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Tuesday, April 23, 2002 (Class 41)




* Contracts allocate risk of future change. E.g., price, but also may other factors.
* As performance approaches, uncertainty goes down, additional information becomes available.
* To what extent, if at all, do we allow parties to get out of commitments in light of new facts?
* UCC § 2-609 (1):
** Right to Adequate Assurance of Performance
** A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.
* If you have reasonable grounds to believe you might not get return performance, but there is risk of being found in breach yourself if you withhold performance. Can request adequate assurance of due performance if you have reasonable grounds.
* UCC § 2-609 (4):
** After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.
* If assurance of due performance is not received within 30 days, then other party is in breach.

Mutual Mistake of Fact ==


Stees v. Leonard ==

[20 Minn. 494] 1874 Minnesota Supreme Court (cb786)

* Builders keep on building on quicksand, owner sues.
* Soil was very different from what both parties thought soil would be. Question is who should legitimately bear risk of this happening?
* Today respective positions of owner and architect might be shifted.

Renner v. Kehl




[722 P.2d 262] 1986 Arizona Supreme Court (cb789)

* Plaintiffs purchased land for growing jojoba, but later discovered there wasn't sufficient water for growing jojoba, plaintiffs sue for recission on basis of mutual mistake.
* Courts are likely to allow mutual mistake of fact if parties are left exactly where they would have been before contract.
* Unusual in this case that court is not leaving parties where they were--it is allowing recission of deal.
* Mutual Mistake of Fact seems to be another way of getting to result when there is no warranty available to court.

Estate of Nelson




* Seller has more information than buyer, has made mistake, thus court is less charitable towards seller, since it could have gotten information.

Diamond in the Rough/Pregnant?-Cow Case




* Other circumstances where future facts mean promise doesn't need to fulfilled--more mutual mistake of fact cases.

Impracticability of Performance




* Extension of impossibility of performance.

Taylor v. Caldwell




[122 Eng. Rep. 309] 1863 King's Bench (cb801)

* Taylor contracted with Caldwell to give concerts for four days. Included condition that hall be in condition for concert.
* Fire occurred that was not fault of either party, making hall unfit for performance.
* Taylor, plaintiff who leased hall for concert, sues defendant for breach of contract.
* Problem: there was no hall at this point, it was destroyed by fire.
* When it is impossible to perform, party is excused from performance.
* Modern contract law has expanded doctrine to include impracticability.

* Problem with impracticability doctrine: subverts contract's role as allocation of risk.
* On the other hand, impossibility may be too rigid a doctrine, courts need some flexibility to change deal.

* UCC § 2-615:
** Excuse by Failure of Presupposed Conditions
** Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance...
*** (force majeur clause, condition by which seller can get out of contract, e.g., seller shall not be responsible for acts of God, acts of war, etc..)
* Compare UCC § 2-509:
** Risk of Loss in the Absence of Breach
** (4): the provisions of this section are subject to contrary agreement of the parties...
* § 2-615 doesn't seem to allow parties to 'provide otherwise'. Seller can only get out of greater obligations, not lesser.
* § 2-615:
** (a) Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
** A basic assumption upon which the contract was made did not turn out that way.
** Assumption must have been extraordinarily basic to the contract.
** Must be unforseeable--if it was foreseeable, then that was the purpose of contract.

Transatlantic Financing Corporation v. United States




[363 F.2d 312] 1966 United States D.C. Court of Appeals (cb805)

* United States chartered vessel to carry cargo from United States to Iran.
* Usual route was through Suez Canal, but because of trouble in Canal, trip incurred increased cost.
* Plaintiff sued to recover additional cost.
* Elements of impracticability:
** Something unexpected must have occurred
** Risk must not have been allocated by agreement or by custom.
** Occurrence must have rendered performance commercially impracticable.
* Court holds that only one element was satisfied--that something unexpected occurred.
* Holds that alternative route shows that risk was allocated by custom.
* 10% additional cost of voyage is not sufficient to be commercially impracticable.

Eastern Air Lines, Inc. v. Gulf Oil Corporation




[415 F.Supp. 429] 1975 Southern District of Florida (cb823)

* Gulf claims that West Texas Sour index is commercially impracticable; but Gulf was still using index for other transactions.
* Court holds Gulf has no impracticability claim.

* Friday will do third party beneficiaries. James Todd's TA group is 'on'.
* Will not cover half measures.


