Ks Outline (Final)

Andrew Gniewek Ks Outline
Last Updated 04/23/09
Ks Case Database
Statute of Frauds
Crabtree (Signed and unsigned writings together satisfy SoF, R2D 132)
Alaska Democratic Party (Promissory estoppel in spite of not satisfying SoF,
R2D 139)
Offer and Acceptance
Ray (Unilateral mistake is insufficient to invalidate agreement)
Lonergan (Generally, ads are not offers, they are requests for offers)
Izadi (Car dealership’s ad is an offer)
Normile (Buying a house; “Qualified acceptance” is new offer)
Petterson (Strict interpretation of offer and acceptance in unilateral K)
Cook (Offeror bound by substantial performance by offeree)
Consideration
Hamer (Uncle and nephew; consideration by foregoing a legal right)
Allegheny College (Donation to college; court found consideration, promoted
idea of promissory estoppel)
Pennsy Supply (Promise and consideration induce each other)
Dougherty (Aunt and nephew; recital of value not consideration)
Batsakis (Mere inadequacy of consideration will not void a K, R2D 79)
Plowman (Past action, moral obligation are not consideration; going to office
is a condition on a gift)
Promissory Estoppel
James Baird (Late acceptance; no PE where offer for exchange)
Drennan (PE basically extended to pre-acceptance reliance)
Berryman (No option K b/c no consideration; narrow PE rule)
Pop’s Cones (PE extended to pre-offer reliance, R2D 90)
Kirksey (Widow relied on promise, but no PE rule)
Greiner (Son relied on mother’s promise for interest in her land)
Wright (PE enforces promise where not biological father)
Katz (PE used to enforce pension)
Restitution/Unjust Enrichment/Quasi-K
Credit Bureau Enterprises, Inc. (Committed man must pay restitution, Rstmt
of Restitution 116)
Watts (Facts sufficient for unjust enrichment or other claims; good opinion!)
Promissory Restitution
Mills (No K to pay for past care of son; only moral obligation)
Webb (Man saved coworker’s life; K to continue paying man, R2D 86)
Principles of K Interpretation
Joyner (Ct uses meaning of “innocent” party; similar to R2D 201)
Parol Evidence Rule
Thompson (Log sale; completely integrated, so no parol evidence)
Taylor (Bad faith insurer; PE may be used to clear up ambiguities)
Sherrod (Dirt-moving contractor; PE can’t show fraud directly contradicting
written K)
Nanakuli (Evidence of trade usage and past course dealings will be admitted)
Implied Terms and the Obligation of Good Faith
Wood (Endorsement deal; implied promise to make reasonable efforts, R2D
205)
Locke (Entertainment K dispute)
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Minority and Mental Incapacity

Dodson (Minor tries to disaffirm K b/c car “blew up” nine months after it was
sold; Minors may incur only voidable contractual duties; Use Rule, R2D 14)
Hauer (Restoration to pre-K positions when mentally incapable party rescinds
K UNLESS other party acted in bad faith, R2D 15)
Duress and Undue Influence
Totem Marine Tug (Cargo hauling; economic duress, R2D 175, 66)
Odorizzi (Teacher; undue influence, R2D 177)
Fraud, Misrepresentation and Non-Disclosure
Syester (Dance lessons; Assertions of opinion may be basis for
misrepresentation in certain circumstances, R2D 168-69)
Park 100 (Hastily signed lease agreement; ct found fraud)
Hill (Termites; duty to disclose in home sales, R2D 161-->R2D 159, CA RULE)
Unconscionability
Williams (Ct adopts unconscionability as a defeator)
Mistake, Changed Circumstances, Impracticability and Frustration
Sherman (Pregant/barren cow case; Essence of the agreement vs. value)
Lenawee County Board of Health (Both parties innocent; risk allocated by as-
is clause, R2D 152)
Wil-Fred’s, Inc. (Subcontractor estimate wrong; unilateral mistake, R2D 153,
IL TEST)
Taylor (K to hire music hall frustrated by destruction of hall by fire, R2D 262-
64)
Karl Wendt (Case franchise; impracticability must be based on more than
simple downturn in market, R261, 66)
Krell (Rented apt loses all value when king’s coronation cancelled; K voidable
because deal frustrated by unanticipated change in purposes, R2D 265, 66)
Modification
Alaska Packers’ Ass’n (Performance already owed is not consideration, R2D
73)
Material Breach; Constructive and Express Conditions
Oppenheimer (Substantial performance not for express conditions)
Jacob & Youngs (Pipe not from Reading; contractor substantially performed)
JNA Realty Corp. (Restauranteur failed to exercise option K before deadline;
ct may excuse nonoccurrence of condition if party acted in good faith UNLESS
the condition was a material part of the agreed exchange)
Computing Value of P’s Expectation; Restrictions on Recovery of
Expectation Damages (Foreseeability and Mitigation)
Sackett (Material breach is grounds for repudiation)
American Standard (Df's performance substantially deviated from
specifications)
Hadley (Damages not natural or foreseeable not awarded, R2D 351)
Floraflax
Rockingham County (Duty to mitigate; Pl should have stopped building, R2D
50)
Havill (Fired employee has duty to make “good faith” effort to find suitable
alternative employment)
Erlich (Emotional distress damages not available in Ks)
Lancelotti (Pl in breach may be able to recover benefit in excess of harm
caused to Df UNLESS Pl’s breach was intentional)
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More Damage Computation; Efficient Breach

Handicapped Children’s Education Board (Teacher breached; school entitled
to salary difference)
Nonrecoverable Damages; Reliance Damages
Wartzman (Flag-pole sitting; reliance damages appropriate, R2D 349)
Walser (R2D 90 gives cts discretion to limit recovery to reliance costs)
Specific Performance
City Stores (Specific performance appropriate in store lease case)
Reier Broadcasting Co., Inc. (Specific performance not appropriate in personal
service case, R2D 367)
Agreed Remedies
Westhaven Associates (Reasonable stipulated damages will be enforced as
stipulated, R2D 356)
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Ks Outline
Grounds for Liability—K Proper; Promissory Estoppel; and, Restitution.
K Proper
What is a K?
K: An enforceable promise.
• Unilateral K: A promise in exchange for a performance.
• Bilateral K: A promise in exchange for a promise.
Master Rule for Ks:

IF (there is offer and acceptance and consideration and no defeaters), OR
(there is a promise and reasonably foreseeable reliance on the promise
and actual reliance and injustice can be avoided only by enforcing the
promise), THEN there is a legally enforceable promise.
Defeators: Statute of Frauds (If the K falls w/in the SoF, no adequate writing, and
no exception–such as R2D 139); Undue Influence; Duress; Economic Duress;
Unconscionability; Bad Faith (In certain situations); Mutual Mistake; Unilateral
Mistake; and, Fraud.
Threshold Considerations for K Proper:
Statute of Frauds:
• There are 3 threshold Qs:
1. Is the K at issue one of the types to which the SoF applies so that a signed
memorandum is required for enforcement? IF no, THEN no SoF
analysis is called. IF yes, THEN…
2. Is the SoF satisfied? That is, is there some sort of writing of its terms
signed by the party to be charged sufficient to meet the SoF
requirements? IF yes, THEN the case may go forward. IF no,
THEN…
3. Are there other factors in the case, such as performance or reliance by the
Pl, which might invoke an exception to the statutory bar? In other words,
can the Pl still be successful in getting K enforcement?
• R2D 110 (Rules, pg. 188).
1. The following classes of Ks are subject to the SoF, forbidding enforcement
UNLESS there is a written memorandum or an applicable exception:
1. A K of an executor or administrator to answer for a duty of his
decedent (the executor-administrator provision);
2. A K to answer for the duty of another (the suretyship provision);
3. A K made upon consideration of marriage (the marriage provision);
4. A K for the sale of an interest in land (the land K provision); and,
5. A K that is not to be performed within one year from the making
thereof (the one-year provision).
• R2D 131. General Requisites of a Memorandum.
1. Unless add’l requirements are prescribed by the particular statute, a K
w/in the SoF is enforceable if it is evidenced by any writing, signed by or
on behalf of the party to be charged, which:
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 Reasonably identifies the subject matter of the K;

 Is sufficient to indicate that a K with respect thereto has been made
b/t the parties or offered by the signer to the other party; and,
 States with reasonable certainty the essential terms of the
unperformed promises in the K.
• R2D 132. Several Writings.
1. The memorandum may consist of several writings if:
 One of the writings is signed; and,
 The writings in the circumstances clearly indicate that they relate to
the same transaction.
2. Crabtree, pg. 306—Pl negotiated with Df's representatives. Just one
document was drawn up (specified salary and made ambiguous reference
to length of employment). Pl claimed he only got half of the raise he was
supposed to get. The ct held that piecing together time cards and another
document to prove there was a K and using parol evidence to explain
ambiguities did not violate the SoF.—IF one or more writings contain
all the essential terms of a K, THEN the K satisfies the SoF; and,
IF some documents are signed and some are unsigned AND they
all treat the same subject matter, THEN they can all be read
together.
 The Crabtree Doctrine—Satisfaction of the SoF by a series of signed
and unsigned writings has been narrowed in subsequent decisions
as requiring two threshold tests to be met:
1. The signed writing must itself establish a “contractual
relationship between the parties”; and,
2. The unsigned writing must “on its face refer to the same
transaction as that set forth in the one that was signed.”
• R2D 139. Enforcement by Virtue of Reliance (Promissory Estoppel).
1. A promise which the promissor should reasonably expect to induce action
or forbearance on the part of the promisee or a third person and which
does induce the action or forbearance is enforceable notwithstanding
the SoF if injustice can be avoided only by enforcement of the promise.
The remedy granted for breach is to be limited as justice requires.
2. [Lists factors to be considered in determining whether injustice can be
avoided only by enforcement of the promise. Rules, pg. 190]
3. Alaska Democratic Party, pg. —Promissory estoppel in spite of not
satisfying the SoF.—…
• 3 reasons for enforcing the SoF (pg. 85-6):
1. Evidentiary—Doing so creates an objective record;
2. Cautionary—It slows King parties down;
3. Channeling—It forces parties into certain K’ing behaviors.
Mutual Assent:
• R2D 24. Offer Defined.
○ An offer is the manifestation of willingness to enter into a bargain, so
made as to justify another person in understanding that his assent to that
bargain is invited and will conclude it.
• R2D 50. Acceptance of Offer Defined; Acceptance by Performance;
Acceptance by Promise.
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○ Acceptance of an offer is a manifestation of assent to the terms thereof

made by the offeree in a manner invited or required by the offer.
○ Acceptance by performance requires that at least part of what the offer
requests be performed or tendered and includes acceptance by a
performance which operates as a return promise.
○ Acceptance by a promise requires that the offeree complete every act
essential to the making of the promise.
• Ray, pg. 23—Pl contracts with Dfs to build home according to specific
specifications. A K was negotiated and signed by one of the Dfs, but the other Df
refuses to build the home when faced with terms of K.—Absent fraud, IF there
is a unilateral mistake as to the K provisions, it is insufficient to
invalidate the agreement.
○ The ct adopts an objective theory for mutual assent, rather than
using the subjective interpretation of the K’ing parties.
○ K’ing parties have a duty to read: “The law is clear, absent fraud,
duress, or mutual mistake, that one having the capacity to
understand a written document who reads and signs it, or,
without reading it or having it read to him, signs it, is bound by
his signature in law…”
○ The subjective intent or the motivation of the K’ing parties is
immaterial: Claimed intent is immaterial, where there is reasonable
manifestation of assent.
Option K: If the offeree/vendee gives the offeror some consideration (a sum of

money, perhaps) to hold the offer open for a stated period of time, under the
CLASSICAL SYSTEM the offer will be irrevocable during that period, as an
“option K.” (See pg. 108)
• R2D 45. Option K Created by Part Performance or Tender.
○ Where an offer invites an offeree to accept by rendering a performance
and does not invite a promissory acceptance, an option K is created when
the offeree tenders or begins the invited performance or tenders a
beginning of it.
○ The offeror’s duty of performance under any option K so created is
conditional on completion or tender of the invited performance in
accordance with the terms of the offer.
• R2D 87. Option K.
○ An offer is binding as an option K if it:
 Is in writing and signed by the offeror, recites a purported
consideration for the making of the offer, and proposes an
exchange on fair terms within a reasonable time; or
 Is made irrevocable by statute.
○ An offer which the offeror should reasonably expect to induce action or
forbearance of a substantial character on the part of the offeree before
acceptance and which does induce such action or forbearance is binding
as an option K to the extent necessary to avoid injustice.
Bilateral K: A promise in exchange for a promise.

