CONTRACTS OUTLINE

JOHN WESLEY WILLIAMSON

REMEDIES – [Every Dog Must Find Unique Egg Plants Growing Really Ripe Mississippi]
Restatement
Number Name What is it? Applicable Case Rule and Test
Attempts to put the injured party in as good a Hawkins v. McGee: “Hairy Hand” Damages = Loss in Value + incidental or
Expectancy position as it would’ve been in had the contract consequential – Cost Avoided
§347
Interest been performed STONISM: Box A v. Box B Value of what was promised – what was
delivered
1. (a) Lost Value Peevyhouse: “A lot for a little” limits the If a breach results in defective or unfinished
2. (b) Cost of Performance expectancy damages construction and the loss in value to the injured
party is not proved with sufficient certainty, (a)
Jacob and Yong v. Kent: reading pipe
he may recover damages based on the
Diminution diminution in the market price of the property
§348
of Value cause by the breach
STONISM: Economic Waste
(b) may recover on the reasonable cost of
completing performance or of remedying defects
if cost isn’t clearly disproportionate to probable
loss in value.
Plaintiff must use reasonable efforts and due Rockingham v. Luten Bridge: “Cost Avoided” Mitigation: 2-part Test: 1. Due Diligence 2.
diligence to find comparable performance – Uncompleted Bridge Comparable Performance – (difference in kind
unavoidable of work or inferior work don’t have to)
Hussy v. Holloway: ‘hat trimmer’ not obligated
§350 damages Damages are not recoverable for loss that the
to accepted lesser employment.
(mitigation) injured party could have avoided w/o undue STONISM: MC > MB
burden, risk, or humiliation. Parker v. 20th Century: actress to cowgirl -
“Loss Avoided”
Test: 351 2 (a) General Damages – naturally arise Hadley v. Baxendale: broken mill shaft lost A party is not liable for damages that the party
351 (b) Special Damages – consequential, profits “Shafted” did not at the time of contracting have reason to
incidental – have to disclose foresee as a probable result of a breach, must be
Morrow v. First Nat’l: stolen coin collection.
foreseeable at the time of signing contract by
Tacit Agreement Test: 1. Defendant must tacitly The bank must have knowledge of special
Foresee both parties
§ 351 agree to special damages 2. Mere knowledge or damages and must tacitly agree.
ability
foreseeability of damages is not enough Just because you think the moon is made out of
Kerr v. RCA: $26.28 radiogram for $6,500
blue cheese doesn’t mean it its
freight profit lost. 2-part test for foreseeability:
Need knowledge beforehand 2. Damages limited
to the limited terms in the contract
Uncertainty Can’t be speculative Freund: publishing case, lost profits uncertain Example: New business rents a building breach,
§ 352 no lost profits b/c no proof. 9/10 business fail.
on Damages You need proof – evidence fight STONISM: 40 MPH MAYBE
Rarely given damages in contract breach Lamm v. Shingleton: Hubby All Wet Case Recovery for emotional disturbance will be
excluded unless the breach also caused serious
Emotional bodily harm or the contract or the breach is the
§ 353
Damages kind that serious emotional disturbance was a
particular likely result

Can recover if: 1. Conscious Disregard 2. Fraud 3. Ainsworth: 6 million dollar man. Insurance Punitive damages are not recoverable for a
Malice 4. Oppression Company refused to pay a claim and help for breach of contract unless the conduct
oppression. Does this violate disproportionate constituting the breach is also a tort for which
Factors of Punitive Damages: Financial Position compensation under 351(3)? punitive damages are recoverable
Punitive of Defendant, Blameworthiness,
§ 355 Seamans: tortious breach of implied covenant 5 elements of fraud 1. A representation was
Damages Vulnerability/injury suffered, offensiveness,
made 2. Representation was false 3. Defendant
means necessary to deter. [Fire Breathing Villains Club Med: false advertisement of vacation.
knew it was false 4. Defendant intended to
Owe Damages] allowed because of fraud
deceive 5. Plaintiff relied and suffered damages
[Real Friends Deter Mean Rolls]
All Contracts impose a duty of Good faith and fair
§ 205 Good Faith
dealing in its performance and its enforcement
The amount of money necessary to compensate Security Stove: Plaintiff relied on the contract ‘ Use Reliance when 1. Restitution would be too
the plaintiff for efforts expended or expenses and defendant should have known he would meager 2. Expectancy would be too excessive
incurred in reasonable reliance upon the contract have expenses traveling to convention.
