CONTENTS

Preface xxxiiiAcknowledgments xxxixAuthors’ Note xli

1 INTRODUCTION TO CONTRACTS 1A. An Introduction to the Study of Contract Law 1

1. The Legal Definition of Contract 12. The Sources, Nature, and Traditions of Contract Law 23. The Doctrine of Precedent and Case Analysis 54. The Role of Scholarly Commentary 115. Theoretical Perspectives on Contract Law 136. International Perspectives on Contract Law 18

B. What Makes an Agreement into a Contract 19

C. The Enforcement of Contracts: An Introduction toRemedies 211. Damages or Specific Performance: An Introduction to the

Distinction Between Law and Equity 21Kakaes v. George Washington University 23& Questions 27& Problem 1.1 27& Questions 28& Problem 1.2 29

2. Expectation Damages 29& Questions 29& Problem 1.3 31& Problem 1.4 31

3. The Method of Enforcing an Award of Damages 32

2 SALES OF GOODS 33A. An Introduction to Article 2 33

1. The Creation of the Uniform Commercial Code 332. The UCC Provisions Covered in This Course: Articles 1 and 2 35

xi

3. Revisions of the UCC 354. The Style and Jurisprudence of the UCC 36

UCC 1-103(a). Construction of [Uniform Commercial Code]to Promote Its Purposes and Policies . . . 36

5. Working with Article 2 376. The Organization of Article 2 and the Citation of Code Sections 387. The Official Comments to the UCC 38

B. The Scope of Article 2 39Audio Visual Artistry v. Tanzer 39& Questions 46& Problem 2.1 47& Problem 2.2 49

C. The Applicability of Article 2 to Sales of Intangible Rights,Especially Software and Other Intellectual Property 50

Conwell v. Gray Loon Outdoor Marketing Group, Inc. 51& Questions 54& Problem 2.3 55

D. Merchants and Article 2 55UCC 2-104(1). Definitions: ‘‘Merchant’’ . . . 55Zaretsky v. William Goldberg Diamond Corp. 57& Problem 2.4 61

E. International Sales of Goods and the CISG 61

3 CONTRACTUAL ASSENT AND THEOBJECTIVE TEST 63A. The Objective Standard for Determining Assent 63

Morales v. Sun Constructors, Inc. 65SR International Business Insurance Co., Ltd. v. World TradeCenter Properties, LLC 68& Problem 3.1 71

B. The Determination of Objective Meaning: The ReasonablePerson Construct 72

& Problem 3.2 72

C. The Duty to Read 731. The Duty to Read Standard Terms 73

James v. McDonald’s Corporation 74& Questions 76

2. Arbitration and Forum Selection Provisions in StandardContracts 78

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3. Boxtop and Shrinkwrap Terms 80& Problem 3.3 81

4. The Duty to Read Standard Terms in a Web-BasedTransaction: Clickwrap and Browsewrap Terms 81Nguyen v. Barnes & Noble Inc. 82Feldman v. Google, Inc. 87& Questions 88& Problem 3.4 89& Problem 3.5 89

D. Tricky Jokes 90Lucy v. Zehmer 90Leonard v. PepsiCo, Inc. 95

4 THE OFFER 101A. The Process of Contract Formation 101

1. The Offer and Acceptance Model 1012. An Overview of the Process of Contract Formation 102

B. The Nature and Qualities of an Offer 1031. The Definition of ‘‘Offer’’ at Common Law 1032. Offers Under UCC Article 2 104

UCC 1-103(b). . . . Applicability of Supplemental Principlesof Law 104UCC 2-204. Formation in General 104

3. Interpreting the Intent of a Communication to DetermineWhether It Is an Offer 105Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc. 105Babcock & Wilcox Company v. Hitachi America, Ltd. 108& Questions 114& Problem 4.1 114& Problem 4.2 115

C. Is an Advertisement an Offer or a Solicitation? 1151. What Makes a Proposal an Offer Rather than a Solicitation? 115

Leonard v. PepsiCo, Inc. 118Sateriale v. R.J. Reynolds Tobacco Company 121& Questions 126& Problem 4.3 126