• Lonergan, pg. 34—Df runs an ad in the local paper to sell a piece of land. Due to
a slight delay in the Pl’s response/action, combined with realities of business by
mail, Df sells the land to another buyer.—…
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○ The “offer” in the paper was not an offer but an invitation for an offer.
“There can be no K unless the minds of the parties have met and mutually
agreed upon some specific thing.”
○ Generally, ads are not offers; rather, they are considered requests for
offers.
○ “If from a promise, or manifestation of intention, or from the
circumstances existing at the time, the person to whom the promise or
manifestation is addressed knows or has reason to know that the person
making it does not intend it as an expression of his fixed purpose until he
has given a further expression of assent, he has not made an offer.”
○ There was not an offer because the letters did not communicate an
“expression or fixed purpose to make a definite offer and was
sufficient to inform the Pl that some further expression of assent
on the part of the Df was necessary.”
• Izadi, pg. 38—Bait-and-switch car ad—IF a reasonable person would
interpret an ad as an offer AND it is actually viewed as an offer by the
purported offeree, THEN it constitutes an offer.
○ EXCEPTION—Although ads are not usually offers, this ad was held to be an
actionable offer as a referendum on bait-and-switch advertising
tactics. This is a classic example of a ct extending K proper to fit new
circumstances.
• Normile, pg. 44—“You snooze, you lose.”—IF an offeree renders a “qualified
acceptance” of an offer, THEN the original offer is terminated AND the
qualified acceptance constitutes a counteroffer proposed for the
original offeror to accept or reject.
○ Changing the terms of the original offer (and then signing it) transforms
the offer into a counteroffer, which then must be accepted anew.
○ Option Ks in the original offer will not necessarily be imputed to
the counteroffer.
○ What terminates an offer or the offeree's power to accept?
 Generally, offers can be revoked anytime prior to acceptance.
“Generally, notice of the offeror's revocation must be
communicated to the offeree to effectively terminate the offeree's
power to accept the offer.” However this communication may
be indirect, and it is enough the offeree receives the info.
(Normile)
• An offer is revoked indirectly if:
○ The offeror takes action clearly inconsistent with the
continued intent to enter a K; and,
○ The offeree obtains reliable information of this action.
 Passage of time may also terminate offeree's power to accept.
 Rejection of the Offer—When an offer is rejected cts have
considered that the offer no longer exists. (Normile)
 The offeror’s death terminates the offer.
 A counteroffer is considered a rejection of an offer and terminates
the offeree's power to accept the original offer.
 If the initial buyer doesn't manifest acceptance of the initial offer or
of a subsequent counteroffer, and the seller sells the prop to
another party, then the sale of the prop to the other party serves as
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“manifestation of intention” on the part of the seller to revoke the

offer or counteroffer to the first party. The sale is considered a
revocation.
Unilateral K: A promise in exchange for a performance.

• CLASSICAL K LAW would say that the offer of a unilateral K can be withdrawn or
revoked, anytime prior to the completion of the act or performance specified.
Using the bridge hypo, the offer can be revoked anytime prior to B reaching the
other side.
• According to CLASSICAL K LAW, the principle characteristic of a unilateral K offer
was that it remained revocable until performance was completed, i.e., an
offeree's full performance of the act(s) called for. However, the beginning of
performance can be construed as an implied promise to complete the
performance called for thus serving as the acceptance of a bilateral K.
• R2D 45. “If an offer for a unilateral K is made, and part of the consideration
requested in the offer is given or tendered by the offeree in response thereto,
the offeror is bound by a K, the duty of immediate performance of which is
conditional on the full consideration being given or tendered within the time
stated in the offer, or, if no time is stated therein, within a reasonable time. “
• According to MODERN K LAW, “an offeror may not revoke an offer where the
offeree has made substantial performance.” The part (or substantial)
performance is viewed as consideration to support a unilateral K and hold it
binding. Also, acting in justifiable reliance on an offer may in some cases be
enough to make a promise binding.
• Petterson, pg. 53—A unilateral K is formed wherein a mortgagee shall receive a
discount if s/he pays off his/her mortgage on or before a certain date. The
mortgagee comes to pay and the mortgagor refuses.—IF an offeree has not
completed performance of the act specified by the offeror, THEN the
offeror may revoke the offer.
• Cook, pg. 58—A case involving a real estate agent bonus whose provisions are
contingent on performance.—IF an offeree has substantially performed,
THEN that substantial performance constitutes consideration for an
option K AND the offeror is bound by his/her promise/offer.
○ CLASSICAL K LAW—The offeror is the master of the offer, and nothing
short of full performance terminates his right to revoke.
○ MODERN K LAW—Part performance transforms a unilateral K into an
option K, which would be irrevocable.
Consideration: The promissor receives something of value from the promise.

That something of value is called consderation. The formation of a K, except in
special exceptions, requires a “bargain” to which the K’ing parties give assent
and a “consideration” which can take the form of either a return promise or a
performance.
• There are two theories to consider: (1) A benefit to the promissor or a
detriment to the promisee; and, (2) The bargain theory of consideration
.
○ BENEFIT/DETRIMENT TEST (OLD TEST)—A benefit to the promissor or
a detriment to promisee.—IF the promisee is not harmed AND the
promissor is not benefited, THEN the K is without consideration.
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There is consideration ONLY IF there is benefit to the promissor

OR detriment to the promisee.
 Hamer, pg. 72—An uncle promises a nephew that if he quits
smoking and drinking until he is 21, he will give him $5000.—IF
there is forbearance to exercise a legal right AND the
forbearance to exercise a legal right was at the request
of the other party, THEN there is consideration.
○ BARGAIN THEORY OF CONSIDERATION (NEW TEST)—For a promise
to be enforceable, it must be the product of a “bargain”: “A negotiation
resulting in the voluntary assumption of an obligation by one party upon
condition of an act or forbearance by the other.”
○ R2D 71. Requirement of Exchange; Types of Exchange.
 To constitute consideration, a performance or a return promise
must be bargained for.
 A performance or return promise is bargained for if it is sought
by the promissor in exchange for his promise and is given by the
promisee in exchange for that promise.
 The performance may consist of:
• An act other than a promise;
• A forbearance; or,
• The creation, modification, or destruction of a legal relation.
 The performance or return promise may be given to the
promissor or to some other person. It may be given by the
promisee or by some other person.
○ Gratuitous or Donative Promise: Generally, it is not enforceable
because there is no exchange of promises or consideration given.
 Allegheny College, pg. –…--Rule for Charitable Donations: IF a
promisee receives some of the money promised by a
donor, THEN the promisee by implication promises to
behave consistently with the goals that the promise was
made to advance, AND the second promise is
consideration for the first.
 Pennsy Supply, Inc., pg. 78—Pennsy Supply, Inc. agreed to take
the AggRite off American Ash Recycling Corp. of Pennsylvania’s
hands in exchange for getting it for free.—IF the occurrence of
the condition would benefit the promissor, THEN it is
probably a consideration. IF there is no benefit to the
promissor, AND the purpose of the occurrence of the
condition is simply to enable the promisee to receive a
gift, THEN there is probably no consideration.
• This is an example of where the b/d test would not find
consideration, but the bargain theory of consideration would.
We need to look to the parties’ motivation.
 Dougherty, pg. 87—Aunt makes a prom note and writes “for
value received.”—IF something is not regarded as
consideration by both parties, THEN it is not
consideration.
• Recited/purported consideration alone is insufficient
to turn a gift into a K.
○ R2D 79. Adequacy of Consideration; Mutuality of Obligation.
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 If the requirement of consideration is met, there is no add’l

requirement of:
• A gain, advantage, or benefit to the promissor or a loss,
disadvantage, or detriment to the promisee;
• Equivalence in the values exchanged; or,
• “Mutuality of obligation.”
 Batsakis, pg. 93—A case invoIving a signed IOU stating that he
agreed to pay $2,000 plus interest later for $25 now.—“Mere
inadequacy of consideration will not void a K”.
• However, “gross inadequacy of consideration may be
relevant to the application of other issues, such as
fraud, mistake, lack of capacity, duress, or undue
influence.”
○ Even if no finding of fraud, mistake, or undue
influence, but transaction was unconscionable, and a
product of disproportionate bargaining power, a “K”
may be voided.
○ Plowman, pg. 99—Workers laid off and promised pension plan that
Employer eventually stops—IF something occurred in the past, THEN
it is not consideration.
Promissory Estoppel:
• R2D 90. Promise Reasonably Inducing Action or Forbearance.
1. A promise which the promissor 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.
• Scope of Promissory Estoppel:
1. Donative/Gratuitous Promises:
• James Baird, pg. 109–A K’or who relies on an offer that is later
retracted—…
○ CLASSICAL RULE– Promissory estoppel must be based on a
promise, and an offer is not a promise; therefore, relying to
their detriment is not grounds for recovery.
2. Pre-Acceptance Reliance:
• Drennan, pg. 112–Similar K bidding process, but twenty years after
the fact.—IF there is reasonable reliance by an offeree
resulting in foreseeable prejudicial change in position, THEN
there is an implied subsidiary promise not to revoke an
offer for a bilateral K, UNLESS the offer expressly provides
for revocability OR the offeree shops around for a better
offer OR the offeror made a bona fide mistake that the
offeree should have realized was a mistake.
○ MODERN RULE–When someone makes an offer in a bilateral
K, there is a subsidiary implied promise not to revoke
the offer when there has been reliance. The
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consideration for this subsidiary implied promise is

the reliance on the offer, by using the offer in the main
bid. Thus, the offer essentially becomes a promise, which
enables the doctrine of promissory estoppel in “Reliance on
an Offer” situations.
○ R2D 87(2)—An offer which the offeror should reasonably
expect to induce action or forbearance of a substantial
character on the part of the offeree before acceptance and
which does induce such action or forbearance is binding as
an option K to the extent necessary to avoid injustice.
3. Reliance During Negotiations:
• Berryman, pg. 122–A case in which a landowner extends an option
to a buyer for $10, but later retracts.—IF there is no bargained-
for consideration for an option K, THEN no option K has
been formed AND an offer may be revoked any time before
acceptance; and, IF no option K has been formed, THEN an
offeree cannot reasonably rely upon the offer AND no
injustice will result from nonenforcement of the offer.
○ Also, the ct uses a promissory estoppel rule that narrows the
definition of injustice to something tantamount to fraud,
and says that there are very few cases in which reliance
could be reasonably expected. This is a classical court
applying a romantic rule narrowly. The court believes that
the actors in a bargained-for exchange should be aware of
the classical rules and protect themselves under those rules.
○ Cts have been extremely reluctant to find promissory
estoppel in situations outside the construction bid
context, regardless of what R2D 87(1) suggests.
 The nominal consideration of $10 was never paid, thus
invalidating the option K. This case might have been
different had the option been paid.
 Thus, the buyer is arguing promissory estoppel
because he “relied” on the offer. However, the
reliance was in the wrong place: Lining up potential
buyers does not justify reliance. Instead, perhaps if
the buyer had purchased add’l tools or something,
promissory estoppel might apply.
 Also, the landowner probably never “reasonably
expected” his offer to induce reliance, the first
problem with promissory estoppel.
○ R2D 87(1):
 An offer is binding as an option K if it:
Is reduced to writing and is signed by the
offeror, recites a purported consideration for the
making of the offer, and proposes an exchange
on fair terms w/in a reasonable time; or,
Is made irrevocable by statute.
4. Pre-Offer Reliance:
• Pop’s Cones, pg. 128–A case involved a TCBY franchisee who sells
everything b/c of promise from a potential renter in the course of
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negotiations.—R2D 90 + IF there is a statement of the

