A contract is

1) An agreement Insufficient Agreement: Indefinite, Incomplete, and Deferred Terms Defective Formulation and Expression of Agreement a) Raffles v. Wichelhaus—Peerless case / Peerless Doctrine --the difference between the 2 ships is not important, both had cotton, deal o The doctrine applies only when parties have different understandings of their expression of agreement o The doctrine does not apply when one party‘s understanding, because of that party‘s fault, is less reasonable than the other party‘s understanding; and o Parol evidence is admissible to establish the facts necessary to apply the rule b) Konic International Corp. v. Spokane Comp. Services, Inc. -$5620/$56.20 -- Where a phrase of contract…is reasonably capable of different interpretations…there is no contract Incomplete and Deferred Agreements a) MGM, Inc. v. Scheider—pilot show, no definite time to start series -- If the contract can be rendered certain and complete, by reference to something certain, the court will fill in the gaps. Joseph Martin, Jr. Delicatessen, Inc. v. Schumacher—Deli lease/$$$ -- It is well settled that a mere agreement to agree, in which a material term is left for future negotiations, is unenforceable Empro Manufacturing Inc. v. Ball-Co Manufacturing—interest in land --As a matter of law parties who make their pact ‗subject to‘ a later definitive agreement have manifested an (objective) intent not to be bound Copeland v. Baskin Robbins USA—Ice Cream factory sale / co-packing --Only when parties are under a contractual compulsion to negotiate does the covenant of good faith / fair dealing attach, as it does in every contract --Deals are rarely made in a single negotiating session—it‘s a gradual process b) c) d) 2) Between two or more persons/parties Not Covered 3) The persons/parties must be legally competent Not covered 4) Consideration 1) Elements a) To constitute consideration, a performance or a return promise must be bargained for. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. c) The performance may consist of 1) an act other than a promise or 2) a forbearance, or 3) the creation, modification, or destruction of a legal relationship d) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person. Why consideration? -Promise about past action cannot ‗hack it.‘ -consideration shows that both parties are serious about their intentions. -gives parties confidence that other party will perform -put limits on things that are legally enforceable 1. Detriment: The promise gives up something of value, or limits his/her liberty in some way 2. Exchange: The promise is given as part of a ―bargain‖ – promisor makes his promise in exchange for the promisee‘s giving something of value or limiting his liberty Bargained For and Given In Exchange 2) Cases a) Kirksey v. Kirksey—Sister Antillico --(bad law?) moving ~60 miles cannot be considered consideration—he promised the house out of kindness (to see her and her kids) b) Hamer v. Sidway—Uncle/Nephew no smoking/drinking till 21 --Forbearance of what one has a legal right to do is valid consideration c) Langer v. Superior Steel Corp.—Retirement/don‘t compete --If a detriment of a definite and substantial character has been incurred by the promisee, then the court may enforce the promise d) Bogigian v. Bogigian—Divorced couple, H has ex-W sign paper --In this case, despite the plaintiff receiving a benefit—not bargained for Mixed Motives and Nominal Consideration 2) Cases a) Thomas v. Thomas—Nominal rent on inherited land --Nominal consideration is good consideration b) Problem at pg 60, law book/penny problem --reliance, consideration… Limits on the Consideration Doctrine  Adequacy of Values Exchanged 2) Cases b) Apfel v. Prudential-Bache Securities, Inc.—securities trading idea --If something is of value enough to be bargained for it can be considered consideration (even something intangible like an idea) b) Jones v. Star Credit Corp.—overcharged welfare recipients on freezer --If a court finds that consideration is outrageous they may strike it down using unconscionability  Pre-Existing Duty Rule 2) Cases a) Levine v. Blumenthal—contract to have rent raised after 1 year/can‘t pay --A conversation asking to pay a reduced rate is not consideration [abstaining from bankruptcy may be] --This case is no longer accurate, modern interpretation is that you don‘t necessarily need consideration—if it‘s agreed upon it‘s OK b) Alaska Packers‘ Association v. Domenico—Fishing case/not working without more money (not in contract) --An agreement with no additional consideration (under duress) is not enforceable (no hold-up game) c) Angel v. Murray—Garbage collection/re-negotiate in good faith --A contract re-negotiated in good faith for unexpected circumstances is enforceable Moral Obligation: Promise Plus Antecedent Benefit  Moral Obligation a) Mills v. Wyman—Dying