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					                                WESTERN STATE UNIVERSITY
                                    COLLEGE OF LAW

                                     CONTRACTS I §111B & C
                                            FALL 2007
                                     PART ONE (WEEKS I and II)

                                     Professor Edith R. Warkentine

                                        CLASS MATERIALS

INTRODUCTION: HOW TO USE THE CONTRACTS I CLASS MATERIALS

The Contracts I Class Materials are designed to give you a running commentary on the different
substantive topics we study, as well as additional questions and hypotheticals to help you prepare
for class. I also include a “Study Guide,” in the form of a brief outline for each topic. Finally, I
include some study aids in the form of charts or graphs. If you are a visual learner, you may find
these materials more helpful than text. Remember, however, that there is no substitute for
doing the reading and thinking yourself. My tables and charts cannot replace the primary
authorities, such as the Restatement (Second) of Contracts and the Uniform Commercial Code
(discussed below).

I have divided the Class Materials by topic, and will post corresponding Class Materials
approximately one week before we begin each new topic. You should always begin your studies
by reviewing the Class Materials that correspond to the topic we will be discussing in class.
Next, read the assigned pages from Chirelstein to give you an introduction to and overview of the
doctrinal material we will be studying. Finally, read the assigned pages in Farnsworth and brief
all assigned cases, taking care to incorporate the short case notes into the “synthesis” portion of
your briefs for the principal cases.

The appendix to these materials contains a detailed outline of the course goals. This outline was
a team effort. It was written by past and present contracts professors at the law school. It forms
the basis for all of the contracts courses taught at Western State. You may find it helpful in
organizing your thoughts about the course.




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WEEK 1. INTRODUCTION; PERSPECTIVES ON LAW; COMMON LAW
CONTRACTS AND THE UNIFORM COMMERCIAL CODE; COURSE
GOALS AND OBJECTIVES

INTRODUCTION

Welcome to the wonderful world of Contract Law. During the next fourteen weeks, we will
explore together the substantive rules of law that govern the legal relationships between parties
who voluntarily enter into agreements to exchange performances. The Class Materials for this
discussion topic offer a non-scholarly introduction to the substantive bodies of law we will be
studying in this course: common law contracts (primarily), and Article 2 of the Uniform
Commercial Code (the "Code" or the "UCC").

Before we begin our studies of contract doctrine, I want to introduce you to a variety of material
that affects what we will do in this course. Accordingly, I have written a fairly extensive
discussion of several topics, all of which you should read before Week I classes begin. I intend
to discuss each of these topics in class, in more or less detail depending on the topic, your
interest, and our time constraints. As you read this material, feel free to make a list of questions
you wish to ask in class. Students enrolled in Section C should be prepared to discuss
everything that follows under Week I in our first class meeting. That means, among other things,
that you should prepare answers to the questions that begin on page nine, and prepare a brief1 of
Lucy v. Zehmer, which begins on p.120 of the Farnsworth text. For Section B’s first class
meeting, students should be prepared with respect to everything except for the topic of reading
and briefing cases, which we will discuss at our second class meeting.

PERSPECTIVES ON LAW

Be aware that when you walked through the law school doors, you left all absolutes behind.
Before we begin our study of contract doctrine, you should be aware of the fact that there are a
variety of contemporary theories of contract law, which offer differing perspectives. I have tried
to summarize some of the most influential of these perspectives below.

Throughout your law school career, you will encounter professors who view the law from
different perspectives. These perspectives reflect, among other things, each individual's age,
race, gender, life experiences, political leanings, historical understandings, and course of studies.
Different "schools of thought" have developed which reflect some of these varying perspectives.
Some of the most common approaches are often referred to as (1) the "classic" approach, (2)
legal realism, (3) law and economics, (4) critical legal studies and (5) law and society.



1 I explain what a case brief is and how to write one starting on page ten of these materials.
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(1)     The "Classic" Approach

The "classic" approach emphasizes legal doctrine. It starts with the notion that an analysis of
cases yields rules of law that can be applied to solve new problems. By framing holdings
narrowly or broadly, the classic approach formulates an approach to answering questions by
reasoning by analogy.

(2)     Legal Realism

Legal realists reject the notion that judges discern the law by comparing, synthesizing and
distinguishing cases. They believe that judges "make" the law by normative choices - that is to
say, judges decide upon the desired results and work backwards to support their decisions This
approach is reflected in a class where the professor asks the student to consider the goals that
different decisions would serve, and to argue which is the "better" goal. Accordingly, policy
arguments become extremely important.

(3)     Law and Economics

The law and economics approach is most often associated with the University of Chicago School
of Law. Its thesis is that contract law should support and encourage the free market by providing
certainty and predictability for those involved in exchanging goods and services. It believes that
courts should evaluate the economic consequences of proposed legal rules, compare the
aggregate benefits and costs of alternate outcomes, and choose the result that is most efficient.
Throughout our casebook, commencing on page seven, you will encounter various references to
the law and economics perspective.

(4)     Critical Legal Studies

Critical legal studies scholars believe that legal doctrine and language conceal underlying
realities involving wealth, status, privilege and power. They challenge basic assumptions hidden
in legal doctrine. For example, classic scholars believe that contract law is based on the notion
of "freedom of contract," but critical legal studies scholars point out that the poor, the
uneducated, and the disenfranchised generally lack the power to contract freely.

(5)     Law and Society

Perhaps the most recent approach to evolve, the Law and Society approach challenges the long-
held belief that legal analysis must involve analysis and synthesis of leading cases to develop
legal rules and work with legal doctrine. Law and Society scholars point out that only a tiny
fraction of all disputes is ever litigated, and an even tinier fraction of those lawsuits ever reaches
the appellate court level. Accordingly, this approach attempts to determine what people do "in
the real world." This approach has been described as a "bottom up" rather than a "top down"

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approach to the legal system. (You will also hear people who take this approach referred to as
empiricists or relationalists.)

As you can see from this brief discussion, there is no one “right” way to approach legal studies. I
personally believe that each approach has something to offer the student, the lawyer and the
scholar, who is attempting to understand, predict and manipulate results in the legal system. If
you keep these different perspectives in mind throughout the course, you may find it somewhat
easier to reconcile decisions that at first blush appear to be totally inconsistent.2

COMMON LAW CONTRACTS

The term "common law contracts" is used to refer to the body of contract law developed through
cases. The judges of the cases established this law and communicated it through their
"opinions." An opinion is a document written by a judge describing the facts of a case and
explaining the reasons why she or he decided the case the way she or he did. Each opinion in the
casebook contains one or more important legal principles (called "rules of law"). Taken together,
the opinions in the casebook give us a fairly comprehensive overview of the common law of
contracts.

The key to understanding contract law is to understand that a contract is based on a voluntary
agreement. A noted contracts scholar has explained the meaning of “contract” in this manner:
“[An] enforceable contract is a societal institution that sets the limits within which parties may
exercise some degree of control over their legal liability.”3 In contrast, many other bodies of law
judge behavior by societal expectations as to how people ought to behave. For example, under
torts law, people may be liable to pay money to others if they fail to comply with certain societal
expectations of behavior (such as the expectation that people will drive in a non-negligent
manner). Similarly, under criminal law, people may be fined or imprisoned if they fail to comply
with other societal expectations (such as the expectation that people will not rob or murder other
people).

Contract law begins with the voluntary agreement of the parties and, when the bargain breaks
down, ends with judicial enforcement of that agreement. In this class, we try to determine how
U.S. American courts have answered the question, "What promises should be enforced?" and to
understand how and why the courts have arrived at their answers.

