Contracts C outline

I. Conditions
A. Express Conditions
1. Refers to an explicit contractual provision, explicitly specify connection between
promises & conditions, will be part of the contract & binding to both parties
2. Express statement that in the contract providing that either
a. a party does not have a duty to perform unless some event occurs or fails to
occur
b. if some event occurs or fails to occur, the obligation of a party to perform 1 or
more of his duties under the contract suspended or terminated
3. Whether a provision of the contract is a condition (obligation) is determined by the
intent of the parties, Intent may be revealed by:
a. the words themselves (provided that or only if)
b. parties relationship to the subject provision (if words used are those if the
performance, the provision is more likely an obligation, if words of the non-
performing party, more likely a condition)
c. custom and usage
4. Duty (under the contract from each side, depends on the condition)
1. satisfied
2. breached remedy
3. discharged restitution
5. Condition: uncertain future event upon which contractual duty depends
1. satisfied-duty arises (100%)
2. fail-duty discharged
3. excused-Waiver Duty arises: protects one side the side who benefits can
waive Prevention-duty arises both parties can ruin the deal Disproportionate
Forfeiture-duty arises Estoppel-duty arises goes with waiver usually, element of
reliance
6. Duty
satisfied-met
breached-failed
discharged-dont have to do it anymore possible restitution
7. Example
1. i promise to hire you for X job at X $ = yes
-contractual duty to hire and pay you if not then its a breach
2. if you pass the bar i promise to hire you for X job at X $ = yes (focus on)
-cant be in breach if failed the bar, employer duty there is one, if pass
then yes you have a duty to work, if the condition is met then both duties
are met
3. if you pass the bar come by and lets talk about a job = ok
-no contractual duty
8. Condition Precedent or Condition Subsequent
a. depends upon whether it triggers a duty (duty doesn't exist unless the
condition occurs)
b. instead terminates a duty (duty exists but is extinguished if he condition does
not occur)
9. Restatements
a. 224 ConditionDefined



A condition is an event, not certain to occur, which must occur, unless its
non occurrence is excused, before performance under a contract
becomes due.
b. 225. Effects of the Non Occurrence of a Condition
1. Performance of a duty subject to a condition cannot become due
unless the condition occurs or its non occurrence is excused.
2. Unless it has been excused, the non occurrence of a condition
discharges the duty when the condition can no longer occur.
3. Non occurrence of a condition is not a breach by a party unless he is
under a duty that the condition occur.
c. 226 How an event may be made a condition
An event may be made a condition by the agreement of the parties or by
a term supplied by the court
d. 227 Standards Of Preference With Regard To Conditions
1. In resolving doubts as to whether an event is made a condition of an
obligor's duty, and as to the nature of such an event, an interpretation is
preferred that will reduce the obligee's risk of forfeiture, unless the event
is within the obligee's control or the circumstances indicate that he has
assumed the risk.
2. Unless the contract is of a type under which only one party generally
undertakes duties, when it is doubtful whether
a. a duty is imposed on an obligee that an event occur, or
b. the event is made a condition of the obligor's duty, or
c. the event is made a condition of the obligor's duty and a duty is
imposed on the obligee that the event occur, the first interpretation
is preferred if the event is within the obligee's control.
10. Cases
a. To satisfy the special condition was to do something, doesn't mean it was a
promise rather than a condition, A condition can be an act to be done by one of
the parties to the contract. (Morrison v. Bare)
b. The Defendants obligation to ship the rice in December was conditioned upon
the Plaintiff giving the Defendant two weeks notice of the place of delivery.
Hence, the last day in December that the Defendant could have performed on
the agreement given the notice required was December 17th. When December
17th passed and the Defendant did not hear from the Plaintiff, it had the right to
rescind the agreement. In other words, the Plaintiff giving two weeks notice of
the place of delivery to the Defendant was a condition precedent to the
Defendants delivery of the rice. The failure to give sufficient notice for the
Defendant to complete delivery in December as required by the contract,
constituted a failure to perform a condition precedent. Therefore, the Defendant
properly rescinded the contract. (Internatio-Rotterdam, Inc. v. River Brand Rice
Mills, Inc)
c. No waiver occurred. failed to obtain all reasonable efforts t get the loan.
(Renovest Co. v. Hodges Development Corp.)
d. The meaning of language is a factual question, but the interpretation of a
document is a question of law rather than of fact. Turning to the interpretation of
the contractual payment provision in the present case, it is not generally intended
that payment by the owner of a building to the general contractor be a condition
precedent to the general contractors duty to pay subcontractors. This is because
small subcontractors cannot afford to assume the risk of nonpayment by the
owners to the general contractor. Therefore, summary judgment was appropriate


in these cases. The interpretation of a contract is a question of law, not fact
(Peacock Construction Co, v. Modern Air Conditioning Inc)
B. Satisfaction Conditions
1. One partys contractual duty conditional on that partys duty ( or 3rd party)
satisfaction w/ the other partys performance
2. Good faith duty is applied
it will fail to be fulfilled only if the promisors lack of satisfaction is honest and in
good faith. Therefore, if the promisor refuses to examine the promisees
performance, or other- wise rejects the performance in bad faith, the condition of
satisfaction will be excused.
3. Obligation that both parties determine the the condition has occurred or been satisfied
4. the promisor is under no duty to pay unless she is satisfied.
a. Mechanical Fitness, Utility, or Marketability
condition of satisfaction is fulfilled by a performance that would satisfy
a reasonable person. It is therefore immaterial that the promisor was not
personally satisfied if a reasonable person would have accepted and
approved the performance tendered. Has to be based on what if a
reasonable person would be satisfied
b. Personal Taste or Judgment
a condition of satisfaction is fulfilled only if the promisor is personally
satisfied. For example, contracts for portraits, dental work, or tailoring all
require the promisors personal satisfaction. where one partys
performance (usually, pay for work) was conditioned upon his being
personally satisfied w/ the others work, can withhold such satisfaction if
the authorized party had a good faith dissatisfaction w/ the work
must be done in good faith, and honest
c. 3rd person
express condition requires the satisfaction of a third person rather than a
party to the contract; construction contracts often include a condi- tion
requiring the satisfaction of the owners architect or engineer. When the
satisfaction of a third person is a condition, most courts take the position
that the condition requires the actual personal satisfaction of the third
person. As in the case where a partys personal satisfaction is required,
however, a condition that requires a third persons personal satisfaction
will be excused if the third persons dissatisfaction is not honest and in
good faith
5. 228 Satisfaction of the Obligor as a Condition **
When it is a condition of an obligors duty that he be satisfied w/ respect to the
obligees performance or w/ respect to something else, & it is practicable to
determine whether a reasonable person in the position of the obligor would be
satisfied, an interpretation is preferred under which the condition occurs if such a
reasonable person in the position of the obligor would satisfied
6. Cases
a. Improperly applied subj. standard and a genuine issue existed. Where a
clause requires satisfaction as to such matters as commercial value or quality,
operative fitness, or mechanical utility, dissatisfaction cannot be claimed
unreasonably. Whether the performance would satisfy a reasonable
person. (Hutton v. Monograms Plus, Inc.)
b. An objective standard is the appropriate standard to employ in a contract for
the construction of a commercial building. Therefore, General Motors rejection of
the Defendants work on aesthetic grounds was unreasonable. An objective


standard of reasonableness is the proper standard to employ in a construction
contract for commercial building. (Morin Building Products Co. v. Baystone
Construction, Inc.)
C. Waiver & Excused of Condition
1. another tool available to avoid the harsh effects of a condition: excusing the condition
based on a finding that the party who did not satisfy the condition would otherwise suffer
a forfeiture.
2. Waiver
a. where a condition doesn't occur, the party whose obligation is subject to
condition may express/conduct herself so that she voluntarily relinquishes the
right to insist on satisfaction
b. is not a material part of the agreement
c. doesn't constitute a material portion of the benefit to be received by the
promisor
3. Estoppel
Where one party has indicated by words or conduct that will not require a
condition to be satisfied, & the other materially changes his position in reliance,
the 1st party is estoppel from insisting that the condition be satisfied. appears
differ from waiver in that reliance by the aggrieved party justifies excuse of a
more material condition than the unilateral act of waiver
4. Prevention
the party whose obligation is subject to a condition may not avoid maturing of
that obligation into an absolute duty preventing the occurrence of the condition.
where that party takes some action or (in action) which prevents satisfaction of
the relevant condition, that condition is excused, & the wrongfully acting parties
obligation becomes an absolute duty
5. Forfeiture
Courts will frequently interpret contract provisions as obligations rather than as
conditions to avoid
6. 229 Excuse of a Condition to Avoid Forfeiture
To the extent that the non-occurrence of a condition would cause
disproportionate forfeiture, a court may excuse the non-occurrence of that
condition unless its occurrence was a material part of the agreed
exchange.
Comment b. Disproportionate forfeiture. The rule stated in the
present Section is, of necessity, a fexible one, and its application is within
the sound discretion of the court. Here, as in 227(1), forfeiture is used
to refer to the denial of compensation that results when the obligee loses
his right to the agreed exchange after he has relied substantially, as by
preparation or performance on the expectation of that exchange. See
Comment b to 227. The extent of the forfeiture in any particular case
will depend on the extent of that denial of compensation. In determining
whether the forfeiture is disproportionate, a court must weigh the extent
of the forfeiture by the obligee against the importance to the obligor of the
risk from which he sought to be protected and the degree to which that
protection will be lost if the non-occurrence of the condition is excused to
the extent required to prevent forfeiture. The character of the agreement
may, as in the case of insurance agreements, affect the rigor with which
the requirement is applied.
7. Cases


