Docstoc

Contracts Outline Bowers Fall 2007

Document Sample
Contracts Outline Bowers Fall 2007 Powered By Docstoc
					                                                                                                                   1

                                             Contracts Outline
                                            Bowers – Fall 2007
                                              Nick Graphia
Introductory Material
Final- rulebook allowed, talk a/b cases and rules
-***What should a good law be looking for? Why?***
          -―Divine Philosopher‖
          -What will ultimate law look like?
-Critically address my presumptions (eg, if a democrat should always win, say what happens when a democrat fights
a democrat)
-Think about comparing this outline to Gilbert‘s, etc.

Theory: reasonable ppl will not break laws of gov‘t, b/c laws are based on reason
         **Both sides have laws supporting their positions, therefore law cannot be practiced on PCs**
         -law provides arguments, not answers
                  -there will be a rule on each side of a case, lawyers must convince judges that they should apply
                  the rule supporting their position (via policy args, etc.)
         -the argument that leads to the most appealing view of social life will/should prevail
                  -mst citizens would prefer that lawyers are aware of culture & make args describing social life
         -common sense (CS) is most important part of law
                  -ex a/b faulty widget v. faulty pacemaker; CS tells us that a quality pacemaker is more imp than a
                  trivial widget
         -law isn‘t a/b applying old answers to new problems
                  -it‘s a process where lawyers play a game involving whether a precedent applies to a new question
                  -lawyers arg the value in accepting/rejecting precedent
                  -lawyers come up w/ new answers to new questions
                  -law is flexible, allowing solutions appropriate to a particular situation
         -in Bower‘s class, Ks will be applied to goals less lofty than morality; we‘ll take the perspective of
         governance of social life

http://en.wikipedia.org/wiki/Swami

http://www.urbandictionary.com/define.php?term=swami


Bowers’ Words of Wisdom:

        -Ways to decide if a K has been formed: swami, formal rules (if formal rules don‘t apply or aren‘t effective,
        we use other ways), fact of social life (business standards, social norms, etc.), UCC, consideration.
                  -for quantum merit, find out what the going rate is. This is a substitute for swamis.
        -One of the issues with K formation is to find out what was promised.
                  -This is scary for new lawyers, there are myriads of possibilities
        -All Ks are inherently incomplete, b/c its hard to know what the future holds. There are 32 trillion
        possibilities for the future.
        -On Ks inside packaging: ―Read the book asshole‖
        -Early Americans wanted to reject British ideas of nobility & unequal pwr relationships in exchange for
        egalitarian exchange. This gr8ly influenced our K law
        -Old British Ks required ‗under seal‘ imprinting to be enforceable. Common Brits wanted to have their Ks
        enforced too, so cts invented consideration
        -Offer + Acceptance fell, b/c legal realism occurred; lawyers realized that they can‘t practice by
        memorizing rules; mindless application of rules is frequently unjust
                                                                                                                     2

         -For Exam, ask what is really going on here. Lawyers forget about this.
         - Just b/c Ks don’t itemize every little thing doesn’t mean they aren’t enforceable. If society wants to
         enforce them, we get around itemization problems by: 1) invent fictional consideration or 2) honor
         good faith promises to act in the future. Sometimes things must be decided ex-parte.
         -The vaguer the info available on a promise is, the more consideration is required.
         -2kinds of unconscionability. 1) Procedural- easier to prove; ie, K not formed; ex: for Gateway, consumer
         lawyer would say K formed on phone & not after he opens the box. 2) Substantive- $8k cost to litigate over
         a $1K problem is something most rational ppl wouldn‘t agree to (Gateway arbitration clause) response to
         substantive arg- Gateay would say its expensive to litigate anyway. See Washington and Broemmer cases
         -Old Saw: When the law is in your favor, argue the law. When the facts are in your favor, argue the facts.
         -Nobody would make promises if punishment too harsh…if breachers were boiled, no one would make
         promises
         -participation constraint: ―I ain‘t playing unless I gain from playing‖
         -Understand what drives the cases, then use them to make a persuasive argument. The best lawyers do this
         and this helps them overcome the old doctrines
         -―You must think I‘m a real dumbshit to pay more or sell for less than market price‖
         -―First rule of law practice: If someone has to go to jail make sure it is your client and not you‖
         -We are very fortunate that we have markets and comparable prices in the absence of Swamis‖
         -Why allow Parole evidence? –ex: sign saying keep off grass means one thing on a lawn and another in a
         drug counselor‘s office. Lawyers must take words in context. Words are symbols; social life, not
         dictionaries, determine their meaning. Must look at form and substance. Also, discussion a/b Elizabeth
         Hurley in Bedazzled (see link above). Does the devil get his soul? Was his wish granted? Hurley honored
         the form of his wishes, but not the substance. Further, think background beliefs, worldviews and
         connotations.
         -K law is valuable b/c it allows parties to make their own choice, so looking at what everyone else does is
         problematic (TENSION POINT)…See post Bloor case for further discussion.
         -Joint Maximizing Principle- both parties create a bigger pie by collaborating. So, each party now has more
         pie when King with each other. This is the big incentive for Ks. Pre-K parties eagerly negotiate to create a
         bigger pie. (See Spaulding Case)
                   -problem: once the K is made though, the big pie incentives dissipate and parties become greedy;
                   they want to maximize their advantage even at expense of other party (perverse interest, etc.)
                   -Mutually beneficial/symbiotic relationships become parasitic…
                   -Key ?? to ask, What would a joint maximizing plan have done at point of K formation?
         -All pie splitting regimes interfere w/ pie maximization

Cases & Analysis

Chapter 1: The Autonomy and Security Principles
Autonomy: The law empowers ppl to make and receive enforceable promises when they communicate decisions to
act or refrain from acting in some definite way in the future, subject to other principles.
Security: The law requires each party to a K formation or performance to do its part to respect the other party‘s
reasonable expectation and reliance.

Contracts- enforceable promises

Lucy v. Zimmer [K for farm sale made in bar, upheld by court]
Fact Summary (FS): Zehmer (D) claimed his offer to sell his farm to Lucy (P) was made in jest
Black letter law (BL): If a person‘s words and acts, judged by a reasonable standard, manifest a certain intent, it is
immaterial what may be the real but unexpressed state of that person‘s mind
Restatement 2nd of Ks (2nd) s.201- Whose meaning prevails p.254
Bowers‘ Analysis (BA): -rules x facts = outcome; What would the sober guy @ the end of the bar say?
 -appellate cts must take facts as given, theory @ common law is there b/c local fact finder hears/sees visual
testimony & is aware of the local customs… the more info one has a/b an environment, the better his judgments are.
-reasons for enforcing promises: 1) good for economy 2)ppl can rely that future promises will be enforced 3)moral
element
                                                                                                                         3

-Building sidewalk example: there are limits on advance planning, sidewalks should be built after we know where
ppl want to walk; compared to common law judge‘s authority- he can adjust to the facts of social life
Relevant Definitions (RD): offer- a proposed promise to undertake performance of an action, or to refrain from
action, that is to become binding upon acceptance by the offeree; mutual assent- a requirement of a valid K that the
parties posses a mutuality of assent as manifested by the terms of the agreement and not by a hidden intent

Embry v. Hargadine [Emp K not upheld b/c boss didn‘t intend to make a binding K. Remandd for factual finding]
FS: Embry(P) was allegedly rehired by Hargadine(D) after his employment K had expired. D denied the rehiring.
BL: The secret feelings, intentions, or beliefs of a party will not affect the formation of a K if their words and acts
indicate that they intend to enter into a binding agreement
BA: -this doctrine can be big trouble for employers, @ trial ct, Embry lost b/c jury was instructed to look @
intentions of both parties. [Sol- attys could advise employers to operate formally]

Oswald v. Allen [Swiss coin case]
FS: Osald(P) brought an action against Allen (D) to enforce a K for the sale of Allen‘s Swiss coin collection.
BL: A K does not exist when the terms used to express an agreement are ambiguous, the parties understood the
terms in diff ways, and neither party should have reasonably been aware of the other party‘s understanding
RD: meeting of the minds- requirement of a valid K, that the parties posses a mutuality of assent as manifested by
the terms of the agreement and not by a hidden intent; enforceability of the K is limited to those terms wh/ the
parties assented

Mesaros v. US [statue of liberty coins, jmt for US]
FS: Mesaros(P) sued for damages for breach of K by gov‘t(D) in failing to deliver statue of liberty coins the P had
ordered pursuant to an advertisement
BL: Advertisements are generally considered invitations for offers wh/ must be ratified by the solicitor
2nd s. 24, 26, 33, 35- Offer denied, Preliminary Negotiations, Certainty, The Offeree’s Power of Acceptance
p.203
BA: legal raw materials don‘t decide the answers. So, args for better social life; lawyers must arg for judge to pick
b/t laws…judge‘s opinions will claim objectivity
          -offer & acceptance are FORMALITIES to indicate a K; simultaneous offers for same promise don‘t
          constitute a K (don‘t satisfy formality test)

Leftkowitz v. Great Minn Surplus Store [$1 Fur coat ad]
FS: Surplus Store (D) advertised one fur stole on a first come first served basis but would not sell the stole to P who
accepted the alleged offer.
BL: Where the offer is clear, definite, and explicit & leaves nothing open for negotiation, it constitutes an offer,
acceptance of wh/ forms a K [even for newspaper ads]
BA: generally, ads are invitations to make offers
-the point of formality is to know what is being agreed to; lawyers get too literal w/ the formality **we need to keep
formalities and the point of formalities (ie, form and substance)

Akers v. JB Sedberry, Inc.
FS: JB (D) did not respond to P‘s offer of resignation during the converstion in wh/ it took place, but later she sent
him a telegram attempting to accept his offer
BL: Offers made in face-to-face convos are generally good during that convo only
2nd s. 36, 41 Methods of termination of the power of acceptance, Lapse of Time
BA: Offerors are masters of their own offers. – time for consideration should vary according to significance of
things offered

Ardente v. Horan [refused to sell home, b/c wouldn‘t leave pertinent furniture]
FS: Ardente(P) asserted that he had accepted the Horan‘s offer to sell their home and that a K had thus been formed,
but the Horans insisted that he had only made a counteroffer.
BL: If acceptance comes with further demands, its not acceptance, it‘s a counteroffer
2nd s. 38, 39, 59 Rejection, Counter-offerors, Purported Acceptance wh/ ads Qualifications p.205-210
                                                                                                                       4

BA: ct could have ruled the other way. The point of rules is to find out if a promise was made & if so, what was
promised…both sides manipulate the rules in a self-serving way. – problem w/ the rules is that they must be applied
to the facts of social life
**Stuart MaCauley: U of Wisc, car manufacturer ex, said no Ks actually exist in car industry b/c no mirror images
[a strict enforcement based on formalities alone leads to absurdity]
RD: specific performance an equitable remedy wherby the court requires the parties to perform their obligations
pursuant to a K (research definition further)

Petterson v. Pattburg [3rd mortg discount case]
FS: Pattperg(D) offered to discount the mortg on Patterson(P)‘s estate on the condition that it be paid on a certain
date. D then sold the mortg b4 P, as executor of the estate, had paid him
BL: An offer to enter into a unilateral K may be withdrawn at any time prior to the performance of the act requested
to be done. ---Be careful w/ this one, its largely obsolete. In subsequent cases, partial performance takes the place of
this rule
2nd s. 42, 43, 46, 50, 53 Revocation by Communication from Offeror recv’d by offeree, Indirect
Communication of Revocation, Revocation of General Offer, Acceptance of offer denied; Acceptance by
performance; acceptance by promise, Acceptance by performance; manifestation of intention not to accept p.
207-209
BA: Rule laid down is good for neither party (see BL supra). – ―The trick is not to know the rules; the trick is to
persuade the judge to pick the rule that benefits my client.‖
RD: unilateral K- an agreement pursuant to wh/ a party agrees to act, or to forbear from acting, in exchange for
performance on the other part of the party.

Marchiando v. Scheck [offeree (P) v. Offeror (D)] [RE agent fired just b4 the close of a sale]
FS: Scheck(D) offered to sell Real Estate to a specified prospective buyer and agreed to pay P a percentage of the
sale price as commission. The offer set a 6 day time limit for acceptance, and P recv‘d D‘s revocation of the offer on
the 6th day. Later that day, P recv‘d the offeree‘s acceptance.
BL: Where an offer invites an offeree to accept by rendering a performance, an option K so created is conditional on
the offeree‘s completion of performance in accordance w/ the terms of the offer
2nd s. 25, 37, 45, 54 Option Ks, Termination of power of acceptance under option K, Option K created by part
performance or tender, Acceptance by performance; Necessity of notification to offeror
BA: hypo a/b lost dog flyer where dog finder does not know ab reward offer. Dog finder gets the dog for social
policy reasons- want to encourage the finder‘s behavior

Davis v. Jacoby [offeree (P) v. Nephews (D)]
FS: Whitehead invites the Davises(P) to help him with his business affairs and to look after his sick wife; Ps
accepted the letter, but b4 they could move down Whitehead killed himself
BL: In case of doubt, it is presumed that an offer invites the formation of a bilateral rather than unilateral K.
2nd s. 32, 50, 54, 56, 58, 63 Invitation of promise or performance, Acceptance of offer denied; Acceptance by
performance; Acceptance by Promise, Acceptance by performance; Necessity of notification to offeror,
Acceptance by promise; Necessity of notification to offeror, Necessity of acceptance complying with terms of
offer, Time when acceptance takes effect p. 203, 209-212
BA: Both parties wanted this deal, so we didn‘t have to know when acceptance occurred; The real rule is to
convince a judge that acceptance occurred; This case is a forerunner of the new K laws.
-GM Hypo: -myriads of concerns/provisions to be negotiated, al lot of back and forth & a lot of clauses. So, @ some
point the offeror/offeree distinction is blurred & therefore irrelevant.

