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Preface xxxvAcknowledgments xxxix
PART I. INTRODUCTION AND CONTRACT FORMATION 1
1 Introduction to Contracts 5
A. Contracts and Promises 51. What Is a Promise? 62. Determining Intent: Basic Rules of Interpretation 83. Contract Formation 10
B. The Contracts Analytic Framework 131. How the Study of Contracts Differs from Other Subjects 132. Analytic Frameworks and Rules 143. Contracts Analytic Framework 14
C. Policies: Freedom of Contract vs. Equity and Fairness 191. Freedom of Contract 192. Equity and Fairness 19
D. Sources of Contract Law 201. Common Law of Contracts 202. Uniform Commercial Code Article 2 Sales 213. Other Sources 22
E. About This Coursebook 23
Key Concepts 24Questions for Review 24Problem Solving and Analysis 25
Contents
xii Contents
2 Contract Formation: Consideration 27
A. Consideration and the Bargain Theory 271. Consideration as the Gatekeeper 272. Diagramming the Deal 283. Policy: Functions of Consideration 29
B. Consideration: Proving the Rule 301. Bargained for Exchange 302. Legal Value 33
C. Additional Characteristics and Issues 351. Form of Consideration: Promise or Performance 352. Consideration Provided to Third Parties 363. Gifts/ Gratuitous Promises 374. Alternatives to Consideration 38
Case Law: Hamer v. Sidway 39Case Law: Dougherty v. Salt 43Key Concepts 44Questions for Review 45Problem Solving and Analysis 46
3 Conditional Gifts 49
A. Overview 49
B. Conditions— A Short Introduction 501. What Is a Condition? 502. What Is an Event? 503. What Is a Conditional Gift? 50
C. Distinguishing Between Conditional Gifts and Gratuitous Promises 511. Legal Value and Conditional Gifts 522. Bargained for Exchange and Conditional Gifts 523. Enforceability of a Promise for a Conditional Gift 53
D. Distinguishing Between Consideration and Conditional Gifts 53
Case Law: Pennsy Supply v. American Ash 54Key Concepts 58Questions for Review 58Problem Solving and Analysis 58
Contents xiii
4 Adequacy and Other Characteristics of Consideration 61
A. Overview 61
B. Adequacy of Consideration 621. Unequal Exchange 63
Case Illustration: Wolford v. Powers 642. Gross Inadequacy 653. Nominal Consideration 654. Mutuality of Obligation 67
Case Law: Batsakis v. Demotsis 68
C. Illusory Promises 711. The Rule and the Rationale 712. Exceptions to the Illusory Promise Rule 723. Option Contracts as a Planning Device 724. UCC: Requirements Contracts/ Output Contracts 73
D. Past Consideration 751. Overview 752. Understanding the Rationale 76
E. Moral Obligation 771. Overview 77
Case Illustration: Doe v. Roman Catholic Archdiocese of Indianapolis 78
2. Exceptions 79
Case Law: Plowman v. Indian Refining Company 80Key Concepts 84Questions for Review 84Problem Solving and Analysis 85
5 The Preexisting Legal Duty Rule 89
A. Preexisting Legal Duty Rule 891. Overview 892. Types of Preexisting Legal Duties 91
Case Illustration: Lingenfelder v. Wainwright Brewery Co. 92
B. Contract Modifications 931. Unenforceable Contract Modifications 952. Enforceable Contract Modifications 963. Exceptions to the Legal Duty Rule 99
Case Law: Alaska Packers’ Ass’n v. Domenico 100
xiv Contents
C. UCC Contract Modification 1041. No Consideration Needed for Modification 1042. Good Faith Requirement 104
D. Choice of Law 1051. Understanding the Statutory Language 1052. Choice of Law: Mixed Goods and Services 107
Case Illustration: Mayo v. Caldwell 109
Case Law: Gross Valentino Printing Co. v. Clarke 109Key Concepts 112Questions for Review 113Problem Solving and Analysis 114
6 Promissory Estoppel 117
A. Overview 117Case Illustration: Hoo Siong Chow v. Transworld Airlines 118
B. Analytic Framework: Proving the Rule 1191. Was There a Promise? 1192. Should Promisor Have Reasonably Expected the Promise to