probability of an offer AND injustice can be avoided only by
the enforcement of that statement as a promise THEN the
statement may be considered a promise.
○ The ct extends promissory estoppel to cases of reliance
where there hasn’t even been a firm offer.
 Even w/o mutual assent, if one of the parties makes a
promise, there can be promissory estoppel.
 The ct lists 4 elements (An echo of R2D 90):
A clear and definite promise;
A promise made with expectation that the
promisee would rely;
A promise on which the promisee reasonably
relies; and,
The promisee suffers a detriment of a
substantial and definite nature.
5. Proxy for Consideration—If there is no consideration for the promise, can
reliance on a promise make the K enforceable?
• Kirksey, pg. 217–Ct held that a widow moving from her land to
brother-in-law’s land was not sufficient consideration to create
a K, after brother in law kicked her off the land later. Ct said
asking Pl to move from her land to his was a “gift promise,” and
thus even though there was a detriment, the gift overrides that so
no consideration.—…
○ CLASSICAL TEST–The b/d test should have been applied, but
it wasn’t. In any event, the ct doesn’t use promissory
estoppel here.
• Greiner, pg. 218–Mother promises son an interest in her land. He
moves himself and his family and makes improvement to the land.
Mother wants to recover possession. Son relied on her promise and
judgment was for him.—…
○ NEWER TEST–This is a classic promissory estoppel case. The
mother’s son reasonably relied on a promise to his detriment.
• Wright, pg. 222–Mother trying to enforce child support against a man who
claimed to be father (even though he knew he wasn’t)—IF there is a promise
AND the promissor should reasonably expect that promise to induce
action or forbearance on the part of the promisee or a third person AND
the promise does induce such action or forbearance on the part of the
promisee or a third person AND injustice would result from non-
enforcement of the promise, THEN there is contractual obligation. (Rule
as applied; Rule as stated has normal I prong.)
• Katz, pg. 238–Employee hit on head during robbery, retires, and is paid a
monthly pension, which later stops—IF there is a promise AND there is
detrimental reliance on the promise AND injustice can be avoided only
by enforcement of the promise, THEN the promise is enforceable. (Note:
Only actual reliance is required, not reasonable reliance.)
1. This is promissory estoppel in a commercial context.
2. In order to show “relied to detriment,” the party need not show that
they lost something to which they were legally entitled, but that
they took an action that they were not legally bound to take.
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Restitution: A restitution claim is not based on the other party's assent

but on that party's "unjust enrichment.” A party unjustly enriched by the
conferral of a benefit must make restitution to the party conferring the benefit.—
Central to recovery in restitution is proof of unjust enrichment.
• Express; implied-in-fact; and, implied-in-law Ks.
1. Express K: Oral or written agreement.
2. Implied-in-fact K: An agreement is implied by the parties’ actions.
3. Implied-in-law K (i.e., quasi-K): A benefit conferred and accepted by one
party, such that it would be unjust for that party to retain the benefit
without compensation.
• Non-Promissory Restitution–When there is no promise by either party, there
can still be restitution.
1. Credit Bureau Enterprises, Inc., pg. 255—Pl was involuntarily committed to
the hospital by the police, who feared he was suicidal. A magistrate judge
found that he was likely to physically injure himself in accordance with
emergency hospitalization procedure. The hospital sought compensation
for services provided, and the court (since his consent was immaterial due
to mental impairment), found for Df.—IF a party is not competent to
refuse services AND the party benefited from the services, THEN
that party is liable under K implied in law/quasi-K/unjust
enrichment/restitution.
1. In this case, the question revolves around whether the Df was
unjustly enriched at the expense of the hospital. Although he never
really agreed to pay (K under duress), he can be forced to pay
because he received the required treatment.
2. Rstmt of Restitution 116, (pg. 259)
1. A person who has supplied things or services to another, although
acting without the other’s knowledge or consent, is entitled to
restitution therefor from the other if:
1. S/he acted unofficiously and with intent to charge therefor;
2. The things or services were necessary to prevent the other
from suffering serious bodily harm or pain;
3. The person supplying them had no reason to know that the
other would not consent to receiving them, if mentally
competent; and,
4. It was impossible for the other to give consent or, because of
extreme youth or mental impairment, the other’s consent
would have been immaterial.
3. Watts, pg. 273–A case involving a couple not married, but the “wife”
claimed that she rendered services for which she was not compensated
that benefited the Df.—…
1. This is a close case, because it’s not clear that she was unjustly
enriched at the expense of her partner. However, this is an
equitable solution, so some judges, as here, feel as though
restitution is applicable.
4. Normally, persons who act gratuitously (i.e., no intent to charge)
cannot recover in restitution. The “no intent to charge” is the key—
i.e., EMT folks can charge for services rendered even though the recipient
may have been unconscious and unable to give assent.
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5. Courts however have been unwilling to grant restitution when

services rendered were by non-professionals (i.e., good
Samaritans).
• Promissory Restitution–Promissory restitution can serve as an exception to
the “no past consideration” rule. Promissory restitution is certainly heftier than
non-promissory restitution.
1. “MATERIAL BENEFIT” RULE–If a party receives a material benefit, other
than gratuitously, the material benefit can make the promise enforceable.
2. R2D 86. Promise for Benefit Received.
1. A promise made in recognition of a benefit previously received by
the promissor from the promisee is binding to the extent necessary
to prevent injustice.
2. A promise is not binding under Subsection (1):
1. If the promise conferred the benefit as a gift or for other
reasons the promissor has not been unjustly enriched; or,
2. To the extent that its value is disproportionate to the benefit.
3. Mills, pg. 286—A father, upon learning that his son has died in the pro
bono care of a doctor, sends a letter promising to pay the doctor
restitution. The father's promise was not binding.—IF there is a moral
obligation to keep a promise AND there was a prior valid
obligation that has been extinguished by the operation of positive
law, THEN the promise is enforceable. (In Mills, there was no prior
valid obligation.)
1. Perhaps the promise is not enforceable because it was the son who
received the material benefit, not the father. Also, this fails in
promissory estoppel because we have no proof of reliance. This
also fails in K proper because there is no consideration. (It cannot
be based on moral obligations.)
4. Webb, pg. 291—Df promised payment to Pl after Pl saved the Df’s life and
was seriously injured in the process.—IF a promisee confers a material
benefit on a promissor AND a promise is made in recognition of
the benefit received, THEN moral obligation can be sufficient
consideration for enforcement of the promise. (This is the “material
benefit rule,” which was adopted by the R2D 86.)
1. The party did not plan to receive a benefit, but it was nonetheless
not gratuitous. Therefore, saving the boss’s life, a material benefit,
makes the promise enforceable.
Principles of K Interpretation:
• THE SUBJECTIVE THEORY OF K INTERPRETATION interpreted Ks on what
was in the mind of the parties—If the parties attributed materially different
meanings to the contractual language, no K was formed since there was no
“meeting of the minds.” MODERN THEORY rejects THE SUBJECTIVE THEORY.
• Cts often state that the “plain meaning” of the language of the K should govern
and that extrinsic evidence is admissible only if the ct concludes that the K is
ambiguous. Most cts will not admit extrinsic evidence of meaning unless the ct
first concludes that the agreement is ambiguous on its face.
• OBJECTIVE THEORY: Words and conduct should be interpreted in accordance
with the standard of a reasonable person familiar with the circumstances, rather
than in accordance with the subjective intent of either of the parties.
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• MODIFIED OBJECTIVE THEORY: A party is bound by the other party’s meaning

if the first party knew, or had reason to know, of the second party’s meaning
while the second party did not know or have reason to know of the first party’s
interpretation.
• If there is ambiguity in the K, it is generally resolved against the party that
authored the K.
• MODERN THEORY: A ct should examine all relevant circumstances in
interpreting the agreement, including preliminary negotiations and
communications between the parties. Definition of terms contained in statutes
or administrative regulations are not determinative of the meaning of such terms
in Ks.
• “It is said that a ct in construing the language of the parties must put itself into
the shoes of the parties. That alone would not suffice; it must also adopt their
vernacular.”
• R2D 201. Whose Meaning Prevails.
1. Where the parties have attached the same meaning to a promise
or agreement or a term thereof; it is interpreted in accordance with
that meaning.
2. Where the parties have attached different meanings to a promise
or agreement or a term thereof, it is interpreted in accordance with
the meaning attached by one of them if at the time the agreement was
made:
a. That party did not know of any different meaning attached by the
other, and the other knew the meaning attached by the first party;
or,
b. That party had no reason to know of any different meaning
attached by the other, and the other had reason to know of the
meaning attached by the first party.
3. Except as stated in this Section, neither party is bound by the meaning
attached by the other, even though the result may be a failure of mutual
assent.
• R2D 202—A writing must be interpreted in context and as a whole document
rather than individual sentences.
• R2D 203—Preferences in interpretation.
• R2D 204—The ct may supply a reasonable term if one has been omitted from
the K.
• Joyner, pg. 352—A developer and a landlord had an interpretative dispute over
the meaning of the term “completely developed.”— IF one party knew OR
had reason to know of the other’s meaning of the disputed language,
THEN the ct must enforce the K according to the “innocent” party’s
meaning.
1. Under the Joyner rule, if both parties are at fault, neither one wins, even
though they may be blameworthy to different degrees.
Parol Evidence Rule: Applies only to Ks that are completely or partially

integrated.
• THE PAROL EVIDENCE RULE determines whether terms neither express nor
implied in writing, but purportedly agreed to orally, may be part of a K.
• Some classical cts allow extrinsic evidence of patent or latent ambiguity, but
more rigidly classical cts require that the ambiguity be patent.
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• Patent ambiguity can be seen on the face of the writing (as in disagreements
over the syntactic structure of a sentence); latent ambiguity arises only from
context in which a term is used.
• Classical cts want to ensure that written agreements will be reliable, while
modern cts are willing to a certain extent to sacrifice this benefit in order to
protect the underdog.
• Integration:
1. Completely Integrated K: A K that contains, within its four corners, the
entire agreement b/t the parties.
a. Only evidence that explains the K terms is admissible.
2. Partially Integrated K: A K in which only a certain part of the transaction is
embodied in writing and the remainder is left in parol. This type of K may
be supplemented with parol evidence that is consistent with the
agreement but may not be contradicted by extrinsic (i.e., parol) evidence.
a. All evidence except that which contradicts the K terms is
admissible.
• CLASSICAL APPROACH:
1. Classical cts look only to the “four corners of the K” to determine
whether it was completely or partially integrated. The presence of
a merger clause would conclusively establish that writing was completely
integrated.
2. Classical cts would generally only admit evidence to explain term if the
term was ambiguous on its face, or patently ambiguous.
3. Classical cts would only admit evidence of collateral agreement if
it dealt w/ a subject distinct from that to which the writing
related.
• MODERN APPROACH:
1. To determine whether K was completely or partially integrated,
modern cts look not only to terms of writing but also consider
evidence of all facts and circumstances surrounding the execution
of the K. The presence of a merger clause would not conclusively
establish that writing was integrated.
2. The following factors would be considered in determining whether
parties intended the writing to be integrated:
a. The subject matter of transaction (the more complex the
transaction, the greater the likelihood of integration);
b. The length of negotiations;
c. The adequacy of time to make the writing conform to oral
agreement;
d. The business experience of the parties;
e. The participation in the negotiations by an attorney or other
experienced K negotiators;
f. The bargaining situation (the more one-sided the situation, the less
likely the agreement should be treated as integrated);
g. The degree of standardization of the writing;
h. The presence of an integration clause; and,
i. The type of transaction (whether the transaction is of a type
typically concluded by integrated writing).
• Thompson, pg. 385—Pl and Df K for logs. P sues to get payment. D claims there
was a verbal warranty for the quality of the logs.—IF a written K expresses
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(1) an entire agreement (2) on its face, THEN parol evidence is