Houston Dairy v. John Hancock Mutual Life [Borrower (P) v. Lender (D)]
FS: Hancock(D) agreed to loan P $$$$ if a commitment letter was signed and a deposit forward w/in 7 days. P took
18 days and later asked for its deposit back when it found more favorable loan terms elsewhere
BL: Mirror image rule…This is obsolete
BA: Mirror image rule is obsolete

Cole-McIntyre Co. v. Holloway [Buyer (D) v. Seller (P)] [meal case]
FS: Cole (D) delayed in notifying Holloway of its acceptance or rejection of a K for delivery of perishable goods.
                                                                                                                        5

Issue: Does delay in notification amount to acceptance of an offer when the subject goods of the K will become
unmarketable by delay?
Holding: Yes
BL: Delay in notification amounts to acceptance of an offer when the subject goods of the K will become
unmarketable by delay
BA: this conforms to the standard trade practices of the time…facts of social life

Seaview Ass’n of Fire Island, NY., v. Williams [Homeowners Association (P) v. Buyer (D)]
FS: Seaview brought an action against Williams to collect homeowners‘ association fees from Williams when
William bought homes within the Seaview community even though William claimed not to be a member of the
association.
Issue: Where there is knowledge that a private community homeowners‘ association provides facilities and services
for the community residents, does the purchase of property there manifest acceptance of conditions of ownership,
including payment for the facilities and services offered?
Holding: Yes
BL: An ‗implied in fact‘ K entails an agreement via conduct, not words.
NI: There was a tacit understanding here, the owner knew or should have known about the conditions required for
ownership

Formation under the UCC:
-The relevant part of the UCC takes a flexible approach to K formation, allowing the law to respond to reasonable
commercial practices instead of only enforcing rigidly formal Ks
         -Ks formed under Article 2 of UCC are often made w/ striking informality
         UCC unusual b/c begins w/ ―This Act shall be liberally construed and applied to promote its underlying
         purposes and policies.‖
         -underlying goals are to simplify, clarify, & modernize the law governing commercial transactions. Also, to
         permit expansion of commercial practices through custom, usage and agreement of the parties &

ProCD, Inc. v. Zeidenberg [Software manufacturer(P) v. Purchaser (D)] [shrinkwrap K case]
FS: When Zeidenberg (D), a customer, bought and then resold the data compiled on its CD-ROM software disk,
ProCD sued for breach of K. There was an end-user license agreement contained inside the packaging barring Z
from using his consumer edition software for commercial purposes. Z used the software for commercial purposes.
Issue: Does a buyer accept goods when, after an opportunity to inspect an enclosed K, he fails to make an effective
rejection (return the product)?
Holding: Yes
BL: 1) A K for sale of goods may be made in any manner sufficient to show agreement; including conduct by both
parties wh/ recognizes the existence of such a K. 2) Shrinkwrap licenses are enforceable unless their terms are
objectionable on grounds applicable to Ks in general. 3) A buyer accepts goods when, after an opportunity to
inspect, he fails to make an effective rejection.
UCC 2-204, 2-206 Firm Offers, Offer and Acceptance in formation of K
BA: Art 2 only applies to sale of goods, but has been highly influential towards sales of services. In fact, the 2 nd
restatement is largely changed b/c of article 2.---Case regarded as blasphemy by traditional K profs, b/c when ppl
buy stuff they have no way to know what they‘re buying. ---Critical thing to this case: if open box & disagree w/
terms, then consumer can take back. Bower‘s quote: ―Read the Book Asshole‖

Empire Machinery Co. v. Litton Business Telephone Systems [buyer-offeror (P) v. seller-offeree (D)]
FS: Empire responded to an invitation to make offer to buy phone system from Litton. There was express language
on the sales form indicating that Empire‘s offer to buy could only be accepted upon approval and execution by
Litton. @ Litton‘s request, empire sent a deposit and purchased $12k in equipment for the phone system. Litton
cashed the deposit check and requested that Mountain Bell give Empire a new phone #. 6 months later, Litton
refused to honor the K, claiming their home office never executed it.
Issue: Can the conduct of an offeree constitute a valid acceptance, even though the offer by its terms indicates that
acceptance can only be made in a particular manner.
Holding: Yes
BL: See issue
                                                                                                                      6

BA: Empire‘s position was that the K was a matter of fact. Appeals ct sd that the fact finder must look at what the
parties
NI: Good outcome, its inherently unfair for Litton to be able to decide at their own convenience whether or not a K
is formed (@ their own discretion, @ their whim)


Ionics, Inc. v. Elmood Sensors, Inc. [Buyer (P) v. Seller (D)] [Battle of the Forms]
FS: Ionics sued Elmwood to recover costs incurred as the results of fires allegedly caused by defective thermostats t
purchased from Elmwood. Ionics‘ purchase form had language saying that all remedies available under state law
would be available. Elmwood‘s said the opposite.
Issue: Where the terms in 2 forms are contradictory, is each party assumed to object to the other party‘s conflicting
clause?
Holding: Yes
BL: See Issue. Old rule a/b last shot winning ends here. This kills the old mirror image rule.
UCC 2-207 Additional terms in Acceptance or confirmation
BA: formal acceptance can be satisfied via ‗expression of acceptance‘ [no strict acceptance is needed to form a K,
but expression of acceptance only matters for the essential parts of a K] ---Article 2 UCC gives general guidelines
for when parties don‘t agree on clauses

SunPublishing v. Remington Paper [Buyer (P) v. Seller (D)]
FS: Sun ordered paper for each month, price set for first four months, but after that it would be negotiated
BL: A K will be deemed invalid due to incompleteness if the agreement does not establish the length of time the
terms of the agreement, such as the price, shall apply.
Issue: Is a K deemed invalid due to incompleteness if the agreement does not est the length of timethe terms of the
agreement, such as price, shall apply?
Holding: Yes

Arnold Palmer Golf Co. v. Fuqua Industries, Inc. [Marketer (P) v. Manufacturer (D)]
FS: Palmer (P) & D negotiated and drafted a 6 page ‗memo of intent‘ outlining their planned business relationship.
D then unilaterally terminated the transaction.
BL: A TC cannot grant sj in a K dispute where the writing itself and extrinsic evidence support conflicting
inferences on whether the parties intended to be bound by the writing.
BA: King companies need to convey their drives and motivators to put a long agreement in context (think GM
merger hypo where lines of offer/acceptance are blurred b/c myriads of clauses); lawyers should persuade the judge
of the context. Cts must look at biz realities /circumstances rather than a narrow reading of the docs…

A/S Apothekernes Laboratorium v. IMC Chemical Group [offeror-buyer (P) v. Offeree-seller (D)]
FS: P brought an action against IMC alleging breach of K, fraud and estoppels, after IMCs board of directors refused
to accept P‘s offer to purchase a division of IMC.
BL: 1) The parties intentions determine whether an enforceable K come into being during negotiations , or whether
some type of formulization requirement is required b/4 it becomes binding. 2) The obligation to negotiate in good
faith prevents a party from renouncing the deal, abandoning the negotiations, or insisting on conditions that do don‘t
conform to the original agreement.
BA: We should honor the sense of the deal. Make cts believe that a deal was intended
RD: estoppel- an equitable doctrine precluding a party from asserting a right to the detriment of another who
justifiably relies on a K. letter of intent- here, was used to set out to bind the parties to negotiate in good faith.

Itek Corp v. Chicago Aerial Indus., INC [Buyer (P) v. Seller (D)]
FS: P sued D for breach of K for the purchase of CAI stocks when, after entering into a letter of intent to negotiate in
good faith, CAI terminated negotiations w/ Itek to sell the stocks for a higher price to a third party.
BL: An enforceable K may be formed in preliminary negotiations if that is the intention of the parties.
BA: Bowers repeatedly mentions that parties share risks when they K for a deal. If prices/values dramatically
change b/4 performance, then the injured party will do all he can to wiggle out of the deal. Bowers doesn‘t think he
should be able to get out of this.

Chomicky v. Buttolph [Buyer (P) v. Seller (D)]
                                                                                                                     7

FS: D had agreed to sell P a parcel of his land, subject to council approval of subdivision. This was in writing. While
waiting for a council decision, parties verbally agreed that if the council denied subdivision request, D would allow
P to use the property as his own, minus the title. Council denied the request and D refused to honor the vebal
agreement.
BL: Ks for the sale of land, and any proposed changes and modifications must be in writing to be enforceable.
2nd 110 (1) d, 129, 131 Statute of frauds- Classes of Ks covered- land Ks must be in writing p.231, Action in
reliance/spec performance (if only way to avoid injury to nonbreaching party, General Requsites of a
Memorandum p.234
BA: This is a good requirement, deals regarding land are serious.

Chapter 2: The Justification Principle
The law enforces promises when prima facie there are sufficient legal reasons to enforce a promise
        The law may restrict parties autonomy to K sometimes.
        Ex: Doesn‘t enforce Jack‘s promise to honor a tennis date w/ Jill. This would not further legally
        recognizable goals of pub pol.

Congregation Kadimah Torasmoshe v. DeLeo [Promisee (P) v. Estate Administrator (D)]
FS: P sought to enforce decedent‘s oral promis to donate $$ to it.
BL: An oral promise to donate $$ is unenforceable.
BA: Case points out flaws in the bishop test. B/C rabbis were there, there‘s no reason to doubt that a promise to
donate was made. But, society doesn‘t want to enforce donation type promises

Schnell v. Nell [will beneficiary (P) v. Testator’s husband]
FS: Out of consideration for his deceased wife, D agreed to pay $200 in exchange for Nell‘s payment of $.01and
agreement to forbear all claims against wife‘s estate.
BL: A K will be void for lack of consideration where the consideration given by one party is only nominal and
intended to be so.
2nd 17, 71, 72, 75, 79 Requirement of a bargain p. 199, Requirement of exchange/Types of Exchange,
Exchange of Promise for performance, Exchange of Promise for Promise, Adequacy of
Consideration/Mutuality of Obligation
BA: Case decided this way b/c the consideration was fake (think hawk/robe). At common law, a donation requires a
promise and deliverance by the promisee.

Hamer v. Sidway [parties not dentfied]
FS: William Story, Sr. (D), promised to pay $5k to William Story 2 nd (P) if he would forbear I the use of liquor,
tobacco, swearing, or playing cards or billiards for money until he became 21.
BL: Forbearance is valuable consideration.
BA: One def of consideration involves detriment to promisor & benefit to promisor; it is really a fiction when a gift
w/ a trivial consideration becomes a K, the consideration doctrine fails. This is why consideration is dying. The
whole pt of consideration doctrine was to not confuse gifts & Ks. This isn‘t working anymore. Its dying; lawyers
create fictions. For exam, ask what is really going on here- lawyers forget about this.


Batsakis v. Demotsis [lender (P) v. Borrower (D)
FS: P loaned D 500K dramaches ($25 US $$) in return for D‘s promise to pay $2k in US $$ once both parties were
back in the states.
BL: Mere inadequacy of consideration will not void a K.
BA: Judges could understand why the bargain was formed, thus it was enforced.

Newman & Snell’s State Bank v. Hunter [Lender (P) v. Debtor (D)]
FS: Hunter agreed to assume deceased husband‘s debt on an insolvent company in exchange for tile of company‘s
worthless stock. Hunter began payments but never recv‘d the stock. She stopped paying when she couldn‘t afford it
anymore.
BL: In order for a K to be valid, valuable consideration must be exchanged b/t the parties.
BA: Decision was results oriented. There‘s no doubt that a bargain was made, but the ct cited lack of consideration
as a reason not to enforce against the little old lady.
                                                                                                                     8


Dyer v. National By-Products, Inc. [Employee (P) v. Employer (D)]
FS: Dyer was hurt on job. In exchange for not suing, National agreed to employ Dyer for life. National later fired
him. Dyer sued and National claimed that he didn‘t have a legitimate clam b/c he couldn‘t have sue anyway due to
WC exclusions.
BL: Settlement of an unfounded claim asserted in good faith constitutes valuable consideration for settlement
agreements.
2nd 74 Settlement of Claims p. 217

Lakeland Employment Group of Akron v. Columber [Former employee (P) v. Former employee (D)]
FS: After several years of employment, D signed a non-competition agreement, then resigned several years later. He
subsequently started a competing company in violation of the agreement. D claimed that the agreement was void
due to lack of consideration. Jmt for P.
BL: Continued employment alone satisfies the Kual requirement of consideration in a covenant not to compete
entered into by an at-will employee who is already employed by the employer.
Reasoning: Although disfavored, agreements not to compete are imposed when they impose reasonable temporal
and geographic limitations. Also, Ohio law allows continued employment for at-will employees to count as
consideration.
BA: The ?? here goes beyond consideration, what kind of Ks do we want to enforce? What kind of Ks do we want to
allow? Good reasons for enforcing Ks are hard to determine. Cts decide both ways regarding renegotiation…
Promises made in market are generally enforced over middle of job renegotiations/‘extortions‘. Think sailboat
example and ex about rope holder renegotiating w/ guy hanging over cliff. Also, if pre-existing duty doctrine
precludes renegotiation, then lawyers should rescind the K and form a new one.