2. The Remedial Issues in Lefkowitz, Harris, and Leonard 126& Question 128

D. Offer and Acceptance Through Electronic Media,Especially by Automated Means (Electronic Agents) 128

E. Offers Under the UNIDROIT Principles and CISG 130

Contents xiii

5 ACCEPTANCE 131A. General Principles of Acceptance 131

Restatement, Second §30. Form of Acceptance Invited 131UCC 2-206(1)(a). Offer and Acceptance in Formation ofContract 132

1. The Acceptance Must Be Communicated to theOfferor 133

2. The Acceptance Must Be in Compliance with AnyInstructions in the Offer Relating to the Manner andMethod of Acceptance 133

3. The Acceptance Must Not Vary the Terms of the ContractProposed in the Offer 134

4. The Acceptance Must Occur While the Offer Is Still inEffect: Lapse or Termination of the Offer 135

5. The Effective Date of Acceptance and the ‘‘Mailbox’’Rule 137& Problem 5.1 138& Problem 5.2 139

B. Interpretation of the Substantive and ProceduralRequirements of Acceptance 140

Roth v. Malson 140& Questions 144Trinity Homes, LLC v. Fang 144& Problem 5.3 146& Problem 5.4 147

C. Inadvertent Manifestation of Acceptance 148Anderson v. Douglas & Lomason Company 150& Questions 153

D. Silence as Acceptance 154Pride v. Lewis 154

E. Revocation of an Offer 158Hendricks v. Behee 159& Question 160& Problem 5.5 160Dickinson v. Dodds 161& Questions 163& Problem 5.6 163

F. Acceptance by Performance: Unilateral Contracts 1641. The Distinction Between Unilateral and Bilateral Contracts 164

& Problem 5.7 166

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Carlill v. Carbolic Smoke Ball Co. 167Leonard v. PepsiCo, Inc. 168& Question 170& Problem 5.8 170& Problem 5.9 171& Problem 5.10 171

2. Performance as an Exclusive or Permissive Method ofAcceptance 172& Problem 5.11 173

3. Shipment as Acceptance of an Offer to Buy Goods 173UCC 2-206(1)(b). Offer and Acceptance in Formation of Contract 173& Problem 5.12 174

4. Communication of Acceptance by Performance 1755. Acceptance of an Offer by an Act That Cannot Be

Accomplished Instantaneously 176Restatement, Second §45. Option Contract Created by PartPerformance or Tender 176Restatement, Second §62. Effect of Performance by OffereeWhere Offer Invites Either Performance or Promise 177& Problem 5.13 177

G. The Offer and Acceptance Model in Perspective 177

H. Acceptance Under the UNIDROIT Principles and the CISG 178

6 CONFLICTING STANDARD TERMS, THEBATTLE OF THE FORMS, AND LATENOTICE OF STANDARD TERMS 181A. The Common Law Approach to Conflicting Standard Terms 181

B. The Battle of the Forms—UCC 2-207 1831. The Rationale and Aim of UCC 2-207 1832. The Structure and Operation of UCC 2-207 184

UCC 2-207. Additional Terms in Acceptance orConfirmation 184Lively v. IJAM, Inc. 189& Questions 192Polytop Corporation v. Chipsco, Inc. 192& Problem 6.1 196& Problem 6.2 196& Problem 6.3 198& Problem 6.4 199& Problem 6.5 199& Problem 6.6 200

Contents xv

C. Standard Terms Revealed After Goods or Services AreOrdered: ‘‘Cash Now, Terms Later,’’ ‘‘Shrinkwrap’’ Terms,and ‘‘Rolling Contracts’’ 201

ProCD, Inc. v. Zeidenberg 202& Questions 206DeFontes v. Dell, Inc. 208Schnabel v. Trilegiant Corporation 214& Questions 221& Problem 6.7 221

D. The UNIDROIT Principles and CISG Provisions on theBattle of the Forms 223

7 PRELIMINARY, INCOMPLETE, ANDINDEFINITE AGREEMENTS 225A. The Scope of This Chapter 225

B. Preliminary Agreements 2251. Preliminary Agreements that Contemplate the Ultimate

Execution of More Final Documents 227Brown v. Cara 227& Questions 233Cochran v. Norkunas 234& Problem 7.1 238

2. Agreement to Agree: Deferred Contract 239Arbitron, Inc. v. Tralyn Broadcasting, Inc. 240& Problem 7.2 246& Problem 7.3 247