son of defendant was cared for by plaintiff --since son did not live with father, no ‗benefit‘ to him not enforceable b) Manwill v. Oyler—Grazing/cattle/ --A mere moral obligation to pay back a debt it not binding to force payback c) Webb v. McGowin—man saved by another man who mangled himself --He made an agreement to pay for what he knew to be a benefit, he paid, his estate should keep paying d) Harrington v. Taylor—axe to the hand case --a humanitarian act, voluntarily performed is not valid consideration e) Problem at pg 127, Marley/Cratchet (grateful merchant)   Promissory Estoppel: Promise Plus Unbargained-For Reliance A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only be enforcement of the promise. The remedy granted for breach may be limited as justice requires. a) Rickets v. Scothorn—Katie/Grandfather‘s promise of 2k to stop working. -- A promise can be enforced, despite no consideration if it is the only fair way to resolve the dispute. b) Feinberg v. Pfeiffer Co.—Promised pension, new president of co. eliminates it -- If there is a promise with no consideration and by not performing it, an injustice is done, the promise can be enforced c) Grouse v. Group Health Plan, Inc.—Pharmacist fired before even started a) d) e) -- If a promise is made which reasonably induces the promisee to rely on the promise, the promise is binding. Cohen v. Cowles Media Co.—Newspaper promise of confidentiality about political candidate --Promise reasonably induced the an action, this promise was broken, defendants liable for damages because of this breach. All-Tech Telecom, Inc. v. Amway Coporation— --Promissory estoppel is not a doctrine designed to give a party…a second bite at the apple in the event it fails to prove a breach of contract. 1) Promises to make gifts: A promise to make a gift is generally unenforceable because it lacks the ‗bargain‘ element of consideration a) Existence of a condition: even if person promising to make a gift requires the promise to meet certain conditions in order to receive the gift, there will still be no consideration if the meeting of the conditions is not really bargain for by the promisor—Kirksey i) Condition happening is of benefit to promisor (1) IF the promisor imposes a condition and the occurrence of this condition is of benefit to him then the bargain element probably WILL be met—Hamer v. Sidway 2) Nominal Consideration: Where the consideration is nominal a court may conclude that the promise lacked a real bargain element 3) Promisee unaware: A contract can only be performed if the promise is aware that performance of something will entitle him to something 4) Past Consideration: Past consideration is no good Detriment: 1) Promisee must do something or give up something that he/she has a legal right to a) Non-monetary: A promisee may give up something, not money—drinking/drugs b) Equality not necessary: The adequacy of detriment in relation to benefit received will not render a contract unenforceable i) BUT extreme disparity may show that there was a lack of bargaining 2) Pre-Existing Duty: Doing something that you already have a legal/contractual duty to a) Modification of a contract: usually modifying a contract will require both parties to add consideration, unless there is a good reason, and this is made known in good faith b) UCC: UCC-209(1) eliminates the pre-existing duty rule an agreement modifying an existing contract needs no consideration to be binding—but must be in good faith and not against a NOM clause. 3) Agreement to accept partial payment: Courts are split—but some treat a promise by a creditor to allow extra time to pay unenforceable because there is no consideration by debtor—Levine v. Blumenthal Illusory Promises 1) Illusory promises are not supported by consideration or a detriment to the other party and are not enforceable. a) Termination: if one or both of the parties can terminate contract at any time the contract will be unenforceable i) North Shore Bottling Co. v. C. Schmidt & Sons, Inc? 2) Implied Promise: Promisee has made an implied promise a) Performing the contract would be of benefit to the promisee, but there is no real contractual obligation i) Wood v. Lucy, Lady Duff-Gordon—Famous designer and her agent --Contract impliedly binding (agent stands to make money if he works, why wouldn‘t he want to?) 5) Embodies one or more promises to do or not to do specified acts Mutuality of Obligation Cases a) Rehm-Zeiher Co. v. F.G. Walker Co.—Whisky, binding contract to buy? --The plaintiff was released from buying ‗under any circumstances‘—not truly binding on them (though later cases suggest that it might be enough to be enforceable) Wood v. Lucy, Lady Duff-Gordon—Famous designer and her agent --Contract impliedly binding (agent stands to make money if he works, why wouldn‘t he want to?) Omni Group, Inc. v. Seattle-First National Bank—satisfaction with feasibility report on land Problem at pg 108, illusory bonus b) c) d) 6) The acts must be enforceable AVOIDANCE OF CONTRACTS Unilateral and Mutual Mistake a) Boise Jr. College District v. Mattefs Construction Co.