CONTENTS ENFORCING PRIVATE AGREEMENTS 1 INTRODUCTION TO CONTRACT LAW 3. Preface Acknowledgments. xxxi xxxv
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1 CONTENTS Preface Acknowledgments xxxi xxxv I ENFORCING PRIVATE AGREEMENTS 1 INTRODUCTION TO CONTRACT LAW 3 1 A. STUDYING CONTRACT LAW 3 1. The Structure of This Book 3 2. The Three Dimensions of Law 5 3. The Restatement and the Uniform Commercial Code 6 4. How to Brief Cases for This Class 9 B. THE NATURE AND HISTORY OF CONTRACT 11 Shaheen v. Knight 11 Restatement (Second) of Contracts 14 Historical Background: From Status to Contract 15 Sir Henry Maine, Ancient Law 15 Historical Background: The Rise of Assumpsit 16 E. Allan Farnsworth, Contracts 16 C. THE BOUNDARIES OF CONTRACT 22 Jordan v. Knafel 22 Relational Background 29 Lawrence A. Cunningham, Contracts in the Real World: Stories of Popular Contracts and Why They Matter 29 xi
2 xii Contents DAMAGES FOR BREACH OF CONTRACT 33 A. WHY STUDY REMEDIES FIRST? 33 B. THE THREE DAMAGE INTERESTS 33 Legal Background: Introduction to Damage Interests 34 E. Allan Farnsworth, Expectation, Reliance, and Restitution Interests 34 Hawkins v. McGee 35 McGee v. United States Fidelity & Guaranty Co. 38 Relational Background: Before and After the Lawsuit 40 Jorie Roberts, Hawkins Case: A Hair-Raising Experience 40 Restatement (Second) of Contracts 42 Nurse v. Barns 43 Differentiating Damage Interests: A Problem 43 Sullivan v. O Connor 44 J. O. Hooker & Sons v. Roberts Cabinet Co. 50 Sales Contracts: The Uniform Commercial Code 56 KGM Harvesting Co. v. Fresh Network 58 Sales Contracts: The Uniform Commercial Code 67 C. THREE LIMITATIONS ON DAMAGES Remoteness or Foreseeability of Harm 68 Hadley v. Baxendale 69 Historical Background: Putting Hadley in Context 72 Richard Danzig, Hadley v. Baxendale: A Study in the Industrialization of the Law 73 Hector Martinez and Co. v. Southern Pacific Transportation Co. 80 Restatement (Second) of Contracts 84 Morrow v. First National Bank of Hot Springs Certainty of Harm 87 Chicago Coliseum Club v. Dempsey 88 Relational and Historical Background: Why Didn t Dempsey Fight Wills? The Role of Race 94 Winston Cigarette Machine Co. v. Wells-Whitehead Tobacco Co. 98 Restatement (Second) of Contracts 100 Anglia Television Ltd. v. Reed 101 Security Stove & Manufacturing Co. v. American Railway Express Co. 103 Economics Background: The Subjectivity of Valuation 109 Ludwig von Mises, Human Action 109 2
3 Contents xiii 3. Avoidability of Harm 110 Rockingham County v. Luten Bridge Co. 110 Relational Background: Why Did the County Change Its Mind? Why Did the Company Keep Building? 113 Barak Richman, Jordi Weinstock & Jason Mehta, A Bridge, a Tax Revolt, and the Struggle to Industrialize: The Story and Legacy of Rockingham County v. Luten Bridge Co. 113 Parker v. Twentieth Century-Fox Film Corp. 120 Relational Background: A Feminist Interpretation of Parker 127 Mary Joe Frug, Shirley MacLaine and the Mitigation of Damages Rule: Re-Uniting Language and Experience in Legal Doctrine 127 Relational Background: The Rise and Fall of the Bloomer Girl Project 129 Victor P. Goldberg, Framing Contract Law: An Economic Perspective 129 Restatement (Second) of Contracts 131 Neri v. Retail Marine Corp. 132 Sales Contracts: The Uniform Commercial Code 136 D. CONTRACTING AROUND THE DEFAULT RULES OF DAMAGES Express Limitations on Consequential and Incidental Damages 138 Sales Contracts: The Uniform Commercial Code Liquidated Damages vs. Penalty Clauses 139 Kemble v. Farren 141 Wassenaar v. Towne Hotel 143 Restatement (Second) of Contracts 150 Lake River Corp. v. Carborundum Co. 151 OTHER REMEDIES AND CAUSES OF ACTION A. SPECIFIC PERFORMANCE AND INJUNCTIONS 153 Legal Background: Introduction to Equitable Remedies 153 Dan B. Dobbs, Introduction to Equity and Equitable Remedies Contracts for Land 157 Loveless v. Diehl 158
4 xiv Contents 2. Contracts for Goods 163 Cumbest v. Harris 163 Scholl v. Hartzell 166 Sedmak v. Charlie s Chevrolet, Inc. 168 Sales Contracts: The Uniform Commercial Code Contracts for Personal Services 172 The Case of Mary Clark, A Woman of Colour 173 Relational Background: The Nature of Mary Clark s Voluntary Indenture 175 Sandra Boyd Williams, The Indiana Supreme Court and the Struggle Against Slavery 175 Lumley v. Wagner 177 Relational Background: In the End Everyone Except the Lawyers Were Losers 181 Stephen Waddams, Dimensions of Private Law 181 Ford v. Jermon 183 Duff v. Russell 185 Historical and Relational Background: Sex and Specific Performance 187 Lea S. VanderVelde, The Gendered Origins of the Lumley Doctrine: Binding Men s Consciences and Women s Fidelity 187 Dallas Cowboys Football Club v. Harris 193 Constitutional Background: The Thirteenth Amendment and Contractual Freedom 199 Bailey v. State of Alabama 199 B. RESTITUTION DAMAGE INTEREST AND CAUSE OF ACTION Restitution for Breach of Contract 205 Bush v. Canfield 206 Restatement (Second) of Contracts Restitution to the Party in Breach 212 Britton v. Turner 212 Vines v. Orchard Hills, Inc. 216 Restatement (Second) of Contracts Restitution and Quasi-Contract 221 Cotnam v. Wisdom 221 Martin v. Little, Brown and Co. 224 C. TORTIOUS INTERFERENCE WITH CONTRACT 226 Lumley v. Gye 226 Historical and Relational Background: The Impact of Lumley v. Gye on Johanna Wagner 228 Lea S. VanderVelde, The Gendered Origins of the Lumley Doctrine: Binding Men s Consciences and Women s Fidelity 228 Restatement (Second) of Torts 229 Texaco v. Pennzoil 230
5 Contents xv Procedural Background: The Most Expensive Legal Mistake in the History of the World 238 Thomas Petzinger, Jr., Oil and Honor: The Texaco-Pennzoil Wars 238 MUTUAL ASSENT 241 II REACHING AN AGREEMENT A. THE OBJECTIVE THEORY OF ASSENT 243 Embry v. Hargadine, McKittrick Dry Goods Co. 244 The Objective Theory of Assent: A Problem 248 Lucy v. Zehmer 249 Relational Background: The Politics and Economics of Lucy v. Zehmer 256 Barak Richman & Dennis Schmelzer, When Money Grew on Trees: Lucy v. Zehmer and Contracting in a Boom Market 257 Restatement (Second) of Contracts 262 B. WHAT ISANOFFER? Preliminary Negotiations 264 Nebraska Seed Co. v. Harsh 264 Lefkowitz v. Great Minneapolis Surplus Store, Inc. 266 Leonard v. PepsiCo 269 Restatement (Second) of Contracts 271 Sales Contracts: The Uniform Commercial Code Written Memorial Contemplated 274 Empro Manufacturing Co. v. Ball-Co Manufacturing, Inc. 275 Restatement (Second) of Contracts 278 Arnold Palmer Golf Co. v. Fuqua Industries, Inc. 278 Memorandum of Intent for the Acquisition of 25% of the Stock of Arnold Palmer Golf Company in Exchange for Certain Assets of Fuqua Industries, Inc. 284 Copeland v. Baskin Robbins U.S.A. 288
