CONTRACTS Summer 2018

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1 Professor Robert Spoo University of Tulsa College of Law Monday through Friday, 10:00 11:50 am Room 2442 Office: CONTRACTS Summer 2018 Welcome to the University of Tulsa College of Law and to our Contracts course. In this course, we will explore the basic principles of contract law, the purposes of contracting, and the consequences of breaching contracts or otherwise failing to perform promises that can be enforced. Students will acquire knowledge of contracts concepts and an ability to apply them in legal analysis. The course will be conducted through a combination of lecture, question-and-answer (Socratic method), and problem-solving. Students should come to every class prepared to answer questions on the material set for that day. I employ a method of random but fair questioning, and I encourage voluntary participation by students. Required Texts and Materials The required texts for this course are: 1) Knapp, Crystal & Prince, Problems in Contract Law (8 th ed. 2016) 2) Knapp, Crystal & Prince, Rules of Contract Law, Statutory Supplement ( ) The first text is a casebook. The second contains provisions of the Uniform Commercial Code (UCC), the Restatement (Second) of the Law of Contracts, and other materials. When I assign sections of the UCC and Restatement (Second), please read them as carefully as you do the other materials in the casebook. Read also any comments found at the end of these provisions. I have not included page numbers from the Statutory Supplement, since the provisions are easily located. The course materials will be supplemented by occasional handouts, as indicated. I strongly recommend that you brief as many as you can of the cases you are assigned to read. You should choose a method of briefing that helps you to understand the cases as fully as possible and to put them in context with other cases that you have read. I will make suggestions in class about how to get at the meat of a case and to isolate its important components. Course Policies The following rules are in effect for the course and are to be observed:

2 2 Students will receive four (4) credits for this course. The final examination will count for 90% of a student s grade. The examination will be four hours, and is scheduled for Monday, August 13, at 9:00 am. You may write your examination on a laptop computer pursuant to College of Law Guidelines and Procedures on Computerized examinations, or you may write it by hand in exam booklets provided. The remaining 10% of the grade will be based on class participation. Good class participation will affect your grade positively. Good connotes qualitative rather than quantitative effort. Students will be permitted to have with them, and to use during the examination, their copies of the Rules of Contract Law: Statutory Supplement, including any handwritten notes that the students themselves have placed on the pages or margins of the Supplement. Students will not be permitted to have with them during the examination any other printed or online materials. Students may not use during the examination a Statutory Supplement that contains another student s (for example, a previous owner s) notes. For this reason, it is imperative that students obtain a copy of the Statutory Supplement that does not include another individual s notes or annotations. Attendance will be taken, and students are responsible for monitoring how many classes they have missed. Because of the accelerated pace of the summer Contracts course, students will be permitted to miss only two class sessions. If a student misses more than two class sessions, the student will be required to drop the course and to re-enroll in the Fall Contracts course. Summer Contracts instructors have adopted this policy in recognition of the compressed timeframe and the difficulty a student would have catching up on class materials missed due to an absence. If there are specific reasons at any point why application of any of the above rules would be unduly harsh or unreasonable, e.g., a serious illness, you should discuss the situation with me at the earliest convenient time. Seating Chart A seating chart will be passed around the class during the first week. Please choose your seat at that time. After the chart is established, please take your chosen seat for every class. If your seat is vacant, you will be marked absent. Should you wish to change seats during the semester, please check with me first so I will know which seat you are taking. Availability of Instructor I make every effort to be available to students. My office hours subject to any changes to be announced in advance will be every class day from 2:00 to 4:00 pm, and for a half hour or so after every class, or by appointment. At any time, if you see my door open and wish to chat, stop by and we ll talk if I m not otherwise busy. Students who wish to schedule an appointment should me. In case of emergency, my cell phone number is

