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Traditional Rule as to Minors Entering Into K's Contracts entered into by minors are voidable, at minor's option, once

e he or she has reached the age of majority. This is still the majority/basline rule. Holdover from other former principles. What does it mean for a contract to be "voidable"? Can be voided if the minor chooses to, however the contract will also be performed should the minor elect. Must take affirmative steps to avoid, within reasonable time of reaching age of majority. The contract is enforceable if the minor so chooses. Rationale for the Rule? Has something to do w/ minors being presumed not to be able to make good judgments. Casebook p. 518: that minors do not have the judgment to protect themselves in the mkt place. Exceptions to the Minority Rule Minor may be liable for the reasonable value of a "necessary". However not necessarily to the contract price, if the price exceeds the reasonable value. May effectively be held liable based upon affirmative misrepresentation of age. May effectively be held liable based on willful destruction of goods. In all these, the contract remains unenforceable but the minor is liable in restitution (for the necessity) or in tort (for the willful damages) Dodson v. Shrader Discusses another possible exception, used in minority of states. "Benefit" rule: upon recession, recovery of purchase price reduced by value of benefit minor received. "Use/depreciation" rule: upon recession, recovery of purchase price reduced by depreciation of item while in minor's possession. Tenessee's new rule (top of p.522): the minor "ought not to be able to recover the amount actually paid, w/o allowing the vendor of the goods reasonable compensation for the use of, depreciation, and willful or negligent damage to the article purchased, while in his hands." But this exception applies only if minor already has paid in advance. Similarities Between Minorities and Mental Incapacity First, a contract entered into a mentaly incompetent person is voidable, not void. Second, an exception may apply for a "necessary". Differences: Traditional test: Known as the Hauer test, it looks for whether the person had sufficient mental ability to know what he or she was doing and the nature and consequences of the transaction (cognitive test).

New/minority test: Whether the person is unable to act in a reasonable manner regarding the transaction and the other person has reason to know of the condition. (volitional test) Differences Between Minority and Mental Incapacity: Majority view is that party alleging mental incapacity must return consideration received, if the contract was made on fair terms and w/o knowledge of the incapacity by the other party. Begin by discussion problem 7-1, on page 519. Defenses to Breach of Contract: Duress: Doctrine originally applied only to cases of actual or threatened physical harm. Later expanded to include threats to person's property (duress of goods). More recently in many jurisdictions, duress has been more broadly applied to include "economic duress" , where most cases arise today. Effect of Duress: Contracts made under economic duress are voidable, not void. Can be ratified either explicitly or by conduct amounting to ratification. Totem Marine v. Alyeska Pipeline Totem claimed it was owed 260-300k under contract with Alyeska. Alyeska said it wasn't sure how soon it could pay. Totem accepted Alyeska's offer to settle for 97,500. Totem now seeks to rescind settlement agreement on grounds of economic duress. Alyeska/2nd Restatement Rule: Test for Duress To avoid agreement for economic duress, must establish: A wrongful or improper threat. Absence of any reasonable alternative to acceptance of the threat. Most courts also add a (secret) third requirement: Must show that the threat was what actually induced the party to enter into the agreement. Think "but-for" causation: " I would not have entered into this contract but for the threat from the opposing party." Reasonable Alternative? Courts originally used a reasonable person standard. But test is now subjective one that asks whether the particular victim was induced by threat. Argument that Totem had no reasonable option: creditors were hounding Totem; if it didn't get money quickly it would have had no choice but to declare bankruptcy. Some Courts hold that financial difficulty alone is insufficient to establish duress; that the defendant must have caused the plaintiff's situation of duress.

Odorozzi v. Bloomfield School District Major (infamous) contracts case. Ordorizzi resigned as school teacher after criminal charges of homosexual conduct war brought against him. Charges later dropped, for unstated reasons. Sued school district when they refused to reinstate him. Essentially was asking for rescission of his agreement to resign. Requirements for Undue Influence: Undue susceptibility to pressure (for example, mental emotional or physical problems) couple with Excessive pressure. But must both be present? Yes, but likely the scale will slide. Confidential Relationship Necessary? Traditional rule required some sort of family or fiduciary relationship. R2C 177(1): Does not require a strict confidential relationship, but says there must be a sufficient relationship between the parties that the person is "justified in assuming that the person will not act in a manner inconsistent with his welfare." 2nd Restatement Duress Rule: To avoid agreement for economic duress, must establish: A wrongful or improper threat. Absence of any reasonable alternative to acceptance of the threat. Must also show that the threat actually induced the party to enter into the contract. Requirements for Undue Influence: (1) Undue susceptibility to pressure (for example, mental emotional or physical problems), coupled with (2) Excessive Pressure Look for: discussion of transaction at an unusual time consummation of transaction in an unusual place Insistent demand that the business be finished at once. absence of 3rd party advisors statements that there is no time to consult advisors/attorneys. (3) Said pressure caused them to enter into a bargain they otherwise would not have. Confidential Relationship Necessary? Traditional rule required some sort of family or fiduciary relationship. R2C 177(1): Does not require a strict confidential relationship, but says there must be sufficient relationship between the parties that the person is "justified in assuming that person will not act in a manner inconsistent w/ his welfare." How is "excessive pressure" shown?

Pg. 552 -- certain conditions to look for. Other Defenses: Fraud or Misrepresentation May provide basis for tort action. Tort Action Generally requires proof of fraudulent intent. If action for negligent misrepresentation is recognized, recoverable damages are likely to be limited. When fraudulent intent is proven, punitive damages may be recoverable. Contract Misrepresentation can be used as a defense to a collection or enforcement claim. Or may be used as affirmative basis for rescission of the contract and restitution of benefits conferred on the other party. Syester v. Banta Underlying claim is a tort action, to recover actual and punitive damages. But to bring that claim, she mist first rescind the contract releases she signed. So the focus here is on the representations that caused her to sign the release. To Set Aside a Contract for Fraud or Misrepresentation of a Contract: R2C 164: To make a contract voidable, there must be a misrepresentation that is either fraudulent or material (defined in 162) that induces the other party's manifestation of assent and upon which the other party is justified in relying. Misrepresentation Here? That she had the ability to be a professional dancer? That she did not need an attorney to review the releases? Was Reliance Reasonable? At the time the statements were made, she already had sued the studio, on the theory that she had been lied to. Are statements of "opinion" actionable? Usually no, need to allow room for salesmanship to happen. Definition of "opinion" -- 168. 169 -- addresses when reliance on statements of opinion is justified. Common law rule that opinion is not actionable has been substantially eroded. Possible reasons "opinion" may be actionable here: Defendants may have misrepresented their actual state of mind. Relationship of trust and confidence between Ms. Syester and her instructor - see 169(a). Hill v. Jones Cases involves alleged non-disclosure of material information. Facts not disclosed: that property in the past had been infested by termites. Classical View: Caveat emptor.