Induce Action or Forbearance? 1203. Did the Promisee Take Action (or Forbearance) in
Reliance on the Promise? 1204. Can Injustice Only Be Avoided by Enforcing the Promise? 1215. Should the Remedy Be Limited? 1216. Detrimental Reliance as a Contracts Principle 124
C. Charitable Subscriptions 124
Case Law: Wright v. Newman 125Case Law: Robinson v. The Detroit News, Inc. 129Key Concepts 133Questions for Review 133Problem Solving and Analysis 134
7 Restitution 137
A. Overview 137
B. Quasi- Contract 1391. Overview 140
Case Illustration: Christiana Mall, LLC v. Emory Hill & Co. 1412. Limits: Officious Intermeddler (Volunteer) Doctrine 1413. Limits: Gratuitous Benefit (Gifts) 1424. Typical Scenarios 142
Case Law: Watts v. Watts 144
Contents xv
C. Promissory Restitution 1491. Preventing Injustice 150
Case Law: Webb v. McGowin 150Key Concepts 153Questions for Review 154Problem Solving and Analysis 154
8 Introduction to Mutual Assent 157
A. Overview 157
B. Objective Theory of Mutual Assent 1581. Overview 158
Case Illustration: Lucy v. Zehmer 159Case Illustration: Ray v. William G. Eurice & Bros. 160
2. Exceptions to the Objective Standard 161Case Illustration: Raffles v. Wichelhaus 162
Case Law: Bull Motor Co. v. Murphy 163Key Concepts 169Questions for Review 169Problem Solving and Analysis 170
9 Offer 173
A. Overview 1731. The Offer Defines the Terms 1732. The Role of the Parties 1743. Distinguishing Preliminary Negotiations 174
B. Proving the Rule 1751. Manifestation of Present Intent to Enter a Bargain 175
Case Illustration: Owen v. Tunison 1762. Stated in Certain and Definite Terms 1763. Communicated to an Identified Person or Persons 1764. Reasonable Understanding of Offeree That a Contract
Will Result If Accepted 177
C. Certain and Definite Terms 1771. Parsing the Rule 1772. Essential Terms and Implied Terms 178
Case Illustration: Douglass v. Panama, Inc. 179Case Illustration: McIllmoil v. Frawley Motor Co. 179
3. Agreement to Agree/ Open Terms 180Case Illustration: L- 7 Designs, Inc. v. Old Navy, LLC 180
Case Law: Lonergan v. Scolnick 181
xvi Contents
D. Special Issues in Offer 1841. Advertisements and Price Quotes 1842. Family Contracts and Social Engagements 185
E. UCC Approach to Offer 1861. Intent 1872. Certainty 187
Case Law: Leonard v. Pepsico 188Key Concepts 193Questions for Review 193Problem Solving and Analysis 194
10 Acceptance and Other Responses to an Offer 197
A. Acceptance Requirements 1971. Overview 1972. Proving the Rule 198
Case Illustration: CX Digital Media, Inc. v. Smoking Everywhere, Inc. 198
B. Acceptance by Promise or Performance 2001. Overview 2002. Offeror Does Not Specify 201
C. Termination of the Power of Acceptance 2031. Rejection 2032. Revocation 2043. Counteroffer 2054. Lapse of Time 206
Case Illustration: Akers v. J. B. Sedberry, Inc. 2075. Death or Incapacity 207
D. Special Issues 2081. Auctions 2082. Silence as Acceptance 2083. Mailbox Rule 210
Case Law: Benya v. Stevens and Thompson Paper Co. 213Key Concepts 216Questions for Review 216Problem Solving and Analysis 217
11 Irrevocable Offers 221
A. Overview 221
B. Option Contracts 222
Contents xvii
1. The Nature of Option Contracts 2222. Proving the Rule 222
Case Illustration: Berryman v. Kmoch 224
C. Conditional Promises and Conditional Contracts 225
D. Promissory Estoppel 2261. Overview 2262. General Contractor– Subcontractor Cases 227
E. Part Performance of Unilateral Contract 2281. Overview 2282. Proving the Rule 2293. Limits and Issues 229
Case Illustration: Ragosta v. Wilder 230
Case Law: Drennan v. Star Paving Co. 231
F. UCC Merchant’s Firm Offer 2351. Overview 2352. Proving the Rule 235
Case Law: Mid- South Packers, Inc. v. Shoney’s, Inc. 238Key Concepts 242Questions for Review 242Problem Solving and Analysis 243
