of the forms) 7. Is a party in Breach? (modification, accord and satisfaction, frustration and impracticability, mistake) 8. Did a condition have to occur before a performance was due? (condition, implied conditions,

substantial performance, immaterial breach) 9. Did breach occur before performance was due? (anticipatory repudiation) 10. What are the remedies for breach? (expectancy, foreseeability, certainty, mitigation, specific

performance, liquidated damages, reliance, restitution,) Restatement 1. Contract Defined

A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

Restatement 79. Adequacy of Consideration; Mutuality of Obligation

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If the requirement of consideration is met, there is no additional requirement of: (a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the

promisee; or (b) equivalence in the values exchanged; or (c) “mutuality of obligation.”

UCC 2102 Scope of Article 2; Certain Security and Other Transactions Excluded From This Article.

Unless the context otherwise requires, this Article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.

UCC 2105(1) Definition of “goods”

(1) Goods must be both existing and identified before any interest in them may pass. Goods that are not both existing and identified are "future" goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.

UCC 2302 Unconscionable

(1) If the court as a matter of law finds the contract or any term of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable term, or it may so limit the application of any unconscionable term as to avoid any unconscionable result.

(2) If it is claimed or appears to the court that the contract or any term thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

3. Jurisprudence UCC 1302 Variation by Agreement

(a) Except as otherwise provided in subsection (b) or elsewhere in [the Uniform Commercial Code], the effect of provisions of [the Uniform Commercial Code] may be varied by agreement.

(b) The obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not

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manifestly unreasonable. Whenever [the Uniform Commercial Code] requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.

(c) The presence in certain provisions of [the Uniform Commercial Code] of the phrase "unless otherwise agreed", or words of similar import, does not imply that the effect of other provisions may not be varied by agreement under this section.

UCC 1103(b) Supplemental Principles of Law

(b) Unless displaced by the particular provisions of [the Uniform Commercial Code], the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.

UCC 1201(b)(3) Definitions “agreement”

(3) "Agreement", as distinguished from "contract", means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in Section 1303.

UCC 1201(b)(12) Definitions “contract”

(12) "Contract", as distinguished from "agreement", means the total legal obligation that results from the parties' agreement as determined by [the Uniform Commercial Code] as supplemented by any other applicable laws.

UCC 2106(1) Definitions of “contract” and “agreement”

(1) In this Article unless the context otherwise requires "contract" and"agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (Section 2401). A "present sale" means a sale which is accomplished by the making of the contract.

4. Offer and Acceptance Restatement 1. Contract Defined

A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

Restatement 2. Promise

(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

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(2) The person manifesting the intention is the promisor. (3) The person to whom the manifestation is addressed is the promisee. (4) Where performance will benefit a person other than the promisee, that person is a beneficiary.

Restatement 17. Requirement of a Bargain

(1) Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.

(2) Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under the rules stated in §§ 8294.

Restatement 71. Requirement of Exchange

(1) To constitute consideration, a performance or a return promise must be bargained for. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his

promise and is given by the promisee in exchange for that promise. (3) The performance may consist of:

(a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation.

(4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

5. At What Point is the Contract Binding? Restatement 90. Reliance

(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

(2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.

6. Restrictions on Offeror’s Power to Revoke Restatement 25. Option Contracts

An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer.

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Restatement 30. Form of Acceptance Invited In case of doubt an 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. Restatement 32. Invitation of Promise or Performance

In case of doubt an 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.

Restatement 36. Methods of Termination of the Power of Acceptance

(1) An offeree's power of acceptance may be terminated by: (a) rejection or counteroffer by the offeree, or (b) lapse of time, or (c) revocation by the offeror, or (d) death or incapacity of the offeror or offeree.

(2) In addition, an offeree's power of acceptance is terminated by the nonoccurrence of any condition of acceptance under the terms of the offer.

Restatement 45. Option Contract Created by Part Performance

(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.

(2) The offeror's 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.

Restatement 54. Acceptance by Performance; Necessity of Notification to Offeror

(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 a 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.