6 xvi Contents 3. Revoking an Offer 295 Dickinson v. Dodds 295 Restatement (Second) of Contracts 300 Legal Background: The Emergence of Firm Offers 301 Sales Contracts: The Uniform Commercial Code 302 C. WHAT ISANACCEPTANCE? Acceptance That Varies Terms The Mirror Image Rule 302 Ardente v. Horan 303 Restatement (Second) of Contracts Acceptance by Correspondence The Mailbox Rule 306 Restatement (Second) of Contracts Acceptance by Performance or Unilateral Contracts? 309 Carlill v. Carbolic Smoke Ball Co. 310 Relational Background: The Smoke Ball and Nineteenth-Century Patent Medicine 313 A. W. B. Simpson, Quackery and Contract Law: The Case of the Carbolic Smoke Ball 313 Restatement (Second) of Contracts 323 White v. Corlies & Tifft 323 Poetic Background: Llewellyn s Verse 326 Restatement (Second) of Contracts 327 Petterson v. Pattberg 328 Relational Background: Additional Information About Petterson v. Pattberg 332 Samuel Blinkoff, Note 332 Restatement (Second) of Contracts Acceptance by Silence 333 Hobbs v. Massasoit Whip Co. 333 Restatement (Second) of Contracts 334 D. E-COMMERCE AND MUTUAL ASSENT 335 Register.com, Inc. v. Verio, Inc. 335 Nguyen v. Barnes & Noble Inc. 342 Statutory Background: Uniform Computer Information Transactions Act 349 Statutory Background: Uniform Electronic Transactions Act (1999) 351 Empirical Evidence on the Use of Online Contracting 353 Florencia Marotta-Wurgler, Some Realities of Online Contracting 353
7 Contents xvii DISCERNING THE AGREEMENT A. INTERPRETING THE MEANING OF THE TERMS Ambiguous Terms 360 Raffles v. Wichelhaus 360 Relational Background: What to arrive ex Peerless Really Meant 361 Grant Gilmore, The Death of Contract 362 A. W. B. Simpson, Contracts for Cotton to Arrive: The Case of the Two Ships Peerless 365 Oswald v. Allen 371 Restatement (Second) of Contracts 372 Sales Contracts: The Uniform Commercial Code Vague Terms 375 Weinberg v. Edelstein 375 Frigaliment Importing Co. v. B.N.S. International Sales Corp. 379 B. FILLING GAPS IN THE TERMS Agreements to Agree 385 Sun Printing & Publishing Ass n v. Remington Paper & Power Co. 386 Restatement (Second) of Contracts Illusory Promises 392 New York Central Iron Works Co. v. United States Radiator Co. 392 Eastern Air Lines, Inc. v. Gulf Oil Corp. 394 Wood v. Lucy, Lady Duff-Gordon 397 Biographical Background: Who Was Lucy, Lady Duff-Gordon? 398 Meredith Etherington-Smith & Jeremy Pilcher, The It Girls 398 Stephen Cox, Mysteries of the Titanic 402 Biographical and Relational Background: Who Was Otis Wood and Why Did He Omit a Best Efforts Clause? 403 Victor Goldberg, Framing Contract Law: An Economic Perspective 404 Sales Contracts: The Uniform Commercial Code 407 C. IDENTIFYING THE TERMS OF THE AGREEMENT Form Contracts or Contracts of Adhesion 408 Carnival Cruise Lines v. Shute 408 Compagno v. Commodore Cruise Line, Ltd. 415 Caspi v. Microsoft Network 417
