Contracts – Spring 2011 Outline

Chapter 5 – Contracts Unenforceable by Operation of LawA. The Distinction Between Void and Voidable Contracts

a. Void contracts – contracts that cannot be enforced at either party’s election. These agreements have no legal effect.

b. Voidable contracts – one party may at his option either enforce or not enforce. Examples include a minor or someone who has been induced to agree by fraud may elect to not enforce the contract.

c. Unenforceable contract – a contract that does not give an immediate right to judicial relief, but which nonetheless has some legal status. Difference between this and avoid contract is that this can be converted into a fully binding contract by the act of one of the parties.

d. R2K § 163 Cmt. C distinguished between void and voidable. Applies to a void contracts.

e. Buckeye Cash Checking, Inc. v. Cardegnai. The court ruled that the distinction between a void and voidable

contract is irrelevant when it comes to an arbitration clause.B. The Public Policy Doctrine

a. Contracts that contravene public policy are voidi. R2K § 178 – a promise or agreement is unenforceable on grounds of

public policy in situations (1) where the legislature has directly declared certain agreements or promises illegal, or (2) where judicial precedent has recognized the existence of a public policy against enforcement.

b. Illegal Contractsi. Anheuser Busch Brewing Ass’n v. Mason

1. Brothel owner trying to get out of a contract b/c it was illegal. Court holds that one must participate (rather than have knowledge of) in the illegal activity in order to make the contract void for illegality (public policy).

c. Contracts in Contravention of Public Policyi. Cases in which a court makes its own determination of the existence

and content of a public policy that would be contravened by enforcement of an otherwise valid contract.

ii. Hewitt v. Hewitt1. P and D had a child together, were never officially married

but held themselves as such. They shared assets. P relied on D’s education and income. They decided to end the relationship and she sued.

2. Issue: Is it right for a court to grant a legal status to a relationship substituting for a marriage granted by the State?

3. The legislature has clearly indicated that official marriage is necessary. The agreement between the parties constitutes a void contract.

4. Enhancing the attractiveness of a private agreement over marriage contravenes the policy of strengthening and preserving the integrity of marriage.

5. Courts have traditionally refused to enforce “living together” agreements, on the grounds that they amount to payment for sex, and are thus illegal.

d. Covenants Not to Compete in Employment Contractsi. An employee may convenant that, should the employee terminate

the employment or be terminated, the employee will not go to work for a competitor of the employer engaged in the same or similar business, within a proscribed geographic area, for a limited period of time following the termination.

ii. Courts will invalidate or reform such clauses unless they are reasonably required to protect a significant interest, are reasonably narrow in geographic scope, and are for a reasonably short period of time.

iii. American Broadcasting Companies, Inc. v. Wolf1. Defendant was a sportscaster who left ABC to go to another

station. D was suppose to give ABC 45 days to match the offer from CBS, but signed with CBS before the end of the 45 day period. ABC sued for breach of contract seeking injunctive relief.

2. Issue: Should P get injunctive relief?3. Hold: No. Injunctive relief is not appropriate for employment

contracts that have expired. Only a negative injunctive is appropriate for employment contracts that have not expired.

4. Injunctive relief is only available negatively for contracts for personal service and then, only before the contract expires.

iv. White v. Fletcher/Mayo/Associates, Inc.1. P was an employee who also owned stock in FMA. Prior to a

merger, he was told to sign a non-compete clause because it would secure his position and help in in his future career. After the merger, he was fired. He sued to determine if the agreement was enforceable. The trial court determined that The trial court determined it overbroad and edited the contract and deemed it enforceable. The court of appeals held the decision because they said it was a sale of business non-compete and not an employment contract.

2. Issue: Was it an employment contract?3. Hold: Yes, and therefore should not have been messed with

by the trial court.C. Unconscionability – Contracts Void for Unfairness

a. UCC § 2-302 is the guide for unconscionability.b. UCC § 2-302 (1) “If the court as a matter of law finds the contract or any

clause of the contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.”

i. The official comment to this section observes that “this section is intended to make it possible for the courts to police explicitly against the contracts or clauses which they find to be unconscionable.”

c. History and Purpose of the Doctrine of Unconscionability

i. Williams v. Walker-Thomas Furniture Co.1. Williams made two separate purchases on the same line of

credit from WT over a period of 5 years. The agreement made it so that none of the purchases were considered paid off until the entire balance was paid off. Williams defaulted and WT sought the return of all of the furniture, which resulted in this suit.

2. Lower courts had said that they did not have the power to deny enforcement of Ks that were unconscionable. This appellet court said that they could and remanded the case for a new trial.

3. The UCC had only recently been enacted by Congress and this court § 2-302 saying that when the element of unconscionability is present at the time the K is made, it should not be enforced. It remanded the case to determine if the K was unconscionable from the start.

d. Elements of Unconscionabilitye. Procedural unsconscionability – once party is induced to enter the contract

without having any meaningful choicef. Substantive unconscionability – unduly fair and one-sided

i. Stirlen v. Supercuts, Inc.ii. Stirlen was an executive for Supercuts. He was fired and sued for

wrongful termination. He further alleged his employment contract to be against public policy and unconscionable because of an arbitration clause that limited the damages he could recover.

iii. The trial court determined that this was unconscionable because it was so one-sided.

iv. The appellate court upheld determining that the employee gave up significant rights while the employer was protected from liability.

D. The Statute of Frauds – Contracts Unenforceable for Want of a Signed Writinga. The SOF identifies specific contexts in which an otherwise valid oral contract

must be evidenced by a written memorial of the transaction and signed by the party against whom enforcement of the contract is sought.

b. Is the Contract Within the Statute of Fraudsi. Transaction types covered by the statute:

1. Contracts by an executor or administrator to pay damages out of his own estate

2. Contracts to act as a surety for the debts or defaults of another person

3. Contracts made in consideration of marriage4. Contracts for the sale of an interest in real property5. Contracts not to be performed within one year of the making

thereof6. From UCC § 2-201(1) contracts for the sale of goods at a

price of $500 or more.ii. If a particular contract falls within the scope of any of these six

situations, it must be evidenced by a writing and signed by the part against who enforcement is sought, or the contract is unenforceable unless the writing requirement is otherwise excused.

iii. Coan v. Orsinger

1. D orally agreed to employ P as resident manager of an apartment building until he completed law school. A month later, D fired P.