A party to a business transaction did not have a duty to volunteer any material information. Jones Rule: "Where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer." ---------------------------R2C 164: To make contract voidable, there must be a misrepresentation that is either fraudulent or material (defined in 162) that indices the other party's manifestation of assent and upon which the other party was justified in relying. Hill v. Jones Case involves alleged nondisclosure of material information. Fact not disclosed: that property in the past had been infested by termites. Is negligent nondisclosure a basis for recession? 164(2) allows rescission based on misrepresentation that is either fraudulent or material. But 161 and cases only allow rescission based on nondisclosure of known facts. Park 100 Investors, Inc. v. Kartes Involves fraud in the execution, as opposed to fraud in the inducement. Prior cases we have looked at, the problem is "fraud in the inducement" meaning, "I would not have agreed to it but for the fraud." Here, we're dealing with "fraud in the execution" which means fraud regarding what is actually being signed. Williams v. Walker-Thomas Furniture Co. Defendant purchased household goods on "rent-to-own" basis. She then bought a stereo for $514. Contract provided that payments would be credited pro-rata to all contracts ("dragnet" clause). Two Parts of Standard: Procedural unconscionability: some defect in the bargaining process. Substantive unconscionability: refers to the fairness of the terms of the resulting bargain. Unconscionability issues are decided by court, not jury. Evidence of Procedural Unconscionability? Contract of adhesion; terms bored in fine print; high pressure sales tactics; absence of other sellers of goods in question. Evidence of Substantive Unconscionability? Is practice inconsistent with practice in trade? Williams:

Term should be considered in light of the "commercial needs of the particular trade or case." ---------------------------------------------------1.24.12 Begin by discussing the doctrine of unconscionability as it is shown in Walker. Court in Walker: Evidence fo substantive unconscionability? Is practice inconsistent with practices of trade? Williams: Term should be considered in light of the "commercial needs of the particular trade or case." Can merchant articulate a reasonable justification for the term? Do other terms in contract protect the same interests? Can Price Terms Be Unconscionable? Arguably it's hard to show lack of assent to price. When goods are purchased in a competitive market, hard to show that price is unfair. --------------------------------------------------------------1.26.12 Adler v. Fred Lind Manor The entire arbitration agreement is unconscionable because it is unilateral. Particular provisions (the cost splitting provision; the attorneys fees provision; the 180-day limitations period) are unconscionable. Courts can sever unconscionable terms: Preserves the individuals rights to contract freely. Public Policy Doctrine v. Other Contract Avoidance Doctrines Public policy doctrine focuses solely on substance of the contract; no element of bargaining misconduct is required. The doctrine makes a contract void, not voidable. Covenants Not to Compete: These have the effect of restraining competition. Therefore, they are unenforceable unless they meet certain requirements. R2C 187-188. Presumptively, they are unenforceable and they burden of proof rests on the party trying to enforce the non-compete. First Step: Covenant must be "ancillary" to a valid transaction or relationship. Purpose of this requirements? To insure that the covenant has a valid purpose other than simply restraining competition.

One such ancillary relationship: employer-employee relationship. R2C 188(2)(b). Second Step: Covenant must be reasonable in scope. Is the time period unreasonable? Is the geographic scope unreasonable? Is the profession or trade unreasonably broad? Third Step: Is the promisee's interest in enforcing the covenant outweighed either by hardship on the promisor or by the public interest? Valley Medical Specialists v. Farber Declines to decide that restrictive covenants on doctors are per se void. But says that such a covenant must serve a protectable interest and should be "strictly construed for reasonableness." Overall point: Level of scrutiny varies depending on nature of activities restricted. ----------------------------------------------------------------- 1.31.12 What if a contract is inconsistent with a statute? If a statute declares a certain type of contract to be unenforceable, courts will follow this. However if it is "inconsistent" as opposed to completely in tension with, courts will typically determine what type of statute is in question: Regulatory Statutes: Enacted for benefit of public as a whole. "Revenue Raising" Statutes: Hunting License Fishing License Restitution available if the contract is unenforceable? Depends In pari delicto: If both parties willfully engage in wrongful conduct, and therefore are "in pari delicto" (equally culpable), the courts usually take the position that the parties should be left where the court finds them and will give no remedy to either party, even if one has received a benefit from the other. Sources of Public Policy? Constitutional provisions, statutes, and other official enactments. Well-established judicial precedent. Hesitance to make judicial pronouncements of public policy. Surrogacy Agreement in R.R. v. M.H.

Biological father would have "full parental rights," surrogate other would allow him to take the child home to live with himself and his wife. Series of payments (10k in total) to birth mother; said this was payment for her services, not for adoption of child, termination of parental rights, or consent to surrender child for adoption. However, birth mother was required to refund all payments if she refused to allow biological father to take the child home from hospital. Previous Chapter: Doctrines involved some defect in the bargaining process, or some problem with the substance of the resulting contract, or a combination of both. Next Chapter: Doctrines address situations in which a party's expectations have been disappointed. First Section: relief because of a mistake at the time the contract was formed, either by both parties (mutual) or by only one (unilateral) Second Section: Relief because of a change in circumstances (doctrines of impossibility, impracticability, and frustration of purpose). Final Section: Enforceability of contractual modifications. Lenawee County Board of Health v. Messerly: Purchasers=Pickles; Sellers=Messerlys. Purchasers of apartment building (purchase price of 25,500) seek to rescind contract after building declared uninhabitable due to inadequate septic tank. Structure of Suits: Health department sued the Pickles and the Messerlys to have the property condemned as uninhabitable. Messerlys filed a cross-claim against the Pickles to foreclose the property. The pickles then made a counterclaim against the Messerlys for rescission, and they make Barnes a defendant (3rd party claim). Nondisclosure of material facts? No evidence that the seller knew of the problem. Second Restatement of 152: Allows relief for mistake by both parities at time contract was made when: The mistake goes to a basic assumption on which the contract was made. The mistake has a material effect on the agreed exchange of performances; and the part seeking relief does not bear the risk of mistake. ----------------------------------------------------------2.2.12 Second Restatement 152: Allows relief for mistake by both parties at time contract was made when:

