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Contracts II
South Texas College of Law Houston
Carlson, Richard R.

Contracts II Outline

Professor Carlson

Spring 2014

Process/Calculations

· Expectation interest is always the favored method. Need compelling reason to not afford expectation damages prior to considering other methods.

Specific Performance:

· Ordering of a party to do something, deliver something, perform in some way

· Disfavored because:

o Inherent restriction of freedom for force to do a service

o Poor performance due to passive aggressive behavior (coerced behavior)

o The good may no longer be available (in the hands of a third party)

o Substitute transaction might be more efficient and able to place party in same position as before

o Are the terms now unconscionable: important consideration for the court. (only needs to be unfair, not necessarily unconscionable)

· Substitute performance is inadequate below.

o Proof of the $ amount of loss is impossibly/very impractical

o Land (always considered unique. Some objects are objectively (or subjectively unique)(inc. Every condo)

§ 1) is the good unique? 2) is it impractical to provide relief by damages

o Covering the undelivered good may be impossible or impractical

· Specific Performance related to good. U.C.C.2-716

o Good is 1)unique or 2) other proper circumstances (often efficiency)

§ Expanded view to allow more specific performance.

§ Narrow view (basically identical to CL, is it impractical to provide relieve by sub. Perf)

o Substitute does not have to be identical, but rather serve buyer’s purposes

Award DAS

Award SP

Appraising even not fungible goods is possible based on comparable

If seller still possess it ordering delivery is generally simple

If a comparable is still different, modify it and recover cost as damages

Specific performance will not require monitoring

If seller free to sell the thing before during the trial, resale evidences the value

Avoids need to compare inexact comparable

Permits efficient breach

Avoids length battle of experts and facts re: the fair market value.

· Negative injunctions

o Does not force performance, but prevents performance as per the contract

o 1) practical prohibit action 2) worthwhile to prevent ‘other losses’

o 1) the service is unique 2)damages are difficult to prove 3) contract prohibits an act 4)prohibition prevents other losses.

o Must consider 1)fairness 2)effect on other parties

§ Difficult v. Impractical? Do not need to prove negative injunction needed to prevent other loss

Specific performance

commercially reasonable amount of time

o Generally the best and easiest assessment of value

o Complaints from the supplier regarding cover

§ Is the substitute really an upgrade

§ Did it come with extra warranties or better delivery and payment terms

§ If buyer is trader/dealer can we know which later purchases is the cover

§ Risk of sham contract with associates

§ 2-712 cover must be reasonable, in good faith (but good faith presumed)

§ Buyer can still opt for market value

Limitations for fixed prices contracts. (Fixed fee based on quantity)

· “back to back fee based contract”

· Where the seller is just an intermediary, the court will not examine just the fixed fee to determine the value gained by the company. UCC 2-713

· Policy

o Difficult to prove the loss in volume

o Denial of damages in this situation would encourage further breaches

o Contracts to the resellers, dealers, and coops might be illusory and unenforceable leaving the intermediary bearing the entire loss on both sides.

Buyer accepts INCOMPLETE PEFORMANCE

o Buyer may have no choice but accept (certain services-construction)