Wood v. Lucy, Lady Duff-Gordon [marketer (P) v. Designer (D)]
FS: Wood recv‘d the exclusive right for one year to to market designs w/ Lucy‘s name for wh/ the 2 would split
profits. Lucy breached and put her name on products w/out Wood‘s knowledge. Lucy claimed there wasn‘t a K, b/c
Wood was not explicitly bound to do anything.
BL: While an express promise may be lacking, the whole writing may be instinct w/ an obligation-an implied
promise- imperfectly expressed so as to form a K.
Good Quote: ―The law has outgrown its primitive stage of formalism.‖ (Cardozo, p. 153)
RD: illusory promise: non-legally enforceable promise b/c performance of the obligation by the promsor is
completely w/in his discretion
Applicable to UCC 2-306(2) Output, Requirements and Exclusive Dealings p.44
BA: Cardoza fictionalized consideration here to get around the illusory promise issue. Today, there are legally
recognized reasons to enforce illusory promises. Really important biz reasons require illusory promises. The hypo
a/b the grain dealer aggregating production risks from all the farmers is a useful example. Neither party knows how
much grain will be produced by each farmer, but promises to sell future grain is necc for stream of commerce
reasons…The consideration doctrine killed theses kinds of deals. But, UCC 2-306 now blesses these kinds of
deals…Just b/c Ks don‘t itemize every little thing doesn‘t mean they aren‘t enforceable. If society wants to enforce
them, we get around itemization problems by: 1)invent fictional consideration or 2) honor good faith promises to act
in the future. Sometimes things must be decided exparte.

Levine v. Blumenthal [lessor (P) v. lessee (D)] OBSOLETE B/C of UCC
FS: Blumenthal couldn‘t afford rent due to the economy. Levine orally agreed to reduce rent then later sued for the
difference.
BL: A promise to do what the promisor is already legally bound to do is invalid consideration and does not support a
K. ie, pre-existing duty rule
2nd 73 Performance of Legal Duty p. 216.           UCC does not require spec consideration.

Gross Valentino Printing Co v. Clarke [Printer (P) v. Publisher (D)]
FS: Valentino couldn‘t print magazine for the price quoted due to increased biz costs. Clarke agreed w/ Valentino on
price increase. Clarke refused to pay the new cost when got bill & Valentino sued.
BL: Under UCC 2-209, a modification of an existing K w/in the UCC needs no consideration to be binding.
2nd 2-209 Modification, Rescission and Waiver p. 37
                                                                                                                         9

BA: This is distinct from the person over the ciff hypo, bc the renegotiation was done in the market. It was not biz
compulsion. Printer had protection from the market; the dangling man has no market protections.

Angel v. Murray [taxpayer (P) v. City (D)]
FS: Maher (D) asked for $10k more per year to collect trash even though his K had not yet expired. The city had has
a substantial housing boom unforeseeable by either party. Taxpayers sued.
BL: Where unanticipated circumstances or conditions have occurred, the parties to a K may voluntarily increase the
amount of compensation due even if no additional consideration is given.
2nd 89 Modification of Executory K p. 225
BA: Consideration doctrine tells bizman facing substantial changes to 1)stick to old agreement or 2)exchange a
hawk or a robe. But, for this case consideration wasn‘t needed.

Devecmon v. Shaw [employee (P) v. employer’s estate (D)]
FS: At his employer‘s request, and in return for his promise of repayment, an employee expended his own funds in
making a non-business trip to Europe.
BL: Sufficient consideration is present where the performing party, in reliance on the other party‘s promise of
repayment, has done something in a manner wh/ he otherwise would not have been compelled to do.
BA: For this case it is immaterial whether employee would have gone on trip anyway. If promisor makes a promise
to promisee & promisee relies on it to his detriment, a promise is enforceable…Samuel Winston was a true beliver
in formality of Ks; loved hawks & robes. Corbin was the first of the legal realists. He presented myriads of evidence
to Winston n order to show that formalities are largely obsolete & describe what the law really is. The law goes
beyond formalities.

Feinberg v. Pfeiffer Co. [employee (P) v. employer]
FS: As a reward for years of long service, Pfeiffer told Feinberg they would pay her $200/month for life upon her
retirement. She retired a year later and D paid the $200 for years. Later, it told P it could only pay her $100/month. P
said no & Pfeifer stopped payments all together.
BL: Under promissory estoppel, as 2nd 90 says, ―a promise wh/ the promisor should reasonably expect to induce
action or forbearance of a definite and substantial character on the part of the promisee and wh/ does induce such
action or forbearance is binding if injustice can only be avoided by enforcement,‖ and it is not necessary for
consideration to be enforceable.
BA: Feinberg won b/c her retirement was induced by the board‘s promise. There‘s lots of evidence that the promise
was made. We can‘t really know that the P relied on promise, but we know a promise was made.
2nd 90 Promise reasonably inducing action or forbearance

Hayes v. Plantation Steel Co [employee (P) v. employer (D)]
FS: Hayes announced his retirement and upon announcement was promised $5k/year. He recv‘d the $$ for several
years then it stopped when management changed.
BL: A promise made to an employee upon the announcement of his retirement is unenforceable.
BA: 2nd 90 provides that reliance must be reasonable. Some ppl react to react to promises idiosyncratically. If so,
reliance isn‘t credible. The vaguer the info available on a promise is, the more consideration is required. 2nd 90 &
2nd 45 are contradictory. 90 says offer+reliance=enforceable promise; 45 says offer+acceptance is necessary.
Problem w/ 90 is that it doesn‘t tell us how much reliance is required.

Drennan v. Star Paving [general Kor (P) v. sub Kor (D)]
FS: P recv‘d a bid from D that was way cheaper than other bids. P used this bid to gain a big job. D said it made a
mistake and could not perform the work at the price it quoted. P sued for breach of K.
BL: Reasonable reliance on a promise binds an offeror even if there is no other consideration.
2nd 87, UCC 2-205 Option K p.224, Firm Offers p.34
BA: Reliance must be reasonable, but this factual issue wasn‘t explored @ trial level. ie, if huge discrepancy b/t
lowest bid & other bids, then entity receiving this bid ought to be on notice that the bid is in error. When a sub Kor
makes a bid, he knows the gen K or will rely on it & the quote is irrevocable due to this reliance. Also, gen Kors
sometimes ‗bid chop‘, but prom estoppel is used to prevent this. Compare this to next case

Southern Cal Acoustics Co., Inc v. C.V. Holder, Inc. [sub (P) v. gen kor (D)]
                                                                                                                      10

FS: Southern thought it was awarded the K, bc its name was listed in the paper under the gen Kor‘s job list. Gen Kor
claimed the listing was a mistake. Southern thought it had a job & therefore declined to work elsewhere. Sub sued
based on promissory estoppel.
BL: Silence in the face of an offer is not an acceptance unless it is understood as acceptance due to relationship b/t
the parties and previous course of dealings.
 NI: one sided compared to previous case. Maintains unequal playing field. 2nd 90 could have been used to resolve
this case.
--------
BA: Special rule for public biddings: want to keep costs down for state, an offer made for public projects is
irrevocable
          -certain procedures are nec for pub works; ie, sealed bids needed for integrity of commerce w/ regard to
          public works; ex: prevent campaign contributors from being given jobs unfairly
          -Bowers wrote regulation implemented by Treen regarding rental space (lowest bidder, etc.) repealed by
          subsequent governors

Sparks v. Gustafson [executor (D) v. Friend of decedent (P)]
FS: Gustafson sued sparks on a breach of K claim for the sale of a building and unjust enrichment claim on the
maintenance of a building after G had maintained Spark‘s building, but had recv‘d no compensation.
BL: Unjust enrichment exists where the D has recv‘d a benefit from the P, wh/ the P has not provided gratuitously,
and it would be inequitable for the defendant to retain the benefit w/out compensating the P for its value.
RD: quasi-K: an implied K created by law to prevent unjust enrichment

----
BA: Ex about one h2o pump tool in farming community. There was an implicit norm that the tool belonged to the
whole group, not just Bower‘s grandpa. Not generally legally binding, but socially binding. Similar to Sparks, they
bargained, ―under the radar‖. Also, Butcher shop example, ―give me a roast‖- not entitled to expect the roast for
free.

Mills v. Wyman [nurse caretaker [Nurse-Caretaker(P) v. Parent (D)]
FS: Mills took care of Wyman‘s son w/out being requested to do so. Later, Wyman promised to compensate P for
expenses arising out of the care for his son. Later, Wyman refused to pay.
BL: A moral obligation is insufficient as consideration for a promise.
BA: gift promise v. consideration promise. Ct didn‘t enforce b/c Mills had no expectation for the exchange.
Compare to next case.

Webb v. McGowin [Good Samaritan (P) v. Estate (D)] [Pine block case]
FS: Webb (P) saved the now deceased J. McGowin from grave bodily injury or death by placing himself in grave
danger and subsequently suffering great bodily harm. McGowin, in return, promised Webb compensation.
McGowen‘s executors now refuse to pay the promised compensation.
BL: A moral obligation is sufficient consideration to support a subsequent promise to pay where the promisor has
recv‘d a material benefit.
2nd 86 Promise for benefit Recv’d p.223
BA: What‘s the deal? Why do cts enforce promisors‘ promises that are made in extreme gratitude?
BA: Mills – jmt for D; promisee recv‘d letter; D made written promise, but had no performance (seriousness in ?);
1825 so cts still clinging to consideration.
v.
Webb- jmt for P; promisee recv‘d $$; D made promise and performed that promise (seriousness not in ?) 1935 so cts
ealized consideration is stupid.
Now, debtor can promise to pay an old debt that‘s not legally enforceable and this promise will be enforced.


Chapter 3: The Justice Principle

-perfect justice is unattainable by us, but we can strive for it, we instead have three more attainable applications of
justice
                                                                                                                       11

             a. Formal Justice= like cases are to be treated alike, and rules be applied consistently, and that
                persona be treated equally under the law
           b. Corrective justice= this the conception underlying the law of unjust enrichment -used for
                recompensation for injuries etc.
           c. Distributive justice= this is the conception that underlies theories of social justice requiring
                wealth and power in society to be distributed fairly.
The Domain to Freedom of Contract:
           a. Capacity
                     i. To be bound to a K, a party must have legal capacity (minors. mentally ill)
                              1. Modern standard for mental capacity to K provides that a person incurs only
                                  voidable contractual duties by entering into a transaction if, due to mental
                                  illness, he is unable to act in a reasonable manner in relation to the transaction
                                  and the other contacting party has reason to know of his condition- Ortelere v.
                                  Teachers’ Retirement Board


Ortelere v. Teachers’ Retirement Board [Husband beneficiary (P) v. Regulatory board (D)]
FS: Ortelere changed her teacher‘s retirement option while she was mentally ill
Issue: Should a K by a mentally ill party unable to act rationally be voidable where the other party knows/should
know of the illness?
Holding: Yes, see BL.
BL: A K is voidable if: 1) one party is mentally ill; 2) the illness renders him incapable to act reasonably; 3) the
other party knows or has reason to know of the condition.
2nd 7, 12, 15 Voidable Ks, Capacity to K, Mental illness or defect p. 196
RD: voidable K- a valid K wh/ may be legally voided @ the option of one of the parties
BA: made an insurance analogy. If ppl can know whether to participate in hindsight, then pooling schemes won‘t
work. Ct made this decision out of sympathy for the P & didn‘t honor K rules.


In the Matter of Baby M (Surrogate parents- P v. Birth Mother D)
FS: Stern sued Whitehead , the birth mother, to enforce a surrogacy K and to obtain custody of Baby M.
Issue: Are surrogate Ks enforceable?
Holding: No
BL: Surrogate Ks violate public policy and are unenforceable.
2nd 178, 179 When a term is unenforceable on grounds of public policy, Bases of Public Policies against
enforcement
BA: K wasn‘t enforced b/c as based on exploitation; its monstrous to separate a child from its mother; father could
provide better; father has some type of claim to baby m; there‘s something discomforting a/b females renting their
bodies; long term though, body renting Ks will b enforceable; but adoption markets allow backdoors around baby
selling statutes. Said many times that we need to articulate the reasons for our principles of pub pol; can‘t just beg
the question.