12 Mutual Assent and the Battle of the Forms 247
A. Overview 247
B. Common Law Approach 249
C. UCC §2- 207 Introduction 2511. Differences Between Common Law and UCC §2- 207 2512. Analytic Framework Overview 252
D. Acceptance with Varying Terms 2531. Has a Contract Formed? 2542. Are the Additional or Different Terms Incorporated into
the Contract? 254
E. Conditional Acceptance 2551. Has a Contract Formed? 2552. Are the Additional or Different Terms Incorporated
into the Contract? 256
Case Law: Krack v. Metal- Matic 257Key Concepts 262Questions for Review 262Problem Solving and Analysis 263
xviii Contents
13 Statute of Frauds 265
A. Overview 2651. History of the Statute of Frauds 2662. Modern Adoption 2663. Policies and Controversy 2674. Proving the Rule 267
B. Is the Agreement Within the Statute? 2681. Marriage Provision 268
Case Illustration: Dienst v. Dienst 2682. Over One- Year Provision 269
Case Illustration: N. Shore Bottling Co. v. C. Schmidt & Sons, Inc. 269
3. Land Sale Contract 2704. Executor Payment of Estate’s Debts 2705. Sale of Goods of $500 or More 2716. Suretyship Agreement 271
C. Does the Writing Satisfy the Statute? 2721. Overview 2722. Proving the Rule 2723. Miscellaneous Issues 274
D. Exceptions to the Statute 2761. Promissory Estoppel 276
Case Illustration: Alaska Democratic Party v. Rice 2772. Full Performance by Both Parties 2783. Full Performance by One Party (Over One- Year Provision) 2784. Part Performance (Land Sale Contracts) 2795. Part Performance (Other Contracts) 279
Case Law: Crabtree v. Elizabeth Arden 280
E. UCC Statute of Frauds 2841. Is the Contract Within UCC §2- 201(1)? 2852. If So, Does the Writing Satisfy the Requirements of
§2- 201(1) or §2- 201(2)? 2853. If Not Sufficient But Within the Statute, Is the Contract
Enforceable Because of an Exception in §2- 201(3)? 286Case Illustration: Songbird Jet Ltd., Inc. v. Amax, Inc. 287
Case Law: Cohn v. Fisher 288Key Concepts 292Questions for Review 293Problem Solving and Analysis 294
Contents xix
PART II. DEFENSES AND EXCUSES 297
14 Defenses: Incapacity 301
A. Overview 301
B. Minor Incapacity 3021. Proving the Rule 302
Case Illustration: In re The Score Bd., Inc. 304Case Illustration: I. B. ex rel. Fife v. Facebook, Inc. 304
2. Exceptions: Enforceable Obligations 305Case Illustration: Webster Street Partnership,
Ltd. v. Sheridan 305
Case Law: Halbman v. Lemke 307
C. Mental Incapacity 3111. Proving the Rule 3112. Effect of Incompetency 3133. Exceptions 313
Case Law: Farnum v. Silvano 314
D. Intoxication 3171. Similarities with Mental Incapacity 3182. Court Cases 318
Case Illustration: Hunt v. Golden 318
Key Concepts 319Questions for Review 319Problem Solving and Analysis 321
15 Defenses: Duress and Undue Influence 323
A. Overview 323
B. Duress 3241. Two Types of Duress 3242. Proving the Rule 324
Case Illustration: Fuhrman v. California Satellite Sys. 3263. Physical Duress 3274. Economic Duress 3285. Third Person Coercion: Knowledge Requirement 329
Case Law: Rich & Whillock, Inc. v. Ashton Development, Inc. 329
C. Undue Influence 3341. Inducement 334
xx Contents
2. Unfair Persuasion 3343. Undue Susceptibility 3354. Inequitable Result 336
Case Law: Odorizzi v. Bloomfield School District 337Key Concepts 342Questions for Review 342Problem Solving and Analysis 343
16 Defenses: Misrepresentation and Nondisclosure 347
A. Overview 3471. Misrepresentation 3472. Nondisclosure 3483. Remedies for Misrepresentation and Nondisclosure 348
B. Defense of Misrepresentation 3491. Misrepresentation 349
Case Illustration: Schott Motorcycle Supply, Inc. v. Am. Honda Motor Co. 349
2. Fraudulent Misrepresentations 3503. Material Misrepresentations 3514. Inducement 3535. Justifiable Reliance 354