a. The court found that the would have suffered forfeiture since it
made substantial improvements to the property. The court also found that the
failure to renew the lease was due to mere forgetfulness and was not an
intentional attempt to exploit a fluctuating real estate market. The court found that
it was unclear whether the suffered a prejudice from the s oversight and
therefore a new trial should be granted. Where a tenant would suffer a forfeiture,
he is entitled to equitable relief where the default has not prejudiced the landlord
and it is a result of an honest mistake. (J.N.A. Realty Corp v. Cross Bay Chelsea)
D. Implied Condition (Constructive)
1. implied that the duty to render performance under a contract is conditional upon the
occurrence of some event or state of the world, even though the contract does not
explicitly so state. In that case, there is said to be an implied or constructive condition
that the relevant event or state of the world must occur before the performance of one or
both parties comes due
2. even if it is not expressly included in a contract document by the contracting parties.
In law, an unwritten requirement (that is deemed important in light of the facts and
circumstances of a contract) implies a condition (called condition precedent) of the
contract
example: if a quantity of umbrellas is ordered to be delivered before the rainy
season but they arrive only after the season has ended, that order may be
cancelable even if the words "Time is of the essence" are not included in the
order.
3. satisfied-duty arises (substantial performance) fail-duty discharged
excused-Waiver Duty arises: protects one side the side who benefits can
waive Prevention-duty arises both parties can ruin the deal Disproportionate
Forfeiture-duty arises Estoppel-duty arises goes with waiver usually, element of
reliance
4. Cases
a. 3 covenants. 1. mutual and independent each party can sue the other for
breach, but one party cannot cite a breach of the other partys covenant as an
excuse for his own breach. 2. conditions and dependent the performance of
one depends on the performance of another and the duty to perform does not
arise until the prior condition is performed. 3. mutual conditions the conditions
must be performed at the same time and the failure of one party to perform is a
ground for alleging breach. (Kingston v. Preston)
II. Performance and Breach: Common Law
A. Implied Conditions and Performance Responsibilities
1. Mutual & Independent Promises
where either party may recover damages from the other, for the injury he may
have received by a breach of the covenants in his favor, and where it is no
excuse for the defendant, to allege a breach of the covenants [by] plaintiff.
2. Conditions & Dependent
the performance of one depends on the prior performance of another, and,
therefore, till this prior condition is performed, the other party is not liable to an
action on his covenant.
3. Mutual & Simultaneous Conditions
mutual conditions to be performed at the same time; and in these, if one party
was ready, and offered, to perform his part, and the other neglected, or refused,
to perform his part, he who was ready, and offered, has fulfilled his engagement,
and may maintain an action for the default of the other[,] though it is not certain
that either is obliged to do the first act.


4. Cases
a. 1. mutual and independent each party can sue the other for breach, but one
party cannot cite a breach of the other partys covenant as an excuse for his own
breach. 2. conditions and dependent the performance of one depends on the
performance of another and the duty to perform does not arise until the prior
condition is performed. 3. mutual conditions the conditions must be performed
at the same time and the failure of one party to perform is a ground for alleging
breach. (Kingston v. Preston)
b. Equity and fairness dictate that one who unintentionally commits a trivial wrong
will not be condemned to a fate so clearly out of proportion with the
transgression. To permit Defendant to recover the cost of replacement of the
pipe would be unduly oppressive. Instead, Defendant will be adequately compensated
by recovering the difference in value of a home with the Reading pipe and the
value of the home, as it exists, with a different kind of pipe. (Jacob & Youngs v.
Kent)
B. Substantial Performance or Material Breach
1.



Nonmaterial Non breaching party
must keep performance
sue later
Breach Material (partial) Non breaching party w/
hold performance for a
chance to cure
accept & sue later

Total Cant or fail to cure or
repudiation
Cancel K or sue later
2.

3. 233 Performance at one time or in installments
1. Where performances are to be exchanged under an exchange of promises, &
the whole of ones performance can be rendered at one time, it is due at one
time, unless the language or the circumstance indicate the contrary
2. Where only a part of ones performance is due at one time under subsection 1,
if the other partys performance can be so apportioned that there is a comparable
part that can also be rendered at that time, it is due at that time, unless the
language or the circumstance indicate the contrary
4. 234 Order of Performances

Satisfied

Duty
Breach
nonmaterial
material
total

Discharged something the other side does



1. Where all or part of the performances to be exchanged under an exchange of
promises can be rendered simultaneously, they are to that extent due
simultaneously, unless the language or the circumstances indicate the contrary.
2. Except to the extent stated in Subsection 1, where the performance of only
one party under such an exchange requires a period of time, his performance is
due at an earlier time than that of the other party, unless the language or the
circumstances indicate the contrary.
5. 235 Effect of Performance as Discharged & Non-performance as Breach
1. Full performance of a duty under a K discharges the duty
2. When performances of a duty under a K is due any non-performance is a
breach
6. Material Breach
a. When one fails to perform 1 of their obligation under the K that is so significant
that the other party can call them out & sue
b. If the obligee does not receive the substantial benefit of her bargain as a
result of failure to perform or defective performance, the breach is considered
material. If the breach is material, the consequences are more severe. The
nonbreaching party (i) may treat the contract as at an end, i.e., any duty of
counterperformance owed by her will be discharged, and (ii) will have an
immediate right to all remedies for breach of the entire contract, including total
damages.
7. Substantial (Minor)
a. The defense when one says they didn't perform, its a minor variance
b. A breach of contract is minor if the obligee gains the substantial benefit of her
bargain despite the obligors defective performance. Examples would be
insignificant delays in completing performance or small deficiencies in the quality
or quantity of performance when precision is not critical. The effect of a minor
(immaterial) breach is to provide a remedy for the immaterial breach to the
aggrieved party. The aggrieved party is not relieved of her duty of performance
under the contract.
8. Cases
a. whether performance is substantial, the following considerations are
significant: 1. the extent to which the injured party will be deprived of the benefit
that he reasonably expected; 2. the extent to which the injured party can be
adequately compensated for the part of that benefit of which he will be deprived;
3. the extent to which the party failing to perform or to offer to perform will suffer
forfeiture; 4. the likelihood that the party failing to perform or offer to perform will
cure his failure, taking account of all the circumstances, including any reasonable
assurances; and 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. No
he did not materially breach the K on getting power to them. They could not do
so because did not full fill their end. (Roberts Contracting Co. v. Valentine-
Wooten Road Public Facility Bd.)
b. the contract is states that the should have received crowns made of
porcelain on gold. Although the crowns were better they were not what was
asked for or what was stated in the contract. did not perform her part of the
contract. (Khiterer v. Bell)
C. Partial or Total Breach
1. Material Breach
a. The aggrieved party acquires the right to suspend or withhold her own
performance until the breaching party substantially performs (e.g., the owner


does not yet have to pay the construction contractor who has materially
breached).
b.The breaching party may be able to cure the breach within a reasonable time
by furnishing the missing performance, by re-performing, or by repairing
defective performance, in order to furnish at least substantial performance.
c. If the cure is successful enough to alleviate the material breach, then the
aggrieved party no longer has the right to suspend or withhold performance
2. Total Breach
a. The aggrieved party retains both the right to damages for any injury and the
right to suspend or withhold her own performance, because of the material
breach;
b. The aggrieved party acquires the right to cancel the contract, eliminating any
further performance duties held by any parties to the contract; and
c. After notifying the breaching party of cancellation, the aggrieved party can hire
someone else to complete the performance once owed by the breaching party.
3. 236 Claims for damages for total & partial breach
1. A claim for damages for total breach is one for damages based on all of the
injured partys remaining rights to performance
2. A claim fro partial breach is one fr damages based on only part of the injured
partys remaining rights to performance
4. 237 Effect on Other Partys Duties of a Failure to Render Performance
Except as stated in 240, it is a condition of each partys remaining duties to
render performances to be exchanged under an exchange of promises that there
be no uncured material failure by the other party to render any such performance
due at an earlier time.
5. 238 Effect on Other Partys Duties of a Failure to Offer Performance
Where all or part of the performances to be exchanged under an exchange of
promises are due simultaneously, it is a condition of each partys duties to render
such performance that the other party either render or, with manifested
present ability to do so, offer performance of his part of the simultaneous
exchange.
6. 240 Part Performance as Agreed Equivalents
If the performance to be exchanged under an exchange of promises can be
apportioned into corresponding pairs of part performance so that the parts of
each pair are properly regarded as agreed equivalents, a partys performance on
his part of such a pair has the same effect on the others duties to render
performance of the agreed equivalent as it would have if only that pair of
performances has been promised
7. 241 Circumstances Significant in Determining Whether a Failure is Material **
In determining whether a failure to render or to offer performance is
material, the following circumstances are significant:
a. the extent to which the injured party will be deprived of the benefit
which he reasonably expected;
b. the extent to which the injured party can be adequately compensated
for the part of that benefit of which he will be deprived;
c. he extent to which the party failing to perform or to offer to perform will
suffer forfeiture;
d. 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;


e. 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.
8. 242 Circumstances Significant in Determining When Remaining Duties are
Discharged **
In determining the time after which a partys uncured material failure to render or
to offer performance discharges the other partys remaining duties to render
performance under the rules stated in 237 and 238, the following
circumstances are significant:
a. those stated in 241;
b. the extent to which it reasonably appears to the injured party that delay
may prevent or hinder him in making reasonable substitute arrangements;
c. the extent to which the agreement provides for performance without
delay, but a material failure to perform or to offer to perform on a stated
day does not of itself discharge the other partys remaining duties unless
the circumstances, including the language of the agreement, indicate that
performance or an offer to perform by that day is important.
9. 243 Effect of a Breach by Non Performance as Giving Rise to a Claim for
Damages for Total Breach
1. With respect to performances to be exchanged under an exchange of
promises, a breach by non performance gives rise to a claim for damages for
total breach only if it discharges the injured partys remaining duties to render
such performance, other than a duty to render an agreed equivalent under 240.
2. Except as stated in Subsection (3), a breach by nonperformance accompanied
or followed by a repudiation gives rise to a claim for damages for total breach.
3. Where at the time of the breach the only remaining duties of performance are
those of the party in breach and are for the payment of money in installments not
related to one another, his breach by non performance as to less than the
whole, whether or not accompanied or followed by a repudiation, does not give rise to a
claim for damages for total breach.
4. In any case other than those stated in the preceding subsections, a breach by
non performance gives rise to a claim for total breach only if it so substantially
impairs the value of the contract to the injured party at the time of the breach that
it is just in the circumstances to allow him to recover damages based on all his
remaining rights to performance.
10. 244 Effect of Subsequent Events on duty to pay damages
a partys duty to pay damages for total breach by non-performance is discharged
if it appears after the breach that there would have been a total failure by the
injured party to perform his return promise
11. 245 Effect of a breach by non-performance as excusing the non-occurrence
of a condition
where a partys breach by non-performance contributes materially to be non-
occurrence of a condition of one of his duties the non-occurrence is excused
12. 246 Effect of acceptance as excusing the non-occurrence of a condition
1. except as stated in section 2, an obligators acceptance or his retention for an
unreasonable time of the obligees performance, w/ knowledge of or reason to
know of the non-occurrence of a condition of the obligors duty, operates as a
promise to perform in spite of that non-occurrence
2. if at the time of its acceptance or retention the the obligees performance
involves such attachment to the obligors acceptance or retention of that
performance operates as a promise to perform in spite of the non-occurrence of