C. The Problem of Indefiniteness or Vagueness in anAgreement 247

Baer v. Chase 248& Questions 250& Problem 7.4 251

D. The Tort of Interference with Contract Relations: Liabilityfor Enticing a Party to Breach a Contract or a PreliminaryAgreement 253

8 THE STATUTE OF FRAUDS 255A. The Basic Principle 255

B. The Requirements of the Statute 256Restatement, Second §131. General Requisites of a Memorandum 257

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1. Writing or Record 2572. Signature 2583. Content 259

C. The Methodology of Applying the Statute 259

D. An Overview of the Six Types of Contract Covered by theTraditional Statute of Frauds 2601. Contracts to Answer for the Debt or Obligation of Another 2602. Contracts of Executors or Administrators to Answer for the

Duty of Their Decedents 2613. Contracts Made upon Consideration of Marriage 2614. Contracts for the Sale of Land or the Transfer of an Interest in Land 2615. Contracts That Cannot Be Performed Within a Year of Execution 2626. Contracts for the Sale of Goods for the Price of $500 or More 262

& Problem 8.1 263

E. Contracts at Common Law: Sales and Transfers of Land andContracts Not Performable Within a Year of Execution 2631. Sales and Transfers of Land 263

& Problem 8.2 263Cooke v. Goethals 265& Questions 269

2. Contracts Not Performable Within One Year of Execution 269Mackay v. Four Rivers Packing Co. 271& Questions 274& Problem 8.3 275& Problem 8.4 276

F. The Statute of Frauds Relating to the Sale of Goods 276UCC 2-201. Formal Requirements; Statute of Frauds 276International Casings Group, Inc. v. Premium Standard Farms, Inc. 277& Problem 8.5 280

G. The Approach of the CISG and UNIDROIT Principles to theStatute of Frauds 281

9 CONSIDERATION 283A. Consideration—The Basic Doctrine 283

1. Introduction to Consideration Doctrine 283Restatement, Second §17. Requirement of a Bargain 284Restatement, Second §71. The Requirement of Exchange;Types of Exchange 285

2. The ‘‘Benefit of Detriment’’ Test 285Congregation Kadimah Toras-Moshe v. DeLeo 286& Questions 287

Contents xvii

Hamer v. Sidway 288& Questions 291

3. The Bargain Theory of Consideration 291Steinberg v. United States 292& Question 296& Problem 9.1 296Pennsy Supply v. American Ash Recycling Corp. 297& Questions 302& Problem 9.2 303

4. The Elusive Purpose of Consideration Doctrine 303Carlisle v. T&R Excavating, Inc. 306& Questions 311& Problem 9.3 312

B. What Suffices as Consideration 3121. Adequacy of Consideration 313

Kessler v. National Presto Industries 3142. Preexisting Duties 317

Restatement, Second §73. Performance of Legal Duty 318White v. Village of Homewood 319& Questions 321& Problem 9.4 321& Problem 9.5 322& Problem 9.6 323

3. Agreements to Settle Disputed Claims or Defenses 324Restatement, Second §74. Settlement of Claims 326Fiege v. Boehm 326& Questions 330& Problem 9.7 331

C. Mutuality and Its Limits 3311. Performance as Consideration 332

& Problem 9.8 3332. Promises as Consideration 334

Wood v. Lucy, Lady Duff-Gordon 336& Questions 338

D. Consideration in the International Context 338

10 PROMISSORY ESTOPPEL 341A. An Overview of Promissory Estoppel 341

1. The Origins and Nature of Promissory Estoppel as a Theoryof Recovery 342Restatement, Second §90. Promise Reasonably InducingAction or Forbearance 344

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& Problem 10.1 3442. The Theoretical Context of Promissory Estoppel and Why It

Matters 345Cohen v. Cowles Media Co. 348& Questions 353

B. Use of Promissory Estoppel to Enforce Gratuitous orCharitable Promises 353

Conrad v. Fields 354& Questions 357& Problem 10.2 359In re Morton Shoe Company 361& Questions 363

C. Promissory Estoppel in the Broader Context of aBargain 364

& Problem 10.3 3651. Promissory Estoppel in Commercial Negotiations 366

& Problem 10.4 367Garwood Packaging, Inc. v. Allen & Company, Inc. 369& Question 373

