UCC and Restatement Provisions

Question 1

§ - Measure of Damages In General

Answer 1

§347 The injured party has a right to damages based on his expectation interest as measured by = loss in value + other loss (including incidental or consequential loss, caused by the breach) - any cost avoided by not having to perform

Question 2

§ - Economic Waste Doctrine

Answer 2

§348 If a breach results in a defective or unfinished construction the non-breacher may recover damages based on : (a) the diminution, in the market price of the property, caused by the breach or (b) the reasonable cost of completing performance or of remedying the defects if the cost is not clearly disproportionate to the probably loss in value to him

Question 3

§ - Unforseeability and Related Limitations on Damages

Answer 3

§351 (1) damages are not recoverable for loss that the party in breach did not have reason to foresee as a result of the breach WHEN THE K WAS MADE (2) loss may be foreseeable as a probable result of a breach because it follows from the breach (a) in the ordinary course of events or (b) as a result of special circumstances that the party in breach has reason to know (3) a court may limit damages for foreseeable loss by allowing recovery only for loss incurred in reliance, or as justice so requires

Question 4

§ Uncertainty as a limitation on damages

Answer 4

§352 Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty (convert into more like renders unrecoverable any portion of the π damages that evidence cannot establish with reasonable certainty)

Question 5

§ Damages based on Reliance Interest

Answer 5

§349 Injured party has a right to damages based on their reliance interest, including expenditures made in preparation for performance or in performance (less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed.

Question 6

§ Avoidability as a Limitation on Damages

Answer 6

§350 damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation. (2) The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.

Question 7

§ Avoidability of damages (Right to Nominal Damages)

Answer 7

§346 1) The injured party has a right to damages for any breach by a party against whom the contract is enforceable unless the claim for damages has been suspended or discharged. (2) If the breach caused no loss or if the amount of the loss is not proved under the rules stated in this Chapter, a small sum fixed without regard to amt. of loss will be awarded as nominal damages.

Question 8

UCC § Liquidation or Limitation of Damages; Deposits

Answer 8

UCC §2-718 (1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

Question 9

Restatement § Liquidation or Limitation of Damages; Deposits

Answer 9

Restatement § 356 Damages for breach . . . may be liquidated in the agreement but only at an amount that is reasonable in light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.

Question 10

UCC § Buyer’s Right to Specific Performance or Replevin

Answer 10

UCC § 2-716 1) Specific performance may be ordered where the goods are unique or in other proper circumstances. (2) The judgment (decree) for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just. (3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered

Question 11

Rest § Offer

Answer 11

Rest. § 24: “An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.”

Question 12

Rest. § Prelim. Negotiations

Answer 12

Rest. § 26: Not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

Comment A: Reason to know depends not only on the words or other conduct, but also on the circumstances, including previous communications of the parties and the usages of their community or line of business.

Comment C: In determining whether an offer is made relevant factors include the terms of any previous inquiry, the completeness of the terms of the suggested bargain, and the number of persons to whom a communication is addressed.

Question 13

Rest. § Certainty:

Answer 13

Rest. § 33: (1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.

(2) the terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.

(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.

Question 14

Rest. § To whom an offer is addressed:

Answer 14

(1) the manifested intention of the offeror determines the person or persons in whom is created a power of acceptance.
(2) an offer may create a power of acceptance in a specified person or in one ore more of a specified group or class of persons, acting separately or together, or in anyone or everyon who makes a specified promise or renders a specified performance.

Question 15

Rest. § : Termination of an offer

Answer 15

Rest. § 36(1)
Revocation by the offeror; Rejection by the offeree;
Counteroffer by the offeree;
Passage of time;
Death or Incapacitation of Offeror

Question 16

Rest. § Option contracts:

Answer 16

Rest. § 25
A promise which meets the requirements for the formation of a contract and limits the promisor’s power to revoke an offer.

Question 17

UCC § Firm Offers

Answer 17

Firm Offers UCC 2-205:
Offer
By a merchant
to buy or sell goods
in a signed writing
that, by its terms, cannot be revoked for a period of time

Question 18

Merchant UCC

Answer 18

UCC 2-104
A person who deals in goods of that kind
Someone who holds themself out as having knowledge or skill peculiar to the practices or goods involved
Someone who has an agent who fits that description

Question 19

UCC Acceptance

Answer 19

UCC 2-207(1):
A definite and reasonable expression of acceptance or a written confirmation

Sent within a reasonable time

Operates as an acceptance

Even though it states terms additional to or different from those offered or agreed upon

Unless acceptance is expressly made conditional on assent to the [new] terms.

Question 20

UCC 2-207(2)

Question 21

UCC 2-207(3)

Question 22

Rest. § Acceptance by Silence or Exercise of Dominion:

Answer 22

Rest. § 69:
(1) an offeree’s silence is an acceptance only if:
(a) “offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation”
(b) “offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer”
(c) “because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept”

Question 23

Form Contracts Rest. §

Answer 23

Rest. § 211:
(1) Except as stated in Subs. (3), where [A] manifests assent to a writing and has reason to believe that like writings are regularly used to embody terms of agreements of the same type, he [assents to] the [terms in the] writing.