Mistake goes to a basic assumption on which the contract was made; Mistake has a material effect on the agreed exchange of performances; and the party seeking relief does not bear the risk of mistake. Party bears risk of mistake when: 154 The risk is allocated to the party by the agreement; the party is aware, at the time the contract was made, that she has only limited knowledge with respect to the facts to which the mistake relates but treats this limited knowledge as sufficient ("conscious ignorance"); or the court allocates the risk to the party because it is reasonable under the circumstance to do so. Boilerplate "as is" clause: Shore Builders: A boilerplate clause is ineffective t prevent rescission because of mutual mistake. A third possible approach: The presence of a boilerplate clause should be a factor in deciding who bears the risk of loss, but not conclusive. Wil-Fred's Inc. v. Metropolitan Sanitary District: Deals with relief for unnatural rather than mutual mistake. Alleged mistake: assumed that heavy trucks could be driven into sand beds to spread fill. Requirements for Unilateral Mistake: 153 In addition to showing all of the requirements for mutual mistake, a party seeking relief for unilateral mistake must show either: that enforcement of contract would be unconscionable, or that the other party had reason to know of the mistake, or that his fault caused the mistake. Impossibility, Impracticability, and Frustration of Purpose: Usually arises when something changes after the parties enter into their contract. Impossibility: Objective v. Subjective Objective - "No one can do it." Subjective - "I can't do it." "Strict Physical Impossibility" Death or incapacity of an essential person. Destruction of subject matter of contract. Key to these cases: Did he parties contemplate that the person or thing was essential to performance? Karl Wendt Farm Equipment v. International Harvester: IH claimed termination of dealership agreement was justified because IH was suffering enormous losses in its equipment division due to a collapse in the market for farm equipment.

-------------------------------------------------------------2.7.12 The three categories involve changes in circumstances that occur between the making of the contract and the time for performance. Impossibility: Objective -- No one can do it Subjective -- I can't do it Strict Physical Impossibility: Death or incapacity of an essential person. Destruction of subject matter of contract. Key to these cases: Did the parties contemplate that ht person or thing was essential to the performance (of the contract)? Karl Wendt Farm Equipment v. International Harvester: IH claimed termination of dealership agreement was justified because IH was suffering enormous losses in its equipment division due to a collapse in the market for farm equipment. Second Restatement 261: Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary. Court: "While the facts suggest that IH suffered severely from the downturn in the farm equipment market, neither market shifts nor financial inability of one of the parties changes the basic assumption of the contract such that it may be excused under the doctrine of impracticability. To hold otherwise would not fulfill the likely understanding of the parties as to the apportionment of risk under the contract." Changes in Market Conditions: In some limited cases, may excuse nonperformance. But "mere lack of profit" is not enough. Frustration of Purpose: Where, after the contract is made, a party's (1) Principal purpose (2) is substantialy frustrated (3) without his fault (4) 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 (5) unless the language or the circumstances indicate the contrary. Impracticability v. Frustration of Purpose:

Impossibility and impracticability focus on the performance; frustration of purpose focuses on the purpose of the performance.

Mel Frank Tool & Supply, Inc. v. Di-Chem Cho. Di-chem entered into 3-year lease, intending to store hazardous materials on premises. In 15th month of lease, was ordered to discontinue use of premises for this purpose. Mel Frank Court: The fact that the government regulation has prohibited a primary use will not be grounds for relief based on frustration of purpose if the tenant has a "serviceable use still available." The contract must be rendered "virtually worthless" to warrant relief based on the frustration doctrine. Force Majeure Clause: "Act of God Clauses" Clause inserted to excuse one party from performance based on a drought, hurricane, or other "act of god". ----------------------------------------------------------------2.9.12 -- Modification of Contracts I. Contract Modification A. Alaska Packers Association v. Domenico 1. Original contract: i. Plaintiffs were to perform sailing and fishing duty on vessel in Alaska in exchange for $50 to $60 plus 2 cents for each salmon caught. ii. After they arrived, plaintiffs demanded $100 instead or they would stop work entirely; defendants agent eventually relented and signed replacement contracts. 2. Preexisting Duty Rule i. A contractual modification that calls for increased compensation for performance already required by a contract is unenforceable. a. i.e. There must be new, additional consideration provided to go with a modified contract. ii. Rationale for Rule: a. Lack of consideration. b. Potential for coercion of one party by the other, especially once performance has begun. iii. How to made the modification enforceable: a. Add additional work responsibilities b. But the original agreement required the workers to do any other work whatsoever when requested to do so by the captain or agent of the Alaska Packers Association. c. Also, courts can refuse to enforce a modification on the ground that the change reflects a mere pretense of a bargain. iv. Exceptions to preexisting duty rule: a. Unanticipated difficulties.

Rationale the assumption of coercion is rebutted when one party has encountered substantial and unforeseen difficulties. b. Detrimental reliance. c. Mutual release, followed by new agreement. Rationale -- Freedom to contract. II. UCC 2-209: A. As a general rule, contractual modifications are enforceable, with or without additional consideration. 1. Rationale modifications are routine in the commercial world and should be presumptively enforceable. 2. Policed by the doctrine of good faith.

I. Performance is Impracticable: A. Was there an event that occurred that made performance as agreed impracticable? 1. An event occurred that has made the performance as agreed impracticable. 2. The nonoccurrence of the event was a basic assumption on which the contract was made. 3. The impracticability resulted without the fault of the party seeking to be excused. 4. The party has not assumed a greater obligation than the law imposes. II. Existing or Supervening Impracticability i. Did the event exist at the time the contract was formed, or did it occur subsequently? a. If the event had already occurred, test is the same as above with additional requirement: Did the party know or have reason to know at the time of contracting of the facts making performance impracticable? III. Agreed Performance: A. Was there a choice between alternative ways of performing? 1. Yes. Then the fact that one alternative becomes impracticable will not excuse the party if another remains available. In this case, the agreed performance is not impracticable. 2. No. If not, were good and move on to next one. B. Additional Expenses: 1. Usually do not rise to the level of making performance impracticable. i. See: Karl Wendt Farm Equipment Co. v. International Harvester Co. IV. Basic Assumption: A. R2C: 1. Determining whether the nonoccurrence of an event was or was not a basic assumption involves a judgment as to which party assumed the risk of its occurrence.

