Contract Law

Rules, Cases & Problems

Second Edition

TEACHER’S MANUAL

Seth C. Oranburg

Professor of Law

University of New Hampshire Franklin Pierce School of Law

Director, Program on Organizations, Business, and Markets

The Classical Liberal Institute at NYU School of Law

Welcome

Welcome to the Teacher’s Manual for Contract Law: Rules, Cases, and Problems, Second Edition. I wrote this manual with one goal in mind: to make teaching contracts easier and more effective for you. Whether you’re new to teaching the course or have been in the trenches for years, this manual is here to support you. It’s designed to help you prepare for class efficiently, engage students effectively, and adapt the material to fit your teaching style.

The structure of this manual is organized into four parts, plus appendices, each designed to serve a distinct purpose in your course preparation:

Part I: Course Planning Guide. Offers suggestions for structuring a four-, five-, or six-credit course and provides options for in-person, hybrid, and online teaching. It includes guidance on using the 1,774-slide deck system that accompanies the casebook, with pacing recommendations for different formats and credit hours. If you’re mapping out your semester or adjusting to a new format, this section is a good place to start.

Part II: Chapter-by-Chapter Lesson Plans. The heart of the manual. Each lesson plan follows the corresponding chapter in the casebook and is meant to give you a clear roadmap for class. The plans include key learning objectives, discussion ideas, suggestions for using Socratic questioning or other methods, and specific slide deck integration with module breakdowns. They also highlight common student misunderstandings so you can anticipate where they might struggle. These are not scripts—they’re flexible guides that you can adapt depending on your teaching style and how your students respond to the material.

Part III: Case Briefs. Provides summaries of the major cases in the book, giving you quick access to key facts, rules, and reasoning. Each brief is cross-referenced to the corresponding lesson plan and slide deck. These are written with the classroom in mind, offering insights into how each case fits into the broader doctrine and how students might engage with it.

Part IV: Problem Solutions. Walks through model answers for the problems in the casebook, using the IRAC method—Issue, Rule, Application, and Conclusion. Instead of just giving the right answer, the solutions emphasize the reasoning process, helping students build strong legal analysis skills. If a problem has multiple possible interpretations, those are flagged so you can guide students through different angles of argument.

I’ve created a podcast that aligns with the casebook’s chapters to provide additional resources for students outside of class. Each episode tackles specific contract law topics, offering real-world examples and expert interviews that help bring the content to life. Instructors can assign episodes to complement reading assignments, or use them as discussion starters in class. You may also enjoy listening to the podcasts as a way to prepare yourself for class. The podcast is available via any of the following links (note that links are case sensitive):

+———————–+———————–+———————–+ | Apple Podcasts | YouTube | Other Platforms | | | | | | bit.ly/OrganizedApple | bit.ly/OrganizedYT | bit.ly/OrganizedPB | +=======================+=======================+=======================+

This manual is meant to be a teaching tool, not just a set of answers. It is structured to be useful whether you’re prepping for class, looking something up during discussion, or reviewing student work. It assumes you’ll bring your own teaching style and experience to the table and that you might not use every section in the same way or in the same order. That’s intentional. Take what works for you and leave the rest.

Contracts is a course that can feel technical and abstract at times, but at its core, it’s about people, their agreements, and the promises that shape their lives. The best classes are the ones where students start to see that for themselves. This manual is here to help you get them there.

How to Use This Manual

This manual is organized into four parts and a set of appendices, each designed to be used independently or in combination. You do not need to read it front to back—instead, use whatever section helps you most for the task at hand.

Quick Reference Guide

If you need to… Go here ——————————————– ————————————————————————————- I’m mapping out my semester. Start with Part I: Course Planning Guide.

I’m prepping for tomorrow’s class. Go to Part II: Lesson Plans for the relevant chapter.

I need to refresh on a case before class. Check Part III: Case Briefs for a quick summary.

I need the model answer for a problem. See Part IV: Problem Solutions for the IRAC-structured response.

I want to know which slides cover a topic. Each lesson plan in Part II includes module breakdowns with slide ranges.

I’m adapting this for a 4-credit course. See Appendix A for credit-hour customization and Appendix B for sample syllabi.

I’m teaching online or hybrid. See Part I for format guidance and Appendix D for online teaching strategies. ———————————————————————————————————————————-

Cross-References

Throughout this manual, cross-references connect the four parts. Each lesson plan in Part II includes references to the corresponding case briefs in Part III, the problem solutions in Part IV, and the specific slide ranges in the accompanying slide decks. Each case brief in Part III references back to the lesson plan and slides. Each problem solution in Part IV references the lesson plan and case briefs. This interconnected structure means you can start anywhere and navigate to related materials quickly.

The Slide Deck System

This edition of the casebook is accompanied by 1,774 slides across 28 chapter decks, built on an atomic concept model—one idea per slide, maximum fifteen words—grounded in cognitive load theory and dual coding research. You do not need to use the slides at all; the casebook and this manual stand on their own. But if you do use them, Part I includes a detailed section on how to integrate them effectively, and every lesson plan in Part II maps its content to specific slide modules.

Two companion instructor resources are also available: a Quick Start Guide (9 slides) for faculty who want to begin using the decks immediately, and a Deep Dive Manual (40 slides) for those who want to understand the full pedagogical framework.

Table of Contents

PART I: COURSE PLANNING GUIDE

Credit Hours and Pacing

How to Adapt to Different Teaching Formats

Structuring Your Semester

Using the Slide Decks Effectively

How to Use the Lesson Plans

How to Use the Case Briefs

How to Use the Problem Solutions

How to Use the Additional Resources

Getting Started

PART II: CHAPTER-BY-CHAPTER LESSON PLANS

Chapter 1: Introduction to Contract Law (60 slides)

Chapter 2: What Is a Contract? (68 slides)

Chapter 3: Mutual Assent (73 slides)

Chapter 4: Offers (65 slides)

Chapter 5: Termination of the Offer (60 slides)

Chapter 6: Acceptance (64 slides)

Chapter 7: Consideration (70 slides)

Chapter 8: Promissory Estoppel (58 slides)

Chapter 9: Promissory Restitution (56 slides)

Chapter 10: The Statute of Frauds (71 slides)

Chapter 11: Mistake (60 slides)

Chapter 12: Improper Bargaining (64 slides)

Chapter 13: Incapacity (56 slides)

Chapter 14: Introduction to Interpretation & Ambiguity (60 slides)

Chapter 15: Intrinsic Evidence & Canons of Construction (68 slides)

Chapter 16: Extrinsic Evidence (60 slides)

Chapter 17: The Parol Evidence Rule (60 slides)

Chapter 18: Warranties (71 slides)

Chapter 19: Conditions (73 slides)

Chapter 20: Performance and Breach (64 slides)

Chapter 21: Repudiation (62 slides)

Chapter 22: Excuse (64 slides)

Chapter 23: Modification and Discharge (60 slides)

Chapter 24: Expectation Damages (73 slides)

Chapter 25: Defective Performance (60 slides)

Chapter 26: Limits on Damages (60 slides)

Chapter 27: Alternative Remedies (58 slides)

Chapter 28: Third-Party Beneficiaries (56 slides)

PART III: CASE BRIEFS

Case Briefs by Chapter (Chapters 1–28)

Alphabetical Table of Cases

PART IV: PROBLEM SOLUTIONS

Problem Solutions by Chapter (Chapters 2–28)

APPENDICES

Appendix A: Customizing Lesson Plans for Different Credit Hours and Modalities

Appendix B-1: Sample Syllabus — Four-Credit, One-Semester Course

Appendix B-2: Sample Syllabus — Five-Credit, Two-Semester Course

Appendix B-3: Sample Syllabus — Six-Credit, Two-Semester Course

Appendix C: Assessment Strategies

Appendix D: Teaching Contract Law Online

About the Casebook

Contract Law: Rules, Cases, and Problems, Second Edition, is designed to be the most flexible and faculty-friendly contracts casebook on the market. It supports traditional case-law-driven classrooms, rule-based doctrinal approaches, problem-based learning, and any combination of these methods. Faculty do not have to commit in advance to one pedagogical approach, because the book is designed to support multiple methods, multiple class structures, and multiple ways of engaging with the material.

The Textbook

The casebook covers 28 chapters spanning the full arc of contract law: formation (Chapters 1–10), defenses (Chapters 11–13), interpretation (Chapters 14–18), performance and breach (Chapters 19–23), and remedies (Chapters 24–28). Each chapter includes principal cases, explanatory text, and practice problems. A statutory supplement keyed to the book includes the UCC and Restatement (Second) of Contracts.

The Slide Decks

Twenty-eight chapter slide decks (1,774 slides total) accompany the casebook. Each deck uses an atomic concept model—one idea per slide, maximum fifteen words—designed to minimize cognitive load and maximize student engagement. Built-in retrieval practice prompts appear every six to eight slides. The decks are modular, allowing faculty to use them in whole or in part.

