Do It Yourself

-threat to breach existing K in bad fth & unfair dealing (must be done for a reasonable commercial purpose; must have a K--can't threaten not to make future Ks; not extortion)

ex. Machinery hauling threat not to K in future is not duress

§176.2: exchange not on fair terms and a threat of: (pretty bad threats)

-harms recipient, doesn't really benefit threatenor (malicious threat)

-prior dealing => dependence; dependence used unfairly

-other use of power for illegit ends

3) cause/induce assent

-conduct of the wrongdoer does not have to be the sole cause but only a substantial cause

-objective/subjective: does it have to be a threat so a rzbl person similarly situated would assent due to threat or only this person? subjective b/c purpose of duress is to protected the weak or in weak economic positions; test is actually induce assent (at some pt. the threat is so remote that it is not an inducing threat)

4) no rzbl alternative to MA (to agreeing to bargain)

limits use of duress; if there is a rzbl alternative, you must do that

176.1.c (I'll sue you for no reason; if you're broke, there is no rzbl alternative; if not, then say, fine, sue me)

176.1.d (I won't sell you anymore widgets under this K - find another merchant and sue for cover)

iii) undue influence (=voidable)

1. unfair persuasion of a party who: (special relationship that makes person especially susceptible to pressure)

a) is dominated by persuader OR

b) if justified to think persuader will act on their behalf

2. if induced by 3P, voidable unless other party, in good fth, and w/o rzn to know of duress:

a) gives value or

b) relies materially on transaction

2. misrepresentation (an assertion not in accord with facts)

a. fact "there are cracks in the foundation"

b. assertion ["as is" is okay w/in reason--but not bait and switch]

1. statement "there are no cracks in the foundation" (verbal or conduct)

must relate to facts/not opinion; is the stmt in accord w/ facts when it's made?

2. concealment (assertion that what is concealed does not exist)

a. hides (paint over the cracks)

b. prevents (lock the basement)

3. non-disclosure §161 only if (known facts):

· special relationship of trust/confidence (family, fiduc. rel) (c)

· correct contents or effect of a written document (d)

· necessary to prevent a previous assertion from being a misrep (fail to correct) [when you said it it was true, now not] [said true, didn't know false, find out later false] (a)

· would correct mistaken assumption on which K based and if non-disclosure violated good faith and fair dealing (b)

· basic assumption

· knows of error

· good faith and fair dealing

ex. buyer knows land very valuable, seller didn't know; buyer gets no misrep defense

ex. seller knows land is on a landfill, buyer didn't know, seller gets misrep defense IF seller knew buyer didn't know, wouldn't have bought if knew, violation of GFFD

What's the difference?

1. info deliberately acquired - legit acquired competitive advantage

2. not a latent defect, just more knowledge, homework done; oil is a factor

2. fraudulent or

- intent to induce MA and

a. maker knows or believes wrong

b. isn't as confident in the assertion as he implies or

c. knows he has no basis for assertion

material

likely to induce MA in this person or rzbl person (subjective)

3. cause (induces MA) [probably not going to be a problem]

4. justified reliance - only means you have to act in GFFD; (even if mistake is unrzbl)

*Remedies:

--file declaratory judgment act; judge can declare the voidable K void: recission (sometimes a collateral benefit under torts - don't confuse with K law) you want to be the P!

CONTENT BASED POLICING DOCTRINES (SUBSTANCE)

I. PUBLIC POLICY

A. foK v.

1. parties' justified expectations and

2. any forfeiture that would result if enforcement was denied and

3. any special public interest is in enforcing the particular term

B. public policy

1) legislation (i.e. labor law or antitrust legis)

2) need to protect public welfare

a. exculpatory clauses: term exempting from tor liability for

i. intentional or

ii. reckless

= against public policy

b. exculp. clause exempting from negligent is unenforceable IF:

i. employers exempt from on the job negligence

ii. exempting one with duty of public service (Amtrak, common carrier, public util, ex. LL case)

iii. Por is in protected class (product liability)

c. exemption from special tort liabil. for physical harm is unenforceable unless

i. term fairly bargained for (ex. experimental drug)

ii. consistent with policy underlying liability

3) restraint of trade (ROT)

ancillary? (part of otherwise valid agreement?)

i. no: void - per se unrzbl/invalid

ii. yes =>

a) voidable or valid?

