Erin Kitchens Wong

CONTRACTS OUTLINE
ENFORCEMENT: CONSIDERATION & PROMISSORY ESTOPPEL

Consideration
1. Consideration: to constitute consideration, a performance or a return promise
must be bargained for.
a. Bargained-for-exchange: performance or promise is sought by the
promisor in exchange for their promise and is given by the promise in
exchange for that promise. For example:
i. an act other than a promise
ii. a forbearance
iii. the creation, modification, or destruction of a legal relation
b. Illusory Contract: only one party promising a consideration that is so
insubstantial no obligations are imposed.
i. Unenforceable due to lack of consideration, lack of mutuality, and
indefiniteness.
c. Valuable consideration: to uphold a contract, consideration must be
something of value – something either beneficial to one party or
disadvantageous to the other.
(Hamer v. Sidway – Uncle promises $$ to nephew if he refrains from drinking)
i. Nominality Doctrine: nominal payments and vague statements of
consideration are insufficient to support a contract. Clearly SHAM
or nominal consideration.
(In Re Greene – man pays mistress $$$ hush money, she only has to pay $1)
ii. Adequacy Doctrine: (peppercorn) Mere inadequacy of
consideration will not void a contract. Valid contract exists if there
is some consideration.
(Batsakis – during war/famine in Greece bargained $25 for $2,000 USD in the future) (Wolford – old man
promises $10,000 if they name their son after him)

d. Gift: one-sided non-reciprocal exchange. A gift has no consideration.

i. Promise to make a gift is not enforceable.
(Kirskey v. Kirsky – BIL promised widow he could live on her land, was a gift not a contract)
Promissory Estoppel
2. Promissory Estoppel: a promise is enforceable by law, even if made without
formal consideration, when a promise detrimentally relied on promise and
injustice can only be avoided by enforcing the promise. Requires:
a. Promise induces reasonable reliance (action or forbearance)
b. Promisee relied on the promise
c. Injustice can only be avoided by enforcement
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Definitiveness
3. Definitiveness: agreement must be sufficiently definite to enable a court to give
it an exact meaning. Otherwise, it is unenforceable.
a. Essential terms: type of good, quantity, time, and price.
a. How definite? Consider the intent of the parties. Did they intend to only
be bound once price was set? If not, then a contract can be definite
enough w/ out a set price. (UCC)
Trimmer v. Van Bomel – jack black movie. Promise to “support him for the remainder of his life” not
specific or definite enough for court to enforce specific performance. Courts cannot dictate terms, can
only enforce those agreements already in place.
**UCC more likely to gap fill if there was an intent to promise

