• Contemporaneous Agreements-if another document is executed at the same time the formal document was signed then that document is treated as part of the K and will not be subject to the PER but if an oral agreement is made before or at the time the formal document is signed then the it must meet the elements of PRE in order to be admitted into evidence. Contemporaneous oral agreements are NEVER allowed in.

1. Four corners- look at the document in writing itself and see the intent f parties
2. Traditional-MAJORITY—looks at the parties objective intent- what would parties naturally do
3. Modern- MINORITY— subjective intent- more likely to allow evidence in
4. UCC 2-202-requires that the K be in writing, that it be final and that the evidence of the prior agreement does not contradict the written K but only explain or supplement it by:

1. by course of dealing /or usage of trade /or by course of performance
2. By evidence of consistent additional terms unless the K is complete- to decide whether the K is complete the UCC looks at whether the parties would certainly put it on writing. This lets a lot of stuff in, b/c we must be CERTAIN that they people would have put it on writing

1. DEFINITION- a clause stating that the writing constitutes the sole and final agreement b/en the parties
2. Although merger clause may make the court more likely to say the K is final- or totally integrated- if the court finds that there is a disparity of bargaining power or the clause was hidden, or if there was a condition* to the entire K the merger clause may not preclude the evidence from being admitted.

• *R2K §217- where parties agreed orally that te performance of the agreement is subject to a condition the agreement is not final/integrated with respect to that condition UNLESS the oral evidence SPECIFICALLY contradicts the writing- Williams v. Johnson

1. Basic rule. If the agreement is ambiguous on its face, or becomes ambiguous in performance parol evidence is admissible to clarify the parties’ intent. But, if the ambiguity is so fundamental that there is no way that the court could determine what the parties intended, there may be no enforceable contract at all.
2. Minority view the trend is to admit parol evidence more frequently. Even where the terms of a contract appear to have a plain meaning; parol evidence will still be admitted to interpret the terms if the language of the contract is reasonably susceptible to the interpretation offered by the party wishing to admit the parol evidence.

1. INTERPRETATION

• If the plain meaning is of the contract is ambiguous then evidence can be admitted

1. APROACHES TO INTERPRETATION

1. The Plain Meaning- (majority)— follow the plain meaning approach in which they only let the evidence in if the document is ambiguous, but if the meaning is clear they will not even let the evidence in
2. Reasonably Susceptible Test (minority)— the court will hear extrinsic evidence to determine if a party could have reasonably interpreted a terms as having a particular meaning. If the evidence shows that the K is reasonably susceptible to that interpretation the court will admit the evidence
3. UCC §2-202—the code encourages the use of extrinsic evidence by allowing trade usage, course of dealings and course of performance even if the K is totally integrated as long as the evidence does not contradict the written K- explain or supplement. The court in interpreting the K will consider: ( in order of importance)

1. Express terms- that is the best evidence if it says middle of the month and then it says the 15^th of each month then terms are express, must follow ALWAYS
2. course of performance- what have we done on this K, the even must have happen more than once- you have received merchandise for 6 mth on the 20^th
3. course dealing- normal way of doing business b/en those two parties- assuming that they have deal w/ each other before- on previous K it always meant the 5 middle days of the month
4. trade usage- what ever is the usage of that word in the trade

1. Restatement § 201(2)- Whose meaning Prevails

1. both parties understand the terms k- then the K is interpreted as is-Plain meaning
2. If A knew, or had reason to know both meanings and B only knew one then B’s interpretation will prevail. If A can show that B should have known through trade usage or common knowlegde then A can rebut presumption in favor of B
3. When neither party knows nor had reason to know what the other party meant then there is no K b/c there was never a meeting of the minds

1. The intent of the parties is giving great weight
2. Words and conduct are to be interpreted in light of all the circumstances- (course dealings and course performance, trade usage.)
3. the K should be interpreted w/ PP in mind
4. a writing interpreted as a whole and all writing are interpreted together
5. unless a different intention is manifested

1. words are interpreted w/in their prevailing meanings
2. technical words or words of art are given their technical meaning

1. interpretation is usually against the drafter, b/c the drafter has more advantage
2. interpretation should favor specific over general terms

• The court will interpret the k to mean what a reasonable buyer would expect it to mean, and thus protect the weakest party’s expectations. We expect insurance to defend us against claims made against us
• The court will not enforce exclusionary clauses in an insurance clause that are unclear basically if the insurer deals with the public upon a mass basis the notice of non coverage in a situation in which the public may reasonably expect coverage, must be conspicuous, plain and clear. (K of adhesion- b/c of unequal bargaining power)
• Restatement §211(3)- surprise terms- we are only agree to the expectable terms
• UCC § 2-206- if a consumer manifest assent to a standard form, a term contained in the form which the consumer would not have reasonably expected is not part of the k unless the consumer expressly agrees to it

1. CONDITIONS

1. Express condition- clearly explicit and stated in the K and are always strictly enforced
2. Implied Conditions – can be of two kinds

1. Condition implied in fact- is the real agreement of the parties, this conditions are treated like express conditions
2. Condition implied in Law/Constructive is not on the K and is not necessarily what the parties agreed on. The law will construe a condition, they are not very strictly enforced

1. CONDITION v. PROMESS

1. Distinguishing: To determine whether a particular act is a condition, a promise, or both, the main factor is the intent of the parties. Words like "upon condition that" indicate an intent that the act be a condition; words like "I promise" or "I warrant" indicates a promise and failure to keep the promise will also generally constitute the failure of a constructive condition.)
2. The Court will treat condition as promises in order to avoid forfeiture where the default is grossly out of proportion to the forfeiture b/c where a condition has failed, the promisor has a defense and may be discharged from the contract without ANY obligation to compensate the promisee for part-performance

1. a duty is imposed on an obligee that an event occur or;
2. the event is made a condition of the obligor’s duty or;
3. The event is made a condition of the obligor’s duty and a duty is imposed on the obligee that the event occur.

