TABLE OF CONTENTS PREFACE TO THE FIFTH EDITION... V TABLE OF CASES... XXVII

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1 TABLE OF CONTENTS PREFACE TO THE FIFTH EDITION... V TABLE OF CASES... XXVII Chapter 1. What Are We Going to Be Doing in This Course? Introduction... 1 Questions Before the Case... 2 R.R. v. M.H Questions, Notes, and Connections What Is a Contract? E. Allan Farnsworth, Changing Your Mind: The Law of Regretted Decisions Why Do Lawyers and Law Students Need to Know About Contracts and Contract Law? Where Does Contract Law Come From? A. English Common Law Origins and the Evolution of Assumpsit E. Allan Farnsworth, The Past of Promise: An Historical Introduction to Contract B. Classical Era of American Contract Law Lawrence M. Friedman, Contract Law in America C. Demise of Classical Principles of Contract Law D. Sources of Modern Contract Law E. Law and Equity: Origins and Current Import in Contract What Is the Lawyer s Role in Contract Law? What Is a First Year Course in Contracts? The Lawyer s Role in Contract Law Revisited Arbitration A. Arbitration in Consumer Contracts B. Arbitration in Commercial Contracts Chapter 2. Has Your Client Made a Deal? Determining Mutual Assent Question Before the Case Lucy v. Zehmer Questions and Notes Questions Before the Case Kolodziej v. Mason Questions Problem Note on the Intention to Be Legally Bound Problems on Mutual Assent Offer Question Before the Case Lonergan v. Scolnick xi

2 xii TABLE OF CONTENTS Questions Questions Before the Case J.D. Fields & Company, Inc. v. United States Steel International, Inc Questions and Notes Note on U.C.C. Article Questions Before the Case Kearney v. Equilon Enterprises, LLC Questions, Notes, and Connections Problem on Implied-in-Fact Contract Destroying the Offer A. Rejection B. Revocation Direct Revocation Indirect Revocation Questions Before the Case Dickinson v. Dodds Questions, Note, and Connections C. Lapse Questions Before the Case Minnesota Linseed Oil Co. v. Collier White Lead Co Questions and Notes D. Death (or Incapacity) of the Offeror (or Offeree) Questions Before the Case Paine v. Pacific Mut. Life Ins. Co Questions and Note Problems Note on Termination by Supervening Incapacity Preserving the Offer Questions Before the Case Beall v. Beall Questions, Notes, and Connections Question Before the Case Board of Control of Eastern Michigan University v. Burgess Questions, Note, and Connections Note on Firm Offers Problems on Firm Offers Problem on Right of First Refusal Note on Option Contracts and Reliance Modes and Methods of Acceptance A. Offeror s Control over the Manner of Acceptance Questions Before the Case La Salle National Bank v. Vega Questions Before the Case Ever-Tite Roofing Corp. v. Green Note on Required Form of Acceptance Questions About La Salle and Ever-Tite

3 TABLE OF CONTENTS xiii Introduction to Davis v. Jacoby Question Before the Case Davis v. Jacoby Questions, Notes, and Connections B. Effectiveness of Promissory Acceptance Introduction to Hendricks Questions Before the Case Hendricks v. Behee Questions Introduction to Adams v. Lindsell Questions Before the Case Adams v. Lindsell Questions and Note Problems Concerning Application of the Mailbox Rule C. Effectiveness of Acceptance by Performance Questions Before the Case Carlill v. Carbolic Smoke Ball Co Questions and Notes Questions Before the Case Marchiondo v. Scheck Questions Problems on Acceptance by Promise, Performance, and Part Performance D. Acceptance by Silence or Inaction Question Before the Case Laredo National Bank v. Gordon Questions, Notes, and Connections E. Imperfect Acceptances Questions Before the Case Gresser v. Hotzler Questions and Notes Questions Before the Case Dorton v. Collins & Aikman Corporation Questions and Notes Questions Before the Case Diamond Fruit Growers, Inc. v. Krack Corporation Questions and Note Introduction to Klocek Question Before the Case Klocek v. Gateway, Inc Questions and Notes Note on Rolling Contracts F. Electronic Acceptances Questions Before the Case Berkson v. Gogo LLC Questions and Notes Note on Smart Contracts