inadmissible to contradict, vary, or supplement the terms of the
agreement. SUB-RULE: IF the evidence is distinct from the subject
matter of the K, THEN it is admissible as a collateral agreement.
1. CLASSICAL APPROACH: The only evidence the ct will consider in
determining integration is what is within the document itself.
2. MODERN APPROACH: You consider the writing itself, but you also consider
contextual evidence, for the purpose of deciding what is final.
• R2D 209—Definition of an integrated agreement.
• R2D 210—Difference complete and partially integrated agreements.
• Taylor, pg. 394—An insuree sues his/her insurer for acting in bad faith.—IF a
writing is integrated, THEN the PER bars outside evidence. However, IF
there are any ambiguities, THEN the PE may be admitted to clear them
up.
1. OLD TEST: PLAIN MEANING TEST: Patent ambiguity can be seen on the
face of the writing (as in disagreements over the syntactic structure of a
sentence).
2. NEW TEST: CORBIN-CONTEXTUAL APPROACH: Latent ambiguity arises only
from the context in which a term is used.
• Exceptions to PER (i.e., Evidence will be admitted in the following
circumstances):
1. To establish oral modifications after execution of a K (MODIFICATION);
2. To establish that the agreement is invalid due to fraud, duress, undue
influence, incapacity, mistake or illegality (INVALIDITY);
3. To establish that the agreement was subject to an oral condition (ORAL
CONDITION);
4. To establish a right to an equitable remedy (EQUITABLE REMEDY);
5. To explain terms if they are not specific enough or have special meaning
(EXPLAIN); and,
a. PLAIN MEANING TEST (PATENT AMBIGUITY)—Ambiguity on the face
of the writing.
b. CORBIN-CONTEXTUAL APPROACH (LATENT AMBIGUITY)—Not
necessary for ambiguity to exist on the face of the writing.
6. To establish a distinct collateral agreement (prior to or concurrent w/ the
K) b/t the parties (COLLATERAL AGREEMENT).
• Sherrodd, pg. 410— The Pl was a sub-K’or for a sub-K’or. The K said that the Pl
would be paid in a lump sum based on the bid of $3.90/cubic yard for 25,000
cubic yards. The job had much more than 25,000 cubic yards, but the Df only
paid him the $97,500. The standard sub-K provisions said that no verbal
agreement could modify the terms of the K, stated that the K would be a
complete expression of the agreement, and that no changes could be made
unless written and signed.—IF (1) a K is in writing AND (2) there is no
mistake AND (3) there is no challenge to the validity of the K AND (4)
there is no allegation of external fraud THEN the writing supersedes
any previous or concurrent oral agreement (i.e., Parol evidence is
inadmissible.).
1. MINORITY—Most cts allow evidence of fraud, PER notwithstanding.
• Nanakuli, pg. 476—Df breached the K by failing to price protect Pl b/c of trade
usage (according to asphaltic paving trade in Hawaii) and an obligation of good
17
faith (advance notice of price increase). Just b/c Df's management has changed
doesn't mean that that Df no longer obligated to abide by K.—…
1. Trade usage and past course dealings b/t K’ing parties may establish
terms not specifically enumerated in the K, so long as no conflict is
created w/ the written terms.
• Korobkin’s PER Analysis:
1. If you have a situation in which someone is offering evidence, do you have
evidence to which the parol evidence even applies?
2. If you do have that kind of evidence, do you have the kind of writing to
which the parol evidence rule applies?
3. Do you have an integrated writing? Is it partial or complete?
a. If you do have an integrated writing, you apply the PER.
○ If you have a complete integration, anything contradictory
or supplementing the writing is inadmissible.
○ If you have a partial integration, contradictory evidence is
inadmissible, but evidence of consistent add’l terms is
admissible.
b. There is a thing called a merger clause, which basically says that
“any other oral Ks are not relevant here.” Thus, if the ct is applying
a CLASSICAL APPROACH, the existence of a merger clause means
that we have complete integration. However, if you are following
the MODERN APPROACH, the merger clause is important, but it’s
not conclusive.
4. Are there exceptions? Yes, of course. (See above)
Implied Terms and the Obligation of Good Faith:

• R2D 77. Illusory and Alternative Promises.
○ There is no consideration if the promissor “reserves a choice of
alternative performances” UNLESS all of the alternatives would have
been consideration, or there is, or appears to both parties to be, a
substantial possibility that the promissor might eliminate the alternatives
that would not be consideration.
 i.e., There’s no K when a promissor says, “Paint my house, and
either I’ll pay you or I won’t,” unless there’s a substantial
possibility that the promissor will choose to pay.
• Even if promise was illusory, it could still be enforceable if
the K’ing parties knew exactly what they were bargaining
for.
• CLASSICAL THEORY required mutuality of obligation. If one party was required
to perform by the K and the other party was free to either accept or reject
performance, then K was not enforceable.
○ Exceptions:
 Unilateral K—An offeror may be bound once the offeree's
performance has begun (R2D 45), but the offeree is not. If the
offeree elects not to complete performance, he is subject to no
liability.
 Option K—
• MODERN THEORY does not require mutuality of obligation if the requirement
of consideration is met. (R2D 79)
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○ In cases involving an exclusive distributor, the court will often imply a

promise by the distributor to use his "best efforts" to sell the product.
 This implied promise serves as consideration.
• The Obligation of Good Faith
○ Wood, pg. 438— Df breached the K b/c she independently endorsed her
fabrics and withheld profits from the Pl who was her exclusive endorser. —
IF a K is “instinct” with an obligation though imperfectly
expressed, THEN a promise will be implied.
 Good faith can be an implied promise. An implied promise
can be create a legally binding K. In this case, an implied-in-fact
term completed consideration, making a legally binding K.
 R2D 205—Every K imposes upon each party a duty of good faith
and fair dealing in its performance and its enforcement.
 Implied-in-fact term–An actual intent to have the K include
these terms, but it remains unexpressed.
 Implied-in-law term–As a matter of justice and fairness, the ct
decides to fill impute a term to the K.
○ Locke, pg. 470–Entertainment K dispute.—…
 Even though they followed the letter, their “artistic discretion”
did not give them the right to break the implied covenant of
good faith.
Rescission Doctrines: Bargaining Defects and Other Substantive

Problems:
• Minors: GENERAL RULE: A minor may disaffirm or rescind a K however they
may not escape “necessaries”—The minor will still be liable for the cost or
depreciation of any use he may have received from the object of the K prior to
rescission.
○ Dodson, pg. 519—Pl minor tries to disaffirm K b/c truck engine “blew up”
nine months after it was sold.—…
 GENERAL RULE—A minor may disaffirm the K, giving back whatever
is left of the prop, and receiving back whatever s/he gave.
 NEW RULE (MINORITY)—When a minor rescinds the K, s/he has to
pay for the “use of, depreciation, and willful or negligent damage of
the article purchased.”
○ R2D 14—In general, until 18, can only incur voidable contractual
duties.
• Mental Incapacity: GENERAL RULE: The vast majority of cts have held that
an incompetent person's transaction is voidable; that is, the incompetent
person has the power to void a K entirely. Generally, the incompetent person is
required to make restoration to the other party UNLESS special circumstances
exist.
○ General Test for Incapacity:
 R2D 15. Mental Illness or Defect.
• The contractual duties of a person with a mental illness or
defects are voidable if s/he is unable to understand in a
reasonable manner the nature and consequences of his
transaction UNLESS the K is on fair terms, the other
party does not know of the mental issue, and
avoidance is unjust.
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 COGNITIVE TEST—A person is unable to understand in a reasonable

manner the nature and consequences of the transaction.
• Hauer, pg. —The ct applies an objective test, focusing
purely on the person mental abilities rather than
his/her actions.—…
○ In Hauer, it was found the other party (the bank)
acted in bad faith and therefore was not entitled
to restoration.
 VOLITIONAL TEST—A person is unable to act in a reasonable
manner in relation to the transaction and the other party has
reason to know of his condition.
• This subjective test involves the other party and focuses
only on action, not mental abilities.
 Where the K is made on fair terms and the other party is without
knowledge of the mental illness or defect, the power of avoidance
terminates to the extent that the K 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 ct may grant relief as justice
requires.
○ Hauer, pg. –…--…
 GENERAL RULE—The ct would attempt to void the K and return all
parties to pre-K positions, meaning that the mentally incapable
party would pay back all of the money or prop.
 If the other party knew or should have known of the mental
illness or defect, proceeding is a breach of good faith, and
the mentally incapable party will receive full damages.
• Duress:
○ R2D 175. When Duress by Threat Makes a K Voidable.
 If a party’s manifestation of assent is induced by an improper threat
by the other party that leaves the victim no reasonable alternative,
the K is voidable by the victim.
 If a party’s manifestation of assent is induced by one who is not a
party to the transaction, the K is voidable by the victim unless the
other party to the transaction in good faith and without reason to
know of the duress either gives value or relies materially on the
transaction.
○ The Main Elements of Duress:
 A wrongful or improper threat (It doesn’t have to be illegal);
• R2D 176—A threat is improper if what is threatened:
○ Is a crime of a tort, or the threat itself would be a
crime or a tort if it resulted in obtaining prop;
○ Is a criminal prosecution;
○ Is the use of civil process and the threat is made in
bad faith;
○ Is a breach of the duty of good faith and fair dealing
under a K with the recipient;
○ Results in an exchange that is not on fair terms, and:
 The threatened act would harm the recipient
and would not significantly benefit the party
making the threat;
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 The effectiveness of the threat inducing the

manifestation of assent is significantly increased
by prior unfair dealing by the party making the
threat; and,
 What is threatened is other a use of power for
illegitimate ends.
 A lack of reasonable alternatives; and,
 Actual inducement of assent to the K because of the threat.
 Also consider whether the party making the promise created the
constraint.
○ Totem Marine Tug, pg. 538—Pl wants to rescind settlement b/c it was
forced into settlement by economic duress of imminent bankruptcy.
Df knew of the Pl's vulnerability, Pl had no viable assets, both parties were
partially at fault, and the Df has much more economic power and stability.
—IF (1) one party deliberately commits a wrongful act and (2) has
knowledge that the other party has no choice economically but to
accept the offer, and (3) the other party involuntarily accepts the
offer, THEN the K is voidable for economic duress.
 There is a debate about what the wrongful act could be: either
causing the economic duress, or taking advantage of the other
party’s vulnerability by making offers in unjust conditions.
• Undue Influence: The unfair persuasion of a party under the domination of
the party exercising the persuasion, or who by virtue of the relationship b/t the
parties, is justified in assuming that the dominant party will not act in a manner
inconsistent w/ the servient party’s welfare.
○ R2D 177. When Undue Influence Makes a K Voidable.
 Undue influence is unfair persuasion of a party who is under the
domination of the person exercising the persuasion or who by virtue
of the relation b/t them is justified in assuming that that person will
not act in a manner inconsistent with his welfare.
 If a party’s manifestation of assent is induced by undue influence
by the other party, the K is voidable by the victim.
 If a party’s manifestation of assent is induced by one who is not a
party to the transaction [voidable unless other party gives value or
relies materially].
○ Undue influence involves persuasion (usually high pressure) which tends
to be coercive in nature (i.e., influence which prevents another party
from acting according to their own judgment).
○ Undue influence may be found in situations in which:
 A family, confidential, or fiduciary relationship is taken advantage
of; or,
 The servient party is unduly susceptible (i.e., temporary or
permanent weakness of mind or body), and in which the dominant
party is excessively forceful.
○ Characteristics of Undue Influence:
 Discussion of the transaction at an unusual or inappropriate time;
 Consummation of the transaction in an unusual place;
 Insistent demand that the business be finished at once;
 Extreme emphasis on untoward consequences of delay;
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 Use of multiple persuaders by the dominant side against a single

servient party;
 Absence of third-party advisors to the servient party; and,
 Statements that there is no time to consult financial advisors or
attorneys.
○ Odorizzi , pg. —Pl arrested on homosexual charges and forced to resign as
teacher or face public humiliation. Dfs approach the Pl at midnight just
after he’d been arrested and didn't allow him time to think it over or seek
counsel.—
 Duress: IF (1) there is a threat of unlawful action, AND (2)
the threat causes consent (3) through fear, THEN there is
duress.
 Fraud: IF (1) there is conscious misrepresentation or
nondisclosure of a material fact, AND (2) it was intended to
induce reliance, AND (3) it induces the innocent party to
enter the K, THEN there is fraud.
 Undue Influence (Two possible rules):
• IF (1) there is excessive pressure by a dominant
subject AND (2) excessive pressure is used to
persuade “one who is vulnerable to excessive
pressure,” THEN there is undue influence.
• IF (1) there is excessive pressure (objective) AND (2)
there is undue susceptibility (subjective), THEN there
is undue influence.
○ Several factors to be used in testing for excessive
pressure: An unusual or inappropriate time or place for
the agreement, multiple persuaders, demand to finish
at once, absence of advisors, restricted access to
counsel.
• Misrepresentation (Fraud): Conscious misrepresentation, concealment,
or non-disclosure of a material fact, which induces an innocent party to enter a
K.
○ R2D 162. When a Misrepresentation Is Fraudulent or Material.
 A misrepresentation is fraudulent if the maker intends his assertion
to induce a party to manifest his assent and the maker:
• Knows or believes that the assertion is not in accord with the
facts;
• Does not have the confidence that he states or implies in the
truth of the assertion; or,
• Knows that he does not have the basis that he states or
implies for the assertion.
 A misrepresentation is material if it would be likely to induce a
reasonable person to manifest his assent, or if the maker knows
that it would be likely to induce the recipient to do so.
○ R2D 163. When a Misrepresentation Prevents Formation of a K.
 If a misrepresentation as to the character or essential terms
of a proposed K induces conduct that appears to be a
manifestation of assent by one who neither knows nor has
reasonable opportunity to know of the character or essential
22
terms of the proposed K, his conduct is not effective as a