3 3 For ordinary matters, however, please me or leave a voic on my office phone. Additional Policies The following additional rules are to be observed: A. Students are expected to be in class, on time, prepared, and, at a minimum, to participate when called upon, as noted above. B. Students are expected to be civil to fellow members of the class during all class discussions. You may disagree, but in doing so you must not be disrespectful. C. Tape recording of the class is generally not permitted. Please speak with me if you believe that extraordinary circumstances justify an exception. D. Unless it is truly necessary, please wait until the break or dismissal of class to exit the classroom. We will take one brief break during each class. E. Absent extenuating circumstances, turn cell phones off while in class. Also avoid other activities that are distracting to the instructor and to fellow students during class (incidental chatting, loud chewing of gum and ANY popping of gum, use of iphones and Blackberries, etc.). F. Laptop computers may be used during class only for purposes associated with the course, e.g., taking notes. They are not to be used for playing computer games, instant messaging, surfing the web, checking the stock market, etc. G. A TWEN site for this course will be set up within the first week of classes. Please log on early in the course. I will be placing Power Point slideshows and other materials on this site that will be useful for review of the course and for exam preparation. Accommodations of Disabilities Any student with a disability requiring reasonable accommodation should contact the Associate Dean of Students to make such accommodation. Syllabus The following syllabus is subject to occasional revision or substitution, which will always be announced in advance. Do not let the assignments below, which are set forth in detail, alarm you. They are manageable if you budget your time wisely. I have divided the material by week ( Week 1, Week 2, and so on); these are tentative divisions, subject to adjustment as needed. Do not leave all the reading for a given class period to the day of class. Also, do not be concerned that we are not reading every page of our lengthy textbook. This course has been

4 4 designed to provide appropriate coverage of the subject. As we near the end of the semester, I will offer to arrange for an extra review period or two, so students can get a better handle on the course material and feel that they are seeing the big picture. Abbreviations: KCP = Knapp, Crystal & Prince, Problems in Contract Law: Cases and Materials. R2d = Restatement (Second) of Contracts, reprinted in Knapp, Crystal & Prince, Rules of Contract Law UCC = Uniform Commercial Code, reprinted in Rules of Contract Law [WEEK 1: July 5-6] I. Introduction KCP pp Leonard v. PepsiCo, Inc. (handout) R2d 1, 17(1) UCC 1-102, 1-103, 1-201(3) & (11) II. Classical Basis of Contractual Obligation A. Objective Theory of Contract [WEEK 2: July 9-13] Raffles v. Wichelhaus (handout) R2d 2, 20(1), 21, 24, 26, 33, 201 KCP pp , Ray v. William G. Eurice & Bros., Inc. Park 100 Investors, Inc., vs. Kartes B. Offer and Acceptance 1. Bilateral Contracts KCP pp Lonergan v. Scolnick Izadi v. Machado (Gus) Ford, Inc. R2d 2, 4, 22, 24, 26, 33, 63 UCC 2-102, 2-105(1), 2-204, 2-206

5 5 2. Revocation, Rejection and Counteroffer KCP pp Normile v. Miller Comment: Remedies for Breach of Contract R2d 30, 36, 38, 39, 43, 46, 50, 58-60, 63, Unilateral Contacts KCP pp Cook v. Coldwell Banker/Frank Laiben Realty Co. Sateriale v. R.J. Reynolds Tobacco Co. R2d 32, Conduct as Acceptance C. Consideration R2d 22, 50, 62 UCC 2-204, What Is Consideration? KCP pp Hamer v. Sidway Comment: History of the Consideration Doctrine R2d 71, What Isn t Consideration? KCP pp Dougherty v. Salt Dohrmann v. Swaney Comment: The Lawyer s Role in Counseling for Legal Effect R2d 73, 77, 79(b), 81 KCP pp Plowman v. Indian Refining Co. Comment: The Power of Agents to Bind Their Principals III. Issues in Applying the Concept of Mutual Assent A. Irrevocable Offers