Restatement 62. Effect of Performance by Offeree Where Offer Invites Either Performance or Promise

(1) Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an

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acceptance by performance. (2) Such an acceptance operates as a promise to render complete performance.

Restatement 79. Adequacy of Consideration

If the requirement of consideration is met, there is no additional requirement of (a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the

promisee; or (b) equivalence in the values exchanged; or (c) “mutuality of obligation.”

Restatement 90. Reliance



UCC 2104(1) and (3) Definitions of “Merchant” and “Between Merchants”

(1) "Merchant" means a person that deals in goods of the kind or otherwise holds itself out by occupation as having knowledge or skill peculiar to the practices or goods involved in the transaction or to which the knowledge or skill may be attributed by the person's employment of an agent or broker or other intermediary that holds itself out by occupation as having the knowledge or skill.

(3) "Between Merchants" means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.

UCC 2204 Formation in General

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including offer and acceptance, conduct by both parties which recognizes the existence of a contract, the interaction of electronic agents, and the interaction of an electronic agent and an individual.

(2) An agreement sufficient to constitute a contract for sale may be found even if the moment of its making is undetermined.

(3) Even if 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.

(4) Except as otherwise provided in Sections 2211 through 2213, the following rules apply: (a) A contract may be formed by the interaction of electronic agents of the parties, even if no

individual was aware of or reviewed the electronic agents' actions or the resulting terms and agreements.

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(b) A contract may be formed by the interaction of an electronic agent and an individual acting on the individual's own behalf or for another person. A contract is formed if the individual takes actions that the individual is free to refuse to take or makes a statement, and the individual has reason to know that the actions or statement will:

(i) cause the electronic agent to complete the transaction or performance; or (ii) indicate acceptance of an offer, regardless of other expressions or actions by the

individual to which the electronic agent cannot react. UCC 2205 Firm Offers

An offer by a merchant to buy or sell goods in a signed record that by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but in no event may the period of irrevocability exceed three months. Any such term of assurance in a form supplied by the offeree must be separately signed by the offeror.

UCC 2206 Offer and Acceptance

(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 nonconforming goods, but the shipment of nonconforming goods is not an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

(2) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror that is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

(3) A definite and seasonable expression of acceptance in a record operates as an acceptance even if it contains terms additional to or different from the offer.

7. Battle of the Forms UCC 1201(b)(31) Definitions “record”

(31) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

UCC 2207 Battle of the Forms

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from

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those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract.Between merchants such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter 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 by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. 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.

8. Consideration Restatement 71. Requirement of Exchange


promise and is given by the promisee in exchange for that promise.

(3) The performance may consist of: (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation.


UCC 2203 Seals Inoperative

The affixing of a seal to a record evidencing a contract for sale or an offer to buy or sell goods does not constitute the record a sealed instrument. The law with respect to sealed instruments does not apply to such a contract or offer.

9. Illusory Contracts Restatement 71. Requirement of Exchange


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promise and is given by the promisee in exchange for that promise. (3) The performance may consist of

(a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation.


Restatement 75. Exchange of Promise for Promise

Except as stated in §§ 76 and 77, a promise which is bargained for is consideration if, but only if, the promised performance would be consideration.

Restatement 77. Illusory and Alternative Promises

A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless:

(a) each of the alternative performances would have been consideration if it alone had been bargained for; or

(b) one of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would not have been consideration.

UCC 1205 Reasonable Time

(a) Whether a time for taking an action required by [the Uniform Commercial Code] is reasonable depends on the nature, purpose, and circumstances of the action.

(b) An action is taken seasonably if it is taken at or within the time agreed or, if no time is agreed, at or within a reasonable time.