4 xiv TABLE OF CONTENTS 6. Deficient Agreements: Insufficient, Inadequate, and Postponed Terms Introduction A. Problems of Misunderstood, Incomplete, and Indefinite Terms Introduction to Mutual Misunderstanding of a Contract Term Raffles Questions Before the Case Raffles v. Wichelhaus Questions Problem on Mutual Misunderstanding of a Contract Term Introduction to Indefinite and Incomplete Terms Varney Questions Before the Case Varney v. Ditmars Questions Question Before the Case Community Design Corporation v. Antonell Questions, Notes, and Connections Note on Long-Term Agreements and Relational Contracts Note on U.C.C. Gap Fillers B. Problems of Postponed Agreement Questions Before the Case Walker v. Keith Questions Questions Before the Case Moolenaar v. Co-Build Companies, Inc Questions and Notes Questions Before the Case Budget Marketing, Inc. v. Centronics Corporation Questions, Notes, and Connections Chapter 3. What Is Consideration and Why Is It Still an Important Part of Contract Law (or Is Consideration Still an Important Part of Contract Law?) Bargain and the Legal Concept of Consideration A. Consideration: Bargained for Problems Questions Before the Case Reed v. University of North Dakota and the North Dakota Association for the Disabled, Inc Questions Questions Before the Case McCormick v. Dresdale Questions and Notes B. Consideration and Family Agreements Questions Before the Case Kirksey v. Kirksey Questions and Notes

5 TABLE OF CONTENTS xv Questions Before the Case Hamer v. Sidway Questions and Notes C. Consideration: One Promise as Consideration for Another Promise Promise as Consideration Illusory Promise Problem Questions Before the Case Keena v. Groupon Questions and Note D. Consideration and Contract Modification Questions Before the Case Alaska Packers Ass n v. Domenico Questions and Notes Questions Before the Case Angel v. Murray Questions and Note Promise to Pay for Something That Happened Before the Promise: Moral Obligations Question Before the Case Harrington v. Taylor Questions Before the Case Mills v. Wyman Questions and Notes Note on Unjust Enrichment and Restitution Questions Before the Webb Cases Webb v. McGowin Webb v. McGowin Questions, Notes, and Connections Reliance and the Legal Concept of Promissory Estoppel A. Overview B. Historical Development Question Before the Case Ricketts v. Scothorn Questions and Notes C. Contemporary Applications of the Doctrine Questions Before the Case Weitz Company, LLC v. Hands, Inc Questions, Notes, and Connections Questions Before the Case Garwood Packaging, Inc. v. Allen & Company, Inc Questions and Note Note on Promissory Estoppel and Promises to Make Loan Modifications Note on Promissory Estoppel in Employment and Retirement Agreements

6 xvi TABLE OF CONTENTS Problem on Promissory Estoppel Note on Promissory Estoppel and Pre-Contract Negotiations D. Remedial Considerations E. The Diminishing Importance of Reliance? Questions Before the Case Congregation Kadimah Toras-Moshe v. DeLeo Questions and Note Chapter 4. Is the Agreement Unenforceable Because of the Flaws in the Agreement Process or Problems with the Language of the Agreement? Contract Law Reasons for Not Enforcing Agreements: Statutes of Fraud Questions Before the Case Radke v. Brenon Questions, Notes, and Connections Questions Before the Case DF Activities Corporation v. Brown Questions and Note Questions Before the Case McIntosh v. Murphy Questions, Note, and Connections Contract Law Reasons for Not Enforcing Agreements: Fraud, Fraudulent or Material Misrepresentations and Nondisclosure Questions Before the Case Halpert v. Rosenthal Questions and Note Questions Before the Case Swinton v. Whitinsville Savings Bank Questions and Note Questions Before the Case Weintraub v. Krobatsch Questions Contract Law Reasons for Not Enforcing Agreements: Defendant s Lack of Capacity Problems Contract Law Reasons for Not Enforcing Agreements: Duress and Undue Influence A. Duress Questions Before the Case Austin Instrument, Inc. v. Loral Corporation Questions B. Undue Influence Questions Before the Case Odorizzi v. Bloomfield School District Questions and Note

