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Contracts
SUNY Buffalo Law School
Su, Rick

Contract Law Outline
Fall 2016
Prof. Su
 
CONTENTS:
 
Chapter 1: An Overview of Contract Law (3)
Purpose, Sources, Enforcing Promises; Unconscionability; Theories: Efficiency, Autonomy, Fairness, Administrablity (4); Indefinite Promises/Open Terms; Consideration (5); Performance of Obligation (6): Idiosyncratic Bargainer, Standards of Performance (Perfect Tender v. Substantial Performance), Default Rules/Opting Out; Allocation of Risks (6); Excuses for Nonperformance (7): Changed Conditions, Unanticipated Costs, Foreseeability, Impracticability, Impossibility, Frustration; Damages: Expectancy, Reliance, and Restitution (8); Efficient Breach; Specific Performance; Limitations on Compensation (9): Mitigation Principle, Foreseeability
CB:      1-4; 14-23; 52-57; 23-52; 66-94; 94-124
 
Chapter 2: Enforcing Promises (10)
Introduction (10); Consideration (10); Adequacy of Consideration (11); Unconscionability (12); Mutuality of Obligation (12): Bilateral v. Unilateral; Promissory Estoppel (12): Family v. Employment Reliance (13), Promissory Estoppel v. Consideration (14)
CB:      131-151; 152-183
 
Chapter 3: The Bargain Context (15)
Introduction (15); Offer & Acceptance (15): Tests of Mutual Assent, Requirements for O&A; Acceptance (16): Methods of Acc. (16), Communication of Acc. (17), Bilateral v. Unilateral (17), Silence as Acc. (17), Mailbox Rule (17); Revocation of Offers (18): In General, Irrevocable (Option Contracts, Firm Offer, Construction Bids); Offer and Counteroffer (19): Intro, Mirror Image Rule, Last Shot Doctrine, Battle of the Forms, Rules v. Standards
CB:      203-246 (skip Bailey v. West; Lucy v. Zehmer; and Ciaramella v. Reader’s Digest Ass’n); 246-278
 
Chapter 4: Contractual Relationships and Conduct (21)
Introduction; Preliminary Negotiations (21); Indefinite Agreements (22); Binding Preliminary Agreements (22); Output, Requirements, & Exclusive Dealings (23); Modification of Existing Agreements (24): Pre-existing Duty, Good Faith, Modification Rules and Risk Allocation (25)
CB:      281-316; 316-336; 380-389
 
Chapter 5: Regulating the Bargaining Process (26)
Introduction; Doctrines (26): Fraud, Duress, Capacity; Duress (26): Reasonable person (27), Circumstantial Economic Duress (27), Ex Ante/Ex Post Duress (28); Fraud (28): Willful & Negligent Misrepresentation, No-Reliance Clauses, Liability/Remedy for fraud (29), Concealment & Disclosure (29), Caveat Emptor, Misrepresentation v. Concealment, Mandatory Disclosure (30); Public Policy (30): Illegality, Immorality (31); Unconscionability (31): Procedural v. Substantive (32), Unequal bargaining powers, Arbitration Clauses (33); Statute of Frauds (33): Promissory Estoppel (34), Predominant purpose (34)
CB:      401-437; 448-464; 480-501; 501-533
 
Chapter 6: Identifying and Interpreting the Terms of a Contract (35)
Introduction (35): Parol Evidence Rule, Integration of terms, Common Law Natural Omission, Four Corners, Merger clause, UCC Hard v. Soft PE Rule, Common Law Plain Meaning (36), UCC Context (36); Identifying Terms, CL v. UCC (36-37); Interpretation of Terms (38): Common Law & Peerless v. UCC (39)
CB:      537-568; 568-584; 593-609
 
Chapter 7: Defining the Terms of Performance (41)
Introduction: Procedural v. Substantive Performance; Implied Conditions (41): Allocating Risk, Implied/Constructive Exchange, Anticipatory Repudiation (42), Divisibility (42); Express Conditions (42): Bright-line rules v. Standards, Conditional Clauses (43), Pay-If-Paid Clauses, Condition Precedent v. Condition Subsequent (43); Modification, Waiver, Election, & Estoppel of Conditions (44); Performance Standards (45): Express Warranties (45), Implied Warranties (46), Warranty Disclaimers (46); Measuring Compliance (47): Substantial Performance (47), Perfect Tender & Cure (48)
CB:      613-636; 636-669; 670-687
 
Chapter 8: Mistake and Excuse (50)
Mistaken beliefs about facts at time of agreement (50); Impossibility (50); Impracticability (51); Frustration of Purpose (51)
CB:      691-710; 759-772; 727-747; 752-759
 
Chapter 9: Conduct Constituting Breach (53)
Anticipatory Breach (53); Insecurity & Right to Demand Assurances (54)
CB:      775-797; 811; 818-829
 
Chapter 10: Remedies (56)
Expectation Damages (56); Specific Performance (56); Reliance Damages (57); Restitution Damages (57); Quasi Contracts (58); Punitive Damages (58); Lost Volume Seller (58); Limits on Compensation (59); Avoidable Damages (59): Duty to Mitigate (59); Liquidated Damages (60)
CB:      841-877; 877-907; 914-921; 929-957
 
 
 
An Overview of Contract Law
 
Introduction The Purposes of Contract Law (1)
Some promises are enforced and others are not.
 