Friday, April 26, 2002 (Class 42)




* General Problem: How do we deal with increasing information as time of performance nears?
** Contract serves purpose of allocating risk; lack of information at time of contract is part of the contract.
** If there is a very basic assumption that turns out to be wrong (both parties are fundamentally mistaken), courts will put both parties back where they were. Mutual mistake of fact.
** Impossibility of Performance--expanded to impracticability. Often claim is that 'it will cost a lot more', but contracts allocate price risk, so usually this claim is viewed skeptically.

Frustration of Purpose




* Issue of whether buyer can get out of contract because of supervening events between time of contracting and time of performance.
* Frustration of purpose applies primarily to buyer.
* UCC § 2-615: Impracticability of performance has become contract doctrine allowing seller to get out of contracts, even outside of Article 2 cases. Has lead courts to adopt frustration of purpose doctrine, to allow buyer to get out of contract. Although not in UCC, most courts will supplement UCC with frustration doctrine under UCC § 1-103.

* Example of frustration of purpose:
** Contracted to rent vacation home for month of August on Martha's vineyard for purpose of sitting on beach. By August, hurricanes have already hit and no longer possible to sit on beach. Purpose has been frustrated--should buyer get out?
* If intervening event was foreseeable (as in bad weather on Martha's Vineyard), then court is less likely to allow claim of frustration of purpose because parties could have included event in contract.
* If person leasing house on the cape advertised specifically on the vacationing issue, and that seemed to be at the heart of the contract, might be able to get out of it under frustration of purpose. I.e., if promisee is involved in very basic assumption that turns out to be false. This might not be true in Martha's Vineyard case--people might have other reasons for wanting to go there than to sit on the beach.
* Under which circumstances do people get lost profits? Court avoids question by saying buyer can get out of contract under frustration of purpose in Chase Precast Corp. v. John J. Paonessa Co.. Aggressive use of doctrine.
* Much more 'stingy' use of doctrine in Posner's opinion in Northern Indiana Public Service Co. v. Carbon County Coal Co..

* Prime issues in course:
** What promises will the law enforce?
** How do we interpret those promises?
** What do we mean by enforce?
** Are there circumstances under which the law will allow people to get out of promises?
** Who may enforce the promise?

Third-Party Beneficiaries




* Similarity between third-party beneficiary issue and other legal issues:
** Tort Law: To whom are duties owed?
** Civil Procedure: Who has standing to bring suit?
** Regulatory Law: Can someone bring an action under a statute that doesn't explicitly grant a cause of action? (ask whether the legislature intended to benefit class of people who are bringing suit)
* Pros and Cons of Third-Party Beneficiaries
** Promisee may be dead, Seaver v. Ransom [120 N.E. 639] 1918 New York Court of Appeals (cb865). Third-party is only party who can bring suit.
** Judicial Efficiency: rather than having one party sue another, who sues another, can permit recovery directly.
** Traditional notion of reciprocity in contract: Party 1 should not be able to sue Party 2, if Party 2 cannot sue Party 1.
** Judicial efficiency plays in as 'con', as well, since it permits more parties to sue.
* Under First Restatement, creditor and donee beneficiaries could sue. But could not sue as incidental beneficiary.
* Modern terminology allows intended beneficiaries to sue.

Septembertide Publishing, B.V. v. Stein & Day, Inc.




[884 F.2d 675] 1989 2d Circuit Court of Appeals (cb878)

* Septembertide was successor to corporation that was equivalent to author of book--Higgins.
* Higgins contracted with Stein & Day for softcover version, S & D would make payments to Higgins.
* Stein & Day contracted to market softcover to New American Library, NAL would make payments to Stein & Day. This contract was made first, in contemplation of Higgins contract.
* One of S & D's secured creditors was Bookcrafters USA. Bookcrafters was perfected secured party, could claim assets of S & D owed to others.
* Higgins wants to get beyond S & D (since its assets can be claimed by Bookcrafters), so attempt to pursue NAL directly, so payments don't get to S & D. Sues NAL on Third-Party Beneficiary theory.
* Court allows 3rd-party beneficiary claim, finding both parties intended benefit.
* Intent that satisfies court is knowledge. Actual knowledge may not even be necessary, simply 'chargability of knowledge' can satisfy third-party beneficiary.

Grigerik v. Sharpe




[721 A.2d 526] 1998 Connecticut Supreme Court (cb871)

* Buyer told seller he wouldn't purchase property if he couldn't build on it. Engineer got Sharpe (engineering company) to do tests, showing that buyer could put in septic tank.
* Buyer purchased property, then was told by town that he couldn't put in septic tank.
* Court holds that both parties needed to have intent to benefit third-party.
* Foreseeability does not suffice for intent




Monday, March 4, 2002 (Class 21) (Assignments 16-17)

Johnson Farms v. McEnroe?