UCC 2305 Open Price Term

(1) The parties if they so intend may conclude a contract for sale even if the price is not settled. In such a case the price is a reasonable price at the time for delivery if:

(a) nothing is said as to price; (b) the price is left to be agreed by the parties and they fail to agree; or (c) the price is to be fixed in terms of some agreed market or other standard as set or recorded

by a third person or agency and it is not so set or recorded. (2) A price to be fixed by the seller or by the buyer means a price to be fixed in good faith. (3) If a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of

one party the other may at the party's option treat the contract as cancelled or the party may fix a

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reasonable price. (4) If, however, the parties intend not to be bound unless the price is fixed or agreed and it is not fixed

or agreed there is no contract. In such a case the buyer must return any goods already received or if unable to do so must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.

UCC 2306 Output, Requirements, and Exclusive Dealings

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

(2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

UCC 2309 Absence of Specific Time

(1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.

(2) If the contract provides for successive performances but is indefinite in duration, it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.

(3) Termination of a contract by one party except on the happening of an agreed event requires that

reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable. A term specifying standards for the nature and timing of notice is enforceable if the standards are not manifestly unreasonable.

9A. Misunderstanding Restatement 20. Effect of Misunderstanding

(1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and:

(a) neither party knows or has reason to know the meaning attached by the other; or (b) each party knows or each party has reason to know the meaning attached by the other.

(2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if:

(a) that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or

(b) that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.

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10. Restitution Restatement 86. Promise for Benefit Received

(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.

(2) A promise is not binding under Subsection (1) (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been

unjustly enriched; or (b) to the extent that its value is disproportionate to the benefit.

Restatement 1 of Restitution

A person who has been unjustly enriched at the expense of another is required to make restitution to the other.

Restatement 2 of Restitution

A person who officiously confers a benefit upon another is not entitled to restitution therefor. 11. Reliance Restatement 90. Reliance



12. Illegal Promises Restatement 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

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(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 and the extent to which it was deliberate, and (d) the directness of the connection between that misconduct and the term.

13. Unjust Terms Restatement 211. Standardized Agreements

(1) Except as stated in Subsection (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.

(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.

UCC 2302 Unconscionability

(1) If the court as a matter of law finds the contract or any term of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable term, or it may so limit the application of any unconscionable term as to avoid any unconscionable result.

(2) If it is claimed or appears to the court that the contract or any term thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

14. Lack of Capacity Restatement 14. Infants

Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person's eighteenth birthday.

Restatement 15. Mental Illness or Defect

(1) A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect

(a) he is unable to understand in a reasonable manner the nature and consequences of the

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transaction, or (b) he is unable to act in a reasonable manner in relation to the transaction and the other party has

reason to know of his condition. (2) Where the contract is made on fair terms and the other party is without knowledge of the mental illness or

defect, the power of avoidance under Subsection (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires.

Restatement 16. Intoxicated Persons

A person incurs only voidable contractual duties by entering into a transaction if the other party has reason to know that by reason of intoxication

(a) he is unable to understand in a reasonable manner the nature and consequences of the transaction, or

(b) he is unable to act in a reasonable manner in relation to the transaction. 15. Fraud and Misrepresentation Restatement 161. When Nondisclosure is Equivalent to an Assertion

A person's nondisclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only:

(a) where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material.

(b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if nondisclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.

(c) where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part.

(d) where the other person is entitled to know the fact because of a relation of trust and confidence between them.

16. Mistake Restatement 151. Mistake Defined

A mistake is a belief that is not in accord with the facts. Restatement 152. When Mistake Of Both Parties Makes A Contract Voidable

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(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154.

(2) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.

Restatement 153. When Mistake of One Party Makes a Contract Voidable

Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and

(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.

Restatement 154. When A Party Bears the Risk of a Mistake

A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to

the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to

do so. 17. Statute of Frauds Restatement 110. Classes of Contracts Covered by Statute of Frauds

(1) The following classes of contracts are subject to a statute, commonly called the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception:

(a) a contract of an executor or administrator to answer for a duty of his decedent (the executoradministrator provision);

(b) a contract to answer for the duty of another (the suretyship provision); (c) a contract made upon consideration of marriage (the marriage provision); (d) a contract for the sale of an interest in land (the land contract provision); (e) a contract that is not to be performed within one year from the making thereof (the oneyear

provision). (2) The following classes of contracts, which were traditionally subject to the Statute of Frauds, are now

governed by Statute of Frauds provisions of the Uniform Commercial Code: (a) a contract for the sale of goods for the price of $500 or more (Uniform Commercial Code §

2201); (b) a contract for the sale of securities (Uniform Commercial Code § 8319);

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(c) a contract for the sale of personal property not otherwise covered, to the extent of enforcement by way of action or defense beyond $5,000 in amount or value of remedy (Uniform Commercial Code § 1206).