2. Promissory Estoppel and the Statute of Frauds 373Restatement, Second §139. Enforcement by Virtue of Actionin Reliance 373& Questions 373McIntosh v. Murphy 374& Questions 378& Problem 10.5 379

D. Remedies in Promissory Estoppel Actions 380Tour Costa Rica v. Country Walkers, Inc. 381& Questions 387& Problem 10.6 388

11 OPTIONS AND FIRM OFFERS 389A. Option Contracts 390

& Problem 11.1 391

B. Promissory Estoppel and Offers 392Drennan v. Star Paving Co. 393& Questions 396& Problem 11.2 397Restatement, Second §87. Option Contract 398& Question 399

Contents xix

C. Firm Offers Under the UCC 399UCC 2-205. Firm Offers 399& Problem 11.3 399& Problem 11.4 400

D. Provisions in the UNIDROIT Principles and CISG on theRevocability of Offers 400

& Question 401

12 OBLIGATION BASED ON UNJUST ENRICHMENTAND MATERIAL BENEFIT 403A. Unjust Enrichment 403

1. The Relationship Between Unjust Enrichment and Contract 4032. The Elements of Unjust Enrichment 4043. Terminology 4074. The Distinction Between Factually and Legally Implied Contracts 407

Martin v. Little, Brown & Co. 408& Questions 411& Problem 12.1 411& Problem 12.2 412& Problem 12.3 413Feingold v. Pucello 413& Questions 415

5. Volunteers and Intermeddlers 416Birchwood Land Company, Inc. v. Krizan 416& Problem 12.4 420

B. The Application of Unjust Enrichment Principles toPromises for Past Benefits: The ‘‘Moral Obligation’’ and‘‘Material Benefit’’ Doctrines 421

Restatement, Second §86. Promise for Benefit Received 422& Questions 423& Problem 12.5 424

13 POLICING CONTRACTS FOR IMPROPERBARGAINING 427A. General Introduction to the Doctrines in This Chapter 427

B. Fraudulent Misrepresentation 4281. The General Principles and Elements of Fraud 428

Restatement, Second §160. When Action is Equivalent to anAssertion (Concealment) 429

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Restatement, Second §162. When a Misrepresentation IsFraudulent . . . 430

2. Affirmative Fraud 432Hodge v. Craig 432& Questions 436& Problem 13.1 437

3. Silence as Fraud: Fraudulent Nondisclosure and the Duty to Speak 438Restatement, Second §161. When Non-Disclosure IsEquivalent to an Assertion 439Kaloti Enterprises, Inc. v. Kellogg Sales Company 439& Problem 13.2 445Milliken v. Jacono 446& Question 449& Problem 13.3 449

4. Misrepresentation of Fact, Opinion, or Prediction 451Rodi v. Southern New England School of Law 451& Problem 13.4 455

5. Misrepresentation of Intent 456& Problem 13.5 457

6. Justifiable Inducement and Contracting Out Of Fraud 458Psenicska v. Twentieth Century Fox Film Corp. 459& Questions 463

7. The Distinction Between Fraud and NegligentMisrepresentation 463

8. The Choice of Remedy for Fraud; Punitive Damages 4649. Fraud in the Inducement Distinguished from Fraud in the

Factum 465& Question 466

C. Duress 466Restatement, Second §175. When Duress by Threat Makes aContract Voidable 468Restatement, Second §176. When a Threat IsImproper 468& Problem 13.6 469& Problem 13.7 470Germantown Manufacturing Co. v. Rawlinson 471& Questions 475& Problem 13.8 476

D. Duress and Bad Faith in Relation to ContractModification 4771. The Interaction of Consideration and Duress Doctrines 477

City of Scottsbluff v. Waste Connections of Nebraska, Inc. 479& Problem 13.9 483

Contents xxi

2. Supervening Difficulties as a Basis for Upholding aModification Without Consideration 484

3. Contract Modifications Under UCC Article 2 485& Problem 13.10 486

E. Undue Influence 487

F. Unconscionability 4881. The Derivation and Meaning of ‘‘Unconscionability’’ 488

UCC 2-302. Unconscionable Contract or Clause 489Restatement, Second §208. Unconscionable Contract or Term 489