—mistaken bid --One who errs in preparing a bid for a public works contract is entitled to the equitable relief of rescission if he can establish the following: 1) The mistake is material 2) Enforcement of a contract pursuant to the erroneous bid would be unconscionable 3) The mistake did not result from violation of appositive legal duty or culpable negligence 4) b) c) d) The party to whom the bid is submitted will not be prejudiced except by the loss of his bargain 5) Prompt notice of the error is given Beachcomber Coins, Inc. v. Boskett—fake coin -- Negligent failure of a party to know or to discover the facts as to which both parties are under a mistake does not preclude rescission or reformation on account thereof. Sherwood v. Walker—Rose of Aberlone, barren cow/not barren! --If mistake is to the very value of something that could not have been foreseen, it may be a mistake/not enforceable Lenawee County Board of Health v. Messerly—faulty sewer/apt. bldg --If the ―as is‖ clause is to have any meaning at all, it must be interpreted to refer to those defects which were unknown at the time the contract was executed. Thus, the parties have assigned the risk of loss to the purchaser Fraud and Duty to Disclose a) b) Laidlaw v. Organ—hogsheads of tobacco/war ending price change --If both parties have equal access to info, it need not be disclosed Hill v. Jones—termites/damage in the house -- Where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not know to the buyer, the seller is under a duty to disclose them to the buyer Modern view is that a vendor has an affirmative duty to disclose material facts where: o Disclosure is necessary to prevent a previous assertion from being a misrepresentation or from being fraudulent material; o Disclosure would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if nondisclosure amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing o Disclosure would correct a mistake of the other party as to the contents of or effect of a writing, evidencing or embodying an agreement in whole or in part o The other person is entitled to know the fact because of a relationship of trust and confidence between them  Duress and Undue Influence Rubenstein v. Rubenstein – inter family farm/estate sale  Duress at common law was where a party entered into a contract: o For fear of loss of life o For fear of loss of limb o For fear of mayhem o For fear of imprisonment b) Austin Instrument, Inc. v. Loral Corp – machine components K with Navy a) Existence of economic duress is demonstrated by proof that immediate possession of needful goods is threatened  Threat to breach, though wrong, does not in itself constitute economic duress. Threatened party must not be able to obtain the goods from another source c) Machinery Hauling, Inc. v Steel of West Virginia – threatening no more business  Party who asserts business compulsion must show that he has been the victim of a wrongful or unlawful act or threat, and:  Such act or threat must be one which deprives the victim of his unfettered will Unconscionability 3 branches of unconscionability 1) Procedural—clause not clear, buried in fine print 2) Substantive—provision is so awful that the court won‘t understand it even if the party that signed it understands it—just gone too far (makes the court throw up) 3) Status—one party is stronger than the other and takes advantage of it Williams v. Walker-Thomas Furniture Co. – company retains interest in all furniture  In determining reasonableness or fairness, the primary concern must be with the terms of the contract considered in light of the circumstances existing when the contract was made. o This test is not simple, nor mechanical Weaver v. American Oil Co. – weaver to indemnify against all loss – AOC negligence  Party seeking to enforce such a contract has the burden of showing that the provisions were explained to the other party and came to his knowledge and there was in fact a real and voluntary meeting of the minds and not merely an objective meeting.  Superiour bargaining power of American Oil is patently obvious and the significance of Weaver‘s signature upon the legal document amounted to nothing more than a mere formality to Weaver for protection of AO Zapatha v. Dairy Mart, Inc. – dairy mart terminate with notice or without  Zapatha had an opportunity to check over the contract with a lawyer, he thought it was straightforward and declined, too bad for him Coursey v. Caterpillar, Inc.  