1. if greater than needed to protect Pee => voidable

2. Por's need is outweighed by hardship to Pee or public harm => valid

b) criterion/consider: (one or all can be deleted/fixed)

i. geography

ii. duration

iii. scope

II. UNCONSCIONABILITY - D has not risk, P gets no advantage = defacto unk

A. look for

1. substantive

2. procedural

3. anything else (is it really bad: duress, misrep?)

B. remedies: usually fixed by recission or reformation (restorative)

1. limit application

2. void entire K

3. void term

C. unk? look at 1. setting, 2. purpose, 3. effect

1. weakness in K-ing parties

2. fraud, etc

3. policy

4. gross disparity in values exchanged (not enough alone - often shows defects in bargaining process; may be enough to deny specific perf.)

5. gross inequality of barg power and terms unrzbly favorable to stronger party

D. best to have a mix of both (1) and (2)

1. procedure

a. choice?

b. unfair surprise?

c. the sillys

2. substantive

a. oppression

b. gross disparity at time of K-ing

c. shocks the conscience

E. valid K, but voidable

III. STANDARD FORM AGREEMENTS

A. test: unknown term-->

· beyond reasonable expectation

· if you're going to take away a warranty rt (which is a rzbl expectation) you need to put it into bold print

2. reason to know term wouldn't be assented to

· bizarre

· oppresive

· elminated dominant purpose

· negates non-standard terms explicitly agreed to

· procedural irregularities (fine print, no opp. to read)

B. generally: remember in Ks of adhesion, parties understand they are assenting to terms that others would assent to, but they are not liable for terms:

1. that Oor knows Oee wouldn't assent or

2. if it is unreasonable

3. consider: prior negotiations or cirx

4. interp. against drafter

C. 2-316 exclusion/modification of Ws

1. specific & conspicuous

2. magic words or plain lang.

3. if buyer examined or refused to, no implied W for obvious defects

4. cop/cod/uot may exclude/modify Ws

IV. MODIFICATIONS: PRE-EXISTING DUTY RULE

A. §73: pre-existing duty rule, can't enforce promise if using the same ¢ unless

B. §89: c/L substitue:

1. executory

2. cirx unanticipated and

3. fair and rzbl (that's an indirect view of direct)

C. common sense: if those three (§89) elements aren't present, it was prob. obtained under duress

D. UCC view: 2-209 Modification Recission Waiver

1. modification needs no new ¢

2. signed agreement to modify/rescind ONLY if in writing is binding

3. merchant/form K: need both parties have to sign

4. SOFs must be satisfied if still within

5. UCC has no duress provision, so see c/L (no bad faith modifcation, etc)

6. if you waive an obligation, you can rescind w/ notice if no reliance

E. definitions: §279

1. substituted K: if accepted by obee in satisfaction of duty

2. if accept substutite K², can't sue for first K

3. novation: substituted K that includes a party who was not party in first K

V. ACCORD AND SATISFACTION

A. §281 accord: K (must have o/a/¢) under which Obee promised to accept stated perf. as satisfaction

B. problem: where does ¢ come from? pre-existing duty rule

C. where can we get ¢ and avoid pre-ex duty rule?

1. new promise (for something diff) or

2. resolve/settle dispute GF in fact (obj. standard)

D. Accord/Satis. v. Subsituted K:

1. accord is promise to take something else => suspends duty under K1

2. satisfaction occurs once promise is performed => discharges duty under K2

3. if no satisfcation, he can recover under accord Or K1 (prob. K1, b/c he compromised in accord K2)