• Summary- when a particular event is under the control of the obligor, the court tends to interpret it to be a promise. However when the even is not in the control of either party the court will interpret as a condition. In any even the court will seek and interpretation that will not cause forfeiture

1. EXCUSE OF CONDITIONS

• Anti waiver clause- clause in the K to prevent waiver’s but can still be waived if the waiver happens very often, and party does not cancel the K then the he has probably waived the right to cancel, b/c gave false sense of reliance

1. If the court finds circumstances that makes compliance with the condition impractical

• A waiver given w/o consideration can be can reestablish as long as he gives fair notice to the other party
• Equitable Estoppel- in this case party waive condition and refuses to pay party is bound to waiver b/c of reliance
• Continuation of performance: If a promisor continues his own performance after learning that a condition of duty has failed to occur, his conduct is likely to be found to operate as a waiver of the condition

• RULE- Under appropriate circumstances a party, despite his owns default may be entitled to relief from the rigorous enforcement of K provisions that would otherwise deny him recovery. But for this rule to apply the moving party must prove: 1) unfairness if performance of the condition is executed 2) that the condition is not material so that it would not prejudice the other party
• Disproportionate forfeiture- forfeiture is the denial of compensation, it is kind of the unconsionability concept but it focuses on the performance of the K as being unfair v the written k as is, the court also looks at the importance of the condition
• Considerations-

• notice is a condition, it is not a material part of the K

1. CONSTRUCTIVE CONDITIONS

1. whenever performances may be rendered simultaneously they re to be performed simultaneously unless the language or the circumstances indicate otherwise
2. except as to number (1) where the performance of only one party requires a period of time his performance is due at an earlier time than that of the other party unless the language or circumstances indicate otherwise- so usually performance is due b/f pay,

• performance must be fully or substantially completed but there are some exemptions

1. if the K is divisible
2. if the parties have agreed upon installment payments
3. trade usage is to the contrary

1. ORDER OF PERFORMANCE

1. TIME- Where the performance of one party requires a period of time, and the other’s does not, the performance requiring time must ordinarily occur first, and its performance is a constructive condition to the other party’s performance.
2. SALE OF GOODS OR LAND- If each party’s promised performance can occur at the same time as the other’s, the court will normally require that the two occur simultaneously, in which case the two performances are "concurrent conditions."

• Tender of performance: Courts express this by saying that where the two performances are concurrent, each party must "tender" (i.e., conditionally offer) performance to the other. UCC §§2-507(1) and 2-511(1).

1. MODERN RULE- there is a presumption that mutual promises in a contract are dependent - performance by one party is conditioned upon performance of the other- and are to be so regarded whenever possible. This is done so that (1) to offer both parties maximum security against disappointment of their expectations by allowing each party to defer his own performance until he has been assured that the other will perform and (2) to reduce the burden of financing one party before the other has performed

1. AVOIDING FORFEITURE

1. Deprivation of expected benefit: The more the non-breaching party is deprived of the benefit which he reasonably expected, the more likely it is that the breach was material.
2. Part performance: The greater the part of the performance which has been rendered, the less likely it is that a breach will be deemed material.
3. The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived
4. The likelihood that the party failing to perform or to offer to perform will cure his failure; taking account of all the circumstances including any reasonable assurances
5. The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing

• Where the acts or promises of the parties are concurrent and to be done or performed at the same time the K is dependent and neither party can maintained an action against the other without providing performance on his part
• When there is a K that requires mutual concurrent conditional performance and one of them has breached a material part of then the condition is not met and the other may get out of the k and sue for total breach
• A delay in performance is not a total breached unless time was of the essence

1. SUSTANTIAL PERFORMANCE

• TEST- Ask Whether the K purpose has essentially been fulfilled
• Substantial performance does not apply to the sale of goods, the UCC uses the perfect tender rule

• The requirement of using reading pipes is not a condition, but a promise b/c the payment was not condition on the using the reading pipes, the only condition was that the house be build
• RULE- if a party has completed substantial performance on his promise but has committed a minor omission due to inadvertence he should be able to recover the money due to him less the amount necessary to fully compensate the other party for the damages caused by the omission
• How do we determine if the work is substantial?