The Podcast

A podcast series aligned with the casebook’s chapters provides additional resources for students outside of class. Each episode tackles specific contract law topics with real-world examples and expert interviews. Faculty can assign episodes to complement reading assignments, use them as discussion starters, or recommend them as supplemental study materials.

Recorded Lectures and Scripts

A library of over 200 recorded video lectures is available, along with lecture scripts that faculty can use to record their own materials. This is particularly valuable for faculty teaching online or hybrid courses who want structured content without building everything from scratch.

Multiple-Choice Questions

With the purchase of the casebook, students gain access to multiple-choice questions via the Carolina Academic Press Core Knowledge platform. This resource provides instant feedback and is useful for knowledge checks, assessment, and exam preparation.

This Teacher’s Manual

This manual provides lesson plans, case briefs, problem solutions, and course planning guidance, all cross-referenced to the slide decks and to each other. It is designed to save faculty preparation time while supporting a wide range of teaching styles and course formats.

At a Glance: The Complete Resource Ecosystem

Resource Description Best For ———————————- ————————————————————— ————————— Casebook (28 chapters) Cases, explanatory text, problems, statutory supplement All formats

Teacher’s Manual Lesson plans, case briefs, problem solutions, course planning Faculty preparation

Slide Decks (1,774 slides) Atomic concept model, modular, retrieval practice built in In-person, hybrid, online

Quick Start Guide (9 slides) Concise implementation guide for the slide decks New adopters

Deep Dive Manual (40 slides) Full pedagogical framework and customization strategies Advanced customization

Podcast Chapter-aligned episodes with real-world examples Pre-class, supplemental

Recorded Lectures (200+) Video lectures plus scripts for faculty recording Online, hybrid, flipped

Core Knowledge Platform Multiple-choice questions with instant feedback Assessment, engagement ——————————————————————————————————————————

Whatever approach you take, this manual and its companion resources are here to help. Whether you use them as a structured guide for your first semester, a quick reference for case summaries and problems, or a starting point for developing your own materials, you have everything you need to make this course effective, engaging, and tailored to your teaching style.

Contract Law: Rules, Cases & Problems

Second Edition

Teacher’s Manual

PART I: COURSE PLANNING GUIDE

With Slide Deck Integration

Seth C. Oranburg

Professor of Law, University of New Hampshire Franklin Pierce School of Law

PART I: COURSE PLANNING GUIDE

Every professor approaches teaching contracts a little differently, and that’s exactly as it should be. This manual isn’t here to dictate how to structure your course—it’s here to make that process easier by providing a flexible framework you can adjust to fit your teaching style, credit hour requirements, and classroom format. Whether you’re teaching a four-, five-, or six-credit course, whether your students are in-person, online, or a mix of both, the key is making intentional choices about pacing and emphasis. This guide will help you think through those decisions so you can build a class structure that works for you and your students.

This edition of the Course Planning Guide includes full integration with the 1,774-slide deck system that accompanies the casebook. Each chapter’s slide deck follows an atomic concept model—one idea per slide, maximum fifteen words—designed to minimize cognitive load and maximize student engagement. Whether you use the slides as your primary teaching tool, as student study aids, or as a framework for structuring your own lectures, this guide explains how they fit into your course.

Credit Hours and Pacing

If you follow the lesson plans in this Teacher’s Manual, you’ll be on track for an excellent six-credit course. That’s what it’s designed for—full coverage of all the major doctrines, deep engagement with case law, time to let students work through problems, and space for broader discussions about policy, theory, and application. A six-credit course allows students to not just learn contract law, but to sit with it, wrestle with it, and internalize how it actually works.

Not everyone gets six credits. More and more, schools are moving toward four-credit contracts courses, which means making choices. This manual is designed to help you make smart cuts so that even if you’re working with less time, your students still walk away with a solid foundation.

If you are one of the lucky few who has more than six credit hours of Contract Law, I recommend assigning more practice problems and working through some of them in class. There is more than enough content in this book to justify eight credit hours or more if you use everything.

There are really two ways to approach a four-credit course. One way is to keep the breadth and streamline the depth, covering all the major topics but moving efficiently through cases, limiting time spent on broader discussions, and assigning fewer in-class problems. The other way is to cut some topics entirely and take a more in-depth approach to what remains, giving students a deeper but more selective dive into contract law.

In my own four-credit course, I maintain breadth because I want students to get exposure to everything they might need for later, whether for the bar, for practice, or just for a well-rounded understanding of contract law. That means I teach every chapter but I don’t necessarily teach every case, and I rarely assign problems in class. Instead, I assign a limited selection of problems as homework and use class time to focus on doctrine and case analysis.

If you’re thinking about cutting breadth rather than depth, it helps to think about which topics are foundational, which are useful but secondary, and which are valuable but time-consuming.

Topic-by-Topic Pacing Guidance

Formation is core—there’s no getting around mutual assent, consideration, promissory estoppel, and the statute of frauds. If you need to streamline anywhere in formation, you might spend less time on promissory restitution, which is interesting but not as central as consideration and estoppel.

Interpretation is where things get complicated. Contract interpretation is arguably one of the most useful real-world skills a lawyer learns in contracts, but it’s also inherently subjective, which makes it difficult to teach efficiently. If you’re short on time, you might focus on the parol evidence rule itself—which courts apply with relative consistency—and spend less time on the broader art of interpretation.

Performance and breach can be streamlined by focusing on substantial performance and material breach as core concepts, while spending less time on specific doctrines like divisibility unless you have the room for them. The UCC’s perfect tender rule makes for an excellent contrast to common law substantial performance, and even if you don’t have time to teach the UCC extensively, students benefit from at least seeing how it differs from traditional common law rules.

Defenses are important, but there’s a lot of material here, and it’s worth thinking about where to spend time. Most students understand fraud, misrepresentation, and duress pretty intuitively, so you might be able to move through those more quickly. Unconscionability is always a great discussion topic, but if time is tight, it might be best handled as an overview rather than a deep dive into every case.

Remedies is another place where choices have to be made. Expectation damages, reliance damages, and restitution are must-teach doctrines. Specific performance and equitable remedies are important but can often be streamlined, especially if students have already been introduced to the general idea that money damages are the default remedy in contract law.

The UCC presents its own set of challenges. If time is tight, one way to introduce students to UCC concepts without devoting weeks to it is to pair UCC rules with their common law counterparts. Firm offers can be taught alongside regular offer and acceptance. The battle of the forms can be introduced when covering acceptance, rather than as its own unit. And perfect tender can be taught as a contrast to common law performance and breach.

Ultimately, the way you structure a four-credit course depends on your priorities. If you want students to be bar-ready, then it makes sense to maintain full breadth and move efficiently. If you want students to develop a more sophisticated understanding of fewer key areas, then cutting some topics in favor of deeper discussions makes sense. There’s no one right way to do it—just trade-offs that have to be made.

This manual is structured to help you no matter which approach you take. If you’re teaching six credits, it provides everything you need for full coverage. If you’re teaching four, it helps you make thoughtful choices about where to focus.

Slide Deck Pacing by Credit Hours

The slide decks provide a built-in pacing mechanism. Each chapter’s lesson plan identifies modules as “essential for all credit hours” or “optional for expanded coverage,” so you can quickly identify what to include or skip based on your course format.

                       50-Minute Classes                           75-Minute Classes   ------------------------ ------------------------------------------- -------------------------------------------   **Slides per session**   20--30 slides                               30--40 slides

4-credit course ~56 sessions, focus on essential modules ~38 sessions, focus on essential modules

5-credit course ~70 sessions, most modules ~47 sessions, most modules

6-credit course ~84 sessions, all modules ~56 sessions, all modules —————————————————————————————————————-

These estimates vary with topic complexity. Simple definitional content moves faster; Socratic case analysis and damages calculations move slower. The lesson plans in Part II include specific pacing guidance for each chapter.

How to Adapt to Different Teaching Formats

The way you teach contracts depends on your format, and each format comes with trade-offs. In-person classes allow for real-time discussion and direct engagement, but they require careful structuring to make sure students stay on track. Online teaching demands more intentionality in course design, since students don’t automatically absorb the back-and-forth of a live classroom. Hybrid teaching combines both, which gives you flexibility, but only if you plan carefully so that the two modes reinforce rather than repeat each other.

This Teacher’s Manual is designed to work in any format. More importantly, it’s built to give you options, so you can decide how much you want to build from scratch and how much you want to use pre-existing resources to save time.

Teaching Contracts In-Person

For an in-person course, the biggest challenge is balancing discussion, explanation, and problem-solving while keeping students engaged. Some instructors take a pure Socratic approach, questioning students on cases, doctrine, and reasoning before stepping in to summarize. Others prefer a hybrid model, blending Socratic questioning with structured lectures or problem-solving exercises.

No matter the approach, one of the easiest ways to free up class time is to offload some of the basic doctrine and case law explanations to pre-class assignments—which is where recorded lectures and podcast episodes can be useful. If students watch a short video or listen to an audio explanation before class, that allows class time to be more focused on discussion, analysis, and deeper engagement rather than repeating what they could have learned on their own.