Mistakes w/ regard to Ks:
       -enforceability of Ks is important in order to encourage trade and planning
       -cts hesitate to review an agreement & review it when 1 or both parties make a mistake
       -cts distinguish b/t mistakes and regrets
       -cts do not relieve parties from their bargains on the basis of hindsight
                 -key purpose of a K is to allocate risks of future events b/t the parties
                 -cts don‘t like to reallocate risks even when the burden on the loosing party is gr8
       -But, mistakes @ the time of K can undermine the validity of a K
                 -cts will rescind Ks made where one party was ignorant of relevant facts and the knowledgeable
                 party didn‘t disclose it when he should have (fraud)
                 -sometimes cts reform Ks when can be easily corrected
                                                                                                                     12

Bowers on Mistakes:
-Judges can decide based on sympathy, but this isn‘t entirely desirable. The whole reason for K law is to standardize
the norms. OTOH, the only way to know a real deal was made is to have swamis. But, usually, ppl mean what they
promise.
-Sometimes, parties have idiosyncratic ideas a/b when they will perform their Kual obligations. Idiosyncratic parties
will say, ―That‘s not what I really meant.‖ If cts make exceptions for peculiar interests, businesses would shut down
(ie, banks not getting paid back on their loans when LSU loses). Regime where idiosyncratic is honored: more
expensive for businesses and everyone. Regime where not honored: better for all, except the idiosyncratic.
-UCC 2-302 p. 40, is a solution to the problem. Ks aren‘t enforced based on unconscionable grounds. This protects
the system as a whole and the notion of consent is saved. B/C 2-302, judges don‘t have to rescind/enforce based on
mistakes. See Williams for the beginning of our exploration on this.
-2 kinds of unconscionability. 1) Procedural- easier to prove; ie, K not formed; ex: for Gateway, consumer lawyer
would say K formed on phone & not after he opens the box. 2) Substantive- $8k cost to litigate over a $1K problem
is something most rational ppl wouldn‘t agree to (Gateway arbitration clause) response to substantive arg- Gateay
would say its expensive to litigate anyway. See Washington and Broemmer cases

Bowers on Standard Form Ks:
-we have business standards & stand forms for common transactions. This is good for business. Its hard to grant
employees negotiating pwr, otherwise they would have to be over trained. B/c don‘t have to over train, prices are
kept down.
Stambovsky v. Ackley [Buyer (P) v. Seller (D)]
FS: P sught to rescind a K to purchase a house upon discovering that it was allegedly haunted
BL: Nondisclosure by the seller of facts solely within its knowledge and undiscoverable by a prudent buyer
constitutes a basis for recession of the K
2nd 151, 153-54, 159, 161-164 Mistake Defined, When mistake of one party makes a K voidable, when a party
bears the risk of a mistake, Misrepresentation defined, When Non-disclosure is equivalent to an Assertion-
When a Misrepresentation is fraudulent or material-when a misrepresentation prevents formation of a K-
When a misrepresentation makes a K voidable p. 239
RD: caveat emptor- let the buyer beware, buyer purchases something @ his own risk; fraudulent
concealment- the concealing of a material fact wh/ a party is under an obligation to disclose; material fact- a
fact w/out the existence of wh/ a K would not have been entered
BA: The burden is on the buyer to disclose to seller his peculiar interests.

Wood v. Boynton [Diamond seller (P) v. Jeweler (D)]
FS: Boynton purchased an uncut stone from Wood for $1; neither party realized the stone was a diamond worth
$700. Wood tried to buy diamond back when realized stone was a diamond. Offered D $1 + $0.10 interest. Jeweler
refused to return the stone.
BL: In the absence of evidence of fraud on the part of the vendee, a mutual mistake as to the nature and value of a
thing sold will not void a basis for rescission of sale.
Issue: Where both parties to a sale are mistaken as to the nature and value of the article sold, but the thing sold was
the same as the thing delivered, and the vendee has committed no fraud, may the vendor rescind the sale?
Holding: No
2nd 152 When mistakes of both parties makes a K voidable. p. 239
BA: Put burden on seller to know the value of there product. They have a special opportunity to know a/b their
product.

Lenawee County Board of Health v. Messerly [County board (P) v. Property Owners (D)]
FS: Defective sewage system unknown to buyer and seller for investment property (apartment units) became known
after sale. County rendered property uninhabitable. Cross claims were involved w/ landowners. Buyers did
reasonable inspection b4 sale and there was an ‗as is‘ clause in K.
BL: It‘s @ the cts discretion to rescind or enforce a K if a mutual mistake is made w/ regard to basic facts
concerning the deal

Elsinore Union Elementary Sch Dist v. Kastorff [School district (P) v. Building Kor (D)]
FS: When a written bid for a building K contained a clerical error and was promptly rescinded by Kastorff, he
claimed that the bargain was void
                                                                                                                      13

BL: A prompt rescission due to an hones clerical error in a bid for a building K may relieve a party from an unfair
and unintended bargain.
2nd 155 When Mistake of Both Parties as to Written expression justifies reformation p. 240

Unconscionability w/ regard to enforcing Ks
       -In principle, a regime of free King treats all persons equally
                 -this is misleading; the relative wealth or power of the parties should make a difference
                 -ex: homeless man v. wealthy tycoon both have the same legal power, in a strict sense, to K for the
                 purchase of a yacht. Its misleading to insist on this legal power as though their situational
                 differences don‘t far outweigh their legal similarity.
                 -Ks can become legal tools for the powerful in society to legislate their will in an authoritarian
                 manner. Thus, certain Ks could become tools to bring about a new feudal order

         -In reality, rules and counter rules can be selected as needed to achieve results desired on grounds of
         justice, etc.
                   -many think that the law in action should be made explicit and not hidden beneath doctrinal
                   manipulations of the law on the books
                   -the unconscionability doctrine attempts to ‗bring justice out of the closet‘
         -A consumer is a buyer and end-user of a good.
                   -many consumers are unsophisticated about King practices
                   -many don‘t have equal bargaining power w/ sellers, but some do

Williams v. Walker Thomas Furniture Co. [Buyer (D) v. Seller (P)]
FS: Williams made a series of purchases, on credit, from Walker Thomas, but defaulted on her payments. The credit
K was one of adhesion and had a clause wh/ said that each credit purchase would be treated as one account.
Williams had been paying on some items for 5 yrs when she bought a stereo. She defaulted on stereo payment and
furniture company tried to reposes all items.
BL: Where, in light of the general commercial background of a particular case, gross inequality of bargaining
power leads to K formation where one party had no meaningful choice, a court can refuse to enforce on the ground
that it is unconscionable.
RD: adhesion K: a K that is not negotiated by the parties and is usually prepared by the dominate party on a ‗take it
or leave it‖ basis. Invented by Bower‘s K teacher. Analysis by cts: enforceable if meets reasonable expectations of
the consumer.
UCC 1-103, 2-302 Supplementary general principles of law applicable p.6, Unconscionable K or clause p. 40
NI: This is juxtaposed to the CAVEAT EMPTOR doctrine
BA: Credit industry puts goods in ppl‘s lives where they couldn‘t afford to have them before. Judge was upper
middle class, so disagreed w/ idea of credit for a stereo. Judge said payment allocation in advance is unconscionable.
So, furn company had to scrap the adhesion clause. Bowers says this is vacuous b/c individual don‘t direct their
payments (Law is an ass here)Credit problem is an ancient one. Today, debtor can choose how hi payment is
allocated to his account. Otherwise, creditor gets to decide.

Toker v. Westerman [Seller (P) v. Buyer (D)]
FS: Westernman alleged that he had been grossly overcharged for a refrigerator-freezer and that the K was
unconscionable.
BL: A flagrantly excessive purchase price for goods may be deemed unconscionable and grounds for
unenforcement/reform.

Frostifresh Corp v. Reynoso [Seller (P) v. Buyer (D)]
FS: Frostifresh sued sued Reynoso to collect on a K for the sale of a refrigerator. Reynoso couldn‘t understand
English, so negotiations were in Spanish . R told frostifresh that he couldn‘t afford, but salesman for Frostifresh
distracted and deluded R into buying. Refig was found to be manifestly overpriced.
BL: Courts have the power under UCC 2-302 to enforce provisions of a K in order to prevent an unconscionable
result.

Washington Mutual Finance Group v. Bailey [Financial institution (P) v. Loan applicant (D)]
                                                                                                                      14

FS: Illiterate recipients of loans & various forms of insurance all signed agreements to arbitrate any disputes arising
from their loan and insurance transactions.
BL: An arbitration agreement is not unconscionable under Ms law if one party to either agreement is illiterate, and
thus does not understand the agreement, or if the other party knows of the illiteracy but fails to inform illiterate party
that the agreement requires arbitration.
Federal Arbitration Act 2, 3, 4

Broemmer v. Abortion Services of Phoenix, Ltd. [Abortion patient (P) v. Clinic (D)]
FS: When Broemmer filed a malpractice complaint against Abortion services, D argued that P had given up her right
to a jury trial when she signed a standardized arbitration agreement prior to treatment.
BL: An adhesion K will be enforced unless it is unconscionable or beyond the reasonable expectations of the parties.
2nd 211 Standard Agreements p.258
RD: K of adhesion- a k, usually in standardized form, that is prepared by one party and offered to another, whose
terms are disproportionately in favor of the drafting party.
BA: Now, its pretty standard that med arbitration clauses aren‘t enforced on patients, b/c the reasonable expectation
is that they won‘t be.
BA: Last 2 cases. Pub pol has evolved from being heavily against arbitration to being heavily for it.

We Care Hair Development v. Engen [franchisors (p) v. franchisees (d)]
FS: Franchisees entered into franchise agreements w/ We Care Hair (P) each of wh/ contained an arbitration clause
for all disputes arising out of the agreement.
BL: A K is unconscionable when viewed as a whole, it is oppressive or totally one sided.

Chapter 4: The Compensation Principle
         ―The law enforces promises mainly by compensating nonbreaching parties for unavoidable, foreseeable,
         and reasonably certain harms caused by a breach.‖

-a K is formed when one party has an expectation, reliance, or restitution interst that rises form a promise deserving
of legal protection. (see p.7 of textbook)
          -the law prefers to put a party injured by a breach into the position he or she would have been in had the K
          been formed, insofar as $$ can do
          -Economics is helpful in determining the expected position of a party (at least in business Ks)
          -K law aims at compensating injured parties and do not aim to punish breaching parties (unlike a tort), b/c
          K breaches deal w/ private wrongs not public wrongs.

Bowers on Compensation:
-Goal is to make injured party as well off as he would have been. Remedy needs to be severe enough to discourage
breaches, but moderate enough to not discourage initial K formation.
-Finding the peak (think in class chart) where we maximize social value is a controversial issue.
-Point of K enforcement is to add value to social life.
-By and large, the Common law is reluctant to enforce the subjective expectations of injured parties.
-Specific performance: make breacher actually fulfill his promise (what ppl in LA are entitled to- oil example).
Problem is that the more we make the breacher spend, the further away from the peak we get. Damages allow ppl to
be in the same position.
-Problem w/ common law is sometimes it encourages breaches b/c paying the party is cheaper than performing. But,
the Pareto Principle says this is good for the public at large & outweighs private goods. Fortunately for common
law, there‘s usually an adequate substitute available.
-Compensation should equal the value of nonbreach state of the world minus value of breach state.
          -a good P‘s lawyer will say convince that the nonbreach state of the world is eternal bliss for his client
White v. Benkowski (Neighbor (P) v. Neighbor (D))
FS: Whites Ked w/ D‘s to supply h2o for their house. D‘s intermittently shut off P‘s h2o supply. P sued for
exemplary and punitive damages.
BL: Damages may be awarded for inconvenience for breach of K, but no punitive damages may be awarded.
BA: Hard to award damages, b/c no pecuniary way to right the wrong. Can‘t look at market in this case. Whites
weren‘t permitted to place their own subjective view on a shower (they have an interest in claiming a peculiar,
inflated value).
                                                                                                                   15


City of Rye v. Public Service Mut. Ins. Co. [City (P) v. Insurance Company (D)]
FS: The City of Rye sought to recover a predetermined amount on a bond absent evidence of its actual loss.
BL: An action on a performance bond will not be enforced if the bond is not related to actual damages.
2nd 356 Liquidated Damages and Penalties p. 304

McCallister v. Patton [City (P) v. Insurance Company (D)]
FS: P sued D alleging the breach of a K for the sale of a car, demanding specific performance of the K.
BL: Equity does not grant specific performance of a K for the sale of personal property if damages in an action @
law afford a complete and adequate remedy.
2nd 344, 347, 359 (1) Purpose of Remedies, Measure of Damages in General, Effect of Adequacy of Damages
p.305; UCC 2716 Buyer’s right to specific performance or Replevin p. 101
BA: must show that remedy at law is inadequate if want spec performance; Ct didn‘t listen to P‘s alleged facts- (that
Ford‘s were scare & couldn‘t find one on his own)