2. The courts determined that the contract violated the SOF because it could not be completed in one year.

c. Satisfying the Writing Requirementi. The difference between the SOF and Parol Evidence Rule is that the

parol evidence rule defines the scope of the terms that a court may consider as comprising the parties’ agreement. The issue is not enforceability, but whether the written memorial represents a complete and unambiguous statement of the parties’ bargain.

ii. A memorandum may, but need not, be a full integrated and written contract.

iii. The memorandum must identify the parties to the contract, the subject matter of the contract, and the essential terms of the contract.

iv. R2K § 131 outlines the memorandum requirementsv. Crabtree v. Elizabeth Arden Sales Corp.

1. Terms for the Plaintiff, Crabtree’s (Plaintiff), employment with the Defendant, Elizabeth Arden Sales Corp. (Defendant), were laid out in several documents and not all of these documents were signed.

2. A document, even if unsigned, might be allowed to support a prior signed document if it either (1) specifically mentions the prior document or (2) obviously deals with the same subject as the prior document.

d. Excusing Compliance Failurei. R2K § 139 allows promissory estoppel to overcome the SOFin

certain circumstances.ii. McIntosh v. Murphy

1. D made a verbal agreement to hire P to work at his car dealership for one year. A written agreement was never made. P sent a telegram to D saying he would arrive from Los Angeles the next day. P started work but was fired to months later.

2. D moved for a directed verdict on the grounds that he was protected by the SOF. Denied and the jury found for P. D appealed.

3. Can the SOF be overcome by reliance on the oral promise made?

4. The court held that if a party has relied on an oral promise and rendered part performance the other party should be estopped from asserting the Statute of Frauds.

e. Merchant’s Exceptioni. UCC § 2-201 (2) – a memorandum sent by one merchant to another

may under certain circumstances be enforceable against the recipient, even though the latter did not sign it.

ii. The transmission of a written confirmation of the oral contract, which is in a form binding on the sender, becomes binding on the receiver if not objected to within ten days of receipt.

iii. Bazak Intern. Corp. v. Mast Industries, Inc.1. Plaintiff, Bazak International Corp., and Defendant, Mast

Industries, Inc., entered in to an oral agreement whereby Defendant agreed to sell close out textiles to Plaintiff. Plaintiff sent purchase orders, but Defendant never delivered the textiles.

2. In the present case, the Court found that the documents met the requirements for confirmatory writings under the merchant exception. The Court did not require that the documents contain explicit words of confirmation. Because the merchant exception applied, the Court allowed Plaintiff to proceed with the breach of contract and fraud

Chapter 6 – Contracts Unenforceable by Election: Regulating the Agreement Process- Voidable contracts are enforceable unless a party with the poser of avoidance

elects to exercise that power. R2K § 7- The infancy doctrine provides that an infant may incur only voidable contracts.

o Creates a power in the infant to avoid the contract at any time before the infant’s 18th birthday (or a reasonable time thereafter).

o R2K § 14 defines infants.- The power of ratification extinguishes any future power to avoid. R2K § 8- If for any reason the power to avoid is not properly exercised, it will be

extinguished. The contract will be ratified and fully enforceable.- Absent ratification of the contract, the power of avoidance may be exercised

either before or after performance by either or both parties.A. Preclusion by Affirmation or Election of Remedies

a. Preclusion by Affirmation of a Voidable Contracti. A contract is voidable only if one or more of the parties have the

power to avoid the legal relations created by the contract by manifesting an election to do so. The power may be extinguished by ratification of the contract. R2K § 7

ii. A contract may not be avoided in part. R2K § 383iii. However, there is an exception where a single contract can be

divided into separate parts where the parties exchange agreed equivalents as to the same part.. R2K § 240 Where both parties have fully performed with regard to a divisible portion, the power holder may avoid either the entire contract or the remaining divisible portions. R2K § 240 & 383

iv. A party holding the power of avoidance may extinguish that power by manifesting an intention to the other party to continue with the contract. R2K § 380(1)

v. A promise to affirm an otherwise voidable duty is binding. R2K § 85vi. Even absent an express promise, a party holding power of avoidance

may affirm a voidable contract by undertaking any act with respect to anything received from the other party, as if the power holder were the owner of that property. R2K § 380(1)

vii. UCC § 2-606(1)(c) acceptance may be deemed to occur when the buyer commits any act inconsistent with seller’s ownership.

viii. The power to avoid can be extinguished by mere delay. R2K § 381

ix. Once the power holder effectively exercises the power of avoidance, the elections is normally irrevocable and the power holder cannot thereafter affirm, unless of course the other party consents to new affirmance. R2K § 382(1)

b. Preclusion by Election of Remediesi. A party with the power of avoidance has not duty to perform while

the power to avoid remains active. In some cases proper exercise of the power of avoidance requires that the power holder tender or attempt to return the consideration received from the other party R2K § 385(1)

ii. If such a tender of the original consideration is required, then the power holder may have to pay damages for nonperformance, unless that party tenders return of the consideration before the power of avoidance is terminated. R2K § 385(2)

iii. Even where a tender of consideration may no longer remain important as a condition to exercise a power of avoidance, recall that the mere retention of the consideration coupled with exercise of the dominion and control resembling that of an owner may itself preclude avoidance. R2K § 380(1)

iv. If a party has more than one remedy, the choice to pursue one by suit or otherwise ordinarily does not bar prayer in the alternative for the other relief. R2K § 378.

v. Where the remedies are inconsistent, and the other party materially changes its position in reliance upon the power holder’s choice of remedy, such pleadings in the alternative are not permitted. R2K § 378

vi. A party seeking rescission of the contract by exercising the power of avoidance will not be granted restitution unless either that party returns or offers to return, condition on reciprocal restitution, any consideration received or the court can assure such a balanced return when granting relief. R2K § 384(1)

vii. Exceptions exists when (i) the property was worthless when received or has been lost or stolen as a result of its known defects, or (ii) the property has been used or disposed of without knowledge of grounds for restitution provided justice requires compensation in its place. R2K § 384(2)

viii. UCC § 2-1-6 (3)-(4) dispensed with the term “rescission” and replaced it with “cancellation” to refer to bringing an end to the contract because of the breach by the other party and “termination” refers to bringing an end to the contract for grounds other than breach.