(continued)

[568 N.W.2d 920] 1997 North Dakota Supreme Court (cb285)

Monarco v. Lo Greco

[220 P.2d 737] 1950 California Supreme Court (cb291)

Halstead v. Murray

[547 A.2d 202] 1988 New Hampshire Supreme Court (cb296)

Capacity to Contract

Kiefer v. Fred Howe Motors, Inc.

[158 N.W.2d 288] 1968 Wisconsin Supreme Court (cb301)

Tomorrow: finish capacity to contract and do next section. Read assignment 18. Justin Calverone's group is 'on'.


Tuesday, March 5, 2002 (Class 22) (Assignments 17-18)

Kiefer v. Fred Howe Motors, Inc.

(continued)

[158 N.W.2d 288] 1968 Wisconsin Supreme Court (cb301)

Ortelere v. Teachers' Retirement Board

[250 N.E.2d 460] 1969 New York Court of Appeals

Cundick v. Broadbent

[388 F.2d 157] 1967 10th Circuit Court of Appeals

McKinnon? v. Benedict

[157 N.W.2d 665] 1968 Wisconsin Supreme Court

Tuckwiller v. Tuckwiller

[413 S.W.2d 274] 1967 Missouri Supreme Court

Read 401-402 and 409-413 in casebook as additional material.


Friday, March 8, 2002 (Class 23) (Assignments 17-18)

Unconscionability

§ 2-302. Unconscionable contract or Clause.

(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

Jones v. Star Credit Corp.

[298 N.Y.S.2d 264] 1969 New York Superior Court (cb409)

Black Industries, Inc. v. Bush

[110 F.Supp. 801] 1953 United States District Court New Jersey (cb320)

Duress

Alaska Packers' Ass'n v. Domenico

[117 Fed. 99] 1902 9th Circuit Court of Appeals

Watkins & Son v. Carrig

[21 A.2d 591] 1941 New Hampshire Supreme Court

Monday: complete pressure in bargaining (assignment 19) and finish concealment & misrepresentation (assignment 20).


Monday, March 11, 2002 (Class 24) (Assignments 19-20)

Austin v. Loral Corporation

[272 N.E.2d 533] 1971 New York Court of Appeals

Foakes v. Bear Problem

Undue Influence

Odorizzi v. Bloomfield School District

[246 Cal. App. 2d 123] 1966 California Court of Appeals

Concealment and Misrepresentation

Vokes v. Murray

[212 So. 2d 906] 1968 Florida Court of Appeals

Tomorrow: do two legitimate cases on concealment and misrepresentation and go on to assignment #21 (up to page 400). Ryan Schiff's TA group is 'on'.


Tuesday, March 12, 2002 (Class 25) (Assignments 22-23)

Swinton v. Whitinsville Sav. Bank

[42 N.E.2d 808] 1942 Massachusetts Supreme Judicial Court (cb354)

Kannavos v. Annino

[247 N.E.2d 708] 1969 Massachusetts Supreme Judicial Court (cb357)

Fina Supply, Inc. v. Abilene Nat. Bank

[726 S.W.2d 537] 1987 Texas Supreme Court (cb362)

Adhesion Contracts

For next class, Ryan Schiff's group is 'on', then in afternoon, Karen Goldenberg's group is 'on'.


Friday, March 15, 2002 (Class 26) (Assignments 21-22)

O'Callaghan v. Waller & Beckwith Realty Co.

[155 N.E.2d 545] 1958 Illinois Supreme Court (cb370)

Tickets

Graham v. Scissor-Tail

[171 Cal.Rptr. 604] 1990 (cb377)

Henningsen v. Bloomfield Motors, Inc.

[161 A.2d 69] 1960 New Jersey Supreme Court (cb380)

Continue at 12pm with question of whether disclosure really works.


Friday, March 15, 2002 (Class 27) (Assignments 22)

(make-up class)

Carnival Cruise Lines, Inc. v. Shute

[499 U.S. 585] 1991 United States Supreme Court (cb389)

Note 1 (cb396): forum selection clause says action needs to happen in Greece. Court upheld forum selection clause. No showing that Greek law wouldn't have been fair law.

Views on Unconscionability

Williams v. Walker-Thomas Furniture Co.