London Bucket Company v. Stewart [Heat Installation company (D) v. Motel owner (P)]
FS: Stewart (P) sought specific performance when London (D) Ked to properly provide and install a heating system
for Stewart‘s (P) motel.
BL: Specific performance will not be granted unless the ordinary common law remedy for breach of K is an
adequate and incomplete remedy.
UCC 1-106, 2-703, 2-704, 2-706, 2-708, 2-709, 2-718 Remedies to be liberally administered p. 28, Seller’s
remedies in general, Sller’s right to identify goods to the K notwithstanding breach or to salvage unfinished
goods, Seller’s resale including Ks for resale, Seller’s damages for non-acceptance or repudiation, Action for
the price, Liquidation or limitations for damages; Deposits p.92

Neri v. Retail Marine Corp [Buyer (P) v. Seller (D)]
FS: Neri Ked to purchase a boat from retail Marine. Later, Neri wrongfully rescinded the K and then brought suit for
recovery of his deposit. Marine counterclaimed seeking damages for its lost sale.
BL: A seller may recover his lost profit from a sales K when the buyer defaults on the purchase if the K market
differential measure of damages is inadequate to put the seller in as good a position as performance would have
done.
UCC 1-106, 2-703, 2-704, 2-706, 2-708, 2-709, 2-718 Remedies to be administered liberally p.6, Sellers
Remedies in General, Seller’s right to identify goods to the K notwithstanding breach or to salvage unfinished
goods, Seller’s Resale including K for resale, Seller’s damages for non-acceptance or repudiation, Action for
the price p.96, Liquidation or limitation of damages; depositsp.103
BA: Bowers gave big talk about market price of boat changing; if it increases, buyer likes & seller doesen‘t and vice
versa. Relevant UCC articles base recovery on market price. This works well for fungible items (can look up instant
price of pork bellies on etrade)…Innocent party has 2 options now: 1) Collect K market damages or 2) Cover- ct
will look at details of substitute transaction; will subtract K price from resale price…P lawyer will say, ―I choose to
apply UCC 1-103 instead of 2-7_ _ and have my client put in as good a position as he would have been.‖ Bower‘s
doesn‘t agree w/ the outcome. By Retail‘s logic, they could have said they lost out on the sale of trillions of boats
that they would have sold but for Neri‘s breach. This is an ‗eternal bliss‘ arg wh/ the ct bought. The P got to imagine
the state of the world where there wasn‘t a breach. This case & similar ones are known as LOST VOLUME CASES;
def lawyers started making P‘s prove that their profits wouldn‘t decrease w/ each subsequent sale & that they
actually would have made the sales anyway.

Fertico Belgium S.A. v Phosphate Chemicals Export ASS’N [Buyer (P) v. Seller (D)]
FS: Phosphate (D) breached a K for sale of fertilizer, but Fertico (P) still obtained possession of the late delivered
goods and resold them @ a profit after covering for the breach (bought more expensive fertilizer from a 4 th party, so
could sell to Altaweed).
BL: Gains made by an injured party on other transactions after the breach are not deducted from recoverable
damages unless such gains resulted from the breach.
UCC 2-711 – 2-715(1) Buyer’s remedies in general; buyer’s security interest in rejected goods, “Cover”;
Buyer’s procurement of substitute goods, Buyer’s damages for non-delivery or repudiation, Buyer’s damages
for breach I regard to accepted goods, Buyer’s incidental and consequential damages p.97
                                                                                                                    16

BA: Agrees w/ the dissent. Nonbreacher availed themselves of the cover articles of UCC-2, but they shouldn‘t have.
Cover transaction must be reasonable. Phosphate actually delivered the goods, they were just late…The cover
articles assume that buyer didn‘t get the goods. B would agree w/ the majority if P had stockpiles of fertilizer, but P
didn‘t. P lawyer got judge to buy into his worldview. The law is intellectually inconsistent here- the P profited twice.
This case is in the book to highlight the LIMITATIONS OF THE UCC.

Vitex Mfg. Corp v. Caribtex Corp [Cloth Manufacturer (P) v. Cloth Importer (D)
FS: Vitex (P) claimed lost profits resulting from Caribex‘s breach of a manufacturing K. Caribex challenged vitex
including overhead as ‗lost profit‘.
BL: Overhead should be treated as a part of gross profits and recoverable as damages and is not considered part of
the seller‘s costs.
RD: overhead- the nec costs associated w/ the operation of a business that are constant and are unrelated to the
costs of production.
BA: Problem is that its at Vitex‘s discretion to decide how they determine overhead. Def ense can argue that Ps can
use materials elsewhere, can also say they would have had the expense anyway. Billy Murray says it‘s a sunk cost
issue. Also, 3rd parties can‘t collect on breaches (the diner across the street can‘t sue for lost biz)

Parker v. 20th Century-Fox Film Corp [Actress (P) v. Film Company (D)]
FS: Parked sued D for breach of employment K. D had cancelled the K but offered her a diff role in diff movie in a
diff country. D claimed that P had a role to accept this role to mitigate damages.
BL: Projected earnings from other employment opportunities only offset damages if the employment is substantially
similar to that of wh the employee had been deprived.
2nd 350 Effect of Adequacy of damages p. 305
BA: The shortcoming w/ this is we can call all alternatives appreciably different (ex: Want to work next to Ted on
the 3rd floor and not next to John on the 2nd floor…). The salvage issue is hard to solve for employment issues, but
its easier for goods like chemicals. Fox could have argued that now P gets to get the $$ and play golf/sunbath all day
w/out having to do any of the work. Ought to be able to subtract the value of her contribution but this is hard w/out
swamis. The right rule should be that if someone is trained capable and prepared, they should have to take alternate
jobs in the same field (Actresses shouldn‘t have to work at McDonald‘s, but they should have to work on other
movies)

Peevyhouse v Garland Coal & Mining Company [Lessor (P) v. Lessee (D)]
FS: Garland refused to do certain restorative work on the property it had leased from Peevy when it was finished w/
its mining operation.
BL: Where the economic benefit to a nonbreaching party by full performance of a K would be grossly
disproportionate to the cost of performance, the damages wh the party may recover are limited to the diminution in
value resulting to its property b/c of its nonperformance.
BA: Black letter very good here. It‘s irrational to repair. The policy is to compensate, not punish. We shouldn‘t force
the breacher to do the absurd.

Locke v. United States [typewriter supplier (P) v. federal gov’t]
FS: P sued Us for breach of a requirements K for the supply and repair of typewriters, wh/ guaranteed that P would
be placed on a list ob businesses that Us had to use.
BL: Where the chance for profit is not outweighed by a countervailing risk of loss, & where it is fairly measureable,
cts should be allowed to value that lost opportunity.
2nd 352 Uncertainty as a limitation on damages p. 303
RD requirements K- an agreement pursuant to which one party agrees to purchase all his required goods or
services from the other party exclusively for a specific period of time.
BA: addresses the eternal bliss standard; limits lawyers‘ imaginations. Ps will argue that they would have gotten all
of the good business, Ds will argue wouldn‘t have gotten any; a priori equitable answer was ¼ of biz (b/c 3 other
agencies)…the law believes in mathematical probabilities when amount of biz is unknowable. The counter to this is
that a random distribution won‘t happen. Analysis has to be qualitative too. The guy might do crappy or slow work.
The other ppl might be experts.

Kenford Co., INC v. County of Erie [stadim operator (P) v. County (D)]
FS: P sued for loss of profits when D failed to construct a domed stadium that P was going to operate.
                                                                                                                   17

BL: To establish loss of future profits as damages for breach of K, a party must demonstrate w/ certainty that such
damages have been caused by the breach, and the alleged loss must be capable of proof w/ reasonable certainty.
RD expectation damages- damages awarded in actions for non performance of a K, wh/ are calculated by
subtracting the injured party‘s actual dollar position as a result of the breach from that party‘s expected dollar
position had the breach not occurred . rational basis test-
NI: opp of other case
BA: ‗New Business Rule‘- any claim for lost profits is precluded, b/c 1) projections have to be grounded in reality &
based in fact 2) cts won‘t allow P‘s lawyers free reign w/ their imagination. Bowers doesn‘t like this. P‘s lawyer
should have looked at the population of Buffalo; should have hired an expert at managing stadiums for comparable
estimates (still would have to look at variables though) …New biz rule is intellectually inconsistent w/ reality, b/c
can look elsewhere

Hadley v. Baxendale [Mill operator (P) v. Carrier (D)]
FS: P arranged to have D transport a broken shaft to an engineer so a copy could be made. P suffered a loss when D
was late returning the shaft, causing the mill to be inoperable longer than anticipated. D claimed this was
unforeseeable and the ct agreed.
BL: The injured party may recover those damages as may reasonably considered arising naturally from the breach
itself and, second, may recover those damages as may reasonably have been supposed to have been in contemplation
of the parties, as the probable result of a breach.
UCC 2-715 Buyers incidental and consequential damages p.100
BA: ―MOST IMPORTANT CASE IN THE HISTORY OF THE WORLD‖ Rule is that the customer must disclose
to the shipper any special values/circumstances of the goods they‘re shipping (otherwise a mailman would have no
reason to know hes not shipping cookies, but rather, an original copy of, say, the Declaration of
Independence)…Bower‘s lecture on the shipping industry and aggregating costs among customers whereby costs of
shipping important things for vulnerable customers is spread out to all customers. (Bowers thinks this solution to
shippers‘ problems is unfair-)-another solution is to put clause on shipping package saying if customer has a peculiar
interest, he must disclose it to the shipper…Bowers likes the Hadley rule, but there are fairness arguments on both
sides. What if the peculiar good shipped is necessary to save brain surgeons lives? But, putting burden on vulnerable
customer is good b/c it keeps costs down for the average consumer. Another hypo: Should rich parents have to pay
for health insurance for poor kids?
-Counter to Hadley rule: It is foreseeable that ppl put valuable things in the mail. Some lawyers will sa that anything
is foreseeable. But, the response is that we want ppl to see the real pt of the rule. Carrier‘s lawyer would prove hat
the average value of a package is and say this is what is foreseeable.
-Also, We need the Hadley rule to prevent perverse concealment by shippers
Competing purposes here: 1) good of society as a whole should be paid for by society as a whole (ie, spread costs) v.
2) broad societal goods should be paid for by only the ppl who particularly use them.

Security Stove & Mfg. Co. v. American Ry. Express Co. [Shipper (P) v. Carrier (D)]
FS: American Railway Express Co. was late in delivering an exhibit shipped by Security Stove. Security was
awarded its expenses a damages.
BL: Where a carrier has notice that a delay will cause a shipper an unusual loss, and where the notice was such that
the carrier will be presumed to have contracted w/ reference thereto, he is responsible for the actual damages
occasioned by his delay. (Couldn‘t worry a/b future profits b/c ‗new biz rule‘- profits unknowable)
See 2nd 90 Promise reasonably inducing action or forbearance (comment d- partial enforcement) p.227
BA: P came up against new biz rule so could only get actual damages. 90 was 1st encountered as a substitute for
consideration. The following cases (below) say, ‗We might enforce the K if justice requires it.

Goodman v. Diker [Franchisor (D) v. Franchisee (P)]
FS: Dicker (P) made certain expenditures after applying for an Emerson radio and phonograph franchise in the
District of Columbia upon the inducement of an Emerson representative, Goodman (D). While Goodman (D) had
represented that the franchise would be granted and radios were delivered, no radios were delivered and the
franchise was denied. Dicker sued for franchise preparation expenses and lost profits. Expenses were awarded, but
not lost profits.
BL: One who by his language or conduct leads another to do what he would not otherwise have done shall not
subject such person to loss or injury by disappointing the expectation upon wh/ he acted.
See 2nd 90 comment d p.227
                                                                                                                    18

RD: detrimental reliance- action by one party, resulting n loss, that is based on the conduct or promises of another
estoppel- an equitable doctrine precluding a party from asserting a right to the detriment of another who justifiably
relied on the K
BA: en of WW2, new biz rule applied…Pre WW2- had crystal radios, post WW2- had vacuum tube radios, so didn‘t
know how new radios would sell. This might ne the difference b/t this and the next case
CONTRAST WITH NEXT CASE

Walters v. Marathon Oil Co. [Perspective franchisee (P) v. Franchisor (D)]
FS: Walters purchased a service station and made improvements to it based upon promises made by D during
negotiations.
BL: Lost profits, if ascertained w/ reasonable certainty, may be properly included / reliance damages where the sole
theory for damages is promissory estoppel.
See 2nd 90
BA: P could have made two type of args here: 1) lost investment opportunity…Bower‘s says this type of ex-parte
arg is flawed; think a/b arg where investing $1 would have turned into $32 trillion. P must be real specific w/ what
tried to do/actually have done to be successful. 2) Arg for lost profits; this is easier to prove. Service station had
reliable evidence of past gasoline sells (empirical evidence). A counter to arg 2 is to get real specific a/b service
station biz or other variables. What if rivers changed their travel routes. What if man street wasn‘t frequented
anymore, b/c of a new interstate?
-new biz rule distinguishes these two cases, but restatement 90 isn‘t real explicit about this. ―Where justice require‖
is vague