2 kinds: 1. Essential – general 2. Incidental –
Recovered everything but lost profits.
special
STONISM: Should have known test
Anglia TV v. Reed: hold expenses prior to K.
Angela hired director and had other expenses.
STONISM: Incentives Matter
Dempsey: No damages for expenses before K
§ 349 Reliance
STONISM: Contract Plan these damages (profits) are too speculative to
expect certain profits – wrestling case.
Sullivan v. O’Connor: Bad Face Lift case,
personal service K
Freund v Wash..Sq.Press: The 6 cent man
case. Damages were not foreseeable and would
enrich him
Putting the party back to where they were before Bollenback: recovered restitution for premiums Elements: 1. Benefit conferred on Defendant 2.
the K, to prevent unjust enrichment - not what P paid because the company thought the policy Conferring party must have the reasonable
§ 370 Restitution
gave up but what D gained was cancelled. expectation of compensation 3. At the request of
the D 4. Unjust enrichment occurred

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 371 Cotnam v. Wisdom: Quantum Merit contract – Quantum Merit: 3-part test – 1. Would defendant
(A) – Benefit Rendered court implies contract ‘Implied in Law’ LOOK let you render the services 2. Would a reasonable
(B) – Benefit Received AT MORE IN DEPTH person expect to be paid 3. No effort to prevent
Measure of
the services from happening
§371 Restitution Michigan RR v. State: Prison Coal Case. 3.40
Damages v 6.85 as a gift because of statue
Boone v. Coe: 12-Month Farmer. Landowner
received to benefit so he owes no restitution.

SALE OF GOODS – UCC – [Great People Always Cheer Rationally]

Every contract or duty within the UCC imposes
§ 1-304 Good Faith an obligation of good faith in its performance
and enforcement.
Perfect Before acceptance, buyer can reject the goods
§ 2-601
Tender Rule for ANY nonconformity
Acceptance When the buyer takes them and intends to keep What constitutes acceptance of goods when the
§ 2-606
of Goods them buyer intends to possess them and keep them
2 instances when seller has the right to cure: (a) Seller must notify the buyer of his intention to
Cure by rejected and the time for performance has not yet cure
§ 2-508
Seller expired (b) seller had reasonable grounds to
believe it would be acceptable.
(1) (a) on the reasonable assumption that its non- Ramirez v. Autosport: P accepted the goods, D Durfee v. Rod Baxter: Car was so substantially
conformity would be cured; or (b) without had reasonable amount of time to cure the impaired.
Revocation
discovery of such non-conformity if his goods. Buyer can only reject goods if non-
§ 2-608 of
acceptance was reasonably induced either by the conforming performance substantially impairs
Acceptance
difficulty of discovery before acceptance or the value of the goods.
seller’s assurances. (2) Reasonable time
Seller’s Remedies – [Really Lazy Cats Itch]
Remedies When the buyer wrongfully rejects or revokes acceptance of goods, fails to make a payment due on
§ 2-703 available to or before delivery, or repudiates, the seller may (a) withhold delivery of the goods (b) stop delivery
Seller by the carrier (c) resell the goods and recover the difference (d) cancel the contract
Old v. Mapes: Marble Counters – LVS but Subsequent contracts, even for the same work,
§ 2-706 LVS must prove he could have done both K’s can be considered independent of the original
contracts
3 Part Test Issues: 2-706(1) the seller is entitled to K price +
R.E. Davis Chemical Corp v. Diasonics: incidental damages – expenses saved and cost
Lost 1-Capacity 2-Profit 3-High Statistical
“medical equipment sale” avoided. Under 2-708(1) the seller would be
§ 2 -708 Volume Probability
entitled to K price – market price of goods +
Seller Variable Cost excluded, not fixed
incidental damages – cost avoided. Under 2-
708(2) profits.