Case Law: Foster v. Cross 354
C. Defense of Nondisclosure 3591. Overview 359
Case Illustration: Caples v. Steel 3592. Synthesizing a Rule 3603. Circumstances Leading to Nondisclosure 360
Case Illustration: Bursey v. Clement 362
Case Law: Hill v. Jones 362Key Concepts 367Questions for Review 367Problem Solving and Analysis 368
17 Defenses: Unconscionability 371
A. Overview 3711. Historic Roots 3722. Policy Considerations 3723. Unconscionability Must Exist at Contract Formation 3734. Remedies 373
Contents xxi
B. Procedural Unconscionability 3741. Gross Inequality in Bargaining Power 3742. Unfair Surprise 375
C. Substantive Unconscionability 3751. Overly Harsh Allocation of Risks 3762. Great Price Disparity 376
Case Law: Williams v. Walker- Thomas Furniture 377Case Law: Capili v. The Finish Line, Inc. 382Key Concepts 387Questions for Review 387Problem Solving and Analysis 388
18 Defenses: Public Policy and Illegality 391
A. Overview 3911. Types of Contracts Against Public Policy 3922. Balancing Test: Analytic Framework 3923. Rescission vs. Partial Enforcement 393
Case Illustration: Keene v. Harling 3944. Availability of Restitution 394
Case Illustration: The Highwayman’s Case 395
B. Contracts Involving Illegality 397
C. Contracts That Restrain Trade 3981. Overview 3982. Reasonability Factors 3993. Extent of Restraint 4004. Striking or Modifying Restraints: Blue Pencil Rule 400
Case Law: Hopper v. All Pet Animal Clinic, Inc. 401
D. Impairment of Family Relations 4091. Contracts That Prohibit Marriage 4092. Contracts Affecting Custody of a Child 410
Case Illustration: United States v. King 410
E. Contracts That Violate Licensing Laws 410Case Illustration: Harness Tracks Sec., Inc. v. Bay State
Raceway, Inc. 411
Key Concepts 412Questions for Review 412Problem Solving and Analysis 413
xxii Contents
19 Excuses: Mistake 417
A. Overview 417
B. Mutual Mistake 4181. Analytic Framework 4182. Made a Mistake 4193. Basic Assumption 4194. Material Effect 4205. Bears the Risk 422
Case Illustration: Nelson v. Rice 423
Case Law: Lenawee County Board of Health v. Messerly 424
C. Unilateral Mistake 4291. Overview 4292. Unconscionable 4303. Knowledge of Mistake or Fault in Causing the Mistake 431
Case Illustration: Info. Int’l Assocs., Inc. v. United States 431
Case Law: Donovan v. RRL Corp. 432Key Concepts 438Questions for Review 438Problem Solving and Analysis 439
20 Excuses: Changed Circumstances 443
A. Overview 443Case Illustration: ConAgra, Inc. v. Bartlett P’ship 444
B. Impossibility 4451. Early Common Law: Strict Liability 445
Case Illustration: Paradine v. Jane 4452. Development of the Modern Approach to Impossibility 445
Case Illustration: Taylor v. Caldwell 4453. Modern Approach to Impossibility 4464. Proving the Rule 4465. Remedies 449
C. Impracticability 4491. Proving the Rule 4502. What Is “Impracticable”? 450
Case Illustration: Mineral Park Land v. Howard 450Case Illustration: Transatlantic Fin. Corp. v. United States 451
3. UCC Approach 452Case Illustration: Publicker Indus. Inc. v. Union
Carbide Corp. 452
D. Frustration of Purpose 453
Contents xxiii
1. Proving the Rule 4542. Substantially Frustrated 454
Case Illustration: Krell v. Henry 454
E. Typical Scenarios 4551. Destruction of a Thing 4552. Death/ Incapacity of a Person 456
Case Illustration: In re the Estate of Sheppard 4563. Government Action 457
Case Illustration: Moyer v. City of Little Falls 457
Case Law: Opera Company of Boston, Inc. v. Wolf Trap Foundation for the Performing Arts 458Key Concepts 464Questions for Review 465Problem Solving and Analysis 465
PART III. INTERPRETATION AND IMPLIED TERMS 469
21 Parol Evidence Rule 471
A. Overview 471