Slide Deck Tip: In-person instructors can use the chapter slide decks as a visual backbone for Socratic discussion. The atomic concept design (one idea per slide) provides natural stopping points for questioning. Advance one slide, pose a question, discuss, then move to the next concept.

Teaching Contracts Online

The biggest challenge in an online course—especially if it’s asynchronous—is making sure students stay engaged and actually absorb the material, rather than just passively reading the casebook. Without a structured back-and-forth discussion, students can feel like they’re just working through the course alone, and it’s easy for them to fall behind.

That’s why having a structured sequence for each topic is key. A good asynchronous course shouldn’t just be a reading list—it should build understanding in steps. A strong asynchronous module for any given topic might look something like this:

1. Start with a short recorded lecture or podcast episode that introduces the topic and frames the key issues.

2. Assign the relevant readings—cases, UCC provisions, Restatement sections—so that students can connect the material to primary sources.

3. Give students an interactive task—a discussion board, a problem set, or a short written reflection—to make them process what they’ve learned.

4. Provide a model answer or feedback opportunity so students can check their understanding.

For faculty who need a structured online course fast, this Teacher’s Manual already ties each lesson plan to a publicly available lecture, meaning you don’t need to script, record, and edit your own videos unless you want to. With minimal effort, you can create a fully online contracts course by linking out to the existing materials in each module.

Slide Deck Tip: For asynchronous courses, the slide decks can be posted as self-study materials alongside the casebook readings. Students can work through slides at their own pace, and the built-in retrieval practice prompts (every 6–8 slides) ensure active engagement even without an instructor present.

Teaching Contracts in a Hybrid Format

Hybrid teaching requires more planning because you have to decide what belongs in the classroom and what belongs online. The best hybrid courses aren’t just half in-person, half online—they’re structured so that the two formats complement each other rather than repeating the same material in both settings.

One of the best ways to make hybrid contracts work is to move content delivery online and use in-person time for discussion, problem-solving, and application. Instead of using class time for basic lectures on doctrine, students can watch a video or listen to a podcast episode beforehand, then come to class ready to work through cases and problems together.

The biggest mistake in hybrid courses is using in-person time as review rather than engagement. If students feel like class is just repeating what they already watched online, they check out. Hybrid courses work best when online components deliver the basics and in-person sessions push students to apply and analyze.

Slide Deck Tip: In hybrid courses, post the slide decks online as pre-class preparation. Students arrive having seen the core concepts visually, freeing class time for deeper Socratic engagement and case analysis.

How to Use These Resources to Save Time

The reality is that shifting to online or hybrid teaching from a traditional in-person course is an enormous time investment—but it doesn’t have to be. The materials provided with this casebook are designed to make that transition smoother, so faculty don’t have to spend hundreds of hours scripting, recording, and structuring a new course from scratch.

If you’re moving online in a pinch, you can simply use the linked lectures and podcasts in each lesson plan and build a fully structured asynchronous course almost immediately. If you want a bit more customization, you can pull from the library of over 200 videos to build a course that fits your approach. If you want to take ownership of the lecture component but don’t want to script everything from the ground up, you can use the provided scripts to record your own materials, either as-is or with modifications.

The point is, you don’t have to reinvent the wheel. Whether you need a turnkey solution, a starting point to build from, or just a few supplemental materials, this book is all about flexibility and making your life easier.

Structuring Your Semester

One of the biggest challenges in teaching contracts—especially if you’re working with fewer credit hours—is figuring out how to pace the material over the course of the semester. Some topics need more time than others, and some can be streamlined or shifted to homework without losing too much depth. The key is balancing doctrine, cases, and application in a way that keeps students engaged while ensuring they come away with a solid understanding of contract law.

Most contracts courses break down into three major phases: formation, enforcement, and remedies. The first third of the semester is usually devoted to formation—offer, acceptance, and consideration, along with promissory estoppel and the statute of frauds. This is where students start building their contract law foundation, so it’s worth spending time making sure they truly understand how agreements come together.

After that, the focus shifts to performance and enforcement—interpretation, conditions, breach, defenses, and excuse. This is where contract law gets messier, because it’s no longer just about whether a deal was made, but what that deal actually means and how the law enforces it. Students start seeing how courts navigate gaps, ambiguities, and failures in agreements, and how contract law balances flexibility with predictability. This middle section tends to take the most time because it’s where so many disputes arise.

The semester usually wraps up with remedies—expectation damages, reliance, restitution, and the question of when specific performance might be appropriate. Remedies are critical because they tie everything together. It’s one thing to learn how contracts are formed and enforced, but at the end of the day, clients want to know: What happens if the other side doesn’t follow through?

Recommended Semester Structure

Phase Chapters Slides 6-Credit 4-Credit ——————– ———— ——— —————- —————- Formation 1–10 645 ~5 weeks ~4 weeks

Defenses 11–13 180 ~2 weeks ~1.5 weeks

Interpretation 14–18 319 ~3 weeks ~2 weeks

Performance 19–23 323 ~3 weeks ~2.5 weeks

Remedies 24–28 307 ~3 weeks ~2.5 weeks

Review — — ~1 week ~0.5 weeks —————————————————————————–

No matter how you structure it, one thing to keep in mind is where students tend to struggle. The biggest conceptual hurdles usually come in three places: consideration (which is an unintuitive and new concept for most students) and alternatives to consideration, interpretation and the parol evidence rule, and expectation damages (especially if math is involved). These are topics where students often need more time to work through cases and problems, so even if you need to move quickly elsewhere, it helps to build in extra class time or discussion opportunities around these tricky areas.

As we go through the lesson plans, we’ll flag what to prioritize for a four-credit course and what can be trimmed or moved to homework. That way, you can adjust your pacing while keeping the core structure of the course intact.

Using the Slide Decks Effectively

This casebook is accompanied by 1,774 slides across 28 chapter decks, designed using an atomic concept model grounded in cognitive load theory and dual coding research. Each slide presents one idea in fifteen words or fewer, ensuring that students process concepts incrementally rather than being overwhelmed by dense visual information.

You do not need to use the slides at all—the casebook and this manual stand on their own. But if you do use them, understanding their design will help you get the most out of them.

Design Principles

Atomic Concepts: One idea per slide, maximum fifteen words. Students process one concept before encountering the next.

Progressive Disclosure: Complex doctrines are broken into sequential steps, building from simple definitions to nuanced application.

Retrieval Practice: Built-in review prompts appear every six to eight slides, asking students to recall material before moving forward.

Dual Coding: Visual design complements verbal instruction. The Catholic Blue (#0A3255) background with white text and yellow (#FFD65C) emphasis creates a consistent, high-contrast reading environment.

Modular Structure: Each chapter’s deck is divided into modules of fifteen to twenty-five slides, corresponding to natural teaching segments.

Companion Instructor Resources

Quick Start Guide (9 slides): A concise implementation guide for faculty who want to start using the slides immediately. Covers basic setup, pacing, and integration with the casebook.

Deep Dive Manual (40 slides): A comprehensive pedagogical framework explaining the research behind the slide design, advanced customization strategies, and detailed pacing guidance for different course formats.

Five Ways to Use the Slides

1. As your primary lecture tool. Project slides during class and use them as the backbone of your presentation. The atomic design provides natural stopping points for Socratic questioning—advance one slide, pose a question, discuss, then move to the next concept. This approach works especially well for faculty who prefer structured coverage of doctrine.

2. As a discussion framework. Keep slides on screen as visual anchors while leading case-based discussion. Students can reference the doctrinal summary on screen while you push them into deeper analysis of the case law. This bridges the gap between lecture and Socratic method.

3. As pre-class preparation. Post slide decks online before class. Students review the core concepts visually, then arrive in class ready for deeper engagement. This is particularly effective in hybrid courses and flipped classrooms.

4. As student study aids. Make the decks available as review materials. The progressive disclosure design and built-in retrieval prompts make them effective self-study tools, especially before exams.

5. As a course-building framework. Even if you never display a slide to students, the module structure in each deck provides a ready-made outline for organizing your own lectures and discussions. The lesson plans in Part II map directly to these modules.