B. Lack of Legal Capacity of One of the Partiesa. Modern law adopts a view where the contract involves multiple parties in a

special relationship such as a fiduciary relationship, the resulting contract is voidable rather than void.

b. A contract between a fiduciary and a beneficiary is voidable unless on fair terms and the beneficiary was aware of all relevant facts. R2K § 173.

c. Persons are presumed to have capacity to enter a contract. R2K § 12(2). The term “capacity” means the legal capacity to incur at least voidable contractual duties. R2K § 12(1).

d. Contracts with Minorsi. A natural person has full legal capacity to incur contractual duties

unless that person is an infant. R2K § 12(2)(b) Unless state law provides otherwise, an infant has the capacity to incur only voidable contractual duties until the beginning of the day before the person’s eighteenth birthday. R2K § 14 cmt. a.

ii. Halbman v. Lemke1. P, a minor, bought a car from D. Shortly after purchase, the

car broke down and needed repair. D offered to help with labor if P supplied the parts. P refused and took it to a shop. P refused to pay the shop. The shop chopped it and had the car towed to P’s fathers house, where it was vandalized and further destroyed. P sued D for return of the purchased price.

2. Lower and appellate courts found for P3. Issue: Does a minor, having disaffirmed a contract for the

purchase of an item which is not a necessity and having tendered the property back to the vendor, have to make restitution to the vendor for damage to the property prior to the disaffirmance?

4. Hold: Absent misrepresentation or tortious damage to the property, a minor who disaffirms a contract for the purchase of an item which is not a necessity may recover his purchase price without liability for use, depreciation, damage, or other diminution in value.

e. Mental Capacityi. R2K § 15 permits avoidance only where “the other party has reason

to know of [the incompetent party’s] condition.ii. Category includes not only the insane, but also those who are

mentally ill, senile, mentally retarded, or drunk.iii. R2K § 15(1)provides that a person lacks capacity because of mental

illness or defect if either (1) He is unable to understand in a reasonable manner the nature and consequences of the transaction, or (2) He is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition.

iv. Ortelere v. Teachers’ Retirement Board1. P, a teacher in D school system, has during her forty years of

work built up a credit in the system’s retirement plan. She leaves work due to involuntary psychosis. P had previously elected to receive a lower monthly retirement benefit so that her husband will receive benefits if she died first. Because of the psychosis, she revoked the election and took more monthly money. She then died two months later. He husband sue to avoid her change in election.

2. If P can prove that his wife was psychotic at the time of election, the election can be avoided.

f. Contracts Affected by a Relationship of Trust and Confidencei. In relationships of trust and confidence, a person’s non-disclosure of

a known fact is equivalent to an affirmative assertion that the fact

does not exist when the other person is entitled to know the fact. R2K § 161(d)

ii. A person is ordinarily not justified in relying on a statement of opinion rather than a statement of fact unless the recipient is in a relationship of trust and confidence with the maker of the opinion and the reliance on the opinion is reasonable. R2K § 169(a)

iii. In either event, the non-disclosure or the statement of opinion might have the effect of making the contract voidable. R2K § 164(a)

iv. Undue influence depends in part on unfair persuasion of a party who, by virtue of the relation between them, is justified in assuming that the other party will not act inconsistent with their welfare. R2K § 177(1)

C. Abuse of the Bargaining Process by One of the Partiesa. Intentional and Negligent Misrepresentation

i. Fraud with respect to the nature of documents signed (fraud in execution) prevents formation of a contract. R2K § 163

ii. Fraud in the inducement – fraud related to the nature of the consideration itself – does not prevent the formation of the contract and thus creates an election of remedies in favor of the injured party.

iii. Fraud in the inducement creates only a voidable contract. R2K § 164(1)

iv. Inducement of assent by either a fraudulent or material misrepresentation upon which the recipient is justified in relying renders a contract voidable. R2K § 164(1)

v. A misrepresentation is an assertion not in accord with the facts. R2K § 159

vi. Concealment intended to keep another from learning true facts of which the party would otherwise have learned is equivalent to an assertion of a fact and is therefore a misrepresentation. R2K § 160

vii. Non-disclosure is also equivalent to an assertion and therefore a misrepresentation, but only where (i) the person knows disclosure is necessary to prevent a previous assertion from being fraudulent or material; (ii) the person knows disclosure would correct a material mistake of the other part, but only if non-disclosure amounts to a failure to act in good faith; (iii) the person knows that disclosure would correct a mistake regarding contents of a writing evidencing the agreement, or (iv) when the other person is entitled to know the fact by reason of a relationship of trust and confidence between them. R2K 160

viii. A misrepresentation is fraudulent when the maker (i) knows or believes the assertion is not in accord with the facts, (ii) does not have the confidence that he states or implies the truth of the statement, or (iii) knows that he does not have the basis that he states or implies for the assertion. R2K § 162(1)

1. A misrepresentation is material if it is likely to induce a reasonable person to manifest assent. R2K § 162(2)

ix. Rescission for either fraudulent or material misrepresentation will only occur if the other party to the contract is justified in relying on the misrepresentation. R2K § 164(1)

x. Hill v. Jones

1. Plaintiffs Warren G. Hill and Gloria R. Hill entered into an agreement with Defendants Ora G. Jones and Barbara R. Jones to purchase Defendants’ home. Plaintiff sought to rescind the agreement after they learned that the home had termites.

2. Rule: Where sellers to a home are aware of facts materially affecting the value of the property, the sellers are under a duty to disclose such facts.

xi. Enhance-It, LLC v. American Access Technologies, Inc.1.

b. Duressi. Duress has been consistently confined to behavior that overcomes

the free will of a party to contract.ii. Under modern duress doctrine, the improper threat must overcome

the free will of actual victim duress.1. R2K § 175 cmt. b: reasonable or ordinary person standard

has become irrelevant.2. R2K § 174 cmt. c: A party’s manifestation of assent is induced

by duress if the duress substantially contributes to his decision to manifest his assent.

iii. If the duress could have been avoided, it will not hold up as a defense. R2K § 175 (1)

iv. Modern duress law normally renders a transaction voidable rather than void.