the condition, only if the obligors w/ knowledge of or reason to know of the
defects manifest assent to the performance
13. 247 Effect of acceptance of part performance as excusing the subsequent
non-occurrence of a condition
an obligators acceptance of part of the obligees performance, w/ knowledge or
reason to know of the non-occurrence of a condition of the obligors duty,
operates as a promise to perform in spite of a subsequent non-occurrence of the
condition under 84 to the extent it justifies the obligee in believing the subsequent
performances will be accepted in spite of that non-occurrence
14. 248 Effect of insufficient reason for rejection as excusing the non-
occurrence of a condition
where a party rejecting a deceptive performance or offer of performance gives an
insufficient reason for rejection, the non-occurrence of a condition of his duty is
excused only if he knew or had reason to know of that non-occurrence & then
only to the extent that the giving of an insufficient reason substantially contributes
to a failure by the other party to cure
15. Cases
a. Repudiation is justified where a material or total breach has occurred. In the
instant case, the court found that the Plaintiffs failure to tender the balance due
under the contract constituted a material breach. Repudiation of a contract is
justified only where the breaching partys breach. A breach of total or partial
depends on the materiality. (Sackett v. Spindler)
b. Modern courts favor finding that promises in an agreement are mutually
dependent. Mutually dependent promises are those in which performance of
obligations by one party is conditioned on performance of obligations by the other
party. Mutually dependent promises can be precedent, subsequent, or
concurrent. In this case, the bulldozer damage constituted a material breach of
the promise to perform in a workmanlike manner. Therefore, the Plaintiff was
justified in withholding installment payments. Because Plaintiffs refusal to pay
the installments was justified, Defendant wrongfully repudiated the agreement by
discontinuing performance. An injured party may treat nonperformance as a
partial breach, and continue to allow the breaching party to perform the rest of
the contract. In this case, by allowing the Defendant to work after the bulldozer
accident, the Plaintiff treated the breach as partial. Because Plaintiff was justified
in refusing to make an installment payment, Defendant breached their agreement
further by stopping performance. The failure of one party to render substantial
performance on an agreement may allow the other party to refuse to perform
some or all of his obligations under the contract. (K & G Construction Co. v.
Harris)
D. Divisible v. Severable Contracts
1. K that are divided into two or more parts, each which can stand free-standing K
2. Court will ask separately if: accomplished substantial performance or materially or
total breach
3. Test of Divisibility:
a. whether the parties intended that the agreement be divisible
b. whether the K by its terms, nature & purpose,is susceptible of division &
apportionment (is it possible to determine the price of each separate
performance) &
c. Whether the division harms the value of performance reasonable expected by
each party (can the injured party make full use of the incomplete performance?
has the injured party received the full value for its payments to date?


E. Repudiation
1. A contracting partys words or a action that indicate an intention not to perform the K
in the future a threatened breach
2. Indicating she will not perform the K or will not perform it further
3. If done in response to a total breach by the other party purported repudiation is really
a justified cancellation of the K
4. 250 When a Statement or an Act is a Repudiation
A repudiation is
a. a statement by 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 under 243, or
b. a voluntary affirmative act which renders the obligor unable or
apparently unable to perform without such a breach.
5. 251 When a Failure to Give Assurance May be Treated as a Repudiation
1. Where reasonable grounds arise to believe that the obligor will commit a
breach by non-performance that would of itself give the obligee a claim for
damages for total breach under 243, the obligee may demand adequate
assurance of due performance and may, if reasonable, suspend any
performance for which he has not already received the agreed exchange until he
receives such assurance.
2. The obligee may treat as a repudiation the obligors failure to provide within a
reasonable time such assurance of due performance as is adequate in the
circumstances of the particular case.
6. 253 Effect of a Repudiation as a Breach and on Other Partys Duties
1. Where an obligor repudiates a duty before he has committed a breach
by non performance and before he has received all of the agreed exchange for
it, his repudiation alone gives rise to a claim for damages for total breach.
2. Where performances are to be exchanged under an exchange of promises,
one partys repudiation of a duty to render performance discharges the other
partys remaining duties to render performance.
7. 254 Effect of Subsequent events on duty to pay damages
1. A partys duty to pay damages for total breach by repudiation is discharged if it
appears after the breach that there would have been a total failure by the
injured party to perform his return promise
2. A partys duty to pay damages for total breach by repudiation is discharged if ti
appears after the breach that the duty that he repudiated would have
been discharged by impracticability or fruition before any breach by non-
performance
8. 255 Effect of a repudiation as excusing the non-occurrence of a condition
Where a partys repudiation contributes materially tot he non-occurrence of a
condition of one of his duties, the non-occurrence is excused
9. 256 Nullification of repudiation/basis for repudiation
1. The effect of a statement as constituting a repudiation under 250 or the
basis for a repudiation under 251 is nullified by a retraction of the statement if
notification of the retraction comes to the attention of the injured party before he
materially changes his position in reliance on the repudiation or indicates to the
other party that he considers the repudiation to be final.
2. The effect of events other than a statement as constituting a repudiation under
250 or the basis for a repudiation under 251 is nullified if, to the
knowledge of the injured party, those events have ceased to exist before he materially


changes his position in reliance on the repudiation or indicates to the other party
that he considers the repudiation to be final.
10. Cases
a. In order for a party to recover on a claim of anticipatory breach of contract, the
other party must have unequivocally refused to perform, or have made clear and
affirmative statements indicating that he is unable to perform. (McCloskey & Co.
v. Minweld Steel Co.)
F. Anticipatory Repudiation
1. If repudiation occurs before the date on which the K performance is due
2. repudiation of a contractual duty before the time for performance, giving the injured
party an immediate right to damage for total breach, as well as discharging the injured
partys remaining duties of performance
3. UCC 2-610 Anticipatory Repudiation
When either party repudiates the contract with respect to a performance not yet
due the loss of which will substantially impair the value of the contract to the
other, the aggrieved party may
a. for a commercially reasonable time await performance by the
repudiating party; or
b. resort to any remedy for breach . . . , even though he has notified the
repudiating party that he would await the latters performance and has
urged retraction; and
c. in either case suspend his own performance or [take other measures to
mitigate damages].
4. UCC 2-611 Retraction of Anticipatory Repudiation
1. Until the repudiating partys next performance is due he can retract his
repudiation unless the aggrieved party has since the repudiation cancelled or
materially changed his position or otherwise indicated that he considers the
repudiation final.
2. Retraction may be by any method which clearly indicates to the aggrieved
party that the repudiating party intends to perform, but must include any
assurance justifiably demanded under the provisions of this Article (Section
2-609).*
3. Retraction reinstates the repudiating partys rights under the contract with due
excuse and allowance to the aggrieved party for any delay occasioned by the
repudiation.
5. UCC 2-609. Right to Adequate Assurance
1. A contract for sale imposes an obligation on each party that the others
expectation of receiving due performance will not be impaired. When
reasonable grounds for insecurity arise with respect to the performance of
either party the other may in writing demand adequate assurance of due
performance and until he receives such assurance may if commercially
reasonable suspend any performance for which he has not already
received the agreed return.
4. After receipt of a justified demand failure to provide within a reasonable
time not exceeding thirty days such assurance of due performance as is
adequate under the circumstances of the particular case is a repudiation
of the contract.
6. UCC 2-612 "INSTALLMENT CONTRACT"; BREACH
1. An "installment contract" is one which requires or authorizes the delivery of
goods in separate lots to be separately accepted, even though the K contains a
clause "each delivery is a separate contract" or its equivalent.


2. The buyer may reject any installment which is non-conforming if the non-
conformity substantially impairs the value of that installment and cannot be cured
or if the non-conformity is a defect in the required documents; but if the non-
conformity does not fall within subsection (3) and the sellergives adequate
assurance of its cure the buyer must accept that installment.
3. Whenever non-conformity or default with respect to one or more installments
substantially impairs the value of the whole contract there is a breach of the
whole. But the aggrieved party reinstates the contract if he accepts a non-
conforming installment without seasonably notifying of cancellationor if he brings
an action with respect only to past installments or demands performance as to
future installments.
7. Cases
a. If two parties enter into a contract to be performed at a designated time
in the future, and one party refuses to perform the contract before the
designated time the parties agreed to perform, the other party may sue
before the contract was to be performed. That party need not wait until
the time for performance has passed (Hochster v. De la Tour)
b. One party may demand assurances from another party when there are
reasonable grounds for insecurity regarding that partys performance and the
demanding party may suspend its performance until it has received such
assurances (Hornell Brewing Co. v. Spry)
G. Performance & Breach under UCC
1. UCC 2-601. Buyers Rights on Improper Delivery
Subject to the provisions of this Article on breach in installment contracts
(Section 2-612) and unless otherwise agreed under the sections on contractual
limitations of remedy (Sections 2-718 and 2-719), if the goods or the tender
of delivery fail in any respect to conform to the contract, the buyer may
(a) reject the whole; or
(b) accept the whole; or
(c) accept any commercial unit or units and reject the rest.
2. UCC 2-602. Manner and Effect of Rightful Rejection
1. Rejection of goods must be within a reasonable time after their delivery or
tender. It is ineffective unless the buyer seasonably notifies the seller.
2. Subject to the provisions of the two following sections on rejected goods
(Sections 2-603 and 2-604),
a. after rejection any exercise of ownership by the buyer with respect to
any commercial unit is wrongful as against the seller; and (b) if the buyer
has before rejection taken physical possession of goods in which he does
not have a security interest under the provisions of this Article, he is
under a duty after rejection to hold them with reasonable care at the sellers
disposition for a time sufficient to permit the seller to remove them; but
c. the buyer has no further obligations with regard to goods rightfully
rejected.
3. The sellers rights with respect to goods wrongfully rejected are governed by
the provisions of this Article on Sellers remedies in general (Section 2-703).
3. UCC 2-508. Cure by Seller of Improper Tender or Delivery; Replacement
1. Where any tender or delivery by the seller is rejected because non-
conforming and the time for performance has not yet expired, the seller may
seasonably notify the buyer of his intention to cure and may then within the
contract time make a conforming delivery.