The assumption may be implied, but it must be shared by both parties. a. i.e.: Death of a necessary person; contract for rental home and home burns down; etc. 2. Party seeking to be excused cannot be the source or basis of the impracticability. I. Frustration of Purpose A. The party claiming this defense must satisfy four requirements: 1. Supervening event that substantially (i.e. totally or near totally) frustrated the partys principal purpose in forming the Contract. i. Parties will not be excused merely because the contract is now not profitable. Purpose must be totally or damn near frustrated. 2. It was a basic assumption on which the contract was made. 3. The supervening event occurred without the fault of the party seeking discharge from the contract. 4. The party seeking discharge did not assume the risk of the supervening event. i. To determine if the party assumed the risk courts will look at a. Foreseeability b. Allocation of risk c. Trade usage I. Contract Modification A. Alaska Packers Association v. Domenico 1. Original contract: i. Plaintiffs were to perform sailing and fishing duty on vessel in Alaska in exchange for $50 to $60 plus 2 cents for each salmon caught. ii. After they arrived, plaintiffs demanded $100 instead or they would stop work entirely; defendants agent eventually relented and signed replacement contracts. 2. Preexisting Duty Rule i. A contractual modification that calls for increased compensation for performance already required by a contract is unenforceable. a. i.e. There must be new, additional consideration provided to go with a modified contract. ii. Rationale for Rule: a. Lack of consideration. b. Potential for coercion of one party by the other, especially once performance has begun. iii. How to make the modification enforceable: a. Add additional work responsibilities b. But the original agreement required the workers to do any other work whatsoever when requested to do so by the captain or agent of the Alaska Packers Association. c. Also, courts can refuse to enforce a modification on the ground that the change reflects a mere pretense of a bargain.

i.

iv. Exceptions to preexisting duty rule: a. Unanticipated difficulties. Rationale the assumption of coercion is rebutted when one party has encountered substantial and unforeseen difficulties. b. Detrimental reliance. c. Mutual release, followed by new agreement. Rationale -- Freedom to contract. II. UCC 2-209: A. As a general rule, contractual modifications are enforceable, with or without additional consideration. 1. Rationale modifications are routine in the commercial world and should be presumptively enforceable. 2. Policed by the doctrine of good faith. III. Exceptions to preexisting duty rule: A. Unanticipated difficulties B. Detrimental reliance. C. Mutual release, followed by new agreement. IV. UCC 2-209 A. As a general rule, contractual modifications are enforceable, with or without additional consideration. 1. Rationale: i. Modifications are routine in the commercial world and should be presumptively enforced. ii. Policed by doctrine of good faith and by duress defense. V. Good/Bad Faith Test Under Article 2: A. First, a party may in good faith seek a modification when unforeseen economic exigencies existed which would prompt an ordinary merchant to seek a modification in order to avoid a loss on the contract. B. Second, it held that even where circumstances do justify asking for a modification, it is nevertheless bad faith conduct to attempt to coerce one, by threatening a breach. VI. Requirement of Protest: A. If the other party fails to protect the requested modification before agreeing to it, some courts would say he effectively waived any claim of bad faith. VII. 2-209 and Statute of Frauds: A. 2-209(3) the requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its protection. B. 2-209(4) although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver. VIII. NOM Clauses: No Oral Modification Clause A. 2-209(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded.

B. But, its waivable. IX. Under Common Law/UCC A. If parties agree to contract modification, unless there is clear evidence of duress or fraud, it is very difficult to get out of it. 1. Especially under the UCC, where modifications are presumed good. X. UCC 2-209: A. As a general rule, contractual modifications are enforceable, with or without additional consideration. 1. Rationale modifications are routine in the commercial world and should be presumptively enforceable. 2. Policed by the doctrine of good faith.

2.21.12 I. Third Party Rights to Contracts A. Common Law v. Second Restatement i. Common law originally distinguished between creditor and done beneficiaries. ii. These distinctions have largely been abolished. iii. Second Restatement distinguishes between intended beneficiaries (with Standing) and incidental beneficiaries (no standing). B. Three Separate Tests for 3rd Party Standing i. (1) both the promisor and promisee must have intended to confer a benefit on the third party. ii. (2) Only the promisee must have intended to confer benefit. iii. (3) The promisee must have intended to confer a benefit, and the promisor must have had reason to know of the promisees intent. C. Determining Intent i. If the contract explicitly provides for third party standing or clearly refutes such standing, the court will enforce that stated intent. ii. Otherwise, the court will consider the totality of the circumstances. II. Herzog v. Irace A. Client (Jones) assigned a portion of his rights to a settlement proceeds to his doctor (Herzog). B. But he later changed his mind and instructed his lawyers to pay the money to him and he would pay Herzog himself. He never paid Herzog.

C. Herzog now sues the lawyers. D. Has an assignment occurred: i. The assignor must make clear his intent to relinquish the right to the assignee and must not retain control over the right assigned or any power of revocation. 1. Was there an actual assignment here? 2. Notice, the obligor must have notice of the assignment. III. Limits on Assignability: 2nd Restatement 317 (2) A. Conflict w/ statute or public policy. B. Material adverse effect on the other party (obligor). C. Preclusion by contractual term. IV. Public Policy Limitations A. Major Example: i. Assignment of proceeds of personal injury action generally valid, but assignment of cause of action generally is not. ii. I can sell the proceeds to my suit, but I cant sell the right to sue. B. But what about the assignment of rights under a personal services contract? V. Partial Assignments A. Historically these were a problem, but 2nd Restatement is more receptive. B. But because of burdens these can impose, some jurisdictions may require consent of oblior. 2.23.12 I. Limits on Assignability: 2nd Restatement 317(2) A. Conflict with statute or public policy B. Material adverse effect on the other party (obligor) C. Preclusion by contractual term. II. Sally Beauty v. Nexxus Products A. Facts i. Best Barber and Beauty had contract to serve as exclusive distributor of Nexxus hair care products in Texas. ii. Best was acquired by Sally Beauty, which was wholly owned by AlbertoCulver, a competitor of Nexxus. iii. The contract contained a termination clause, but Nexxus would have had to wait more than a year. B. Is this a personal service contract? i. Generally, duties under personal services contract are not delegable, especially as to artists or professionals. ii. Rationale: 1. Delegation would be inconsistent with parties intent. C. UCC 2-210(1) i. A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his

original promisor perform or control the acts required under the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach. D. Clauses that prohibit delegation of duties i. Generally these are likely to be more successful than clauses that forbid assignment of rights. ii. If a clause forbids delegation except on consent of the promise, must the refusal to consent be reasonable? 1. Courts are split.