BARGAIN: OFFER & ACCEPTANCE

Offer
1. Offer: Expression of a present intent to enter into a contract w/ an identified
offeree. Must be reasonably certain and identify parties, subject, and some sort
of price term.
a. Invitation to bargain v. offer
a. Intent: must be clear and specific language to convey actual intent to offer
that can be accepted and form a contract
(Courteen Seed – telegrams sent back and forth insufficient to constitute a clear offer)
b. Offer cannot be withdrawn once accepted.
(Fairmount Glass – price quote + invitation for acceptance = offer. Cannot be revoked once accepted)
c. Preliminary negotiations do not constitute offers.
d. Advertisements and price quotes almost never constitute offers.
e. Irrevocable offers: option contracts, certain firm offers, construction bids
can all operate as irrevocable offers.
i. Option Contract: (Restatement) When someone offers to hold
open an offer until its accepted or until a specified time.
ii. An offer is binding as an option contract if its:
1. Is in writing and signed by the offeror, recites a purported
consideration for the offer, and proposes an exchange on fair
terms within a reasonable time;
a. OR is made irrevocable by statute
b. OR the offeror should reasonably expect to induce
action or forbearance of a substantial character; the
offer induces such reliance, and enforcement is
necessary to avoid injustice.
iii. Firm Offer (UCC): Merchant’s signed, written offer may remain
open and be irrevocable for (1) the time stated in the offer, or (2) a
reasonable time (<3 months).
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Acceptance
2. Acceptance: A manifestation of assent to the terms set by the offeree in a
manner invited or required by the offer.
f. Offeror can require acceptance by any reasonable manner/medium. If
they do not specify how offer must be accepted, offeree can accept in any
reasonable way.
i. Acceptance by performance: requires at least part of what the
offer requests to be performed or tendered
ii. Acceptance by promise: requires that offeree complete every act
essential to making of the promise
g. Power of Acceptance Terminated: an offeree’s power of acceptance is
terminated at the time specified in the offer, or at the end of a reasonable
time.
(Ever-tite Roofing – accepted offer by showing up to do the work. Commencing work was an instrument
of acceptance laid out in contract and was done within a reasonable amount of time).
i. Offeree’s power of acceptance terminated if:
ii. Offeror manifests an intent NOT to enter into the proposed
contract.
iii. Rejection or counteroffer by the offeree
iv. Lapse of time
v. Revocation by the offeror
vi. Death or incapacity of the offeror or offeree
h. Direct Negotiations: When parties are bargaining face-to-face or over the
phone, the time for acceptance does not usually extend beyond the end of
the conversation.
Counteroffer
3. Counteroffer: an offer made by an offeree to offeror proposing a substituted
bargain differing from that proposed by the original offer.
i. Constitutes a rejection of original offer.
j. Restatement
i. Mirror Image Rule: offer can only be accepted if the offeree agreed
precisely and completely to the terms offered.
1. If terms differ, the “acceptance” is a counteroffer and
terminates the original offer.
ii. Last Shot Doctrine: If one or both parties performed, even though
mirror image rule had not been satisfied, both parties are bound to
the terms of the last offer.
UCC 2-207
k. UCC § 2-207. Additional Terms in Acceptance or Confirmation.
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i. Nonmerchant contract: if at least one party not merchant,

additional or new terms are treated as proposals and become part
of the contract only if the offeror expressly agrees to them.
ii. Merchant contract: If all parties are merchants, any new or
modified terms automatically become part of the agreement
unless: (1) offer explicitly states acceptance is limited to terms of
the original offer, (2) additional or different terms materially alter
the offer, or (3) Offeror objects to additions within reasonable
time.
UCC Language:
iii. A written expression of acceptance or a written confirmation
constitutes an acceptance even if it includes additional or different
terms. (2-207(1)).
1. UNLESS the acceptance is expressly conditioned on assent to
the additional or different terms.
2. If acceptance not truly conditional on assent to new terms,
the “after the comma” language in UCC 2-207(1) does not
apply. Proceed to 2-207(2)  below
iv. Additional terms between merchants become part of the contract
unless:
1. The original offer expressly limits acceptance to the terms of
the offer
2. They materially alter it
3. Notification of objection to them has already been given or is
given within a reasonable time after notice of them is
received. (UCC 2-207(2))
v. If acceptance is expressly conditioned on assent to the additional or
different terms, and the other party has not accepted such terms
BUT the parties’ conduct recognizes the existence of a contract,
THEN the contract consists of the terms to which the parties agree
(UCC 2-207(3)).
1. Courts will fill in the “gaps” with UCC gap filling provisions
2. TA Flowchart
(Ionics – thermostats defective and purchase order form contained various conditions in small print.
Terms were contradictory but conduct of parties established existence of contract.)
(Step Saver – Telephone order, purchase order, ship w/ invoice. Conflicting terms regarding warranties.
“Box-top” license materially altered the parties’ agreement  so opening box was NOT conditional
acceptance. UCC default terms filled in blanks and provided for express and implied warranties.)
Oral Promises
4. Oral Promises: test for determining whether parties intend to be bound by oral
agreement:
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b. Did the parties expressly reserve the right not to be bound in the absence
of a signed writing?
c. Was there partial performance?
d. Have all the parties agreed on all terms?
e. Was the agreement one that would normally be reduced to writing?
5. Idiosyncratic Bargainer: “unreasonable” or idiosyncratic bargainer bears the cost
of such a system since they have to take special care to signal adequately their
belief.
f. If you are someone who wants something very specific, must be very clear
and specific in your contract.
6. Contract implied-in-fact: mutual intent to contract which does not come from
implied duty or obligation, but out of FACTS from which consent may be inferred
g. Requires:
i. Mutual agreement
ii. Intent to promise
iii. Implied in fact (not in words)
Bailey v. West – horse buyer and horse caretaker. Confusion about who actually owned the horse and
who should pay the caretaker for his services. Held there was no mutual agreement or “intent to
promise” b/w parties. No contract implied in fact.