Cover on the part of the seller is a defacto duty to 2-704(2): where the goods are unfinished an 2-709 requires attempt at resale before claiming
mitigate when goods are wrongfully rejected or aggrieved seller may exercise reasonable price of goods from buyer ( must make a
repudiated before performance commercial judgment for the purposes of reasonable effort to resell the goods at a
§ 2 -704
Cover by avoiding loss and of effective realization either reasonable price, unless the circumstances
& § 2-
Seller complete the manufacture and wholly identify reasonably indicate that such effort will be
709
the goods to the contract or cease manufacture unavailing.
and resell the scrap or salvage value or proceed
in any other reasonable manner.
Benefits Lost are not equal to cost incurred. Can Any commercially reasonable charges, expenses,
recover incidental expenses. Quantity discount Nobs Chemical v. Koppers: large quantity or commissions incurred in stopping delivery, in
Incidental
is not an expense discount case, the breach took out the discount the transportation, care and custody of goods
§ 2 - 710 Damages –
so couldn’t recover incidental after the buyer’s breach, in connection with
Seller
return or resale of the goods or otherwise
resulting from the breach.
Buyer’s Remedies – [Big Cows Never Bother Other Silly Lizards Except Iguanas]
If the seller fails to deliver or repudiates or the Cancel, cover, recover goods if paid all or party,
buyer rightfully rejects or revokes acceptance recover good if buyer is unable to recover and
Buyer’s
§2-711 with respect to the goods he can: goods were in existence or identified to the K
Remedies
later, specific performance or damages for non-
delivery.
K – Cost of Cover + Consequential and Durawood Treating: ‘crossties’ - held internal 2-712 (1) Cover – by good faith without
Incidental damages – Savings. cover was valid but potential lost profits should reasonable delay purchase goods in substitution
Cover by
§2-712-1 Mitigation under UCC not be recovered for those didn’t receive from seller (2) buyer
Buyer
Interior Elevator: cover partial and recover difference in cover price and Contract price and
normal damages for the rest consequential damages
Non- Used when buyer does not enter into subsequent
§ 2–713 Delivery or contract (cover) Total Breach
Repudiation
Where the buyer has accepted goods and given
Breach in
notification he may recover as damages for any
Regard to
§ 2-714 non-conformity of the tender the loss resulting in
Accepted
the ordinary court of events from the seller’s
Goods
breach.
(1) Incidental Damages: expenses reasonably
Other Buyer resulting from breach. The cost to inspect/ transfer
§2-715
Damages items

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 (2) Consequential Damages: other damages that
occur, physical harm, lost profits
Specific Specific Performance may be decreed where the
§ 2-716
performance goods are unique or in other proper circumstances.
A term fixing unreasonably large liquidated Damages for breach by either party may be
Liquidated damages is void as a penalty liquidated in the agreement but only at an
§ 2-718
Damages amount which is reasonable in light of the
anticipated harm
Reliance must be basis for the bargain. Must be Overstreet v. Norden Laboratories, Inc.: Vet
Expressed part of the contract that the buyer paid for. buys new medicine that is suppose to prevent
§ 2-313
Warranty Special words do not need to be used to form an disease but instead does not work and mares
express warranty abort foals.
§ 2-314 2 Kinds: 1. Merchantability 2-314 (usages of
Implied
& § 2- trade) 2. Fitness for particular purpose 2-315
Warranty
315
SPECIFIC PERFORMANCE – [Saban Envies Friday Night Lights]
A remedy in equity, in which a party will be Amaco: 3 part test: 3 Part Test: 1. Property is
Specific compelled to completely perform their part of unique (specialty goods, land, personal service)
§ 357
performance the K. 2. If accurate calculation is uncertain (priceless)
3. Difficulty and uncertainty in asserting
Effect of If money is adequate then no specific
§359
Adequacy performance.
Factors If damages are adequate consider: 1.The difficulty of proving damages w/ reasonable certainty 2
Affecting Difficulty of procuring a suitable performance by means of money awarded as damages 3.The
§360
Adequacy likelihood that an award of damages could not be collected
of Damages
ABC v. Wolf: 3 part test: 1. Is the restraint Billboard Case
Non-
§188 ancillary? 2. Is the restraint reasonable as to
competing
time? 3. Is the restraint reasonable as to space?