1. look at the k in comparison to the breach- hired to pay one room or to pain building
2. the party must performed but just a small mistake

1. what purpose does the performance serves
2. the excuse for deviating from the K
3. the cruelty of enforcing strict adherence or compelling the promisee to receive less than what he bargained for
4. the difference b/en the tendered performance and the performance of the promisee
5. restatement § 241-whether the party performed in good faith and in accordance with fair dealings p. 281 blue book

• the good must not be perfect, it must only adhere to what you agreed to sell other wise the buyer has the right to reject
• commercial unit- does not mean parts, it must be the whole unit- oven example
• the seller generally has the right to "cure" the defect

1. DIVISIBILITY AND RESTITUTION

1. performance of each party is divided into two or more parts
2. the number of parts due from each party is the same- consideration for each part
3. and the intent of the parties on whether they intended the k to be divisible- kitchen remodeling, a lot of things for remodeling but you only wanted one job

1. Definition of Restitution

1. Rule

• this was a divisible K that had to parts 1)grade, 2) was to make improvement to the streets, BUT in general construction K are not divisible

• RULE: employment k are normally divisible
• RULE: when a party has not substantially performed and has materially breach a k he may still recover even if the k is not divisible as long as the other party has received a benefit – the court tries to prevent unjust enrichment and allows him t recover for the benefit he conferred
• A hired laborer is entitled to compensation for his services though he does not continued to work for the entire duration of the K, b/c the other party is continuously receiving a benefit and the worker is working under the expectation that he will get pay, the contractor cannot refuse to receive what he has already received

1. the reasonable value to the other party of what he receive in terms of what it would have cost him to replicate the benefit from another person
2. the extend to which the other party’s property has been increased in value or his other interest advanced

1. INPRACTICALITY AND FRUSTRATION OF PURPOSE

1. EXISTING IMPRACTICALITY (during K formation)

1. 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 if performance as agreed has been made impracticable by the occurrence of the contingency the non occurrence of which was an assumption on which the K was made
2. The buyer then has an option to receive the goods or not but they have no claim
3. Where the caused mentioned in paragraph a affects only a part of the seller’ capacity to perform he must allocate production and delivery among his customers but may at his option include regular customers not then under k as well as his own requirements by further manufacture. He may also allocate in any manner which is fair and reasonable

1. at time K is made performance is impracticable
2. without the fault of the party seeking to be excused
3. not foreseeable by the party seeking to be excuse
4. event is the basic assumption of K
5. UNLESS the party assumed the risk

• A thing is impossible in legal contemplation when it is impractical and a thing is impractical when it can only be done at an excessive and unreasonable cost
• Where performance depends upon the existence of a given thing and such existence was assumed as the basis of the agreement performance is excuse to the extend that the thing ceases to exist or turns out to be non-existence. – cows being pasture
• Normally increase in cost in performance is NOT an impracticable event UNLESS the cost was considerable increased due to the necessity of performing in a manner radically different from what was originally contemplated

1. SUPERVENING INPRACTICALITY ( after the parties have entered into the K)

• The services involved must be personal. The best test for whether services are "personal" is whether they could be validly delegated to a third person.

1. K does not identified source- it does not said where he is going to get the goods from, then we will examine how difficult it is to get them, but in general the court will not find impracticability b/c can get the goods from any where
2. if you have a specific source named in the K- then if impracticable to get from them you do not have to go find other sellers

1. Suspends (rather than discharges) the promisor’ s duty while the impossibility continues.
2. After the impossibility ceases, the duty reattaches, UNLESS
3. it appears that performance thereafter would be materially more burdensome had there been no impracticability or frustration.

1. FRUSTRATION OF PURPOSE

1. Definition

• Frustration- applied where the bargained for performance is still possible but the purpose or value of the K has been totally destroy by some superseding event, such frustration will discharge the K. BUT normally where the seller’s cost has increased that will not be enough to frustrate the K.
• UCC does not provide an specific code for frustration, it is with impracticability under § 615, and it always protect the seller. Buyers are said to always assume a risk when they order goods so, there is really no frustration of purpose for buyers.
• The ability to perform is there, but there is no present consideration and the K has been frustrated, he cant get what he bargain for
• Subjective- I can not do it
• Objective- It can be done- that is the only time frustration applies

• To say I don’t have the money is not an excuse b/c you have assume he risk that you may not have money
• Leases are seen as contractual obligation and one is not very likely to be excuse

1. Was the event or situation the foundation of the contract? Yes, the room was rented b/c of its position. Cab ride to the Derby race is different b/c the cab had no special qualification that led to its selection and that was not the foundation of the K
2. Was the purpose of the K frustrated? Yes coronation was canceled
3. Was the event so severe that cannot reasonably have said to be in the contemplation of the parties at the time of entering into the contract? Yes, the parties had no reason to believe that the coronation will get canceled

• Commentary estates that the frustration must be substantial and that it is not enough that the transaction has become less profitable for the affected party or that he will sustain a lost. BUT where the value of the performance is totally or nearly totally destroy by superseding events the court may find frustration if other circumstances beside the money exist- in this case there was no reason to purchase the goods any more b/c they were outdated so useless
• The frustration must be severe that it is not fair to be regarded as w/in the risk parties assumed under the K
• Foreseeability of the event is a factor in determining if a party should be excused, but the mere fact that even was foreseeable does NOT compel the conclusion of frustration.