B. Defining Terms 4721. What Is Parol Evidence? 4732. What Is a Final and Complete Expression? 4733. What Is a Partial Expression? 4734. What Is Contradictory Evidence? 4745. What Are Consistent Additional Terms? 474
Case Illustration: Snyder v. Herbert Greenbaum & Associates, Inc. 474
C. Analytic Framework 4751. Determining Integration 4762. Admissibility of Evidence 4803. Exceptions 481
Case Illustration: Italian Cowboy Partners v. Prudential Insurance Co. of America 483
D. UCC Parol Evidence Rule 485
Case Law: Gianni v. R. Russell & Co. 486Case Law: Lee v. Joseph E. Seagram & Sons, Inc. 488
xxiv Contents
Key Concepts 492Questions for Review 492Problem Solving and Analysis 493
22 Interpreting Ambiguous Terms 497
A. The Analytic Framework 497
B. Identifying Interpretation Issues 4991. Do the Parties Have a Dispute Over the Meaning of a Term? 4992. Is the Term (or Contract) Ambiguous? 501
C. Primary Rules of Interpretation 5051. Language of the Express Terms 506
Case Illustration: Whittington v. Eli Lilly and Co. 5062. Course of Performance/ Conduct 5083. Course of Dealing 5094. Trade Usage/ Custom 509
Case Illustration: Robinson v. United States 510Case Illustration: Hurst v. W.J. Lake & Co. 511Case Illustration: Ermolieff v. R.K.O. Radio Pictures 511
D. Secondary Rules of Interpretation 5111. Preference to Interpret Contracts as Valid, Lawful, and
Reasonable 512Case Illustration: Entremont v. Whitsell 512
2. Conflicts Between Clauses 5133. Ejusdem Generis 513
Case Illustration: 242- 44 E. 77th St., LLC v. Greater New York Mut. Ins. Co. 513
4. Interpretation Against the Drafter 514Case Illustration: Grove v. Charbonneau Buick- Pontiac, Inc. 514
Case Law: Frigaliment Importing v. BNS Int’l Sales Corp. 515Key Concepts 519Questions for Review 520Problem Solving and Analysis 520
23 Implied Terms 525
A. Overview 525
B. Supplementing the Contract with Implied Terms 5261. Overview of the Common Law 526
Case Illustration: Beal v. Las Vegas Sav. Bank 5272. UCC Gap Fillers 528
Contents xxv
C. Implied Obligation of Good Faith and Fair Dealing 5301. Common Factual Scenarios 5302. Definition of Good Faith 531
Case Illustration: Sons of Thunder v. Borden, Inc. 5323. Special Case: Satisfaction Clauses 533
Case Illustration: Morin Building Products Co. v. Baystone Construction 533
4. Implied Obligations of Reasonable Efforts 534
Case Law: Wood v. Lucy, Lady Duff- Gordon 534
D. UCC Article 2 Implied and Express Warranties 536
Case Law: Bayliner Marine Corp. v. Crow 540
E. Implied Warranty of Habitability 544
Case Law: Mease v. Fox 545Key Concepts 548Questions for Review 548Problem Solving and Analysis 549
PART IV. BREACH, CONDITIONS, AND REPUDIATION 553
24 Breach of Contract 555
A. Overview 555
B. Levels of Breach 5571. Partial Breach/ Substantial Performance 557
Case Illustration: Jacob & Youngs, Inc. v. Kent 5582. Material Breach 559
Case Illustration: Volvo Trucks North America v. Wisconsin Department of Transportation 560
3. Total Breach 561
C. Determining the Materiality of the Breach 5621. Amount of Benefit Not Received 562
Case Illustration: O. W. Grun Roofing & Constr. Co. v. Cope 5632. Adequacy of Damages 5633. Forfeiture Suffered by Breaching Party 5634. Likelihood of Cure 5645. Lack of Good Faith and Fair Dealing 564
xxvi Contents
D. Discharge of Duties 5641. Full Performance 5642. Tender of Performance That Is Rejected 5653. Agreement by the Parties 5654. Valid Defense or Excuse 5655. Occurrence of a Condition 5656. Total Breach/ Repudiation by the Other Party 565
Case Law: Milner Hotels, Inc. v. Norfolk & Western Railway Co. 566
E. UCC Nonperformance Rules 5711. Seller’s Nonperformance 5712. The Perfect Tender Rule 5723. Buyer’s Nonperformance 575
Case Illustration: Neumiller Farms, Inc. v. Cornett 576