(3) In addition the Uniform Commercial Code requires a writing signed by the debtor for an agreement which creates or provides for a security interest in personal property or fixtures not in the possession of the secured party.

(4) Statutes in most states provide that no acknowledgment or promise is sufficient evidence of a new or continuing contract to take a case out of the operation of a statute of limitations unless made in some writing signed by the party to be charged, but that the statute does not alter the effect of any payment of principal or interest.

(5) In many states other classes of contracts are subject to a requirement of a writing. Restatement 130. Contract Not to be Performed Within a Year

(1) Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the Statute of Frauds until one party to the contract completes his performance.

(2) When one party to a contract has completed his performance, the oneyear provision of the Statute does not prevent enforcement of the promises of other parties.

UNCISG Article 1. Sphere of Application

(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States:

(a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting

State. (2) The fact that the parties have their places of business in different States is to be disregarded whenever this

fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.

(3) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.

UNCISG Article 11

A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.

UCC 1201(b)(31) Definitions “record”

"Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

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UCC 1201(b)(37) Definitions “signed”

"Signed" includes using any symbol executed or adopted with present intention to adopt or accept a writing. UCC 1201(b)(43) Definitions “writing” or “written”

"Writing" includes printing, typewriting, or any other intentional reduction to tangible form. "Written" has a corresponding meaning.

UCC 2201. Formal Requirements; Statute of Frauds.

(1) A contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against which enforcement is sought or by the party's authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in the record.

(2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against the recipient unless notice of objection to its contents is given in a record within 10 days after it is received.

(3) A contract that does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable:

(a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement;

(b) if the party against which enforcement is sought admits in the party's pleading, or in the party's testimony or otherwise under oath that a contract for sale was made, but the contract is not enforceable under this paragraph beyond the quantity of goods admitted; or

(c) with respect to goods for which payment has been made and accepted or which have been received and accepted (Sec. 2606).

(4) A contract that is enforceable under this section is not unenforceable merely because it is not capable of being performed within one year or any other period after its making.

21. Modifications and Discharge Restatement 89. Modification of Executory Contract

A promise modifying a duty under a contract not fully performed on either side is binding: (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties

when the contract was made; or (b) to the extent provided by statute; or

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(c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

UCC 2209. Modification, Rescission and Waiver.

(1) An agreement modifying a contract within this Article needs no consideration to be binding. (2) A signed agreement which excludes modification or rescission except by a signed writing cannot be

otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

(3) The requirements of the statute of frauds section of this Article (Section 2201) 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 subsection (2) or (3) it can operate as a waiver.

(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict 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.

Restatement 281. Accord and Satisfaction

(1) An accord is a contract under which an obligee promises to accept a stated performance in satisfaction of the obligor's existing duty. Performance of the accord discharges the original 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 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.

UCC 3311. 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

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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 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 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.

22. Warranties UCC 1201(b)(10) Definition of “conspicuous”

“Conspicuous”, with reference to a term, means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is “conspicuous” or not is a decision for the court. Conspicuous terms include the following:

(A) a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and

(B) language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.

UCC 2106(2) Definition of “conforming” Goods or conduct including any part of a performance are “conforming” or conform to the contract when

they are in accordance with the obligations under the contract. UCC 2312 Warranty of Title and Against Infringement

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that (a) the title conveyed shall be good, and its transfer rightful; and (b) the goods shall be delivered free from any security interest or other lien or encumbrance of which

the buyer at the time of contracting has no knowledge. (2) A warranty under subsection (1) will be excluded or modified only by specific language or by

circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.