manifestation of assent.
○ R2D 164. When a Misrepresentation Makes a K Voidable.
 If a party’s manifestation of assent is induced by either a fraudulent
or a material misrepresentation by the other party upon which the
recipient is justified in relying, the K is voidable by the recipient.
 [Fraud or misrepresentation by third party: The K is voidable unless
the other party gave value or relied on it in good faith.]
○ Elements of Misrepresentation:
 Df made false statements.
• Statements of opinions may give rise to misrepresentation
if:
○ The party giving the opinion knows facts that are
incompatible with the opinion; or,
○ The party giving the opinion has no basis for forming
the opinion.
• Promises made with no intent to perform constitutes a
false statement on which an action for rescission may be
brought.
 False statements were as to material matters with reference to the
entering of the K (“material” misrepresentation); or, Df knew that
the statements were false (“fraudulent” misrepresentation).
 Pl believed the false statements and reasonably entered into the K
in reliance on the false statements.
• The recipient of an opinion may reasonably rely on it if the
party giving the opinion:
○ Is in a fiduciary relationship w/ the Pl;
○ Is an expert on matters covered by the opinion; or,
○ Renders the opinion to a party who, because of age or
other factors, is peculiarly susceptible to
misrepresentation.
○ Remedies:
 Fraudulent Misrepresentation—Both a K action for rescission
and a tort action for damages are available. There are 2 rules for
determining damages in tort cases:
• The out-of-pocket rule allows the Pl to recover the difference
between what s/he parted with and what s/he received, plus
consequential damages suffered prior to the discovery of the
fraud.
• Under the benefit-of-the-bargain rule, the Pl is to be put in
the position in which s/he would have been had the Df
spoken truthfully.
• Punitive damages may be awarded in a tort action for
misrepresentation.
 Material Misrepresentation—A K action for rescission is
available. A tort action may not be available or recovery may be
limited.
○ Syester, pg. 557— Pl elderly widow purchased thousands of hours of
dance lessons (3 lifetime memberships) b/c Df used dishonest selling
techniques, told her she had potential to be a professional dancer and
23
that she had improved when really she did not. Df had ex-instructor
convince her to drop suit and they would offer past due commissions. Df
persuaded Pl not to seek counsel.—…
 R2D 168-69—Assertions of opinions can be the basis for
misrepresentation. If these opinions can be justifiably relied
upon, and they are not in accord with the facts, they can be called a
misrepresentation.
○ Park 100, pg. 580—…—
 First Rule: DUTY TO READ RULE: Both parties are required to know
the terms of the agreement they are signing, and they cannot avoid
their obligations for failure to read it.
 Second Rule: Two different versions of exceptions to the DUTY TO
READ RULE:
• IF party A employs misrepresentation to induce
another party B’s obligation under an agreement,
THEN party A cannot bind party B to the terms of the
agreement.
• IF the guarantor has been induced to enter the K of
guaranty by fraudulent misrepresentations or
concealment on the part of the guarantee, THEN the K
of guaranty cannot be enforced by the guarantor.
 Third Rule: IF there was (1) a material misrepresentation of
fact by one party AND (2) it was made with knowledge or
reckless ignorance of the falsity of the statement AND (3) it
was relied upon by the other party AND (4) it proximately
caused the injury to the relying party, THEN there is fraud.
• Nondisclosure:
○ A party’s non-disclosure of a fact known to him/her is an assertion (for
misrepresentation purposes) in the following cases only:
 Where disclosure of the fact is necessary to prevent a previous
assertion from being mistakenly relied upon;
 Where he knows that disclosure of the fact would correct a mistake
of the other party about a basic assumption, and if non-disclosure
amounts to a failure to act in good faith;
 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; or,
 Where the other person is entitled to know the fact because of a
relationship of trust and confidence between them (i.e., a fiduciary
relationship).
○ Factors to consider in deciding whether fairness requires disclosure of
material information:
 Difference in intelligence of the parties;
 Relationship b/t the parties;
 The manner in which the information is acquired. Information
acquired through deliberate and costly investigation might not have
to be disclosed (because it creates an incentive to investigate);
 The nature of the fact not disclosed. In Ks to sell property, there
is usually a duty to disclose an intrinsic defect not discoverable by
reasonable care;
24
 The general class to which the party who is concealing the

information belongs. It is much more likely that a seller will be
required to disclose information than a purchaser;
 The nature of the K itself. In releases and insurance Ks,
practically all material facts must be disclosed;
 The importance of the fact; and,
 The conduct of the concealing party. Active concealment of any
material fact should be fraudulent as a matter of law.
○ Hill, pg. 567—Df sellers knew of termite problems but didn't tell Pl
homebuyer about it.—IF the seller of a home knows of facts
materially affecting the value of the prop AND those facts are not
readily observable AND the facts are not known to the buyer,
THEN the seller is under a duty to disclose them to the buyer AND
the K is voidable if the seller does not disclose.
 An alternative the ct considered was the CA RULE:
• IF the seller of a home knows of facts materially
affecting the value of the prop AND those facts are
known or accessible only to the seller AND they are
not known to the buyer AND they are not within the
reach of the diligent attention and observation of the
buyer, THEN the seller has a duty to disclose AND the
K is voidable if the seller does not disclose.
 R2D 161 lets us know that a nondisclosure can be equivalent to an
assertion for the purposes of R2D 159.
 Note that this is a case where evidence of fraud under the CORBIN-
CONTEXTUAL APPROACH should have been admissible under the
PER as an invalidating cause.
• Unconscionability: Unconscionability includes the absence of meaningful
choice together w/ K terms that are unreasonably favorable to one party. In
determining the reasonableness or fairness, the terms of the contract must be
considered in light of circumstances existing when the K was made. The Q of
unconscionability is legal issue to be decided by the ct.
○ R2D 208. Unconscionable K or Term.
 If a K or term thereof is unconscionable at the time the K is made a
ct may refuse to enforce the K, or may enforce the remainder of the
K without the unconscionable term, or may so limit the application
of any unconscionable term as to avoid any unconscionable result.
○ IF there is unconscionability at the time a K is made, THEN the K
should not be enforced.
 Unconscionability includes the absence of meaningful choice and K
terms that are unreasonably favorable to the other party.
• There are several factors to define the absence of meaningful
choice.
• The rule for whether terms are unreasonable is whether they
are unconscionable according to the mores and business
practices of the time and place. (Circular reasoning)
○ Williams, pg. 586—If Pl defaulted on payment on any item, Df could
repossess all the items previously purchased—IF there is [(1a) an
absence of meaningful choice by one party OR (1b) gross
25
inequality of bargaining power] AND (2) terms unreasonably

favorable to the other party, THEN the K/term is unconscionable.
 This is an atypical approach to unconscionability, in that it doesn’t
discuss procedural/substantive unconscionability.
○ Corbin says: “If no reasonable person would enter, and no honest or fair
man would accept, there is no K.”
○ You need both procedural and substantive unconscionability: They must
be inversely proportional.
 PROCEDURAL UNCONSCIONABILITY refers to some defect in the
bargaining process. Consider:
• The use of printed form Ks drawn by the party in the stronger
position, which establish industry-wide standards on a take-
it-or-leave -it basis;
• The circumstances surrounding the execution of the K
including its commercial setting, its purpose and its actual
effect;
• The hiding of clauses which are disadvantageous to one
party in a mass of fine print;
• Phrasing clauses in language that is incomprehensible to the
layman; and,
• Inequality of bargaining or economic power.
 SUBSTANTIVE UNCONSCIONABILITY relates to the fairness of
the terms of the resulting bargain, such as price or remedies
provided in the event of breach. Consider:
• Significant cost-price disparity or excessive cost;
• A denial of basic rights and remedies to a buyer of consumer
goods;
• The inclusion of penalty clauses;
• An overall imbalance in the obligations and rights imposed by
the bargain.
Justifications for Nonperformance:

• Mistake:
○ R2D 151: A mistake is a belief that is not in accord with the facts.
○ Mutual Mistake:
• R2D 152. When Mistake of Both Parties Makes a K Voidable.
a. Where a mistake of both parties at the time a K was made as
to a basic assumption on which the K was made has a
material effect on the agreed exchange of performances, the
K is voidable by the adversely affected party UNLESS he
bears the risk of the mistake under the rule stated in R2D
154.
b. 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.
• Elements of a Mutual Mistake:
a. The mistake must concern a basic assumption on which the K
was made;
26
○ Look for an unexpected, unbargained-for gain on the

one hand and an unexpected, unbargained-for loss on
the other.
b. The mistake must have a material effect on the agreed
exchange of performances.
○ A material effect is found when the resulting
imbalance in the agreed exchange is so severe that
the adversely affected party cannot fairly be required
to carry it out.
○ Look for a disadvantage to the party seeking
avoidance and an advantage to the other party,
though the advantage is not necessary.
c. The adversely affected party must not bear the risk of the
mistake.
○ R2D 154—A party bears risk of mistake when:
 The risk is allocated to him by agreement b/t the
parties;
• "As is" or "no reliance" clauses in the
K have been interpreted as
allocating the risk to the buyer.
• There is a hesitancy to use "as is"
clauses found in standard boilerplate
language to allocate the risk of
mutual mistake (because of a general
aversion to boilerplate clauses);
however, a specifically tailored
provision which results from
bargaining may be enforced.
 The party is aware that s/he has only limited
knowledge with respect to the facts which the
mistake related but treats his limited knowledge
as sufficient (“Conscious ignorance”); or,
 The risk is allocated to him by the ct on the
ground that it is reasonable to do so.
• Sherman, pg. 668—Pregant/barren cow case—IF the mistake of
the parties goes to the whole substance (essence) of the
agreement, as opposed to being a mere quality (accident),
THEN rescission may be granted.
a. The judge says “the parties” would not have made the sale if
they had known that the cow was pregnant rather than
barren–This seems to be willful ignorance of the strategic
behavior or deviance of parties.
b. A mistake about category is a real mistake–Essence of the
agreement v. value—OLD TEST.
• Lenawee County Board of Health, pg. 664—Bloom installed
defective septic tank, then sold to Df, who then sold to Pickles. Raw
sewage seeped from the ground. --IF there is a mistaken belief
relating to a basic assumption of the parties upon which the
K is made AND that assumption materially affects the
agreed performances of the parties, THEN the ct has
27
discretion to grant rescission, UNLESS the party seeking

rescission has assumed the risk of loss in connection with
the mistake.
a. Lenawee adopts R2D 152.
b. Even if the mutual mistake is material, an “as is” clause
allocates the risk, invalidating the excuse of mistake (See
above).
○ Unilateral Mistake:
• R2D 153. When Mistake of One Party Makes a K Voidable.
a. Where a mistake of one party at the time a K was made as to
a basic assumption on which he made the K has a material
effect on the agreed exchange of performances that is
adverse to him, the K is voidable by him if he does not bear
the risk of the mistake under the rule stated in R2D 154; and,
○ The effect of the mistake is such that enforcement of
the K would be unconscionable; or,
○ The other party had reason to know of the mistake or
his fault caused the mistake.
• Elements of a Unilateral Mistake:
a. A basic assumption of the parties;
b. A material effect on the agreed exchange;
c. The party seeking to avoid the K must not bear the risk of the
mistake; and,
○ The effect of the mistake is such that enforcement of
the K would be unconscionable and the other party
can be returned to his pre-K state; or,
○ The other party had reason to know of the mistake or
his fault caused the mistake.
• Some jurisdictions have adopted further requirements:
a. Rescission will be allowed for mistakes of fact but not for
mistakes of judgment. More recent cases, however, focus
on the strength of the proof that a genuine and identifiable
mistake was made.
b. Some jurisdictions require that the mistake not be due to
negligence. There is a clear tendency to relax this
requirement where proof of mistake is strong and the effect
of the enforcement will be devastating to the mistaken party
(Gross negligence will usually defeat a unilateral mistake
claim).
• Wil-Fred’s, Inc., pg. 674–Wil-Fred’s, Inc. relies on Ciaglo’s wrong bid
(An echo of the Drennan case).—…
a. Wilfred’s, Inc. uses the IL TEST:
○ The mistake relates to a material feature of the K;
○ The mistake occurred notwithstanding the exercise of
reasonable care;
○ The mistake is of such grave consequences that
enforcement of the K would be unconscionable; and,
○ The other party can be placed in status quo.
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b. In this case, a unilateral mistake was found, but Wil-Fred’s,