Case Law: Ramirez v. Autosport 577Key Concepts 582Questions for Review 582Problem Solving and Analysis 583
25 Conditions to Performance 587
A. The Basics of Conditions 5871. Conditions and Duties 5872. Conditions Can Lead to Harsh Consequences 5883. Express Conditions vs. Constructive Conditions 589
B. Characteristics of Express Conditions 5891. Distinguishing Promises from Conditions 5892. Condition Precedent vs. Condition Subsequent 592
C. Analytic Framework 5931. Did the Parties Intend to Include an Express Condition
in the Contract? 5942. Has the Condition Occurred? 5953. If the Condition Has Not Occurred, Has the Condition
Been Excused? 595Case Illustration: Clark v. West 596Case Illustration: Cantrell- Waind & Associates,
Inc. v. Guillaume Motorsports, Inc. 597
Case Law: Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon & Co. 598Case Law: J.N.A. Realty Corp. v. Cross Bay Chelsea, Inc. 604
D. Constructive Conditions (Implied by Law) 6091. Overview 6092. Substantial Performance and Constructive Conditions 610
Contents xxvii
Key Concepts 610Questions for Review 611Problem Solving and Analysis 612
26 Anticipatory Repudiation 615
A. Overview 615
B. Analytic Framework 6161. Has a Party Repudiated the Contract? 616
Case Illustration: Convergent Group Corp. v. County of Kent 618
2. Rights of Non- Repudiating Party 6203. Retraction of Repudiation 620
Case Law: DiFolco v. MSNBC 621
C. Request for Adequate Assurance of Performance 6261. Reasonable Grounds for Insecurity 628
Case Illustration: Turntables, Inc. v. Gestetner 6282. Demand for Adequate Assurances of Performance 6293. Failure to Provide Adequate Assurances Is a
Repudiation 629
Case Law: Hawa v. Moore 630Key Concepts 632Questions for Review 633Problem Solving and Analysis 633
PART V. REMEDIES 637
27 Introduction to Remedies and the Expectation Interest 641
A. Overview of Themes 6411. Expectation Interest or Benefit of the Bargain 6422. Substitutional Remedies vs. Specific Remedies 6423. Legal Remedies vs. Equitable Remedies 6434. Money Damages Are Favored 6435. Purpose Is to Compensate, Not Punish 6446. Theory of Efficient Breach 644
B. Three Interests (Theories) of Recovery 6451. Overview 6452. Expectation Interest 646
xxviii Contents
3. Reliance Interest 6474. Restitution Interest 6475. How Do the Interests Differ? 648
C. The Expectation Interest and Money Damages 6491. Types of Damages 6502. Limits to Avoid Overcompensation 6523. Avoiding Overcompensation Through Offsets 653
D. General Damages (Direct Damages) 6531. Overview 6532. Measure of General Damage 654
E. Consequential Damages (Special Damages) 6571. Lost Profits Arising from Collateral Contracts 6582. Breach Causes Plaintiff Liability to a Third Party 6583. Injury to Person or Property Caused by the Breach 6584. Loss of Use Damages 6595. Plaintiff Incurs Fines or Government- Imposed Fees
Because of the Breach 659
F. Incidental Damages 660
G. Adjustments and Offsets 6621. Prepayments Made by Breaching Party 6622. Non-Breaching Party Reduces Loss Through Mitigation 6633. Breach Results in Gain for Non- Breaching Party 664
Key Concepts 665Questions for Review 665Problem Solving and Analysis 666
28 Certainty, Causation, and Foreseeability 669
A. Overview 669
B. Certainty 6701. Amount of Accuracy Needed 6702. Certainty and Lost Profits 670
Case Illustration: Connoble v. Clark 6703. New Businesses and Evidence of Loss 671
Case Illustration: El Fredo Pizza, Inc. v. Roto- Flex Oven Co. 6714. Impact of Uncertainty 672
Case Law: Kenford Co. v. County of Erie 673
C. Causation 675Case Illustration: Vanessa Redgrave v. Boston Symphony 676Case Illustration: Fowler v. Campbell 676
Case Law: Cannon v. Yankee Products Co., Inc. 677
Contents xxix
D. Foreseeability 6811. Test for Foreseeability 681