2. The Remedy Where a Contract or Term Is Found to BeUnconscionable 489

3. The Elements of Unconscionability 490& Problem 13.11 492& Problem 13.12 495Feldman v. Google, Inc. 496Lhotka v. Geographic Expeditions, Inc. 500Zuver v. Airtouch Communications, Inc. 506& Questions 513& Problem 13.13 514

4. The Range of Unconscionability Doctrine 515& Problem 13.14 516

5. Unconscionability and the Prohibition of Class Actions 517

G. An International Perspective 518

14 ILLEGALITY, VIOLATION OF PUBLIC POLICY,AND LACK OF CONTRACTUAL CAPACITY 519A. Introduction 519

B. Illegality 522& Problem 14.1 523& Problem 14.2 524Danzig v. Danzig 525& Questions 527& Problem 14.3 528

C. Contracts in Violation of Public Policy 529Woodman v. Kera LLC 530& Questions 533Syncom Industries, Inc. v. Wood 535& Questions 540& Problem 14.4 540

D. Incapacity Based on Minority 5411. General Principles 541

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2. Disaffirmance and Ratification 542Foss v. Circuit City Stores, Inc. 543& Questions 548I.B. v. Facebook, Inc. 549& Question 551

3. Misrepresentation 552Topheavy Studios, Inc. v. Doe 552

4. Exceptions to a Minor’s Lack of Capacity, EspeciallyContracts for Necessaries 553& Problem 14.5 555

5. Restitution on Disaffirmance 555

E. Incapacity Based on Mental Illness or Defect 557Restatement, Second §15. Mental Illness or Defect 558In re Seminole Walls & Ceilings Corp. 559& Questions 562Farnum v. Silvano 562& Questions 565& Problem 14.6 566

15 CONTRACT INTERPRETATION ANDCONSTRUCTION 569A. The Content of Contractual Obligations 569

B. Interpretation 5711. Sources of Contract Meaning 571

& Problem 15.1 572& Problem 15.2 572Restatement, Second §202. Rules in Aid ofInterpretation 573Restatement, Second §203. Standards of Preference inInterpretation 573UCC 1-303. Course of Performance, Course of Dealing, andUsage of Trade 574Terry Barr Sales Agency, Inc. v. All-Lock Company, Inc. 575& Questions 581

2. Interpretation of Written Agreements 582Right Field Rooftops, LLC v. Chicago Baseball Holdings, LLC 585& Questions 591& Problem 15.3 591Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co. 592& Questions 594White City Shopping Center v. PR Restaurants, LLC 595& Questions 597& Problem 15.4 598

Contents xxiii

3. Interpretation of Standard Contracts 598Atwater Creamery Co. v. Western National Mutual Insurance Co. 599& Questions 604& Problem 15.5 604

C. Construction of Contract Obligations 6061. Gap Fillers 607

Restatement, Second §204. Supplying an Omitted EssentialTerm 607UCC 2-311. Options and Cooperation RespectingPerformance 608Family Snacks of North Carolina, Inc. v. Prepared ProductsCo. 609& Questions 612& Question 614

2. The Example of Exclusive Dealings and Output andRequirement Contracts 614UCC 2-306. Output, Requirements and ExclusiveDealings 615& Problem 15.6 615& Problem 15.7 616

3. The General Obligations of Good Faith and Fair Dealing 618Restatement, Second §205. Duty of Good Faith and FairDealing 618UCC 1-304. Obligation of Good Faith 618United Airlines, Inc. v. Good Taste, Inc. 619& Questions 625

D. The Doctrine of Misunderstanding and Its Relation toContract Interpretation and Construction 625

Konic International Corp. v. Spokane Computer Services, Inc. 627& Questions 630& Problem 15.8 630

16 THE PAROL EVIDENCE RULE 631A. Introduction to the Parol Evidence Rule 631

B. Application of the Parol Evidence Rule 6361. The Evolution of the Parol Evidence Rule 638

Masterson v. Sine 641& Questions 647

2. Contemporary Approaches to the Parol Evidence Rule 647Myskina v. Conde Nast Publications, Inc. 647& Questions 652

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Lopez v. Reynoso 653& Questions 658& Problem 16.1 659& Problem 16.2 660