1. R2K § 174 says duress due to physical coercion is void because there was never a K in the first place.

a. Cmt. a: “mechanical consent” is not consent at all.2. R2K § 175 says duress not resulting from physical coercion is

voidable because the consent was coerced.v. An improper threat that leaves the victim with no reasonable

alternative to consent makes the contract voidable. 175(1)1. R2K identifies two types of improper threats

a. Some threats are per se improper, like commission of a crime or tort, criminal prosecution, bad faith use of civil process and “a breach of duty of good faith and fair dealing under a contract with the recipient.”

b. Some threats are improper based upon its impact on the resulting exchange between parties.

vi. A party’s economic circumstances may in some circumstances wrongfully or improperly overcome that party’s will and eliminate reasonable alternatives.

vii. Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Service Co.(Alaksa, 1978)

1. D hired P to ship construction materials from Houston to a port in Alaska. The amount of goods to be picked in Houston was much greater than originally stated by D, resulting in delays. P was forced to hire an additional boat at the Panama Canal, but due to delays in agreeing by D, additional shipping delays were incurred. After docking in California, D decided to end the agreement. P hired a lawyer to collect payment,

encouraging him to use their economic situation to compel payment. They negotiated a settlement for $97,500. P subsequently sued claiming they agreed to the settlement under economic duress. D got the cased dismissed on summary judgment. P appealed.

2. On appeal, the appellate court ruled that an important memo was referred to in testimony, and erroneously denied by the trial court. Further, the court decided to considered the memo and decide the case.

3. Appellate court said that P, if all facts stated were proved true, had provided the necessary elements for a claim of economic duress, and the issue should have withstood summary judgment.

4. D knowingly withheld payment knowing that P would have to accept a subpar settlement to pay off debt.

D. Failure of the Bargaining Processa. When parties have fairly negotiated a contract and voluntarily accepted

correlative legal obligations in a fair exchange supported by a theory of legal obligation such as consideration, the resulting contract and duties created are absolute.

b. Effect of erroneous assumptions:i. Risk is allocated to the party making the error.

c. In a few extreme cases, the nature and context of the error may permit the erroneous party to avoid the contract or excuse that party’s future obligations under the contract.

i. The appropriate remedy is normally rescission and restitution, or merely excuse from future obligations.

d. An error regarding future events rarely, if ever, justifies the creation of power of avoidance in the erroneous party.

e. If an error relates to facts in existence at the time of contract formation, serious errors create a power of avoidance in both parties. Can be rescission followed by restitution.

f. A mistake in integration occurs where the parties’ written memorialization of their actual contract fails to reflect accurately their actual contract.

i. Correct remedy is to reform the contract.ii. If a party refuses, a court order can be issue to compel reform. R2K §

155g. Mutual Mistake

i. R2K § 156 – Contracts made upon a common mutual mistake as to an existing fact become voidable at the election of either party.

ii. Mistake must be confirmed in both parties and proven by the party asserting the mutual mistake.

iii. R2K § 152(1) The mistake must relate to a basic assumption having a “material effect” on the agreed exchange of performances of the parties.

iv. Must show that the resulting imbalance is so severe he can not fairly be required to carry it out.

v. A mistake is an erroneous belief that is not in accord with the facts existing at the time of the making of the contract. R2K § 151

vi. A mistake differs from a misunderstanding because both parties consent to the mistaken facts of the contract. R2K §152(1)

vii. R2K § 154 states three situations when the risk of a mistake is allocated to a party: (a) the agreement allocates the risk to that party; (b) that party is aware he has only limited knowledge of the mistaken fact and yet treats that knowledge as difficult; or (c) the court allocates the risk to that party because it is reasonable to do so.

viii. UCC does not specifically address mistake.ix. Sherwood v. Walker

1. This is the case of the not-so-barren cow. Sherwood (Plaintiff) contracted to buy a cow believed to be barren, at a low price from Walker and others (Defendants). Later, the parties realized the cow was with calf. The Plaintiff wanted to enforce the contract while Defendants wanted rescission.

2. The court found that the parties’ misapprehension regarding the barren nature of the cow went to the substance of the agreement. As such, the agreement was void; due to its pregnancy, the cow ceased to be the animal that was originally deemed to be.

x. Lenawee County Board of Health v. Messerly1. The Appellees/vendees, Mr. and Mrs. Pickles (Appellees),

purchased a 600 square-foot tract of land with rental property upon it, from the Appellants/Vendors, Mr. and Mrs. Messerly (Appellants). Shortly after buying the property, the Lenawee County Board of Health (BOH) brought suit against the Appellees and Appellants of the property and condemned it because there was a defective sewage system on the property.

h. Unilateral Mistakei. R2K § 153 allows rescission for unilateral mistake, but only for

situations involving material mistakes, provided that the mistake party does not bear the risk of mistake.

ii. Cummings v. Dusenbury1. Purchasers of log house sued vendors for rescission of the

contract for sale. Following bench trial, the 15th Circuit Court, Carroll County, John W. Rapp, J., found that because of unilateral mistake, purchasers were entitled to rescission of the contract and damages, less amount for rent for period of time they occupied the premises. Vendors appealed and purchasers cross appealed. The Appellate Court, Hopf, J., held that: (1) unilateral, as well as mutual, mistake could support rescission of the contract, at least where the mistake did not arise out of negligence or lack of prudence on the part of contracting party seeking the relief; (2) purchasers established requisite elements to application of doctrine of unilateral mistake; (3) rescission of the contract for sale could be made and still place vendors in status quo; (4) any variance between allegations and proof regarding theory of unilateral mistake was not shown to have been prejudicial to vendors; (5) vendors were not shown to have acted

fraudulently; and (6) no implied warranty of habitability was applicable to home nearly ten years old.

Chapter 7 – Contracts Unenforceable by Later Events: Discharge of Future Duties Absent a Breach

- In this situation, there is nothing wrong with the contract itself, at least in terms of whether the parties created a valid agreement between themselves. Rather, post-formation, an event occurred without the fault of either party but making full performance by one party literally impossible, highly impracticable, or at the very least more expensive or drastically less beneficial than originally anticipated.