(3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim

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which arises out of compliance with the specifications. UCC 2313 Express Warranties

(1) Express warranties by the seller are created as follows: (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and

becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

UCC 2314 Implied Warranty of Merchantability

(1) Unless excluded or modified (Section 2316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.

(2) Goods to be merchantable must be at least such as (a) pass without objection in the trade under the contract description; and (b) in the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within

each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promise or affirmations of fact made on the container or label if any.

(3) Unless excluded or modified (UCC 2316) other implied warranties may arise from course of dealing or usage of trade.

UCC 2315 Implied Warranty of Fitness for Particular Purpose

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

UCC 2316 Disclaimer of Warranties

(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to

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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 (UCC 2202) negation or limitation is inoperative to the extent that such construction is unreasonable.

(2) Subject to subsection (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, for example, that “There are no warranties which extend beyond the description on the face hereof.”

(3) Notwithstanding subsection (2) (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 buyer's 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 desired 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

(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.

(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 (UCC 2718 and 2719).

UCC 2715 Buyer’s Incidental and Consequential Damages

(1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

(2) Consequential damages resulting from the seller's breach include (a) any loss resulting from general or particular requirements and needs of which the seller at the time

of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of warranty. UCC 2719 Contractual Modification or Limitation of Remedies

(1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages,

(a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and

(b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive,

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in which case it is the sole remedy. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be

had as provided in this Act. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.

Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

UCC 2608 Revocation of Acceptance in Whole or in Part

(1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it

(a) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

(b) without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.

(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.

23. Unanticipated Events Restatement 261: Discharge by Supervening Impracticability

Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the nonoccurrence 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.

Restatement 265 Discharge by Supervening Frustration

Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the nonoccurrence 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.

Restatement 266 Existing Impracticability or Frustration

(1) Where, at the time a contract is made, a party's performance under it is impracticable without his fault because of a fact of which he has no reason to know and the nonexistence of which is a basic assumption on which the contract is made, no duty to render that performance arises, unless the language or circumstances indicate the contrary.

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(2) Where, at the time a contract is made, a party's principal purpose is substantially frustrated without his fault by a fact of which he has no reason to know and the nonexistence of which is a basic assumption on which the contract is made, no duty of that party to render performance arises, unless the language or circumstances indicate the contrary.

Restatement 272 Relief Including Restitution

(1) In any case governed by the rules stated in this Chapter, either party may have a claim for relief including restitution under the rules stated in § 240 and 377.

(2) In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties' reliance interests.

UCC 2615 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 nondelivery 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 nondelivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.

24. Good Faith Restatement 205 Duty of Good Faith and Fair Dealing

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

UCC 1304 Obligation of Good Faith

Every contract within the UCC imposes an obligation of good faith in its performance and enforcement. UCC 1201(b)(20) Definition of “Good Faith”

Except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable

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commercial standards of fair dealing. UCC 1309 Option to Accelerate at Will

A term providing that one party or that party's successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or when the party "deems itself insecure," or words of similar import, means that the party has power to do so only if that party in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against which the power has been exercised.

25 and 26. Promise and Condition Restatement 2(1) Definition of Promise

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

Restatement 224 Definition of Condition

A condition is an event, not certain to occur, which must occur, unless its nonoccurrence is excused, before performance under a contract becomes due.

Restatement 227 Standards of Preference with Regard to Conditions

(1) In resolving doubts as to whether an event is made a condition of an obligor's duty, and as to the nature of such an event, an interpretation is preferred that will reduce the obligee's risk of forfeiture, unless the event is within the obligee's control or the circumstances indicate that he has assumed the risk.

(2) Unless the contract is of a type under which only one party generally undertakes duties, when it is doubtful whether

(a) a duty is imposed on an obligee that an event occur, or (b) the event is made a condition of the obligor's duty, or (c) the event is made a condition of the obligor's duty and a duty is imposed on the obligee that the

event occur, the first interpretation is preferred if the event is within the obligee's control.