CONTRACTUAL RELATIONSHIPS & CONDUCT

Preliminary Agreements
1. Preliminary Agreements:
a. Parties are liable for promises made during preliminary negotiations when:
(Red Owl Stores – p spent significant amount of $$ preparing to own a Red Owl store, last minute Red
Owl backed out)
i. One party makes a promise that they should reasonably expect to
induce action or forbearance
ii. Other party reasonably relies
iii. The relying party sustains an injury
b. Type I: complete and binding both sides to ultimate objective. Offer,
acceptance, and consideration  what we could consider a contract.
i. Is there an expressed reservation of the right not to be bound in the
absence of a written instrument?
ii. Has there been partial performance?
iii. Have all the terms of the alleged contract been agreed upon?
iv. Is the agreement at issue the type of contract that is usually
committed to writing?
c. Type II: Incomplete, only obligates parties to negotiate in good faith. NOT
binding to ultimate contractual objective.
(Brown v. Cara – MOU is a type II non-binding prelim-agreement b/c intention of parties is obvious. Court
should only enforce and preserve agreements that were intended to be binding)
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i. Is the intent to be bound revealed by the language of the

agreement?
ii. What is the context of the negotiations?
iii. Existence of open terms?
iv. Partial performance?
v. Necessity of putting the agreement in final form, as indicated by the
customary form of such transactions (?)
d. Some states hold that prelim-agreements are unenforceable if ANY
essential term is open to negotiation
i. Other jurisdictions hold that prelim-agreements can create a
binding obligation to negotiate remaining terms in good faith
e. Policy: courts should avoid trapping parties in surprise contractual
obligations that were never intended.
i. But courts should enforce and preserve agreement that were
intended as binding.
Relational Contracts
2. Relational Contract (UCC 2-306): terms must be made in good faith and not
unreasonably disproportionate to commercial standards.
a. Requirements Contracts: contract that calls for the seller to provide as
many goods as the buyer requires.
(Eastern Airlines – requirements contract for fuel is valid as long as the quantity is not unreasonable or
disproportionate to prior demands. Mere claim of unprofitability cannot excuse performance).
b. Output Contract: contract where one party agrees to purchase all the
product of a certain type produced by the other party.
c. Exclusive Dealings Contract: obligation by seller to use best efforts to
supply the goods, and by the buyer to use best efforts to promote their
sale.
(Lady Duff-Gordon – fashion influencer exclusive dealings contract)
i. Reasonable diligence AND good faith
1. Requires parties to take into account interest of other party
and potentially incur some losses
2. Does NOT require parties to incur so many losses that they
are forced in bankruptcy or make every conceivable effort to
accomplish a given goal.