2. Where the buyer rejects a non-conforming tender which the seller had
reasonable grounds to believe would be acceptable with or without money
allowance the seller may if he seasonably notifies the buyer have a further
reasonable time to substitute a conforming tender.
4. UCC 2-606. What Constitutes Acceptance of Goods
1. Acceptance of goods occurs when the buyer
a. after a reasonable opportunity to inspect the goods signifies to the
seller that the goods are conforming or that he will take or retain them in
spite of their non-conformity; or (keep anyway)
b. fails to make an effective rejection (subsection (1) of Section 2-602),
but such acceptance does not occur until the buyer has had a reasonable
opportunity to inspect them; or (fails to reject)
c. does any act inconsistent with the sellers ownership; but if such act is
wrongful as against the seller it is an acceptance only if ratified by him.
(Pets example)
2. Acceptance of a part of any commercial unit is acceptance of that entire unit
(have to accept the WHOLE unit)
5. UCC 2-607. Effect of Acceptance; Notice of Breach; Burden of Establishing
Breach After Acceptance; Notice of Claim or Litigation to Person Answerable Over
1. The buyer must pay at the contract rate for any goods accepted.
2. Acceptance of goods by the buyer precludes rejection of the goods accepted
and if made with knowledge of a non-conformity cannot be revoked because of it
unless the acceptance was on the reasonable assumption that the non-
conformity would be seasonably cured but acceptance does not of itself impair
any other remedy provided by this Article for non-conformity.
3. Where a tender has been accepted
a. the buyer must within a reasonable time after he discovers or should
have discovered any breach notify the seller of breach or be barred from
any remedy; and
b. if the claim is one for [intellectual property] infringement or the like . . .
and the buyer is sued as a result of such a breach he must so notify the
seller within a reasonable time after he receives notice of the litigation or
be barred from any remedy over for liability established by the litigation.
4. The burden is on the buyer to establish any breach with respect to the goods
accepted
6. UCC 2-608 Revocation of Acceptance in Whole or in Part
1. The buyer may revoke his acceptance of a lot or commercial unit whose non-
conformity substantially impairs its value to him if he has accepted it
a. on the reasonable assumption that its non-conformity would be cured
and it has not been seasonably cured; or
b. without discovery of such non-conformity if his acceptance was
reasonably induced either by the difficulty of discovery before acceptance
or by the sellers assurances.
2. Revocation of acceptance must occur within a reasonable time after the buyer
discovers or should have discovered the ground for it and before any substantial
change in condition of the goods which is not caused by their own defects. It is
not effective until the buyer notifies the seller of it.
3. A buyer that so revokes has the same rights and duties with regard to the
goods involved as if he had rejected them.
7. UCC 2-507 EFFECT OF SELLER'S TENDER; DELIVERY ON CONDITION


1. Tender of delivery is a condition to the buyer's duty to accept the goods and,
unless otherwise agreed, to his duty to pay for them. Tender entitles the seller to
acceptance of the goods and to payment according to the contract.
2. Where payment is due and demanded on the delivery to the buyer of goods or
documents of title, his right as against the sellerto retain or dispose of them is
conditional upon his making the payment due.
8. UCC 2-605 WAIVER OF BUYER'S OBJECTIONS BY FAILURE TO
PARTICULARIZE
1. The buyer'sfailure to state in connection with rejection a particular defect which
is ascertainable by reasonable inspection precludes him from relying on the
unstated defect to justify rejection or to establish breach
a. where the sellercould have cured it if stated seasonably; or
b. between merchants when the seller has after rejection made a request
in writing for a full and final written statement of all defects on which the
buyer proposes to rely.
2. Payment against documents made without reservation of rights precludes
recovery of the payment for defects apparent on the face of the documents.

Non-Conforming Tender

Accept
Timing is important
2-606 failure to reject,
signify non conforming
is ok, any act
inconsistent
A. Revoke Acceptance
2-608 Substantial
impairment, reasonable
time after discovery



B. Notify the seller of
defects and sue 2-607


C. If fail to do A & B pay
K price, pay full price &
no damages 2-607

Reject 2-602 sellers cure 2-508 if cured cant reject has to be perfect
9.

10. Limitations
a. Section 2-601 says the rule does not apply to installment contracts or to
contracts in which the parties agree the buyer will not have such a remedy
b. A buyer is not permitted to seize on a technical defect in order to reject (which
would be operating in bad faith)
c. if the contract involves a so-called shipment contract, which means the
sellers tender responsibilities involve delivering the goods to a carrier, only
certain sellers breaches in transporting the goods give buyer the right to reject
d. Most important, if the buyer rejects the goods, the seller often has a right (not
duty) to cure the non-conformity by repairing defective goods or
replacing them w/ conforming goods
11. Cases
a. A buyer can reject goods for non-conformity, but the rejection does not
automatically terminate the contract. With appropriate time given to the seller to


fix the non-conformity, if not fixed, the buyer may rescind the contract. (Ramirez
v. Autosport
III. Excused Defenses
A. Impossibility
1. must be objective
2. must arise after the contract has been entered into
3. If the facts giving rise to impossibility already existed when the contract was formed,
the question is not really one of discharge of contractual duties. Rather, it is a contract
formation problem, namely, whether the contract is voidable because of mistake
4. If a contract is discharged because of impossibility, each party is excused from duties
arising under the contract that are yet to be fulfilled. Either party may sue for rescission
and receive restitution of any goods delivered, payments made, etc.
5. If the performance to be rendered under the contract becomes only partially
impossible, the duty may be discharged only to that extent. The remainder of the
performance may be required according to the contractual terms. This is so even though
this remaining performance might involve added expense or difficulty.
6. Temporary impossibility suspends contractual duties; it does not discharge them.
7. Specific Situations
a. Death or the physical incapacity of a person necessary to effectuate the
contract serves to discharge it.
b. supervening illegality may serve to discharge a contract
c. If the contracts subject matter is destroyed or the designated means for
performing the contract are destroyed, contractual duties will be discharged.
8. Cases
a. When a situation arises, through no fault of either party to a contract, that
makes it impossible to perform under the contract, both parties are excused from
performing their respective duties under the agreement. (Taylor v. Caldwell)
b. 460 (1) Where the existence of a specific thing or person is, either by the
terms of a bargain or in the contemplation of both parties, necessary for the
performance of a promise in the bargain, a duty to perform the promise (Unke v.
Thrope)
B. Frustration of Purpose
1. reason entered into the K no longer exist
2. Reason courts have been reluctant
a. by using frustration of purpose, courts are implying terms into a contract, which
could obscure the actual intentions of the parties
b. the aggrieved party is often left with uncompensated damages, because its
ability to perform is unimpeded
c. courts are disinclined to grant relief for parties misassumptions about the
future
d. courts cannot easily determine at what point payment should be excused
based on the lost value of performance
e. freedom of contract and other policies driving contract law encourage
performance and therefore weigh against a courts decision to excuse
performable contract duties
3. Cases
a. A partys duties are discharged where a partys purpose is frustrated without
fault by the occurrence of an event, which the nonoccurrence of which was a
basic assumption on which the contract was made (Krell v. Henry)


b. found that a lessor could foresee that its supermarket tenant might bring an
action to enforce a radius restriction in the lease to keep him from leasing
property to another supermarket chain (Adbar, L.C. v. New beginnings C-Star)
C. Impracticability
1. expands the category of cases in which relief may be granted based on unanticipated
circumstances
2. Rarely successful
3. 261 Discharge by Supervening Impracticability
Where, after a contract is made, a partys performance is made impracticable
without his fault by the occurrence of an event the non-occurrence of which was
a basic assumption on which the contract was made, his duty to render that
performance is discharged, unless the language or the circumstances indicate
the contrary.
Elements
1. event that was nonoccurrence of which is a basic assumption of K
(after formation)
2. event makes the performance of the party seeking discharge
impracticability
3. party seeking discharge of duty doesn't bear the risk of event
4. 269 Temporary Impracticability or Frustration
Impracticability of performance or frustration of purpose that is only temporary
suspends the obligors duty to perform while the impracticability or frustration
exists but does not discharge his duty or prevent it from arising unless his
performance after the cessation of the impracticability or frustration would be
materially more burdensome than had there been no impracticability or
frustration
5. 270 Partial Impracticability
Where only part of an obligors performance is impracticable, his duty to render
the remaining part is unaffected if
a. it is still practicable for him to render performance that is substantial,
taking account of any reasonable substitute performance that he is under
a duty to render; or
b. the obligee, within a reasonable time, agrees to render any remaining
performance in full and to allow the obligor to retain any performance that
has already been rendered
6. 271 Impracticability as Excuse for non-occurrence of a condition
if the occurrence of the condition is not a material part of the agreed exchanged
and forfeiture would otherwise result
7. 272 Relief Including Restitution
1. either party may have a claim for relief including recitation under the rules
stated 240 & 2377
2. If those rules together w/ the rules will not avoid injustice, the court may grant
relief on such terms as justice requires including protection of the parties reliance
interests
8. UCC 2-615. Excuse by Failure of Presupposed Conditions
subject to the preceding section on substituted performance:
**a. 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 under a contract
for sale if performance as a greed has been made impracticable by the
occurrence of a contingency the non-occurrence of which was a basic
assumption on which the contract was made or by compliance in good faith with


any applicable foreign or domestic governmental regulation or order whether or
not it later proves to be invalid.
9. Cases
a. A legal impossibility, which renders a contract voidable, is defined as a thing
that is not practicable or in other words, only done at an excessive and
unreasonable cost (Transatlantic Financing Corp. v. United States)
b. A force majeure clause does not protect against the ordinary risks of a
contract, but rather, it excuses performance where something beyond the parties
control occurs that prevents performance (Northern Indiana Public Service Co. v.
Carbon County Coal Co)
D. Force Majeure Clause
1. specify how particular risks are allocated between the parties & may also help define
how the excuse defense will be applied
2. Serve one or more of the following
a. Specifying and clarifying aspects of the excuse doctrine:
i. which events the parties will not occur & why this non-occurrence are
basic assumptions on which the K was made
ii. payors principal purpose (relevant for frustration of purpose)
iii. which risks are allocated to one of the parties &
iv. how much difficulty of performance is necessary to find impracticability
b. doing events that can serve as excuses: strikes, economic downturns,
technology failure
c. contracting out of the default rules on excuse
IV. Remedies
A. Remedies at law (Damages)
1. 344 Purpose of Remedies
judicial remedies under the rules stated in this restatement serve to protect 1 or
more of the following interests of a promisee:
a. his :expectation interest, which is his interest in being reimbursed for
loss caused by reliance on the K by being put in as good a position as he
would have been in had the K not been made
b. his reliance interest which is his interest in being reimbursed for loss
caused by reliance on the K by being out in as good a position as he
would have been in had the K not been made
c. his restitution interest which is his interest in having restored to him
any benefit that he has conferred on the other party
2. 345 judicial Remedies Available
Judicial remedies available for the protection of the interest stated in 344
include a judgement/order
a. awarding a sum of money due under the K or as damages
b. requiring specific performance of a K or enjoining its nonperformance
c. requiring restoration of a specific thing to prevent unjust enrichment
d. awarding a sum of money to prevent unjust enrichment
e. declaring the rights of the parties &
f. enforcing an arbitration award
3. Availability of damages
1. the injured party has a right to damages for any breach by a party against
whom the K is enforceable unless the claim for damages has been suspended or
discharged