Penalty Test: 1. Damages difficult to predict 2. Lake River: unenforced clause. Held they could (1) Damages for breach by either party may be
Reasonably forecast damage recover regular damages but liquidated damages liquidated in the agreement but only at an
provided a windfall for the plaintiff. amount that is reasonable in light of the
Courts will not grant shotgun clauses anticipated or actual loss cause by the breach
Hawaiian Sugar: enforced clause. Barge was
and the difficulties of proof of loss. A term
late in being made and late delivering sugar so
fixing unreasonable large liquidated damages is
court upheld the 17K a day liquidated damages
unenforceable on grounds of public policy
because the parties new what they were getting
Liquidated
§ 356 into and damages were difficult to estimate at
Damages
time of contracting.
Southwest Engineering: enforced clause.
Installed navigation aids at airfields with
liquidated damages of $100 a day. Contract was
completed late and each party too a calculated
risk and bound by reasonable contractual
provisions pertaining to liquidated damages.
CONSIDERATION [C B R B T L S A D T U I O F M O E R V L B C M]
§17 Consideration Formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration
Bargain/ Except as in § 76 (Conditional Promise) and § 77 (Illusory and Alternative Promises) a promise Must have detriment
§75
Exchange which is bargained for is consideration if, the promised performance would be consideration
(1) A promise which the promisor should Ricketts v. Scothorn: $2,000 grandfather gift to 1. Justified/ Reasonable
reasonably expect to induce action or quit working. 2. Induced
forbearance on the part of the promise or a 3. Detrimental
Colonial Savings: all up in flames
third person and which does induce such 4. Reliance
action or forbearance is biding if injustice can Walters v. Marathon Oil: Gas station promise 5. Promissory Estoppel
Reliance be avoided only be enforcement of the When someone cannot prove bargain/exchange
§90 Feinberg v. Pfeiffer: $200 for life retirement
Doctrine promise. The remedy granted for breach may but relied on contract
be limited as justice requires. (2) A charitable Devecom v. Shaw: ‘Devil Made Me do it case”
Willingston v. Corbin
subscription or a marriage settlement is
Katz v. Danny Dare: unstable inducement of Test: 1. Must have been a promise 2. Reliance
binding under Subsection (1) without proof
retirement with pension must have been foreseeable 3. Promise induced
that the promise induced action or
reliance 4. Injustice only avoided by enforecmen
forbearance Hayes v. Plantation Steel: take care of you
Past Consideration 1. A promise made in Mills v. Wyman: Majority Pull – past care STONISM: Transaction Costs
recognition of a benefit previously received cannot be consideration, there was no new legal §82 - §84 Without Bargain
by the promisor from the promise is binding detriment. Promise for past care. P took care of
to the extent necessary to prevent injustice 2. D’s son who had fallen ill. D was thankful and Webb v. McGowin: Minority Pull –
Promise for
A promise is not binding under (1) if a. the promised to her and then reneged. enforceable contract for past actions. Material
§86 Benefit
promisee conferred the benefit as a gift or for benefit conferred. Webb was seriously injured
Received
other reasons the promisor has not been when he fell and prevented a log from falling on
unjustly enriched; or b. to the extent that its McGowin, he promised to pay him a sum for the
value is disproportionate to the benefit rest of his life, when he died estate stopped
paying but court held enforceable contract
A performance or a return promise must be §71(2)(b) Forbearance: Hamer v. Sidway: Can be: 71 (2) Performance or return promise is
bargained for and sought for by the promisor “Good Southern Baptist” bargained for if its sought by the promisor in
Types of
§ 71 exchange for his promise and is given by the
Exchange
promise in exchange for that promise 71 (3)(a)
An act other than a promise (b) forbearance (c)

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Pre-Existing Obligation
Stone going to Germany
Mutuality at will employment
Performance of No sham consideration – nominal
§73
Legal Duty
A mutual agreement to compromise a valid
Settlement of disputed claim is supported by consideration
§74
Claims but invalid is not consideration.
Courts do not look for the value of
consideration, not do they look to the
Adequacy of adequacy of consideration. They simply look
§79
Consideration for a bargained for exchange and new legal
detriment.