[350 F.2d 445] 1965 DC Circuit Court of Appeals (cb403)

---

Monday, March 18, 2002 (Class 28) (Assignments 22-23)

Armendariz v. Foundation Health Psychcare Services, Inc.

[6 P.3d 669] 2000 California Supreme Court (cb416)

Public Policy

Bovard v. American Horse Enterprises, Inc.

[201 Cal.App.3d 832] 1988 California Court of Appeals (cb425)

X.L.O. Concrete Corp. v. Rivergate Corp.

[634 N.E.2d 158] 1994 New York Court of Appeals (cb429)

Tomorrow: assignment 29 -- 'determining subject matter to be interpreted'.


Tuesday, March 19, 2002 (Class 29) (Assignments 23, 29)

Hopper v. All Pet Animal Clinic

[861 P.2d 531] 1993 Wyoming Supreme Court (cb436)

Central Adjustment Bureau, Inc. v. Ingram

[678 S.W.2d 28] 1984 Tennessee Supreme Court (cb442)

DeMuth? v. Miller

[652 A.2d 891] 1995 Pennsylvania Superior Court (cb440)

Simeone v. Simeone

[581 A.2d 162] 1990 Pennsylvania Supreme Court (cb445)

Assignment for Friday: Parole Evidence.


Friday, March 22, 2002 (Class 30) (Assignment 29)

Gianni v. R. Russell & Co.

[281 Pa. 320] 1924 Pennsylvania Supreme Court (cb556)

Materson v. Sine

[436 P.2d 561] 1968 California Supreme Court (cb560)

For Monday, finish up Parol Evidence, will do Assignment 30. Shawn Farrell's group is 'on'.


Monday, March 25, 2002 (Class 31) (Assignments 29-30)

MCC-Marble Ceramic Center v. Ceramica Nuova d'Agostino

[144 F.3d 1384] 1998 11th Circuit Court of Appeals (cb566)

Bollinger v. Central Pennsylvania Quarry Stripping and Construction Co.

[229 A.2d 741] 1967 Pennsylvania Supreme Court (cb567)

Frigaliment Importing Co. v. B.N.S. International Sales Corp.

[190 F.Supp. 116] 1960 United States District Court SDNY (cb574)

Raffles v. Wichelhaus

[159 Eng.Rep 375] 1864 Court of Exchequer (cb582)

For tomorrow, finish off this section of the chapter (p604). Michael Haven's TA group is 'on'.


Tuesday, March 26, 2002 (Class 32)

Oswald v. Allen

[417 F.2d 43] 1969 2d Circuit Court of Appeals (cb584)

Principles for Allocating Loss -- Decreasing Principles of Culpability

W.W.W. Associates, Inc. v. Giancontieri

[566 N.E.2d 639] 1990 New York Court of Appeals (cb586)

Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.

[442 P.2d 641] 1968 California Supreme Court (cb592)

Hurst v. W.J. Lake & Co.

[16 P.2d 627] 1932 Oregon Supreme Court (cb601)

Tucker v. Forty-Five Twenty-Five

[199 So.2d 522] 1967 Florida Court of Appeals (cb603)

By next Monday, read through 638.


Tuesday, April 2, 2002 (Class 34) (Assignments 31-32)

Eastern Air Lines, Inc. v. Gulf Oil Corporation

[415 F.Supp. 429] 1975 Southern District of Florida (cb610)

Market Street Associates v. Frey

[941 F.2d 588] 1991 (cb613)

Dickey v. Philadelphia Minit-Man Corp.

[105 A.2d 580] 1954 Pennsylvania Supreme Court (cb617)

For Friday, read through end of chapter. Dimple's group is 'on' for Friday.


Friday, April 5, 2002 (Class 34)

Bloor v. Falstaff Brewing Company

[601 F.2d 609] US Ct App 1979 (cb619)

Notes: Best efforts

Zilig v. Prentice-Hall, Inc.

[717 F.2d 671] 1983 2nd Circuit Court of Appeals (cb626)


Monday, April 8, 2002 (Class 35)

Bak-A-Lum Corp. of America v. Alcoa Building Products, Inc.

[351 A.2d 349] 1976 New Jersey Supreme Court (cb634)

Lockewill, Inc. v. United States Shoe Corp.

[547 F.2d 1024] 1976 8th Circuit Court of Appeals (cb638)

Sheets v. Teddy's Frosted Foods

[427 A.2d 385] 1980 Connecticut Supreme Court (cb642)

Burnham v. Karl & Gelb

[745 A.2d 178] 2000 Connecticut Supreme Court (cb647)

Public policy issues: economic impact of wrongful discharge doctrine--possibly much greater than actual damages in lawsuits (because of avoidance behavior).