Complete Slide Inventory

Chapter Slides Chapter Slides Chapter Slides ———————————— ——— —————————————————- ——— ———————————– ——— Ch 1: Introduction to Contract Law 60 Ch 11: Mistake 60 Ch 21: Repudiation 62

Ch 2: What Is a Contract? 68 Ch 12: Improper Bargaining 64 Ch 22: Excuse 64

Ch 3: Mutual Assent 73 Ch 13: Incapacity 56 Ch 23: Modification and Discharge 60

Ch 4: Offers 65 Ch 14: Introduction to Interpretation & Ambiguity 60 Ch 24: Expectation Damages 73

Ch 5: Termination of the Offer 60 Ch 15: Intrinsic Evidence & Canons of Construction 68 Ch 25: Defective Performance 60

Ch 6: Acceptance 64 Ch 16: Extrinsic Evidence 60 Ch 26: Limits on Damages 60

Ch 7: Consideration 70 Ch 17: The Parol Evidence Rule 60 Ch 27: Alternative Remedies 58

Ch 8: Promissory Estoppel 58 Ch 18: Warranties 71 Ch 28: Third-Party Beneficiaries 56

Ch 9: Promissory Restitution 56 Ch 19: Conditions 73

Ch 10: The Statute of Frauds 71 Ch 20: Performance and Breach 64
———————————————————————————————————————————————————–

Total: 1,774 slides | Average: 63.4 slides per chapter

How to Use the Lesson Plans

Every professor approaches contracts differently, and this Teacher’s Manual is built to meet you wherever you are. Some instructors like to follow a structured plan from start to finish, while others prefer to mix and match, pulling what they need and leaving the rest. However you teach, the lesson plans in this manual are designed to save you time and give you a solid foundation for class preparation, whether you’re running a Socratic-heavy class, giving more structured lectures, or taking a hybrid approach.

These lesson plans are also designed with compliance in mind, so if you need to get a course up and running quickly, you don’t have to struggle to reinvent the wheel. The learning objectives at the start of each plan aren’t just a useful way to clarify what students should take away from a given class; they also help faculty stay focused on what matters most in each lesson. They provide a roadmap for structuring discussions, guiding assessments, and ensuring coverage of key doctrinal areas. And of course, they serve an additional function for faculty who need to align their courses with ABA accreditation requirements, institutional mandates, or learning outcome reporting.

Each lesson plan follows the corresponding chapter in the casebook and is meant to be flexible. These aren’t rigid scripts, and they’re certainly not step-by-step instructions for how to teach. Instead, they offer a roadmap for framing class discussions, covering key doctrinal points, and anticipating student challenges. If you’ve taught contracts before, you might skim through a lesson plan just to check how the cases and doctrines are framed before heading into class. If you’re teaching the course for the first time or trying a new approach, you might use them more closely, letting them help shape your pacing and discussion flow.

No matter how you teach, one of the most important things is keeping an eye on pacing. Some topics—like consideration or the parol evidence rule—tend to generate a lot of organic discussion, while others—like mistake or impossibility—sometimes require a little more work to bring to life. The lesson plans reflect this by signaling where you might want to leave more time for class engagement and where a more direct explanation might be the best way through.

For instructors teaching a four-credit course, the lesson plans also help you make decisions about what to keep and what to streamline. If you want to cover the full breadth of contract law but don’t have time to go deep on every topic, the plans suggest which cases are essential and which might be optional. If you prefer to cover fewer topics in more detail, the plans can help you prioritize.

You don’t have to use the lesson plans the same way every day. Some classes lend themselves to a structured approach where you follow the plan closely, while others might take on a life of their own once discussion starts. The point is to have a resource that makes preparation easier—something you can lean on heavily when you need to but set aside when the discussion is flowing naturally.

How to Use the Case Briefs

You can absolutely use this book for a traditional, case-driven approach, where students read the full opinions, get called on to explain what the court held and why, and then work through the implications in discussion. If that’s how you teach, the case briefs in this manual give you a structured way to prepare for those conversations. They provide quick reference points for facts, holdings, and reasoning, and they highlight where students are likely to struggle so you can be ready to guide them through the difficult parts.

But that’s only one way to use the cases. If you prefer a more descriptive, rule-based approach, you can use the case briefs to provide examples of how courts have applied doctrines without necessarily requiring students to dig through the full opinions themselves. This book also works for a problem-based approach, where the cases serve as background material but most class time is spent on application.

The reason the case briefs aren’t embedded within the lesson plans is precisely because this book isn’t forcing you to use them in one particular way. If you want cases to be at the heart of your teaching, they’re here for you. If you’d rather keep the focus on doctrine and application, the cases can be illustrative rather than central. If you’re somewhere in between—integrating case discussion some days and focusing on problem-solving on others—you don’t have to pick a “traditional” or a “modern” book. You can flex.

However you approach case law in your contracts course, these briefs are here to help. Whether you’re preparing for Socratic questioning, pulling cases in as illustrations, or keeping them in the background while focusing on problem-solving, you have the flexibility to decide how much or how little case analysis to emphasize.

How to Use the Problem Solutions

One of the most effective ways to help students learn contract law is by requiring them to apply it. That’s what the problem sets in this casebook are designed to do—push students beyond memorization and into real legal reasoning. Whether you use problems for in-class discussion, homework, or assessment, they help students bridge the gap between understanding rules and using them to analyze new fact patterns.

The problem solutions in this manual are structured in IRAC format—Issue, Rule, Application, and Conclusion—so students can see what a well-organized response looks like. Some instructors require students to write their answers in IRAC form, while others allow for more flexibility, but exposure to a structured response helps students develop the skill of translating legal doctrine into analysis.

While these problems are not designed to be used verbatim for final exams, they can serve as models for drafting exam questions. Because the problems and solutions are printed in the casebook and Teacher’s Manual, students may have access to them, making direct replication impractical. However, faculty can easily modify problems by changing names, subject matter, and key facts to create useful, unique exam questions.

Faculty teaching online or hybrid courses may also have formal assessment requirements, and problems provide one way to meet them. With the purchase of this casebook, students also get access to multiple-choice questions through the Carolina Academic Press Core Knowledge platform. This is an excellent tool for engagement and assessment, giving students instant feedback while ensuring they are keeping up with key concepts.

How to Use the Additional Resources

Teaching contracts isn’t just about getting through the doctrine—it’s about keeping students engaged, helping them develop legal reasoning skills, and ensuring they walk away with a deep understanding of how contract law operates in the real world. That’s why this book is more than just cases and problems. With slides, podcasts, recorded lectures, multiple-choice questions, and more, you have access to an entire ecosystem of resources that allow you to customize your teaching, streamline your preparation, and meet student needs in different learning environments.

Slides and Visual Aids

For faculty who like to use slides as teaching tools, this casebook comes with a full set of PowerPoint slides that align with each chapter. They highlight the core doctrinal points, key case holdings, and problem-solving frameworks that students need to grasp. In online or hybrid courses, slides are often critical for structuring asynchronous lessons. Whether you use them as lecture tools, pre-class preparation materials, or study aids for students, these slides help ensure that the core material is presented clearly and efficiently.

Podcasts and Recorded Lectures

One of the biggest time investments in teaching an online or hybrid course is creating high-quality lectures. Faculty transitioning to online teaching often find that scripting, recording, and editing lectures takes dozens or even hundreds of hours. That’s why this casebook provides a library of recorded lectures and podcast episodes that align with the material—so you don’t have to create everything from scratch. Faculty who want a turnkey online course can use the linked lectures and podcasts in each lesson plan, allowing students to engage with the material without requiring you to script new lectures.

Multiple-Choice Questions

With the purchase of this casebook, students gain access to multiple-choice questions via the Carolina Academic Press Core Knowledge platform. This resource is particularly useful for keeping students engaged and meeting assessment requirements in online or hybrid courses, but it can also be a great tool for in-person classes. Students often like multiple-choice quizzes because they provide instant feedback—they can see whether they understand a concept without waiting for an instructor to grade their work.

Discussion Boards and Peer Engagement Tools

For faculty teaching online, one challenge is ensuring that students aren’t just absorbing information but actually engaging with each other and the material. This casebook supports structured discussion prompts that can be used in online forums, hybrid classrooms, or even traditional courses looking to extend engagement beyond class time.

Statutory and Supplementary Materials

This casebook is keyed to a statutory supplement that includes the UCC, Restatement (Second) of Contracts, and other essential statutory materials. Some faculty require students to read primary legal sources in full, while others prefer to introduce rules through discussion and lecture first. This flexibility allows faculty to decide how much statutory engagement makes sense for their teaching style, ensuring that students develop an awareness of primary sources without being overwhelmed by excessive reading assignments.

Getting Started

Teaching contracts is an opportunity to guide students through one of the most fundamental areas of law—one that touches almost every aspect of their personal and professional lives. It’s a subject that blends doctrine with strategy, legal interpretation with real-world application, and history with modern commerce. It’s also a course that can be taught in many different ways, which is exactly why this book was designed to be flexible, adaptable, and supportive of different teaching styles and formats.

If you’re new to teaching contracts, this manual is here to help. It provides structured lesson plans, case briefs, and problem solutions so that you don’t have to build everything from scratch. You can follow the guidance here as closely or as loosely as you like, and as you gain confidence in your teaching approach, you’ll find ways to make the material your own. This book isn’t a script—it’s a toolbox. You can take what works for you, adapt what you need, and leave what doesn’t fit your style.

For faculty trying new methods, whether that’s shifting to a problem-based approach, integrating more doctrinal explanation, or adapting to online or hybrid teaching, this book gives you the flexibility to experiment. You don’t have to commit to one approach forever. The beauty of this book is that it lets you flex—you don’t have to choose between a “traditional” casebook and a “modern” one. You can decide how much case law to emphasize, how much time to devote to problem-solving, and how best to blend doctrine and application for your students.