STONISM: cesspool of ambiguity
§ 175 Duress
Selmer v. Blakeslee-Midwest:
(1)A threat is improper if (a) what is
threatened is a crime or a tort, or the threat
itself would be a crime or a tort if it resulted
in obtaining property (b) what is threatened is
§ 176 Threats a criminal prosecution (c) what is threatened
is the use of civil process and the threat is
made in bad faith (d) the threat is a breach of
the duty of good faith and fair dealing under a
contract with the recipient
Elements of Business Unconscionability: (1)
lack of adequate opportunity to fairly review
the contract (2) inability to understand the
§ 208 Unconscionble provisions of the document (3) lack of
opportunity to seek independent professional
advice regarding the terms and provisions of
the agreement.
There is no commitment. I will if I feel like it.
Both parties must be bound: must be
mutuality. The promise is illusory because
the person is still free to buy from anyone else
they choose.
Alternative Performance: A promise which
Illusory and reserves to the promisor several alternative
§ 77 Alternative performances is generally consideration only RULE: Buyer can’t rely on the K condition to
Promises if each of the alternative performances would avoid liability on the K. Such provisions are to
have been consideration had it been bargained ensure that Buyer will make “reasonable efforts”
for alone… Alternatively, there is
consideration if one of the alternatives
performances would be consideration and
there is a “substantial possibility” that before
the promisor makes his choice, events will
eliminate the other alternatives.
Option contracts are contracts that leave open Seyferth v Groves: $1 now for $40 an acre later
an option that one party can accept. In an
option contract, one has purchased time to
decide.
Option
§ 87 A small payment (nominal) may furnish
Contract
consideration for a short time option
proposing an exchange on fair terms of an
offer proposing a transaction involving much days notice was consideration for service station
larger sums.
A firm offer is an offer that will remain open
for a certain period or until a certain time or
happening of a certain event, during which it
§ 2-205 Firm-Offer
is incapable of being revoked. As a general
rule, all offers are revocable at any time prior
to acceptance, even those offers that purport
Alaska Packers: Demanded $100 or wouldn’t
work so captain agreed but court overruled b/c
captain was under duress and was a PEO
Levine v. Blumenthal: liquid debt $175 v $200
Williams v. Roffey Bros: 27 unit contractor
Glamorgan City Council: Mining company
agreed to pay police to secure the situation.
Mining company claimed lack of consideration
and pre-existing duty. Held: new legal
detriment was found in the duty undertaken
beyond their normal duty
Duncan v. Black: New Legal Detriment
“Cotton Allotment” The farmer had no right to
forbear because he did not have a right to the
cotton allotment in the first place
Batsakis v. Demotsis: ‘Greek Lady Case’
Post v. Jones: “Whale Oil Case”
Schnell v. Nell: no false recitals
STONISM: A man is allowed to be a fool
Post v. Jones: ‘Whale Oil Case’ was stranded
and ships came to rescue
Berger v. Berger: Husband threatened his wife
that if she didn’t sign a settlement agreement, he
would turn her salon business into the IRS.
Court ruled NO CONSIDERATION because the
husband had committed the crime of extortion.
FDIC v. Linn:
Smith v. Price’s Creameries: Clause allowed
termination “for any reason” P claimed that it
was “unconscionable and void as a matter of
law” Court said he was educated and that no
evidence was given that he did not have an
opportunity to review the fine print
Must Be: Gross Inequality of bargaining power
Grean v. Grean:
Sorenson v. Connelly: Buyer agrees to buy
Seller’s house for $49,500 conditional upon
Buyer getting a loan for $39,000. Buyer tells
Seller “they have made other arrangements.”
Seller then sells house for $47,000 and sues
Buyer to recover the lost $2,500. Held for Seller.
to secure the loan and suit lies on their failure to
make efforts. Court found no evidence of
reasonable effort.
Corenswet v. Amana Refrigeration:
Lewis v. Fletcher: nothing paid so no
consideration, an option K not supported by
consideration is merely a revocable offer to sell.
Marsh v. Lott: 25¢ for 100,000K real estate
Linder v. Mid-Continent Petroleum Corp: 10
Gurfein v. Werbelovsky: S accepted an order
for 5 cases of glass plates. B had an option to
cancel before shipment. S refused to ship. B
sued. S claim that because B had the option to
cancel, there was no consideration. Court held:
The seller had a right to enforce the buyer’s
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the creation, modification, or destruction of a
legal relation
Performance of a legal duty owed to a promisor
which is neither doubtful nor the subject of
honest dispute is not consideration; but a similar
performance is consideration if it differs from
what was required by the duty in a way which
reflects more than a pretense of bargain.