A. Historical Development of the Impossibility DoctrineB. Modern Impossibility, Impracticability, & Frustration

a. Supervening illegality – R2K § 264b. Supervening death or incapacity – R2K § 262c. Supervening destruction – R2K § 263d. UCC § 2-615(a) implies a construction condition that a seller’s performance

requirement to deliver goods is legally excused if a supervening event makes the delivery impossible.

e. R2K § 261 – (i) performance of a duty to render services or transfer goods or property must be literally impossible; (ii) the excused party must not bear the risk of the occurrence of the supervening event as a “basic assumption” of the contract, (iii) the event must have occurred without the fault of the excused party, and (iv) the contract must not have assigned the risk of the event to the excused party.

f. A successful impracticability defense under the restatement rules requires an extreme and unreasonable expense and difficulty that cannot be surmounted by reasonable effort.

g. Transatlantic Financing Corp. v. United Statesi. The Plaintiff, Transatlantic Financing Corporation (Plaintiff), sued

the Defendant, the United States (Defendant), in quantum meruit after it was forced to take the longer route from Texas to Iran around the Cape of Good Hope rather than the shorter route through the Suez Canal.

ii. The D.C. Circuit Court of Appeals sets forth a three-part test for impossibility: (1) something unexpected must have occurred; (2) the risk of the unexpected occurrence must not have been allocated by contract or custom and (3) the unexpected occurrence must have rendered performance commercially impracticable. Elements 1 and 2 were met, 3 was not.

h. Mel Frank Tool & Supply, Inc. v. Di-Chem Co.i. Action for a breach of lease. D vacated the facility after city officials

informed D that it could no longer store its materials on the leased premises because D was in violation of a city ordinance enacted after the lease was signed.

ii. Rule: A contract can only be avoided under the idea of frustration of purpose when an obligee’s entire purpose for entering the contract is frustrated.

iii. Holding: Doctrines of impossibility and frustration both stand on a premise that a contract was made with a specific purpose in mind. The lease was made for the storage of chemicals, hazardous chemicals were not specified.

C. Discharge of Duty by Assent or Modificationa. Rescission addresses situations in which the parties simply wish to

terminate all future contractual relationships. Look at R2K § 238(2)b. Executory bilateral accord – considers the duty discharged in the future by

only upon completion of satisfaction of an accord agreement. R2K § 281(1)c. Substituted contracts – an obligee accepts the substituted contract in

satisfaction of the obligor’s duty under the original contract. R2K § 279(1)d. Doctrinal Development

i. Pre-existing Legal Duty Rule1. Angel v. Murray MINORITY

a. P agreed to pay more than it was contractually obligated to for refuse collection, in modification of the original contract. Trial court held that there was no consideration for the increase, since D was already obligated to collect refuse.

b. Rule: Pre-existing duty rule will not be applied when there are unforeseen circumstances and the opposing party agrees to compensate for those unforeseen circumstances.

c. Hold: Follows R2K § 89 and allows enforcement of an agreement if the parties voluntarily agree and if (1) the promise modifying the contract was fully performed; the underlying circumstances which prompted the modification were unanticipated by the parties and (3) the modification is fair and equitable. Reversed.

ii. Agreed Resolution of Disputes – Accord and Satisfaction1. Clark v. Elza

a. P was in an automobile accident alleged to have resulted from D’s negligence. Parties verbally agreed to a $9500 settlement. After the case was removed from the schedule, P refudiated the settlement, as the injuries were worse than previously thought.

b. Issue: Whether a verbal settlement agreement functioned as an executory accord or substitute contract?

c. Hold: An executory accord is an agreement for the future discharge of a pre-existing claim and does not discharge the underlying claim until it is performed.

iii. Dispute Resolution Under Duress1. Kelsey-Hayes Co. v. Galtaco Redlaw Castings Corp.

a. D threatened to stop production if P didn’t agree to pay a higher price.

b. Rule: A contract is voidable if made under economic duress.

c. Hold: Economic duress can exist absent criminal or tortious activity.

e. Effect of Writing Restricting Oral Modificationi. NOM – No Oral Modification clause – purports to prevent the parties

from amending the written agreement orally.ii. NOW – No Oral Waiver clause – purports to restrict power of the

parties to relinquish the right to insist on strict compliance with a NOM clause.

iii. UCC likes these clauses, R2K does not.iv. Modifications to a contract within the Statute of Frauds must also be

in writing and signed by the party to be charged to be enforceable. R2K § 149(1) and UCC § 2-209(3)

v. Absent an applicable exception, an oral modification to an original written contract within the SOF is generally not enforceable even if supported by a theory of obligation.

vi. UCC § 2-209 (2) a signed agreement which excludes modification or rescission except by a singed writing cannon be otherwise modified or rescinded.

vii. UCC § 2-209(4) provides that a subsequent oral rescission or modification may operate as a waiver even though the attempt is otherwise precluded by the NOM clause under 2-209(2) or SOF requirements in 2-209(3).

viii. Wisconsin Knife Works v. National Metal Crafters1. Plaintiff contracted with defendant to provide raw materials

for the manufacture of spade bits. Plaintiff's purchase orders stated that a contract modification was not binding on plaintiff unless it was made in writing and signed by plaintiff. Defendant failed to deliver on time. Plaintiff issued new purchase orders and nearly two years later terminated the contract where only half of the purchase orders had been delivered. Plaintiff brought a breach of contract suit claiming that defendant violated the terms of delivery. The trial court gave jury instructions that the parties could modify the contract orally or by conduct. The court dismissed plaintiff's claims upon a jury verdict in defendant's favor. On review, the court reversed and remanded for a new trial, holding that where modification could only be effectuated in writing the jury instruction that modification could occur otherwise was erroneous. On remand, the trial court was free to consider the alleged waiver of delivery and damages.

2. The court reversed the trial court's entry of judgment in favor of defendant and remanded for a new trial where the jury instruction indicating that a modification of contract could occur in a manner other than by writing was erroneous where the contract indicated that modification could only occur by writing.

Chapter 8 – When an Enforceable Promise Becomes Due: Breach of Promise & Non-Satisfaction of Conditions

- A breach of contract is linked to any non-performance of a duty under that contract when the duty becomes due. R2K § 235(2)

o That duty is discharged when full or perfect performance is achieved. § 235(1)

A. Anticipatory Repudiationa. It is possible to breach a duty before it is due by repudiation – i.e. declaring

an intent not to perform before performance is due.b. A clear repudiation of a duty before it is due discharges the inured party’s

duty to perform and creates an immediate claim for total breach and damages at the time of the repudiation. R2K § 253(2) and (1)

c. The injured party does not waive the right to rely on repudiation even when urging the repudiating party to perform. R2K §§ 253, 256, 257. UCC §§ 2-610 and 2-611. CISG § 72(1).

d. R2K § 250 – repudiation includes statement by the obligor indicating intent to commit breach that would constitute total breach at the time of performance or voluntary conduct rendering obligor actually or apparently unable to perform.

e. If statements are unclear, the insecure obligee may have a right to seek or demand assurance that the obligor will perform when performance comes due. R2K § 251. UCC § 2-609

f. UCC § 2-610 requires that the repudiation “substantially impair the value of the contrat.”

g. Truman L. Flatt & Sons Co., Inc. v. Schupfi. Land contract where the buyer attempted to modify the price term

and when the seller rejected his proposed modification then elected to proceed with the original terms of the contract.

ii. Rule: A party may retract their repudiation unless the other party materially changed position in reliance on this repudiation or the other party indicates that he considers the repudiation final

iii. Hold: A repudiation must be clear and unequivocal. P’s letter to D seeking to modify the price term was not. No specific performance.