7 TABLE OF CONTENTS xvii 5. Contract Law Reasons for Not Enforcing Agreements: Illegality and Public Policy A. Illegality Problem B. Public Policy Questions Before the Case Hanks v. Powder Ridge Restaurant Corp Questions Questions Before the Case Valley Medical Specialists v. Farber Questions and Note Contract Law Reasons for Not Enforcing an Agreement: Unconscionability Questions Before the Case Williams v. Walker-Thomas Furniture Company Williams v. Walker-Thomas Furniture Company Questions and Note Questions Before the Case Vernon v. Qwest Communications International, Inc Questions and Note Contract Law Reasons for Not Enforcing Agreements: Mistaken Factual Assumptions and Other Kinds of Mistakes A. Mistaken Factual Assumptions Questions Before the Case Estate of Nelson v. Rice Questions and Note Questions Before the Case Grenall v. United of Omaha Life Insurance Company Questions B. Other Kinds of Mistakes Questions Before the Case DePrince v. Starboard Cruise Services, Inc Questions Chapter 5. What Are the Terms of the Deal? Where Do Terms Come From? A. Party-Supplied Terms: Is That All There Is? B. Context-Supplied Terms: Course of Performance, Course of Dealing, and Usage of Trade The U.C.C. and Section The Restatement and Other Summaries of Contract Law Problems on Trade Usage and Course of Dealing C. Court-Supplied Terms Terms Implied by Courts to Effectuate Assumed Intent Questions Before the Case Wood v. Lucy, Lady Duff-Gordon Questions and Note

8 xviii TABLE OF CONTENTS Daniel Wm. Fessler, Teaching Notes for Fessler & Loiseaux s Contracts: Morality, Economics and the Marketplace Terms Implied by Courts to Further Public Policy The Implied Duty of Good Faith and Fair Dealing Questions Before the Case Stokes v. DISH Network, L.L.C Questions Questions Before the Case Locke v. Warner Bros., Inc Questions and Notes Problem on Good Faith D. Legislature-Supplied Terms Connections Problems on Terms Implied by the U.C.C Parol Evidence: What if the Parties Disagree About Whether Certain Words Are Even Part of the Contract? A. Common Law Questions Before the Case Blondell v. Ahmed Questions Questions Before the Case Barker v. Price Questions B. Uniform Commercial Code Questions Before the Case Posey v. Ford Motor Credit Co Questions and Note C. Exceptions and Scope of Parol Evidence Rule Questions Before the Case Weiss v. Smulders Questions and Note Questions Before the Case Poeppel v. Lester Questions and Notes Problems on Parol Evidence D. A World Without Parol Evidence The Convention on the International Sale of Goods Using Extrinsic or Other Parol Evidence to Discover the Meaning of the Terms Used in the Written Contract A. The Problem: Contracts and Words Questions Before the Case Frigaliment Importing Co., Ltd. v. B.N.S. Int l Sales Corp Questions, Notes, and Connection B. Ambiguity: When Does It Exist? Questions Before the Case In re Kohn

9 TABLE OF CONTENTS xix Questions Questions Before the Case Gassner v. Raynor Mfg. Co Questions and Notes Trident Center v. Connecticut General Life Ins. Co Questions, Note, and Connections C. The Use of Rules, Maxims and Extrinsic Evidence to Construe Contract Language Edwin W. Patterson, The Interpretation and Construction of Contracts Problems on Construction of Contracts D. Special Interpretive Rules for Contracts of Adhesion Questions Before the Case Meyer v. State Farm Fire & Cas. Co Questions Questions Before the Case Broemmer v. Abortion Services of Phoenix, Ltd Questions and Note Warranties and the U.C.C A. Introduction B. Express Warranties Questions Before the Case Daughtrey v. Ashe Questions, Notes, and Connections Problem on Express Warranty C. Implied Warranties Generally Questions Before the Case D. Implied Warranty of Merchantability Webster v. Blue Ship Tea Room, Inc Questions and Notes Note on Causation Problems on Merchantability E. Implied Warranty of Fitness for Particular Purpose Questions Before the Case Leal v. Holtvogt Questions Question Before the Case Singer Company v. E.I. du Pont de Nemours and Company Questions, Notes, and Connections F. Disclaimers of Warranties Questions Before the Case Office Supply Co., Inc. v. Basic/Four Corporation Questions, Notes, and Connections