6 6 1. Pre-Acceptance Reliance KCP pp James Baird Co. v Gimbel Bros., Inc. Drennan v. Star Paving Co. 2. Option Contracts and the Firm Offer KCP pp Berryman v. Kmoch R2d 87, , (1) and (3), (37) and (43) B. Qualified Acceptance: The Battle of the Forms KCP pp Princess Cruises Inc. v. General Electric Co. Brown Machine, Inc. v. Hercules, Inc Paul Gottlieb & Co. v. Alps South Corp. Problem 2-5 R2d 59 UCC C. Electronic Contracting [WEEK 3: July 16-20] KCP pp DeFontes v. Dell, Inc. Hines v. Overstock.com, Inc. Problem 2-6 IV. Liability in the Absence of a Bargained For Exchange A. Promissory Estoppel 1. Promises Within the Family KCP pp Harvey v. Dow R2d 90(1) 2. Charitable Subscriptions

7 7 KCP pp King v. Trustees of Boston University R2d 90(2) Problem Promissory Estoppel in Commercial Context KCP pp Pop s Cones, Inc. v. Resorts International Problem 3-2 B. Restitution 1. Restitution in the Absence of a Promise KCP pp Credit Bureau Enterprises, Inc. v. Pelo Comment: Development of the Law of Restitution KCP pp Watts v. Watts 2. Promissory Restitution KCP pp Mills v. Wyman Webb v. McGowan Problem 3-4 R2d 82, 83, 86 V. Statute of Frauds: Required Formality A. General Principles 1. Scope of the Statute; Sufficiency of the Writing KCP pp Crabtree v. Elizabeth Arden Sales Corp. R2d 110, Exceptions Based on Reliance KCP pp Alaska Democratic Party v. Rice Problem 4-1 R2d 129, 139

8 8 B. The Sale of Goods and the Statute of Frauds KCP pp Buffaloe v. Hart Problem 4-2 UCC 2-201, 1-201(37) & (43) VI. Interpreting the Agreement A. Principles of Interpretation 1. General Principles KCP, pp Joyner v. Adams Comment: Interpretive Principles R2d , , KCP, pp Frigaliment Importing Co. v. B.N.S. International Sales Corp. UCC 1-205, Contracts of Adhesion R2d 211 B. The Parol Evidence Rule [WEEK 4: July 23-27] 1. The Common Law Rule KCP, pp Thompson v. Libby Taylor v. State Farm Restatement (Second) , The UCC Rule and Trade Usages KCP, pp Nanakuli Paving & Rock Co. v. Shell Oil Co. Problem 5-1 UCC 2-202, 1-205, VII. Supplementing the Agreement A. Reasons for Implied Terms KCP, pp

9 9 Wood v. Lucy, Lady Duff-Gordon Leibel v. Raynor Manufacturing Co. UCC 2-306(2), 2-308, B. Implied Obligation of Good Faith KCP, pp , Locke v. Warner Bros., Inc. R2d 205 UCC 1-102(3), 1-203, 1-201(19), 2-103(1) (b), 2-306(1) KCP, pp Problem 6-2 C. Warranties KCP, pp Bayliner Marine Corp. v. Crow UCC 2-313, 2-314, 2-315, Problem 6-3 VIII. Policing the Contract: Defenses Relating to Capacity and Fairness A. Minority and Mental Incapacity KCP, pp Problem 7-1 Dodson v. Shrader Sparrow v. Demonico Comment: Historical Development of the Law of Contractual Capacity R2d UCC B. Duress and Undue Influence KCP, pp Totem Marine Tug & Barge v. Alyeska Pipeline Odorizzi v. Bloomfield School District R2d C. Misrepresentation and Nondisclosure KCP, pp Syester v. Banta Stechschulte v. Jennings Comment on Lawyers= Professional Ethics Restatement (Second) , , 173 D. Unconscionability KCP, pp ,