4. substituted K: you can no longer recover under K1 b/c K2 replaces and K1 is discharged

5. assumption: accord and satis (obee would prefer substituted, though)

6. for sub: must show evidence of recission

VI. CONDITIONAL PERFORMANCE

A. §20: promise creates rzbl belief that assent = bargain (creates duty)

B. condition: event not certain to occur which must occur before perf. due (postpones duty) [remember: time not condition b/c certain to occur] *does not prevent formation

C. purpose occurence of perf/condition non-occ of perf/cond

promise create duty discharges duty breach

condition postpone duty duty to per. arises/matures duty never matures/discharge eventually

can only sue for breach is also promise

D. burden Fed. R. Civ. P 9

1. P's case if condition precedent

2. D's case if condition subsequent

E. Policy:

1. shifts risk

2. creates incentive to perf.

F. preference: promise b/c strict results (can be created expressly or by ct; interp: against drafter and intent of parties)

G. when express conditions often used:

1. condition of ¢

2. quality

3. satisfactory condition (to Pee - ex. painting case)

4. time

H. discharge

· occurence terminates duty except

· no discharge if

· breach of Obor's GFFD and

· couldn't have been prevented b/c of:

· impracticability and

· not matierally increase burden of Obor

I. Interpretation; §227:

sub§1: is it an ExCP or expression of a time when something will inevitably do something (a description)

decide based upon:

a. forfeiture: when Obee has expended resources, but ExCP not met, so reliance; this is okay if the parties' intent is clear - if not, avoid forfeiture (not reliance on expectations, but material/performance reliance)

-if event within his control, he often does assume that risk of forfeiture (I make promise conditional upon a condition occuring in my control)

ex) Obor Obee

pay work

when Owner pays

not a condition b/c Obee in risk of forfeiture and he has no control

ex) Obor Obee

pay reconstruct

"when" the mine returns to profitable operation

risk of forfeiture by Obee, but condition under his control

b. control: Obee more likely to take risk of forF if the condition being met is in his control

sub§2: preferred: obee's control => duty on him (promise)

ex) Obor Obee

sell buy

buyer make selection "by Sept. 1"

promise b/c event is within obee's control

B. satisfaction as a condtion: if can determine if rzbl man would be satisfied => obj. standard; if not, subj. standard (a personal thing, ex. daughter painting)

VII. ESCAPING DUTY:

TERM Interpretation of term

A. Promise

B. Condition

1. Constructive Conditions

2. Express

a. occurence?

i. => duty to perform

b. non-occurance?

i. => discharge of duty unless (4 avoidance doctrines) [usually not a material part of bargain; not reason for deal]

A) breach of GFFD by Obor §245

did Obor do something to prevent the occurence of the condition?

1. breach of duty to act in GF

2. contributes materially to non-occurence of condition (would condition have occured w/o breach?)

3. non-occurence excuses event

B) impracticability (nearly or totally impossible) §271

as a result of an act of God or another 3P makes it hard or impossible

doesn't matter if Obee made a bad deal/bad estimate

unforseen or unforseeable thing prevent condition?

C) waiver by Obor §84 (no ¢ needed)

duty, Obor says it's okay (express waiver)

usually occurs w/ waiver by conduct (fire ins. case)

Obor can reinstate duty if:

1. rzbl notice/extention to Pee and

2. not unjust due to material reliance on waiver and

3. proimse not binding apart from being a waiver (if o/a/¢)

D) pure forfeiture (really bad forfeiture §229)

weigh:

1. extent of forF (how bad is it)

2. material part of K?