• There must be substantial frustration – purpose frustrated and loss of total commercial value
• the court held in this case that the land though it could not be used for what it was rented it could still be used and taken advantage of. Some courts do this but it is not the norm

• She is going to design for model to wear to the Grammies awards, she has appendicitis and can go to the awards, the buyer has assumed a risk, and we do not penalize the seller

Answer: There are 2 possible ways to compensate the party for the performance:

1. if the contract is divisible, use Doctrine of Divisibility
2. if not, use restitution to compensate the party

1. RESPONSE TO BREACH

1. a stmt to the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach OR
2. a voluntary affirmative act which makes performance impossible or apparently impossible-
3. injured party must be ready willing and able to perform but for the repudiation

1. Where 1) reasonable grounds arise to believe that the obligor will commit a breach that would in itself give the obligee a claim for damages for total breach. The obligee may 2) demand adequate assurance of due performance and may if reasonable suspend any performance for which he has not already receive the agreed exchange until he receives such assurance
2. the 4) obligee may treat as a repudiation the obligors failure to provide w/in a 3) reasonable time such assurance of due performance as it is 5) adequate under the circumstances

• UCC and repudiation

1. for a commercially reasonable time await performance by the repudiating party OR
2. revert for any remedy for breach even though he has notified the repudiating party that he would await performance and has urged retraction AND
3. in either case suspend his own performance or proceed

1. A K for sale imposes an obligation on each party that the other’s expectations of receiving due performance will not be impaired. 1) When reasonable insecurities arise the other party 2) in writing may demand adequate assurance of due performance and until he receives such assurance he may if commercially reasonable 3) suspend any performance for which he has not already receive the agreed returned
2. B/en merchants the reasonableness of grounds for insecurities and the adequacy of any assurance should be determine according to commercial standards
3. Failure to provide w/in reasonable time- not more than 30 days such assurance is a repudiation of the K

• RETRACTION OF REPUDIATION

1. Has canceled the K
2. Has materially change position or
3. otherwise indicate the K is canceled- by getting another job
4. the K has reached performance time

1. where the obligors insolvency gives the obligee reasonable grounds to believe that the obligor will commit a breach the obligee may suspend any performance form which he has not received the agreed exchanged until he receives assurance in the form of performance itself and offer of performance or adequate security
2. a person is insolvent who either has ceased to pay his debt as they become due or is bankrupt

1. a parties duty to pay damages for total breach for repudiation is discharged if it appears after the breach that there would have been a total failure by the injured party t perform his return promise
2. if the duty that he repudiated has been discharged by impracticability or frustration before any breach by non-performance

• this applies to the UCC as well

• If the injured party does not cancel the K but disregards the repudiation and treats the k as still in force and the repudiation is retreated prior to the time of performance then the repudiation is nullified and the injured party is left with his remedies, if any invocable at the time of performance

• Before the buyer ask for assurance of performance he must have reasonable grounds for insecurities that the other party is not going to be able to performed as bargained
• UCC written demand- the code is to be liberally construe and a court may waived the requirement if both parties had a clear understanding that a party is suspending performance until adequate assurance of due performance is received

1. An installment K is one which requires the delivery of goods in separate lots to be separately accepted
2. the buyer may refuse any installment which is non conforming, if that non conformity substantially impairs (so no perfect tender rule) the value of that installment AND the installment can not be cure- if the other party makes an offer to cure then the buyer must accept the installment
3. if the non-conformity or default impairs the value of the whole K there is a breach of K, but if the injured party accepts a non performing installment w/o timely notification of cancellation or if he brings an action regarding ONLY past installments the injure party is said to have reinstated the K (waived his right)

• The buyer refuses or neglects to pay for one or more installments it depends on the circumstances of each case whether the breach of K is so material that it would be justifiable for the injured party to cancel the K or whether the injure party only has a claim for damages
• Circumstances to consider for the SELLER to find a breach of the whole K

1. is it impossible or unreasonably burdensome from a financial point of view to make the seller supply the future installments
2. the fact that the buyer did not pay creates a reasonable apprehension on the sellers mind that the buyer will not pay for the future installments either- if you are insecure then ask for assurance

1. GENERAL DAMAGES

• K damages usually have limitations an a party hardly ever gets all its true damages paid
• Usually there are not attorney fees

1. Expectation Interest- attempt to put the promisee in the position he would have been had the promise been performed "benefit of the bargain" (though the best way to give a party the benefit of the bargain is to given them the actual bargain- actual performance is only granted if damages are not enough to make person whole)
2. Reliance Interest-puts the promise back in the position in which he would have been had the promise not been made- compensate for loses.- like in torts, but me in the position I was before I got hit by the truck
3. Restitution Interest- attempts to put the promisor back in the position in which he was before the promise was ever made- prevent unjust enrichment, promisee is restore any benefit that he conferred tot he other party

1. the lost in valued or expectations caused by the other party breach PLUS
2. any other lost, including incidental or consequential loss (foreseeable, certain, calculable) caused by the breach LESS
3. any cost that he has avoided b/c of the breach

• Good for loosing Ks also
• If you non-breaching party then give them the higher value

• Most jurisdictions don’t let you recover for more than the (R2K) price but others do

• breach of K b/c there was a guarantee- that you will get a better nose
• for a breach of K you usually get expectation damages, under this theory you only recover for damages that are foreseeable form the breach
• expectation damages are used more often on commercial settings- though medicine is a service the modern law considers it a commercial transaction
• the court did not have to chose from restitution and reliance, though they prefer reliance, b/c the damages would have been the dame b/c of the waiver

1. DAMAGES FOR MENTAL DISTRESS

1. the breached caused the bodily harm
2. the harm was especially foreseeable from the breach of the K

1. PUNITIVE DAMAGES

1. SALE OF GOODS- UCC

• If the seller repudiates then we determine damages for the market price a reasonable time after the repudiation
• Majority- 2-713- a commercially reasonable time after the repudiation for the buyer to cover. If has not made cover after the reasonable time after the repudiation then your damages will be set. Most buyers will cover though
• Perfect Tender Rule- remember that the perfect tender rule allows for some imperfections if they are accepted w/in the trait
• Usually is better to accept the good if you need them and sue under 714

• buyer that accepts a non-conforming tender is not penalized by the loss of any remedy due to him. If accepting some and rejecting the rest it must be done in good faith.