Inc. couldn't have relied on Ciaglo’s bid too much b/c it was
aware immediately of the mistake and the impact of the
mistake was so severe. Also, the discrepancy so great and
obvious that Wil-Fred’s, Inc. should have recognized that
there was a mistake.
Changed Circumstances:
• Impracticability:
○ Increased cost alone does not excuse performance UNLESS the rise
in cost alters the essential nature of the performance;
○ A rise or collapse in the market is not sufficient (though if the
market collapses completely, there will usually be an impossibility
defense);
○ A severe shortage of raw materials or supplies due to a contingency such
as war, embargo, local crop failure, or unforeseen shutdown of major
sources of supply, which either causes a marked increase in cost or
altogether prevents the seller from securing the supplies
necessary to his performance will usually constitute impracticability;
○ Where the K provides for an exclusive means of performance, the
impracticability of that means may release the promisor from his duty.
Where the performance is set out in unqualified terms, the promisor may
be required to perform by alternate means even though those means are
more expensive;
○ The claimed impracticability must arise from an unforeseen
contingency and without fault of the party seeking to avoid the K;
○ The nonoccurence of the contingency must be a basic assumption of the
K; and,
○ The parties must not have explicitly or implicitly allocated the risk that the
contingency might occur. Assumption of risk may be determined by
examining:
 The extent to which the parties allocated other risks;
 The circumstances surrounding the K, including trade usage;
 The purpose of the K; and
 Force majeure clauses may make a determination of
impracticability easier by pointing to who bears the risk.
• Impracticability may only be used to avoid enforcement (rescind) of the
K.
• Impracticability involves a case where a change of circumstances not
specifically provided for in the agreement occurs after the agreement is
made.
• Impossibility: R2D 262-64
○ A situation where there are specific goods, unique to the K, are destroyed,
making fulfillment impossible. The main case is Taylor, in which the K to
hire a music hall was held to be frustrated, by the destruction of the music
hall by fire.
• Impracticability: R2D 261, 66
○ The first response to this, as an excuse, should be: C’mon! After all, a K
allocates the risk of performance. This excuse is seldom raised, and
29
accepted even less. The Q is, what would a case have to look like in order
to allow you to prevail with impracticability. (See pg. 697)
○ Karl Wendt, pg. 687–Pl and Df had dealer sales and service agreement. Df
suffering severe financial losses sold farm equipment to Case. Case didn't
offer Pl a Case franchise.—…
 Impracticability must be based on way more than a simple
downturn in the market.
• Frustration of Purpose: R2D 265, 66: If in the case of a supervening event,
after K formation, the purpose of the K is frustrated, a K may also be considered
void.
○ The main case is Krell, in which a Krell’s flat is rented to view the king’s
coronation, but the coronation is cancelled, and the flat no longer has any
value.—IF a deal loses all value to a party, because of an
unanticipated change in purposes, THEN the K is voidable.
• Modification:
○ GENERAL RULE: Performance of a legal duty owed to a promisor which is
neither doubtful nor the subject of honest dispute is not consideration.
○ R2D 89. Modification of an Executory K. A promise modifying a duty
under K not fully performed on either side is binding:
 If the modification is fair and equitable in view of circumstances not
anticipated when the K was made;
 To the extent that justice requires enforcement in view of material
change of position in reliance on the promise; or,
 To the extent provided by statute.
○ Alaska Packers’ Assn, pg. 715–Fishermen agreed to work in Alaska fishing
for $50/day. Once there, they threatened to not work unless their wages
were raised to $100/day. The court held that the one-sided modification
was unenforceable because there was no consideration for the promise to
pay the add’l amount. Pre-existing obligations or legal duties do not
constitute consideration.—IF party A agrees to give add’l
consideration to party B for B’s performances of the exact
services that B was already under K to render, THEN the new
promise is without consideration. Two “narrowings” of this rule:
 IF the parties agree to modify their K, so that each party is
giving the other party some add’l consideration, THEN K.
The new K has the old terms, plus add’l consideration from
both parties.
 IF both parties agree to voluntarily rescind their promises
and create a new K, THEN K. The new K can be completely
different from the old.
 The rationale for the PRE-EXISTING DUTY RULE is that the ct is
worried about the potential for extortion in allowing one
party to induce the other party’s reliance up to the last
possible moment.
 A modification of a K must have fresh consideration.
 R2D 73—PRE-EXISTING DUTY RULE—Merely promising to perform
an existing (contractual) obligation will not serve as valid
consideration for add’l return compensation from the other party.
30
• However, such small add’l compensation as one day’s rent

has been seen as adequate consideration for modification.
(See pg. 719)
 Exceptions to the PRE-EXISTING DUTY RULE (See R2D 89 (See pg.
225)):
• “Unanticipated difficulties” encountered in the performance
of obligated duties;
• The possibility of modification will induce a material change
of position, so that injustice will result if the modification is
not enforced; or,
• Circumstances unexpectedly changed and one party relied
on resulting proposed modification.
 MODERN APPROACH—We seek to regulate modification through
“good faith” concepts rather than consideration.
Justifications for Nonperformance:

• Conditions:
○ There are 3 different mechanisms a party can impose upon another party
to induce a performance:
 Duty –Bargain for that performance to be part of the party’s
duties/obligations under the express terms of the K.
Nonperformance of a duty makes the non-performer liable for
damages.
 Condition something that the other party wants you to do on their
doing something you want them to do (i.e., I will pay on the
condition that you deliver).
 Promissory Condition –Condition your obligation on the other
party’s performance, and make that performance a duty for the
other party (i.e., I will pay on the condition that you deliver, and you
must deliver or I can sue for damages.).
• Difference B/t a Duty and a Condition:
○ “I promise to buy 1000 bushels of wheat from you at $10/bushel, on
condition that you deliver to my factory in Lowell.”
 Nonoccurrence of the condition (delivery) relieves the buyer from
his/her duty to perform.
○ “I promise to buy 1000 bushels of wheat from you at $10/bushel; you
promise to sell me 1000 bushels of wheat at $10/bushel and deliver the
wheat to my factory in Lowell.”
 The seller has a duty to deliver the wheat; if the seller doesn’t
deliver, he has breached the K.
• Express Conditions:
○ CLASSICAL THEORY: Express conditions must be expressly fulfilled.
A failure to do so results in the discharge of a duty to perform.
○ MODERN THEORY: Express conditions must still be fulfilled (i.e., If the
condition is met, the performance by the other party is then required), but
there are certain exceptions which will excuse the failure of the
condition and require the other party to perform.
○ R2D 235. Definition of Duty.
 Full performance of a duty under a K discharges the duty.
31
 When performance of a duty under a K is due any nonperformance

is a breach.
○ R2D 224. Definition of a Condition.
 A condition is an event, not certain to occur, which must occur,
unless its nonoccurrence is excused, before performance under a K
becomes due.
○ R2D 225. When a Performance Becomes Due.
 Performance of a duty subject to a condition cannot become due
unless the condition occurs or its nonoccurrence is excused.
 Unless it has been excused, the nonoccurrence of a condition
discharges the duty when the condition can no longer occur.
 Nonoccurrence of a condition is not a breach by a party unless he is
under a duty that the condition occur.
○ Oppenheimer, pg. 786–A case involved an express condition to get
permission for tenant work, which later didn’t happen.— IF the parties
have expressly conditioned their duties under a K, THEN
substantial performance does not satisfy the express condition on
either party’s duties. (An express condition must be literally performed
unless it is waived by the party requesting performance.)
• Implied Conditions:
○ Constructive Condition of Exchange—“I’ll give you this for that.” Does the
nonperformance of one party justify the nonperformance of the other?
 These implied conditions require substantial performance.
○ Jacob & Youngs, pg. 806—Df deviated from the K by not using the
specified pipe.—IF the parties have not expressly conditioned their
duties under the K, AND party A has substantially performed,
THEN A’s substantial performance constitutes satisfaction of the
constructive condition on his duties, UNLESS A is a willful
transgressor.
 Determining whether an omission was significant to the parties or
there has been substantial performance is a fact-intensive inquiry.
• Factors include the purpose to be served, the desire to be
gratified, the excuse for deviation, and cruelty of enforced
adherence.
• “Substitution of equivalents may not have the same
significance in fields of art on the one side and in those of
mere utility on the other. Nowhere will change be tolerated,
however, if it is so dominant or pervasive as in any real or
substantial measure to frustrate the purpose of the K.”
• Excuses for Nonoccurrence of a Condition (which would still create the
conditioned duty):
○ Prevention (A failure of good faith):
 A condition is excused if a party that must perform is hindered from
doing so by the other party or does not make a good faith effort to
meet the condition.
○ Waiver: A condition is excused if the promissor intentionally relinquishes
a known right or acts in a way inconsistent with claiming it.
 A waiver needs no consideration to be binding;
 A waiver may be retracted at any time, so long as the other party
has not changed his position in reliance on the waiver; and,
32
 A waiver may be effective after expiration of the time for

performance of a condition has expired, if:
• The condition which is asserted to have been waived
is not a material part of the agreed exchange; and,
• Its nonperformance does not materially affect the value
received by the obligor.
○ Forfeiture: A condition is excused if the enforcement would cause
disproportionate forfeiture. Failure of a condition to occur should not
be excused if the condition was a material part of the agreed
exchange.
 A condition may be excused to avoid forfeiture even though the
failure of the condition consisted of a failure by the obligor, by his
own inadvertence, to perform an affirmative duty;
 Most cts would excuse failure of a condition to avoid forfeiture in
cases where performance of the condition was
impracticable; and,
 This is most likely enforced in the area of renewal of leases when
there are substantial leasehold improvements.
 JNA Realty Corp., pg.—A case involved a restauranteur who wishes
to exercise an option on a lease, but fails to do so before time
expired. Restauranteur claims it didn't know notice of renewal was
required.—…
• What if the excuse of forfeiture is caused, inadvertently, by
the nonoccurring party? The equitable solution is, if they
acted in good faith, to still hold that the duty is
required.
• Will there be some terrible hardship to the party that was
trying to satisfy the condition?
• RS229. Excuse of Forfeiture.
○ To the extent that the nonoccurrence of a condition
would cause disproportionate forfeiture, a ct may
excuse the nonoccurrence of that condition unless its
occurrence was a material part of the agreed
exchange.
○ Estoppel:
 When a party makes a statement that induces another party to act,
that party shouldn’t be permitted to escape liability for the
consequences that come from its statement inducing the other
party to act (i.e., If JNA Realty Corp. had said: “Don’t worry about
it.”)
 You would use estoppel if there was a strong opposition to
waiver b/c of materiality.
 You need substantial reliance.
• Material Breach: Deals with whether degree of nonperformance is
sufficient for other party to repudiate the K.
○ R2D 237—Except as stated in R2D 240, it is a condition of each party’s
remaining duties to render performances to be exchanged under an
exchange of promises that there be no uncured material failure by the
other party to render any such performance due at an earlier time.
33
 There, to argue that nonperformance is justified, a party must

show the other party has left an uncured material failure
(i.e., no substantial performance).
○ Note: Even if you give substantial performance, forcing the other
side to perform their duty, you have still probably breached the K.
○ Analyzing Breach:
 The ct must first determine whether the breach is material. IF it
is, THEN;
 The ct must determine whether the breach has become total—This
will depend on “materiality” factors listed below and:
• The extent to which further delay appears likely to prevent or
hinder the making of substitute arrangements; and,
• The degree of importance that the terms of the agreement
place on performance without delay.
○ Federal Ct Four-Factor Test for Materiality:
 Whether the breach operated to defeat the bargained-for
objective of the parties;
 Whether the breach caused disproportionate prejudice to the
nonbreaching party;
 Whether custom and usage consider such a breach to be
material; and,
 Whether the allowance of reciprocal nonperformance will result in
the accrual of an unreasonable and unfair advantage.
○ Sackett, pg. 817— Pl delayed payment and Df allowed several extensions
before notifying him that sale was off. Df then offered to accept cash
payment but Pl made no offer.—IF a party commits a material breach,
THEN the other party may repudiate the K.
 Two Types of Breach:
• Total Breach—A complete discharge of all duties under the
K.
• Partial Breach–You can sue later, but you still owe a
duty to complete.
○ However, in terms of the ongoing relationship, you
have the right to suspend your performance until it is
certain that the breach is total.
 Only a total breach of the K justifies repudiation, not a partial
breach. Whether breach is total or partial depends on its
materiality (R2D 241):
• The extent to which the injured party will be deprived of
a benefit that he reasonably expected;
• The extent to which the injured party can be adequately
compensated for a lack of complete performance;
• The extent to which the party failing to perform will
suffer forfeiture;
• The likelihood that the party failing to perform will cure the
failure; and,
• The extent to which the behavior of the party failing to
perform comports with the standards of good faith
and fair dealing (This allows courts to make moral
34
judgments on parties' culpability rather than being restricted

to willfulness).
 Note: Sackett blends “material failure” with total breach. DO NOT
DO SO. An uncured material defect tells you whether the condition
in question is excused or not. Determine total or partial breach by
using R2D 242.
• Note: It is critical to keep the question of total or partial
breach separate from the question of whether there is a
uncured material defect, which tells you whether the
condition in question is excused or not.
○ R2D 241. Circumstances Significant in Determining Whether a Failure is
Material. (pg. 270)
○ R2D 242. Circumstances Significant in Determining When Remaining
Duties Are Discharged. (pg. 270)
Amanda’s Notes on Constructive Condition of Exchange:

1. Step 1: “Is there a constructive condition of exchange?” In the absence of
expressed language, would the failure of one party to perform duties
excuse the nonperformance of the other party to perform their duties?
(Does the fact that Jacob & Youngs failed to use Reading Manufactured
pipe/complete the K to precise specifications justify Kent in saying “I don't have
to pay you the K price”?)
a. Constructive Condition of Exchange (Jacob & Youngs):
i. R2D 234 (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.
ii. R2D 234 (2)—Except to the extent stated in RS234 (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.
2. Step 2: Even if there is a constructive condition of exchange, what would it take
to satisfy the condition? What counts as occurrence? Substantial
Performance/No Material Failure as in (See R2D 241 (See below))
a. R2D 237—Except as stated in R2D 240, it is a condition of each party's
remaining duties to render performances to be exchanged under an
exchange of promises that there be no uncured material failure by the
other party to render any such performance due at an earlier time.
b. So to trigger the other party's duty, the first party need only
substantially perform its commitments/substantially comply.
c. No uncured material failure; or, substantial performance.
d. Literal performance is not necessary to trigger this party's duty.
i. Cardozo then asks "Under the facts presented, did Jacob & Youngs
substantially perform?" And then, how do you determine whether a
party has substantially performed? That's where you get the
language. (pg. 808)
e. R2D 241 answers "How do you determine if a party has substantially
performed?" (i.e., What is an uncured material failure?)
35
f. R2D 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:
i. The extent to which the injured party will be deprived of the benefit
which he reasonably expected;
ii. The extent to which the injured party can be adequately
compensated for the part of that benefit of which he will be
deprived;
iii. The extent to which the party failing to perform or to offer to
perform will suffer forfeiture;
iv. 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;
v. The extent to which the behavior of the party failing to perform or
offer to perform comports with standards of good faith and fair
dealing.
3. Step 3: If there is substantial performance (which there is found to be in Jacob
& Youngs) then the other party's duty is not discharged. Then, there are
“pure” vs. “promissory” conditions.
a. If you don't satisfy a pure condition, you don't comply with it. It doesn't
necessarily mean that the K is in breach.
b. A promissory condition is a condition when not complying with the
condition would be a breach of the promise.
4. Step 4: Recognize that even if there is substantial performance (i.e.,
the condition has been satisfied), there may still be a breach. How do
you measure damages?
a. Cost-to-Complete—What Cardozo says is the GENERAL RULE.
b. Expectation Damages—What the K’or wanted as the benefit of bargain.
c. Difference-in-Value (Better argument in Jacob & Youngs)—Cardozo
basically says: “In a situation where the defect is really minor and where
the cost to complete is grievously out of balance with the benefit that
would be rendered from completing, you can measure damages not by
cost to complete but by difference in value”
Computing the Value of the Pl’s Expectation; Restrictions on Recovery

of Expectation Damages (Foreseeability and mitigation): Damages occur
when there is an unjustified nonperformance (i.e., breach of the K).
• R2D 344—
○ 3 Types of Damages:
 Expectation Interest: The interest an injured party has in being
put in as good a position as she would have been in if both parties
had fully performed.
 Reliance Interest:
 Restitutionary Interest:
• Expectation Damages: The general intent of expectancy damages is to put
the injured party in a position that he would have been in had the K
been performed on both sides—The expectation to be protected is the Pl’s
net expectation.
○ R2D 347 lays out the formula for computing expectation interest:
36
 Expectation Damages=Loss in Value + Other Loss – Cost Avoided

– Loss Avoided (pg. 848)
• Loss in Value=Value to injured party of the performance –
Value of any given performance.
• Other Loss=Incidentals.
• Cost Avoided=The further cost that the performance would
have incurred.
• Loss Avoided=Any benefit from reallocating resources
already purchased.
 Short-Form Expectation Damages=Expected profit + Non-
reimbursed expenditures.
○ Usually the Pl will seek expectation damages (unless it’s a losing K or
there is a high loss avoided).
○ A “cover purchase” is one that the aggrieved party purchases, and the
cost fixes the damages as long as the cover was reasonable.
 Handicapped Children’s Education Board, pg, 857–Pl brought suit
against Df for resigning in breach of employment K despite medical
documentation saying that job stress caused hypertension. Pl had
to pay higher salary for substitute but substitute also more
qualified.—IF one party breaches a K, THEN the other party
should be compensated for the difference between what
that party expected to receive and what that party actually
received (provided that the party satisfies the duty to
mitigate).
• The hiring of the other teacher was a reasonable “cover
purchase” which fixed damages.
• Merely b/c the cover purchase was more expensive
does not automatically make it unreasonable.
○ In cases in which the item is unique (such as land), the ct will use
market value as the measure.
○ In construction cases, the usual measure of expectation damages is
cost to complete.
 American Standard, pg. 861– Df's performance substantially
deviated from specifications where Df failed to completely clear
foundations on Pl's land.—…
• Just like Jacob and Youngs, the ct may decide that difference
in value is a better measure than cost to complete if there is
an economic waste, UNLESS:
○ The breach was willful; and,
○ The work not done is not incidental.
• R2D 348–Alternatives to cost-to-complete.
○ R2D 347–Expectation damages are the norm.
○ Restrictions on Expectations Damages:
 Hadley, pg. 869–Pl millowner sent broken crank shaft to get
repaired thru Df's carrier service. Delivery delayed causing delay in
operation of mill.—IF consequential damages arising from
breach are either general damages or special damages,
THEN the damages are recoverable.
• 2 Types of Expectation Damages:
37
○ General damages are damages naturally arising

from the breach in the usual course of things.
○ Special damages are those reasonably supposed
to have been in the contemplation of both
parties at the time the K was made as a
probable result of the breach. (OLD TEST)
• R2D 351 (NEW TEST)—
○ 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 K
was made.
○ Loss may be foreseeable as a probable result of a
breach because it follows from the breach:
 In the ordinary course of events; or,
 As a result of special circumstances, beyond
the ordinary course of events, that the
party in breach had reason to know.
○ A ct 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.
 HADLEY TEST OF FORESEEABILITY allows injured party to recover:
○ Those damages reasonably considered arising
naturally from breach itself; and,
○ Damages reasonably contemplated at the time the K
was made as probable result of breach (i.e., Df only
needed to have reason to know, he mustn’t have
actually known.).
 Florafax, pg. 874– …--…
• 3-Part Test for Consequential Damages:
○ Contemplated at the time of the signing
(Foreseeability);
○ Flow directly from the breach (Causation); and,
○ If the loss is capable of being measured (Reasonably
certain, and not speculative).
• Alternative Damages:
○ Reliance Damages: Generally, these are out-of-pocket expenses and
expenditures induced by reliance on the K itself. Reliance damages
include value of gains forgone in reliance on Df's performance.
 Reliance damages may be mitigated by the Df showing that full
performance would have resulted in net loss. In this way, the
Df would not be insurers of the Pl's ventures.
 Wartzman, pg. 965–H wanted to raise money thru flagpole sitting
venture but W structured corporation wrong and failed to hire
securities specialist. H did not have to mitigate damages by paying
for securities specialist.—IF anticipated profits (expectation
damages) are too speculative to be determined, THEN
38
monies spent in part performance or in reliance are

recoverable, LESS any loss that the breacher can prove with
reasonable certainty that the injured party would have
suffered had the K been performed. (R2D 349)
• Reliance damages are still a bad idea if the K was a
losing one, because it still factors in loss avoided. However,
proving loss will probably be too speculative as well. The
main advantage of reliance damages is that they are easier
to prove.
• 2 Types of Reliance Damages:
○ Essential Reliance—Damages incurred in the
preparation and performance of K; or,
○ Incidental Reliance–Damages incurred by relying on
the existence of K.
○ Reliance Damages Based on Promissory Estoppel:
 Walser, pg. 975—…--The discretion to award reliance or
expectation damages is delegated to the trial judge, even
when reliance is the basis for enforcing the promise. Some
jurisdictions limit damages to reliance when the basis of
liability is reliance.
• If the case is based on promissory estoppel, the
reliance damages will probably only be out-of-pocket
expenses instead of full reliance damages.
○ Restitutionary Damages: Damages awarded for unjust enrichment.
 GENERALLY:
• MODERN K LAW allows the nonbreaching party to elect
recovery of restitutionary rather than expectation damages.
(R2D 373)
• At COMMON LAW, the breaching party could not recover
under restitution because that would encourage breach. But
since purpose of K law is not to punish but to compensate,
under MODERN K LAW, even a breaching party may be
entitled to restitution by virtue of the benefit conferred on
the other party by part performance. (See Lancelloti, R2D
374)
• If performance obligations imposed by the K have been
"discharged" for some reason, such as incapacity or
impracticability, either or both of the parties may be entitled
to restitutionary relief. (R2D 375-77)
 APPLICATION:
• 3 Different Situations in Restitution Cases:
○ Df breached; Pl seeking remedy;
○ Pl breached, but asserts his rights to restitution
nonetheless; or,
○ Neither party is in breach.
 R2D 373:
• Subject to the rule stated in Subsection (2), on a breach by
nonperformance that gives rise to a claim for damages for
total breach or on a repudiation, the injured party is entitled
39
to restitution for any benefit that he has conferred on the

other party by way of part performance or reliance.
• The injured party has no right to restitution if he has
performed all of his duties under the K and no performance
by the other party remains due other than payment of a
definite sum of money for that performance.
 U.S. & Coastal Steel Erectors, pg. 983–Dispute arose when Blair
refused to pay sub-K’or (U.S. & Coastal Steel Erectors) for crane
rental. U.S. & Coastal Steel Erectors terminated performance after
completion of about 28% of the sub-K when the Df failed to make
payments. The ct held that U.S. & Coastal Steel Erectors entitled to
restitution (i.e., recover in quantum meruit)—…
• If the aggrieved party in a breach situation is on the losing
end of a K, they may use quantum meruit to try and get
market value for their work.
• Quantum meruit allows promisee to recover value of services
undiminished by any loss which would have been incurred by
complete performance (i.e., “market value restitution”). The
standard for measuring the reasonable value of the services
rendered is the amount for which such services could have
been purchased from one in the Pl's position at the time and
place the services were rendered
• Essentially, if your K would be a losing one, you may want to
say “forget the K” through restitution.
○ Restitutionary Damages for Breaching Party:
 R2D 374. Restitution in Favor of Party in Breach.
• 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. 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.
 Lancellotti, pg. 988–Pl contracted to buy Df's hoagie business and
paid Df money. However, due to a dispute over certain terms for
improvement, Pl abandoned the business and sued for restitution of
his payment. Df counterclaimed and sued for rent.—…
• Under R2D 374, Pl in breach may be able to recover benefit
in excess of harm caused to the Df. Because the party who
is seeking restitution has generated the problem of
determining restitutionary damages by his/her breach,
recovery should be limited to the lesser of either:
○ The value of the benefits conferred; or,
○ The defendant's increase in wealth.
40
• However, comment (b): Intentional variation from terms of