III. Chapter 10 A. Question addressed i. When does obligation to perform arise under an otherwise valid and nonavoidable contract? 2.28.12 I. J.N.A. Realty Corp v. Cross Bay Chelsea Inc. A. Equitable Relief based on forfeiture when: i. The tenant would suffer a forfeiture; ii. There has been no showing of prejudice to the landlord; and iii. The tenants failure was due to mere venial inattention rather than culpable misconduct. II. Breach of Contract A. A breach occurs when a party fails to perform a contractual duty, unless the nonperformance is excused. B. A breach always entitles the injured party to some type of remedy usually money. C. But what effect will a breach have on other partys duty of performance? i. Hypo 1. You agree to buy my used car for $1000 no later than March 11; we memorialize this agreement on a cocktail napkin. a. Whose duty to perform arises first? b. Neither, most courts would say they arise at the same time. ii. Hypo 2 1. Im going on vacation until next Sunday. I orally agree to pay a neighborhood kid 40 bucks to cut my lawn by Saturday. a. Who has to perform first? b. If we dont address this in our contract, his cutting the lawn will be seen as a constructive condition to my obligation to pay.

c. If he waits until Sunday morning to cut my lawn, will I be excused from my obligation to pay him? III. Jacob & Young v. Kent A. Plumbing specifications provided: i. All wrought-iron pipe must be well galvanized, lap welded pipe of the grade known as standard pipe of Reading manufacture. ii. 1000 to 1500 feet of non-Reading pipe was installed. iii. Kent refused to pay the balance of 3484.46 until the contractor replaced the pipe. B. Two Issues i. Is Kent (purchaser) excused from his duty to pay the full contract price? ii. What remedy is he entitled to receive for the contractors breach? C. Did Breach occur? i. Yes, but Kent still had to perform his obligation. ii. Only a substantial deviation from the contract would justify Kents refusal to perform (to pay the full amount provided for). 1. Put another way, the contractor substantially performed its obligations

3.1.12 I. Begin by reviewing the above notes on the Jacobs case. II. Breach in Jacobs & Young A. Yes, but Kent still had to perform his obligation. B. Only a substantial deviation from the contract would justify Kents refusal to perform (to pay the full amount provided for). i. Put another way, the contractor substantially performed obligations. III. Measure of Damages A. Cost of correcting the defect? i. In other words, cost of giving Kent what he expected to receive under the contract? B. Difference in value between the home had the Reading pipe been installed and the home with the pipe that was actually used? IV. Variation on Hypo A. Going on vacation until next Sunday. I orally agree to pay neighborhood kid $40 to cut and edge my lawn by Sunday. B. When I return, hes cut but hasnt edged it. i. This is a breach but does it excuse obligation to pay, at least until he completes it? ii. Depends on if the breach is considered material. V. Material Breach and Substantial Performance: Two Sides of Same Coin A. If Im wondering whether I can withhold my performance (payment), the question is whether the kid has materially breached.

B. If the kid is wondering whether he can sue m for payment, the question is whether he has substantially performed. VI. Sackett v. Spindler A. Facts i. Plaintiff agreed to buy defendants newspaper stock for $85,000. 1. 6k due on or before 7/10 2. 20k due on or before 7/14 3. 59k due on or before 8/15. 4. 6% interest on any late balance. ii. Several deadlines were not met, and they were pushed back. iii. On 10/5 Defendants attorney wrote a letter saying due to plaintiffs delay in performance, there will be no sale and purchase of the stock. iv. Defendant later sold the stock to another buyer and netted 20, 680. v. Plaintiff (buyer) claimed the 10/5 letter amounted to a repudiation of the contract and thus a total breach by defendant; defendant (seller) counterclaimed for breach. B. Problems faced by seller i. First, was he entitled to withhold his performance until payment was made? 1. This turned on whether breach was material or immaterial. ii. Second, was he entitled to treat the contract as terminated? 1. This turns on whether the breach was partial or total. C. Outcome i. Sackett applies 275 of First Restatement. VII. Material v. Total Breach A. The court treats the two as synonymous, but the Second Restatement does not. i. 2nd Restatement 1. Total breach is a material breach that either cannot be cured or has not been cured after a reasonable period of time. 2. A material breach allows me to withhold my performance, but I cant walk away until the material breach becomes a total breach. a. Until it becomes a total breach, the material breach is a partial breach. ii. Second Restatement 241 1. Circumstances that are significant when deciding whether a breach is material: a. The extent of the harm to the injured party. b. The adequacy of monetary damages to compensate for the injured partys loss. c. The extent to which the breaching party will suffer a forfeiture if the breach is treated as material.

d. The ability and willingness of the breaching party to implement a cure. e. The good faith of the breaching party. iii. When Does a Material Breach Become a Total Breach? 1. See Second Restatement 242. 2. In addition to the circumstances listed in 241: a. Whether the non-breaching party reasonably believes that further delay will prevent or hinder it from making reasonable substitute arrangements. b. The extent to which the agreement calls for performance without delay. 3. Comments suggest another factor: whether the non-breaching party has acted reasonably and given the breaching party a chance to cure.