3. how imp. was risk Obor sought to avoid

* not accepted in majority and not in Texas, use §227

VIII. CONSTRUCTIVE CONDITIONS PRECEDENT

A. Philosophy: est. order and quality of perf. to protect the parties to get justified expectations

B. 3 models:

1. K orders perf.

2. simulataenous perf (widgets; if partly, due at same time to extent possible)

3. sequential perf (period of time needed; ex. builder)

C. tender: offer and ability to perf; if accepted, you must perf. if not => breach

D. performance

1. perfect perf = dishcharge, no breach

2. substantial, imperfect perf = dishcharge + partial breach; must render or offer perf. for duty to arise (CCP)

3. non-perf or insubstantial perf = discharge + total breach

4. **ExCP: must have perfect perf or duty does not arise

5. **CCP: must have substantial perf => duty arises + parital breach

E. substantial perf = immaterial breach (RSK only)

1. a breach is material when: (not exhaustive)

a. extent that party is deprived of rzbl expectations

b. can he be adequately compensated for benefit he is deprived of?

c. will breacher suffer forF?

d. will he cure? (look at 1. cirx, 2. rzbl assurances)

e. extent that breacher comported w/ GFFD (ct. less generous if willful than negligent)

2. if breach is immaterial = imperfect perf and can get damages, but duty arises

F. damages §236

1. total breach = damages for all of injured parites remaining rts.

2. partial breach = damages for part of injured party's rts. to remaining perf + specific perf. if wanted

G. part performance as agreed equivalents §240: if there are equivalents, the ct. can decide to apportion perf; then the equiavlents follow the rules of a K (like a mini-K)

· progess pymts. not usually agreed equivalents

· severability is not the norm

· is the intent of parties relevant????

· intent

· terms and provision

· cirx

· conduct

· singleness or apportinoability of the ¢

· assent to promise singlely or as a whole

H. discharge of duties?

i. consider:

1. factors in §241 (material); how much needs to be cured, how likely to be cured

2. delay = prevention/hinderance from making other arrangements

3. does agreement provide for perf. w/o delay (time of essence)

ii. non-occurence =

1. suspended perf

2. once too late => discharge

IX. CURE

A. effect: breach is still there, but it becomes non-material and you still have to pay for the consequences

B. 2-507 & 2-511: tender of delivery conditional upon duty to pay and vice-versa

C. tender =

1. offer + present apparent ability to perform (must be followed by perf)

2. put/hold conforming goods at buyer's disposition and

3. give buyer rzbl notice, if needed, for accepting

D. UCC is different from RSK: UCC rejects substantial perf.

1. §2-601 imperfect tender (does not have to be a material problem):

a. reject whole

b. accept whole (can still get damages for partial breach)

c. accept commercial unit (GF)

2. §2-508 when buyer rejects whole or part after imperfect tender:

a. IF time remains for perf:

i. cure allowed until K time is up

ii. as long as buyer notified seasonably

iii. and tender made during K time

b. IF it's past time to perf:

i. S gets time to cure if he rzbly thought B would accept

1. rzbly though acceptance? uot, cop, cod, express in K; $ allowance, if uot

ii. and he seasonably notifies

iii. => rzbl time to cure

1. reasonable? cirx

3. 2-612 installment K's; breach: (don't mix up with RSK 240)

a. if K requires/authorizes goods "in seperate lots", the K is an installment K (even if the K says "ea delivery is a sep. K")

b. if it's an installment K, UCC rejects perfect tender doctrine; you can reject the entire K only for a material breach of the entire K; however, the installment must be perfectly tendered

X. ANTICIPATORY REPUDIATION

Three Questions:

1. what is a repudiation?

2. what are the effects/consequences of the reupdiation?

3. are there subsequent acts that might have an effect on the status of the repudiation?

I. What is a repudiation?

A. 3 ways:

1. by stmt. §250

i. stmt

ii. clear, unequivocal; "I will (not)"

a. yes? => got to iii.

b. no? => assurance?

iii. with gravity (if actually occurs = total breach)

a. yes? => repudiation

b. no? => assurance?