(3) In case of doubt, an interpretation under which an event is a condition of an obligor's duty is preferred over an interpretation under which the nonoccurrence of the event is a ground for discharge of that duty after it has become a duty to perform.

Restatement 229 Excuse of a Condition to Avoid Forfeiture

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

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Restatement 234 Order of Performances (1) Where all or part of the performances to be exchanged under an exchange of promises can be rendered

simultaneously, they are to that extent due simultaneously, unless the language or the circumstances indicate the contrary.

(2) Except to the extent stated in Subsection (1), where the performance of only one party under such an exchange requires a period of time, his performance is due at an earlier time than that of the other party, unless the language or the circumstances indicate the contrary.

Restatement 238 Constructive Conditions of Exchange

Where all or part of the performances to be exchanged under an exchange of promises are due simultaneously, it is a condition of each party's duties to render such performance that the other party either render or, with manifested present ability to do so, offer performance of his part of the simultaneous exchange.

Restatement 240 Agreed Equivalents

If the performances to be exchanged under an exchange of promises can be apportioned into corresponding pairs of part performances so that the parts of each pair are properly regarded as agreed equivalents, a party's performance of his part of such a pair has the same effect on the other's duties to render performance of the agreed equivalent as it would have if only that pair of performances had been promised.

Restatement 241 Circumstances Significant in Determining Whether a Failure is Material

In determining whether a failure to render or to offer performance is material, the following circumstances are significant:

(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;

(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;

(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking

account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports

with standards of good faith and fair dealing. UCC 1103: Construction of UCC to Promote Its Purposes and Policies

(a) UCC must be liberally construed and applied to promote its underlying purposes and policies, which are: (1) to simplify, clarify, and modernize the law governing commercial transactions; (2) to permit the continued expansion of commercial practices through custom, usage, and agreement

of the parties; and (3) to make uniform the law among the various jurisdictions.

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(b) Unless displaced by the particular provisions of the UCC, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.

UCC 1302: Variation by Agreement

(a) Except as otherwise provided in subsection (b) or elsewhere in the UCC, the effect of provisions of the UCC may be varied by agreement.

(b) The obligations of good faith, diligence, reasonableness, and care prescribed by the UCC may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever the UCC requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.

(c) The presence in certain provisions of the UCC of the phrase “unless otherwise agreed”, or words of similar import, does not imply that the effect of other provisions may not be varied by agreement under this section.

UCC 2209(5): Waiver

A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict 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.

UCC 2307: Delivery in Single Lot or Several Lots

Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.

UCC 2511: Tender of Payment by Buyer; Payment by Check

(1) Unless otherwise agreed tender of payment is a condition to the seller's duty to tender and complete any delivery.

(2) Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives any extension of time reasonably necessary to procure it.

(3) Subject to the provisions of this Act on the effect of an instrument on an obligation (UCC 3310), payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.

UCC 2601: Buyer’s Rights on Improper Delivery

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Subject to the provisions of this Article on breach in installment contracts (UCC 2612) and unless otherwise agreed under the sections on contractual limitations of remedy (UCC 2718 and 2719), if the goods or the 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.

UCC 2607: Effect of Acceptance; Notice of Breach; Burden of Establishing Breach After Acceptance

(1) The buyer must pay at the contract rate for any goods accepted. (2) Acceptance of goods by the buyer precludes rejection of the goods accepted and if made with

knowledge of a nonconformity cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured but acceptance does not of itself impair any other remedy provided by this Article for nonconformity.

(3) Where a tender has been accepted (a) the buyer must within a reasonable time after he discovers or should have discovered any breach

notify the seller of breach or be barred from any remedy; and (b) if the claim is one for infringement or the like (subsection (3) of UCC 2312) and the buyer is

sued as a result of such a breach he must so notify the seller within a reasonable time after he receives notice of the litigation or be barred from any remedy over for liability established by the litigation.

(4) The burden is on the buyer to establish any breach with respect to the goods accepted. (5) Where the buyer is sued for breach of a warranty or other obligation for which his seller is answerable

over (a) he may give his seller written notice of the litigation. If the notice states that the seller may come in

and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the two litigations, then unless the seller after seasonable receipt of the notice does come in and defend he is so bound.