REGULATING BARGAINING PROCESS

Unconscionability
1. Unconscionable Contracts: Formation defense. Contractual term was so
procedurally or substantively unfair and offensive that the harmed party should
be relieved from its consequences. All unconscionable contracts will NOT be
enforced. Must have BOTH:
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a. Substantive unconscionability: terms of the agreement itself unfair (i.e.

unreasonable price or term)
b. Procedural Unconscionability: defective bargaining process (i.e.
oppression or surprise)
William v. Walker-Thomas Furniture – single widow entered into contract w/ furniture store about
installment plans. Once she defaulted on one item, store took back all items based on contract provision.
Contract held as unconscionable b/c there was absence of meaningful choice and gross inequality of
bargaining power b/w parties).
Duress
2. Duress: If party’s acceptance of a contract is induced by an improper threat by
another that leaves the victim no reasonable alternative, the contract is voidable.
a. Threat is improper if:
i. the threat is a breach of the duty of good faith and fair dealing
ii. Resulting exchange is not on fair terms
iii. Threatened act would harm the recipient and would not
significantly benefit the party making the threat
b. Requires that the threatened party have no reasonable alternative but to
assent.
c. Three types: duress of person, duress of goods, economic duress
(Austin v. Loral – Austin threatened to stop producing item unless Loral paid more, Loral had no
reasonable alternative and had to complete the items on time for the U.S. gov’t. Contract voidable on
ground of duress)
Mental Illness
3. Mental Illness: Person incurs only voidable contractual duties by entering into a
transaction by reason of mental illness or defect.
a. Unable to understand the nature and consequences of the transaction
b. Unable to act in a reasonable manner in relation to the transaction
c. Other party has reason to know of the mental condition
**If the contract is just and the other party did not know of the condition,
then the contract will be enforced IF there has been partial performance
(Faber – man purchased land while suffering from manic episode. Contract voidable due to mental
disorder of Faber.)
Illegal/Immoral
4. Illegal & Immoral: contractual promise is unenforceable on grounds of illegality if
any part of the contract is illegal (consideration, performance, of contractual
object)
a. Unenforceable due to public policy if a court determines that enforcing
that contract would be repugnant to the public interest or welfare or to
good morals.
b. when deciding whether certain contracts should be enforceable, courts
must weigh:
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i. Interests of parties involved, interests of third parties (i.e.

externalities), and importance of enforcing promises vs. public
policy reasons AGAINST certain types of contracts (i.e., illegal or
immoral contracts)
c. Policy:
i. autonomy theory- moral obligation to keep one’s promises. Law
should respect the intent of the parties. Protect innocent parties.
ii. Economic theory- incentives. Law should not incentivize illegal or
immoral behavior by protecting it.
(Watts – illegal gambling placing bets w/ booky. Contract for a criminal act may not give rise to a cause
of action)
(In re Baby M – surrogacy contract in conflict w/ public policies of state. Violates rights of natural
parents. Contract void)