Under the ―procedural‖ rubric are facts which involve the ―meeting of the minds‖ of the contracting parties: age, education, intelligence, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, whether alterations in the printed terms were possible, and whether there were alternate sources of supply for the goods in question  7) Offer Ascertainment of Assent: The “objective” test a) Embry v. Hargadine, McKittrick Dry Goods Co.—contract renegotiation b) -- It is not necessary to have both parties intend to contract, so long as it is reasonable to think that is what they intended. Lucy v. Zehmer—land sale contract on a napkin --How would the conduct look to the other party? Offer Creation of Power of Acceptance a) Longergan v. Scolnick—sale of land offered in newspaper—joshua tree -- There can be no contract unless the minds of the parties have met and mutually agreed upon some specific thing. Lefkowitz v. Great Minneapolis Surplus Store—man trying to buy woman‘s clothing for $1 from newspaper add/first come first serve 1) The advertisement was clear, definite, and explicit, and left nothing open for negotiation. 2) While an advertiser has the right at any time before acceptance to modify his offer, he does not have the right, after acceptance, to impose new or arbitrary conditions not contained in the published offer. Leonard v. Pepsico—Harrier Jet/Pepsi points --The terms were not sufficiently definite to have an enforceable contract Southworth v. Oliver—definite offer made to several people -- The fact that a price quotation is sent to more than one person does not, of itself, require a holding that such a price quotation is not such an offer. Bretz v. Portland General Electric Co.—buy Beartooth Coal mine --When the instrument (writings) itself negates the existence of a contract it may not be relied on for purposes of satisfying the SOF b) c) d) e) 8) Acceptance Acceptance: Exercise of Power of Acceptance Acceptance by Promise a) LaSalle National Bank v. Vega—contract to be accepted by approval of board of trustees -- An offeror has complete control over an offer and may condition acceptance to the terms of the offer. Hendricks v. Behee—agent received withdrawal of offer to purchase --There is no contract until acceptance of an offer is communicated to the offeror Ever-Tite Roofing Corp. v. Green—Roofing C. sees other roofers doing their job -- Objections must be given before the start of performance—performance had already begun, too late to revoke Corinthian Pharmaceutical Systems, Inc. v.Lederle Laboratories—tried to get vials of DPT vaccine at the low price before increase --The buyer was the offeror – as per their catalogue --An acceptance need not be a mirror image of the offer b) c) d) Acceptance by Performance—NOT by promise a) Carlill v. Carbolic Smoke Ball Co.—flu/smoke ball 100L reward  In this case each person need not inform the Smoke Ball Co. when they accept the offer before they start using the smoke ball  If you put up a lost dog poster you wouldn‘t expect everybody to write you a note stating that they would begin looking for it.  Inconvenience sustained by one party at the request of the other is enough to create consideration Glover v. Jewish War Veterans of United States—unaware of reward -- It is impossible that there should be an acceptance unless the offeree knows of the existence of the offer. b) Acceptance by Conduct or Silence a) Russell v. Texas Co.—property rights/mineral rights -- The true test would be whether or not the offeror was reasonably led to believe that the act of the offeree was an acceptance, and upon the facts of this case it seems evident that even this test is met. b) Ammons v. Wilson & Co.—shortening/lard – tweedy/traveling booker --Silence as acceptance in previous deals gives reason to enforce future dealings accepted in such a way even if unintended Nature and Effect of Counter-Offer a) Textile Unlimited Inc. V. A..BMH and Company, Inc.—arbitration/yarn -- All the terms which the parties‘ forms do not agree drop out, and the UCC supplies the missing terms. --Avoid a rule which would allow one party to obtain ‗all of its terms simply because it fired the last shot in the exchange of forms‘ b) Hill v. Gateway 2000—Additional Terms inside computer box/arbitration -- A contract need not be read to be effective; people who accept take the risk that the unread terms may in retrospect prove unwelcome. Termination of Offer: Destruction of Power of Acceptance a) Dickinson v. Dodds—withdraw offer at racetrack --if a person has reason to know that offer is withdrawn, they can‘t accept Irrevocable Offer: Option Contracts a) Humble Oil & Refining Co. v. Westside Investment Corp. If you pay to keep a contract open, you can negotiate and later agree to original terms, you purchased the right to negotiate + accept if you want Drennan v. Star Paving Co.