2. if the breach caused no loss or if the amount of the loss is not proved under
the rules stated in this chapter, a small sum fixed w/o regard to the amount of
loss will be awarded as nominal damages
B. Expectation damages Common Law
1. Get the aggrieved party to the level where they would be if full performance
had occurred
a. Direct
Expectation, Reliance measure caused by the breach
b. Indirect: awarded for secondarily loss resulting from breach
Incidental and Consequential
i. Incidental: extra costs incurred by the aggrieved party dealing
w/ the breach or mitigating losses from the breach
Seller has to reclaim goods
"They would also get any incidental damages that
occurred from the breach
ii. Consequential: other losses arising as a consequence of the
breach, may be loss profits, lost customers, lost business volume
& other breaches from the breach
Indirect losses from the breach.
Subtract any monies that were saved by the
breach
2. Cases
a. In cases of substantial performance, compensation for defects of trivial or
inappreciable importance has been developed. (Jacobs and Youngs v. Kent)
b. When substantial performance has been rendered, the remedy is the cost of
the completion or correction, unless that cost is grossly and unfairly out of
proportion to the good to be attained. When that is true, the measure is the
difference in value.(Khiterer v. Bell)
c. The proper measure of damages in cases involving the breach of a
construction contract is the difference between the amount due on the contract
and the amount necessary to properly complete the job or to replace the
defective construction, which is appropriate.. When the contractors breach was
unintentional and constituted substantial performance in good faith, and
remedying the defective performance would result in unreasonable economic
waste damages should be based ipon the difference between the value of the
property as constructed and the value if performance had been properly
completed. (Lyon v. Belosky Construction)
d. When the title of goods has not passed to the buyer, and the seller has the
property in his possession, the measure of damages upon the buyers breach
where there is an available market is the difference between the contract price or
market price. In absence of the market price, then whatever the difference is
between the contract price and price obtained on resale (Sackett v. Spindler)
e. Damages for breach of contract cannot be so excessive that they cause
economic waste (Peevyhouse v. Garland Coal & Mining)
C. Incidental Damages (indirect)
1. are extra cost incurred by the aggrieved party in dealing w/ the breach or trying to
prevent (mitigate) further losses
2. Include cost of storing/reshipping/reselling defective/repudiated goods, boarding up &
paying extra insurance on a building eft behind by vendor, handling a defective delivery,
arranging the purchase of substitute goods, paying a broker to find a sub buyer, or
spending employee time negotiating a replacement K w/ a new party


3. UCC 2-710 Sellers incidental damages
Incidental damages to an aggrieved seller include any commercially reason-able
charges, expenses or commissions incurred in stopping delivery, in the
transportation, care and custody of goods after the buyers breach, in connection
with return or resale of the goods or otherwise resulting from the breach.
4. UCC 2-715. Buyers Incidental . . . Damages.
1. Incidental damages resulting from the sellers breach include expenses
reasonably incurred in inspection, receipt, transportation and care and custody of
goods rightfully rejected, any commercially reasonable charges, expenses or
commissions in connection with effecting cover and any other reasonable
expense incident to the delay or other breach
5. For attorneys fees to be included
1. They are specified as recoverable in the parties agreement
2. They are granted by statue
3. The lawsuit is frivolous or in bad faith
D. Consequential Damages
1. Indirectly a result of the breach
2. downstream losses
3. lost profits, lost customers, lost business value,
3. Aggreived party must prove the consequential damage was caused by the breach
4. may be recovered only if, at the time the contract was made, a reasonable person
would have foreseen the damages as a probable result of a breach.
5. UCC 2-715. Buyers Incidental and Consequential Damages.
1. Incidental damages resulting from the sellers breach include expenses
reasonably incurred in inspection, receipt, transportation and care and custody of
goods rightfully rejected, any commercially reasonable charges, expenses or
commissions in connection with effecting cover and any other reasonable
expense incident to the delay or other breach
2. Consequential damages resulting from the sellers breach include
a. any loss resulting from general or particular requirements and needs of
which the seller at the time of contracting had reason to know and which
could not reasonably be prevented by cover or otherwise; and
b. injury to person or property proximately resulting from any breach of
warranty.
6. Cases
a. The damages to which a non-breaching party is entitled are those arising
naturally from the breach itself or those that are in the reasonable contemplation
of the parties at the time of contracting. Hadley v. Baxendale
b. A non-breaching party is only entitled to damages within the contemplation of
the parties at the time of contracting. Kenford v. County of Erie
E. Sellers Remedies Buyers Breach
1. Mitigation of damages: preventing the damages from becoming worse, try to cover or
buy from another seller
2. 2-703. SELLER'S REMEDIES IN GENERAL
Where the buyer wrongfully rejects or revokes acceptance of goods or fails to
make a payment due on or before delivery or repudiates with respect to a part or
the whole, then with respect to any goods directly affected and, if the breach is of
the whole contract, then also with respect to the whole undelivered balance, the
aggrieved seller may
a. withhold delivery of such goods
b. stop delivery by any bailee as hereafter provided ;


c. proceed under the next section respecting goods still unidentified to the
K;
d. resell and recover damages as hereafter provided 2-706;
e. recover damages for non-acceptance 2-708 or in a proper case the
price 2-709;
f. cancel.
3. 2-704 Sellers right to ID goods to the K notwithstanding breach or salvage
unfinished goods
1. An aggrieved seller under the preceding section may
a. identify to the K conforming goods not already identified if at the time
he learned of the breach they are in his possession or control;
b. treat as the subject of resale goods which have demonstrably been
intended for the particular K even though those goods are unfinished.
2. Where the goods are unfinished an aggrieved seller may in the exercise of
reasonable commercial judgment for the purposes of avoiding loss and of
effective realization either complete the manufacture and wholly identify the
goods to the K or cease manufacture and resell for scrap or salvage value or
proceed in any other reasonable manner.
4. 2-705 SELLER'S STOPPAGE OF DELIVERY IN TRANSIT OR OTHERWISE.
1. The seller may stop delivery of goods in the possession of a carrier or other
bailee when he discovers the buyer to be insolvent (2-702) and may stop delivery
of carload, truckload, planeload or larger shipments of express or freight when
the buyer repudiates or fails to make a payment due before delivery or if for any
other reason the seller has a right to withhold or reclaim the goods.
2. As against such buyer the seller may stop delivery until
a. receipt of the goods by the buyer; or
b. acknowledgment to the buyer by any bailee of the goods except a
carrier that the bailee holds the goods for the buyer; or
c. such acknowledgment to the buyer by a carrier by reshipment or as
warehouseman; or
d. negotiation to the buyer of any negotiable document of title covering
the goods
3. a. To stop delivery the seller must so notify as to enable the bailee by
reasonable diligence to prevent delivery of the goods.
b. After such notification the bailee must hold and deliver the goods
according to the directions of the seller but the seller is liable to the bailee
for any ensuing charges or damages.
c. If a negotiable document of title has been issued for goods the bailee is
not obliged to obey a notification to stop until surrender of the document.
d. A carrier who has issued a non-negotiable bill of lading is not obliged to
obey a notification to stop received from a person other than the
consignor.
5. 2-706 SELLER'S RESALE INCLUDING CONTRACT FOR RESALE.
1. the seller may resell the goods concerned or the undelivered balance thereof.
Where the resale is made in good faith and in a commercially reasonable manner
the seller may recover the difference between the resale price and the K price
together with any incidental damages allowed under 2-710, but less expenses
saved in consequence of the buyers breach.
2. Except as otherwise provided in subsection (3) or unless otherwise agreed
resale may be at public or private sale including sale by way of one or more
contracts to sell or of identification to an existing contract of the seller. Sale may


be as a unit or in parcels and at any time and place and on any terms but every
aspect of the sale including the method, manner, time, place and terms must be
commercially reasonable. The resale must be reasonably identified as referring
to the broken contract, but it is not necessary that the goods be in existence or
that any or all of them have been identified to the contract before the breach.
3. Where the resale is at private sale the seller must give the buyer reasonable
notification of his intention to resell.
4. Where the resale is at public sale
a. only identified goods can be sold except where there is a recognized
market for a public sale of futures in goods of the kind; and
b. it must be made at a usual place or market for public sale if one is
reasonably available and except in the case of goods which are
perishable or threaten to decline in value speedily the seller must give the
buyer reasonable notice of the time and place of the resale; and
c. if the goods are not to be within the view of those attending the sale the
notification of sale must state the place where the goods are located and
provide for their reasonable inspection by prospective bidders; and
d. the seller may buy.
5. A purchaser who buys in good faith at a resale takes the goods free of any
rights of the original buyer even though the seller fails to comply with one or more
of the requirements of this section.
6. The seller is not accountable to the buyer for any profit made on any resale. A
person in the position of a seller (2-707) or a buyer who has rightfully rejected or
justifiably revoked acceptance must account for any excess over the amount of
his security interest, as hereinafter defined (2-711(3)).
6. 2-708 SELLER'S DAMAGES FOR NON-ACCEPTANCE OR REPUDIATION.
1. respect to proof of market price, the measure of damages for non-acceptance
or repudiation by the buyer is the difference between the market price at the time
and place for tender and the unpaid K price together with any incidental
damages, but less expenses saved in consequence of the buyer's breach.
2. If inadequate, to put the seller in as good a position as performance would
have done then the measure of damages is the profit (including reasonable
overhead) which the seller would have made from full performance by the buyer,
together with any incidental damages, due allowance for costs reasonably
incurred and due credit for payments or proceeds of resale.
7. 2-709 ACTION FOR THE PRICE. specific performance
1. When the buyer fails to pay the price as it becomes due the seller may
recover, together with any incidental damages under the next section, the price
a. of goods accepted or of conforming goods lost or damaged within a
commercially reasonable time after risk of their loss has passed to the
buyer; and
b. of goods identified to the K if the seller is unable after reasonable effort
to resell them at a reasonable price or the circumstances reasonably
indicate that such effort will be unavailing.
2. Where the seller sues for the price he must hold for the buyer any goods which
have been identified to the K and are still in his control except that if resale
becomes possible he may resell them at any time prior to the collection of the
judgment. The net proceeds of any such resale must be credited to the buyer
and payment of the judgment entitles him to any goods not resold.
3. After the buyer has wrongfully rejected or revoked acceptance of the goods or
has failed to make a payment due or has repudiated, a seller who is held not


entitled to the price under this section shall nevertheless be awarded damages
for non-acceptance under the preceding section.
8. 2-710 SELLER'S INCIDENTAL DAMAGES.
Incidental damages to an aggrieved seller include any commercially reasonable
charges, expenses or commissions incurred in stopping delivery, in the
transportation, care and custody of goods after the buyers breach, in connection
with return or resale of the goods or otherwise resulting from the breach
9. 350 AVOIDABILITY AS A LIMITATION ON DAMAGES
1. Except as stated in Subsection (2), damages are not recoverable for loss that
the injured party could have avoided without undue risk, burden, or humiliation.
2. The injured party is not precluded from recovery by the rule stated in
Subsection (1) to the extent that he has made reasonable but unsuccessful
efforts to avoid loss.
10. 351 UNFORESEEABILITY AND RELATED LIMITATIONS ON DAMAGES
conseq.
1. Damages are not recoverable for loss that the party in breach did not have
reason to foresee as a probable result of the breach when the contract was
made.
2. Loss may be foreseeable as a probable result of a breach because it follows
from the breach
a. in the ordinary course of events, or
b. as a result of special circumstances, beyond the ordinary course of
events, that the party in breach had reason to know.
3. A court may limit damages for foreseeable loss by excluding recovery for loss
of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it
concludes that in the circumstances justice so requires in order to avoid
disproportionate compensation.
11. 352 UNCERTAINTY AS A LIMITATION ON DAMAGES
Damages are not recoverable for loss beyond an amount that the evidence
permits to be established with reasonable certainty.
12. 353 Loss due to emotional disturbance almost never granted
Recovery for emotional disturbance will be excluded unless the breach also
caused bodily harm or the contract or the breach is of such a kind that serious
emotional disturbance was a particularly likely result.
Seller remedies

2-703 No consequential damages in
Buyer's Breach - because it does
not cause problems downstream
if it occurred.