IDENTIFYING & INTERPRETING TERMS

Parol Evidence Rule
1. Parol Evidence Rule: agreement b/w parties that neither will be permitted to
introduce evidence in court other than the written contract itself if a dispute
arises.
a. Integration:
i. Unintegrated writing: parol evidence rule does NOT apply. Other
terms are admissible
ii. Partially integrated writing: writing is a final statement with regard
to some terms, but not to others. Additional terms are admissible
that do not contradict the terms of the writing
iii. Fully integrated writing: parol evidence rule applies. Complete and
exclusive statement of all terms, therefore no other terms are
admissible.
b. Old Common Law: Hard parol evidence rule. Textualist approach
i. Natural omission test: additional terms are admissible only if
parties would have naturally omitted those terms in the writing. If
parties would have naturally omitted terms, then the writing is not
fully integrated.
ii. Four corners presumption: if the writing appears to be complete,
then courts assume that agreement is fully integrated
iii. Plain Meaning Rule: courts will assume parties intended to give a
standard, dictionary or “objective” meaning to any disputed terms.
1. When terms are ambiguous, courts can use extrinsic
evidence to interpret
2. Restatement II and UCC reject plain meaning rule.
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(W.W.W. – contract contained a reciprocal cancellation provision, but p claims that provision was only
supposed to apply to him. When a contract is unambiguous and complete, it will be enforced according
to its terms.)
c. Restatement/Modern Common Law: Split hard/soft parol evidence rule.
i. Intent of the parties test. Considers evidence outside four corners
d. UCC: Soft parol evidence rule. Apply contextualism
i. Certain inclusion test: excludes extrinsic evidence of consistent
additional terms if the parties certainly, rather than naturally,
would have included such terms in their written agreement.
ii. Dealings, Usage of trade, course of performance can make
admissible evidence to explain or supplement ambiguous terms of
an agreement
e. Merger/Integration Clause: presumptively conclusive evidence of full
integration but can be a “rebuttable presumption” in some courts.
i. Ex) “this agreement sets forth the entire understanding of the
parties…”
Oral agreements
2. Oral Agreement can vary a written contract under the following conditions:
a. Agreement must be a collateral one
b. Must not contradict express or implied provisions of the written contract
c. Must be one that parties would not ordinarily be expected to embody in
writing
(Mitchell v. Lath – oral agreement to remove icehouse from property, but not included in written
contract. That would normally be included in written contract – case dismissed).
d. Evidence of oral contract terms are permissible if:
i. Contract is silent on the matter
ii. Alleged oral agreement doesn’t contradict or alter the meaning of
the written terms.
(Masterson – made oral agreement limiting the buyback option to family only to keep ranch in the
family. Exception to the parol evidence rule, extrinsic evidence allowed).
Plain Meaning Rule
Textualism & Contextualism
3. Contextualism: court strives to interpret contractual provisions using the context
under which the parties drafted the provisions.
a. Ex post approach which considers the effect of the holding on the parties
in the case at hand
b. Takes into consideration the fact that parties do not always draft clear
contracts, so in order to enforce a contract as the parties intended, judges
should look to outside evidence of the parties’ intent
c. Prevents the exploitation of unsophisticated individuals who enter into
contracts
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4. Textualism: courts strive to interpret contractual provisions using the text of the
provisions alone
a. Ex ante approach, considers effect of the holding on parties in the future
b. Incentivizes parties to draft clear contracts
c. Treats parties in the case at bar as a means to an end

DEFINING TERMS
Promises, Conditions & Warranties
1. Promises, Conditions, & Warranties
a. Promise: if a party breaks a promise, the other party still has to perform
BUT they can sue for damages.
i. Can be modified
b. Condition: If a party violates a condition, then the other party does not
have to perform.
i. Can be waived
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.
ii. Both parties can agree to waive condition
iii. Ambiguous terms will be ruled a promise, not a condition
iv. Nonoccurrence of condition will constitute a breach
(Howard v. Federal Crop – plowed their field right after crops were destroyed. Insurance contract
required that field not be plowed until after inspectors came. Contract did NOT create an express
condition b/c it did not have explicit language to that effect)
c. Express Warranty: created by seller when they:
i. Provide an affirmation of fact or promise relates to the goods
ii. Provide a description of goods
iii. Provide a sample or model of goods
iv. NOT Warranty: opinions, affirmation of value
v. Breach of Express Warranty=breach of contract
Oral Modification
2. Oral Modification
a. Pre-existing duty rule (Common Law): performance of a legal duty that is
already owed is insufficient consideration. Modification of a promise not
enforceable without new consideration
(Alaska Packers – fisherman demand more $$. Not enforceable b/c no consideration)
b. Restatement: a promise modifying a duty under a contract is binding if:
i. Contract not fully performed on either side
ii. Modification is fair and equitable, in light of circumstances that
were unforeseen by either party at time of contract (i.e. housing
prices went down)
iii. Provided by statute
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iv. Justice requires enforcement in view of reliance on promise