Sullivan v. O’Connor [Patient (P) v. Doctor (D)]
FS: O‘Connor, a plastic surgeon, promised to enhance Sullivan‘s beauty by performing an operation on her nose.
The nose was made worse off post surgery than it was pre surgery. P sued for damage subject to the K guaranteeing
improvement.
BL: Where an offer promises to enhance physical beauty, breach of the K would permit recovery for pain and
suffering, mental distress, and a worsening of the condition.
2nd 344, 353 Purpose of remedies, Loss due to emotional distress p. 302
BA:

Oliver v. Campbell [Attorney (P) v. Client (D)] READ CASE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
FS: After Oliver had represented D in a legal matter, D fired Oliver before the final resolution of the case and
refused to pay Oliver the fee stipulated in their express K.
BL: One who has been injured by a breach of K may elect to pursue any of the 3 remedies: 1) proceed in quantum
merit so far as performance has been completed, 2) keep the K alive for both parties, or 3) treat the breach as a
repudiation and sue for the profits that would have been realized through performance.
RD: quantum meruit- equitable doctrine allowing recovery for labor and materials provided by one party, even
though no K was entered into, in order to avoid unjust enrichment for the benefited party. Repudiation- the actions
or statements of a party to a K that evidence his intent not to perform, or continue performance, of his duties or
obligations thereunder. Restitution- the return or restitution of what the defendant has gained in a transaction to
prevent the unjust enrichment of the defendant.
BA: We choose Oliver rule in certain cases and Algernon rule in other cases…Hypo a/b plumber, many details ca‘t
be worked out in advance. Can‘t K life away. Instead we have quantum meruit- measure how much you deserved
(do this by showing how much it is worth/ what the going rate is)…Ex a/b representing client in a legal matter.
Can‘t predict exactly ho much work is involved (can‘t try a case bass ackwards). Hiring lawyers & plumbers
presents practical problems with formalities; we need to look at social life

United States v. Algernon Blair, Inc. [Federal Government (P) v. General Kor (D)] READ CASE!!!!!!!!!!!!
FS: Coastal Steel Erectors, a subKor, brought suit n the name of the U.S.(P) against Algernon (D), the prime Kor on
a gov‘t project, to recover n quantum meruit the value of the labor and materials it had furnished up to the point at
which it justifiably ceased work.
BL: A promisee is allowed to recover in quantum meruit the value of services he gave to a D who breached their K
irrespective of whether he would have lost $$$ had the K been fully performed and would thus be precluded from
recovering in a suit on the K.
                                                                                                                     19

BA: We choose Oliver rule in certain cases and Algernon rule in other cases. What is wrong w/ Blair rule is that it
requires yoo to think that GenK is absolutely stupid to breach. This case can encourage parties to provoke breaches.
But, lawyers can persuade judge that the provoking party was overreaching. Lawyers should advise client that he
should breach once the provoker overreaches n a provokable way…Blair case not that bad for social life; it is bizarre
b/c parties aren‘t usually as stupid as Blair

Chapter 5: The Autonomy Principle Again
- Once we decide a K has been formed, a range of questions arise as to what the terms, express and implied, mean.
        -express terms- must be identified can be interpreted inconsistently by parties w/ regard to each sides
        specific rights, duties, and powers in the circumstances that actually arise
        - implied terms- must be identified and interpreted

Gianni v. R. Russel & Co., INC. [Store Operator (P) v. Property Owner (D)]
FS: P entered into a lease agreement w/ D. P claimed that orally D promised that P would have exclusive rights to
sell soda in the building. In writing, P promised to pay higher rent and not sell tobacco. D later allowed a new tenant
to sell soda. P sued for a breach, but D denied the oral agreement.
BL: An oral agreement is not enforceable if it is left out of a written K where it is natural that the oral agreement
would have been contained in the writing.
RD: parol evidence rule- doctrine precluding parties to an agreement from introducing evidence of prior or
contemporaneous agreements in order to repudiate or alter the terms of a written K.
BA: What state of the world didn‘t the K describe? Negotiations are expensive, so dealing with remote possibilits is
a deterrent to biz. But, what if one of these possibilities comes up? Here, ct assumed the K was complete. (B: ct was
playing fast and loose) B/c the subject wasn‘t covered in the K, they said exclusivity wasn‘t important. Ct said it was
―natural‖ that the parties didn‘t care a/b exclusivity. Natural here was a finding of social life. P‘s lawyer screwed up,
should have checked around for prescnce/absence of exclusivity clauses in comparable Ks. Bowers thinks the 4
corners doctrine sucks. B thinks ct is wrong here.

                          Masterson- no parole

                          Gianni- parol allowed

Masterson v. Sine [Transferor (P) v. Transferee (D)]
FS: Masterson conveyed a ranch to Sine (his sister) with the option to buy back ranch for a period of 10 years. P
went bankrupt, trustee tried to purchase from sister. She declined, saying her & brother had an oral agreement that
the prop would stay in the family. Trustee sued.
BL: Even where a writing appears complete on its face, evidence to prove the existence of a collateral agreement is
such that it might naturally be made as a separate agreement by parties similarly situated.
UCC 2-202 Final Written expression: Parol or Extrinsic evidence p.32
2nd 209-210, 213-215 Integrated agreements – Completely and Partially Integrated agreements, Effect of
Integrated agreements on prior agreements (parol evidence rule) – Evidence of prior or contemporaneous
agreements and negotiations – Contradiction of integrated terms – Consistent Additional terms p.257
RD: Collateral agreement- an agreement that is made prior to or contemporaneous w/ a written agreement, wh/ is
admissible in evidence as it is consistent w/ the written document, declaratory relief- a judgment of the court
establishing the right of the parties, extrinsic evidence- evidence that is not contained w/in the text of a document
but wh/ is derived from the parties‘ statements or the circumstances under wh/ the agreement was made
BA: Judge Tranor was hated b/c he allowed parol evidence. Dissent didn‘t think deal b/t bro & sis actually
happened. Think Bower‘s example were he was suing someone who ‗sold‘ his crane to his bro-in-law to avoid
seizure. B would have argued for trustee that title never transferred.

Interform Co. v. Mitchell [Construction Supply Co (P) v. Construction Company (D)]
FS: Mitchell used P‘s concrete-molding forms for two separate jobs, but only paid him for the first use. Mitchell
claimed they had bought the molds; Interform said there was only a lease. One of the K forms said the transaction
was a lease. Interform sd there was no sale intended, only a lease and construction companies commonly use ―sale‖
forms for lease transaction.
                                                                                                                    20

BL: Extrinsic evidence is admissible under Idaho law to determine the intent of the parties to K.
BA: Good that ct found this wasn‘t actually a sale. Even though the form said ―Purchase Order‖ the standard
practice was for Ks to use these forms for mere rentals. Plus, concrete forms are unique; general Kors usually don‘t
buy them. Lesson for students: Don‘t use the four corners doctrine. We need more than paper to figure out what is
going on.

Lee v. Joseph E. Seagram & Sons, Inc. [Seller (P) v. Buyer (D)]
FS: D orally promised to set P‘s sons up in a distributorship as part of the consideration for the sale of P‘s biz to D
under a written K.
BL: A collateral oral agreement not covering or contradicting the terms of the contemporary written agreement may
be proved parol unless the written agreement is deemed completely integrated.
RD: collateral agreement- an agreement that is made prior to or contemporaneous w/ a written agreement, wh/ is
admissible in evidence as long as it is consistent w/ the written K
BA: D‘s strongest available argument- price that D paid P was fair & consistent w/ market price. It is unlikely that
other compensation was offered. Ds lawyer fell down on the job when he didn‘t do this…P might argue that the cash
price was artificially low, therefore they were getting paid in ways other than cash.

-Why allow Parole evidence? –ex: sign saying keep of grass means one thing on a lawn and another in a drug
counselor‘s office. Lawyers must take words into context. Words are symbols, social life, not dictionaries, determine
their meaning. Must look at form and substance. Also, discussion a/b Elizabeth Hurley in Bedazzled (see link
above). Does the devil get his soul? Was his wish granted? Hurley honored the form of his wishes, but not the
substance. Further, think background beliefs, worldviews and connotations.

Nelson v. Elway [Car dealerships (P) v. Buyer of Dealerships (D)]
FS: Prospective buyers of a car dealership discussed, but did not execute a written K memorializing, a reduced sale
price in exchange for a $50 fee on each car sold by the dealership over a seven-year period.
BL: A plan and unambiguous merger clause bars extrinsic evidence where sophisticated parties, w/ the assistance of
counsel, have extensively negotiated a detailed written K.
BA:

-book stuff: Gianni approach only uses express terms; Masterson approach uses express terms as a ‗window‘ to
figure ought what the parties actually intended.
         -lawyer‘s goal is to put in terms governing all reasonably foreseeable situations
         -this isn‘t always practical, even when a situation is contemplated in a K, problems still exist:
                   1) Vagueness, 2) Term ambiguity, 3) Sentence ambiguity
                   -probs can arise when parties had diff idea of meaning @ time of formation

Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.
FS: D Ked to repair P‘s steam turbine and to perform work at its own risk and expense and to indemnify P against
all loss and damage. D also agreed not to procure less than $50K insurance to cover liability for injury to property.
But when the turbine rotor was damaged, P clamed it was covered under that policy, while D said it was only to
cover injury to third persons.
BL: The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it
appears to a court to be plain and ambiguous on its face but whether the offered evidence is relevant to prove a
meaning to which the language of the instrument is reasonably suspectible.
BA: MOST CITED CASE FOR LEGAL REALISTS!!!!! Legal realism says its not the doctrine driving the results,
but something else…K law is valuable b/c it allows parties to make their own choice, so looking at what everyone
else does is problematic (TENSION POINT)…Bower‘s like Tranor‘s approach b/c he allowed parole evidence. It
was cheaper for the PWR company to protect its own property, therefore it would have been useful for the TC to
inquire about this. This would help them see what the deal really was.

W.W.W. Associates, Inc. v. Giancontieri [Developers (P) v. Sellers (D)]
FS: Developers sought to compel specific performance of a K to sell certain property. Parties had put a right to
cancel provision in K if closing not reached by a certain date. P‘s said only they had the right to cancen and not D.
The ct ruled that P‘s extrinsic evidence supporting this would not be allowed.
                                                                                                                    21

BL: When parties set down a writing in a clear, complete document, their writing should be enforced according to
their terms, and extrinsic evidence is generally inadmissible to add to or vary the writing.

----Bowers wants us to deal w/ form and substance. At beginning of semester we didn‘t deal w/ the weakeness of
language (Ferguson Farm…)

Brinderson-Newberg Joint Venture v. Pacific Erectors, INC. [General Kor (P) v. SubKor(D)]
FS: A Kor and subKor disagreed upon the meaning of certain construction phrases in the building K. There was an
integration clause.
BL: For parol evidence to be admitted to clarify k terms, the K must be reasonably susceptible to the meaning given
by the parol evidence on an objective standard.
2nd 200-203, 206, 207 Interpretation of Promise or Agreement- Whose Meaning Prevails- Rules in Aid of
Interpretation- Standards of Preference in Interpretation, Interpretation against the draftsman,
Interpretation Favoring the Public p.255
BA: Rejected by Nanakuli. ‗Erect Complete‘ has a substantive meaning that needs to be addressed. Problem w/ the
result here is that it ignores the sense of the deal. This is the broad problem w/ the parole evidence rule; it ignores
the sense of the deal.
B saya this is the same type of situation as Algamon Blair.

Frigaliment Importing Co. v. B.N.S. Int’l Sales Corp [Buyer (P) v. Seller (D)]
FS: P ordered ‗chicken‘ from D, intending to buy young chicken suitable for broiling and frying. BNS believed in
considering the weights ordered at the prices fixed by the parties, that the order could be filled with older chickens.
There were definitions available supporting both definitions. D asked what kind of chickens P wanted & P
responded w/ the German word for fowl.
BL: The party who seeks to interpret the terms of the K in a sense narrower than their everyday use bears the burden
of persuasion to so show, and if the party fails to support its burden, it faces dismissal of its complaint.
UCC 1-205, 2-208 Course of Dealing and Usage of Trade p.15, Course of Performance or Practical
Construction p. 37
BA: ‗Chicken v. Huen‘ Judge said that if there is any unclearness, the burden is on the P. B says this sucks- the
buyer could just not pay for it. Then, the burden would switch b/c the other side would sue & become a P.


Nanakuli Paving and Rock Co. v. Shell Oil Co., Inc. [Buyer (P) v. Seller (D)]
FS: P entered into long term supply Ks w/ D to buy asphalt. P sued when D raised the price from $46 to $76 citing
common trade uses in Hawaii…
BL: Under the UCC, an agreement goes beyond the written words to mean the bargain of the parties in fact, a found
in their language or by implication from other circumstances, including course of dealing, usage of trade, and course
of performance.
RD: course of dealing- previous conduct b/t two parties to a K wh/ my be relied upon to interpret their actions.
Trade usage- a course of dealing or practice commonly used in a particular trade.
BA: Decision rejects Brinderson. P won, b/c everyone understood that ‗posted price‘ meant price @ time of bid, not
@ time of delivery; this is how things were done in Hawaii…trade usages, common practices + Hawaii gov‘t
wouldn‘t allow for price increases. Shell‘s lawyers could have argued that the wanted to use price protection for a
falling market or would have argued that past practice are no longer relevant b/c circumstances differ appreciably.
Article 2 says that when the issue is what the words mean, parole evidence isn‘t applied and extrinsic evidence is
therefore allowed. Response to this is that this isn‘t how Nanakuli makes its bids, they base it on steady prices. UCC
2 killed formalism, now we have to argue on the merits.