B. Conditional Promisesa. A condition is generally a fact that must occur before a promise becomes

due. R2K § 224b. The failure of the condition means the other party’s performance does not

become due, making breach legally impossible. R2K § 225(1)c. Duty is also discharged by the nonoccurrence of the condition. R2K § 225(2)d. The nonsatisfaction of the condition itself rarely constitutes a breach of

contract unless the party also promised to satisfy the condition. R2K § 225(3)

e. Express Conditionsi. Express conditions are created by the agreement of the parties, not

implied in law by a court. R2K § 226ii. Language and circumstances are interpreted to not create a

condition in order to reduce obligee’s control or the obligee has otherwise assumed the risk. § 227(1)

iii. If the event is within the control of the obligee, in cases of doubt come language and circumstances are interpreted to create a promise by the obligee that the event will occur, rather than to condition the obligor’s duty to perform. R2K § 227(2)

iv. Oppnheimer & Co., Inc. v. Oppenheim, Appel, Dixon & Co.1. Parties entered into a letter agreement setting forth certain

conditions precedent to the formulation and existence of a sublease between them. The agreement provided that there would be no sublease between the parties “unless and until” P delivered to D the prime landlord’s written consent to certain “tenant work” on or before a specified deadline. If the condition did not occur, the sublease would be null and void. P provided only oral notice on the specified date. Therefore substantial performance does not apply in this case.

2. Rule: A condition precedent is “an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises.

f. Ordering of Performancesi. Constructive Conditions for Simultaneous Exchanges

1. Where performances can be exchanged simultaneously, they are due simultaneously. R2K § 234(1)

2. Each party’s duty to perform is subject to an implied condition that the other party actually performs or offers to perform. R2K § 238

ii. Constructive Condition for Nonsimultaneous Exchange1. Where performances cannot be exchanged simultaneously

because one party’s performance takes time, the performance requiring time is due first. R2K § 234(2)

2. In a non-simultaneous exchange, the party’s performance due second is subject to an implied condition that the first party’s performance will not be materially defective. R2K § 237.

3. Where a party renders a materially defective performance, the defective performance does not discharge the other party’s duty to perform. Rather, the duty is suspended. R2K § 225(1)

a. This gives the defective party an opportunity to cure. R2K § 242

b. But when cure is no longer legally permissible, the suspended duty is discharged because the implied condition did not occur. R2K § 225(2)

iii. El Dorado Hotel Properties, Ltd. v. Mortensen1. The debtors had executed a promissory note and deed of

trust in connection with their purchase of a large piece of property. The agreements provided that upon payment of an installment of the note, a partial release of the property would be made. The time for payment was extended for five days. When the debtors conditioned their tendered payment on the recording of the release, the creditors refused the payments and instituted their collection and foreclosure action. The trial court granted summary judgment to the creditors and the debtors appealed. The court reversed and

remanded, holding that when a contract did not specify a time for performance, the performance was to be simultaneous. Therefore, it was an issue of fact whether the creditors had time to prepare the release so as to have it effective when the payment was tendered.

2. The court reversed the summary judgment, which found for the creditors in their collection and foreclosure action against the debtors. The court remanded for further proceedings.

g. Constructive Conditionsi. Courts, not the parties, imply constructive conditions to fulfill

reasonable but unexpressed intent of the parties and to promote fairness in the enforcement of otherwise unconditional promises. R2K § 226

ii. Jacobs & Youngs v. Kent1. P built a house for D. P was to install Reading pipe, but

inadvertently installed pipe that was not. D demanded a redo, but P refused. P sued.

2. Rule: The measure of damages for a trivial and innocent omission is not the cost of replacement, but the difference in value.

3. D is only entitled to the difference in price.h. Excuse, Waiver and Other Relief From Effect of Conditions

i. Doctrine of good faith.1. The parties must exercise good faith and fair dealing: (i) to

refrain from preventing or hindering the occurrence of the condition, and (ii) to take affirmative steps to cause its occurrence, at least when the occurrence is within the party’s control. R2K § 245.

ii. Doctrine of Waiver1. The party who benefits from the nonoccurrence of the

condition may waive its effect in most cases.2. All constructive conditions may be waived regardless of

materiality. R2K § 246iii. Doctrine of Forfeiture

1. R2K § 2292. Forfeiture implies a “denial of compensation that results

when the obligee loses his right to the agreed exchange after he has relied substantially, as by preparation or performance, on the expectation of that exchange.

iv. Holiday Inns of America, Inc. v. Knight1. Plaintiffs appealed from a summary judgment for defendants

in an action seeking a declaration that an option contract was still effective, despite late receipt of plaintiffs' payment. The court reversed, relying on Cal. Civ. Code § 3275, which provided relief from a loss in the nature of a forfeiture upon making full compensation to the other party, and was applicable to an option contract where the only relief sought was from the provision making time of the essence in tendering annual payments. Since defendants had not

suffered any injury justifying termination of the contract, none of their reasonable expectations had been defeated, and they would receive the benefit of their bargain, namely, the full price of the option, summary judgment was directed to be entered for plaintiffs.

2. Reversed with directions to enter summary judgment for plaintiffs in order to prevent a forfeiture on the option contract, since plaintiffs acted in good faith, defendants had received the benefit of their bargain, and suffered no damages.