UCC 2-209
c. UCC: 2-209 Modification, Rescission and Waiver
i. Agreement modifying a contract needs no consideration to be
binding IF it’s made in good faith
ii. NOM provision cannot be modified or rescinded, unless
modification is in writing and signed by both parties
iii. If attempt at modification or rescission does not meet requirements
of (ii)…it can operate as a waiver of a NOM provision
iv. A party who has made a waiver affecting an executory portion of
the contract may retract the waiver by reasonable notification,
unless retraction would be unjust due to reliance on waiver.
v. UCC 2-209 Flowchart
Summary: NOM clause can be “waived” if the two parties make an oral modification. But some
jurisdictions required detrimental reliance on “waiver”, since that makes more sense.
(Wisconsin Knife Works – detrimental reliance on oral agreement about delivery dates. Oral modification
acted as a waiver b/c it was detrimentally relied on)
PerfectTender/Implied Warranty
3. Implied Warranty of Merchantability: warranty that the goods shall be
merchantable is implied in contract for their sale if seller is a merchant of those
goods.
a. Pass without objection in the trade
b. Fair average quality
c. Fit for ordinary purposes for which goods are used
4. Perfect Tender Rule: (UCC) goods and their delivery must conform to the
contract in every respect (including time of delivery).
(Ramirez v. Autosport – new van had several defects. Buy can reject goods that do not conform exactly
to contract of sale and seller has not cured defects within a reasonable amount of time)
a. If the goods or tender of delivery fail in any respect to conform to the
contract the buyer may:
i. Reject the whole
ii. Accept the whole
iii. Accept any units and reject the rest
iv. Seller’s options:
b. Seller can have further reasonable time to substitute conforming tender.
c. If buyer accepts non-conforming goods, they can revoke acceptance if:
i. the buyer reasonably assumed that non-conformity would be cured
but has not
ii. Buyer did not discover the nonconformity and acceptance was
reasonably induced by seller’s assurances or difficulty of discovery
before acceptance.
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d. Timing: revocation must occur within a reasonable time after buyer

discovers or should have discovered non-conformity and before any
substantial change to the goods.

MISTAKE & EXCUSE

Excuse
1. Excuse: an exogenous risk materializes and renders performance impossible,
impracticable, or pointless.
a. Performer’s Rule: risks associated w/ performance of a contractual
obligation generally assigned by default to the performing party.
i. Unless contract clearly allocates burden of risks.
(Stees v. Leonard – quicksand under building they tried to build. Performing party bound to make good
on his obligations, notwithstanding any accident)
Exceptions:
b. Frustration of purpose: buyer’s excuse
i. party is excused from duties under a contract when there arises: (1)
unexpected contingency, (2) party was without fault, (3)
purpose/value of contract substantially frustrated.
(Lloyd v. Murphy – car lot leased to Ds during war time ban on selling cars. No frustration of purpose b/c
war conditions were reasonably foreseeable and did not completely destroy value of lot.)
c. Impossibility/Impracticability: seller’s excuse.
i. Impossibility (Old Common Law): arises from the perishing or
destruction of the person or thing (Taylor – concert hall destroyed by fire)
ii. Impracticability (UCC and modern common law): arises when (1)
unexpected/unforeseeable contingency occurs, (2) neither party
assumed the risk, and (3) performance is rendered commercially
impracticable
1. Commercial impracticability: duty excused if performance
can only be accomplished with unreasonable difficulty or at
extreme and unreasonable cost.
Mistake
2. Mistake: endogenous risk materializes when one or both parties are mistaken
about a material fact that exists at the time of their agreement (agreed to sell a
barren cow, later found out it was fertile).
a. Mutual Mistake: contract voidable by adversely affected party if it
contains a mistake by both parties at the time of the contract about a
basic assumption that has material effect on contract (mistaken about the
same thing)
i. UNLESS party bears the burden of risk a mistake
1. Agreement provides one person to bear burden
2. Party knew they didn’t have enough info to know all the
risks, but entered contract anyway
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3. Court allocated risk on the ground of reasonability

b. Unilateral Mistake: contract voidable by adversely affected party if it
contains a mistake by one party at the time of the contract about a basic
assumption that has a material effect on contract. AND the mistake either:
i. Makes enforcement of the contract unconscionable
ii. Other party had reason to know of the mistake or fault caused the
mistake
c. Due Diligence: parties must exercise due diligence to avoid mistake.
i. Not a mistake if they could have easily figured it out.