1. CAN THE SELLER CURE?

UCC 2-508- Seller have a right to cure b/f performance time– if seller deliver earlier. The seller must give notice that he is going to cure, if the buyer covers after he has been notified then he is responsible for both goods

Seller time to cure at performance time- thought that the buyer would have received the goods despite him knowing that the good is not a perfect tendered, then he may have a reasonable time to cure, 100 or 99 widgets, or car with automatic locks, if middle man involved

2. DID THE BUYER ACCEPT THE GOODS?

• Normally if you accept then it is too late to reject the goods Unless

1. There is a substantial impair of the good
2. It is difficult to discover the imperfection or
3. the seller assurance that the goods are going to be OK or
4. that seller was going to cured and after a reasonable time he has not

• there must be notice to the seller and it must be done w/in reasonable time after discovery

1. where the buyer has accepted the goods and given notification he may recover damages for non conformity for any lost due to the sellers breach as determined in any manner which is reasonable
2. the measure of damages for breached of warranty is the difference at the time and place of acceptance between (the value of the gods accepted — the value they would have had if they would have been as warranted –market value)
3. may also recover any consequential damages

1. the measure of damages is he difference b/en the market price at the time the buyer learned of the breach and the k price together with any consequential damages but less expenses saved in consequence of the breach

• See notes on the meaning of learned of the breach- reasonable time after the repudiation

1. Market price is to be determined as of the place for tender or in case of rejection after arrival or revocation of acceptance ,as of the place of arrival

1. After a breach the buyer may "cover" by making in good faith and w/o unreasonable delay (tell why on exam) any reasonable purchase or K for purchase in substitution for those due form the seller
2. The buyer then may recover form the seller the difference b/en K price and the cover price plus any incidental or consequential damage, minus any expenses saved because of the breach (if any)

• Under this section there is no obligation to mitigate cover prices only to act in good faith

1. DID THE BUYER MAKE ANY DOWN PAYMENTS? 2-718

1. CAN THE BUYER GET SPECIFIC PERFORMANCE?

1. Applies if the good s are unique or other proper circumstance

1. Specific performance is discretionary
2. Replevin- not discretionary- applies if after a reasonable effort he is unable to effect cover for such good or circumstances indicate that such efforts are unavailable

1. wrongfully rejected, 2) wrongfully revoked acceptance 3) failed to make payments

1. ARE THE GOODS …

1. Resale the Goods- 2-706

1. the seller has the right to resell the goods or the undelivered balance thereof as long as the resale is made in good faith and in a commercially reasonable manner, PRIVATE and IF IT IS PUBLIC the buyer has notice of the resale, the seller may recover the resale price and the K price together with any incidental damages less any expenses saved because of the breach

1. Keep the Goods- 2-708

• Market Measure {(Market $ — K $) + Incidental}—money saved}
• Profit Measure: Applies if S has not began to manufacture or if LVS

1. Market Measure- the measure of damages for non-acceptance and repudiation is the difference b/en the market price at the time and place of tender (delivery) and the unpaid K price, plus incidental damages but less any expenses saved b/c of the breach
2. Profit Measure- If damages in 1, are inadequate to put the seller in the same position had the bargain taken place the measure for damages is the profit (including the overhead allotted for that K) which S would have made from the full performance of B plus any incidental damages. Plus allowance for cost reasonably incurred- labor, materials- and due credit for payments or cost of resale

• Profit losses are consequential damages
• If you chose to keep the goods any loses or any gains are yours and the court will not mitigate or make you repay
• Section (2) applies only if the seller has not manufacture the goods or if the seller is a Lost Volume Seller –LVS. Does not apply to real estate sales or service K- unless several people working for you, or service takes little time)

• in installment K if B repudiates before the all the installments are due then the S is allowed to get damages for all the future installments as well

• you don’t get damages for something for which you could have mitigated- you are made whole no matter whether you sell for scrap or if you complete, but better to complete-you want to chose the one with less damages b/c "duty" to mitigate

1. HAS B ACCEPTED THE GOODS or ARE THE GOODS IDENTIFIABLE TO THE K

1. Buyer accepted the goods or of conforming goods lost or damage within a commercially reasonable time after risk of their loss has passed to the buyer OR
2. The goods are identify to the K, if the seller is unable to resell after a reasonable effort to resell at a reasonable price or circumstances indicate that such an effort will be unavailing

• Buyer breaches -the seller is entitled to the difference b/en the K price and the value for which he sold. A fair result could also be obtained by applying expectation damages
• Seller breaches the buyer is entitled to the difference b/en market value and K price
• In Ks the burden of proving that loses could have been avoided is on the breaching party
• Leases-

1. Common Law-even thought lessee vacates and no pay rent you are still responsible to pay the rent for the K period and there is no duty to mitigate
2. Modern Law- now in most jurisdictions there is a duty to mitigate

• Unless the K is divisible or the contractor has substantially performed an action for the agreed price for he job will not lie but Construction Ks are hardly ever divisible
• If the owner refuses to pay then the contractor is entitled to either 1 or 2

1. difference in value
2. cost to replicate or replace- Safety, esthetic defects always get cost of replace

1. the difference b/en the value of the property as constructed minus the value if performance had been properly completed
2. the constructor will still recover b/c he has substantially perform he has conferred a benefit