Corenswet, INC. v. Amana Refrigeration, INC. [Distributor (P) v. Manufacturer (D)]
FS: Dealt w/ Amana distributorship.
BL: When a K expressly provides that either party may terminate the agreement for any reason, no obligation exists
requiring there be a good faith reason for this termination.
BA: Coren could have argued (instead of this is a ‗till death do us part argument) that the market didn‘t protect
Coren b/c they had to make specialized investments; should have explained that parties didn‘t want ‗no fault‘
                                                                                                                  22

BOOK STUFF p.417 – step 1- identify express terms, 2) interpret in order to ascertain the rights of each party
(sometimes can use parol evidence), 3) look to implied terms

Spaulding v. Morse [Trustee (P) v. Dad (D)]
FS: In a divorce agreement, D promised to pay $1200/year until his son finished HS and $2200/year for 4 years
while attending college. Son graduated from HS and joined the army. Dad quit paying. Trustee sued for Dad to
continue paying.
BL: If a K as a whole produces a conviction that a particular result was fixedly desired although not expressed by
formal words, the defect may be supplied by implication and the underlying intention effectuated is sufficiently
declared.
2nd 204 Supplying an Omitted Essential Term p.256
NI: Ct ruled that dad didn‘t have to pay while son in army or otherwise not in college. But, Dad would have to pay
the $2200 when/if son when to college. This honored the purpose of the K, even though this particular contingency
was not n the K.
BA: ***Bowers likes this case*** A narrow reading would entail that dad has to keep paying. This is what the form
of the words say. But, we can‘t just read the words. The draft for WW2 was unforeseeable (America was on an
isolationist cycle after WW1) Ct is thinking of a ‗joint maximization‘ type of principle (see words of wisdom) when
they decide this case. The parties never would have agreed to what the P is now demanding. Buying P‘s position
would give her an incentive to ‗chisel‘ Counter to arg a/b wife chiseling is that the two would have agreed to this.
The $$ is not going to pool tables and expensive merchandise for wife under guise of helping son. Rather, mom
wanted to send son to Tulane and not LSU. Common interest is betterment of son. Does P‘s position contribute to
this?
-Key ?? to ask, What would a joint maximizing plan have done at point of K formation?

Wood v. Lucy, Lady Duff-Gordon
SEE FS, p. 7 this outline

Bloor v. Falstaff Brewing Corp. [Brewery Trustee (P) v. Marketing Agent (D)]
FS: Bloor, reorganization trustee for Ballatine Brewery, sued D for breaching a K to use best efforts to promote and
maintain a high volume of sales of Ballantine brands. Falstaff was supposed top pay $.50/ barrel of beer sold as part
of purchase price… Falstaff didn‘t use its best efforts to promote sales volume.
BL: A Kual provison which obligating one to use its ―best efforts‖ to promote and maintain a high volume of sales
of a certain product is breached by a policy which emphasizes profit w/out fair consideration of the effect on sales
volume.
UCC 2-306(2)
BA: Big problem w/ K‘s, ―How do the parties split up/share the pie?‖…All pie splitting regimes interfere w/ pie
maximization. Problem w/ fixed royalty system is that it interferes w/ parties incentives to maximize the joint pie.
          -‗best efforts‘ mean biggest pie for both parties; judges enforced this K based on joint maximization
          principle.
-judges enforced K based on joint maximization…problem w/ fixed royalty system is it interferes w/ parties
incentives to maximize the joint pie.

Note on Implication. Book, p. 427
-Some terms of a K are not expressed by either party. They are presupposed and left implicit in the agreement.
-Some choices are made by the parties and others aren‘t. When choices aren‘t made, the ct will read in ‗tacit
assumptions‘
-Sometimes reading implied terms into a K is criticized, b/c by the very nature of a K ppl are using their free choice
to make autonomous decisions.
          -BUT, a moment‘s reflection will suggest that no one ever acts outside of social, economic and historical
          environment that constrains the available opportunities. We cannot live the life of an honored cannibal!!!!
          -There is no point to complaining that someone did not act as no one ever acts in the relevant
          circumstances.
-Perhaps, the autonomy principle requires only that a person enjoys a range of reasonable opportunities from wh/ to
choose… ie, a party is being autonomous when he chooses to bound himself according to a certain norm required by
a certain kind of K.
                                                                                                                    23

Greer Properties, Inc. v. LaSalle National Bank [Buyer (P) v. Seller (D)]
FS: P entered into a K to purchase property subject to clean up by D. D could terminate if clean up became
―economically impractical‖. D found out it would be a little more expensive than thought to clean up. They breached
the K, and tried to sell to a higher bidder.
BL: A party vested w/ Kual discretion must exercise that discretion reasonably.
2nd 205 Duty of good faith and fair dealing p.256
UCC 1-102(3), 1-201(19), 1-203, 2-103(1)(b) Purposes; Rules of Construction; Variation by agreement p.4,
General Definitions (good faith), Obligation of Good Faith p. 14, Definions and Index of Definitions (good
faith) p.24
BA: Breaching party was just trying to wiggle out of K.

******ADD BOOK STUFF****** (through Burger King, night before memo)

Eastern Air Lines, Inc. v. Gulf Oil Corp. [Airlines (P) v. Oil Company (D)]
FS: P bought jet fuel from D, but price changes after an oil embargo brought the parties into contention on the
source of the reference price and other K elements.
BL: If the established course of dealing, the established usages of trade, and the basic K have existed w/out dispute
for a substantial length of time, a party may not defend its breach by complaining about practices in the trade unless
the other party has in fact acted in bad faith.
UCC 2-306- Output, Requirements and Exclusive Dealings p.44
RD: commercial impracticability-
BA: Requirements Ks (long term ones too) are hard to deal with; ie ‗illusory promises.‘ This case is like the old
Lucy-Duff problem, where there was no promise to actually do anything…Historically, many cts didn‘t enforce
requirements Ks b/c no real consideration (didn‘t pass the formality test). ***Now, if a deal makes sense, cts will
enforce- K must pass the smell test; the formality test is no longer necessary*** In the absence of consideration,
then, ‗good faith‘/‘best efforts‘ is imputed onto the other party. The problem then is how much good faith is
needed??? (was UCC 2-306 appropriate here?)…
-The deal made sense instantly, b/c fuel needs varied for Easter Airlines; this precluded an exact preorder b/c
consumption unknowable. Also made sense b/c the oil company is in a better position to aggregate fuel variances
(think grain dealer example). On good faith, though, Bowers thinks the judge screwed up. Can‘t say it is OK to act
in bad faith just because the other party knew about it. Just b/c something is a business standard doesn‘t mean it is
permissible. The judge should have examined the deeper reasons behind the business practices. Bowers says that
fuel freighting is really a form of chiseling. On its face, biz ppl never want to agree to deals where other parties
speculate against them. But, K prob should have been enforced b/c was oil companies screw up; internal competing
incentives might have made them make a bad deal—shareholders should correct this, not courts. Also, whole pt of K
is for oil company to aggregate the risk. They can‘t complain once one of the risks they assume comes into
fruition…
NI: Now, aggregator doesn‘t want to take the burden of the risk assumed. Ie, the reason for the risk assumed comes
into fruition and now cries like a baby. [Think post-Katrine type example where ins companies delay, deny and
undervalue certain claims…the whole reason the insured Ked with them is b/c they could assume a risk wh/ the
insurers couldn‘t afford…]

Orange and Rockland Utilities INC. v. Amerada Hess Corp. [Utility Companies (P) v. Oil Company (D)]
FS: P entered into a requirements K w/ D, specifying estimates of P‘s oil requirements and setting a fixed price, but
when the market price nearly doubled, P dramatically increased its demand for oil.
BL: A buyer in a rising market has acted in bad faith if the fixed parts in a requirements K is used for speculation, or
if conditions at the time of King are unilaterally changed by the buyer to take advantage of the market at the seller‘s
expense.
Book Quote: ―It is well settled that a buyer in a rising market cannot use a fixed price in a requirements K for
speculation.‖ P.442
RD: arbitrage- bad faith- requirements K-
BA:Ks should never be interpreted in such a way that one of the parties intended to let the other speculate against it.

Citizens for Preservation of Waterman Lake v. Davis [Non-Profit organization (P) v. Kor (D)]
FS: D Ked w/ a town (P) to operate certain property as a commercial dump; however, he operated the dump in a
manner contrary to representations he had made to the Department of Natural Resources and others.
                                                                                                                    24

BL: While existing law is an implied term of every K, it acts only to clarify ambiguous Ks and cannot give rise to a
cause of action where the law itself grants none.
BA:

Jungmann & CO., INC v. Atterbury Brothers, INC.
FS: Two companies entered an agreement for the shipment of thirty tons of casein, and the shipper failed to notify
the recipient about the shipments in conformity with the shipping agreement
BL: A party to a K may not recover damages if the party has not performed all its conditions precedent under the K.
2nd 224-27, 229 Condition Defined- Effects of Non-Occurrence of a Condition- How an event may be made a
condition- Standards of Preference w/ Regard to Conditions, Excuse of a Condition to Avoid Forfeiture p.264
BA: Sometimes delivery time/method/notice makes a difference (for instance, no storage…)…Suppose instead of
letter, notification came via a skywriter or passenger pigeon.
          -If company only cared a/b receiving info, then ct should say letter is adequate for notice
          -OTOH, if there‘s a good reason for the delivery method, then it should matter
-Seller‘s lawyer screwed up, this is why seller lost. Must convince judge that this is a promise, or condition.
-We can‘t use the formalist method to let the buyer speculate. P can always say that D is just using a pretext to get
out of the K…

Peacock Construction Co. INC v. Modern Air Conditioning, INC. [General Kor (P) v. Sub Kor (D)]
FS: P had sub Ked to do work for D under a K calling for final payment of sub Kors ―within 30 days after
completion of the work…and full payment therfor by Owner.‖
BL: Ambiguous provisions in sub Ks wh/ do not expressly shift the risk of payment failure by the owner to the sub
Kor will be interpreted as constituting absolute promises to pay and not as setting payment by the owner as a
condition precedent to payment.
BA: Here lang said sub would only get paid when gen Kor got paid. The term wasn‘t really ambiguous. Cts
generally look to why the owner doesn‘t pay in order to enforce these types of clauses. 1) If the owner doesn‘t pay
b/c of this particular sub screws up, then would matter (Endogenous Risk). 2) If owner doesn‘t pay b/c of another
sub screwing up, then ths shouldn‘t matter (Exogenous Risk). 3) Bowers says the law hasn‘t got to what happens
when the owner doesn‘t pay b/c the job as a whole is crappy (diff kind of Exogenous risk); (ie, an amusement park
that is a flop and the crappy work can‘t be pinpointed, etc.)---this would be an ‗uninsurable exogenous risk‘ Who
pays then? Loss spread to all the subs? The Gen Kor is screwed and has t pay the sub anyway?
-Further, we must look to see who it is reasonable/economical to impose the risk on.

Burger King Corp v. Family Dining, Inc. [Licensor (P) v. Licensee (D)]
FS: P after years of not requiring strict compliance w/ a Kual term, sought to void the K for violation thereof.
BL: A party to a K may, by its actions, excuse the other from compliance w/ a Kual condition.
BA: Ct interpreted the K language as a condition and not a promise…There should be reasonable reasons to enforce
certain K clauses. What prob happened s a wiz-kid internal auditor read the K and thought he knew what it
meant…The problem is that t is tough to plan for 10 yrs in the future- You need a lot of play in the joints for long
term K. ***the parties didn‘t make an airtight plan, b/c it is impossible to predict the future!!!!***

***ADD BOOK STUFF***

Fry v. George Elkins Co. [Offeror (P) v. Real estate broker (D)]
FS: Fry (P) made an offer to purchase a home, with certain loan conditions on his purchase, but he made little effort
to effectuate the conditions of the sale.
BL: The failure to make a good faith effort to carry out an obligation essential to the consummation of a deal
constitutes breach of K.
BA: Subjectivity detracts from law & adds to law @ same time…Here, K was conditional on buyer getting a certain
loan ($20k @ 5%...); buyer found a loan that would be suitable but for a prepayment penalty. Ct said that if sale was
conditional on a prepayment penalty not being there we had to put it in. Bowers says that the prepayment penalty
was a subjective reason for not going through w/ the deal, then claimed the loan was bad so backed out of deal. B
says this is a peculiar interest of the party. Ct said t was ‗bad faith‘ on part of the buyer…Good faith/bad faith is a
conclusory term used by the cts, we must use the subjective objective test. Even if it wasn‘t bad faith it was certainly
subjective, thus we should use an objective standard to evaluate the interests of the parties. Contradicts the next case
b/c here the burden of peculiar interest is put on the buyer.
                                                                                                                   25


Pannone v. Grandmaison [Buyer (P) v. Seller (D)]
FS: P, highly fearful of radiation, conditioned the purchase of a home on the results of a radon gas test, wh/ came
back easily w/in safe limits, but still caused P to cancel the K.
BL: If an agreed upon Kual condition leaves one party the discretion to approve whether the condition has been met,
that party must act in accordance w/ a standard of subjective good faith.
BA: B thinks this result sucks, b/c the burden of the peculiarity is on the seller when he has no way to really know
a/b it. Sellers shouldn‘t have to. Also, Bowers would have added how to measure safe levels (EPA test or
something)…If the party really cared a/b the radon, he should be explicit a/b his subjective (peculiar) desire.
Otherwise, cts should evaluate the K based on an objective standard. But, how do we know what the objective
standard is?? We know simply from observation (Bowers dorm mate rum bottle example).
-When ordinary ppl think they‘re dealing w/ ordinary ppl they make deals based on an ordinary standard.