Finally, contracts is fun to teach—or at least, it can be. The material is rich, relevant, and full of opportunities for engagement, and this book is structured to help you make the most of that. Whether you prefer rigorous case analysis, lively class discussions, real-world hypotheticals, or deep policy debates, there’s room for all of it here. Contracts law is about people making deals, keeping promises, and sometimes breaking them, and that makes for great teaching material.

Whatever approach you take, this book is here to help. Whether you use it as a structured guide for your first semester, a quick reference for case summaries and problems, or a starting point for developing your own materials, you have everything you need to make this course effective, engaging, and tailored to your teaching style.

Now let’s get started!

Contract Law: Rules, Cases & Problems

Second Edition

Teacher’s Manual — Lesson Plans

All 28 Chapters with Slide Integration

1,774 Slides Across 28 Chapter Decks

Seth C. Oranburg

Professor of Law, University of New Hampshire Franklin Pierce School of Law

How to Use These Lesson Plans

These lesson plans are designed for faculty teaching Contract Law using the second edition casebook. Each chapter’s plan includes integrated references to the corresponding slide deck, enabling seamless coordination between your teaching notes and visual materials.

There are many effective ways to teach this material. The plans below offer one reliable approach that works particularly well for new professors, while experienced faculty can adapt these suggestions to fit their established methods.

Each chapter begins with a Chapter Overview box showing the total slide count, estimated class time, major cases, and key doctrines. The Module Breakdown maps slide ranges to teaching segments, marking which modules are essential for all credit hours and which can be included for expanded coverage.

Slide references appear throughout the lesson content as “Slides X–Y” indicators. These correspond to the atomic-concept slide decks (one idea per slide, maximum 15 words per slide) that accompany the casebook.

Pacing estimates assume approximately 20–30 slides per 50-minute class and 30–40 slides per 75-minute class, though this varies with topic complexity and Socratic engagement.

Cross-references at the end of each chapter link to the corresponding Case Briefs, Problem Solutions, and related chapters elsewhere in this Teacher’s Manual.

SLIDE DECK SUMMARY

Ch 1 60 slides Ch 11 60 slides Ch 21 62 slides ———– ———– ———– ———– ———– ———– Ch 2 68 slides Ch 12 64 slides Ch 22 64 slides

Ch 3 73 slides Ch 13 56 slides Ch 23 60 slides

Ch 4 65 slides Ch 14 60 slides Ch 24 73 slides

Ch 5 60 slides Ch 15 68 slides Ch 25 60 slides

Ch 6 64 slides Ch 16 60 slides Ch 26 60 slides

Ch 7 70 slides Ch 17 60 slides Ch 27 58 slides

Ch 8 58 slides Ch 18 71 slides Ch 28 56 slides

Ch 9 56 slides Ch 19 73 slides

Ch 10 71 slides Ch 20 64 slides
———————————————————————–

Total: 1,774 slides | Average: 63.4 slides per chapter

CHAPTER 1: INTRODUCTION TO CONTRACT LAW

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases None (introductory chapter)

Key Doctrines Freedom of contract, Bargain theory, Objective theory

Slide Deck File Chapter_01_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Historical Foundations (Slides 1-15)

Essential for all credit hours

MODULE 2: Law vs. Equity (Slides 16-25)

Optional for 4-credit courses

MODULE 3: Theories of Contract Law (Slides 26-40)

Essential for all credit hours

MODULE 4: Objective vs. Subjective (Slides 41-55)

Essential for all credit hours

MODULE 5: Course Overview and Review (Slides 56-60)

Essential for all credit hours

LESSON PLAN: Chapter 1 — Introduction to Contract Law

This lesson sets the tone for the course. It introduces students to what

contract law is, why it exists, and how it has developed over time. It

also gives students their first look at how promises become enforceable

and how courts interpret agreements.

This chapter in the casebook focuses on the foundations of contract law,

including its historical origins, theoretical justifications, and the

distinction between law and equity. While this material is important,

how much time you spend on different elements will depend on your

teaching approach, credit hours, and format.

🎧 Listen to Mastering Contracts Podcast Episode 1: Introduction

Learning Objectives

By the end of this lesson, students should be able to:

Explain what contract law is and how it differs from other areas of law.

Describe the historical origins of contract law (Roman law, English

common law, and American contract law).

Understand the difference between law and equity and why it matters in

contract enforcement.

Recognize the key sources of modern contract law (common law,

Restatement, and UCC).

Articulate the major theories of contract law (efficiency, reliance,

fairness, and autonomy).

Distinguish between the objective and subjective approaches to contract

interpretation.

Setting the Stage: What Is Contract Law?

(15--20 minutes)

The goal of this opening discussion is to get students thinking about

contract law in real-world terms before diving into doctrine. You might

start with one or more of these questions:

"What is a contract?" (Most students will define it as a written

agreement. Push them to think about oral contracts, implied contracts,

and contracts they have entered into without realizing it.)

"What's the last contract you entered into?" (Many will say they haven't

signed one recently---point out things like cell phone plans, terms of

service agreements, leases, gym memberships.)

"What's the purpose of contract law?" (Encourage students to think

beyond just "enforcing agreements" and consider ideas like economic

efficiency, reliance, fairness, and autonomy.)

Faculty who prefer a doctrinal-first approach may instead introduce the

definition of a contract using Restatement § 1 and UCC § 2-105 before

asking students to apply those definitions to real-world agreements.

Comparison of Private vs. Public Law

To help students understand why contract law is unique, introduce the

distinction between:

Public law (e.g., criminal law, tax law---where obligations are imposed

by the government).

Private law (e.g., contract law---where obligations are voluntarily

created by the parties).

You might ask: "Can you opt out of criminal law? What about contract

law?" This frames the idea that contract law is about self-imposed

obligations, which is key to its function in a market economy.

Historical Foundations of Contract Law

(20--30 minutes, can be assigned as reading instead)

The casebook covers the origins of contract law in Jewish law, Roman

law, and English common law. Some faculty may teach this material in

class, while others may assign it as background reading and focus

discussion time on modern contract law.

For faculty who cover this in class, you might:

Discuss how early legal systems enforced promises and how this shaped

modern contract law.

Introduce the common law vs. lex mercatoria (law of merchants)

debate---should contract law be based on rigid rules or flexible

commercial practices?

Compare English common law's formalistic approach with American contract

law's evolution toward legal realism.

If you want students to engage with this material without spending too

much class time on it, consider assigning them a short written

reflection on how contract law's history influences modern doctrines.

Law vs. Equity in Contract Enforcement

(15--20 minutes, optional for 4-credit courses)

This section is historically important, but how much time you spend on

it depends on your credit hours and approach.

If covering this in class, discuss:

How common law courts historically handled contract disputes.

How the Court of Chancery and equity courts developed principles like

specific performance and rescission.

Why these historical distinctions still matter today (jury trial rights,

equitable defenses, the availability of specific performance).

If time is short, this material can be assigned as background reading,

with a brief mention in class about how equitable remedies are still

considered exceptional today.

Theories of Contract Law

(20--30 minutes, or assign part as reading)

Contract law is not just about rules---it's about why those rules exist.

This discussion introduces the four main justifications for enforcing

contracts:

Economic Efficiency -- Enforcing contracts allows people to trade and

invest, creating wealth.

Reliance -- If people make plans based on promises, breaking them can

cause harm.

Fairness -- Some promises should be enforced because it would be unjust

to let one party walk away.

Autonomy -- People should be free to create binding obligations as part

of their self-determination.

This discussion can be framed as a debate by asking:

"Should contract law enforce all promises? Why or why not?"

"Is contract law primarily about economic growth, fairness, or something

else?"

Faculty teaching a doctrinal-first course may instead introduce these

theories briefly in lecture and revisit them later in the semester when

discussing specific doctrines (e.g., reliance theory when covering

promissory estoppel).

Objective vs. Subjective Approaches to Contract Interpretation

(15--25 minutes, essential for all formats)

This is a core issue in contract law that will come up throughout the

course. Faculty can introduce it through a discussion:

"If two people disagree about what a contract means, whose

interpretation should win?"

"Should courts focus only on what the parties wrote (objective view) or

what they actually intended (subjective view)?"

Students often assume the law should prioritize actual intent, but

pushing them to consider the benefits of an objective standard (e.g.,

predictability, reducing fraud) can create a lively discussion.

For faculty using a problem-based approach, a simple hypothetical can

illustrate the issue:

Alice tells Bob she'll sell him "the car." Alice meant her Toyota, but

Bob assumed she meant her Tesla. Is there a contract?

Students will quickly realize that contract law has to balance fairness,

reliance, and predictability---just as they discussed earlier when

learning about contract theories.

Wrapping Up and Assigning Next Class

(5--10 minutes)

To close, quickly summarize:

What contract law is and why it exists.

The historical context and how it shaped modern contract law.

The different approaches to contract interpretation and how they impact

enforcement.

Faculty teaching online or hybrid courses should remind students to

complete multiple-choice questions in Core Knowledge, ensuring they

engage with the material before the next class.