4 Main Remedies

2-706(1) Resale resell the goods to someone else


measure the damages for the
seller: K price - Resale price
if resell price is higher, seller can
only sue for incidental cost

Commerically reasonable



Seller remedies


doesn't fit if price goes up

2-708(1) Market price
differential
K price - market price


based on location, tender etc.


doesn't fit if price goes up

2-708(2) Loss Volume Seller the neri v, retail marine case


lost profits from high volume
sales


direct damage, because it cost
the seller a sale


no consequential damages

2-709 Action on price sue for the money, goods have
perished


just want them to pay


buyer must have received the
goods

2-710 Incidental charges

13.

14. Cases
a. Repudiation of a contract is justified only where the breaching partys breach
constituted a total or material breach, not merely a partial breach. Sackett v.
Spindler
b. The measure of damages owed to a wrongfully discharged employee is the
amount of salary agreed upon for the period of employment reduced by the
amount the employer proves the employee has earned or with reasonable effort
may have earned from other employment. Parker v. Twentieth Century-Fox Film
Corp.
E. Reliance Damages
1. Puts the aggrieved party in the same position had the K never been entered
2. Used when other damages are to speculative, cant figure what would have been
3. maybe award when a promise is enforced under 90
4. available only under reasonable expenses, may not recover if damages could have
been mitigated or avoided
5. 349 Damages Based On Reliance Interest
As an alternative to the measure of damages stated in 347, the injured party
has a right to damages based on his reliance interest, including expenditures
made in preparation for performance or in performance, less any loss that the
party in breach can prove with reasonable certainty the injured party would have
suffered had the contract been performed.


6. Cases
a. If damages from lost profits are impossible to calculate, the aggrieved party
may be entitled to recover reliance expenditures Security Stove & Mfg. Co. v.
American Ry. Express Co.
b. If a party acts to his detriment on the affirmative assurances of another, that
party can be protected by estopping the other party from alleging anything in
opposition to the natural consequences of his own course of conduct. 2) Yes.
Reliance damages are proper under promissory estoppel Goodman v. Dicker
F. Restitution Damages
1. relief that seeks to return the parties to their pre-K position, as if the K had occurred
2. requiring each party to restore to the other party any benefits conferred by that other
party that it would be unjust to retain
3. 2 forms
a. Damages
paying the value of benefits conferred
b. Specifc Restitution
an order in equity to restore a particular object to the rightful person
4. Comes in when a K has been rescinded
5. either party can get this
construction guy doesn't finish the job, he breaches, do you get to keep the
kitchen? the amount the kitchen adds to your home? calculated in different ways
6. 371 MEASURE OF RESTITUTION INTEREST
If a sum of money is awarded to protect a party's restitution interest, it may as
justice requires be measured by either
a. the reasonable value to the other party of what he received in terms of
what it would have cost him to obtain it from a person in the claimant's
position, or
b. the extent to which the other party's property has been increased in
value or his other interests advanced.
7. 373. Restitution When Other Party Is In Breach
1. Subject to the rule stated in Subsection (2), on a breach by non-performance
that gives rise to a claim for damages for total breach or on a repudiation, the
injured party is entitled to restitution for any benefit that he has conferred on the
other party by way of part performance or reliance
2. The injured party has no right to restitution if he has performed all of his duties
under the contract and no performance by the other party remains due other than
payment of a definite sum of money for that performance.
8. 374 374. Restitution In Favor Of Party In Breach
1. Subject to the rule stated in Subsection (2), if a party justifiably refuses to
perform on the ground that his remaining duties of performance have been
discharged by the other party's breach, the party in breach is entitled to
restitution for any benefit that he has conferred by way of part performance or
reliance in excess of the loss that he has caused by his own breach
2. To the extent that, under the manifested assent of the parties, a party's
performance is to be retained in the case of breach, that party is not entitled to
restitution if the value of the performance as liquidated damages is reasonable in
the light of the anticipated or actual loss caused by the breach and the difficulties
of proof of loss.
9. 377 Restitution in cases of Impracticabilty, frustration, non-occurrence
A party whose duty of performance does not arise or is discharged as a result of
impracticability, frustration of purpose, non-occurrence or disclaimer by a


beneficiary is entitled to restitution for any benefit that he has conferred on the
other party by way of part performance or reliance
10. Cases
a. A breaching party is entitled to restitution in excess of the loss caused by the
breach. Lancellotti v. Thomas
b. he measure of recovery for quantum meruit is the reasonable value of the
performance . . . and recovery is undiminished by any loss which would have
been incurred by complete performance . . . While the contract price may be
evidence of reasonable value of the services, it does not measure the value of
the performance or limit recovery. Rather, the standard for measuring the
reasonable value of the services rendered is the amount for which such services
could have been purchased from one in the plaintiffs position at the time and
place the services were rendered Blanton v. Friedberg
G. Liquidated Damages
1. can agree on the dollar amount of (or formula for computing) damages for a particular
type of breach
2. UCC 2-718. Liquidation or Limitation of Damages
1. Damages for breach by either party may be liquidated in the agreement but
only at an amount which is reasonable in the light of the anticipated or actual
harm caused by the breach, the difficulties of proof of loss, and the
inconvenience or non-feasibility of otherwise obtaining an adequate remedy. A
term fixing unreasonably large liquidated damages is void as a penalty.
elements: 1. reasonable amount 2. difficult/non-foreseeable 3. none
3. 356. Liquidated Damages And Penalties
1. Damages for breach by either party may be liquidated in the agreement but
only at an amount that is 1. reasonable in the light of the anticipated or actual
loss caused by the breach and the 2. difficulties of proof of loss. A term fixing
unreasonably large liquidated damages is unenforceable on grounds of public
policy as a penalty.
4. Cases
a. the test. RS 356(1) to see if the clause is reasonable under totality of the
circumstance. Wassenaar v. Panos
H. Punitive Damages
1. rarely award for K cases
2. there must be a tort action also
3. 355 Punitive Damages
Punitive damages are not recoverable for a breach of contract unless the
conduct constituting the breach is also a tort for which punitive damages are
recoverable.
I. Buyer Remedies
1. 2-711 BUYER'S REMEDIES IN GENERAL; BUYER'S SECURITY INTEREST IN
REJECTED GOODS.
1. Where the seller fails to make delivery or repudiates or the buyer rightfully
rejects or justifiably revokes acceptance then with respect to any goods involved,
and with respect to the whole if the breach goes to the whole K, the buyer may
cancel and whether or not he has done so may in addition to recovering so much
of the price as has been paid
a. "cover" and have damages under the next section as to all the goods
affected whether or not they have been identified to the K; or
b. recover damages for non-delivery.
2. Where the seller fails to deliver or repudiates the buyer may also


a. if the goods have been identified recover them; or
b. in a proper case obtain specific performance or replevy the goods
3. On rightful rejection or justifiable revocation of acceptance a buyer has a
security interest in goods in his possession or control for any payments made on
their price and any expenses reasonably incurred in their inspection, receipt,
transportation, care and custody and may hold such goods and resell them in like
manner as an aggrieved seller
2. 2-712 COVER"; BUYER'S PROCUREMENT OF SUBSTITUTE GOODS.
1. After a breach within the preceding section the buyer may "cover" by making
in good faith and without unreasonable delay any reasonable purchase of or K to
purchase goods in substitution for those due from the seller.
2. The buyer may recover from the seller as damages the difference between the
cost of cover and the K price together with any incidental or consequential
damages as hereinafter, but less expenses saved in consequence of the seller's
breach.
3. Failure of the buyer to effect cover within this section does not bar him from
any other remedy.
3. 2-713 BUYER'S DAMAGES FOR NON-DELIVERY OR REPUDIATION.
1. Subject to the provisions of this Article with respect to proof of market price,
the measure of damages for non-delivery or repudiation by the seller is the
difference between the market price at the time when the buyer learned of the
breach and the K price together with any incidental and consequential damages,
but less expenses saved in consequence of the seller's breach.
2. Market price is to be determined as of the place for tender or, in cases of
rejection after arrival or revocation of acceptance, as of the place of arrival.
4. 2-714 BUYER'S DAMAGES FOR BREACH IN REGARD TO ACCEPTED GOODS.
1. Where the buyer has accepted goods and given notification, he may recover
as damages for any non-conformity of tender the loss resulting in the ordinary
course of events from the sellers breach as determined in any manner which is
reasonable.
2. The measure of damages for breach of warranty is the difference at the time
and place of acceptance between the value of the goods
accepted and the value they would have had if they had been as warranted,
unless special circumstances show proximate damages of a different amount.
3. In a proper case any incidental and consequential damages under the next
section may also be recovered.
5. 2-715 BUYER'S INCIDENTAL AND CONSEQUENTIAL DAMAGES.
1. Incidental damages resulting from the sellers breach include expenses
reasonably incurred in inspection, receipt, transportation and care and custody of
goods rightfully rejected, any commercially reasonable charges, expenses or
commissions in connection with effecting cover and any other reasonable
expense incident to the delay or other breach.
2. Consequential damages resulting from the sellers breach include
a. any loss resulting from general or particular requirements and needs of
which the seller at the time of contracting had reason to know and which
could not reasonably be prevented by cover or otherwise; and
b. injury to person or property proximately resulting from any breach of
warranty.
6. 2-716 BUYER'S RIGHT TO SPECIFIC PERFORMANCE OR REPLEVIN.
1. Specific performance may be decreed where the goods are unique or in other
proper circumstances.