(2) Where [B] has reason to believe that [A] would not [give his assent] if [A] knew that the writing contained a particular term, the term is not part of the agreement.

Question 24

Generally Enforceable Rest. §

Answer 24

Rest. § 211(1):
Exception: If the drafter has reason to believe counterparty would not have assented if they knew about a provision, not part of the K (Rest. § 211(3))

Question 25

Good Faith and Fair Dealing (Rest. § 205)

Answer 25

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

Question 26

Construed Against Drafter (Rest. § 206)

Answer 26

In choosing among the reasonable meanings of a promise or agreement or a term thereof,
that meaning is generally preferred which operates against the party who supplies the words or
from whom a writing otherwise proceeds.

Question 27

Doctrine of Unconscionability (Rest. § 208)

Answer 27

If a contract or term thereof is unconscionable at the time the contract is made
a court may refuse to enforce the contract, or
may enforce the remainder of the contract without the unconscionable term, or
may so limit the application of any unconscionable term as to avoid any unconscionable result.

Question 28

Public Policy Constraints (Rest. § 207, Rest. § 178-96)

Answer 28

Public Policy should be against these terms.

Question 29

Requirement of Exchange Rest. §

Answer 29

Rest. § 71:
(1) To constitute consideration, a performance or a return promise must be bargained for
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
(3) Performance may consist of
a. An act other than a promise, or
b. A forbearance, or
c. The creation, modification, or destruction of a legal relation.
(4) the performance or return promise may be given to the promisor or to some other person. it may be given by the premise or some other person.

Question 30

Modifications Rest. §

Answer 30

Rest. § 89: Must be “fair and equitable in view of circumstances not anticipated by the parties when the contract was made

Question 31

Modifications UCC

Answer 31

UCC 2-209: Needs not consideration to be binding. Must meet the test of good faith.

Question 32

Adequacy of Consideration/Mutuality of Obligation Rest. §

Answer 32

Rest. § 79.
If requirement of consideration is met, there is no additional requirement of equivalence in the values exchanged.
Comment D:
Disparity in value might indicate that there was no bargained for exchange.

Question 33

Forbearance to assert or the surrender of a claim or defense as consideration Rest.

Answer 33

Rest. § 74(1):
Forbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless
a. the claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or

b. the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid.

Question 34

Promise Reasonably Inducing Action or Forbearance
Rest. §

Answer 34

Rest. § 90(1)

A promise which the promisor should reasonably expect to induce action or forbearance on the part of a promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only be enforcement of the promise.

The remedy granted for breach may be limited as justice requires.

Question 35

Lack of Capacity Infancy, Defense in formation Rest. §

Answer 35

Rest. § 14 Minors can void a contract at any time up to 18th birthday.

Question 36

Mental Impairment Rest. §

Answer 36

Rest. § 15 Applies to people:

Unable to understand in a reasonable manner the nature and consequences of the transaction, or

Unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of this condition.

Question 37

When reliance on an assertion of opinion is not justified Rest. §

Answer 37

Rest. § 169

Recipient is not justified in relying on [an opinion] unless the recipient

A. stands in such a relationship of trust and confidence to the person whose opinion is asserted that the recipient is reasonable in relying on it

B. Reasonably believes that, as compared with himself, the person whose opinion is asserted has special skill, judgment or objectivity with respect to subject matter;

C. Is for some other special reason particularly susceptible to a misrepresentation of the type involved.

Question 38

Rest. § Implied Duty of Good Faith & Fair Dealing

Answer 38

Rest. § 205
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement

Question 39

UCC Implied Duty of Good Faith and Fair Dealing

Answer 39

UCC 1-304: Every Contract or duty within the UCC imposes an obligation of good faith in its performance and enforcement.

Question 40

Contract interpretation Rest. §

Answer 40

Rest. § 201(1): Where the parties have attached the same meaning to a promise or agreement or a term thereof it is interpreted in accordance with that meaning.

Rest. § 201(3): Neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.

Rest. § 201(2): When the parties have different meanings for the term:
A’s meaning prevails

If when the contract was made

(a) A did not know that B had a different meaning in mind and B knew the meaning A had in mind;
or
(b) A had no reason to know that B had a different meaning in mind and B had reason to know the meaning A had in mind.

Question 41

UCC Supplying an Omitted Essential Term

Answer 41

UCC 2-204

When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.

Question 42

UCC: Open Price Term

Answer 42

UCC 2-305
(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if
(a) Nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to agree; or
(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or record.

(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith

(3) When a price left to be fixed. . . fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.

Question 43

Rest Illusory Promises

Answer 43

UCC Output Requirements and Exclusive Dealings

Question 44

Gap filling

Answer 44

UCC 2-204: If an essential term is omitted the court will supply a reasonable term in light of the circumstances

Price

Place of Delivery

Quantity

Time of Delivery

Question 45

Parol Evidence Rule: Integrated Agreements

Answer 45

Partial or Total Integration: Partial: final, but not complete. Total: Final and complete. Rest 210

Total Integration: no admissibility of supplementary or contradictory terms

Rest 209(1): integrated agreement is a final expression of the parties’ agreement on a particular term.

Question 46

Final Written Expression: Parol or Extrinsic Evidence UCC

Answer 46

CHECK