Trimming for 4- or 5-Credit Courses

This lesson is foundational and should not be trimmed entirely, but

faculty in 4- or 5-credit courses may:

Assign the history of contract law as reading rather than covering it in

class.

Briefly summarize law vs. equity instead of discussing it in depth.

Limit the contract theories discussion and return to it when relevant

later in the semester.

The core material---the purpose of contract law, sources of doctrine,

and interpretation principles---should always be covered in class.

CROSS-REFERENCES

• Slide Deck: Chapter_01_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 1

• Problem Solutions: See Problem Solutions section, Chapter 1

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 1–3 (Formation Foundations)

CHAPTER 2: WHAT IS A CONTRACT?

CHAPTER OVERVIEW

Total Slides 68 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.7 sessions | 75-min classes: ~1.9 sessions

Major Cases Steinberg v. Chicago Medical School, Pappas v. Bever

Key Doctrines R2d § 1, UCC Article 2, Predominant purpose test

Slide Deck File Chapter_02_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Promise, Agreement, Bargain Definitions (Slides 1-20)

Essential for all credit hours

MODULE 2: Bilateral vs. Unilateral Contracts (Slides 21-35)

Essential for all credit hours

MODULE 3: Common Law vs. UCC Scope (Slides 36-50)

Essential for all credit hours

MODULE 4: Steinberg v. Chicago Medical School (Slides 51-65)

Essential for all credit hours

MODULE 5: Review (Slides 66-68)

Essential for all credit hours

LESSON PLAN: Chapter 2 — What Is a Contract?

This lesson introduces students to the fundamental definition of a

contract and begins the process of unpacking key legal concepts like

promise, agreement, and bargain. Students will also be introduced to

sources of contract law, the difference between common law and the UCC,

and the objective approach to contract formation. The material in this

chapter is foundational---students must grasp these concepts early to

understand later doctrines like offer, acceptance, and consideration.

Because this is an early-stage lesson, it should engage students and

encourage active thinking, whether through Socratic case discussion, a

rule-based doctrinal approach, or problem-solving exercises.

🎧 Listen to Mastering Contracts Podcast Episode 2: Promises, Promises --

Defining a Legal Obligation

Learning Objectives

By the end of this lesson, students should be able to:

Define a contract according to the Restatement (Second) of Contracts

(R2d) § 1 and explain how it differs from informal agreements.

Differentiate between promises, agreements, and bargains and understand

how each term fits within contract law.

Explain the difference between bilateral and unilateral contracts.

Recognize that not all promises are enforceable and begin identifying

the criteria that make a promise legally binding.

Distinguish between common law contracts and UCC contracts, applying the

predominant purpose test to determine which law governs.

Analyze how courts determine whether a manifestation constitutes a

promise, using Pappas v. Bever.

Begin engaging with case law analysis through Steinberg v. Chicago

Medical School.

Setting the Stage: What Is a Contract?

(15--20 minutes)

Students often assume that a contract is a written document with

signatures. Challenge that assumption early by asking:

"What do you think a contract is?"

"Does a contract have to be in writing?"

"What's the difference between an agreement and a contract?"

These questions frame the discussion for the definition of a contract

under R2d § 1: A contract is a promise or a set of promises for the

breach of which the law gives a remedy, or the performance of which the

law in some way recognizes as a duty.

Faculty who use a doctrinal-first approach may start here by introducing

this definition and breaking it down word by word, emphasizing key

terms:

Promise

Breach

Remedy

Duty

Faculty who use a case-based approach might instead begin with Steinberg

v. Chicago Medical School, asking students to think about whether the

relationship between Steinberg and the school constituted a contract or

something else.

Key Discussion Point: Not All Promises Are Contracts

Ask students: "If I promise to give you \$100 next week, is that a

contract?"

Modify the hypothetical: "What if I promise to give you \$100 if you mow

my lawn?"

Guide them toward realizing that some promises are enforceable, and some

are not---this is what contract law is about.

Promise, Agreement, and Bargain: What's the Difference?

(20--30 minutes, can be trimmed for 4-credit courses)

Many students assume these words are interchangeable. Use R2d §§ 2-3 to

clarify:

Promise = A manifestation of intent to act or refrain from acting in a

certain way.

Agreement = A manifestation of mutual assent.

Bargain = An exchange of promises or performances.

This is where faculty might introduce bilateral vs. unilateral

contracts:

Bilateral = Promise for a promise.

Unilateral = Promise for performance.

Case Application: Pappas v. Bever

The casebook includes Pappas v. Bever to illustrate that not all

statements of intent qualify as promises. Faculty might assign students

to

Identify the key facts of the case.

Debate whether Bissonette's pledge was a true promise or a mere

statement of intent.

Apply R2d § 2 to determine whether a legally enforceable obligation was

formed.

Alternative Approach: Problem-Based Discussion

Faculty who use a problem-first approach might skip straight to Problem

2.1, asking students to distinguish between contracts, agreements, and

bargains in different hypothetical scenarios.

Common Law vs. UCC: What Law Governs?

(15--20 minutes, essential for all formats)

This section helps students begin distinguishing between common law and

UCC contracts. Faculty can:

Introduce the UCC § 2-102 definition of a sale of goods.

Explain how the predominant purpose test determines whether the UCC or

common law applies.

Walk through a simple example: A contract for a kitchen remodel vs. a

contract for purchasing cabinets---which is governed by the UCC?

If time is short, faculty could assign this as reading rather than

spending class time on it. There will be many other opportunities to

bring up common law versus UCC distinctions throughout the course.

Interpreting Promises: Objective vs. Subjective Standards

(20--30 minutes, depending on credit hours and teaching method)

This section introduces the fundamental principle of contract

interpretation: Should courts interpret contracts based on what the

parties actually intended (subjective) or how a reasonable person would

interpret their words and actions (objective)?

Case Application: Steinberg v. Chicago Medical School

This case illustrates the objective approach. Faculty can:

Ask students to break down the court's reasoning.

Emphasize that courts don't require a "meeting of the minds" in a

subjective sense---only an outward manifestation of intent.

Discuss how this aligns with the definition of a promise in R2d § 2.

For faculty using a problem-based approach, Problem 2.2 (The Monster and

the Beast) provides an excellent real-world example of disputed promises

and interpretation.

Wrapping Up and Assigning Next Class

(5--10 minutes)

To close, quickly summarize:

A contract is a legally enforceable promise.

Not all agreements are contracts, and not all promises are legally

enforceable.

Contract law depends on outward manifestations---not private thoughts.

Faculty teaching online or hybrid courses may remind students to

complete multiple-choice questions on Core Knowledge, reinforcing the

week's material.

CROSS-REFERENCES

• Slide Deck: Chapter_02_Slides.pptx (68 slides)

• Case Briefs: See Case Briefs section, Chapter 2

• Problem Solutions: See Problem Solutions section, Chapter 2

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 1–3 (Formation Foundations)

CHAPTER 3: MUTUAL ASSENT

CHAPTER OVERVIEW

Total Slides 73 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.9 sessions | 75-min classes: ~2.1 sessions

Major Cases Lucy v. Zehmer, Raffles v. Wichelhaus, Embry v. Hargadine

Key Doctrines Objective manifestation, Misunderstanding, R2d § 20

Slide Deck File Chapter_03_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Objective Theory Introduction (Slides 1-18)

Essential for all credit hours

MODULE 2: Lucy v. Zehmer Case Narrative (Slides 19-38)

Essential for all credit hours

MODULE 3: Raffles v. Wichelhaus (Peerless) (Slides 39-58)

Essential for all credit hours

MODULE 4: Embry v. Hargadine (Slides 59-68)

Include for 5-6 credit

MODULE 5: Mastery Checklist (Slides 69-73)

Essential for all credit hours

LESSON PLAN: Chapter 3 — Mutual Assent

This lesson introduces mutual assent, the fundamental principle that

both parties must manifest agreement to form a contract. It focuses on

objective intent, offer, and acceptance, as well as the different ways

mutual assent can be established or undermined.

Since mutual assent is at the core of contract formation, this lesson

needs to ensure students grasp:

How courts determine whether parties have agreed to a contract

(objective test).

The difference between an offer and preliminary negotiations.

How acceptance functions in bilateral and unilateral contracts.

How contract law reconciles conflicting interpretations of agreements.

Faculty can choose to introduce these concepts through case discussion,

doctrinal explanation, or problem-solving exercises, depending on their

preferred teaching approach.

🎧 Listen to Mastering Contracts Podcast Episode 4: Bargains and the

Objective Theory of Contract

Learning Objectives

By the end of this lesson, students should be able to:

Define mutual assent and explain the objective theory of contracts.

Differentiate between offers and preliminary negotiations.

Explain how acceptance functions in both bilateral and unilateral

contracts.

Recognize situations where mutual assent may be unclear or disputed.

Apply the objective standard of contract formation to real-world

scenarios.

Introducing Mutual Assent and the Objective Standard

(20--25 minutes)

Contracts are about agreement---but how do we know when two people have

agreed?