3.13.12 I. Truman L. Flatt & Sons v. Schupf A. Lund mentioned it as an excellent example for an exam answer. B. Facts: i. Plaintiff agreed to buy real property, subject to condition that city council approve its application to operate an asphalt plant there. ii. After encountering public opposition, plaintiff withdrew its application for rezoning. iii. Before the closing date, plaintiff wrote to defendants and asked if theyd be wiling to sell at lower price; defendants said no. Plaintiffs elected to buy anyways at full price, Defendants said no. C. Appellate Court: i. There was no anticipatory repudiation. 1. It must be clear and un ambiguous. 2. Court says there must be a definite and unequivocal manifestation of an unwillingness to perform. ii. Even if there were a repudiation, plaintiff retracted it before the closing and thus defendant was still bound. D. Repudiation: i. Yes, unless 1. The other party materially changed its position in reliance on the repudiation, or 2. The other party declared to treat the repudiation as final. E. Quandary:

Whats a party to do if she receives a communication that raises doubts as to the other partys willingness to perform, but that may not be so unequivocal as to be a repudiation? ii. UCC 2-609: 1. When reasonable grounds for insecurity arise w/ respect to the performance of either party the other may in writing demand adequate assurances 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. Similar rule in the 2nd Restatement 251. II. Hornell Brewing Co. v. Spry A. Did plaintiff have grounds for insecurity on the second occasion? i. reasonable grounds for insecurity generally requires that there have been an objective change in financial condition either an actual change, or at least a change in the information known to the party.

i.

III. Problem 10-2 on Page 842: Four Issues A. Was there an express condition that the screenplay and pre-production report be submitted by August 1? i. Look at: 1. Language of contract 2. Course of performance 3. General Maxims of interpretation 4. Anti-forfeiture maxim of 227(1). B. If so, should that condition be excused for any reason? C. If not, was there a material/total breach by NBS? i. Lunds paraphrased factors for total breach: 1. Extent of harm to injured party. 2. Adequacy of monetary damages. 3. Extent to which the breaching party will suffer forfeiture if the breach is considered material. 4. The ability and willingness of the breaching party to implement a cure 5. The good faith of the breaching party. D. If not a total breach on NBS part, did Mason commit an anticipatory repudiation? i. Has there been a definite and unequivocal manifestation of unwillingness to perform. 1. Likely yes. ii. If so, can Mason retract the repudiation? 1. Yes, if he does so before the other side suffers a loss. 3.15.12 -- Damages

I. Damages A. Three Possible Purposes for Contract Damages 1. To protect the non-breaching partys restitution interest (to make sure the breaching party hasnt been unjustly enriched). a. Protecting the restitutionary interest of the non-breaching party. 2. To protect the non-breaching partys reliance interest (to restore the non-breaching party to her original position). 3. To protect the non-breaching partys expectation interest (to give the full benefit of the bargain). ii. The first is generally considered the most important, however the last one (expectation damages) is the one most commonly applied.

II. Formula for Expectation Damages: A. Loss in value + other loss cost avoided loss avoided = Expectation Damages. i. Loss in Value 1. What did I expect to receive if this contract had been performed? ii. Other Loss 1. Primarily refers to consequential and incidental damages. a. Damages one suffers as a result of the breach. iii. Cost Avoided 1. The cost that would have been expended in fulfilling the contract. a. If its a contract for building a house, it could be building material, employee pay, etc.) iv. Loss Avoided 1. The amount the non-breaching party is able to mitigate damages a. Again, if its a contract for building a house, then this could be the materials the builder was able to use on another site, or something of that nature. B. Case 2: Pg. 850 i. Loss in Value = (100-25) =75K ii. Other Loss =1000 for the employment agency iii. Cost avoided = none iv. Loss avoided = 45k she was paid v. (100k-25k) + (1k) (0) (45k) vi. Damages= 31k III. Roesch v. Bray A. Basic measure of damages in breach of real estate sales contract: i. Difference between contract price and fair market value.

B. But should the seller also be able to recover incidental or consequential damages? C. The appellate court said no, citing concerns that the damages might mount indefinitely. D. Appellate Court i. Loss of value (for formula) will be there difference between the price of the contract at the time of the breach, and the fair market value of the property. IV. How to measure fair market value? A. Expert testimony. B. Testimony by seller. C. Resale price, if resale occurs within a reasonable time and in an arms-length transaction.

3.20.12 I. Incidental and Consequential Damages A. Consequential Damages i. Expenses incurred by the injured party as a result of the other partys breach of the contract. B. Incidental Damages i. Damages which do not derive directly form the breach, but from the results of the breach; they are more indirect in nature. II. Recovering Interest Before Judgment A. Usually only when the parties provided for it in the contract. B. Or if the court can establish a fixed amount that should have been on a certain date, the Court will start the clock there as opposed to the point where the judgment is delivered. III. Handicapped Childrens Education Board v. Lukaszewski A. Ms. Lukascewski, who had one-year teaching contract, quit her job to take a higher-paying job. B. School board had only one applicant for her position, who was more qualified; had to pay new teacher 1,024. 64 per year more than it had paid Ms. Lukaszewski. C. Holding i. She was ordered to pay the difference between her salary and what the school had to pay the new teacher. IV. American Standard v. Schectman A. Contractor failed to complete work as agreed. B. It would have cost 90k to complete the work.

i.

Damages 1. Usually the measure of damages is the amount it costs to complete the work that was initially agreed to be done. 2. Two Exceptions a. When the contract has been substantially performed in good faith and the cost of completion would involve economic waste. E.g., Jacobs and Young. b. When the breach is incidental to the main purpose of the contract and completion would be disproportionately costly.

V. Hadley v. Baxendale: The Palsgraf of Contracts A. Rule of Hadley i. Damages for breach of contract are recoverable only if: 1. Damages arise naturally from the breach (general, direct or immediate damages), or 2. They are the result of special circumstances communicated to the breaching party when the contract was formed (special or consequential damages). ii. Rationale 1. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case. a. Trying to protect burgeoning industries? VI. Second Restatement 351 A. (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. B. (2) Loss may be foreseeable as a probable result of a breach because it follows from the breach i. (a) in the ordinary course of events (Direct Damages), or ii. (b) as a results of special circumstancesthat the party in breach had reason to know (Consequential Damages). C. Restatement Notes: Pg. 873 1. Though it does not explicitly require it, application of the Hadley test is uniformly understood to depend on the defendants knowledge at the time the contract is made. 2. It is only necessary that the type of loss be foreseeable. Not the manner in which the loss occurs.

a. Similar to Wagon Mound.