Chapter 9 – Remedies for Breach of Contract- Restitution interest (R2K 344(c))

o Requires the party against whom restitution is sought to disgorge the value of any benefits received from the other party.

o Restitution (1) may provide an independent cause of action in equity for unjust enrichment, quasi-contract, or quantum meruit in the absence of a promise; (2) may provide a basis for enforcing an otherwise unenforceable promise under R2K § 86; and finally (3) may serve merely as one of several mechanisms to measure damages under R2K §§ 370-377

- Reliance interest (R2K § 344(b))o Attempts to compensate the nonbreaching party for expenditures made

in performing or preparing to perform that party’s obligation under the contract. See R2K § 349

- Expectancy interest (R2K § 344(a))o Attempt to compensate the nonbreaching party for the benefits lost by

reason of nonperformance of the contract.- Injured party has a right to damages for any breach. R2K § 346(1)- Even when a specific monetary loss cannot be proven or does not exist, a breach

will give rise to a claim for nominal damages.- Specific performance and an injunction will usually not be ordered where

monetary damages would be adequate to protect the expectation interest of the injured. R2K § 359(1)

A. Election of Contract Based Remediesa. A choice or election between equitable remedies and monetary damage

remedies must be recognized.B. Election to Seek Rescission and Restitution Damages Off the Contract

a. The goal of expectancy damages is to place the injured party in as good a position as if the contract had been performed. R2K § 344(1)(a)

i. Can’t place an injured party in a better positionb. Because of other losses such as consequential losses that may escalate the

expectancy losses far beyond the actual contract price, the contract itself is seldom a serious limitation on expectancy recovery. R2K § 347(b)

c. United States v. Algernon Blair, Inc.C. Election to Seek Damages on the Contract

a. The Expectancy Interest

i. The law normally protects expectancy interest by entering a judgment or order awarding the injured party a sum of money due under the contract or as monetary damages. R2K § 345(a)

ii. Where an injured party has fully performed, they usually get the contract price.

iii. A little more complicated when not fully performed.1. To simplify and systemize, if not calculation, the proper

measure of the expectancy interest is fragmented into several components. R2K § 347

iv. The injured party’s measure of the expectancy interest for total breach involves the following four factors:

1. Loss in value caused by the breaching party’s failure or deficiency.

2. Plus any other loss caused by the breach, including incidental and consequential losses

3. Less an cost avoided by not having to perform4. Less any loss avoided by not having to perform

v. Hawkins v. McGee1. Hawkins (P) underwent surgery to repair scar tissue on his

hand resulting from burns he sustained from contact with an electrical wire. Dr. McGee (D) gave Hawkins a 100% guarantee that he would be able to repair the scar tissue by grafting skin from his chest to his hand. The surgery was unsuccessful and Hawkins was left with a hairy hand. At trial, Hawkins sought damages for breach of contract due to McGee’s failure to perform including pain and suffering. The jury entered judgment for Hawkins but the judge ordered remittitur. Hawkins refused and brought this appeal.

2. Issue: How are damages determined for breach of contract?3. Hold: In this case, Hawkins was not entitled to damages for

pain and suffering because he would still have endured them had the procedure been successful. Hawkins was entitled to the difference between what he sought – a perfect hand, and what he received – a hairy hand. The plaintiff was also entitled to incidental losses resulting from the breach.

vi. American Standard, Inc. v. Schectman1. American Standard, Inc. (P) operated a pig iron

manufacturing plant on 26 acres of land abutting the Niagara River in Tonawanda. On the property were several buildings, a 60-ton blast furnace, railroad tracks and locomotives, and other heavy machinery. American Standard decided to close the plant and contracted with Schectman (D) to convey the buildings and equipment, in exchange for $275,000 and his promise to remove everything. Schectman promised to remove all foundations etc., including those beneath the surface and not visible, and grade the property as specified. D failed to perform and P brought suit and was awarded $90,000. D appealed.

2. Issue: What is the measure for damages in the beach of a construction contract?

3. Hold: The general rule of damages for breach of a construction contract is that the injured party may recover those damages which are the direct, natural, and immediate consequence of the breach and which can reasonably be said to have been in the contemplation of the parties when the contract was made. That the fulfillment of defendant’s promise would add little or nothing to the sale value of the property does not excuse the default. The rule that the measure of P’s damage is the cost of completion is not altered by the mere fact that the burden of performance was heavier than anticipated, and the cost of completion disproportionate to the end to be obtained. Affirmed.

b. The Reliance Interest Alternativei. As an alternative to the expectancy interest recovery, the injured

party is entitled to damages based on the reliance interest, including expenditures made in preparation for performance. R2K § 349

1. May be reduced by any loss that the breaching party can prove with reasonable certainty the injured party would have suffered had the contract been fully performed. § 349

ii. Walser v. Toyota Motor Sales, U.S.A., Inc.1. A car dealer was mistakenly told that he was approved to be

a Lexus dealer and in reliance on this promise, his father bought property for the new dealership.

2. Issue: Is it proper to limit the damages in a promissory estoppel claim to out-of-pocket expenses?

3. Held: Yes. Judgment affirmed. The court held that relief may be limited to the party’s out-of-pocket expenses made in reliance on the promise.

c. Limitations on the Expectancy and Reliance Interestsi. Foreseeability Limitation

1. Damages are not recoverable for loss that the breaching party did not have reason to foresee as a probably result of the breach. R2K § 351(a)

2. Hadley v. Baxendale (Good law in Minnesota)a. Plaintiffs operated a mill, and a component of their

steam engine broke causing them to shut down the mill. Plaintiffs then contracted with Defendants, common carriers, to take the component to W. Joyce & Co. to have a new part created. When delivery was delayed due to Defendants’ neglect, causing Plaintiffs’ mill to remain closed longer than expected, Plaintiffs sued to recover damages.

b. The damages to which a nonbreaching party is entitled are those arising naturally from the breach itself or those that are in the reasonable contemplation of the parties at the time of contracting.

c. No. A nonbreaching party is entitled damages arising naturally from the breach itself or those that are in

the reasonable contemplation of the parties at the time of contracting.

d. Hadley 1 damages: General damages – e. Hadley 2 damages: damages not directly related to

the contract. Recoverable if and only if they are reasonably foreseeable to the breaching party at the time the contract was signed.

3. Florafax International, Inc. v. GTE Market Resources, Inc.a. Part of Florafax’s recovery was for developing a

service to replace GTE as out of pocket expenses.ii. Mitigation Limitation

1. Rockingham County v. Luten Bridge Co.2. Parker v. Twentieth Century-Fox Film Corp.

iii. Certainty Limitation1. R2K § 352 provides that “damages are not recoverable for

loss beyond an amount that the evidence permits to be established with reasonable certainty.

2. A-S Development, Inc. v. W.R. Grace Land CorporationsD. Equitable Alternatives When Monetary Damages are Inadequate

a. Inadequate Monetary Remedyi. Sedmak v. Charlie’s Chevrolet, Inc.