8 xviii Contents Restatement (Second) of Contracts Which Terms Were Agreed To? 419 Step-Saver Data Systems, Inc. v. Wyse Technology 420 Sales Contracts: The Uniform Commercial Code 430 Union Carbide Corp. v. Oscar Mayer Foods Corp Terms That Follow Later 436 ProCD v. Zeidenberg 437 Hill v. Gateway Klocek v. Gateway 446 WRITTEN MANIFESTATIONS OF ASSENT A. INTERPRETING A WRITING THE PAROL EVIDENCE RULE 451 Thompson v. Libbey 452 Masterson v. Sine 453 Restatement (Second) of Contracts 457 Sales Contracts: The Uniform Commercial Code 458 Pacific Gas and Electric Co. v. G. W. Thomas Drayage & Rigging Co. 459 Trident Center v. Connecticut General Life Insurance Co. 462 Comparative Law Background: The Parol Evidence Rule Under the United Nations Convention on Contracts for the International Sale of Goods 468 Daniel D. Barnhizer, CISG as an Alternative System of Default Rules Governing the Sale of Goods 468 B. REFORMING A WRITING MISTAKES IN INTEGRATION 472 The Travelers Insurance Co. v. Bailey 472 Restatement (Second) of Contracts 474 C. REQUIRING A WRITING THE STATUTE OF FRAUDS 475 Restatement (Second) of Contracts The Statute and Its Exceptions 476 Boone v. Coe 476 Restatement (Second) of Contracts 479 Riley v. Capital Airlines, Inc. 480 Sales Contracts: The Uniform Commercial Code 483 Restatement (Second) of Contracts Satisfying the Requirement of a Writing 485 Schwedes v. Romain 485 Restatement (Second) of Contracts 489
9 Contents xix Ethical Background: The Role of the Lawyer in Schwedes 490 American Bar Association Model Rules of Professional Conduct (2002) Satisfying the Requirement of a Signature 494 Cloud Corp. v. Hasbro, Inc. 495 Statutory Background: Writings and the E-SIGN Act 498 Statutory Background: Provisions for E-Signatures 499 Uniform Electronic Transactions Act (1999) 499 Uniform Computer Information Transactions Act (2001) 499 MULTIPARTY TRANSACTIONS A. TRANSFERRING RIGHTS OR DUTIES TO THIRD PARTIES 501 Legal Background: Introduction to Assignment and Delegation 501 E. Allan Farnsworth, Contracts Assignment of Contractual Rights 503 Kelly Health Care v. The Prudential Insurance Co. of America 503 Restatement (Second) of Contracts 506 In re Nance 506 Restatement (Second) of Contracts Delegation of Contractual Duties 514 Sally Beauty Co. v. Nexxus Products Co. 515 Sales Contracts: The Uniform Commercial Code 519 B. THIRD-PARTY BENEFICIARIES OF A CONTRACT The Birth of the Third-Party Beneficiary Rule 520 Lawrence v. Fox 521 Relational Background 526 Anthony Jon Waters, The Property in the Promise: A Study of the Third Party Beneficiary Rule Intended Beneficiaries 535 Seaver v. Ransom 535 Restatement (Second) of Contracts Distinguishing Intended from Incidental Beneficiaries 539 Sisters of St. Joseph of Peace, Health, and Hospital Services v. Russell 539 Restatement (Second) of Contracts 546