—mistaken bid—bid too little b) --As between the subcontractor who made the bid and the general contract who reasonably relied on it, the loss resulting from the mistake should fall on the party who caused it. 9) In accord with lawful requirements such as the Statute of Frauds Statute of Frauds Contracts that must be in writing 1) Any executor or administrator upon any special promise to answer for the damages out of his own estate 2) Contracts that bind one person to pay the debts of another 3) Marriage (not important) 4) Sales of land/property 5) If contract is not to be performed within the space of one year from the making The ―one year‖ rule a) North Shore Bottling Co. v. C. Schmidt & Sons, Inc—selling beer in NYC --The SOF requires an agreement to be in writing if ―by its terms it is not to be performed within one year from the making thereof‖ Oral agreement/piecing together memos to form a contract a) Crabtree v. Elizabeth Arden Sales Corp.—broken oral employment contract-You can satisfy the writing requirement by pasting together a bunch of writings that can all be shown to be connected Final note on writings a) DF Activities Corporation v. Brown—Domino‘s pizza/FLWright chair --Get the contract in writing— -- If she said she made an oral agreement but claimed that the contract would have to be in writing to be enforceable then she would lose the SOF defense—you have to deny a contract/agreement ever existed (except land sales) Statute of Frauds: Must be in writing if it is: 1) 2) 3) 4) 5) A contract to answer for the debt/duty of another party A contract made upon consideration of marriage A contract for the sale of land A contract that CANNOT be performed within one year from its making Under the UCC sale of goods for more than $500/5,000 Damages Measuring and Compensating Loss Resulting From a Breach a) b) c) Sullivan v. O‘Connor—nose-job case --Possible entitlement to pain and suffering in a contract case Curtice Brothers Co. v. Catts—Tomato cannery --Though not preferred, courts can grant specific performance Hadley v. Baxendale—broken crankshaft at mill --Possible loss of profits if breach occurs must be communicated to give party a chance to perform with heightened standards Mental Anguish and Punitive Damages Bohac v. Department of Agriculture—whistle-blower case --no damages will be awarded for mental distress that may be caused by a breach of contract b) Acquista v. New York Life Insurance Co.—Disabled physician/insurance --If an insurer denies a claim in bad faith they punitive damages may be assessed against them --Although the policy limits define the amount for which the insurer may be held responsible in performing the contract, they do not define the amount for which it may be held liable for upon a breach c) Boise Dodge, Inc. v. Clark—turned back the odometer --Fraudulent breaches of contract are punishable by punitive damages in order to deter people from fraudulent behavior Damages—Expectation, Restitution, Reliance 1) Expecation: Puts plaintiff in position he would have been had the contract been performed a) Benefit of what would have happened—includes profits that would have been made from the contract 2) Reliance: Puts plaintiff in the position he/she was in before contract was made a) Does not allow plaintiff to recover lost/potential profits b) Used in a few situations: i) When damages can‘t be easily estimated using expectation—starting up a new business—cab driver problem ii) Promisorry estoppel 3) Restitution a) Damages are in the amount equal to the defendant‘s benefit received from P‘s performance. Punitive Damages Resulting From Breach 1) Punitive Damages—very rare in contract cases a) Tort from breach—seller of a car turns back the odometer and P finds out, punitive damages may be awarded because seller has also committed ‗fraud‘ Boise Dodge, Inc. v. Clark a) i) Bad Faith—some courts regard bad faith in association with a contract as a tort, breaking a contract to make a better deal somewhere else (1) Insurance company refusing to settle—Acquista v. New York Life Insurance Co.—Disabled physician/insurance --If an insurer denies a claim in bad faith they punitive damages may be assessed against them Parol Evidence Parol Evidence Rule Limiting parol evidence introduction might - Reduce false representations - People might not remember what they really say - Figure out the intent Rabin‘s rules - An integrated contract (express or implied) o Integrated = contains all necessary terms - May not be contradicted by parol - But may be explained and supplemental - Unless You‘d expect to find this in the writing in the first place o Or it is double zipped - You can‘t zipper out fraud New York v. California NY = less allowing parol evidence CA = much more laid back!