• A person who is wrongfully discharged will recover the amount of salary agreed, for the K period agreed upon, minus the amount the employer can affirmatively prove that the employee has earned or with reasonable efforts would have earned from other employment
• The employee has to make a reasonable effort to mitigate the damages then, but he only needs to take those jobs that are comparable or substantially similar to the one she was deprived- she does not have to take another job, but if could of taken the jobthen they will not get damages for something to which they could have mitigated for
• You don’t have to relocate
• There is no deduction from collateral sources such as unemployment benefits, moonlighting, welfare, employee is usually not allow to recover punitive damages

1. CONSEQUENTIAL DAMAGES

1. Foreseeability- did the breacher have reason to know these damages would be caused by his breach at the time he contracted? PP- parties should be able to bargain fairly if more risk are foreseeable then they should charge more or get out of the bargain if they knew the possibility of a certain damage

1. damages are not recoverable for damages that the party in breached did not have reasons to foresee as a result f the breached when the K was made
2. a loss may be foreseeable if it 1) follows from the natural source of events 20 as a result of special circumstances to which the party in breach had reasons to know
3. a court may limit foreseeable loss by excluding for loss of profits if justice so requires in order to avoid disproportionate compensation

• A party is liable for all direct damages, which both parties to the K would have contemplated as flowing from the breach if at the time they entered in to the k they had bestowed proper attention upon the subject and have been fully informed of the facts. The damages must not follow just be likely to follow

1. Avoidability- did the injured party reasonably mitigate his damages by cover or other methods available? If they make a reasonable attempt to mitigate and they fail they will still recover the cost incurred
2. Certainty- is it certain that the breach caused the damages?

1. There are two types

1. Certainty as to the fact of loss- are we certain that the loss incurred was due to the breach? Must prove this with reasonable certainty. –Must show but for causation
2. Certainty as to amount of loss- courts allow a little more leeway here. The certainty as to fact of loss has been proven, but now how much loss is there? Problems sometimes arise when trying to prove this; (new businesses have no track record)

1. New Business Rule- new businesses cannot prove they would have had future profits b/c they have no proof; thus they can not recover for future loses. But, franchise restaurants may be an exception or the court some times lets experts testify
2. Can also claim a loss of good will; (meaning lost of clients so lost of future profits) but must still show foreseeability, certainty, and that it was not avoidable.
3. Common law, attorneys fees were not awarded for breach of contract, so you must place a clause in your contract that awards these for a breach. However, some states, like Texas have statutes that give a claim for attorneys fees in a contract case.
4. Primary Profit- you can get both as long as you can prove all three things. Texaco and stopping go, bad gas then no sales of the stopping go.

1. UCC 2-715 BUYERS incidental and consequential damages-

1. general or particular requirements and needs of which the seller at the time of contracting had reason to know- foreseeable- and which could not reasonably be prevented by cover or otherwise. –Avoidability AND
2. Injury to person or property proximately resulting from any breach of warranty- certainty- (Proximately resulting is easier to prove than certainty, so it is easier to recover for these types of damages in a breach of contract)

1. DECEPTIVE TRADE PRACTICES CONSUMER PROTECTION ACT

1. Background info.

• This has change over the years now a little less protection now than before
• This provision is to be liberally construe to support the policies

1. Waiving the DTPA

• This is a consumer protection act that cannot be waived b/c it is against public policy
• Certain ways you can waive your DTPA rights:

1. legal counsel present AND
2. writing AND
3. You must also not be in a bad bargaining position.
4. Waiver can not be conspicuous

1. Definitions § 17.45

1. Goods: tangible chattels, and real property or service purchased or leased for use.—the statute allowed goods bought for resale to be cover
2. Services: work, labor, or service purchased or leased for use.
3. Person: individual, partnership, corporation, association, or other group however organized with assets under $25 M.

(a) A person who hires an attorney is a consumer

(b) Patients are not consumers with respect to doctors and health care providers, unless unconscionable activity such as false or misleading advertising

(c) Pharmacists are not exempt from DTPA

4. Consumer: a person who seeks or acquires goods or services (includes any agency of the state, corporation or any large business limited if the business consumer has any assets greater than $25 million.
5. Unconscionable action: means an act or practice which to a person's detriment:

1. What gives you a C.O.A. under the DTPA? § 17.50 Relief for consumers:

• Must show actual damages under the DTPA to filed a cause of action, can also recover for mental anguish

1. fit into the laundry list § 17.46: misrepresentation is "producing cause" (odometer change, advertising going out of business sale when actually not, pyramid schemes, price increase during disaster period)
2. Breach of Warranty- we look outside the DTPA to see if there is a warranty, if a warranty has been disclaimed then there has been no warranty
3. Any unconscionable act § 17.45 – grossly unfair… representing that the agreement confers rights which it does not
4. Violation of Texas insurance code
5. False, misleading information known at the time to be false that mislead the consumer. Misrepresenting quality, grade, model…etc. Representing that the goods have qualities that they do not have ( if misrepresents something then there is DTPA claim)

1. Different Causation Standard

• Producing Cause: to bring a suit under the DTPA you only need to show that the damages were the proceeding cause of the misrepresentation. This is an easier causation standard to meet than foreseeable and proximate cause (foreseeability --- proximate cause --- producing cause)

1. Innocent Act: Meaning that the seller innocently violated the deceptive act. Then consumer may recover economic damages only

• Can never get mental anguish damages for innocent act
• Can never treble (triple) these damages

1. Knowing Act (aware of falsity): the consumer can recover UP to trebled economic damages and mental anguish damages. (Only the economic damages are trebled)
2. Intentional Act: seller had specific intent that the consumer relied on misrepresentation. Can recover trebled damages for both the economic damages and the mental anguish damages. So, the whole amount is trebled in this case.