BREACH
Substantial Performance
1. Breach: party has failed to fully perform by the due date. Injured party may sue
for a remedy.
a. Substantial Performance (Restatement): an equitable defense to breach
of contract asserted by a party who has substantially performed their
contract obligations prior to breaching the contract
i. If a party substantially performs obligations (only small details
omitted), it will not be forced to bear the replacement cost needed
to fully comply.
1. Instead, will owe the difference in value b/w full
performance and performance received.
ii. However, if other party’s performance materially impacts essence
of what was contract  material breach
(Jacob & Youngs v. Kent – wrong type of pipe installed by contractors. Way too expensive to replace all
the piping, so court held they “substantially performed”)
Anticipatory Repudiation
2. Anticipatory Repudiation: a definite and unequivocal manifestation that the
party will not render performance. Injured party may sue immediately as if there
were a breach of contract and does not have to perform their part of the
promise.
(Hochster v. De La Tour – courier repudiated contract to travel with P, P obtained another on equally
good terms, but later than desired start date. P has option to file suit for damages immediately in
anticipation of breach)
a. Must be a voluntary affirmative act or sufficiently positive language to be
reasonably interpreted to mean that party will not or cannot perform.
i. Expressing doubts insufficient
b. Prospective inability to perform, with no assurances given in a reasonable
amount of time  can be treated as anticipatory repudiation (i.e.
bankruptcy)
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c. Repudiation alone gives rise to a claim for damages for total breach (even
before breach committed by non-performance or anything has been
received in exchange)
d. Can be nullified by retraction before other party materially relies on
repudiation
(Truman Flatt – entered into contract to purchase land, zoning permit denied so they requested
to be let out of contract, then decided to continue w/ contract anyway. Party can rescind or
retract anticipatory repudiation if other party has not materially relied upon it or provided
notice that it considers the contract repudiated)
3. Remedy for Anticipatory Repudiation: damages measured by market value at
the time the party learned of repudiation + a commercially reasonable amount of
time.
a. Some jurisdictions require mitigation of damages and just sue
immediately, others allow injured party to wait until time for performance
to mitigate.

REMEDIES
Damages
1. Damages
a. Nominal: no provable loss in a breach, court can award trivial sum of $$.
(i.e. client breaches contract, but you find another client easily at no extra
cost)
b. Expectancy: forward looking. Puts P in position they would have been if
the contract had been performed.
i. Measured by promised condition minus the present condition
ii. Provable loss.
iii. Value of performance that should have been rendered + any
incidental damages or recoverable consequential damages resulting
from breach, - any losses or costs that the injured party saved by
not having to perform the contract.
iv. If expectations damages are too speculative to measure, or they
would not have profited at all from contract  reliance damages
c. Reliance: backward looking. Puts P back in position they were in before
the contract was made.
i. Measured by prior condition minus present condition
ii. Reliance, but no loss of profits.
iii. Injured parties expenditures minus any loss the injured party would
have sustained in the contract
iv. Can also be compensated for pain and suffering if they were
reasonably foreseeable consequence of a breach (nose job case)
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d. Restitution: backward looking. Returns any benefit one party conferred on

the other party. BOTH parties entitled to restitution damages.
e. Punitive: not in contract law.
f. See Attack Outline
g. Cost of Completion v. Difference in Value: central to contract of
incidental? Cost of completion reasonably proportionate or unreasonably
disproportionate? (Peevy v. Coal & Mining)
2. Limitations
a. Foreseeability: Not liable for damages that are not foreseeable at the time
the contract was made. (Hadley – didn’t know delayed delivery would stop
production entirely)
b. Mitigation: Once non-breaching party receives notice of breach, they must
cease performance and mitigate damages (Luten bridge building case)
c. Certainty: injured party cannot recover more from a breach than they
would have gained if the contract had been performed. In cases of
uncertainty, default rule is $0 in damages. (Freund – cannot prove how
profitable a published book would be, only nominal damages awarded.)
Specific Performance
3. Specific Performance: [rarely granted] requires the breaching party to perform
contractual obligations.
a. Awarded when unique or other proper circumstances exist (i.e. limited-
edition Corvette that couldn’t be bought anywhere else)