3. Application of the Parol Evidence Rule Under the UCC 661UCC 2-202. Final Written Expression: Parol or ExtrinsicEvidence 662& Problem 16.3 663

C. The Scope of the Parol Evidence Rule 665& Problem 16.4 666

Sound Techniques, Inc. v. Hoffman 669& Problem 16.5 673

D. Contract Interpretation and Parol Evidence Under theUNIDROIT Principles and the CISG 674

& Problem 16.6 674

17 MISTAKE AND EXCUSE DUE TOCHANGED CIRCUMSTANCES 677A. Mistake 678

1. Mutual Mistake 679Restatement, Second §152. When Mistake of Both PartiesMakes a Contract Voidable 680Restatement, Second §154. When a Party Bears the Risk of aMistake 680& Problem 17.1 680SCI Minnesota Funeral Services, Inc. v. Washburn-McReavyFuneral Corporation 681& Questions 686& Problem 17.2 687& Problem 17.3 689& Problem 17.4 690Estate of Nelson v. Rice 691Cherry v. McCall 694& Questions 696

2. Unilateral Mistake 696Bert Allen Toyota, Inc. v. Grasz 698& Problem 17.5 701& Problem 17.6 702

3. Mistake in Expression and Reformation 703

B. Excuse Due to Changed Circumstances 7051. Impracticability 706

Contents xxv

Restatement, Second §261. Discharge by SuperveningImpracticability 707CNA International Reinsurance Co. v. Phoenix 707& Questions 709UCC 2-615. Excuse by Failure of Presupposed Conditions 710Clark v. Wallace County Cooperative Equity Exchange 711& Questions 712All Points Capital Corp. v. Boyd Brothers, Inc. 713& Problem 17.7 714& Problem 17.8 715& Problem 17.9 716

2. Frustration of Purpose 716Restatement, Second §265. Discharge by SuperveningFrustration 717Lindner v. Meadow Gold Dairies 717& Questions 722

18 CONDITIONS AND PROMISES 725A. An Overview of the Components of a Contract: Conditions

and Promises 7251. Identification of Promises and Conditions 7262. The Requirement of Uncertainty in Relation to Future

Events and Past Events 7273. What Purposes Do the Parties Seek to Achieve in Including

Conditions in the Contract? 7284. The Sequencing of Performance: Conditions Precedent and

Concurrent Conditions 7295. The Arcane and Confusing Distinction Between Conditions

Precedent and Conditions Subsequent 7306. An Introduction to the Distinction Between Express Conditions

and Construed or Implied Conditions 731& Question 733& Problem 18.1 734

7. Pure Promises, Pure Conditions, and Terms That are BothConditions and Promises (Promissory Conditions) 734

8. Interpretation to Determine If a Term Is a Condition orMerely a Timing Provision 735& Problem 18.2 736& Problem 18.3 737

B. A Promise to Take Action to Try to Satisfy aCondition 738

& Problem 18.4 739& Problem 18.5 739

xxvi Contents

C. Substantial Compliance with Construed (or Implied)Conditions 740

Jacob & Youngs, Inc. v. Kent 741& Questions 747& Problem 18.6 747

D. Conditions of Satisfaction 748& Problem 18.7 750& Problem 18.8 751

E. The Use of Conditions to Provide for AlternativePerformances 751

& Problem 18.9 752

F. The Use of Conditions to Sequence Performances Wherethe Performance of the Parties Will Not Be Instantaneousand Simultaneous 752

& Problem 18.10 755& Problem 18.11 755

G. Excuse of Conditions 7561. Waiver and Estoppel 756

& Problem 18.12 758& Problem 18.13 759& Problem 18.14 760

2. Obstructive or Uncooperative Conduct 761Sullivan v. Bullock 761

3. Unfair Forfeiture 763United Properties Limited v. Walgreen Properties, Inc. 764

19 MATERIAL BREACH, SUBSTANTIALPERFORMANCE, AND ANTICIPATORYREPUDIATION 771A. The Distinction Between Material and Nonmaterial

Breach 7711. Material Breach 7712. Substantial Performance 772

Restatement, Second §241. Circumstances Significant inDetermining Whether a Failure Is Material 773& Problem 19.1 773& Problem 19.2 774