3.22.12 VII. Florafax v. GTE A. Damages Sought i. Profits lost as a result of the cancellation of the Florafax/Bellarose contract. ii. Florafaxs consists of establishing its own call center. B. Were Florafaxs lost profits within the parties contemplation? i. Well yes, they had provided for it in the contract. GTE had agreed to pay for lost profits if they breached. C. Reasonably Certainty Requirements i. Courts typically are quite strict in demanding proof of fact of damage. ii. But may be less demanding when it comes to proof of amount of damages. D. New Businesses? i. Courts historically were reluctant to award lost profits because of a lack of track record. ii. But some courts are more willing to entertain these damages now. VIII. Rockingham County v. Luten Bridge Co. A. The bridge to nowhere case. B. Although the County Commission repudiated the contract, the contractor continued with the work. C. Justification for Doctrine of Mitigation of Damages i. It precludes the infliction of damage on the defendant without benefit to the plaintiff. ii. It promotes economic efficiency by giving the non-breaching party an incentive not to waste resources. D. Measure of Damages Here i. An amount sufficient to compensate plaintiff for labor and materials expended and expense incurred. E. Other Steps Contractor might have to take to mitigate damages? i. Sell unused materials, or use them on another job. ii. Take other jobs? IX. Havill v. Woodstock Soapstone A. Even if the employer would have had a valid grounds for terminating her, it didnt follow its own procedure. B. How long should damages be awarded? i. Heres a lot of discretion here. ii. But the court says the trial court should have considered her stated intention to stay until retirement and the likelihood she would actually have stayed that long.

iii. Lost vaca time? Routine Bonuses lost? Potential raises? 1. Court says these were less certain and properly denied. X. General Principle as to Mitigation A. The non-breaching employee is required to use reasonable efforts to obtain other employment that is the substantial equivalent. B. Burden of Proof i. The burden of proving failure to mitigate is on the breaching employer. ii. Must show that other suitable employment existed and that plaintiff might have obtained it through reasonable efforts.

3.27.12 I. Mitigation of Damages A. It precludes the infliction of damage on the defendant without benefit to the plaintiff. B. It promotes economic efficiency by giving the non-breaching party an incentive not to waste resources. II. Havill v. Woodstock A. Applies the general rule that a non-breaching employee is required to use reasonable efforts to obtain other employment that is the substantial equivalent. III. Burden of Proof A. The burden of proving failure to mitigate is on the breaching employer. 1. Must show that other suitable employment existed and that plaintiff might have obtained it through reasonable efforts. 2. Reasons for this: i. Seems only fair to place burden on breaching party ii. Employer may have more info about job market. IV. What Steps must be taken to mitigate? A. Second Restatement 350 1. Non-breaching party must take steps to mitigate as can be accomplished without undue risk, burden, or humiliation. V. Inferior Jobs A. The duty to mitigate generally extends only to alternative employment that is substantially equivalent to the position lost. VI. Lost Volume Seller A. Recognized by UCC in 2-708(2). B. Recognized under common law as well.

C. Three Requirements for Lost Volume Seller 1. Plaintiff possessed capacity to make an additional sale. 2. It would have been profitable to do so. 3. It probably still would have made the additional sale absent the defendants breach. VII. Recovering Attorneys Fees A. American Rule 1. Each party must pay his own attorney fees. B. English Rule 1. Prevailing party gets their fees paid. C. Exceptions 1. Statutes i. Hundreds of statutes provide for awarding of attorneys fees under varying circumstances. 2. Litigation Misconduct i. Rule 11 of FRCP ii. 28 U.S.C. 1927 iii. Inherent power to impose sanctions for bad faith conduct. 3. Contractual Provisions i. Generally, these are enforceable. 4. Emotional Distress damages: i. Traditional rule says no, they are not recoverable. ii. Still embodied in the Restatement a. Generally not recoverable, but distress damages may be recoverable when: Breach of contract causes bodily harm. Emotional distress is particularly likely consequence of the breach. 5. Punitive Damages i. May be recoverable when: a. There has been a bad faith breach of an insurance contract, especially in the case of refusal to pay a third party claim, or b. The breach constitutes an independent tort for which punitives are recoverable. 3.29.12 Remedies Under the UCC I. Two Scenarios for Buyers A. Seller delivers the goods, but the goods are non-conforming to the contract. B. Seller either doesnt deliver the goods, or repudiates before performance is due. C. Perfect Tender 1. Buyer may reject goods if they fail in any respect to conform to the contract. UCC 2-601.

2. Exceptions i. Installment contracts, when one installment is non-conforming. a. If the goods are delivered in installments, you cant reject the remaining installments if the first one is non-conforming. b. If the seller cures any nonconformity within the time period for performance. c. If the goods were rejected in bad faith based on a trivial defect. D. Steps to Rejecting Non-Conforming Goods 1. Rejection must be made within a reasonable time, and notice must be given to the seller. UCC 2-602(1). 2. What constitutes a reasonable time depends on the nature of the goods and the speed required. E. Accepting Non-conforming Goods? 1. If the buyer, after a reasonable time for inspection, signifies that it will accept the goods. 2-606(1)(a) 2. If the buyer fails to make an effective rejection after reasonable time has passed. 2-206(1)(b) 3. If the buyer does anything inconsistent with the sellers ownership. 2606(1)(c). F. Remedies if it Accepts Non-Conforming goods? 1. Buyer must pay contract price. 2-607(1). 2. But may recover any damages that result in the ordinary course of events from the sellers breach, i. Which usually is the difference in value between what was agreed and what was delivered. 2-714(1-2). ii. Also may recover incidental and consequential damages. 2-714(3). II. Cancellation A. Termination of a contract for breach. Similar to a declaration of total breach under common law. B. When can buyer cancel? 1. When the buyer rightfully rejects non-conforming goods. 2. When the seller has failed to deliver goods. 3. When the seller has repudiated. C. Remedies when Buyer Cancels 1. Buyer may recover so much of the price as has been paid, 2-711(1), plus 2. Either, cover damages or market damages, plus 3. Incidental and consequential damages, 2-715, less 4. Any expenses saved as a result of the breach. D. Cover Damages 2-712 1. 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. Cover is the preferred remedy because its a more exact measure, but a buyer is not required to cover. Failure to cover may affect recovery of consequential damages.