(b) if the claim is one for infringement or the like (subsection (3) of UCC 2312) the original seller may demand in writing that his buyer turn over to him control of the litigation including settlement or else be barred from any remedy over and if he also agrees to bear all expense and to satisfy any adverse judgment, then unless the buyer after seasonable receipt of the demand does turn over control the buyer is so barred.

(6) The provisions of subsections (3), (4) and (5) apply to any obligation of a buyer to hold the seller harmless against infringement or the like (subsection (3) of UCC 2312).

UCC 2609 Right to Adequate Assurance of Performance

(1) A contract for sale imposes an obligation on each party that the other's 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 and

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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 party's right to demand adequate assurance of future performance.

(4) After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.

UCC 2612: 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 nonconforming if the nonconformity 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 nonconformity does not fall within subsection (3) and the seller gives adequate assurance of its cure the buyer must accept that installment.

(3) Whenever nonconformity or 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 nonconforming 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.

UCC 2717: Deduction of Damages From the Price

The buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.

27. Anticipatory Repudiation UCC 2609: Right to Adequate Assurance of Performance

(1) A contract for sale imposes an obligation on each party that the other's 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 and 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 party's right to demand adequate assurance of future performance.

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(4) After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.

UCC 2610: 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 (b) resort to any remedy for breach (UCC 2703 or UCC 2711), even though he has notified the

repudiating party that he would await the latter's performance and has urged retraction; and (c) in either case suspend his own performance or proceed in accordance with the provisions of this

Article on the seller's right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (UCC 2704).

UCC 2611: Retraction of Anticipatory Repudiation

(1) Until the repudiating party's next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final.

(2) Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of this Article (UCC 2609).

(3) Retraction reinstates the repudiating party's rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.

Restatement 251: When a Failure to Give Assurance May be Treated as a Repudiation

(1) Where reasonable grounds arise to believe that the obligor will commit a breach by nonperformance that would of itself give the obligee a claim for damages for total breach under § 243, the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance.

(2) The obligee may treat as a repudiation the obligor's failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case.

28 and 29. Remedial Concepts Restatement 344: Purpose of Remedies

Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promisee:

(a) his “expectation interest,” which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed,

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(b) his “reliance interest,” which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made, or

(c) his “restitution interest,” which is his interest in having restored to him any benefit that he has conferred on the other party.

Restatement 347: Measure of Damages in General

Subject to the limitations stated in § 35053, the injured party has a right to damages based on his expectation interest as measured by

(a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus

(b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that he has avoided by not having to perform.

Restatement 350: Avoidability as a Limitation on Damages (Mitigation)

(1) Except as stated in Subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation.

(2) The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.

Restatement 351: Unforeseeability (Hadley Rules)

(1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.

(2) Loss may be foreseeable as a probable result of a breach because it follows from the breach: (a) in the ordinary course of events, or (b) as a result of special circumstances, beyond the ordinary course of events, that the party in

breach had reason to know. (3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing

recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.

Restatement 352: Certainty

Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.

Restatement 353: Loss Due to Emotional Disturbance

Recovery for emotional disturbance will be excluded unless the breach also caused bodily harm or the contract or the breach is of such a kind that serious emotional disturbance was a particularly likely result.

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Restatement 355: Punitive Damages Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is

also a tort for which punitive damages are recoverable. Restatement 374: Restitution in Favor of Party in Breach

(1) Subject to the rule stated in Subsection (2), if a party justifiably refuses to perform on the ground that his remaining duties of performance have been discharged by the other party's breach, the party in breach is entitled to restitution for any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach.

(2) To the extent that, under the manifested assent of the parties, a party's performance is to be retained in the case of breach, that party is not entitled to restitution if the value of the performance as liquidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss.

Buyer’s Remedies: UCC 2712: “Cover”; Buyer’s Procurement of Substitute Goods

(1) After a breach within the preceding section the buyer may “cover” by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.