A key to understanding the answers you will learn is to understand the meaning of “enforcement”
in U.S. American courts. Controlling notions of contract policy are expressed most clearly in the



2 If you would like to know more about how these different perspectives have influenced theories about contract law,
see Robert A. Hillman, THE RICHNESS OF CONTRACT LAW (1997).
3 Jean Braucher, Contract Versus Contractarianism: The Regulatory Role of Contract, 47 WASH. & LEE L. REV. 697
(1990).
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law of damages and remedies. Understanding the different damage interests greatly facilitates
understanding the grounds for enforcing promises and contract formation in general.

At the very beginning of this course, we therefore begin by briefly exploring the meaning of
"enforcement": what are the consequences of failing to perform a contractual obligation? Many
students are surprised to learn that there is no "punishment" for failing to perform, even if that
failure is willful. Rather, the goal of contract law is to put the parties in the position they would
have been in had the contract been performed. Students are also surprised to learn that generally
courts put aggrieved parties in their bargained-for positions by awarding monetary damages,
rather than by ordering the defaulting party to perform as originally promised. These guiding
principles help predict and explain the remedies available to an aggrieved party when a contract
is breached.

After a quick overview of contract remedies, we then explore themes of contract formation: Are
all promises enforceable? If not, what makes a promise enforceable? Did the parties intend to
make a binding agreement? Even if the parties did intend to make a binding agreement, have the
parties really bound themselves to anything? Next, we consider whether all voluntary
agreements should be enforced by the courts. Are there any limits on the types of agreements
that will be enforced?

In the second semester of this course, we expand our understanding: We explore themes of
meaning: what did the parties mean by their agreement? What are their respective rights and
obligations? We look at contract performance: Did the parties properly do what they promised
to do? If not, what is the legal significance of the failure of performance? Next, we take a much
closer look at contract remedies. Finally, we consider the rights of third parties to contracts.

Common law contracts encompasses almost every kind of agreement you can imagine: a contract
to buy or sell real property (land), a contract to buy or sell personal property (goods, such as cars,
and intangibles, such as intellectual property), a construction contract, a contract between a
movie studio and a movie star, a contract between a babysitter and the parents of his charge, and
even a contract between a lawyer and her client. Over the years, many types of contracts have
become very specialized, and precise rules have been established to govern such contracts. In
this class, however, we focus on the general rules applicable to all types of contracts.

Contract law does not exist in a vacuum. Although most modern societies have some form of
contract law, the law that we study in this class is closely tied to our type of government and our
economic system. As you read the cases in the casebook, try to be aware of the context in which
each case arose and was decided. Ask yourself: What is the year of the case? Was it decided in
England or in the United States? Was it decided in the middle of a war, a depression, or a period
of high inflation? Who were the judges who decided the case? What was the judge’s legal
perspective? Is it articulated or do you have to dig beneath the surface? How might the same
case have been decided by someone coming from the law and economics perspective? Legal
realism? Critical legal studies?
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THE UNIFORM COMMERCIAL CODE4

The Uniform Commercial Code (commonly referred to as the "UCC" or the "Code") is state law.
It has been enacted (with variations) in every state in the United States. The UCC codifies5 parts
of the common law of contracts, property and tort as each relates to transactions involving
personal property. Although the title of the Code suggests that it relates only to "commercial"
transactions, you should be aware that the UCC applies not only to business transactions, but also
to transactions involving consumers and other non-commercial transfers. The reference to
“commercial” transactions means that the Code deals primarily with the business of selling or
otherwise dealing in goods (tangible personal property), transporting and delivering goods,
paying for goods, and making related extensions of credit. The Code was designed to address all
of the stages of a typical commercial transaction: the formation and construction of a contract in
a transaction in goods (Article 2) or a lease of goods (Article 2A), payment (Articles 3, 4, 4A and
5), "bulk" transfers of goods (Article 6), storage and shipment of the goods (Article 7), and
secured credit extensions (Article 8 and 9). The UCC is a living document; it is constantly being
reviewed and interpreted.

The UCC has a pervasive effect on everyday life. It comes into play every time a car dealer sells
a new car, a bartender serves a mixed drink, a con artist forges a promissory note, a lawyer
cashes a settlement check, a farmer negotiates a bank loan, a railroad ships a poodle, a professor
buys a computer on credit, a museum buys a painting, or a parent buys groceries for the family.
Any lawyer who expects to have contact with the commercial world (in other words, any lawyer)
must know how to read and use the Code.

Where did it come from? The UCC was drafted in the late 1940's and enacted in the 1950's and
1960's. It was a joint project of the National Conference of Commissioners on Uniform State
Laws and the American Law Institute, which is a distinguished group of practitioners and
academics. The aim of the drafters of the UCC was to unify and integrate a patchwork quilt of
state commercial statutes.

The chief reporter (a combination author/editor) of the Code was Karl Llewellyn, a professor at
Columbia University Law School. Llewellyn was an academic with a rare appreciation for actual
business practice. His influence on the UCC was profound. If Karl was the "founding father" of
the Code, his law clerk and later-wife, Soia Mentschikoff, was certainly its "founding mother."

What is in it? The UCC consists of 14 articles (referred to as "divisions" in California). Each is
divided into parts, which consist of several sections. The sections are, in many instances, further
divided into subsections. Each Code provision is given a separate reference number. Take for
4
  The UCC discussion is adapted from class materials prepared by Professor Sidney De Long, Seattle University
School of Law.
5
  A rule of law is codified when a legislature enacts it as a statute.

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example section 2-302(2). The article is indicated by the first number, which is one or two digits
and is followed by a dash. All sections are designated by a three-digit number. The first digit
references the part. Subsections, if any, are in parentheses. Thus, 2-302(2) refers to: Article 2,
Part 3, section 302, subsection 2.

We will be studying only portions of the first two articles of the Code this semester. Accordingly,
when I talk about the Code or the UCC in class, I will usually be referring to Article 2. Students
may elect to take upper division courses that concentrate in greater detail on other articles of the
Code. An upper division course on Article 2 is a required course. So that you have at least a
passing familiarity with the Code, a brief description of each of the articles follows:

ARTICLE 1               Contains basic definitions and general principles applicable to all of the
                        other articles. Article 1 therefore applies regardless of what other article
                        also may govern your issue. The most important rules of construction are
                        found in Article 1: Purposes and policies; Variance by agreement (1-102);
                        Supplementary principles of law (1-103); Good faith (1-203); and Course
                        of dealing, usage of trade (1-205).

ARTICLE 2               Regulates transactions in goods. The organization of Article 2 is
                        chronological, corresponding to the sequence of events in the life of a
                        contract. It begins with formation, continues with performance and breach
                        and concludes with remedies.

ARTICLE 2A              Based largely on Article 2, Article 2A regulates leases of goods.

ARTICLE 3               Governs negotiable instruments (once known as "bills and notes"). The
                        important concept of a "holder in due course" is covered here.

ARTICLE 4               Regulates the bank check collection system. It describes the obligation of
                        a bank to its customer, and obligations throughout the banking system.

ARTICLE 4A              Addresses issues arising out of wire transfers (electronic funds transfers).

ARTICLE 5               Regulates letters of credit, a form of bank obligation used in commercial
                        transactions and frequently used as a payment mechanism in international
                        transactions.

ARTICLE 6               Governs bulk transfers, and aims at protecting unsecured creditors of the
                        seller. Many states have abandoned this article of the Code (although it
                        still is in effect in California).

ARTICLE 7               Regulates documents of title, the pieces of paper that evidence someone's
                        right to possess goods.
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ARTICLE 8               Regulates the rights of owners of securities (such as stocks.) It addresses
                        how to legally transfer full or partial rights in stock.