3. Total and Partial Breach and the Concept of Cure 774Raymond Weil, S.A. v. Theron 775& Questions 779& Problem 19.3 780

Contents xxvii

B. The Consequences of Substantial Performance 7801. The Usual Measure of Relief for Substantial Performance 7802. Relief for Substantial Performance Where the Cost to Rectify the

Defective Performance Is Disproportionately High 782Landis v. William Fannin Builders, Inc. 782& Problem 19.4 787

3. The Recovery of the Breaching Party: Unjust Enrichment orRecovery Under the Contract 788Menorah Chapels at Millburn v. Needle 790& Questions 793

C. Breach and Substantial Performance Under UCC Article 2:The Perfect Tender Rule 7941. Perfect Tender Under Article 2 794

UCC 2-601. Buyer’s Rights on Improper Delivery 794& Problem 19.5 794

2. Limitations on the Perfect Tender Rule 795& Problem 19.6 796

D. Anticipatory Repudiation and ProspectiveNonperformance 7981. Anticipatory Repudiation 798

Restatement, Second §250. When a Statement or an Act Is aRepudiation 799Restatement, Second §253. Effect of a Repudiation as aBreach and on Other Party’s Duties 800UCC 2-610. Anticipatory Repudiation 800Wholesale Sand & Gravel, Inc. v. Decker 801& Problem 19.7 802

2. Retraction of Repudiation 8033. Prospective Inability to Perform 804

Restatement, Second §251. When a Failure to GiveAssurance May Be Treated as a Repudiation 804UCC 2-609. Right to Adequate Assurance ofPerformance 804& Problem 19.8 805& Problem 19.9 806

20 INTRODUCTION TO CONTRACT DAMAGESAND THE ‘‘BENEFIT OF THE BARGAIN’’ 809A. The Goal and Fundamental Principles of Contract Damages 809

1. The Distinctions Among the Expectation, Reliance, andRestitution Interests 810Restatement, Second §344. Purposes of Remedies 811

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& Problem 20.1 811& Problem 20.2 812Hawkins v. McGee 814& Questions 817& Problem 20.3 817

2. Theoretical Perspectives on ‘‘Benefit of the Bargain’’Damages 819

B. The ‘‘Benefit of the Bargain’’ at Common Law 8231. Components of Expectation Damages 8232. Introduction to Measurement of the Expectation Interest 824

Restatement, Second §347. Measure of Damages in General 825Hubbell Homes v. Key 827& Questions 830& Problem 20.4 831

3. Measurement of the Expectation Interest When NeitherParty Performs 831Turner Broadcasting System, Inc. v. McDavid 832& Questions 837Handicapped Children’s Education Bd. v. Lukaszewski 838& Questions 841& Problem 20.5 842& Problem 20.6 843

4. Measurement of the Expectation Interest When theBreaching Party Performs in Part 844& Problem 20.7 846& Problem 20.8 847

C. ‘‘Benefit of the Bargain’’ Damages Under the UCC 848UCC 1-305(a). Remedies to Be Liberally Administered 848

1. Buyer’s Damages Under the UCC 849UCC 2-712. ‘‘Cover’’; Buyer’s Procurement of Substitute Goods 850UCC 2-713. Buyer’s Damages for Non-Delivery or Repudiation 851Chronister Oil Co. v. Unocal Refining & Marketing 852& Problem 20.9 854UCC 2-714. Buyer’s Damages for Breach in Regard toAccepted Goods 855

2. Seller’s Damages Under the UCC 855UCC 2-706. Seller’s Resale Including Contract for Resale 857UCC 2-708. Seller’s Damages for Non-Acceptance or Repudiation 857& Problem 20.10 860& Problem 20.11 860

D. Limitations on Recovery of ‘‘The Benefit of the Bargain’’ 8611. Reasonable Certainty of Damages 861

Rancho Pescado, Inc. v. Northwestern Mutual Life Insurance Co. 862

Contents xxix

Hollywood Fantasy Corp. v. Gabor 867& Questions 872

2. Foreseeability of Damages 872Hadley v. Baxendale 873& Problem 20.12 875McNaughton v. Charleston Charter School for Math andScience, Inc. 878& Questions 883& Problem 20.13 883