1. Attorney's Fees

• But, if consumer wins, consumer also gets attorney's fees, and court costs but if consumer loses he does not get attorney's fees but he does not have to pay the sellers attorney fees unless he brought claim in bad faith
• Contingency fees- awarding 1/3 of the fee is not fair, b/c statute only requires a reasonable attorney fee, so that is all the loser has to pay

1. Notice- consumer must give 60 days notice to the seller and state the amount sought, by including all attorney fees expended to date. This is to give seller an opportunity to settle. If seller offers to settle for the amount consumer wants, the consumer must accept.
2. Settlement Offers- If seller makes a settlement offer and the case still goes to trial and damages are not found to be much more than the offer, then consumer will recover either the amount of the settlement or the amount decided by the jury.
3. Exemptions- the DTPA does not apply to the following cases

1. Written Contract claim for more than $100,000 where the person had an attorney and the contract was not residential.
2. No claim for more than $500,000 - unless it is your residence
3. If settlement offer is the amount that you say you are damaged, must accept
4. If the settlement amount was fair and you did not take it then you will not recover attorney fees

Gormely v Stover

• Rule: You cannot bring a negligence claim for personal injury damages or death against a health care provider under the DTPA unless the alleged DTPA claim is not based on the physician breaching the required standard of care of the medical profession— then it is the underlying nature of the action that determines whether the patient ca sue under the DTPA
• This rule is only limited to negligence, this still leaves warranty
• In general the DTPA does not apply to te rendering of professional services the essence of which is the providing of advice, judgment, opinion or so, unless there is a misrepresentation or failure to disclose, Unconscionability, breach of express warranty…etc.
• Lawyers can be sued under the DTPA only for failure to disclose information or an express misrepresentation or express warranties. (must be a misrepresentation, not just something that requires judgment by the attorney)

1. Prevention & Cooperation: all courts read all contracts as containing an implied condition that the parties will act in good faith and will not hinder or prevent the other party from performing. There must be a K in order for there to be a duty of good faith
2. Wrongfulness: the prevention or hindrance must be wrongful; however, this does not require a showing of bad faith or malice; just a showing that the other party would not have reasonably anticipated such conduct, whatever its motivation.
3. Must act in good faith when rejecting goods and satisfying conditions

• The court requires expressions of dissatisfaction to be made in good faith
• Courts use an objective test to decide whether a reasonable person would have been satisfied with the goods. They do this because there are set standard, and there is ma more utilitarian approach. The clarity of the parties as to subjectivity will also come in to show intent, when the parties explicitly make it a subjective test if both parties agree to it

• Must also make a good faith effort to secure a loan when this is a condition precedent to a party's performance. This applies to all conditions proceedings the party must make a reasonable and good faith effort to satisfy the condition

1. Some instances require subjective test: matters of personal taste or fancy. self portraits are an example; the other party must know it is a subjective decision based on personal taste.

• Although these contracts look like illusory the parties both have an obligation under the K, he must at least look at the portrait and in good faith say he doesn't like it.

1. UCC: under the UCC, it is an objective test using "reasonable commercial standards" (UCC 2-103)- good faith of a merchant is honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade
2. Employment at will: in at will employment contracts a person could get fired for no reason at all, but the legislature has limited at will discharges by protecting employers form discrimination firings. Many states say that the resumption of at will contracts can be altered by stmt in employee handbooks or manuals, or by other K theories such as promissory estoppel, or implied covenant of good faith or policies established by the employer

• Although he did not meet the quotas it was the employee who prevented him from performing thus his non-performance is excused
• He still could have a cause an action not for the termination but for the performance b/c seller misrepresented that the items were good

1. Satisfying 3^rd parties

• This happens often in construction k- engineers or architects
• The purpose of having a 3^rd party decide is to get their subjective view on the decision. So it is a subjective test; but, if there is evidence of bad faith, then we will bring in others, to see if it meets an objective standard.

1. Implicit agreement not to interfere with other party

• There is a duty to perform in good faith, that also means that one will exercise best efforts to sell or try to perform- service stations across the street
• In all contracts there is an implicit agreement by each party to not interfere with the other party's ability to perform the contract.
• A party can not intentionally and purposefully do any thing to prevent the other party from performing, and he then may not recover damages for the breach
• This case was different b/c he did not know that when he bought from other party he was diminishing the supply of the market that is why he could still recover, so they were not acting in good faith

1. Conduct that makes the other party's performance more difficult

• one parties makes performance more difficult by making other purchases that decreased the supplied of those goods available
• A party's action that only makes the other party's performance more difficult will not release the party that must perform from doing so, when the party causing the difficulty does so in good faith and does not intend to interfere then no release. If in bad faith, then this would amount to a breach due to interference

1. EQUITABLE REMEDIES

1. when the legal damages for the breach are inadequate

1. when damages are unascertainable- tough to calculate w/ certainty
2. When the subject of the contract is unique

• real property- there is a presumption real property is unique, this is for buyers mostly, the seller has a hard time proving but the law is nice and it allows either party to get SP, this is the mutuality argument, though in most jurisdictions this requirement has been defeated
• Examples-Hope diamond, Marilyn Monroe dress, personalized property such as art, jewelry, antiques