the K will preclude restitution, even if his performance
benefits other party.
• A breaching party may still request market value for the
enrichment they give the other party.
○ Exception to Restitutionary Damages: R2D 373(2)—If the
nonbreaching party has fully performed his obligations under the K and
the breaching party's only remaining duty of performance is the payment
of a sum of money, the nonbreaching party may not elect a restitutionary
recovery but is limited to expectation damages.
• Non-Recoverable Loss: Emotional distress damages are generally not
recoverable.
○ R2D—“Recovery for emotional disturbance will be excluded UNLESS the
breach also caused bodily harm or the K or the breach is of such a kind
that serious emotional disturbance was a particularly likely result.
Common examples are Ks of carriers and innkeepers with passengers and
guests, Ks for the carriage or proper disposition of dead bodies, and Ks for
the delivery of messages concerning death. Breach of such a K is
particularly likely to cause serious emotional disturbance. Breach of other
types of Ks, resulting for example in sudden impoverishment or
bankruptcy, may by chance cause even more severe emotional
disturbance, but, if the K is not one where this was a particularly likely
risk, there is no recover for such disturbance.”
○ Erlich, pg. 920–Homeowners filed an action against the K’or who built their
new house for breach of K, fraud, negligent misrepresentation, and
negligent construction. Plaintiffs testified they suffered emotional distress
as a result of the defective condition of the house and Df’s invasive and
unsuccessful repair attempts.—…
 Emotional distress damages are not available in Ks.
 Usually, injuries must be dealt with in tort, and not in Ks.
 Reasonable Breach–Breachers are not outlaws, but, in fact, may be
efficient.
 There is no culpability element in breach of K, therefore no punitive
damages may be awarded. (See pg. 927)
• Mitigation of Damages:
○ R2D 350—“[D]amages are not recoverable for loss that the injured party
could have avoided without undue risk, burden or humiliation,” UNLESS
the party has made “reasonable efforts” to avoid the loss.
○ The Pl may not recover for those injurious consequences of the Df's
breach that the Pl could by reasonable action have avoided.
 After an absolute repudiation or refusal to perform by one party to
a K, the other party cannot continue performance to collect the
entire K amount.
 The Df has the burden of proving that:
• One or more discoverable opportunities for a comparable K
were available (The opportunities must be truly comparable
—Look at location, type of services, hours, status, etc.);
• The nonbreaching party unreasonably made no attempt to
avoid damaging consequences;
41
• It was reasonably likely that the nonbreaching party could

have formed an alternate K;
• The Df will be liable for all expenses that the nonbreaching
party had to expend in seeking to mitigate the damages;
• If the Pl makes a K that is not comparable, his damage
recovery will still be reduced. This does not apply, however,
when the plaintiff could have performed both the new K and
the breached K. Also the Pl has no duty to mitigate by taking
a non-comparable job.
○ Rockingham County, pg. 887–…--…
 After an absolute repudiation or refusal to perform by one party to
a K, the other party cannot continue performance to collect
the entire K amount.
○ Havill, pg. 890–…--…
 A fired employee has a duty to make a “good faith” effort to
find suitable alternative employment–Burden of proof is on Df
to show that the fire employee didn’t.
• Other Applicable Remedies:
○ Specific Performance: The ct awards the promisee the very benefit he
was promised by making the other party perform as agreed upon.
 2 Broad Categories Where Specific Performance may be
Timely and Feasible:
• Where specific relief does not require cooperation of
defaulting promissor (i.e., to seize goods or prop). Practical
impediments are at a minimum; or,
• Where specific performance does require the cooperation of
the promissor. This requires coercion so practical
impediments are substantial.
○ The ct will not coerce performance that is personal in
nature;
○ The ct is reluctant to order specific performance where
difficulties of supervision or enforcement are foreseen;
and,
○ The ct is reluctant to grant specific performance where
a damage remedy is adequate.
 R2D 359. Effect of Adequacy of Damages.
• Specific performance or an injunction will not be ordered if
damages would be adequate to protect the expectation
interest of the injured party.
• The adequacy of the damage remedy for failure to render
one part of the performance due does not preclude specific
performance or injunction as to the K as a whole.
• Specific performance or an injunction will not be refused
merely because there is a remedy for breach other than
damages, but such a remedy may be considered in
exercising discretion under the rule stated in R2D 357.
 Essential criteria for determining whether specific performance
should be granted is inadequacy or impracticability of legal
remedies (R2D 360):
• Where damages are inadequate to compensate party;
42
• Where it is impossible to arrive at legal measure of damages;

and,
• If damages are awarded, the likelihood that damages would
be collected.
 City Stores, pg. 1010– If Df able to secure zoning to allow shopping
center, Pl had opportunity to lease space in Df's mall on terms at
least equal to those offered to other dept. stores in the center.
Consideration for unilateral K was found based on Df using Pl's
letter to support their case in the zoning hearing. However, terms
left open so may or may not be option; Ct found this to be K w/
conditions precedent: 1) Df gets zoning and 2) Df must enter lease
w/ other major tenants. Ct found unilateral K w/ option despite
conditions precedent b/c not too indefinite.—IF a party has been
placed under a duty to offer a lease to the other party, AND
money damages for the lost right to enter into the lease
would be incalculable and inadequate, THEN specific
performance may be the appropriate remedy.
• In many settings, especially employment settings, courts
have been unwilling to enforce specific performance—it’s too
close to forced servitude. However, courts are increasingly
willing to enforce specific performance, especially in land
cases.
• MINORITY RULE—Specific performance, while limited, can be
granted if specific conditions are met.
• “Equity will not grant specific performance if the hardship to
the defendant is greater than the potential benefit to the
plaintiff.”
 Steps in Determining Whether to Grant Specific
Performance:
• Does a K exist?
• Are its terms sufficiently certain and definite?
○ Where all material terms have been agreed upon,
specific performance will not be denied on the ground
of indefiniteness (R2D 362).
○ However, failure to agree on material terms may result
in denial of specific performance but sometimes may
be overcome by trade usage, course of performance,
implication of terms, or “courageous common sense”
(See comment b to R2D 362).
○ Korobkin’s Rule of Specific Performance (MAJORITY RULE—Specific
performance is hard and complicated):
 Ask whether the remedy at law is adequate.
 Is the K specific enough or the type that would be easy to
supervise?
 Does the party seeking relief have clean hands?
 Does specific performance hurt third party interest?
 R2D 367. Ks for Personal Service or Supervision.—Against specific
enforcement of personal service K but recognizes exception of
negative enforcement by injunction.
43
• A promise to render personal service will not be specifically

enforced.
• A promise to render personal service exclusively for one
employer will not be enforced by an injunction against
serving another if its probable result will be to compel a
performance involving personal relations the enforced
continuance of which is undesirable or will be to leave the
employee without other reasonable means of making a
living.
 Reier Broadcasting Co., Inc., pg. 1022–In dispute arising from K for
exclusive rights to broadcast university athletic events, broadcast
company was not entitled to injunctive relief to prevent football
coach from performing services elsewhere during K.—…
• Specific performance should never be granted in a personal
service K (Public policy against involuntary servitude).
• Enforcing a negative covenant which would force Df into
personal service also not allowed.
○ Agreed Remedies:
 GENERALLY:
• When there is a breach, parties can agree on damages and
litigate only on issue of whether nonperformance was
excused breach to save judicial resources.
• Sometimes the original K specifies remedy in case of breach.
Agreed remedy provision (liquidated damages clause)
subject to judicial scrutiny and will not be enforced unless
certain tests are met. Advantages of stipulating damages in
advance:
○ Facilitates in the calculation of risks and reduces the
cost of proof.
○ For the injured party, it may afford the only possibility
of compensation for loss that is not susceptible of
proof with sufficient certainty.
○ May save judicial resources and also parties' time,
energy and money.
 APPLICATION:
• R2D 356. Liquidated Damages and Penalties.
○ Damages for breach by either party may be liquidated
in the agreement but only at an amount that is
reasonable in light of the anticipated or actual loss
caused by the breach and the difficulties of proof of
loss. A term fixing unreasonably large liquidated
damages is unenforceable on grounds of public policy
as a penalty.
○ A term in a bond providing for an amount of money as
a penalty for nonoccurrence of the condition of the
bond is unenforceable on grounds of public policy to
the extent that the amount exceeds the loss caused by
such nonoccurrence.
• Westhaven Associates, pg. 1032–Parties agree to liquidated
damages if in case of breach—IF the stipulated damages
44
are reasonable, THEN they will be enforced as

stipulated.
 Korobkin’s 3-Step Analysis:
• Look at the intent of the parties: Is this really an effort to
measure damages in breach, or is it just punitive? This step
often doesn’t do much work, because there is not much
content. These clauses are often a combination of the two,
and it’s hard to identify the unstated motive of the parties.
• At the time of K, are the damages difficult to estimate? This
speaks to the main purpose of stipulated damages. A
legitimate use of stipulated damages is to fill in a gap of this
sort, and thus the ct looks for such a gap.
• In retrospect, do the stipulated damages represent a
reasonable forecast of the actual damage? This is kind of
comparing the estimation from step 2 to the reality of step 3.
45

Ks Outline (Final)

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Ks Outline (Final)

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Andrew Gniewek Ks Outline

Last Updated 04/23/09

Minority and Mental Incapacity

More Damage Computation; Efficient Breach

Grounds for Liability—K Proper; Promissory Estoppel; and, Restitution.

Master Rule for Ks:

Threshold Considerations for K Proper:

 Reasonably identifies the subject matter of the K;

○ Acceptance of an offer is a manifestation of assent to the terms thereof

Option K: If the offeree/vendee gives the offeror some consideration (a sum of

Bilateral K: A promise in exchange for a promise.

“manifestation of intention” on the part of the seller to revoke the

Unilateral K: A promise in exchange for a performance.

Consideration: The promissor receives something of value from the promise.

There is consideration ONLY IF there is benefit to the promissor

 If the requirement of consideration is met, there is no add’l

consideration for this subsidiary implied promise is

negotiations.—R2D 90 + IF there is a statement of the

Restitution: A restitution claim is not based on the other party's assent

5. Courts however have been unwilling to grant restitution when

• MODIFIED OBJECTIVE THEORY: A party is bound by the other party’s meaning

Parol Evidence Rule: Applies only to Ks that are completely or partially

(1) an entire agreement (2) on its face, THEN parol evidence is

Implied Terms and the Obligation of Good Faith:

○ In cases involving an exclusive distributor, the court will often imply a

Rescission Doctrines: Bargaining Defects and Other Substantive

 COGNITIVE TEST—A person is unable to understand in a reasonable

 The effectiveness of the threat inducing the

 Use of multiple persuaders by the dominant side against a single

terms of the proposed K, his conduct is not effective as a

 The general class to which the party who is concealing the

inequality of bargaining power] AND (2) terms unreasonably

Justifications for Nonperformance:

○ Look for an unexpected, unbargained-for gain on the

discretion to grant rescission, UNLESS the party seeking

b. In this case, a unilateral mistake was found, but Wil-Fred’s,

• However, such small add’l compensation as one day’s rent

Justifications for Nonperformance:

 When performance of a duty under a K is due any nonperformance

 A waiver may be effective after expiration of the time for

 There, to argue that nonperformance is justified, a party must

judgments on parties' culpability rather than being restricted

Amanda’s Notes on Constructive Condition of Exchange:

f. R2D 241. Circumstances Significant in Determining Whether a Failure Is

Computing the Value of the Pl’s Expectation; Restrictions on Recovery

 Expectation Damages=Loss in Value + Other Loss – Cost Avoided

○ General damages are damages naturally arising

monies spent in part performance or in reliance are

to restitution for any benefit that he has conferred on the

• However, comment (b): Intentional variation from terms of

• It was reasonably likely that the nonbreaching party could

• Where it is impossible to arrive at legal measure of damages;

• A promise to render personal service will not be specifically

are reasonable, THEN they will be enforced as

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