ARTICLE 9               Governs extensions of credit where the repayment of the obligation is
                        secured by an interest in personal property. Much of Article 9 deals with
                        the respective rights of people who claim competing interests in the same
                        personal property, e.g., other lenders, buyers or involuntary lien holders.
                        A major revision of Article 9 was effective in most states on July 1, 2001.

For your convenience, Articles 1 and 2 are reproduced in Selections.

How Does the UCC relate to Common Law Contracts? Judge-made law can be changed by
statute. The UCC regulates many areas previously regulated by common law, which the UCC
supersedes. You will find, however, that Article 2 of the UCC is in large part the same as the
common law principles of contract we will be studying. Sections 1-102 and 1-103 of the Code
address the relationship between the Code and the common law: the Code is to be liberally
construed to achieve its purposes, which means that if the Code conflicts with common law, it
will DISPLACE that law. However, Code law is SUPPLEMENTED by the principles of
common law with respect to any issue not specifically displaced by the Code.

The Code has two other important effects on non-Code law. First, even if the Code does not
apply to a particular transaction, a court may apply Code principles to resolve the dispute before
it; this process is known as applying the code "by analogy." Second, the Code exerts a major
influence on the development of the common law of contracts as reflected in the Second
Restatement of Contracts, which, in many instances drafted Code-like sections (the Restatement
is described and explained below).

Most of the Uniform Commercial Code has been revised several times since it was originally
promulgated. The revision of Article 2 began many years ago, but ultimately turned into a
political “hot potato.” To date, NO states have adopted the revised version of Article 2 and most
scholars and commentators agree that its passage is unlikely.

Throughout this course, we will be comparing and contrasting rules of common law contracts
with the rules of the Code. To the extent that a problem falls within the scope of Article 2
(transactions in goods), the rules of the UCC will govern your analysis, rather than the rules of
the common law of contracts. The first and perhaps one of the most important steps in your
analysis of any contracts problem, therefore, will be deciding whether or not Article 2 applies.




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ADDITIONAL QUESTIONS/HYPOTHETICALS

For each of the following hypothetical fact patterns, determine whether you should use common
law contracts or UCC Article 2 to analyze the contract. Refer to UCC Sections 2-102 and 2-105
to assist you in your analysis. (Read carefully. Are there any other UCC Sections that you think
you need to consult?) Be prepared to explain WHY Article 2 does or does not apply. If you
think you need to know more facts before you can decide, identify the facts you will need to
know.

    1.      A contract to work as a professional basketball player.
    2.      A contract for the sale of a house.
    3.      A contract for the sale of an ocean liner.
    4.      The purchase of a soda from a fast-food restaurant.
    5.      A contract to design a house.
    6.      A contract to supply lumber to be used to build a house.
    7.      A contract to install a red tile roof on a house.
    8.      A garage sale.
    9.      The sale of Girl Scout Cookies.
    10.     The sale of a membership in a health club.

LANGUAGE AND CONTRACTS LAW

One of the emphases in all of your law school classes, but particularly in our contracts classes,
will be language. A contract always involves communication between the two parties. In an
overwhelming number of cases, that communication is by words, in either oral or written form.
As a result, what we study in contracts is a language product.

As we will see, language is, at best, an imperfect tool, and, in many instances, a particular piece
of language may be susceptible to multiple interpretations. Good lawyers recognize not only
those language interpretations that support their clients' positions, but also those that the
opposing counsels will assert. Transactional lawyers (those who draft contracts) attempt to avoid
ambiguities in the language they draft or at least to clarify those ambiguities that pose future risks
to their clients. In this class, you should pay particular attention to language, how it is used by
the parties, by the authors of the case opinions, by the authors of your textbook, and by your
professor.




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INTRODUCTION TO LEGAL REASONING AND ANALYSIS; CASE BRIEFING

In the Contracts class, we explore the specifics of contract law. (We will usually refer to this part
of the course as studying “rules” or “doctrine.”) In addition, as you can see in the Contracts
Objectives Outline in the appendix, a major skill that we emphasize in this class is basic legal
analysis and reasoning. (You will often hear this skill described as “learning to think like a
lawyer.”)

Learning rules is primarily a process of memorization. Learning legal reasoning and legal
analysis is much more difficult and complex. At first, you may find that learning this skill is
difficult and time-consuming. It is common for students to become frustrated because they often
think that they are reading cases only to “learn the rules.” They believe that they can “learn the
rules” more rapidly and more easily by reading a narrative statement of the rules. That is why so
many students immediately opt for the readily-available study aids. Once you understand that the
reason we are reading and briefing cases is not only to learn the law but also, and more
importantly, to learn legal analysis and reasoning, you will see why study aids are not the answer
and why the effort is ultimately worthwhile.

For the rest of your career as a law student and as a lawyer, you will be spending a significant
amount of your time reading cases. You have already been introduced to this skill in the
Introduction to Legal Methods course. I am sure that you have already learned that this type of
reading is different from reading you have done in the past. You must spend a great deal of time
reading very carefully.

You also need to develop a mechanism for taking notes on what you have read. Traditionally,
law students and lawyers use a form of note taking called a "brief." You have been introduced to
the skill of case briefing in the Introduction to Legal Methods class. You know that before you
can brief a case, you need to read the case carefully. Following is a suggested "six
step approach" to reading cases.6 After you have done a good, complete job reading the case, you
can begin to write your case brief. Following the discussion of reading cases is a suggested form
of brief for you to use initially. You may have already learned other forms for briefing. I do not
require that you use “my” suggested brief form for my class. However, I urge you to try it before
you decide not to use it. Eventually, you will develop your own "form" of brief, which will still
vary depending on the purpose for which you are reading and briefing a particular case.




6
 The following material discussing how to read cases is taken from course materials prepared by Professor Michael
Hunter Schwartz.
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                                SIX STEPS OF READING CASES

                                             Step 1
             Review the casebook’s table of contents and introductory material at the
                  beginning of chapter in which the assignment falls (if any).
                       Also review applicable portion of class materials.

                                               Step 2
                           Skim all of the material assigned for the week.

                                               Step 3
                       Go back to the beginning of the assignment and read
                        each case very slowly (looking up every unfamiliar
                     word in a law dictionary or English dictionary as needed);
                                 highlight or take notes regarding:
                       (1)     Issues for which the case was placed in the casebook and
                       (2)     Facts which are essential to the court's decision (where necessary
                               create a diagram of the key facts or of the relationships between the
                               parties).

                                               Step 4
                              Read the case again and focus now upon
                      the stated and unstated reasons for the court's decision.
                    (Ask yourself: Why did the court decide the case this way?)

                                                Step 5
                     State, in your own words, the holding of the case and any
                        abstract principles of law relied upon by the court.

                                              Step 6
                         Compare cases (including note cases), looking for:
                        (1)  The relationships among the cases,
                        (2)  Conflicts between cases and how such conflicts might be
                             reconciled or whether the conflicts cannot be reconciled, and
                        (3)  Gaps in logic or reasoning in any of the cases.




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                                     SAMPLE BRIEF FORMAT
Chapter:
Section:
Sub-Section:
Page Number:
Case Name:
Jurisdiction; Year

PARTIES
Include the names of the parties and identify their roles in the litigation (i.e., “plaintiff,"
“defendant,” “appellant,” “appellee.” I think it is as important to describe their role in the
disputed transaction as well. For example, “aggrieved buyer,” “nonperforming real estate
vendor.”

FACTS
Distinguish between relevant facts and irrelevant facts. Include only relevant facts in your brief.
Relevant facts are those that are significant to the court's resolution of the issue(s) before it.
Remember that in contracts, language is crucial; often, the key facts include the specific words
used by the parties.

PROCEDURAL HISTORY
The relief sought in the lower court(s), and what happened in the lower court(s). For example,
“Plaintiff sued for breach of contract. The jury found for plaintiff and awarded $100,000.”