1. Advantages: Outcome will protect the parties reliance interests b/c they will receive the benefit of the bargain.
2. Disadvantages: Supervision by the court - must make sure they do it
3. Factors used in determining if specific performance should be granted

1. UCC—Goods

• Output contracts are usually given SP when the K requires a particular available source

1. Temporary Injunctions: only granted if

1. DEFENSES to Specific Performance(SP):

1. Personal Services and Employment contracts:

1. It is undesirable to compel continuation of a personal relationship after a dispute- lose trust
2. it amounts to involuntary servitude
3. It is hard to supervise the performance of the contract. (hard to enforce the quality of their performance)

• SP is almost never granted for construction Ks

1. COVENANT NO TO COMPETE

1. Courts will enforce these and grant injunction as long as they are not unreasonable in terms of time and geographic location, or subject matter
2. If you get injunction you don’t get the injunction and vice versa unless there was some competition b/f trial

1. LIQUIDATED DAMAGES AND LIMITATION OF REMEDIES

1. Liquidated damages- clauses that specified the amount to be paid in case of a breach

• The party invoking the clause has the burden of proof that: (the test is one or two but some jurisdictions examine 2 and 3)

1. The clause must be a reasonable forecast of the actual damages the reasonable forecast is measured at the time the contract was made. The amount of liquidated damages must bear a reasonable proportion to the probable loss
2. The damages have to be difficult to determine- the amount of actual could not or was very difficult to be determine by the parties at the time of the K was made.
3. Intent- only some jurisdictions will focus on the intent of the parties
4. Clause was not intended as a penalty for breach- amount in the clause can not be grossly disproportionate to the probable loss

1. Under the UCC: liquidated damages are allowed under the same conditions of the CL, but any limitation of damages when personal injury is involved is prima facie unconscionable. The UCC also allows you to limit the damages recoverable to return the goods or to replace or repair…etc. UCC looks also at either the reasonable forecast OR the actual lost.

1. ASSIGNMENT AND DELEGATION

• So, Betty has a right to receive the bananas (obligee) and a duty to pay for them
• Sam's has a right to receive money (obligee) and a duty to deliver the bananas

• So, Sam's is the obligor and Betty is the obligee and assignor
• Bob is the assignee
• If Betty was getting the goods on credit, then Sam did not extend credit to Bob, so in that case the assignment may be invalid b/c that is a change in the K, same goes if he sells to a guy in San Antonio, burden to big

1. Notice

• The rights vest at the time the notice is given
• A debtor is not affected by an assignment until he has CLEAR notice.
• If he pays to the assignor in ignorance of the assignment he is relieved form liability and he may set up against the assignee any defense acquired prior to notice which he would have available against the assignor had there been no assignment.
• After notice he is liable for paying to the assignor what is due to the assignee.
• The UCC also requires a notice.
• A party can set off- discount – money due to him when the other party owes him money but if the second party assigns his rights then if the first party was given notice before the money was due then he can not set off that the 2^nd party owes him

1. Gratuitous Assignments

These can be made as long as the assignment is in writing or is accompanied by delivery of a something that is customarily accepted as a symbol or as evidence of the right assigned. (Any instrument that shows the assignee has the right to collect). But the person can always take the assignment back if not in writing

2. Assignment of Future Rights

1. Can only be assigned if you have a job or a K and have not earned the money yet but have a right to it. If you have no job or not contract you have nothing to assign
2. But, you could contract with the bank to give you money and then the first job you get you will pay them back. This is different b/c you are NOT making an assignment, rather you are making a contract. You don’t have any thing, you don’t have any thing to assign. Assignment gives ownership, and it is a better right, contract does not.

1. UCC- §2-210- DELEGATION of Performance and ASSIGNMENTS of Rights

• A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. **NO delegation of performance relieves the delegator of any duty to perform or any liability for breach.
• The UCC also requires that the K not be alter in a way that may change the duties of the parties or create burdens.
• If an assignment that delegates performance creates reasonable grounds for insecurity, the obligee can request assurance under §2-609
• *** UCC is different from CL in that you can NOT prohibit assignments of a right to future payments of money $
• under UCC assignment really means that duties can not be delegated rather than rights can not be assigned

1. DELEGATION OF DUTIES

1. R2K §318- follows the UCC delegation language, delegation permissible unless substantial interest in having original person perform, and it does not release the assignor of any duties unless agreed by the parties that it will.

• Personal services— A party can NEVER delegate a personal service contract
• Question: If a contract is assigned does this mean that both the rights under the contract are assigned, and the duties under the contract are delegated? Yes; presumption that when a contract is assigned, both the rights and duties are transferred

• Rule: in general there is a presumption that duties can be delegated UNLESS there is a reason why the non-assigning party would find performance by another substantially different from what he bargained for.
• There was a conflict of interest b/c the delegatee is the competitor of the obligee. The obligor was under a contract to used their best efforts, and not the best efforts of some third party)

1. Two types of TPB: there are only two types of TPB the K must be made primarily for the 3^rd persons benefit, otherwise she is only an incidental beneficiary and cannot enforce the K

1. Donee- this is a gratuitous gift out of love and affection; as long as there is consideration in the original contract, then it is enforceable.
2. Creditor- the person owes the TPB a debt

1. Elements of TPB rule:

1. The original k that the parties entered into has a valid consideration