Case Illustration: Mansfield v. Trailways, Inc. 6822. General Damages 6823. Consequential Damages 6824. Impact of Unforeseeable Consequences 683
Case Law: Hadley v. Baxendale 683Case Law: Brown v. Vermont Justin Corp. 686Key Concepts 689Questions for Review 689Problem Solving and Analysis 690
29 Mitigation 693
A. Overview: The Mitigation Principle 6931. Reasonable Efforts to Mitigate 6942. No Actual “Duty to Mitigate” 6953. Burden of Proof 6954. Unsuccessful Efforts 695
B. Effect of Mitigation on Damage Awards 6951. General Damages and Mitigation 6952. Consequential Damages and Mitigation 6953. Incidental Damages and Mitigation 696
Case Law: Rockingham County v. Luten Bridge Co. 697Case Law: Lewis v. Mobil Oil Corp. 701
C. Lost Volume Seller 7051. Overview 7052. Three- Prong Test 7073. Burden of Proof 707
Case Law: C.L.C. Corp. v. Ragtime, Inc. 708Key Concepts 711Questions for Review 711Problem Solving and Analysis 712
30 Real Estate, Employment, and Construction Contracts 715
A. Overview 715
B. Real Estate Contracts 7161. General Damages for Real Estate Contracts 7162. Establishing Fair Market Value and Certainty 717
Case Illustration: Roesch v. Bray 717
xxx Contents
3. Recovery of Down Payment 7184. Consequential Damages 7195. Incidental Damages 7196. Specific Performance 7207. Real Estate Leases and Mitigation 720
Case Law: Smith v. Mady 720
C. Employment Contracts 7231. Employee Breach 723
Case Illustration: Handicapped Children’s Education Board of Sheboygan County v. Lukaszewski 724
2. Employer Breach 726Case Illustration: Havill v. Woodstock Soapstone Co. 726
3. Employment Contracts and Mitigation 727Case Illustration: Parker v. Twentieth Century- Fox
Film Corp. 729
Case Law: Roth v. Speck 731
D. Construction and Service Contracts 7331. General Damages for Contractor Breach 733
Case Illustration: McKee v. Wheelus 735Case Illustration: Peevyhouse v. Garland Coal & Mining Co. 735Case Illustration: Landis v. William Fannin Builders, Inc. 736
2. Awarding Both Cost to Repair and Diminution in Value 736Case Illustration: Marchesseault v. Jackson 737
3. Specific Performance 7374. Consequential and Incidental Damages 738
Case Illustration: Alpine Indus., Inc. v. Gohl 738Case Illustration: Doughty v. Simpson 739
5. Contracting Party Breach 740
Case Law: Eastlake Construction Co. v. Hess 741Key Concepts 747Questions for Review 747Problem Solving and Analysis 748
31 UCC Remedies 751
A. Overview 7511. Buyer’s vs. Seller’s Remedies 7522. Types of Damages 753
B. Buyer’s Remedies: Nondelivery and Rejection 7531. Analytic Framework Overview 7532. Recover Any Price Paid— UCC §2- 711 7543. Cover Damages— UCC §2- 712 7544. Market Damages— UCC §2- 713 755
Contents xxxi
5. Incidental Damages— UCC §2- 715(1) 7586. Consequential Damages— UCC §2- 715(2) 7587. Cancellation— UCC §2- 711(1) 7618. Specific Performance— UCC §2- 716 761
C. Buyer’s Remedies: Acceptance of Non- Conforming Goods 7611. Warranty Damages— UCC §2- 714 7612. Consequential and Incidental Damages— UCC §2- 715 763
Case Law: Doner v. Snapp 764
D. Seller’s Remedies: Wrongful Rejection/ Repudiation 7691. Overview 7692. Resale Damages— UCC §2- 706 770
Case Illustration: Coast Trading Co. v. Cudahy Co. 7713. Market Damages— UCC §2- 708(1) 7724. Seller’s Expected Profit— UCC §2- 708(2) 773
Case Illustration: Rodriguez v. Learjet, Inc. 7745. Seller’s Incidental Damages— UCC §2- 710 775
E. Seller’s Remedies: Seller Action for the Price— UCC §2- 709 776
Case Law: Sprague v. Sumitomo Forestry Co. 776Key Concepts 780Questions for Review 780Problem Solving and Analysis 781
32 Other Damages 785
A. Overview 785
B. Punitive Damages 7861. Breach Involves a Tort 786
Case Illustration: Walker v. Signal Companies 7862. Exceptions to Tort Requirement 787