ISSUE
Narrowly framed question(s) of law: include key facts. For example, “Where a seller agrees to
send 500 widgets, but sends a few less, is that a material breach justifying the buyer’s refusal to
pay the contract price?”

HOLDING
The answer to the Issue. (Rule of law applied to facts) For a narrow holding, restate the issue in
answer form as the holding. For example, “Where a seller agrees to send 500 widgets, but sends
a few less, that is not a material breach justifying the buyer’s refusal to pay the contract price, but
only allows the buyer to deduct the cost of the undelivered goods.” For a broad holding,
generalize from the specific facts. A very broad holding in this example would be, “If a seller
fails to perform fully as promised, a buyer is justified in refusing to pay the full contract price.”

DECISION/DISPOSITION
What order was entered by the court as a result of its holding? Which party prevailed? What will
happen next?



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REASONING
Why the court answered the issue(s) the way it did. State the rule(s) of law the court applied: if
there is more than one rule, do the rules conflict? Why did the court select the rule(s) it used to
resolve the case? What is the source of the rule(s) - constitution, statute, common law? How
does the court apply the rule to the facts? What facts are most important to the court's decision
(Would the decision change if a given fact were changed?) [Please Note: Courts do not always
explain their decisions clearly. In fact, the abstract rule of law on which a decision is based may
not actually be stated in the case. You may have to read the textual material in the casebook or
the case notes before you are able to understand the opinion you are briefing.]
Many students think that the most important part of their brief is the statement of the rule
of law. However, as explained above, you are reading cases not only to learn a rule of law
but also, and more importantly, to learn legal analysis. Therefore, I believe that this section
of the brief is most important. Later in the course, you will see that a court’s opinion, when
it is well written, is a sample of a good answer to a law school or bar examination. For now,
be sure to write this part of the brief using your own words so that you really have to
understand the reasoning that led to the court’s decision.

EVALUATION/CRITIQUE (OPTIONAL: We can discuss why you might want to include
such a section in your brief)

Your personal commentary on the opinion

[Please Note: You may not feel very comfortable trying to evaluate judicial opinions at the
beginning of the semester. Make an effort to look at each case through a legal perspective other
than the one you think the judge used. You may take into account your own personal views of
“right and wrong” in this section of the brief. Be aware that public policy considerations can be
crucial to a court’s decision. Policy, however, is very often not explicitly stated by courts so you
will have to derive it yourself from the result. Because contract law is, in part, designed to
facilitate commerce, many contract decisions can be explained on certainty/predictability policy
grounds. The policy of fairness has also managed to find its way into many contracts decisions.
When in doubt, look for both. If you understand why the court decided the case the way it did,
you are more likely to be able to use the court's decision in other contexts.]

SYNTHESIS

Why is the case in the casebook and why is it here? How does it relate to the preceding and
succeeding cases? What additional information have you learned from the cases cited in the
notes following the main case?

[Please note: You will not be able to include a “synthesis” section in your brief until after you
have read two or more cases that deal with a related issue.]

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WEEK II. THE MEANING OF “ENFORCE;” THE BARGAINING
PROCESS

THE MEANING OF “ENFORCE” - INTRODUCTION TO REMEDIES

It is impossible to separate the law of contract damages from the larger body of motives and
policies which constitutes the general law of contracts.7 For this reason, the authors of our text
begin with materials on contract remedies. Remedies is a complex topic. Rather than try to
teach you what you need to know from reading the cases in our text, I use an excerpt from one of
the most famous contract law review articles (at least, one of the most-cited law review articles)
ever written, which summarizes the key concepts.

The Fuller & Purdue article analyzes the purposes that might be pursued in awarding contract
damages or in “enforcing” contracts generally. It distinguishes three principal purposes which
may be pursued in awarding contract damages, which it describes as:

The restitution interest. The plaintiff has in reliance on the promise of the defendant conferred
some value on the defendant. The defendant fails to perform his contract. The court may force
the defendant to disgorge the value he received from the plaintiff. The object here may be termed
the prevention of gain by the defaulting promisor8 at the expense of the promisee; more briefly,
the prevention of unjust enrichment. The interest protected may be called the restitution interest.

The reliance interest. The plaintiff has in reliance on the promise of the defendant changed his
position. For example, the buyer under a contract for the sale of land has incurred expense in the
investigation of the seller’s title or has neglected the opportunity to enter into other contracts. We
may award damages to the plaintiff for the purpose of undoing the harm which his reliance on the
defendant’s promise has caused him. Our object is to put him in as good a position as he was in
before the promise was made.

The expectation interest. Without insisting on reliance by the promisee or enrichment of the
promisor, we may seek to give the promisee the value of the expectancy which the promise
created. We may in a suit for specific performance actually compel the defendant to render the
promised performance to the plaintiff, or, in a suit for damages, we may make the defendant pay
the money value of this performance. Here our object is to put the plaintiff in as good a position
as he would have occupied had the defendant performed his promise.


7 The entire discussion of remedies is excerpted from L.L. Fuller and William R. Perdue, Jr., The Reliance Interest
in Contract Damages, 46 YALE L. J. 52 (1936).
8 You will be seeing and hearing this word constantly in my classroom. Quite simply, the promisor is the person who
makes (gives) a promise; the promisee is the person who “receives” the promise (to whom the promise is made). A
good rule of thumb as you start paying attention to language in contracts is that if someone is described as an “or,”
that person is giving (promising, selling, leasing, employing…), and if someone is described as “ee,” the person is
“receiving.” Some examples of these types of “paired” words are vendor/vendee, lessor/lessee, employer/employee.
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...It is obvious that the three “interests” we have distinguished do not present equal claims to
judicial intervention. It may be assumed that the ordinary standards of justice would regard the
need for judicial intervention as decreasing in the order in which we have listed the three
interests. The “restitution interest,” involving a combination of unjust impoverishment with
unjust gain, presents the strongest case for relief….

On the other hand, the promisee who has actually relied on the promise, even though he may not
thereby have enriched the promisor, certainly presents a more pressing case for relief than the
promisee who merely demands satisfaction for his disappointment in not getting what was
promised him.

It is as a matter of fact no easy thing to explain why the normal rule of contract recovery should
be that which measures damages by the value of the promised performance. Since this “normal
rule” throws its shadow across our whole subject it will be necessary to examine the possible
reasons for its existence….

To summarize, the reason for this very brief look at contract remedies is that we will soon begin
to explore the question, “what promises should be enforced?” It is important to have some idea
about the meaning of “enforce,” before you try to answer that question! Don’t worry … we will
study contract remedies thoroughly in the second semester of this course. However, judges who
must decide the issue of whether there is an enforceable contract – whether a given promise
should be enforced – understand what their decision will mean. It is important that you also
understand what such a decision means; hence, this very brief exposure to the notion of contract
remedies – the meaning of “enforce.”

ADDITIONAL QUESTIONS/HYPOTHETICALS

    1. Assume that you have been retained as a consultant to one of the former Soviet-block
       countries, to formulate rules of contract law. Would you provide that the preferred
       remedy for breach of contract is the award of damages measured by the expectancy
       interest? Why or why not?

    2. In each of the following fact patterns, assume that the promise described has not been
       performed. What do you think would be an appropriate remedy for the party’s non-
       performance?

            a. Professor promises to give each student who turns in five extra credit assignments
               an additional 10 points on the mid-term examination. Several students do the
               extra assignments.

            b. Mother promises daughter to take her to the mall for shopping after the daughter
               cleans her room. Daughter cleans her room.