10 xx Contents ENFORCEABILITY 547 III PRINCIPLES OF ENFORCEABILITY A. SIX CORE PRINCIPLES OF ENFORCEABILITY Party-Based Principles Standards-Based Principles Process Principles Integrating the Core Principles of Enforceability 565 B. APPLYING THE PRINCIPLES OF ENFORCEABILITY TO A CASE 568 Michelle Marvin v. Lee Marvin 569 Frances Morone v. Frank Morone 576 Sari Posner v. Victor Posner 577 THE DOCTRINE OF CONSIDERATION A. THE HISTORICAL ORIGINS OF THE DOCTRINE 579 Historical Background: The Origins of the Doctrine of Consideration 579 A. W. B. Simpson, The Doctrine of Consideration Introduction 579 B. THE BARGAIN THEORY OF CONSIDERATION 582 Economics Background: Bargains and the Division of Labor 582 Adam Smith, Lectures on Jurisprudence 582 Adam Smith, The Wealth of Nations Distinguishing Bargains from Gratuitous Promises 583 Johnson v. Otterbein University 584 Hamer v. Sidway 586 Relational Background: Other Dealings Between Willie and His Uncle 590 Hamer v. Sidway (N.Y. Supreme Court) 591
11 Contents xxi Kirksey v. Kirksey 593 Relational Background: Dear Sister Antillico 594 William R. Casto & Val D. Ricks, Dear Sister Antillico... : The Story of Kirksey v. Kirksey 594 Dahl v. HEM Pharmaceuticals Corp. 599 Restatement (Second) of Contracts Past Consideration 602 Moore v. Elmer Moral Consideration 604 Mills v. Wyman 604 Relational Background: Levi Lives! 608 Geoffrey R. Watson, In the Tribunal of Conscience: Mills v. Wyman Reconsidered 608 Boothe v. Fitzpatrick 612 Webb v. McGowin 615 Webb v. McGowin (Ala. Supreme Court) 618 Relational Background: Was a Promise Made? 619 Richard Danzig & Geoffrey R. Watson, The Capability Problem in Contracts 619 Restatement (Second) of Contracts 621 C. CONTRACT MODIFICATION AND THE PREEXISTING DUTY RULE 622 Harris v. Watson 622 Stilk v. Myrick 623 Alaska Packers Ass n v. Domenico 624 Relational Background: Were the Fishing Nets Really Rotten? 627 Debora L. Threedy, A Fish Story: Alaska Packers Association v. Domenico 628 Brian Construction and Development Co. v. Brighenti 632 Restatement (Second) of Contracts 636 Sales Contracts: The Uniform Commercial Code 636 United States v. Stump Home Specialties Manufacturing 637 D. ADEQUACY OF CONSIDERATION 638 Economics Background: Subjectivity and the Inequality of Exchange 639 Ludwig von Mises, Human Action 639 Newman & Snell s State Bank v. Hunter 640 Restatement (Second) of Contracts 641 Dyer v. National By-Products, Inc. 642
12 xxii Contents THE INTENTION TO BE LEGALLY BOUND Comparative Law Background: The English Law of Contract 648 Intention to Create Legal Relations 648 A. USING FORMALITIES TO MANIFEST AN INTENTION TO BE LEGALLY BOUND The Seal 652 Aller v. Aller 654 Statutory Background: New Jersey Changes Its Mind 657 Wagner v. Lectrox Corp. 657 Restatement (Second) of Contracts 658 Sales Contracts: The Uniform Commercial Code Nominal Consideration 659 Schnell v. Nell 659 Statutory Background: Documents Under Seal in Indiana 662 Lon L. Fuller, Basic Contract Law 662 Restatement (Second) of Contracts Recitals 663 Smith v. Wheeler 664 Jolles v. Wittenberg 665 Restatement (Second) of Contracts Written Expression of Intention to Be Legally Bound 666 Legislative Background: The Rationale for the Uniform Written Obligations Act 667 Handbook of the National Conference of Commissioners on Uniform State Laws & Proceedings of the Thirty-Fifth Annual Meeting 668 Thomas v. First National Bank of Scranton 675 Kay v. Kay 676 Federal Deposit Insurance Corp. v. Barness 677 First Federal Savings and Loan Ass n of Pittston v. Reggie 678 B. LACK OF INTENTION TO BE LEGALLY BOUND 679 Ferrera v. A. C. Nielsen 679 Evenson v. Colorado Farm Bureau Mutual Insurance Co. 681 Eiland v. Wolf 682