10 xx TABLE OF CONTENTS Chapter 6. Performance, Conditions, and Excuse: When Does Someone Who Made an Enforceable Deal Not Have to Do What She Agreed to Do? Performance and Breach A. Contractual Obligations: Of Promises, Covenants and Warranties B. The Strict Liability Nature of Contract Conditions: Not Having to Perform Because Something That the Contract Expressly Said Had to Occur Didn t A. Effect of Conditions Questions Before the Case Luttinger v. Rosen Questions and Connections Questions Before the Case Schindler Elevator Corp. v. Tully Const. Co., Inc Questions B. Distinguishing Conditions from Covenants Questions Before the Case Mind & Motion Utah Investments LLC v. Celtic Bank Corp Questions and Notes Excuse: Legitimate Ways to Avoid Performance A. Excuse: Post-Formation Modification, Waiver, and Estoppel Modification Questions Before the Case Schinkel v. Maxi-Holding, Inc Questions and Notes Waiver and Estoppel (and Retraction) Questions Before the Case Kamco Supply Corp. v. On the Right Track, LLC Questions and Notes Problem: The Case of the Drunken Law Professor B. Excuse: Failure to Perform Terms or to Satisfy Conditions Because of External Factors Impossibility Death and Contracts Questions Before the Case Taylor v. Caldwell Questions and Note Questions Before the Case Route 6 Outparcels, LLC v. Ruby Tuesday, Inc Questions and Note Impracticability and Frustration of Purpose Questions Before the Case Krell v. Henry Questions and Notes Avoidance of Forfeiture Acme Markets, Inc. v. Federal Armored Express, Inc

11 TABLE OF CONTENTS xxi Questions Prevention Questions Before the Case Cox v. SNAP, Inc Questions Non-Occurrence of a Post-Formation Constructive Condition of Exchange Questions Before the Case Brinton v. Haight Questions and Note Express vs. Constructive Conditions C. Excuse: When the Other Side Fails to Substantially Perform Under a Common Law Contract (aka Material Breach ) The Material Breach Concept What Constitutes a Material Breach Questions Before the Case Jacob & Youngs, Incorporated v. Kent Questions and Notes Questions Before the Case Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc Questions and Notes Exceptions, Exclusions and Nuances to the Material Breach Concept a. Divisible Contracts Problems on Divisible Contracts b. Election of Remedies Questions Before the Case ESPN, Inc. v. Office of the Commissioner of Baseball Questions and Note c. Huge Exclusion: U.C.C. and Perfect Tender Questions Before the Case Panike & Sons Farms, Inc. v. Smith Questions and Note D. Excuse: Anticipatory Repudiation as Other Guy s Unambiguous Indication of an Unwillingness or Inability to Perform Unequivocal Statement as Anticipatory Repudiation Questions Before the Case Hochster v. De La Tour Questions Unambiguous Conduct as Anticipatory Repudiation Retractions of Repudiations Questions Before the Case Pavone v. Kirke Questions and Note

12 xxii TABLE OF CONTENTS 4. Failure to Give Adequate Assurance of Future Performance as Repudiation (at least under the U.C.C.) Questions Before the Case Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp Questions and Notes Chapter 7. How Does the Law Enforce a Deal? The Problem Examined Money Damages A. The Preliminaries: Material Breach and Cancellation (and a Small Comment on Partial Breach) B. The General Measure of Contract Damages for Total Breach: The Expectation Interest (Receipt of the Benefit of the Bargain) The General Theories: Expectation Interest, Reliance Interest, and Restitution Interest Basic Expectancy Interest Damages: Benefit of the Bargain Through Price or Cost Differential Some Easy Expectation Damages Problems Questions Before the Case Hawkins v. McGee Questions and Notes Problems on Price Differential Expectation Damages as Cost of Repair and Completion a. Measuring Expectancy Interest by Cost of Completion Questions Before the Case Lewin v. Levine Questions b. Limitations on Cost of Completion Due to Economic Waste Questions Before the Case Groves v. John Wunder Co Questions Questions Before the Case Peevyhouse v. Garland Coal & Mining Co Questions and Notes Expectation Damages for Lost Profits and Opportunities Consequential or Direct Damages? Questions Before the Case Penncro Associates, Inc. v. Sprint Spectrum, L.P Questions and Notes Incidental Damages Note on Attorneys Fees as Incidental Damages, and a Question