3. The Mitigation Principle 884DeRosier v. Utility Systems of America, Inc. 886& Problem 20.14 891UCC 2-710. Seller’s Incidental Damages 892UCC 2-715. Buyer’s Incidental and ConsequentialDamages 893& Problem 20.15 893& Problem 20.16 893

21 CONTRACT REMEDIES IN THE BROADERCONTEXT 895A. Noneconomic and Noncompensatory Damages 896

1. Damages for Pain, Suffering, and Emotional Distress 897Erlich v. Menezes 897Lane v. Kindercare Learning Centers, Inc. 904& Questions 905& Problem 21.1 906

2. Punitive Damages 906Restatement, Second §355. Punitive Damages 907& Problem 21.2 908

B. Agreed Remedies 9081. Policing Liquidated Damages Clauses 910

Restatement, Second §356. Liquidated Damages and Penalties 910UCC 2-718. Liquidation or Limitation of Damages; Deposits 910Kent State University v. Ford 912& Problem 21.3 919& Problem 21.4 920

2. Contractual Limitations on and Modifications of Remedy 921Wedner v. Fidelity Security Systems, Inc. 921& Questions 924UCC 2-719. Contractual Modification or Limitation of Remedy 925& Problem 21.5 925

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C. Specific Performance and Injunctions 9261. The Common Law’s Preference for Damages 9262. Inadequacy of Damages 928

Van Wagner Advertising Corp. v. S&M Enterprises 930& Questions 933& Problem 21.6 934& Problem 21.7 934& Problem 21.8 935

3. The Discretionary Nature of the Remedy 935Campbell v. Carr 936& Questions 938& Problem 21.9 939

4. Injunctive Relief as an Alternative to Specific Performance 939Systems and Software, Inc. v. Barnes 941& Questions 945& Problem 21.10 945

D. Restitution as a Remedy upon Breach of Contract 9461. Rescission and Restitution 946

Worcester Heritage Society, Inc. v. Trussell 947& Questions 949& Problem 21.11 951

2. Restitution to the Party in Breach 952& Problem 21.12 953UCC 2-718. Liquidation or Limitation of Damages; Deposits 953

22 THE RIGHTS OF NONPARTIES 955A. Third-Party Beneficiaries 955

1. The Intent to Confer Power of Enforcement on the ThirdParty 955Restatement, Second §302. Intended and IncidentalBeneficiaries 956Restatement, Second §304. Creation of Duty toBeneficiary 956Masad v. Weber 958& Problem 22.1 963& Problem 22.2 963

2. Non-Clients as Third-Party Beneficiaries of a ContractBetween an Attorney and a Client 964& Problem 22.3 965

3. Members of the Public as Third-Party Beneficiaries ofGovernment Contracts 966& Problem 22.4 967

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4. Vesting of Rights in the Beneficiary and the Power of theOriginal Parties to Modify the Contract 968Restatement, Second §311. Variation of a Duty to aBeneficiary 968& Problem 22.5 969

5. Defenses Available to the Promisor Against theBeneficiary 969& Problem 22.6 970

6. The Promisee’s Rights of Enforcement 970In re Marriage of Smith & Maescher 971& Questions 974

B. Assignment and Delegation 9741. The Transfer of Contract Rights and Duties 9742. Assignment: General Principles 975

Restatement, Second §317. Assignment of a Right 977UCC 2-210(2). . . . Assignment of Rights 979& Problem 22.7 980

3. Assignments That Violate Public Policy 981Gurski v. Rosenblum and Filan, LLC 981& Questions 985

4. Anti-Assignment Clauses 985Restatement, Second §322. Contractual Prohibition ofAssignment 985& Problem 22.8 986

5. The Effect of Assignment, Notice of Assignment, and theObligor’s Defenses Against the Assignee 988& Problem 22.9 989

6. The Delegation of Contractual Duties 990Restatement, Second §318. Delegation of Performance of Duty 991Restatement, Second §328. Interpretation of Words ofAssignment . . . 992UCC 2-210(1), (5), and (6). Delegation of Performance . . . 992& Problem 22.10 992& Problem 22.11 993& Problem 22.12 994& Problem 22.13 994

Self-Assessment Questions 997Table of Cases 1107Table of Secondary Sources 1111Table of Laws, Regulations, and Model Statutes 1115Index 1117

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