Ask students to consider:

"Can you form a contract without realizing it?

"Does it matter what you were thinking, or just what you said?"

"If you joke about selling your car for \$10, and someone accepts, is

that a contract?"

These questions help introduce the objective standard---what matters in

contract formation is not what someone privately intended, but what a

reasonable person would have understood from their words and actions.

Defining Mutual Assent: The Objective Theory of Contracts

Use Restatement (Second) of Contracts § 17 to introduce the objective

theory:

Contract formation requires a manifestation of mutual assent.

Courts look at outward expressions of intent, not private thoughts.

Some faculty may use historical context here, discussing how courts used

to follow a subjective "meeting of the minds" standard but shifted to an

objective approach for clarity and predictability.

Instructors should "preview" the essential elements of a contract:

Offer + Acceptance = Mutual Assent

Consideration = bargained-for exchange

Offer: What Qualifies as a Valid Offer?

(20--30 minutes, or assign as reading for shorter courses)

Introduce Restatement §§ 24-26:

An offer is a clear, definite promise that, if accepted, creates a

binding contract.

Preliminary negotiations, invitations to bargain, and advertisements are

not offers.

Students often struggle to differentiate true offers from negotiations,

so this is a good point for faculty to introduce case law or

hypotheticals.

Case Application: Lucy v. Zehmer

(Optional for faculty who emphasize case law)

This case illustrates the objective standard of intent---even if one

party thought they were joking, a reasonable person might view their

conduct as an offer.

Faculty may ask:

"Should courts enforce agreements made in a social setting?

"Is Zehmer's claim that he was joking enough to void the contract?"

"Why should the law take the joker at his work? Was might be some

consequences is joking was a defense to contract formation?"

Alternative Approach: Problem-Based Learning

Faculty who emphasize problem-solving may instead use Problem 3.1, which

presents a scenario where one party believes they made an offer, but the

other disagrees.

Ask students to analyze whether a reasonable person would view the

statement as an offer.

Discuss how different courts might handle ambiguous communications.

Acceptance: How Contracts Are Formed

(20--30 minutes, depending on depth of coverage)

Acceptance in Bilateral vs. Unilateral Contracts

Introduce Restatement §§ 50-54 and discuss how acceptance works in:

Bilateral contracts -- A promise is accepted by another promise or by

actions which otherwise manifest an acceptance (like beginning

performance).

Unilateral contracts -- A promise is accepted by complete performance.

Ask students:

"Why does the law allow different forms of acceptance?"

"What if someone starts performing but hasn't told the offeror

yet---should that count as acceptance?"

Case Application: Carlill v. Carbolic Smoke Ball Co.

This case illustrates how an advertisement can create a unilateral

contract if it includes clear terms for acceptance.

Discussion points:

Did Carbolic's ad constitute an offer or mere puffery?

Why do courts sometimes enforce contracts that businesses never expected

to be taken literally?

Faculty who emphasize doctrine-first learning may summarize the case

quickly and instead focus on how unilateral contracts function in modern

commercial transactions (e.g., rewards programs).

When Is Mutual Assent Unclear? Ambiguities and Mistakes

(15--25 minutes, essential for all formats)

The Problem of Ambiguous Assent

Ask students:

"What happens when both parties sign a contract but have different

interpretations of a term?

"If one party thinks a contract is final and the other thinks

negotiations are still ongoing, how do we resolve it?"

Introduce Restatement § 20---when parties misunderstand each other,

courts may:

Find no contract if there was no meeting of the minds on material terms.

Enforce the contract based on the reasonable expectations of one party.

Case Application: Raffles v. Wichelhaus (The Two Ships Peerless)

This case is a great example of mutual mistake in contract formation.

Faculty may ask:

"Should courts enforce contracts when both parties misunderstood a key

term?"

"How does this case relate to the objective standard?"

Alternative Approach: Problem-Based Learning

Faculty who emphasize problem-solving may instead use Problem 3.3, which

presents a real-world ambiguity.

Ask students to determine whether mutual assent existed.

Discuss how courts might interpret ambiguous agreements differently.

Wrapping Up and Assigning Next Class

(5--10 minutes)

Mutual assent requires objective intent.

An offer must be clear, definite, and indicate commitment.

Acceptance must conform to the offer and create a binding agreement.

Not all statements are offers, and not all agreements form contracts.

Faculty teaching online or hybrid courses may remind students to

complete Core Knowledge multiple-choice assessments, reinforcing these

key points.

CROSS-REFERENCES

• Slide Deck: Chapter_03_Slides.pptx (73 slides)

• Case Briefs: See Case Briefs section, Chapter 3

• Problem Solutions: See Problem Solutions section, Chapter 3

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 1–3 (Formation Foundations)

CHAPTER 4: OFFERS

CHAPTER OVERVIEW

Total Slides 65 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.6 sessions | 75-min classes: ~1.9 sessions

Major Cases Leonard v. Pepsico, Lefkowitz v. Great Minneapolis Surplus Store

Key Doctrines Power of acceptance, Advertisement rule, R2d § 24, R2d § 26

Slide Deck File Chapter_04_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Definition of Offer (R2d § 24) (Slides 1-15)

Essential for all credit hours

MODULE 2: Preliminary Negotiations (Slides 16-25)

Essential for all credit hours

MODULE 3: Leonard v. Pepsico (Harrier Jet) (Slides 26-40)

Essential for all credit hours

MODULE 4: Lefkowitz v. Great Minneapolis (Slides 41-55)

Essential for all credit hours

MODULE 5: Certainty Requirement (Slides 56-62)

Essential for all credit hours

MODULE 6: Review (Slides 63-65)

Essential for all credit hours

LESSON PLAN: Chapter 4 — Offers

This chapter introduces students to the nature of an offer---a

fundamental concept in contract formation. Students must learn to

differentiate between an offer and preliminary negotiations, understand

the role of certainty in contract terms, and assess whether

advertisements, bids, and rewards can function as offers.

This lesson builds upon the foundational principles in previous chapters

and sets the stage for later discussions on acceptance and contract

formation. It is important to emphasize that not all statements that

sound like offers actually create contractual liability and that context

matters.

The Restatement (Second) of Contracts (R2d) § 24 provides the legal

definition:

\"A 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.\"

A key challenge in teaching this material is that students often assume

that an offer is merely a statement of intent. However, they must grasp

the objective nature of contract interpretation---courts focus on how a

reasonable person in the offeree's position would interpret the

offeror's words and actions.

This chapter's cases and problems allow students to analyze ambiguous

situations and apply R2d § 24 and related provisions to determine when a

legally valid offer has been made.

🎧 Listen to Mastering Contracts Podcast Episode 5: Offer or Not?

Classroom Approach and Socratic Discussion Strategy

Defining an Offer

(15--20 minutes)

Start by asking students:

What is an offer?

Have you ever made an offer that you later retracted?

If someone says, \"I'll sell you my car for \$10,000,\" is that an

offer?

Most students will instinctively focus on intent, which is useful, but

remind them that contract law evaluates objective manifestations of

intent, not hidden thoughts.

Use a simple example, e.g.:

A stranger on the street offers to buy someone's house for a million

dollars.

A lumber company negotiates for months before presenting a signed

written statement with a definitive price.

Ask: Which of these is an offer? Why?

Students should recognize that the lumber company's proposal carries the

indicia of a legally enforceable offer, whereas the random street

proposal lacks seriousness and context. You can also prelude that it

probably also lacks sufficient definitiveness in that it lacks material

terms.

Key Socratic Questioning

How does context shape whether something is an offer?

Why do courts look at manifestations rather than subjective intent?

How can parties signal their intention to be bound (e.g., writing,

specificity, seriousness)?

By the end of this discussion, students should recognize that an offer

must reasonably justify the offeree's belief that acceptance will create

a contract.

Offers vs. Preliminary Negotiations

(20 minutes)

Introduce R2d § 26, which clarifies that expressions of interest are not

offers if the offeree knows or has reason to know that the offeror does

not intend to be bound.

Case Application: The Lumber Dealer's Inquiry as a Prelude to Lucy

A lumber dealer asks, \"Would you sell your land for \$50,000?\"

A farm owner responds, \"Yes.\"

Ask students:

Is this an offer and acceptance?

Does the lumber dealer's statement invite a definitive commitment?

How does the phrasing (\"would you sell?\") affect the interpretation?

Students should recognize that this is a preliminary negotiation, not an

offer---the lumber dealer has not manifested intent to be immediately

bound.

Socratic Questioning Strategy

How can parties phrase statements to avoid being misinterpreted as

making an offer?

If an offeree is uncertain whether an offer is being made, what should

they do?

These questions help students develop contract drafting awareness and

practical negotiation strategies---skills they will need in legal

practice.

Certainty in Offers

(15--20 minutes)

R2d § 33(1) states that even if an offeror intends to be bound, an offer

is not valid unless it contains reasonably certain terms. Courts will

not enforce vague promises.