The Sources and Functions of Contract Law (2)
Sources: (2)
 
 
Common Law
Functions: (3)
Sorting which promises to enforce
Gap-filling for incomplete details
 
Enforcing Promises (4)
What is a Promise?
Restatement §§ 1, 2, 4
Lucy v. Zehmer; Sup. Ct. Vir., 1954 (14)
: The objective, outward expression of a party’s intent to be bound in an agreement, as opposed to that party’s subjective mental assent to the agreement, is all that matters when determining the existence of a valid and enforceable contract.
Key facts: Zehmer’s outward actions, when interpreted by a reasonable person, indicate a willingness to be bound in his agreement to sell his farm to Lucy, and Lucy is thus entitled to specific performance of that agreement.
Reasonable Belief (18)
Leonard v. PepsiCo., 1997
Key facts: Harrier Fighter Jet
Value of Lucy Ferguson Farm (19)
Objective v. Subjective Intent (21)
Instant reaction = fine, no reliance
 
Limitations on Enforcement: Unconscionability (52)
UCC § 2-302
Williams v. Walker-Thomas Furniture Co. I; Dist. Col. Ct. App., 1964 (53)
: One who signs a contract has a duty to read it or to have someone else read and explain it to him.
Key facts: One who signs a contract has a duty to read it or to have someone else read and explain it to him. One who refrains from reading the contract and, in conscious ignorance of its terms, voluntarily assents to the contract may not later be relieved of the negative consequences of entering a bad bargain.
Williams v. Walker-Thomas Furniture Co. II; U.S. Ct. App., Dist. Col. Cir., 1965 (55)
: When an element of unconscionability is present at the time of contract formation, the resulting contract is not enforceable.
Key facts: When an element of unconscionability exists when the contract is formed, the contract is not enforceable. “Unconscionability” is defined as the absence of meaningful choice on the part of one of the parties to a contract, combined with contractual terms which are unreasonably favorable to the other party.
 
Introduction to Theories of Contract Law (23)
 
 
 
ADMINISTRABILITY
 
Autonomy Theories (24)
Ex post perspective (26

ng outside. If a patron stood outside, a Pioneer employee would inform him of the name called and he would have a limited time from the time his name was called to redeem the prize. During one of the bank nights, Mr. and Mrs. St. Peter entered the drawing and stood outside Pioneer’s theatre waiting for a name to be called.
More on Consideration (51)
Contract v. Gift (52)
 
Performance of the Obligation (66)
Idiosyncratic Bargainer (66)
Jacob & Youngs, Inc. v. Kent; Ct. App. N.Y., 1921 (66)
: A party who substantially performs its obligations under a contract is entitled to expectation damages based on full performance of the contract, minus an offset for defects in the party’s performance.
Key facts: Jacob & Youngs (Jacob) (plaintiff) is a general contractor that built a country residence for Kent (defendant). The contract stated that Jacob was to be paid $77,000, and one specification in the contract was that all pipes used be manufactured in Reading, Pennsylvania. Jacob completed work in June 1914. In March 1915, Kent noticed that some of the pipe was manufactured in other places besides Reading. Kent demanded the pipe be replaced. Replacement of the pipe, however, would require substantial additional work and expense by Jacob. Additionally, the existing pipe was of the same quality as Reading pipe and was supplied based on an innocent mistake by Jacob caused by the inattention of its subcontractor.
Conditions and Dependent Promises (70)
Standards of Performance (70)
Perfect Tender
UCC § 2-601
Substantial Performance
Default Rules, “Presumed Intentions,” and Opting Out (72)
Justification of Default Rules (73)
 
Allocating Risks (74)
Stees v. Leonard; Sup. Ct. Minn., 1874 (74)
: If a person enters into an express contract to perform a certain act, he is bound by that contract unless he can establish absolute impossibility of the required performance.
Key facts: Stees (plaintiff) entered into a contract with Leonard (Leonard) (defendant) for the construction of a three-story building on Stees' lot. The contract contained plans and specifications for the building to be erected, including details regarding the thickness of the foundation walls and the size and location of the footings. On the first two attempts to construct the building, the building collapsed after reaching the height of three stories. After the second collapse, Leonard refused to do any further work under the contract. Stees commenced an action against Leonard to recover damages resulting from Leonard's failure to complete the building. Stees alleged that the collapse was due to Leoanard's negligent work and the poor quality of the materials used. Leonard alleged that the collapse was caused by the soil.