13 Contents xxiii THE DOCTRINE OF PROMISSORY ESTOPPEL Historical Background: Early Alternatives to the Doctrine of Consideration 685 A. W. B. Simpson, The Doctrine of Consideration Introduction 685 A. THE DEVELOPMENT OF PROMISSORY ESTOPPEL AS A SUBSTITUTE FOR CONSIDERATION Family Promises 687 Ricketts v. Scothorn 687 Historical Background: The Doctrine of Equitable Estoppel 690 John Norton Pomeroy, Essential Elements Constituting the Estoppel 690 Discussion of the Tentative Draft of Contracts, Restatement No Promises to Convey Land 692 Greiner v. Greiner 692 Restatement (Second) of Contracts Promises of a Pension 695 Feinberg v. Pfeiffer Co. 695 Pitts v. McGraw-Edison Co Construction Bids 706 James Baird Co. v. Gimbel Bros., Inc. 706 Relational Background: More About the Mistake 708 Lon L. Fuller, Basic Contract Law 709 Drennan v. Star Paving Co. 709 Restatement (Second) of Contracts Charitable Subscriptions 713 Allegheny College v. National Chautauqua County Bank of Jamestown 714 B. PROMISSORY ESTOPPEL AS AN ALTERNATIVE TO BREACH OF CONTRACT 718 Goodman v. Dicker 720 Hoffman v. Red Owl Stores, Inc. 721 Relational Background: What Was the Promise in Red Owl Stores? 731 William C. Whitford & Stewart Macaulay, Hoffman v. Red Owl Stores: The Rest of the Story 731
14 xxiv Contents Restatement (Second) of Contracts 740 Restatement (Second) of Torts (1977) 740 Doctrinal Background: The Tort of Promissory Misrepresentation 741 Randy E. Barnett & Mary E. Becker, Beyond Reliance: Promissory Estoppel, Contract Formalities, and Misrepresentations 741 Theoretical Background: The Death of Contract? 744 Grant Gilmore, The Death of Contract 744 E. Allan Farnsworth, Developments in Contract Law During the 1980s: The Top Ten 747 Empirical Background: Promissory Estoppel in the Nineties 748 Robert A. Hillman, Questioning the New Consensus on Promissory Estoppel: An Empirical and Theoretical Study 748 C. ESTABLISHING THE ELEMENTS OF PROMISSORY ESTOPPEL Promise 750 Blatt v. University of Southern California 750 Spooner v. Reserve Life Insurance Co. 753 Ypsilanti v. General Motors 757 Ypsilanti v. General Motors (Mich. Appeals Court) 765 Relational Background: Settlement of the Case 769 James Bennet, G.M. Settles Suit over Plant Closing Reasonable Reliance 770 Alden v. Vernon Presley Injustice of Nonenforcement 774 Cohen v. Cowles Media Co. (Minn. Supreme Court) 774 Cohen v. Cowles Media Co. (U.S. Supreme Court) 778 Cohen v. Cowles Media Co. (Minn. Supreme Court) 780 Empirical Background: The Elements of Promissory Estoppel 781 Robert A. Hillman, Questioning the New Consensus on Promissory Estoppel: An Empirical and Theoretical Study 782 Sidney W. DeLong, The New Requirement of Enforcement Reliance in Commercial Promissory Estoppel: Section 90 as Catch D. A HYPOTHETICAL ALTERNATIVE TO RESTATEMENT Restatement (Third) of Contracts 790