2. by conduct

i. voluntary act

· clarity still req'd

ii. affirmative act

iii. impair abil to perf. (very great impairment: make it appear perf. impossible)

3. not receiving assurances if/when due

a. when can you request assurance?

i. rzbl grounds (apparent inability) to believe (stmt/action by other party that's not a breach, but makes you nervous)

ii. obor will materially breach

b. recourse

i. suspend perf. until assured

ii. if adequate assurance not provided in rzbl time => repudiation (UCC = no assurance in 30 days = repudation; UCC only requires request for assurance to be in writing)

B. not repudiation:

1. expresses doubt (may give Obee rt to demand assurances)

2. stmt that threatens conduct that would not be a material breach

C. when occurs/type of breach

1. if before perf due: breach by anticipatory repudiation

2. after perf due: present repudiation

II. Effect of Repudiation

A. Anticipatory Repudiation

1. gives Obee claim for damages for total breach against Obor

2. discharges Obee duty to perf. §253.2

3. excuses ExCP's (§255)

B. Actual Repudiation by non-perf §243 (present repudiation)

1. breach + repudiation = total breach (increases all breach to material breach if also a repudiation.)

P's options:

1. accept, I'll sue you

2. rely, get new accomodations

3. * with 1 or 2 => you can't rectract your repudiation!

III. Post-repudiation Conduct

A. Obee's urging for Obor to retract repudiation => no effect §257

B. retraction (of anticip. repud) by Obor §256 = nullifcation when

1. notice to injured party

2. before matieral reliance

and

3. no indication injured party views repudiation as final

* then no breach, not even partial; restores status quo

C. retraction of actual breach + repudiation = steps back down to partial breach

XI. MISTAKE

A. Mutual (§152)

1. mistake?

2. by both parites? (if by one party => unilateral mistake)

3. basic assumption of K?

a. no objective test

b. doest core part of transaction remain the same?

4. has material impact? (balancing)

a. releif by reformation?

b. relief by restitution?

c. other relief?

d. overall impact

5. one party did not bear risk of mistake? §154

a. by agreement (not very express; ex. "as is")

b. conscious ignorance (diamond case)

c. if risk is allocated by ct b/c rzbl (comments)

i. ct will allocate risk to farmer is minerals on land

ii. look at human behavior

iii. if defect, buyer doesn't have to buy

iv. if benefit, seller has to sell anyway

fault of a party doesn't matter unless breach of GFFD

**YES to all = relief**

6. don't confuse misunderstanding (RSK 20) w/ mutual mistake

B. Unilateral Mistake

i. cts. less likely to grant b/c strips one party of rzbly expected benefit

1. mistake by one party?

2. basic assumption

3. material

4. neither party accepted risk

5. AND

a. enforcement = unk OR

b. other party should know/rzn to know /caused mistake (if actual knowlege, would be misrep by non-disclosure

XII. IMPOSSIBILITY & FRUSTRATION OF PURPOSE

A. Excuse Doctrines

1. maxim: K is a law of strict liability; Por has undertaken a promise to perf. and he generally bears the risk of increased difficulty of perf. (we don't care why you didn't perform; doesn't matter if willful or negligent, etc.)

2. exceptions: at what pt., when the K is silent, do we excuse Por's failure of performance? eventually, there is a line drawn --> excuse doctrines

a. mistake (mutual and unilateral)

· focus: things as they existed at time K was made

· doctrine looks for mistake that impacts the overall exchange; material imbalance in the exchange that was not anticipated

· the exchange is beyond the cirx comtemplated at time K made

· doesn't usually mean perf. is more difficult

b. impracticability

· focus: generally upon things after the K was formed

· doctrine looks not for material imbalance, but extreme and sometimes unexpected hardship in performance

· may or may not affect value exchanged

· what level of difficulaty has been confronted in performance?