(2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (UCC 2715), but less expenses saved in consequence of the seller's breach.

(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy. UCC 2713: Buyer’s Damages for Nondelivery or Repudiation

(1) Subject to the provisions of this Article with respect to proof of market price (UCC 2723), the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article (UCC 2715), but less expenses saved in consequence of the seller's breach.

(2) Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

UCC 2714: Buyer’s Damages for Breach in Regard to Accepted Goods

(1) Where the buyer has accepted goods and given notification (subsection (3) of UCC 2607) he may recover as damages for any nonconformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable.

(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted,

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unless special circumstances show proximate damages of a different amount. (3) In a proper case any incidental and consequential damages under the next section may also be recovered.

Seller’s Remedies: UCC 2706. Seller’s Resale Including Contract for Resale

(1) Under the conditions stated in Section 2703 on seller's remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (UCC 2710), but less expenses saved in consequence of the buyer's breach.

(2) Except as otherwise provided in subsection (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.

(3) Where the resale is at private sale the seller must give the buyer reasonable notification of his intention to resell.

(4) Where the resale is at public sale (a) only identified goods can be sold except where there is a recognized market for a public sale of

futures in goods of the kind; and (b) it must be made at a usual place or market for public sale if one is reasonably available and

except in the case of goods which are perishable or threaten to decline in value speedily the seller must give the buyer reasonable notice of the time and place of the resale; and

(c) if the goods are not to be within the view of those attending the sale the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and

(d) the seller may buy. (5) A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer

even though the seller fails to comply with one or more of the requirements of this section. (6) The seller is not accountable to the buyer for any profit made on any resale. A person in the position of a

seller (UCC 2707) or a buyer who has rightfully rejected or justifiably revoked acceptance must account for any excess over the amount of his security interest, as hereinafter defined (subsection (3) of UCC 2711).

UCC 2708: Seller’s Damages for Nonacceptance or Repudiation

(1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (UCC 2723), the measure of damages for nonacceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article (UCC 2710), but less expenses saved in consequence of the buyer's

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breach. (2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position

as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article (UCC 2710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.

UCC 2709: Action for the Price

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

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

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

(2) Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him to any goods not resold.

(3) After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (Section 2610), a seller who is held not entitled to the price under this section shall nevertheless be awarded damages for nonacceptance under the preceding section.

UCC 2716: Specific Performance

(1) Specific performance may be decreed where the goods are unique or in other proper circumstances. (2) The decree for specific performance may include such terms and conditions as to payment of the price,

damages, or other relief as the court may deem just. (3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable

to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. In the case of goods bought for personal, family, or household purposes, the buyer's right of replevin vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

UCC 2718: Liquidated Damages

(1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

(2) Where the seller justifiably withholds delivery of goods because of the buyer's breach, the buyer is

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entitled to restitution of any amount by which the sum of his payments exceeds (a) the amount to which the seller is entitled by virtue of terms liquidating the seller's damages in

accordance with subsection (1), or (b) in the absence of such terms, twenty per cent of the value of the total performance for which the

buyer is obligated under the contract or $500, whichever is smaller. (3) The buyer's right to restitution under subsection (2) is subject to offset to the extent that the seller

establishes (a) a right to recover damages under the provisions of this Article other than subsection (1), and (b) the amount or value of any benefits received by the buyer directly or indirectly by reason of the

contract. (4) Where a seller has received payment in goods their reasonable value or the proceeds of their resale shall

be treated as payments for the purposes of subsection (2); but if the seller has notice of the buyer's breach before reselling goods received in part performance, his resale is subject to the conditions laid down in this Article on resale by an aggrieved seller (UCC 2706).

UCC 2719: Contractual Modification or Limitation of Remedy

(1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages,

(a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and

(b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.

(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act.

(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

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Documents

Contracts Outline SPRING CONTRACTS BURNHAM 5.DAMAGES a.Basic Remedial Concepts i. Mitigation: ii.Certainty iii.Causation b.Expectancy damages c.Liquidated Damages: d.Consequential