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            c. Homeowner promises neighbor’s son to pay him for picking up the papers while
               homeowner is on vacation. The neighbor’s son picks up the papers while the
               homeowner is on vacation.

            d. Roofing company promises to repair homeowner’s roof for $3000. It starts work,
               but fails to complete the job.

            e. Actress promises to perform the leading role in Cinderella at the Santa Fe Opera
               in the summer 2006 season. At the last minute, she says she will not be able to
               appear, because she is going to be performing at the opera in Florence, Italy.

            f. Car Dealership promises to repair the air conditioner in Consumer’s car. It
               completes the job and Consumer picks up the car, only to find that the air
               conditioner is still not working.

MUTUAL ASSENT

Contract formation requires a bargain in which there is a manifestation of mutual assent to the
exchange. Manifestation of mutual assent requires that each party either make a promise or
begin or render a performance. The manifestation of assent may be made wholly or partly by
written or spoken words or by other acts or by failure to act.

At common law, it is convenient to think of contract formation as a sequential event in which
one party makes an offer and the other party then accepts the offer. In each instance, we look for
an expression that the party is willing to enter into the contract; we call a sufficient expression of
willingness by both parties "mutual assent." As we will see, in practice (particularly in complex
transactions), the procedure is much less simple. The sequential model, however, is a good place
to start. Think of pre-contract communications as lying on a continuum. At one end of the
continuum are communications that no reasonable person would consider to be offers. For
example, someone might say, “I’m thinking of selling my house.” Could anyone reasonably
think that they can form a contract by saying, “I accept!” At the other end of the continuum are
communications that any reasonable person would understand to be an offer. What would such a
communication look like?

When we discuss offers in class, I will put the continuum on the board, and ask where a
particular communication falls on the continuum (and I will ask WHY).




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                                     THE CONTINUUM



         NOT OFFER                                   OFFER




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                                               APPENDIX

                 OBJECTIVES FOR A TWO-SEMESTER, SIX-UNIT
                           CONTRACTS COURSE

I.      INTRODUCTION

        A.       Law Is A Profession That Requires Its Practitioners To Have Certain Skills

                 1.      The practice of law requires lawyers to exercise independent judgment in
                         advising their clients how to proceed in the face of a legal problem.
                 2.      To render a reasoned judgment in advising their clients, lawyers must be
                         able not only to determine what law applies to their clients’ situations
                         generally, but also to predict how that law will specifically affect the
                         clients’ matters.
                 3.      In short, to render a reasoned judgment, lawyers must possess certain skills
                         that enable them to evaluate their clients’ matters objectively and provide
                         the clients’ with an independent evaluation of the clients’ problems and
                         alternatives to resolve those problems.

        B.       The American Bar Association Has Identified Certain Skills and Values Every
                 Lawyer Should Have

                 1.      In its MacCrate Report,9 the ABA has identified the following as skills
                         every lawyer should have:

                         (1)      Problem solving;
                         (2)      Legal analysis and reasoning;
                         (3)      Legal research;
                         (4)      Factual investigation;
                         (5)      Communication;
                         (6)      Counseling;
                         (7)      Negotiation;
                         (8)      Litigation and alternative dispute-resolution procedures;
                         (9)      Organization and management of legal work; and
                         (10)     Recognizing and resolving ethical dilemmas. Id. at 141- 207.




9 ABA Section of Legal Educ. & Admissions to the Bar, Statement of Fundamental Lawyering Skills and
Professional Values, (Report of the Task Force on Law Schools and the Profession: Narrowing the Gap, 1992)
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                2.      The ABA has also identified the following as values every lawyer should
                        have:

                        (1)     Provision of competent representation;
                        (2)     Striving to promote justice, fairness, and morality;
                        (3)     Striving to improve the profession; and
                        (4)     Professional self-development. Id. at 207-21.

        C.      Western State University College Of Law Is Committed To Teaching Its Students
                The Skills They Will Need To Practice Law

                1.      Western State’s mission in part provides “the College of Law emphasizes
                        the study and practice of lawyering skills required for the ethical, skillful,
                        and professional practice of law . . . .”
                2.      This emphasis on lawyering skills is intended particularly to meet “the
                        educational needs of those who seek to practice in small to medium law
                        offices, corporate law departments and governmental and other public
                        service settings.”

        D.      Teaching Skills At Western State: Contracts

                1.      It is impossible to teach all of the skills or inculcate all of the values
                        identified by the ABA in a first year course such as Contracts. However,
                        the Contracts course jump starts a student’s understanding of legal analysis
                        and reasoning, and begins the process of the student learning how to solve
                        problems.
                2.      Contracts does not simply consist of teaching students the substance of the
                        law, i.e., it is not simply the rote memorization of legal rules in Contract
                        law.
                3.      Instead, the Contracts course emphasizes not only learning the rules, but
                        more important, learning how to recognize when the rules apply and then
                        applying the rules to specific fact situations.
                4.      As explained more fully below in II.4 below, by learning how to apply the
                        rule, the student begins to learn to predict the likely outcome in a client’s
                        case, a prerequisite to providing the client with a reasoned and objective
                        advice on how to proceed.
                5.      As set out in the specific topic areas below, in a variety of doctrinal
                        settings throughout the contracts course, the student is repeatedly required
                        not only to learn the “rule,” but also to apply it to particular fact situations
                        and then predict how a court will rule.



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II.     GENERAL OBJECTIVES

        A.      Introduction: Sections B-E, below, contain set of general objectives for Contracts.
                 Some of the listed skills are specific to Contracts (e.g., “B. Understanding
                Policies Underlying Contract Law”). Other objectives (e.g., “E. Performing Basic
                Legal Analysis and Reasoning”) are general skills every lawyer must possess.

                NOTE: The purpose of setting out these objectives is to describe the skills and
                knowledge we expect our students to acquire. Our purpose is not to prescribe the
                methodology a professor should use to help the students acquire these skills and
                knowledge.

        B.      Understanding POLICIES Underlying Contract Law

                1.      Identify public policies underlying contracts doctrine.

                        a.      E.g., contract law has developed in part to promote a more efficient
                                use of resources.

                2.      Given a rule of contracts law, determine which public policy(ies) the rule
                        implicates.

                        a.      E.g., to achieve a more efficient use of resources, law should
                                encourage (or not discourage) contracts. Rules concerning offer
                                and acceptance ensure that a person who has made an offer – and
                                thus has expressed a willingness to enter into a contractual
                                relationship – will not be forced into a contract except upon the
                                terms he or she is willing be contractually bound. If a person does
                                not believe he can specify the terms of his contractual relationship,
                                he or she likely will be less willing to enter into a contract.

        C.      Legal SKILLS Specific To Contracts Or Which Reinforce Skills Learned In Other
                Classes

                1.      Case Briefing. Identify and define each of the components of a case brief
                        (case name & citation, procedural setting, facts, issue, holding, applicable
                        rule, rationale);

                2.      Case Reading. Identify the procedural setting, issue, key facts, applicable,
                        rule, holding and rationale in a court opinion raising contract law issues;


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                3.      Issue Identification. Determine whether a particular fact situation contains
                        a contracts issue.

                4.      Legal Analysis & Reasoning. Given a fact situation:

                        a.      Identify the contract law issue(s) raised by those facts;
                        b.      Identify the specific contract rule(s) related to those issues;
                        c.      Apply contract rule(s) to those facts;
                        d.      Conclude (i.e., predict) how a court would likely decide the issues
                                raised by those facts. See II.E below, for a detailed discussion of
                                this skill.

                5.      Contract Drafting. Given a hypothetical fact pattern raising a basic
                        contract drafting issue, recognize the drafting issue and understand the
                        implications of failing to address that issue.