—allow more, trying to figure out the intention of the parties even though there‘s a contradiction Courts more likely to admit parol evidence in the case of an adhesion contract when the terms may be buried in fine print and/or not fully agreed upon Mitchell v. Lath – remove the ice house from property after sale of house Before such an oral agreement as the present is received to vary the written contract at least three conditions must exist 1. The agreement must in form be a collateral one 2. It must not contradict express or implied provisions of the written contract 3. It must be one that parties would not ordinarily be expected to embody in the writing b) Masterson v. Sine – can sell the land outside the family?—messed up facts  When the parties to a written contract have agreed to it as an ―integration‖—a complete and final embodiment of the terms of an agreement—parol evidence cannot be used to add to or vary its terms  Even under the rule that the writing alone is to be consulted, it was found necessary to examine the alleged collateral agreement before concluding that proof of it was precluded by the writing alone a)  One policy is based on the assumption that written evidence is more accurate than human memory  Another policy is based on the fear that fraud or unintentional invention by witnesses interested in the outcome of the litigation will mislead the finder of facts c) Alaska Nortnern Development, Inc. v Alyeska Pipeline Service Co. o turns on the meaning of what is inconsistent / contradiction o Anything that changes the meaning of the writing is inconsistent  Another view is contradiction, when the terms are opposite instead of just inconsistent d) Luther Williams, Jr., Inc. v. Johnson – private homeowners understand the K to be an estimate, contractor thinks it is a real contract  Parol Evidence: o Briefly stated: when the parties to a contract reduce their agreement to writing, that writing is presumed to be the final repository of all prior negotiations, and testimony concerning prior or contemporaneous oral agreements which tend to vary, modify, or contradict the terms of the writing is inadmissible  Intent must be gathered by: conduct and language of the parties and the surrounding circumstances—document alone will not suffice Interpretation a) Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co. – indemnity insurance, turbine, 3rd party insurance or for property too?  Accordingly, the exclusion of relevant, extrinsic evidence to explain the meaning of a written instrument could be justified only if it were feasible to determine the meaning the parites gave to the words from the instrument alone  Exclusion of parol evidence regarding such circumstances merely because the words to not appear ambigious to the reader can easily lead to the attribution to a written instrument of a meaning that was never intended  The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is…whether the offered evidence is relevant to prove a meaning to which the language of offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. b) A. Kemp Fisheries, Inc v. Castle & Cooke, Inc. – seaworthy? – freezers aren‘t   Charter Agreement is an integrated contract. The agreement itself is complete and comprehensive  Warranties of the vessels seaworthiness, engines, and freezing system are not collateral agreements that would normally be made in separate agreements c) Frigaliment Importing Co. v. B.N.S. International Sales Corp. – chicken case!  Duty of Good Faith Duty of Good Faith a) Market Street Associates Limited Partnerhip v. Frey – JCPenny land/purchase  A contract shall be deemed to contain such implied conditions as are necessary to make sense of the contract, or that a contract obligates the parties to cooperate in its performance in ‗good faith‘ to the extent necessary to carry out the purposes of the contract, comes to much the same thing b) Zapatha v. Dairy Mart, Inc. – see above  Cannot find in that document any deception or unfairness that has a bearing on the right of Dairy Mart to terminate the agreement as it did. A rep. read the termination clause to Mr. Zapatha before they signed it  No showing that in terminating it Dairy Mart engaged in any unfair, deceptive, or bad faith conduct Employment Contracts a) Hillesland v. Federal Land Bank Association of Grand Forks – inside deal  Must show longevity of service, and breach of an of an express employer policy regarding the adjudication of employee disputes  No cause of action when P relies on employment contract that contains no express term specifying duration of employment Conditions Conditions Express Conditions a) Dove v. Rose Acre Farms, Inc. – bonus, got sick right at the end Certainly a plaintiff cannot, upon fialing to perform his part of the contract, sue his adversary for damages alleging that his own non-performance was because of impossibility. Dove failed to perform all of the conditions of the contract and is not entitled to recover any portion of the bonus Wal-Noon Corp. v. Hill – lease, rooftop Notice is an indispensable condition precedent to defendant‘s duty to perform under the covenant to