Gap Filling Flashcards
Gap filling tools
Tailored rules
Off the rack default ruls
Approach to default rules
Can be majoritarian: Fill gaps in the way most people would
Penalty - diverge as to force explicit filling out
Good faith
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement.
faithfulness to an agreed common purpose and consistency with the justified expectations of the other party.
Goldberg v. Levy
Diverting sales away to prevent sale percentage violates the duty of good faith and fair dealings
Mutual Life insurance co of new york v. tailored women
A party exercising their rights under the powers of the contract will not be in violation of good faith and fair dealings
Consideration in Illusory Promises cases
Implied Duty of Good faith and Fair dealings
Examples of illusory promises
Requirements/Output contracts; exclusive dealing/commission arrangements
Output/requirement contracts
A goods contract (usually) in which promisor explicitly agrees to provide promise (at specified price with
All of the promisor’s produced output; OR
All of the promisee’s requirements for the good
Eastern v. Gulf
A lack of mutuality and indefiniteness can be resolved if the court can determine the volume of goods by reference to objective evidence of the volume of goods required to operate the business.
Further, subject to historical performance
GFFD in output/requirement contracts
Basic Rule: option holder has discretion within “reasonably foreseeable” quantities
But subject to GF: Historical performance; commercial standards (merchants)
Parties may expressly specify range:
Contractual estimates, maxima or minima;
Reductions of output/requirements tend to be given slightly more deference than increases;
Exclusive dealings
Best effort on both sides to supply and promote