        D.      Understanding Differences Between COMMON LAW of Contracts and
                UNIFORM COMMERCIAL CODE

                1.      Given a fact situation, analyze and conclude whether the facts raise a
                        common law contracts issue or an issue under Article 2 of the Uniform
                        Commercial Code.

        E.      Perform Basic Legal Analysis and Reasoning. Each of the topic areas of the
                Contracts course is intended to provide students with basic legal analysis and
                reasoning skills. To accomplish this, students generally are expected to be able to
                perform four basic tasks with respect to a fact situation: (1) issue identification,
                (2) rule recognition, (3) fact identification, and (4) analysis of the facts within the
                rule’s framework. The end result of being able to perform these tasks is the
                student’s being able to reach a conclusion firmly based on the law and facts that
                will enable the student to predict with some confidence how a court would resolve
                the fact situation. This ability to predict enables a lawyer to advise the client on
                how to proceed, and is what clients pay their lawyers for. The ability is developed
                through the consideration of cases, statutes and Restatement sections concerning
                the topic area, and hypotheticals that build on the cases, statutes and Restatement
                sections. The four basic tasks, with an explanation of how they relate to a
                lawyer’s provision of services to a client, are:

                1.      Be able to determine whether a fact situation raises an issue regarding the
                        specific topic of contract law (e.g., offer, acceptance, defenses, damages,
                        etc.).


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                        a.      This task relates to the practice of law because clients generally do
                                not identify with precision the kind of legal problem they have.
                                Rather, they tell the lawyer the facts that have led them to consult
                                with the lawyer. It is then up to the lawyer to determine where
                                within the legal landscape the client’s problem lies.

                2.      Be able to state the general rules concerning the specific topic of contract
                        law, and understand that they provide the framework for analyzing the
                        fact situation.

                        a.      The applicable rule is the framework within which a lawyer
                                evaluates the client’s facts. Unless a lawyer can identify what rules
                                may be relevant, the lawyer has no reference point for evaluating
                                the client’s facts. Without that reference point, a lawyer will be
                                unable to predict with any certainty the likely legal outcome of the
                                client’s matter.

                        b.      In addition to being able to identify the general rule that may apply
                                to a client’s matter, a lawyer must also be familiar with exceptions
                                to that general rule. Whether the general rule or an exception will
                                apply will depend on the particular fact situation, thus requiring the
                                lawyer to be able to identify both relevant and irrelevant facts. See
                                3, below.

                3.      Identify the relevant facts in the fact situation that support or do not
                        support finding that a particular rule is applicable.

                        a.      Identifying the relevant facts is key to determining whether a
                                particular [rule/case’s reasoning] – and thus the outcome the
                                [rule/case] mandates – should be applied to the client’s fact
                                situation.
                        b.      The facts of a client’s matter may distinguish the matter from a
                                previously-decided case (the facts may be “irrelevant”), thus
                                precluding the application of that case’s rule. Conversely, the facts
                                may bring the client’s matter within the ambit of the previously-
                                decided case, mandating the application of that case’s rule – and
                                consequent result.
                        c.      Lawyers regularly must determine whether their clients’ matters
                                can be distinguished from – or fall within the purview of – a
                                previously-decided case, and advise the client accordingly. A
                                lawyer must be sensitive to the relevant facts to accomplish this.
                        d.      A lawyer, however, does not just identify the relevant facts. Just as
                                important to the lawyer’s mental processes in evaluating a client’s
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                                situation is a lawyer’s ability to recognize when a fact is irrelevant.
                                 Put another way, in evaluating a client matter, the lawyer must be
                                able not only to recognize relevant facts, but also to disregard
                                irrelevant facts.

                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the issue that has been
                        presented.

                        a.      There are two parts to the foregoing analysis:

                                (1)     First, a lawyer must be able to look at both sides of the
                                        issue objectively and identify legal arguments that support
                                        or undermine the client’s position. This does not mean
                                        merely that a lawyer simply identifies both sides of an
                                        argument and then advises the client to flip a coin. Rather,
                                        the lawyer must evaluate the arguments on both sides, and
                                        determine which argument or arguments are more likely to
                                        prevail before a court. See (2), below.
                                (2)     Second, based on an evaluation of arguments on both sides,
                                        the lawyer must reach a conclusion. This forces the lawyer
                                        (and in law school, the student) to predict how a court
                                        would decide. This relates to a lawyer’s practice because a
                                        lawyer’s prediction will allow the client to make a reasoned
                                        decision. For example, if the law and facts are against the
                                        client, the client may be better served by initiating
                                        settlement negotiations rather than by engaging in
                                        protracted – and likely losing – litigation.

                        b.      Analysis is a skill that is central to nearly all of the other skills the
                                ABA has identified. For example, legal research provides the
                                lawyer with the framework within which to evaluate the facts.
                                Factual investigation will help reveal the relevant facts to be
                                evaluated. As already noted, a lawyer will be hard pressed to
                                counsel a client competently unless the lawyer can determine the
                                likely outcome. It is nearly impossible to negotiate with an
                                opposing lawyer unless you are familiar with the factual and legal
                                landscape of your client’s matter, which reveals the strengths and
                                weaknesses of your client’s case. The same is true of engaging in
                                alternative dispute resolution. Finally, it is not sufficient that a
                                lawyer be able to “think” about the law and facts; it is of little use
                                to the client unless the lawyer can communicate in a cogent manner
                                the lawyer’s reasoning and advice. Legal analysis and reasoning is,
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                                in a sense, the first step for a law student toward acquiring the
                                skills that will enable the student to engage in problem solving for
                                clients.

               NOTE: In any given year, a professor will cover all the major subject areas (e.g.,
                Contract Formation, Defenses, Meaning, etc.), but within each major subject area,
                a professor may choose to emphasize, de-emphasize or even eliminate some of the
                more narrowly-defined topics (e.g., within the major subject area of Contract
                Defenses, a professor may decide to cover all the defenses, but cover them in
                varying depth, or may even decide not to cover one or more of the defenses
                listed.) See VI below.
               Nevertheless, there are certain topics or sub-topics that a professor should usually
                cover in the Contracts course. These topics are marked by a ► symbol.

III.    CONTRACT FORMATION: MUTUAL ASSENT (INCLUDING CERTAINTY)

        NOTE: A predicate to each of the following categories (manifestation, certainty, offer,
        acceptance, etc.) is the ability to determine whether a fact situation raises a contract
        formation issue. This predicate ability to identify fact situations that raise contract
        formation issues develops throughout the duration of the course.

        A.      ►Concerning whether a fact situation MANIFESTS the parties’ mutual assent to
                be bound in a contractual relationship, develop the ability to:

                1.      Determine whether a fact situation raises a manifestation issue;
                2.      State the rules concerning manifestation and understand that they provide
                        the framework for analyzing the fact situation;
                3.      Identify the relevant facts in the fact situation, including any operative
                        words of the parties that support or do not support finding a manifestation
                        of mutual assent;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the manifestation issue.

        B.      Concerning whether a fact situation involves a CERTAINTY issue, develop the
                ability to:

                1.      Determine whether a fact situation raises a certainty of terms issue;
                2.      State the rules concerning certainty of terms and understand that they
                        provide the framework for analyzing the fact situation;
                3.      Identify the relevant facts in the fact situation, including any operative
                        words of the parties that support or do not support finding the terms are
                        sufficiently certain;

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                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the certainty of terms issue.


        C.      ►Concerning whether a fact situation involves an OFFER issue, develop the
                ability to:

                1.      Determine whether a fact situation raises an offer issue;
                2.      State the rules concerning offer – including rules dealing with specialized
                        offer situations such as advertisements, circulars, requests for bids and
                        auctions – and understand that they provide the framework for analyzing
                        the fact situation;
                3.      Identify the relevant facts in the fact situation, including any operative
                        words of the purported offeror, that support or do not support finding that
                        an offer has been made;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the offer issue.