2. The decree for specific performance may include such terms and conditions as
to payment of the price, damages, or other relief as the court may deem just.
3. The buyer has a right of replevin for goods identified to the K if after
reasonable effort he is unable to effect cover for such goods or the
circumstances reasonably indicate that such effort will be unavailing or if the
goods have been shipped under reservation and satisfaction of the security
interest in them has been made or tendered.
7. 2-717 DEDUCTION OF DAMAGES FROM THE PRICE.
The buyer on notifying the seller of his intention to do so may deduct all or any
part of the damages resulting from any breach of the K from any part of the price
still due under the same contract.
8. 2-719 CONTRACTUAL MODIFICATION OR LIMITATION OF REMEDY.
1.Subject to the provisions of subsections (2) and (3) of this section and of the
preceding section on liquidation and limitation of damages,
a. the agreement may provide for remedies in addition to or in substitution
for those provided in this Article and may limit or alter the measure of
damages recoverable under this Article, as by limiting the buyers
remedies to return of the goods and repayment of the price or to repair
and replacement of non-conforming goods or parts; and
b. resort to a remedy as provided is optional unless the remedy is
expressly agreed to be exclusive, in which case it is the sole remedy.
2. Where circumstances cause an exclusive or limited remedy to fail of its
essential purpose, remedy may be had as provided in this Act.
3. Consequential damages may be limited or excluded unless the limitation or
exclusion is unconscionable. Limitation of consequential damages for injury to
the person in the case of consumer goods is prima facie unconscionable but
limitation of damages where the loss is commercial is not.
9. 2-723 PROOF OF MARKET PRICE: TIME AND PLACE.
1. If an action based on anticipatory repudiation comes to trial before the time for
performance with respect to some or all of the goods, any damages based on
market price shall be determined according to the price of such goods prevailing
at the time when the aggrieved party learned of the repudiation.
2. If evidence of a price prevailing at the times or places described in this Article
is not readily available the price prevailing within any reasonable time before or
after the time described or at any other place which in commercial judgment or
under usage of trade would serve as a reasonable substitute for the one
described may be used, making any proper allowance for the cost of transporting
the goods to or from such other place.
3.Evidence of a relevant price prevailing at a time or place other than the one
described in this Article offered by one party is not admissible unless and until he
has given the other party such notice as the court finds sufficient to
prevent unfair surprise.
Buyer Remdies

2-711

2-712 Cover go to another seller for
the items
not always an option


Elements



Buyer Remdies


1. good faith
2. not unreasonable
3. substitutive
purchase
4. price cover-price K+
incidental +
consequential
3. something close cant
not buy a pruis and go
get a BMW

2-713 Market Value market value-K price +
incidental +
consequentials
market value is when
the buyer learned of the
breach


non-delivery or
repudiation

2-714 non conforming
good or Breach of
Warranty
value promised goods-
actual goods+
incidentals +
consequentials
have to keep the
goods and noftiy the
seller
even if only kept 1/2

2-716 Specific
Performance
1. goods are unique
2. other proper
circumstances
(inability to cover)
order a custom car
to get the item not the
money

10.

J. Specific Performance
1. Orders a party to perform the unfulfilled promises rather than payment the other party
receives performance rather than payment
2. most common in real estate
3. Elements
a. unique
b. irreplaceable
4. 359. EFFECT OF ADEQUACY OF DAMAGES
1. Specific performance or an injunction will not be ordered if damages would be
adequate to protect the expectation interest of the injured party.
2. The adequacy of the damage remedy for failure to render one part of the
performance due does not preclude specific performance or injunction as to the
K as a whole
3. Specific Performance or an injunction will not be refused merely because there
is a remedy for breach other than damages, but such a remedy may be
considered in exercising discretion under the rule in 357
5. 360 FACTORS AFFECTING ADEQUACY OF DAMAGES
In determining whether the remedy in damages would be adequate, the following
circumstances are significant:
a. the difficulty of proving damages with reasonable certainty,
b. the difficulty of procuring a suitable substitute performance by means
of money awarded as damages, and
c. the likelihood that an award of damages could not be collected
6. 362 Effect of Uncertainty of terms


Specific performance or injunction will not be granted unless the terms of the K
are sufficiently certain to provide a basis for an appropriate order
7. 364 Effect of Unfairness
1. Specific performance or an injunction will be refused if such relief would be
unfair because
a. the contract was induced by mistake or by unfair practices,
b. the relief would cause unreasonable hardship or loss to the party in
breach or to third persons, or
c. the exchange is grossly inadequate or the terms of the contract are
otherwise unfair.
2. Specific performance or an injunction will be granted in spite of a term of the
agreement if denial of such relief would be unfair because it would cause
unreasonable hardship or loss to the party seeking relief or to third persons.
8. 366 Effect of Difficulty in Enforcement/Supervision
A promise will not be specifically enforced if the character & magnitude of the
performance would impose on the court burdens in enforcement or supervision
that are disproportionate to the advantages to be gained from enforcement & to
the harm to be suffered from its denial
9. 367 Contracts for personal service/supervision
1. a promise to render personal service will not be specifically enforced
2. a promise to render personal service exclusively for 1 employer will not be
enforced by an injunction against serving another if its probable result will be to
compel a performance involving personal relations the enforced continuance of
which is undesirable or will be to leave the employee w/o other reasonable
means of making a living
10. Cases
a. Where legal remedies are not practicable or adequate, specific performance
may be an adequate remedy to enforce a contract, even when the contract has
left terms open for future negotiation. Ammerman v. City Stores Co.
b. Specific performance may be ordered under the proper circumstances where
the remedy at law is not adequate. Laclede Gas v. Amoco Oil
V. Third Party Rights & Duties
A. 3rd Party
1. rights and duties of persons who are not in privity (that is, not parties) to the original
K, but who acquire rights or duties by assignment (of contract rights), by delegation (of K
duties), or by being third-party beneficiaries of contracts made by other parties
2. Which 3rd parties can sue?
a. intended beneficiaries
3. 302. Intended And Incidental Beneficiaries
1. Unless otherwise agreed between promisor and promisee, a beneficiary of a
promise is an intended beneficiary if recognition of a right to performance in the
beneficiary is appropriate to effectuate the intention of the parties and either
a. the performance of the promise will satisfy an obligation of the
promisee to pay money to the beneficiary; or
b. the circumstances indicate that the promisee intends to give the
beneficiary the benefit of the promised performance
2. An incidental beneficiary is a beneficiary who is not an intended beneficiary.
3. Elements
a. Is X a 3rd party? intent of parties, relationship between promisee & 3rd
party, creditor or donee promisee-debt to TPB or Promisee-gift to the
TPB b. Effect TPB


4. Determine the promisees Intend
a. Language of K
was the name in the K, who was intended to be paid/get benefits
b. factors
i. expressly designated in the K
ii. is the performance to be made directly to the 3rd party?
iii. rights in the K
iv. relationship to the promisee
5. Rights of the Beneficiary Vest? 311
a. manifest assent to the promise
b. brings suits to enforce the promise
c. materially changes position in justifiable reliance on the promise
6. 311 Variation of a duty to a beneficiary
1. Discharge or modification of a duty to an intended beneficiary by conduct of
the promisee or by a subsequent agreement between promisor and promisee is
ineffective if a term of the promise creating the duty so provides.
2. In the absence of such a term, the promisor and promisee retain power to
discharge or modify the duty by subsequent agreement.
3. Such a power terminates when the beneficiary, before he receives notification
of the discharge or modification, materially changes his position in justifiable
reliance on the promise or brings suit on it or manifests assent to it at the request
of the promisor or promisee.
4. If the promisee receives consideration for an attempted discharge or
modification of the promisors duty which is ineffective against the beneficiary,
the beneficiary can assert a right to the consideration so received. The promisors
duty is discharged to the extent of the amount received by the beneficiary.
7. 309 Defenses against the beneficiary
1.A promise creates no duty to a beneficiary unless a contract is formed between
the promisor and the promisee; and if a contract is voidable or unenforceable at
the time of its formation the right of any beneficiary is subject to the infirmity.
2. If a contract ceases to be binding in whole or in part because of impossibility,
illegality, non occurrence of a condition, or present or prospective failure of
performance, the right of any beneficiary is to that extent discharged or modified.
3. Except as stated in Subsections (1) and (2) and in 311 or as provided by the
contract, the right of any beneficiary against the promisor is not subject to the
promisors claims or defenses against the promisee or to the promisees claims
or defenses against the beneficiary.
4. A beneficiarys right against the promisor is subject to any claim or defense
arising from his own conduct or agreement.
8. 304 Creation of Duty to Beneficiary
A promise in a K creates a duty in the promisor to any intended beneficiary to
perform the promise, & the intended beneficiary may enforce the duty
9. 305 Overlapping duties to beneficiary & promise
1. A promise in a K creates a duty in the promisor to the promisee to perform the
promise even though he also has a similar duty to an intended beneficiary
2. Whole or partial satisfaction of the promisors duty to the beneficiary satisfies
to that extent the promisors duty to promisee
10. Donee v. Creditor
a. Creditor can sue
b. donee no but there is an exception