POLICY

Autonomy theories: contract law enforces promises. There exists a moral obligation to keep
one’s promise. 
 Out of respect for autonomy and in trust
 Great social utility to a general regime of trust and confidence in promises and
truthfulness
 Promising transforms a morally optional activity into a morally mandatory activity
 Autonomy theory to justify government power in moral obligations= “legal enforcement
of contract promotes individual freedom by giving people the power to bind themselves
with other” 
 But what about the freedom to change one’s mind? → freedom to renege on a promise
basically takes away the freedom to make binding commitments, impossible to have
both. But you DO have the freedom to make or NOT make a contract/promise. 

Economic theories: view contract adjudication as a mechanism for creating rules and rights that
will provide incentives for individuals in the future
 Asks how the enforcement of contract law will influence the behavior and promises of
people in the future
 Erin Kitchens Wong

 Reducing anxiety about the future through contracts/promises enhances social welfare
(gets rid of a social loss)
 On the other hand, broken promises are a social cost and contract law encourages
promises
 As a society, it has been accepted that the aggregate benefits of promise-making
outweighs the aggregate harms
 Economic analysis suggests a ground for legal enforcement of promises

Pluralist theories: some argue that neither efficiency or autonomy alone can justify a legal
obligation to keep one’s promise
 Pluralism argues that the courts pursue multiple goals including: efficiency, protection of
individual autonomy, and fairness. Fairness is necessary in order to do justice to both
parties involved. 

Default Rules & Gap Filling

 Ex ante perspective
o Gap fills with what the parties would likely have agreed to if they had addressed
the issue in their contract
o If you want specific terms that are different than the default rules, you need to
make that clear so the other party can price that in
 Ex post perspective
o Generally considers justice for the parties before the court
 Pluralist perspective
o We don’t know who the disadvantaged party is until we apply the default rules
Other Policy Stuff:
- Protect innocent parties
- Encourage clear contracts
- Protect the intent of parties
- Incentivize entering contracts
- Avoid injustice
- Encourage good faith dealing
- Protect public interests – bodily autonomy, biological child-parent relations, etc.
 Erin Kitchens Wong

UCC V. RESTATEMENT

1. 4 Key Differences:
a. Mirror Image Rule (Restatement) v. 2-207 (UCC)
b. Parol Evidence Rule
i. Restatement → common law. Split in approaches
ii. UCC → more liberal approach.
c. Textualism v. Contextualism
i. Restatement → split.
ii. UCC → contextualism
d. Substantial Performance (Restatement) v. Perfect Tender rule (UCC)

2. Other, less important differences:

a. Modification
i. Restatement: old common law requires consideration. Pre-existing duty
rule. New common does not requires modification if made in good faith
ii. UCC: Requires good faith
b. Firm Offer (UCC) v. Option Contract (Restatement)
i. The idea that when you make an offer you have to hold it open for a
certain amount of time.
c. Preliminary Contracts
i. Type I v. type II analysis applies to both. A normal type I is just a contract
(offer, acceptance, and consideration).
ii. Only need to use this type of analysis if you think it might be a type II.
iii. Restatement:
iv. UCC: courts more willing to gap fill and find a contract
d. Output and Requirements Contract
i. Practically only comes up with UCC (moveable goods)
e. Impossibility (old common law) v. Impracticability (UCC, modern common law)