10 Williams v. Walker-Thomas Furniture Co. Comment: Historical Development of the Doctrine of Unconscionability Higgins v. Superior Court of Los Angeles County Comment: Mandatory Arbitration and Unconscionability Comment: Consumer Protection Legislation UCC R2d 208 E. Public Policy KCP, pp , Valley Medical Specialists v. Farber In re Baby Problem 7-4 R2d 178, 181, IX. Mistake and Changed Circumstances A. Mistake 1. Mutual Mistake KCP, pp Sherwood v. Walker (handout) 2. Unilateral Mistake KCP, pp DePrince v. Starboard Cruise Servs. R2d , 157 B. Impossibility, Impracticability, and Frustration KCP, pp Taylor v. Caldwell (handout) Krell v. Henry (handout) KCP, pp Mel Frank Tool & Supply, Inc. v. Di-Chem Problem 8-1 Restatement (Second) UCC 2-613, C. Modification KCP, pp Problem 8-3 Alaska Packers= Assn v. Domenico Kelsey-Hayes Co. v. Galtaco Redlaw Castings Corp. 10

11 11 Restatement (Second) 73, 89 UCC [WEEK 5: July 30-Aug. 3] X. Breach of Duty A. Express Conditions KCP, pp enxco Development Corp. v. Northern States Power Co. J.N.A. Realty Corp. v. Cross Bay Chelsea, Inc Problem 9-1 R2d 224, 227, 229 KCP Morin Building Products Co. v. Baystone Construction Co. R2d 228 B. Substantial Performance and Material Breach KCP, pp Jacob & Youngs, Inc. v. Kent Comment: The Doctrine of Constructive Conditions Sackett v. Spindler Restatement (Second) , 237, UCC 2-601, 2-608, C. Anticipatory Repudiation and Assurances KCP, pp Truman L. Flatt & Sons v. Schupf R2d 250, 251, 253, 256 UCC 2-609, 2-610, KCP, p Problem 9-2 XI. Expectation Damages A. Computing Damages 1. Introduction to Expectation Damages KCP, pp Crabby s Inc. v. Hamilton Handicapped Children s Education Board v. Lukaszewski Restatement (Second) 344, 347

12 12 2. UCC Damages KCP, pp Buyer=s Damages under UCC Problem 10-2 UCC 2-711, 2-712, 2-713, KCP, pp Seller=s Damages under UCC Problem 10-3 UCC 2-703, 2-706, 2-708(1), Measuring Expectation KCP, pp American Standard, Inc. v. Schectman Restatement (Second) 348 B. Restrictions on the Recovery of Expectation Damages 1. Forseeability 2. Causation KCP, pp Hadley v. Baxendale R2d 351 KCP pp Florafax International, Inc. v. GTE Market Resources, Inc. R2d 352 UCC 2-710, 2-715, Mitigation of Damages KCP, pp , Rockingham County v. Luten Bridge Jetz Service Co. v. Salina Properties R2d 350 UCC 2-708(2) 4. Non-Recoverable Damages: Attorneys Fees, Emotional Distress, Punitive Damages KCP, pp

13 [WEEK 6: Aug. 6-9] XII. Alternatives to Expectation Damages A. Reliance Damages Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Company, Inc. KCP, pp Erlich v. Menezes Comment: Recovery of Punitive Damages for Bad Faith Breach of Contract Problem 10-1 R2d 353, 355 KCP, pp Wartzman v. Hightower Productions, Ltd. Walser v. Toyota Motor Sales, U.S.A., Inc R2d 349 B. Restitution Damages KCP United States ex rel. Coastal Steel Erectors, Inc. v. Algernon Blair, Inc. Lancellotti v. Thomas R2d , C. Specific Performance KCP, City Stores Co. V. Ammerman R2d , UCC D. Agreed Remedies: Liquidated Damages and Penalty Clauses KCP, pp Barrie School v. Patch R2d 356, 361 UCC [Aug , Reading Days] 13

14 FINAL EXAM: Monday, Aug. 13, 9:00 am 14

CONTRACT LAW TBA (Addendum to Follow)

CONTRACT LAW TBA (Addendum to Follow) CONTRACT LAW 504-3 E.Y. Wu, Professor of Law -- Office: #240 -- Phone - 713-313-7038 or ewu@tmslaw.tsu.edu Office Hours: Wednesdays 5:00-7:00; all other times by prior appointment! Emergency: check with