        D.      ►Concerning whether a fact situation involves an ACCEPTANCE issue, develop
                the ability to:

                1.      Determine whether a fact situation raises an acceptance issue;
                2.      State the rules concerning acceptance – including rules re manner of
                        acceptance, unilateral or of bilateral contracts, knowledge of the offer and
                        silence as acceptance – and understand that they provide the framework
                        for analyzing the fact situation;
                3.      Identify the relevant facts in the fact situation, including any operative
                        language, that support or do not support finding that there has been an
                        acceptance;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the acceptance issue.

        E.      ►Concerning whether a fact situation involves a TERMINATION of the power
                OF ACCEPTANCE issue, develop the ability to:

                1.      Determine whether a fact situation raises an issue regarding the
                        termination of the power of acceptance;
                2.      State the rules concerning the effect of terminating the power of
                        acceptance, and understand that they provide the framework for analyzing
                        the fact situation;
                3.      Identify the relevant facts in the fact situation that support or do not
                        support finding that the power of acceptance has been terminated;

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                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the termination of acceptance
                        issue.

        F.      Concerning whether a fact situation involves the common law “MAILBOX
                RULE,” develop the ability to:

                1.      Determine whether a fact situation raises an issue regarding the mailbox
                        rule;
                2.      State the various mailbox rules, and understand that they provide the
                        framework for analyzing the fact situation;
                3.      Identify the relevant facts in the fact situation that support or do not
                        support finding that the mailbox rule should govern the situation;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the mailbox rule issue.

        G.      ►Concerning contract formation under ARTICLE 2 OF THE UNIFORM
                COMMERCIAL CODE, develop the ability to:

                1.      State the rules applicable to formation under Article 2 of the U.C.C., and
                        understand that they provide the framework for analyzing the fact
                        situation;
                2.      Identify the relevant facts in a fact situation that support or do not support
                        finding that Article 2 should govern the situation;
                3.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the Article 2 issue.

IV.     CONTRACT FORMATION: CONSIDERATION

        A.      ►Concerning CONSIDERATION GENERALLY, develop the ability to:

                1.      Determine whether a fact situation raises an issue regarding consideration
                        generally (bargained for exchange);
                2.      State the general rules concerning consideration, and understand that they
                        provide the framework for analyzing the fact situation;
                3.      Identify the relevant facts in the fact situation that support or do not
                        support finding that consideration is present;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the consideration issue.

        B.      ►Concerning SPECIALIZED instances of CONSIDERATION, develop the
                ability to:

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                1.      Determine whether a fact situation raises an issue regarding specialized
                        consideration situations:
                         ►Forbearance;
                         ►Adequacy of consideration;
                         Compromise of invalid claims;
                         ►Illusory promise;
                         ►Pre-existing duty rule;
                         ►Moral duty and past consideration
                2.      State the rules concerning specialized consideration situations, and
                        understand that they provide the framework for analyzing the fact
                        situation;
                3.      Identify the relevant facts in the fact situation that support or do not
                        support finding that consideration is present;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the specialized consideration
                        issue.

V.      CONTRACT FORMATION: PROMISSORY ESTOPPEL

        A.      ►Concerning PROMISSORY ESTOPPEL, develop the ability to:

                1.      Determine whether a fact situation raises an issue regarding promissory
                        estoppel;
                2.      State the elements of promissory estoppel and each of the contexts in
                        which the courts use promissory estoppel, for example,
                         ►as an alternative theory of recovery to breach of contract;
                         ►as a “substitute for consideration”;
                         ►as a substitute for a writing required by a statute of frauds;
                         in the construction bidding context;
                         to police overstepping in the bargaining process;
                        and understand that the elements provide the framework for analyzing the
                        fact situation;
                3.      Identify the relevant facts in the fact situation that support or do not
                        support finding that conditions for finding promissory estoppel are
                        present;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the promissory estoppel issue.

        B.      ►In addition, students will understand the range of remedies that are available
                under promissory estoppel.



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VI.      CONTRACT DEFENSES

         A.       Defenses to Contract Formation:

                  1.        ►Misrepresentation And Non-Disclosure;
                  2.        Mistake;
                  3.        ►Unconscionability;
                  4.        ►Duress;
                  5.        Undue Influence;
                  6.        Statute Of Frauds;
                  7.        ►Contracts Against Public Policy.

         B.       ►Concerning CONTRACT DEFENSES, develop the ability to:

                  1.        Determine whether a fact situation raises a contract defense;
                  2.        State the elements of the defense raised, and understand that the elements
                            provide the framework for analyzing the fact situation;
                  3.        Identify the relevant facts in the fact situation that support or do not
                            support finding that relevant defense(s) is(are) present;
                  4.        Analyze the relevant facts within the legal rule framework to reach a
                            conclusion about whether a court would decide the defense(s) is(are)
                            present.

VII.     CONTRACT MEANING10

         A.       ►Concerning the PAROL EVIDENCE RULE, develop the ability to:

                  1.        Determine whether a fact situation raises a parol evidence rule issue;
                  2.        State rules relating to the parol evidence rule, including:
                             ►common law and Article 2 rules relating to the type of evidence to
                                 which the rule applies;
                             ►whether a contract is partially or completely integrated;
                             ►whether the evidence is consistent or contradictory; and
                             ►exceptions to the rule;
                            and understand that the rules provide the framework for analyzing the fact
                            situation;
                  3.        Identify the relevant facts in the fact situation that support or do not
                            support finding that a parol evidence issue is present;
                  4.        Analyze the relevant facts within the legal rule framework to reach a
                            conclusion about how a court would decide the parol evidence rule issue.

10 Topics covered in this section of the outline and the sections that follow are studied in Contracts II.
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        B.      ►Concerning CONTRACT INTERPRETATION, develop the ability to:

                1.      Determine whether a fact situation describes a contract that contains an
                        ambiguity or set of ambiguities (including any “gaps”), and identify the
                        ambiguity(ies) or gaps;
                2.      State rules relating to the resolution of contract ambiguities and the filling
                        of gaps, and understand that the rules provide the framework for analyzing
                        the fact situation;
                3.      Identify the facts in the fact situation that are relevant to resolving the
                        ambiguity(ies) or gaps;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would resolve the ambiguity or gap.

VIII.   THIRD PARTY CONTRACT ISSUES

        A.      ►Concerning THIRD PARTY BENEFICIARIES, understand the importance of
                the doctrine of third party beneficiaries in everyday life (e.g., life insurance
                contracts), and develop the ability to:

                1.      Determine whether a fact situation raises a third party beneficiary issue;
                2.      State each of the rules of third party beneficiary law, including the rules
                        relating to
                         ►the distinction between intended and incidental beneficiaries;
                         ►the rights of intended beneficiaries;
                         ►the rights of the promisee; and
                         where applicable, the claims and defenses of the promissor;
                        and understand that they provide the framework for analyzing the fact
                        situation;
                3.      Identify the facts in the fact situation relevant to the third party beneficiary
                        issue;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the third party beneficiary
                        issue.

        B.      ►Concerning ASSIGNMENT & DELEGATION, understand the importance of
                the assignment and delegation in everyday life (e.g., consumer and commercial
                credit), and develop the ability to:

                1.      Determine whether a fact situation raises an assignment or delegation
                        issue, or both;

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                2.      State each of the rules of assignment and delegation law, including the
                        common law and Article 2 rules relating to:
                         ►the effectiveness of assignments;
                         ►limitations on assignments;
                         discharge or modification of assignments;
                         the rights of the assignee against competing assignees;
                         the claims and defenses of the obligor;
                         ►delegability and the effect of an improper delegation;
                         liability of delegatee and novation;
                        and understand that they provide the framework for analyzing the fact
                        situation;
                3.      Identify the facts in the fact situation relevant to the assignment and/or
                        delegation issue;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the assignment and/or
                        delegation issue.