Balla v. Gambro

[584 N.E.2d 104] 1991 Illinois Supreme Court (cb648)

Nanakuli Paving & Rock Co. v. Shell Oil Co.

[664 F.2d 772] 1981 9th Circuit Court of Appeals (cb651)

Columbia Nitrogen Corp. v. Royster Co.

[451 F.2d 3] 1971 4th Circuit Court of Appeals (cb660)

Will start remedy discussion tomorrow, assignment #24, Eric Slagle's TA group is 'on'.


Tuesday, April 9, 2002 (Class 36) (Assignment 24)

Klein v. PepsiCo?, Inc.

[845 F.2d 76] 1988 4th Circuit Court of Appeals (cb453)

Northearn Delaware Industrial Development Corp. v. E.W. Bliss Co.

[245 A.2d 431] 1968 Delaware Chancery Court (cb464)

Laclede Gas Co. v. Amoco Oil Co.

[522 F.2d 33] 1975 8th Circuit Court of Appeals (cb459)

Walgreen Co. v. Sara Creek Property Co.

[966 F.2d 273] 1992 7th Circuit Court of Appeals (cb465)

Justin Calvarone's TA group is 'on' for Friday.


Friday, April 12, 2002 (Class 37) (Assignments 25-26)

R.E. Davis Chemical Corp. v. Diasonics, Inc.

[826 F.2d 568] 1987 7th Circuit Court of Appeals (cb480)

Buyer's Remedies

Laredo Hides Co., Inc. v. H & H Meat Products Co., Inc.

Will continue on Tuesday and do additional assignment on liquidate damages and foreseeability. Ryan Polk's TA group is 'on'.


Tuesday, April 16, 2002 (Class 38) (Assignment 27-28)

Laredo Hides Co., Inc. v. H & H Meat Products Co., Inc.

[513 S.W.2d 210] 1974 Texas Court of Appeals (cb476)

Tongish v. Thomas

[840 P.2d 471] 1992 Kansas Supreme Court (cb495)

Rockingham County v. Luten Bridge Co.

[35 F.2d 301] 1929 4th Circuit Court of Appeals (cb492)

Parker v. Twentieth Century-Fox Film Corp.

[474 P.2d 689] 1970 California Supreme Court (cb500)

Jacob & Youngs v. Kent

[129 N.E. 889] 1921 New York Court of Appeals (cb507)


Friday, April 19, 2002 (Class 39) (Assignment 38)

Hadley v. Baxendale

[156 Eng.Rep. 145] 1854 Court of Exchequer (cb521)

Wasserman's Inc. v. Township of Middletown

[645 A.2d 100] 1994 New Jersey Supreme Court (cb543)

Luttinger v. Rosen

[316 A.2d 757] 1972 Connecticut Supreme Court (cb665)


Monday, April 22, 2002 (Class 40) (Assignments 34-35)

Luttinger v. Rosen

[316 A.2d 757] 1972 Connecticut Supreme Court (cb665)

Doubleday & Co., Inc. v. Curtis

[763 F.2d 495] 1985 2d Circuit Court of Appeals (cb679)

Third-Party Satisfaction

Peacock Construction Co. v. Modern Air Conditioning, Inc.

[353 So.2d 840] 1977 Florida Supreme Court (cb674)

Constructive Conditions


Tuesday, April 23, 2002 (Class 41)

Mutual Mistake of Fact

Stees v. Leonard

[20 Minn. 494] 1874 Minnesota Supreme Court (cb786)

Renner v. Kehl

[722 P.2d 262] 1986 Arizona Supreme Court (cb789)

Estate of Nelson

Diamond in the Rough/Pregnant?-Cow Case

Impracticability of Performance

Taylor v. Caldwell

[122 Eng. Rep. 309] 1863 King's Bench (cb801)

Transatlantic Financing Corporation v. United States

[363 F.2d 312] 1966 United States D.C. Court of Appeals (cb805)

Eastern Air Lines, Inc. v. Gulf Oil Corporation

[415 F.Supp. 429] 1975 Southern District of Florida (cb823)


Friday, April 26, 2002 (Class 42)

Frustration of Purpose

Third-Party Beneficiaries

Septembertide Publishing, B.V. v. Stein & Day, Inc.

[884 F.2d 675] 1989 2d Circuit Court of Appeals (cb878)

Grigerik v. Sharpe

[721 A.2d 526] 1998 Connecticut Supreme Court (cb871)



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