1. Plaintiffs sued defendant on a contract for the purchase of a car. The trial court ordered defendant to specifically perform on the contract. Defendant contended that (1) the existence of an oral contract was not supported by the credible evidence; (2) if an oral contract existed, it was unenforceable because of the Statute of Frauds; and (3) specific performance was an improper remedy because plaintiffs did not show their legal remedies were inadequate. The court affirmed, holding that failure to specify the selling price did not render the contract void or voidable. As long as the parties agreed to a method by which the price was to be determined and as long as the price could be ascertained at the time of performance, the price requirement for a valid and enforceable contract was satisfied. The court held that because there was no dispute as to quantity, part payment for a single indivisible commercial unit removed the oral contract from the Statute of Frauds. The court held further that plaintiffs had no adequate remedy at law and, thus, were entitled to specific performance.

2. The court affirmed, holding that (1) failure to specify the selling price did not render the contract void or voidable; (2) because there was no dispute as to quantity, part payment for a single indivisible commercial unit removed the oral contract from the Statute of Frauds; and (3) plaintiffs had no adequate remedy at law and, thus, were entitled to specific performance.

b. Personal Service Contractsi. Lumley v. Wagner

1. Lumley (P) contracted with Wagner (D) for her to sing at Lumley’s theater for three months. Under the contract, Wagner promised not to perform at other theaters while under the contract without written consent. The defendant subsequently arranged to sing at Gye’s theater for more money.

2. Lumley sued and sought an injunction preventing Wagner from performing at other theaters. The trial court granted injunctive relief for the plaintiff and Wagner appealed.

3. Yes. Injunctive relief can be used to enforce a promise not to render personal services.

E. Remedies Specified or Modified by Contracta. Remedies Specified by Contract

i. Bd. Of Co. Comm. Of Adams Co. v. City & Co. of Denver1. Defendant city and plaintiff cities entered into an

Intergovernmental Agreement (IGA) concerning a new airport. Defendant promised to operate the airport within maximum noise levels called noise exposure performance standards (NEPS). If these noise levels were exceeded and not cured as provided by the IGA, then defendant would compensate plaintiffs with noise mitigation payments. The noise levels were exceeded, and plaintiffs brought suit. The noise mitigation payment provision was enforceable as a valid liquidated damages clause. The provision was not so disproportionate on its face as to constitute a penalty. The liquidated damages were a reasonable estimate of the presumed actual damages. Plaintiffs suffered actual injury, and they had standing to sue. There was no error in the trial court's finding that NEPS compliance was not impossible. Prejudgment interest was properly awarded. The trial court did not err in compensating plaintiffs for only one contour violation per year.

2. Judgment was affirmed. Trial court's determination that evidence satisfied the elements required for a valid liquidated damages clause was supported by the record. Plaintiffs' zoning regulations fully complied with the IGA. The IGA permitted only one noise contour violation per year.

3. Predicates for a valid liquidated damages clause:a. At the time the contract was entered into, the

anticipated damages in case of breach were difficult to ascertain.

b. Parties mutually intended to liquidate them in advance

c. The amount of liquidated damages, when viewed as of the time the contract was made, was a reasonable estimate of the potential actual damages the breach would cause.

b. Remedies Modified by Contracti. Schrier v. Beltway Alarm Company

1. Pursuant to a contract to provide alarm to the husband and wife's liquor store, the husband and the alarm company entered in to a maintenance agreement. The contract limited the liability of the company in the event of a breach or negligence by the company. The husband alleged that that he had activated two alarm buttons during the robbery, but prior to the shooting, asserting that the company delayed 14 minutes in notifying the police of the alarm and but for the delay he would not have been shot. The trial court, holding the limitation clause valid, entered summary judgment for the company for claims in excess of that amount and dismissed the claim pursuant to § 4-402 for lack of subject matter jurisdiction because the amount in controversy was less than $ 500. The husband and wife argued that the liquidated damage clause of the contract was invalid and that the limitation of liability clause was void as a matter of public policy. The court held that the parties' contract was valid and binding on the husband and wife because the parties reached a commercially sensible arrangement. The court noted that the parties were not in an unequal bargaining position.

2. The court affirmed the trial court's order, which granted summary judgment to the alarm company.

ii. Cayuga Harvester, Inc. v. Allis –Chalmers Corporation1. Plaintiff's action against defendants for breach of express

warranties, implied warranty of merchantability, implied warranty of fitness for purpose, and fraud was dismissed by the lower court. On appeal, the court held that plaintiff had made a prima facie showing that the limited remedy failed of its essential purpose. The court held that plaintiff had offered no good reason why the consequential damage exclusion clause should not have been given effect because the failure of the repair and the replacement warranty was not due to bad faith or willfully dilatory conduct. Although plaintiff could not recover consequential damages, it would, if successful at trial, have been entitled to other damages. The court held that plaintiff was not placed in a bargaining position where it lacked a meaningful choice. Plaintiff's pecuniary loss resulting directly from defendant's wrongful conduct could have been recovered in cause of action for fraud.

2. The court modified the order of the trial court and, as modified, affirmed the order. Plaintiff had made a prima facie showing that the limited remedy failed of its essential purpose. Plaintiff had offered no good reason why a consequential damage exclusion clause should not have been given effect, and plaintiff's pecuniary loss resulting directly from defendant's wrongful conduct could have been recovered in a cause of action for fraud.

F. UCC Buyer and Seller Remediesa. Buyer’s Remedies

i. Delivery of Non-Conforming Goods – The “Perfect Tender Rule” Versus Damages for Loss in Value

ii. Buyer Monetary Damages for Seller Breach1. Dangerfield v. Markel

iii. Seller’s Remedies – UCC § 2-708 and the “Lost Volume Seller” Rule1. R.E. Davis Chemical Corp. v. Diasonics, Inc.

Chapter 10 – Rights and Duties of Persons Not Actual Parties to the ContractA. Third Party Beneficiaries

a. Restatement Positions Comparedb. The Problem of Incidental Beneficiaries and Government Contracts

i. Martinez v. Socoma Companies, Inc.B. Assignments and Delegation

a. Assignment of Contract Rightsi. Herzog v. Irace

b. Delegation of Contract Dutiesc. Assignment of Entire Contract

i. Sally Beauty Co. v. Nexxus Products Co.