13 TABLE OF CONTENTS xxiii 6. Money Damages Under the U.C.C a. Buyer s Remedies Basic Problems on Buyer s Damages Under the U.C.C b. The Role of Notice of Breach and Buyer s Remedies Questions Before the Case Gebbia v. Schulder Questions c. Seller s Remedies Basic Problems on Seller s Damages Under the U.C.C d. The Role of Notice of Breach and Seller s Remedies Questions Before the Case Fuji Photo Film USA, Inc. v. Zalmen Reiss & Associates, Inc Questions C. The Reliance Interest as an Alternative Measure of Money Damages Expectation vs. Reliance Damages Generally Questions Before the Case Merry Gentleman, LLC v. George and Leona Productions, Inc Questions and Notes Reliance Damages and Promissory Estoppel Edward Yorio & Steve Thel, The Promissory Basis of Questions Before the Case Dynalectric Co. of Nevada, Inc. v. Clark & Sullivan Constructors, Inc Questions D. Limitations on Money Damages Awards First Limitation on Money Damages: Avoidable Loss and Mitigation Questions Before the Case Parker v. Twentieth Century-Fox Film Corp Questions and Notes Questions Before the Case R.R. Donnelley & Sons Co. v. Vanguard Transp. Systems, Inc Questions Second Limitation on Money Damages: Foreseeability Questions Before the Case Hadley v. Baxendale Questions and Notes Questions Before the Case Sunnyland Farms, Inc. v. Central New Mexico Elec. Co-op., Inc Questions

14 xxiv TABLE OF CONTENTS 3. Third Limitation on Money Damages: Certainty Questions Before the Case Manouchehri v. Heim Questions Questions Before the Case ESPN, Inc. v. Office of the Commissioner of Baseball Questions Agreed Remedies A. Liquidated Damages Questions Before the Case Dobson Bay Club II DD, LLC v. La Sonrisa de Siena, LLC Questions and Note Questions Before the Case Kvassay v. Murray Questions and Note Problems on Liquidated Damages B. Limitation of Remedies to Repair, Replacement, or Return of Money Paid Non-Monetary Relief A. Specific Performance: Doing What Was Promised A Short Digression into the History of Equitable Remedies Specific Performance at Common Law Questions Before the Case Oliver v. Ball Questions and Notes Questions Before the Case Reed Foundation, Inc. v. Franklin D. Roosevelt Four Freedoms Park, LLC Questions Specific Performance Under the U.C.C Questions Before the Case i.lan Systems, Inc. v. Netscout Service Level Corp Questions and Note Specific Performance and Negative Injunctions B. Rescission and Cancellation Arbitration as a Contractual Alternate to Lawsuits Questions Before the Case Jackson v. Shakespeare Foundation, Inc Questions Restitution Interest as an Alternative Measure of Damages Questions Before the Case United States v. Algernon Blair, Incorporated Questions and Notes Questions Before the Case Britton v. Turner Questions and Note

15 TABLE OF CONTENTS xxv Chapter 8. What Are the Alternatives to Contracts and Contract Law? (Quasi-Contract and Restitution) Nature and Origins of Quasi-Contract Henry Sumner Maine, Ancient Law George E. Palmer, Law of Restitution Elements of a Quasi-Contractual Claim A. In General John W. Wade, Restitution for Benefits Conferred Without Request Questions Before the Case Patterson v. Patterson Questions B. At the Request of the Defendant Question Before the Case Schott v. Westinghouse Electric Corporation Questions and Note C. Not at the Request of the Defendant Question Before the Case Cablevision of Breckenridge, Inc. v. Tannhauser Condominium Association Questions Questions Before the Case Watts v. Watts Problem: The Good Samaritan and the Greedy Doctor D. At the Request of a Third Party Questions Before the Case Flooring Systems, Inc. v. Radisson Group, Inc Questions and Note Problem on Third Party Benefits Promissory Restitution Webb v. McGowin Other Remedies for Unjust Enrichment Questions Before the Case Pull v. Barnes Questions and Notes Britton v. Turner Chapter 9. When Do You Have Rights and Duties Under a Contract That You Did Not Make? Third Party Beneficiaries Questions Before the Case Lawrence v. Fox Questions Questions Before the Case A. When a Third Party Is an Intended Beneficiary Ex parte Stamey Questions

16 xxvi TABLE OF CONTENTS Questions Before the Case Midwest Grain Products of Illinois, Inc. v. Productization, Inc. and CMI Corp Questions B. Cancellation and Modification of the Rights of the Third Party Beneficiary and Defenses Against the Third Party Beneficiary Questions Before the Case Olson v. Etheridge Questions and Note Assignment and Delegation A. Introduction to Assignment and Delegation: What Are They? B. Consequences of an Assignment and Delegation: Who Can Sue Whom? Assignee (But Not the Assignor) Can Sue Obligor Problems Obligee Can Sue Delegator Problems C. Limitations on Assignment and Delegation Questions Before the Case Sally Beauty Co., Inc. v. Nexxus Products Co., Inc Questions Final Note from the Authors INDEX