Mabley & Carew Co.: There was an
inducement for her to continue to work creating
a binding obligation upon the company to pay.
K-Mart Case: P worked at K-Mart, blew the
whistle on his manager and was fired. Court
held that it was improper to fire him.
To have forbearance on giving claim, there must
be a legal right to something. If you do not own
the item, then you have no right to sell it and
therefore suffer no legal detriment.
If consideration is met, there is no additional
requirement of benefit, detriment, equivalence of
values, or mutuality of obligation
Gross Inadequacy – such that it “shocks the
conscience of the court” will not meet
consideration
Mitchell v. C.C. Sanitation: threatening
garbage job
(2) a threat is improper if the resulting exchange
is not on fair terms, and (a) the threatened act
would harm the recipient and would not
significantly benefit the party making the threat,
(b) the effectiveness of the threat in inducing the
manifestation of assent is significantly increased
by prior unfair dealing by the party making the
threat, or (c) what is threatened is otherwise a
use of power for illegitimate ends.
If a contract or term thereof is unconscionable at
the time the contract is made a court may refuse
to enforce the contract, or may enforce the
remainder of the contract without the
unconscionable term, or may so limit that
application of any unconscionable term as to
avoid any unconscionable result.
Usually when we don’t have mutuality of
contract, then we probably have illusory.
Appear Illusory, but aren’t:
1. Satisfaction Clause – pay someone to
paint a portrait of yourself to your
satisfaction
2. Output/Requirement – info here
3. Exclusive agency – terms specified
4. Best Efforts –
A promise to choose one of several alternative
means of performance is illusory unless every
alternative involves some legal detriment to the
promisor. However, if the power to choose
rests with the promisee or some third party not
under the control of the promisor, the promise
is enforceable as long as at least one alternative
involves some legal detriment
X pays $1 to Z for real property to hold the offer
open for 3 days and Land cost $50K. Is this a
false recital, intent to K, does it matter if it was
paid?
Unilateral contracts, enforceable because one
has begun performance, or option contracts,
enforceable because one has purchased time to
decide (whether to purchase land) are not held
objectionable on “mutuality” grounds
An offer by a merchant to buy or sell goods in a
signed writing which by its terms gives
assurance that it will be held open is not
revocable, for lack of consideration, during the
time stated or if no time is stated for a
reasonable time, but in no event may such period
 to be irrevocable on their face. promise, ship quickly and they couldn’t cancel. of irrevocability exceed three months; but any
There was consideration such term of assurance on a form supplied by the
offeree must be separately signed by the offeror.
If there is not consideration then we look to Consideration must exist on both sides of the
Mutuality of
§79(b)(c) see if there is mutuality of obligation contract; that is, promises must be mutually
Obligation
obligatory.
A agrees to sell all of his output of a Empire Gas: Empire K’s with Bakery to sell Phosphate: agree to buy the entire consumption
particular product to B. them propane to convert their vans over to but of phosphate rock, came in different form but
bakery decides not to, court holds must show still obligated to buy. Held consideration
No lack of mutuality of obligation here good faith reason not to
Good Faith Requirement: §1-203 and §205
Great Northern Railroad: contract had
§2-306(1) Output consideration for the 12 mths.
De Los Santos v. Great Western Sugar:
Contracted to haul quantities of D’s beets to beet
receiving station and unload them but had
contracted with others to do the same so was no
and exclusive contract and no consideration.
Good Faith / Best Efforts Wood v. Lucy: gave exclusive rights to market Requirement contracts (promises to buy “all that
A court may find an implied promise her designs for a period and she would receive I will require”) and output contracts (promises to
furnishing mutuality in appropriate half, but said nothing of his duty to market them sell “all that I manufacture”) are enforceable.
circumstances (such as exclusive marketing imposed a duty to use “reasonable, best efforts” Consideration exists, as the promisor is suffering
agreements). The courts generally will find thus making it enforceable. a legal detriment; he has parted with the legal
Exclusive an implied promise to use best efforts and right to buy or sell the goods he may need or
Scott v. Lumber: No mutuality because was
2-306(2) Dealings sustain agreements that might otherwise manufacture from another source.
conditioned on buying a ship. Held valid K.