E. Market Damages 2-713 1. The difference between the market price at the time when the buyer learned of the breach and the contract price. 2. Market price is to be determined as of the place of tender, or in cases of rejection after arrival, or revocation of acceptance, as of the place of arrival. 3. Specific Performance? i. May be available when the goods s are not unique. III. Sellers Remedies A. Available when: 1. If the buyer wrongfully rejects goods, or wrongfully revokes acceptance. 2. If the buyer fails to make payment that is due on or before delivery. B. Recoverable Damages 1. Resale damages 2-706 or 2. Market price damages 2-708(1)), or 3. In some cases, lost profits 2-708(2) C. Sellers Resale 1. Sellers equivalent of cover. 2. Resale must be made in good faith and in commercially reasonable manner. May occur through private or public sale. i. Certain notice requirements apply. D. Market Damages 1. Difference between the market price at the time and place for tender and the unpaid contract price. E. Lost Profits? 1. When? i. When market damages are no adequate to give the seller the benefit of its bargain. 2-708(2). ii. Examples: a. Sellers is a lost volume dealer; or b. There is no market price for the goods involved c. When the contract price-market rice difference would result in overcompensation. d. Other rare situations we arent responsible for. 4.3.12 I. How Can a Buyer accept Non-Conforming Goods A. If the buyer, after a reasonable time for inspection, signifies that it will accept the goods. 2-606(1)(a). B. If the buyer fails to make an effective rejection after reasonable time has passed. 2-606(1)(b).

C. If the buyer does anything inconsistent with the sellers ownership. 2606(1)(c). II. Revocation of Acceptance A. Requires a fairly high showing. B. See 2-608(2) revocation must occur -- before any substantial change in condition of the goods which is not caused by their own defects. III. Remedies if Accept Non-Conforming Goods A. Buyer must pay contract price. 2-704(1) B. But may recover any damages that result in the ordinary course of events from the sellers breach, which usually is the difference in value between the delivered and promised goods. 2-714 (1)-(2) C. Also may recover incidental consequential damages. 2-714 (3) D. To preserve these remedies, though, must give notice w/I reasonable times. 2-607(3)

IV. Alternative Measure of Recovery A. When reliance damages ever be used when the basis of recovery is contract? V. Expectation Damages v. Reliance Damages or Restitution Damages A. Recovery of expectation damages normally protects the plaintiff the best. Gives the highest damages usually. VI. Wartzman v. Hightower Productions A. Why are reliance damages more appropriate here? B. Generally, reliance damages may be appropriate when expectation damages cannot be proven with reasonable certainty. C. Here, the difficulty is proving lost profits on this (highly speculative ) venture. VII. Limitation on Reliance Damages A. Courts says that recovery may be reduced if it can be proven that plaintiffs would not have recouped their reliance expenditures even if defendant hadnt breached. B. But the burden is on the defendant to prove this. VIII. Pre-Contract Reliance A. Should the plaintiff be able to recover expenses it incurred before entering into the contract with the defendant? IX. Walser v. Toyota Motor Sales U.S.A., Inc. A. Basis of recovery is promissory estoppel question before the court is: i. Should the court use expectation damages in an action for promissory estoppel? 4.5.12 I. Three Situations Addressed Today

A. Restitution as a remedy for breach of contract. B. Restitution in favor of a breaching party who has partially performed. C. Restitution when a contract is voidable for some reason. II. Coastal Steel Erectors v. Algernon Blair A. Sub contractor had already begun work on the project. General contractor refused to pay for the crane rental, the sub refused to perform the rest and sued for the amount of money already spent on the project. B. However they would have lost money had they completed the project, thus they sued for restitutionary damages. C. Take-Away i. Illustrates principle that the non-breaching party may forego contract damages and instead sue for the value of services performed. ii. One reason to do so: because the non-breaching party stood to lose money under the deal. iii. Measuring Restitution Damages a. The reasonable value of the performance b. Not reduced by the expected loss on the contract. c. The court also says that the recovery is not measured or limited by the contract price. iv. Two Limitations a. The election can be made only when the defendant has committed a total breach. b. The election cant be made if the plaintiff has completed performance and the only thing left is for the defendant to pay. III. Lancellotti v. Thomas A. Should a breaching party be able to recover the reasonable value f services performed before the breach? i. Traditional Common Law said Hell NO B. Modern View i. The breaching party may recover for the value of any benefit conferred, minus any harm caused by the breach. C. Limitations on Recovery i. Recovery is limited to lesser of (a) value of benefits conferred or (b) nobreaching partys increase in wealth. ii. In no case will the party in breach be allowed to recover more than a ratable portion of the total contract price. iii. Damages suffered by the non-breaching party must also be deducted. IV. Ventura v. Titan Sports,Inc. 4.10.12 Specific Performance I. Limitations on Availability of Specific Performance Remedy A. Must show damages are an inadequate remedy.

B. Equitable relief is discretionary; courts take equitable factors into account. C. Courts consider practical difficulties of shaping relief. D. Finally, courts consider whether contract is too indefinite to enforce by specific performance. II. When might Specific Performance be Available? A. Contracts for sale of land or other real property. 1. Especially true when it is the seller that breaches. B. Also where the item is unique such as artwork, heirlooms, etc. 1. UCC 2-716 III. City Stores Co. v. Ammerman A. The contracts course in a nutshell 1. Contract Formulation issues: i. Unilateral contract B. Case indicates increasing willingness of some courts to grant specific performance. C. The court orders defendants to specifically perform their agreement to lease a department store to plaintiffs on terms at least as favorable as those given to other department stores. D. Appropriateness of Specific Performance Here? 1. Were the terms of the contract sufficiently definite to warrant specific performance? 2. Did the equitable factors favor the plaintiff? 3. Why would an award of damages be inadequate? E. Difficulties of Supervision? 1. Such contracts should be specifically enforced unless the difficulties of supervision outweigh the importance of specific performance to the plaintiff. F. Hardship to Defendant 1. What if the defendant had already leased out all of the department stores sites to other tenants? i. Perhaps damage would be more appropriate. IV. Reier Broadcasting v. Kramer A. Personal Service Contracts 1. Generally, specific performance will not be ordered on these. 2. Reasons: i. Difficulties of supervision; smacks of involuntary servitude.