· seller's remedy

c. frusteration of purpose

· focus: general upon things in the future

· buyer's remedy

B. elements:

1) event, "it is a basic assumption that event will not happen"

1. death/incapacitation of a particular, necessary 'person' §262

2. destruction/failure to exist of a particular, necessary thing §263

3. gov't regulations §264

4. not usually market conditions or financial position of the parties

5. unless fall under §261

6. if there's something in the K about the event, it's probably not a basic assumption

2) performance impracticable w/o Por's fault

a. w/o Por's fault

i. acts of God

ii. act caused by Pee

b. impracticable:

i. substantiallly more difficult

ii. beyond the range of normal expectation - unrzbl, no one would do this

iii. must use reasonable efforts to surmount obligation

A) are there alternative methods?

B) it's not enough to say I can't do it, but the thing can't be done - or can only be done at extraordinary and unanticipated costs

iv. examples

A) Bell bldg. necessary to install air conditions v.

B) Dauchy: shcool uncessary to build school (only need land); only performance had been destroyed

3) unless Por assumed the risk (uncommon b/c the hardship is so great)

C. Frustration of purpose: no fault and after K

1. basic assumption

2. substantial frustration

3. of principle purpose?

4. no assumed risk

XIII. Remedies

LV + OL - (CA + LA)

P/buyer cover or 3PK - mkt price KP - amt. pd. 3Pk performed - mkt price

mkt price +IL + CD (foreseeable)

P/seller K price - pymts. recv'd IL only cost-actually spent resale

A. Expectancy Damages:

LV + OL - (CA + LA)

perf expected - perf recv'd incident/conseq losses costs saved b/c of breach substitute transactions

made possible by breach

B. Other losses

1. incidental: cost of avoiding losses

2. consequential: secondary profits that would have been gained w/ 3P's; must be specifically pleaded

C. loss of value

1. cost of repair unless disporportionately higher than mkt value

2. why? probably wouldn't have been bargained for

D. loss of volume

1. unlimited supply +

2. unlimited customers

3. then damages = lost profit only

E. UCC and expectancy losses:

1. cover 2-712 (P buyer)

1) no unrzbly delay

2) substitute (same thing or as close as you can get)

3) GF (act in commercially rzbl manner)

LV + OL - (CA + LA)

cover + incident/conseq - (K price + expenses saved)

if no cover, => mkt value

2. no consequential damages

a) 2-706: seller's resale damages

b) 2-708: seller's damages for non-acceptance or repudiation

F. Certainty

1. §352: can't recover if can't prove w/ rzbl certainty

2. alternative measure if can't show w/ rzbl certainty

a) §348: if uncertain + delays use of property

damages = rental value OR int. on value of proprty

b) defective/unfinished perf

damages = cost to correct/complete unless disproprtionate (then you get decreased mkt value)

3. reliance (§349) alternative measure: see reliance

4. TX: how to prove lost profits for new ventures

I) presumption against loss profits (fail certainty test)

II) rebut to show we suffer some loss

a) specific clients lost

b) specific sales lost

c) specific contracts

d) similar enterprises in comparable markets

III) then argue amt. that was lost

5. emotional diturbance (§353)

a) bodily harm

b) missing body

6. punitive damages (§355) not recoverable unless also a tort; in Texas, you can get atty's fees for boK action if you win

G. foreseeability

1. damages must be foreseeable as a probable cause of the breach (§351)

2. foreseeable if:

a) occurs in the ordinary course of events OR

i) at time K made

ii) objective test

b) result of special cirx that breacher had rzn to know

1. recitals in the K that show intent

2. parol evidence of telling the intention (not a PEv. problem, not addying/varying a term of the K)

3. UCC: buyer gets ID and CD; seller gets ID

H. Avoidability (§350)

1. §350: losses not recoverable that could have been avoided w/o unrzbl burden, humiliation, risk; except: if rzbl but uncuccesful efforts made

2. from time you have rzbl beleif other party will breach, you can't recover more

3. on Trail's exam, don't say duty to mitigate; there's no duty, just don't get recovery

I. Reliance (§349)

1. use when can't prove loss of value to rzbl degree of certainty

2. expenditures made in prep. to perform/performance - losses avoided

All participants in the study group must always follow the BSL Honor Code.