15 Contents xxv PERFORMANCE AND BREACH 791 IV PERFORMANCE A. THE IMPLIED DUTY OF GOOD FAITH PERFORMANCE 793 Goldberg Corp. v. Levy 795 Mutual Life Insurance Co. of New York v. Tailored Woman 796 Stop & Shop, Inc. v. Ganem 802 Food Fair Stores, Inc. v. Blumberg 805 The Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd. 807 Restatement (Second) of Contracts 808 Sales Contracts: The Uniform Commercial Code 808 B. IMPLIED AND EXPRESS WARRANTIES Implied Warranties of Merchantability and Fitness for a Particular Purpose 809 Vlases v. Montgomery Ward & Company 809 Sales Contracts: The Uniform Commercial Code Express Warranties 814 Royal Business Machines, Inc. v. Lorraine Corp. 814 Sales Contracts: The Uniform Commercial Code 819 CBS, Inc. v. Ziff-Davis Publishing Co Express Disclaimers of Warranty 827 Schneider v. Miller 828 Pelc v. Simmons 831 Sales Contracts: The Uniform Commercial Code 831 Morris v. Mack s Used Cars 832 CONDITIONS A. THE EFFECT OF A CONDITION 836 Inman v. Clyde Hall Drilling Co. 836 Understanding the Effect of Conditions: A Problem 840
16 xxvi Contents B. WHAT EVENTS ARE CONDITIONS? Is the Event a Condition, a Promise, or Both? 841 Howard v. Federal Crop Insurance Corp. 841 Restatement (Second) of Contracts Is the Event a Condition, a Promise, or Neither? 845 Chirichella v. Erwin 845 C. AVOIDING CONDITIONS Waiver and Estoppel 848 Clark v. West 848 Restatement (Second) of Contracts 850 Sales Contracts: The Uniform Commercial Code Excuse to Prevent Forfeiture 852 J.N.A. Realty Corp. v. Cross Bay Chelsea, Inc. 852 Restatement (Second) of Contracts 857 BREACH A. CONSTRUCTIVE CONDITIONS 859 Kingston v. Preston 860 Morton v. Lamb 862 Jacob & Youngs v. Kent 863 Jacob & Youngs v. Kent (Motion for Reargument) 868 Relational Background: Why All the Fuss About Reading Pipe? 869 Richard Danzig, The Capability Problem in Contract Law 869 B. PROSPECTIVE NONPERFORMANCE Anticipatory Repudiation 872 Albert Hochster v. Edgar De La Tour 872 Harrell v. Sea Colony, Inc. 875 Sales Contracts: The Uniform Commercial Code Adequate Assurances of Performance 881 Scott v. Crown 881 Sales Contracts: The Uniform Commercial Code Material Breach 885 B & B Equipment Co. v. Bowen 887 Lane Enterprises, Inc. v. L. B. Foster Co. 890 Did Shawn Kemp Materially Breach? A Problem The Perfect Tender Rule: Cure and Rescission 898 Ramirez v. Autosport 898 Sales Contracts: The Uniform Commercial Code 904
17 Contents xxvii C. COST OF COMPLETION VS. DIMINUTION IN VALUE: THE EXPECTATION INTEREST REVISITED 908 Groves v. John Wunder Co. 908 Peevyhouse v. Garland Coal Mining Co. 913 Restatement (Second) of Contracts 919 Relational and Legal Background: Is Peevyhouse a Lesson in Lawyering or Corruption? 920 Judith L. Maute, Peevyhouse v. Garland Coal Co. Revisited: The Ballad of Willie and Lucille 920 DEFENSES TO CONTRACTUAL OBLIGATION 929 V LACK OF CONTRACTUAL CAPACITY A. INTRODUCTION REBUTTING THE PRIMA FACIE CASE OF CONTRACT 931 Theoretical Background: Legal Rules as Presumptions 932 Richard A. Epstein, Pleadings and Presumptions 932 B. DEFICIENCIES IN CONTRACTUAL CAPACITY Incompetence 938 Ortelere v. Teachers Retirement Board of New York 938 Restatement (Second) of Contracts Infancy 947 Webster Street Partnership, Ltd. v. Sheridan 947 Halbman v. Lemke 952 Zelnick v. Adams 952 Historical Background: The Extension of Childhood 953 Hillary Rodham, Children s Rights: A Legal Perspective 953 Brooke Shields v. Gross 954 Restatement (Second) of Contracts 959