repair In re Carter – change in financial condition of the corp. he was buying There was a provision that the company might change in the ordinary course of business b) c) - Excuse of Express Conditions Substantial Performance Jacobs & Youngs v. Kent – reading pipe  The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to the good to be attained. o When that is true, the measure is the difference in value o There was no difference in value in this case (avoid waste) O.W. Grun Roofing and Construction v. Cope – messed up roof color  To constitute substantial compliance the contractor must have in good faith intended to comply with the contract, and shall have substantially done so in the sense that the defects o are not pervasive o do not constitute a deviation from the general plan contemplated for the work o are not so essential that the object of the parties in making the contract and its purpose cannot, without difficulty, be accomplished by remedying them  Such performance permits only such omissions or deviations from the contract as are inadvertent and unintentional, are not due to bad faith, do not impair the structure as a whole, and are remediable without doing material damage to other parts of the building in tearing down and reconstructing Lowy v. United Pacific Insurance Co.—98% of job done, then a dispute, other finishes work  Where a person agrees to do a thing for another, he is not entitled to payment until he has himself done the thing he agreed to do, unless full performance has been excused, prevented, or delayed by the act of the other party Existing Impracticability Mineral Park Land Co. v. Howard – Fill supposed to come from this place, ½ underwater! - A thing is impossible in legal contemplation when it is not practicable  A thing is impracticable when it can only be done at an excessive and unreasonable cost United States v. Wegematic Corp. – govt. computer case, possible, but at higher cost  No basis for thinking that when an electronics system is promoted by its manufacturer as a revolutionary breakthrough, the risk of the revolution‘s occurrence falls on the purchaser  Reasonable supposition is that it has already occurred, or at least, the manufacturer is assuring the purchaser that it will be found to have when the machine is assembled Supervening Impracticability Taylor v. Caldwell – Burned down music hall  Both, P&D are excused, there is no way for them to have foreseen or expect this ‗act of god‘ Canadian Industrial Alcohol Co. v. Dunbar Molasses Co. – K to sell lots of molasses stuff, middleman can‘t make the supplier make more  Duty will be discharged if the mill is destroyed before delivery is due. The duty will subsist if the output is reduced because times turn out to be hard and labor charges high… Dills v. Town of Enfield – 100k deposit to make plans for the town, too pricey to make the plans  A party claiming that a supervening event or contingency has prevented, and thus excused, a promised performance must demonstrate that: 1) The event made the performance impracticable 2) The nonoccurrence of the event was a basic assumption on which the contract was made 3) The impracticability resulted without the fault of the party seeking to be excused; and 4) The party has not assumed a greater obligation than the law imposes  This case, like almost all others involving discharge-concerns the issue of which party bears the loss resulting from an event that renders performance by one party uneconomical  Where sophisticated contracting parties have negotiated termination provisions, courts should be slow to invent additional ways to excuse performance Frustration Krell v. Henry – Kings coronation procession, rented apartment, no procession, waste   In each case one must ask: 1) What was the foundation of the contract? 2) Was the performance of the contract prevented? 3) Was the event which prevented the performance of the contract of such a character that it cannot reasonably be said to have been in the contemplation of the parties at the date of the contract?  All of these should be answered in the affirmative in order to discharge both parties from the contract  Where it must be asked whether the object of the contract was frustrated by the nonhappening of event, parol evidence is admissible to show that the subject of the contract was understood by both parties Washington State Hop Producers, Inc. v. Goschie Farms Inc – hop base contracts  A change in circumstances makes one party‘s performance virtually worthless to the other, frustrating his purpose in making the contract o Must have been a principal purpose in making the contract / completely the basis of the contract that without it the transaction would make little sense o The frustration must be substantial – so severe that it is not fairly to be regarded as within the risks that he assumed under the contract