Case Illustration: White v. Blue Cross and Blue Shield of Greater New York 788
C. Emotional Distress Damages 7891. Bodily Injury in Addition to Emotional Distress 790
Case Illustration: Sullivan v. O’Connor 7902. Serious Emotional Distress Was a Likely Result 791
Case Illustration: Christensen v. Superior Court 791Case Illustration: Windeler v. Scheers Jewelers 792Case Illustration: Agredano v. United States 793
D. Attorney’s Fees 7931. By Statute 794
xxxii Contents
2. Court Rules 7943. By Agreement 7944. Collateral Litigation 7945. Bad Faith 795
E. Liquidated Damages and Other Agreed Remedies 7951. Overview 7952. Proving the Rule 796
Case Illustration: Vanderbilt University v. DiNardo 797
F. Prejudgment and Post- Judgment Interest 7981. Prejudgment Interest 7982. Post- Judgment Interest 799
G. Alternative Award: Nominal Damages 799Case Illustration: Freund v. Washington Square Press 800
Key Concepts 800Questions for Review 800Problem Solving and Analysis 801
33 Specific Performance and Other Injunctions 805
A. Overview 8051. Equitable Remedy vs. Legal Remedy 8052. Mandatory vs. Prohibitory Injunctions 806
B. Rule Basics: Specific Performance 8071. Inadequacy of Money Damages 807
Case Illustration: Houseman v. Dare 8082. Certain and Definite Terms 809
Case Illustration: Bettancourt v. Gilroy Theatre Co. 8093. Feasibility 810
C. Other Limits 8101. Unfairness and the Relationship to Defenses 810
Case Illustration: Wollums v. Horsley 8112. Unclean Hands 8113. Laches 812
Case Law: Dover Shopping Center, Inc. v. Cushman’s Sons, Inc. 812
D. Issues for Different Types of Contracts 8151. Sale of an Interest in Real Property 815
Case Illustration: McCollam v. Cahill 8162. Contracts for the Sale/ Transfer of Goods 816
Case Illustration: Sedmak v. Charlie’s Chevrolet, Inc. 8173. Personal Services Contracts 8184. Construction Contracts (and Other Service Agreements) 819
Contents xxxiii
Case Law: Dallas Cowboys Football Club v. Harris 819Key Concepts 823Questions for Review 823Problem Solving and Analysis 824
34 Alternatives to Expectation: Reliance and Restitution 827
A. Overview 827
B. Reliance Interest 8281. When to Use Reliance Damages 8282. Types of Reliance: Essential vs. Incidental Reliance 829
Case Illustration: Security Stove & Manufacturing Co. v. American Railway Express Co. 829
3. Losing Contracts 8314. Certainty, Foreseeability, Causation, and Mitigation 832
Case Law: Gruber v. S- M News Company 832
C. Restitution Interest 8361. When to Use Restitution 8362. Restitution for Non- Breaching Party 837
Case Illustration: Oliver v. Campbell 8373. Types of Restitution 8384. Measuring Market Value Restitution 8395. Losing Contracts 840
Case Illustration: IT Corp. v. Motco Site Trust Fund 841
Case Law: United States v. Algernon Blair 842
D. Restitution for Breaching Party 844
Case Law: Freedman v. Rector, Wardens and Vestrymen of St. Mathias Parish 845Key Concepts 849Questions for Review 849Problem Solving and Analysis 850
PART VI. THIRD PARTY RIGHTS 853
35 Third Party Rights 855
A. Third Party Beneficiaries 8561. Formation Requirements 8562. Rights of the Third Party and Promisee 858
xxxiv Contents
3. Defenses and Modification 8594. Special Case: Government Contracts 860
Case Law: Macedonia Church v. Lancaster Hotel 861
B. Assignment of Rights 8681. What Rights May Be Assigned? 8692. Formation Requirements 8713. Revocation of Gratuitous Assignments 8724. Rights of the Parties 872
C. Delegation of Duties 8731. What Duties May Be Delegated? 874
Case Illustration: Price v. Pan- Am. Motor Corp. 8752. Formation Requirements 8753. Rights of the Obligee 876
Case Law: Sally Beauty Co. v. Nexxus Products Co. 877Key Concepts 882Questions for Review 882Problem Solving and Analysis 883
Table of Cases 885Index 891