Godburn v. Meserve [Life tenant (P) v. Executor (D)]
FS: P agreed to live as tenants in the home of Wells for the remainder of her life, providing food and basic care in
exchange for a promise by Wells to leave P the home in he will.
BL: In order to constitute prevention of performance, the conduct on the part of the party who is alleged to have
prevented performance must be wrongful, and, accordingly, in excess of his legal rights.
BA: Ct thought all old women became mean (thus, not peculiar), so they ruled accordingly. If judges had had nice
grandmothers, they would have ruled the other way.
-The law is uncertain…??? of what social life is all about is difficult to determine. So, we must make convincing
args a/b social life.




Examples of K’s in Social Life: [Add risk sharing, construction, note card on tv, lending crisis anything
else!!!]

Ideas from my jobs:

Carpet Lawn- price to cut lawn didn‘t change based on the weather (rain, sun, etc.); job @ Albermarle wasn‘t
itemized in a strict sense, Uncle Denny and the plant supervisor had a long working relationship whereby CL would
do extra/less work as needed by the plant: in a draught, would spend more time irrigating; in rainy weather would
spend more time cleaning up debris (leaves, etc.); if planted flowers died due to extreme weather (exogenous), it
                                                                                                                       26

wasn‘t a mortal sin; didn‘t have to be cut every Saturday, if a hurricane or something else came up could wait ‗till
Monday; more/less man hours. Bottom Line- every little possibility was not worked out, but the deal worked passed
on biz standards of the landscaping biz and particular ones of the two parties. Albermarle got their grounds
professionally maintained and CL made a lot of $$$

Waiter- no deliveries b/t 11am & 2pm. Probably not explicitly stated on any of the order forms, but is generally
accepted, due to the lunch rush. Restaurants can‘t spare enough employees to handle a big delivery and distributors
act accordingly.

AGF- if their bank screwed up and we didn‘t get paid, we‘d work w/ the customers even though they didn‘t conform
to the letter of the loan agreements

Royalty Ks:

http://www.ivanhoffman.com/royalties.html

Franchise Agreements:

Franchise Agreements

Book Publishing:

http://www.adlerbooks.com/contract.html

Music Industry Contracts:

http://www.negativland.com/albini.html

Football Coaches:
By Jodi Upton and Steve Wieberg, USA TODAY
Head football coaches' contracts with NCAA Division I-A schools can be more than a matter of money. Here are
some of the more unusual provisions of current deals:
The perks

Lifetime care: Air Force's Fisher DeBerry will get a lifetime monthly annuity after he steps down — $7,000 a
month if he coaches through the 2006 season, a figure that rises to $9,000 a month if he coaches through the 2010
season. His wife would collect two-thirds of the monthly amount if he dies before she does.
No rocking chair here: Colorado State wrote a retirement clause into 69-year-old Sonny Lubick's contract
extension in January. If he retires before January 2, 2010 Lubick can stay at the school for up to two years as a
$75,000-a-year "public relations and fundraising consultant."
Sharing the cost of education: Florida's Urban Meyer gets $100,000 a year for family educational expenses.

Getting away: Hawaii's June Jones gets 10 economy-fare round-trip tickets a year for personal use or use by his
family "to any destination in the United States."

After coaching: Michigan reworked Lloyd Carr's contract in 2003, extending it through the 2007 season with
automatic one-year rollovers and stipulating that, at its conclusion, Carr will be appointed an associate athletics
director. Duties will include fundraising and speaking.

For (lots of) family and friends: Kansas' Mark Mangino can request up to 50 tickets per home game, between the
35-yard lines on the west side of Memorial Stadium, and gets use of a stadium suite. He also gets four men's
basketball season tickets in the lower level, between the free throw lines, of Allen Fieldhouse.

Flight time: Oklahoma's Bob Stoops gets up to 35 hours a year of private plane availability. Ohio State's Tressel
gets 10 hours of jet time for personal use. Virginia's Al Groh gets "reasonable use of the University's aircraft and
vehicles" for his duties.
                                                                                                                   27


The penalties

You cheat, you pay: Arizona State's Dirk Koetter must pay up to $300,000 in damages if he's fired for NCAA or
conference rules violations. Arizona's Mike Stoops must pay $100,000.

Cost of being a Michigan man: LSU's Les Miles must pay $500,000 to leave before his contract expires at the end
of 2011 — $1.25 million if he leaves for Michigan, where he played, graduated with a degree in economics and
coached under Bo Schembechler and Gary Moeller.

Tough on crime: Cincinnati's Mark Dantonio and Florida's Urban Meyer can be suspended or fired for
"commission of a crime ... whether prosecuted or not." Not counting minor traffic offenses.

The parochial
No more November surprises: Auburn pledges to Tommy Tuberville that neither the school president nor athletics
director or anyone acting under their authority "shall discuss or negotiate directly or indirectly Auburn's prospective
employment of any other person as Head Football Coach of Auburn" without giving Tuberville prior notice. That's
to avoid a repeat of a messy 2003 episode in which then-President William Walker, athletics director David Housel
and two Auburn trustees flew to Kentucky to talk to Louisville's Bobby Petrino two days before Tuberville coached
the Tigers against Alabama.
Says Tuberville: "This is a volatile job. It can be over before you know it — as I found out in 2003."
Fancier digs: California's Jeff Tedford gets $500,000 if he's still coach when Cal plays its first game in a renovated
Memorial Stadium, a project he has advocated. Construction on a new athletics training center is scheduled to start
after this season, though the city of Berkeley plans to sue to block the project because of concerns about the
stadium's earthquake-threatened location on the Hayward Fault. Work on the stadium itself, including a "seismic
retrofit" designed to withstand an earthquake of 8.0 magnitude on the Richter scale, wasn't to begin until 2008 or
2009, depending on fundraising.
In honor: Georgia's Mark Richt commits $30,000 in both 2006 and 2007 toward a $150,000 endowed scholarship
in the name of David Jacobs, a starting nose tackle who suffered a career-ending stroke in 2001.
Staying big-time: Arkansas State promises Steve Roberts that the school will devote "economic and other support"
to allow the program "to remain reasonably competitive in all relevant aspects with the other similar athletic
programs ... (including) maintenance and improvement where necessary and practicable of physical facilities such as
office facilities, locker-room facilities, dining and dormitory facilities, physical training and exercise facilities,
economic and personnel support, including a budget sufficient to hire and retain necessary assistant coaches and to
cover the expenses associated with recruiting." The contract gives Roberts an out "without any penalty" if the school
opts not to remain in the NCAA's Division I-A.
I cannot approve this message: Texas A&M's Dennis Franchione cannot "publicly endorse any political candidate,
issue or referendum, whether on the national, state or local level." He can be fired if he does.
Wellness check: Virginia's Al Groh is required each year to "arrange for and obtain a medical evaluation of his
fitness," with the school covering the cost up to $500. Test results are "shared confidentially" with the athletics
director and university president.
Well-insured: Kansas' Mark Mangino gets a $2 million term life insurance policy, and the school will contribute up
to $25,000 toward upgrading it to a $4 million policy if he becomes eligible for increased insurance benefits. "In
recognition of Head Coach's value to Athletics and its programs," the school also can purchase an additional $2
million policy in which KU is named the beneficiary.

A little bit extra
•Road receipts: Marshall's Mark Snyder gets 20% of the net proceeds (after travel and game expenses) from one
non-conference road game of his choice per year, up to $50,000. He can share the money with hisassistants.
•Standing by his president: Oklahoma contributes an average of $750,000 a year toward an "anniversary benefit"
paying Bob Stoops $3 million on Dec. 31, 2008, marking his 10th anniversary at the school. He forfeits the money if
he leaves for another coaching job before then, though he'll get a prorated portion if he leaves in 2007 or 2008 in
conjunction with David Boren's departure as president. Stoops also gets 35 hours of private air travel a year.
•Anniversary pay: Florida State's Bobby Bowden got $250,000 last January in recognition of his 30th season at the
school. He got $75,000 for his 25th anniversary in 2001.
                                                                                                                    28

•Mr. Chairman: Beyond his contract guarantees, Texas' Mack Brown reported $120,000 in outside income as
chairman of the board of the UT Golf Club.
•Deferred gains: California's Jeff Tedford can collect $2.5 million after a five-year period ending in 2009.
...Georgia's Mark Richt can collect $2.4 million after eight years ending in 2013. ... Colorado State's Sonny Lubick
can collect $1.025 million after seven years ending in June 2010.
•"Longevity bonuses": Some schools call them "continuation incentives." Ohio State's Jim Tressel can collect
$400,000 after this season; $425,000 after each of the following three seasons; a total of $3.5 million if he's still at
OSU on Jan. 31, 2013. ... Louisville gives Bobby Petrino $1 million at the end of the 2007, 2010 and 2013 seasons
and $2 million at the end of the 2015 season. ... Florida will give Urban Meyer $250,000 after this season and a total
of $2.1 million in annual payments in a five-year period ending in 2011.
Performance matters
•Winning it all: An undefeated run to a national championship is effectively worth $1.18 million to Arizona State's
Dirk Koetter ($1.05 million for a 12-0 regular-season finish, $125,000 for reaching the Bowl Championship Series
title game and $5,000 for a final No. 1 poll ranking). He gets $781,500 if ASU loses once during the regular season
and goes on to win it all.
•Mark of a good season: Doug Martin's contract with Kent State is automatically renewed for an additional year if
the Golden Flashes have a .625 winning percentage in the Mid-American Conference or finish in the top two in the
MAC's East Division. They're 4-2 in the league and second in the division with two games left.
•We're No. 6: Maryland's Ralph Friedgen gets $20,000 bonus if his team finishes in a four-way for sixth place in
the Atlantic Coast Conference.
•Fannies in the seats: Kansas' Mark Mangino gets $100,000 if season ticket sales hit 40,000 by Sept. 1 each year. ...
Cincinnati's Mark Dantonio gets $20,000 for each home game for which attendance is 32,000 or higher (including at
least 25,000 paid) and $60,000 for average annual home attendance of better than 40,000. Wyoming's Joe Glenn
gets a $50,000 cut from the first 5,000 season tickets sold each season, another $20 per season ticket sold over 5,000
and $1 for each single-game ticket sold.
•Clean living: Central Florida's George O'Leary gets $50,000 every year there are no violations of the student code
of conduct; no arrests, indictments or convictions of crimes; and no "neglect or willfull conduct" in violation of
NCAA rules.
•Minority emphasis: Washington State's Bill Doba gets $10,000 each year that Cougars' minority player graduation
rate is at least 5% higher than the grad rate for minority males in the school's overall student body.
•Giving is good: Washington's Tyrone Willingham gets $20,000 if donations from the school's Tyee Club increase
by 10% or more in a year's time.
•Mark of a good season: Texas Tech's Mike Leach gets $25,000 when the Red Raiders win five of their eight Big
12 games. ... Doug Martin's contract with Kent State is automatically renewed for an additional year if the Golden
Flashes have a .625 winning percentage in the Mid-American Conference or finish in top two in the MAC's East
Division (they're now 4-2 in the league and second in the division).
•Quality wins: Cincinnati's Mark Dantonio gets $15,000 for each win vs. a top-25 ranked team.
•Highest-quality win: Each of Chan Gailey's assistant coaches at Georgia Tech gets $5,000 for beating Georgia.
•Stats matter: Bowling Green's Gregg Brandon gets $1,000 when his team leads the Mid-American Conference in
total offense or scoring and $1,000 for leading the league in total defense or scoring defense.
Performance is required
•Part of the deal: Nevada's Chris Ault, who's paid $360,000 a year, must "perform such television and radio
appearances as are reasonably arranged and scheduled by the University at no additional compensation to the
employee." Same for personal appearances.
•Also part of the deal: Ohio U., like many schools, sets player graduation-rate goals for Frank Solich — in his case
60% or an NCAA Academic Progress Rate that corresponds to a 60% grad rate. But unlike other schools, Ohio
offers Solich no bonus for achieving it.
•More than a coach: Wyoming's Joe Glenn "is appointed by the University as its Head Football Coach and
Lecturer in Intercollegiate Athletics."

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:80
posted:2/1/2011
language:English
pages:28