(requirements) appear illusory. Example: Y corp. was granted exclusive rights
Bloor v. Flagstaff: Court held they did not use to sell Dominick’s dresses in return for one-half
A agrees with B that A will buy all of his best efforts to market the beer so enforced the the profit. The agreement was silent as to any
requirements for a particular good from B at liquidated damages clause. obligation on the part of Y corp. help y-corp
an agree-upon price.
impliedly promised to use its best efforts to sell
Dominick’s dresses.
Although reservation of an unqualified right to cancel or withdraw at any time may be an
Right to
illusory promise, the consideration is valid if this right is any way restricted, the right to cancel
2-309 (2) Cancel or
upon 60 days notice. Note that article 2 implies a requirement of reasonable notice even if it is
Withdrawal
not specified in the contract.
Voidable promises are not held on The promisor is allowed to promise under some Example: Victor entered into a contract with
“mutuality” grounds. rule designed for the promisor’s protection, then Baby Jane, an infant. Baby Jane’s power to
a new promise to perform the voidable disaffirm her contractual obligation will not
Voidable obligation is enforceable. prevent her promise from serving as
§ 78
Promises consideration.
The promise of a minor is voidable but if the
minor upon turning 18, promises to make good
on the first promise, it is enforceable.
Promise to Pay A subsequent promise to pay a debt that has been barred by statute of limitations is enforceable Must be a singed writing, new promise may be
Indebtedness: against the promisor. Since “past consideration” and “moral obligation” are not consideration, implied from part payment of the debt or other
§ 82
Statue of this is simply an exception where a promise is enforced even though there is no consideration. acknowledgement, new promise must be
Limitations communicated to creditor
Promise to Pay Exception when a debtor promises to pay a debt that has been discharged in bankruptcy An express promise to pay all or part of an
Indebtedness proceedings or debt that is not yet discharged but is dischargeable in bankruptcy proceeding indebtedness of the promisor, discharged or
§ 83
discharged in begun before the promise is made. dischargeable in bankruptcy proceedings begun
Bankruptcy before the promise is made, is binding
Conditional Promises are enforceable, no Example: Alice promises to deliver goods to A conditional promise is not consideration if the
matter how remote the contingency, unless Charles “only if her son comes into the promisor knows at the time of making the
the “condition” is entirely within the business.” Valid consideration exists. If the promise the condition cannot occur. (2) A
promisor’s control. promise were “only if I decide to take my son promise conditional on a performance by the
Conditional A promise conditioned on the promisor’s into the business,” a court might find no promisor is a promise of alternative
§ 76 consideration. performances within §77 unless occurrence of
Promise satisfaction is not illusory because the
promisor is constrained by good faith (for the condition is also promised.
contracts involving mechanical fitness, utility, Kirksey v. Kirksey: “Dirty Old Man” – NO Conditions that are outside the control of the
or marketability) GIFTS
promisor. Conditions that cannot occur
Condition to gift vs. Bargained exchange
Foakes v. Beer: Foakes owes beer money and (1) A promise modifying a duty under a contract
Modification needs new consideration §275 both agree if Foakes pays B $500 and pays the not fully performed on either side is binding (a)
rest in installments he would forgive the rest – if the modification is fair and equitable in view
Modification
not consideration. of circumstances not anticipated by the parties
§ 89 of Executory
when the contract was made or (b) to the extent
Contract
Sugar House Finance v. Anderson: possibly provided by statue think 2-209 or C to the extent
73 but look at liquidated illustration that justice requires enforcement of material
change of position in reliance on the promise
A and B make a K under which A promises to If a party, before he has fully performed his duty
build a fence and B promises to pay A $1,000. under a contract, manifests to the other party his
As A begins to build the fence, he says to B, assent to discharge the other party’s duty to
Modification
§2-209 “The price we agreed on was too high, and you render part or all of the agreed exchange, the
under UCC
need pay only $900 for the fence.” A then duty is to that extent discharged without
builds the fence. B’s duty to pay A to the extent consideration.
of the $100 is discharged and B owes A only $900