18 xxviii Contents ASSENT IMPROPERLY OBTAINED AND ASSENT TO IMPROPER TERMS 961 A. MISREPRESENTATION 961 Halpert v. Rosenthal 962 Restatement (Second) of Contracts 967 Byers v. Federal Land Co. 968 Vokes v. Arthur Murray, Inc. 971 Restatement (Second) of Contracts 975 B. DURESS 976 Hackley v. Headley 977 Austin Instrument v. Loral Corp. 981 United States v. Progressive Enterprises 985 Restatement (Second) of Contracts 988 C. UNDUE INFLUENCE 989 Odorizzi v. Bloomfield School District 989 Relational Background: Donald Odorizzi s Story 995 Restatement (Second) of Contracts 1001 D. UNCONSCIONABILITY 1001 Williams v. Walker-Thomas Furniture Co Sales Contracts: The Uniform Commercial Code 1007 Restatement (Second) of Contracts 1007 In re RealNetworks 1010 Discover Bank v. Superior Court 1012 Gatton v. T-Mobile USA, Inc E. ENFORCEABILITY OF ARBITRATION CLAUSES IN FORM CONTRACTS 1027 AT&T Mobility v. Concepcion 1027 Samaniego v. Empire Today, LLC 1035 Commercial Background: Contracting Around Government Courts and State-Created Contract Law 1040 Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry 1040 F. PUBLIC POLICY 1047 A.Z. v. B.Z Meyer v. Hawkinson 1056 Legal Background: Freedom of Contract 1062 Printing and Numerical Registering Co. v. Sampson 1063 Restatement (Second) of Contracts
19 Contents xxix 17 FAILURE OF A BASIC ASSUMPTION 1065 A. MISTAKES OF PRESENT EXISTING FACTS Mutual Mistake 1067 Sherwood v. Walker 1067 Nester v. Michigan Land & Iron Co Wood v. Boynton 1078 Lenawee County Board of Health v. Messerly 1081 Restatement (Second) of Contracts Unilateral Mistake and the Duty to Disclose 1090 Tyra v. Cheney 1090 Drennan v. Star Paving Co Restatement (Second) of Contracts 1093 Laidlaw v. Organ 1094 Restatement (Second) of Contracts 1097 The Baseball Card Case: A Problem 1098 B. CHANGED CIRCUMSTANCES Impossibility and Impracticability 1099 Paradine v. Jane 1099 Historical Background: The Alien Prince Rupert 1100 Historical Background: One View of How and Why Paradine v. Jane Became a Leading Case 1100 Grant Gilmore, The Death of Contract 1100 Taylor v. Caldwell 1103 Restatement (Second) of Contracts 1107 Sales Contracts: The Uniform Commercial Code 1108 CNA & American Casualty v. Arlyn Phoenix 1108 Transatlantic Financing Corp. v. United States 1110 Sales Contracts: The Uniform Commercial Code Frustration of Purposes 1115 Krell v. Henry 1115 Historical Background: The Ailing King 1119 E. Allan Farnsworth & William F. Young, Contracts 1119 Legal Background: Should the Loss Lie Where It Fell? 1119 Lloyd v. Murphy 1121 Restatement (Second) of Contracts 1125 C. ALLOCATION OF RISK IN LONG-TERM CONTRACTS 1126 Aluminum Company of America v. Essex Group, Inc Procedural Background: The Aftermath of the ALCOA Decision 1138
20 xxx Contents Northern Indiana Public Service Co. v. Carbon County Coal Co Empirical Background: Survey of Corporate Counsel 1146 Russell J. Weintraub, A Survey of Contract Practice and Policy 1146 Table of Judges 1153 Table of Cases 1157 Table of Statutes 1167 Index 1173
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