IX.     CONTRACT PERFORMANCE, NON-PERFORMANCE AND MATERIAL
        BREACH

        A.      NOTE: A predicate to the objectives outlined in section B., below, is the
                understanding that in the real world, the order of the parties’ respective
                performances is governed by the law concerning conditions (events that must
                occur before a party’s performance becomes due), that a particular party’s duty to
                perform under a contract is generally triggered by the occurrence of an event (i.e.,
                a condition), and that a lawyer must be able to identify any conditions to the
                performance of his or her client to be able to advise that client as to whether the
                client’s non-performance or incomplete performance may constitute a material
                breach, exposing the client to liability to the other party.

        B.      ►Concerning performance, non-performance and material breach, understand the
                importance to a client’s decision on how to proceed under a contract of being able
                to determine when a client’s duty becomes due, and develop the ability to:

                With respect to express conditions:

                1.      Distinguish through analysis a contract term that is a promise from a term
                        that raises an issue as to whether the term creates an express condition to
                        performance;
                2.      Analyze whether the contract term has, in fact, created an express
                        condition to performance;


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                3.      State rules concerning the occurrence or non-occurrence of an express
                        condition, and understand that they provide the framework for analyzing
                        the fact situation; and
                4.      Analyze the relevant facts and contract terms within the legal rule
                        framework to reach a conclusion about how a court would decide whether
                        the condition has occurred or not occurred.

                With respect to constructive conditions:

                1.      Given a factual situation (including contract language), recognize when an
                        issue has been raised as to the ordering the performances of the parties’
                        promises, i.e., whether a constructive condition is present.
                2.      State rules concerning the constructive condition issue, and understand
                        that they provide the framework for analyzing the fact situation;
                3.      Identify the facts in the fact situation relevant to the constructive condition
                        (i.e., order of performance) issue;
                4.      Analyze the relevant facts and contract terms within the legal rule
                        framework to reach a conclusion about how a court would decide the order
                        of the parties’ performances, which in turn determines the respective
                        duties of the other party.
                5.      Given a factual situation with a constructive condition, determine whether
                        an issue concerning that condition’s occurrence has been raised.
                6.      State rules (e.g., substantial performance) concerning the occurrence or
                        non-occurrence of a constructive condition, and understand that they
                        provide the framework for analyzing the fact situation;
                7.      Identify the facts in the fact situation relevant to the issue of the
                        constructive condition’s occurrence;
                8.      Analyze the relevant facts and contract terms within the legal rule
                        framework to reach a conclusion about how a court would decide whether
                        the constructive condition has occurred or not occurred.

                With respect to excuses to performance when a condition has not occurred:

                1.      Having determined that a condition (express or constructive) has not
                        occurred, identify possible bases for excusing or discharging the non-
                        occurrence of the condition, including:
                         waiver or estoppel;
                         extreme forfeiture;
                         ►non-occurrence of a prior condition;
                         ►divisibility;
                         ►anticipatory repudiation;
                         failure to provide adequate assurances where they are required;

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                         ►impracticability and frustration.
                2.      State rules concerning the possible bases for excusing or discharging the
                        non-occurrence of the condition, and understand that they provide the
                        framework for analyzing the fact situation;
                3.      Identify the facts in the fact situation relevant to whether a possible excuse
                        or ground for discharge does excuse or discharge the non-occurrence of
                        the condition.
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the excuse or discharge issue.

X.      REMEDIES FOR BREACH OF CONTRACT

        A.      ►Concerning damages in general, understand the policies underlying the
                fundamental assumptions that remedies in contract are intended to redress breach
                and not to punish, and are generally substitutional rather than specific, and
                develop the ability to:

                1.      Determine whether a fact situation raises a damages issue;
                2.      State the appropriate measure of general damages based on the type of
                        breach (e.g., defective performance vs. non-performance), type of contract
                        and identity of the victim of the breach, and understand that it provides the
                        framework for analyzing the fact situation;
                3.      State the appropriate measure of special damages, if applicable, and
                        understand that it provides the framework for analyzing the fact situation;
                4.      Identify the facts in the fact situation relevant to the calculation of the
                        damages;
                5.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would calculate the damages;
                6.      Determine whether a fact situation raises a limitations on damages issue;
                7.      State the rules for limitations on damages, and understand that they
                        provide the framework for analyzing the fact situation;
                8.      Identify the facts in the fact situation relevant to the limitation on damages
                        issue;
                9.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would determine any limitations on damages
                        issue.

        B.      ►Concerning reliance damages, develop the ability to:

                1.      Determine whether a fact situation raises a reliance damages issue;
                2.      Identify and state the appropriate measure of reliance damages raised by
                        the fact situation;

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                3.      Identify the facts in the fact situation relevant to the calculation of reliance
                        damages;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would calculate the reliance damages;
                5.      State the situations where a party may recover only reliance damages and
                        not expectation damages;
                6.      State rules for the fact situations where a party may recover only reliance
                        damages, and understand that they provide the framework for analyzing
                        the fact situation;
                7.      Identify the facts in the fact situation that are relevant to determining
                        which reliance damages only situation is implicated;
                8.      Identify the facts in the fact situation relevant to a reliance damages only
                        situation;
                9.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the reliance damages only
                        issue(s).

        C.      ►Concerning restitution, develop the ability to:

                1.      Identify whether a factual situation raises a restitution issue.
                2.      State the situations where a party may recover only restitution;
                3.      State the elements of a claim for unjust enrichment, and understand that
                        they provide the framework for analyzing the fact situation;
                4.      Identify the facts in the fact situation relevant to whether the alleged
                        wrongdoer has been unjustly enriched;
                5.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the unjust enrichment issue.
                6.      State the measure of restitution for each of the situations where a party can
                        recover only restitution, and understand that it provides the framework for
                        analyzing the fact situation;
                7.      Identify the facts in the fact situation relevant to calculating the
                        appropriate restitution damages;
                8.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would calculate the restitution damages.

        D.      ►Concerning “agreed” damages (i.e., liquidated damages), develop the ability to:

                1.      Recognize an agreed damages clause;
                2.      Determine whether a fact situation raises an issue regarding the
                        enforceability of an agreed damages clause;
                3.      State the test for the enforceability of an agreed damages clause, and
                        understand that the test provides the framework for analyzing the fact
                        situation;
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                4.      Identify the facts in the fact situation relevant to the agreed damages issue;
                5.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the agreed damages issue.

        E.      ►Concerning specific performance, develop the ability to:

                1.      Determine whether a fact situation raises a specific performance issue;
                2.      State the test courts use to determine whether to grant specific
                        performance – including the discretionary considerations used by the
                        courts to make such decisions – and understand that the test provides the
                        framework for analyzing the fact situation;
                3.      Identify the facts in the fact situation relevant to the specific performance
                        issue;
                4.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the specific performance issue.

        F.      Concerning injunctions against breach, develop the ability to:

                5.      Determine whether a fact situation raises an injunction against breach
                        issue;
                6.      State the test courts use to determine whether to grant an injunction against
                        breach – including the discretionary considerations used by the courts to
                        make such decisions – and understand that the test provides the framework
                        for analyzing the fact situation;
                7.      Identify the facts in the fact situation relevant to the injunction against
                        breach issue;
                8.      Analyze the relevant facts within the legal rule framework to reach a
                        conclusion about how a court would decide the injunction against breach
                        issue.




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