1. detrimental reliance-If the promisee tells the donee beneficiary of the
contract and should foresee reliance by the beneficiary, and the
beneficiary reasonably relies to her detriment, the beneficiary can sue
the promisee directly under a promissory estoppel/detrimental reliance
theory (see III.D., supra), even though the beneficiary cannot sue the
promisee as a third-party beneficiary.
12. 313 Government Contracts
2. In particular, a promisor who contracts with a government or govern-
mental agency to do an act for or render a service to the public is not subject to
contractual liability to a member of the public for consequential damages
resulting from performance or failure to perform unless
a. the terms of the promise provide for such liability; or
b. the promisee is subject to liability to the member of the public for the
damages and a direct action against the promisor is consistent with the
terms of the contract and with the policy of the law authorizing the
contract and prescribing remedies for its breach.
13. Cases
a. A promise made for the benefit of another may be enforced by the person for
the benefit of whom the promise was made. Lawrence v. Fox
b. Any third person, for whose direct benefit a contract was intended, can sue on
it. Seaver v. Ransom
c. 1. Under the third-party contract beneficiary doctrine in this state, a third party
can recover on the contract if shown to be an "intended beneficiary" under either
the "intent to benefit" or the "duty owed" test. This court adopts the intended
beneficiary approach set out in Restatement (Second) of Contracts 302 2.
Unpaid subcontractors and materialmen on a private property project are not
intended third-party beneficiaries under the defaulting general contractor's
performance bond. Cretex v. Construction leaders
d. a person is a donee only if the promisees contractual intent is either to make a
gift to him or to confer on him a right against the promisor Martinez v. Socoma
B. Assignment
1. A & B enter K, one of the parties seeks to transfer rights/duties under the K to a 3rd
2. a transfer of a right is called an assignment
3. Main issues
a. what rights may be assigned?
b. what is necessary for an effective assignment?
c. is the assignment revocable or irrevocable?
d. what are the rights & liabilities of the various parties?
e. that problems exist if there have been successive assignments of the same
right?
4. Rights to be assigned: all contractual rights may be
a. exceptions:
i. assigned rights would substantially change obligors duty; service K
(lawyer or doc), requirements & output Ks
ii. Rights assigned would substantially alter obligors risk
iii. assignment of future rights
iv. assignment prohibited by law
v. express contractual provision against assignment
5. Elements to an effective assignment
a. requirements of writing: can be oral, writing is must: wage assignment, interest
of land, intended as security interests


b. adequate description
c. present words of assignment
d. consideration not needed
6. 317 . Assignment of a Right
1. An assignment of a right is a manifestation of the assignors intention to
transfer it by virtue of which the assignors right to performance by the obligor is
extinguished in whole or in part and the assignee acquires a right to such
performance.
2. A contractual right can be assigned unless
a. the substitution of a right of the assignee for the right of the assignor
would materially change the duty of the obligor, or materially increase the
burden or risk imposed on him by his contract, or materially impair his
chance of obtaining return performance, or materially reduce its value to
him, or
b. the assignment is forbidden by statute or is otherwise inoperative on
grounds of public policy, or
c. assignment is validly precluded by contract.
7. 322 Contractual Prohibition Of Assignment **
1. Unless the circumstances indicate the contrary, a contract term prohibiting
assignment of the contract bars only the delegation to an assignee of the
performance by the assignor of a duty or condition.
2. A contract term prohibiting assignment of rights under the contract, unless a
different intention is manifested,
a. does not forbid assignment of a right to damages for breach of the
whole contract or a right arising out of the assignors due performance of
his entire obligation;
b. gives the obligor a right to damages for breach of the terms forbidding
assignment but does not render the assignment ineffective;
c. is for the benefit of the obligor, and does not prevent the assignee from
acquiring rights against the assignor or the obligor from discharging his
duty as if there were no such prohibition.
8. 323 Obligors Assent to assignment or delegation
1. a term of a K manifesting an obligors assent to the further assignment of a
right or an obligees assent to the future delegation of the performance of a duty
or condition is effective despite any objection
2. a manifestation of such assent after the formation of a K is similarly effective if
made for consideration or in circumstances in which a promise would be binding
w/o consideration or if material change of position takes place in reliance on the
manifestation
9. 324 Mode of assignment in general
it is essential to an assignment of a right that the obligee manifest an intention to
transfer the right to another w/o further action or manifestation of intention by the
obligee. The manifestation may be made to the other or to a 3rd person on behalf
and except as provided by statue or K, may be made either orally or writing
10. 327 Acceptance/disclaimer by the Assignee
1. A manifestation of assent by an assignee to the assignment is essential to
make it effective unless
a. 3rd person gives consideration for the assignment
b. the assignment is irrevocable by virtue of the delivery of a writing to a
3rd person


2. an assignee who has not manifested assent to an assignment may, w/n
reasonable time after learning of it existence and terms render it inoperative from
the start by disclaimer
11. 328 Interpretation of Words of Assignment; Effect of Acceptance of
Assignment
1. Unless the language or the circumstances indicate the contrary, as in an
assignment for security, an assignment of the contract or of all my rights under
the contract or an assignment in similar general terms is an assignment of the
assignors rights and a delegation of his unperformed duties under the contract.
2. Unless the language or the circumstances indicate the contrary, the
acceptance by an assignee of such an assignment operates as a promise to the
assignor to perform the assignors unperformed duties, and the obligor of the
assigned rights is an intended beneficiary of the promise.
12. 329 Repudiation by assignor & novation w/ assignee
1. the legal effect of a repudiation by an assignor of his duty to the obligor of the
assigned right is not limited by the fact that the assignee is a competent person &
has promised to perform the duty
2. if the obligor w. knowledge of the repudiation accepts any performance from
the assignee w/o reserving his rights against the assignor a novation arises by
which the duty of the assignor is discharged & similar duty of the assignee is
substituted
13. 334 Varation of obligors duty by assignment
1. if the obligor;s duty is conditional on the personal cooperation of the oringal
obligee or another person, an assignees right is subject to the same condition
2. if the obligors duty id conditional on cooperation which the obligee could
properly delegate to an agent, the condition may occur if there dis similar
cooperation by an assignee
14. 336 Defenses against an assignee
1. By an assignment the assignee acquires a right against the obligor only to the
extent that the obligor is under a duty to the assignor; and if the right of the
assignor would be voidable by the obligor or unenforceable against him if no
assignment had been made, the right of the assignee is subject to the infirmity.
2. The right of an assignee is subject to any defense or claim of the obligor which
accrues before the obligor receives notification of the assignment, but not to
defenses or claims which accrue thereafter except as stated in this Section or as
provided by statute.
3. Where the right of an assignor is subject to discharge or modification in whole
or in part by impossibility, illegality, non occurrence of a condition, or present or
prospective failure of performance by an obligee, the right of the assignee is to
that extent subject to discharge or modification even after the obligor receives
notification of the assignment.
4. An assignees right against the obligor is subject to any defense or claim
arising from his conduct or to which he was subject as a party or a prior assignee
because he had notice.
15. 338 Discharge of an Obligor after Assignment
1. Except as stated in this Section, notwithstanding an assignment, the assignor
retains his power to discharge or modify the duty of the obligor to the extent that
the obligor performs or otherwise gives value until but not after the obligor
receives notification that the right has been assigned and that performance is to
be rendered to the assignee.


2. So far as an assigned right is conditional on the performance of a return
promise, and notwithstanding notification of the assignment, any modification of
or substitution for the contract made by the assignor and obligor in good faith and
in accordance with reasonable commercial standards is effective against the
assignee. The assignee acquires corresponding rights under the modified or
substituted contract.
3. Notwithstanding a defect in the right of an assignee, he has the same power
his assignor had to discharge or modify the duty of the obligor to the extent that
the obligor gives value or otherwise changes his position in good faith and
without knowledge or reason to know of the defect.
4. Where there is a writing of a type customarily accepted as a symbol or as
evidence of the right assigned, a discharge or modification is not effective
a. against the owner or an assignor having a power of avoidance, unless
given by him or by a person in possession of the writing with his consent
and any necessary endorsement or assignment;
b. against a subsequent assignee who takes possession of the writing
and gives value in good faith and without knowledge or reason to know of
the discharge or modification.
C. Delegation
1. transfer of contractual duties
2. Main issues
a. what duties may be delegated?
b. how does one make a valid delegation?
c. what are the rights/liabilities of the various parties where there has been a
valid delegation?
3. Terminology
X and Y have a contract. Y delegates duties thereunder to Z. Y is the obligor
because Y is the one with the duty to perform the obligation. Y also is the
delegator (sometimes called the delegant) because Y delegated the duty. Z is
the delegate (sometimes called the delegatee) because Z is the one to whom
the duty was delegated. X is called the obligee, because X is the one for whom
Y or Z is obligated to perform.
4. All contractual duties may be delegated, written/oral, manifest present intention
exception
i. duties of personal judgment or skill
ii. special trust
iii. change of obligees expectancy
iv. contractual restriction on delegation
5. UCC 2-210. Delegation of Performance; Assignment of Rights
1. 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 party delegating of any duty to perform or any liability
for breach.
2. Except as otherwise provided in Section 9-406, unless otherwise agreed, all
rights of either seller or buyer can be assigned except where the assignment
would materially change the duty of the other party, or increase materially the
burden or risk imposed on him by his contract, or impair materially his chance of
obtaining return performance. A right to damages for breach of the whole
contract or a right arising out of the assignors due performance of his entire
obligation can be assigned despite agreement otherwise.


4. Unless the circumstances indicate the contrary a prohibition of assignment of
the contract is to be construed as barring only the delegation to the assignee of
the assignors performance.
**5. An assignment of the contract or of all my rights under the contract or an
assignment in similar general terms is an assignment of rights and unless the
language or the circumstances (as in an assignment for security) indicate the
contrary, it is a delegation of performance of the duties of the assignor and its
acceptance by the assignee constitutes a promise by him to perform those
duties. This promise is enforceable by either the assignor or the other party to the
original contract.
6. The other party may treat any assignment which delegates performance as
creating reasonable grounds for insecurity and may without prejudice to his rights
against the assignor demand assurances from the assignee (Section 2-609).
6. 318. Delegation of Performance of Duty
1. An obligor can properly delegate the performance of his duty to another unless
the delegation is contrary to public policy or the terms of his promise.
2. Unless otherwise agreed, a promise requires performance by a particular
person only to the extent that the obligee has a substantial interest in having that
person perform or control the acts promised.
3. Unless the obligee agrees otherwise, neither delegation of performance nor a
contract to assume the duty made with the obligor by the person delegated
discharges any duty or liability of the delegating obligor.
7. 319 Delegation of performance of condition
1. where a performance by a person is made a condition of a duty, performance
by a person delegated by his satisfies that requirement unless the delegation is
contrary to PP or terms of the agreement
2. Unless otherwise agreed an agreement requires performance of a condition by
a particular person only to the extent that the obligor has a substantial interest in
having that person perform or control the acts required
D. Cases
1. that where a person contracts with another to do work or perform service, and it can
be inferred that the person employed has been selected with reference to his individual
skill, competency, or other personal qualification, the inability or unwillingness of the
party so employed to execute the work or perform the service is a sufficient answer to
any demand by a stranger to the original contract of the performance of it by the other
party, and entitles the latter to treat the contract as at an end, notwithstanding that the
person tendered to take the place of the contracting party may be equally well qualified
to do the service British Wagon v. Lea
2. Since the terms of the contract were undefined, the seller would be obligated to obey
the demands of the assignee. The demands would create a new measure of ice to be
supplied and a new term in the agreement that the seller never bound itself to perform.
Crane ice cream v. terminal freezing & heating
3. A contract is assignable except when there is some reason why the non-assigning
party would find performance by the other party unsatisfactory. Sally Beauty Co. v.
Nexxus Products Co.