Case Application: Academy Chicago Publishers v. Cheever

A publisher agreed to publish an anthology of John Cheever's stories,

but the contract failed to specify which stories would be included.

The court ruled the contract too indefinite to enforce.

Ask students:

What was missing from this agreement?

If the publisher and Cheever had agreed on a process for selecting

stories, would that have been enough?

When can courts supply missing terms, and when do vague contracts fail

entirely?

This case highlights why precise contract drafting is crucial---it

forces students to think about ambiguity in agreements and why courts

sometimes refuse to enforce deals.

Are Advertisements Offers?

(20--25 minutes)

Students often assume that advertisements are offers, but they must

learn that ads typically invite offers, rather than making them.

Introduce R2d § 26 cmt. b:

\"Advertisements of goods by display, sign, handbill, newspaper, radio,

or television are not ordinarily intended or understood as offers to

sell.\"

Ask: Why don't businesses want every ad to be a legally binding offer?

Key Issues:

Ads often lack quantity terms (e.g., \"Sale on TVs!\"---how many are

available?).

There is an oversubscription problem---if an ad were an offer, every

customer could demand the product.

Case Application: Lefkowitz v. Great Minneapolis Surplus Store

The store advertised fur coats for \$1, first come, first served.

Lefkowitz arrived first but was refused because the store had a \"house

rule" limiting the deal to women.

The court ruled the ad was an offer because:

It specified price, quantity, and terms of acceptance.

\"First come, first served\" solved the oversubscription problem.

Ask students:

Why was this ad an offer when most ads are not?

How could the store have written its ad to avoid this outcome?

Encourage discussion on how specific language transforms an

advertisement into a binding offer.

Bids and Rewards as Offers

(20 minutes)

Bids in Construction Contracts

Requests for bids are invitations for offers.

Submitted bids are offers that the requesting party can accept or

reject.

Ask: Why would contractors want bid submissions to be offers rather than

negotiations?

Rewards as Offers

Reward offers require performance for acceptance.

Case Application: Carlill v. Carbolic Smoke Ball Co.

The company promised £100 to anyone who used its product and still got

sick.

A woman followed the instructions and got sick.

The court ruled the ad was an offer because:

It required specific performance for acceptance.

The company demonstrated intent by setting aside money to pay claims.

Ask students:

Why do courts treat reward ads differently from retail ads?

Could a company avoid liability in a Carbolic Smoke Ball-type case?

This discussion reinforces unilateral contracts and helps students

recognize when offers can be accepted only by performance.

Conclusion

An offer must indicate a clear intent to be bound.

Preliminary negotiations are not offers.

Advertisements are usually not offers, unless they specify definite

terms and solve the oversubscription problem.

Bids and rewards may function as offers if they invite definite

acceptance.

CROSS-REFERENCES

• Slide Deck: Chapter_04_Slides.pptx (65 slides)

• Case Briefs: See Case Briefs section, Chapter 4

• Problem Solutions: See Problem Solutions section, Chapter 4

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 4–6 (Offer and Acceptance)

CHAPTER 5: TERMINATION OF THE OFFER

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Dickinson v. Dodds

Key Doctrines Revocation, Option contract, Firm offer, R2d § 36

Slide Deck File Chapter_05_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Methods of Termination (Slides 1-15)

Essential for all credit hours

MODULE 2: Revocation Rules (Slides 16-28)

Essential for all credit hours

MODULE 3: Dickinson v. Dodds Case (Slides 29-43)

Essential for all credit hours

MODULE 4: Option Contracts (Slides 44-52)

Essential for all credit hours

MODULE 5: Firm Offers (UCC § 2-205) (Slides 53-58)

Include for 5-6 credit

MODULE 6: Review (Slides 59-60)

Essential for all credit hours

LESSON PLAN: Chapter 5 — Termination of the Offer

Once an offer is made, the power of acceptance shifts to the offeree.

However, offers do not remain open indefinitely. This chapter introduces

the various ways an offer can be terminated, thereby extinguishing the

offeree's ability to accept.

The Restatement (Second) of Contracts (R2d) § 35(1) provides the

foundational rule:

\"An offer gives to the offeree a continuing power to complete the

manifestation of mutual assent by acceptance of the offer.\"

However, R2d § 35(2) makes clear that this power is not unlimited:

\"A contract cannot be created by acceptance of an offer after the power

of acceptance has been terminated in one of the ways listed in § 36.\"

This chapter covers the four primary methods of termination, as outlined

in R2d § 36(1):

Rejection or counteroffer by the offeree

Lapse of time

Revocation by the offeror

Death or incapacity of either party

Each method has distinct legal implications, and students should develop

an analytical framework for determining when an offer ceases to exist.

🎧 Listen to Mastering Contracts Podcast Episode 6: Death of an Offer

Classroom Approach and Socratic Discussion Strategy

The Fragility of Offers

(10--15 minutes) Begin with a conceptual discussion:

Does an offer exist forever once it is made?

How does an offeror control the duration of their offer?

If someone makes an offer, can they take it back?

These questions help students appreciate that offers are

temporary---they either lead to a contract or they dissolve through

termination.

Illustrate the Concept

Compare an offer in a commercial transaction (e.g., a store offering to

sell a car) to an informal proposal (e.g., two friends discussing dinner

plans). In the former, legal consequences attach; in the latter, they do

not. This distinction introduces contractual enforceability and the

conditions under which an offer is extinguished.

Rejection and Counteroffers

(20 minutes)

Restatement Rule: R2d § 38(1)

\"An offeree's power of acceptance is terminated by his rejection of the

offer, unless the offeror has manifested a contrary intention.\"

A rejection destroys the offeree's ability to later accept the offer

unless the offeror renews it.

Case Application: Smaligo v. Fireman's Fund Insurance Co.

The plaintiffs had a settlement offer from an insurer.

Their actions suggested rejection of the offer (e.g., continued

litigation efforts).

The court ruled that the settlement offer was no longer open.

Ask students:

What constitutes an explicit rejection?

What if the offeree simply ignores the offer?

Can silence be a rejection? (Introduce R2d § 69 on acceptance by

silence.)

Counteroffers and the "Mirror Image" Rule

R2d § 39(1) states that a counteroffer terminates the original offer and

creates a new offer.

Ask students to analyze:

If a buyer offers to purchase a car for \$15,000 and the seller replies,

"I'll sell it for \$16,000," is the original offer still valid?

If the buyer then says, "Okay, I'll accept the \$15,000 price," has a

contract been formed?

Students should recognize that the original offer was terminated, and a

new acceptance is not possible unless the seller re-offers the original

terms.

Lapse of Time

(15--20 minutes)

An offer is not open indefinitely. The offeror sets the duration, or, if

no duration is specified, it lapses after a reasonable time under R2d §

41.

Understanding "Reasonable Time"

A supplier offers to sell materials at a quoted price but does not

specify an expiration date.

The buyer tries to accept six months later.

Ask: Does the offer still exist?

Students should apply industry norms, market conditions, and common

sense to determine when an offer naturally expires.

Step 4: Revocation by the Offeror

(20 minutes)

Restatement Rule: R2d § 42

\"An offeree's power of acceptance is terminated when the offeror takes

definite action inconsistent with an intention to enter into the

proposed contract and the offeree acquires reliable information to that

effect.\"

An offeror may revoke at any time before acceptance, but revocation must

be communicated to the offeree.

Application: Indirect Revocation

A seller offers to sell a house to a buyer.

Before the buyer accepts, they learn that the seller has sold the house

to someone else.

Is the original offer revoked, even though the seller never directly

informed the buyer?

Students should recognize that revocation can be implied from actions

and circumstances.

Death or Incapacity

(10--15 minutes)

Restatement Rule: R2d § 48

\"An offeree's power of acceptance is terminated when the offeror or

offeree dies or is deprived of legal capacity to enter into the proposed

contract.\"

Unlike revocation, death or incapacity automatically terminates an offer

without requiring notice.

Socratic Questions:

Why does contract law treat death differently from revocation?

What if the offeree accepts before learning of the offeror's death?

What happens in corporate transactions when a CEO who made an offer

dies?

These questions encourage critical thinking on the relationship between

personal agency and contractual obligation.

Key Takeaways

Rejection and counteroffers immediately terminate an offer.

Lapse of time occurs if an offer is not accepted within a reasonable

timeframe.

Revocation is effective when communicated, either directly or

indirectly.

Death or incapacity automatically terminates an offer.

CROSS-REFERENCES

• Slide Deck: Chapter_05_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 5

• Problem Solutions: See Problem Solutions section, Chapter 5

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 4–6 (Offer and Acceptance)

CHAPTER 6: ACCEPTANCE

CHAPTER OVERVIEW

Total Slides 64 slides —————— ————————————————————————————— Estimated Time 50-min classes: ~2.6 sessions | 75-min classes: ~1.8 sessions

Major Cases Ever-Tite Roofing v. Green, Minneapolis & St. Louis Railway, Flender Corp. v. Tippins

Key Doctrines Mailbox rule, UCC § 2-207, Mirror image rule

Slide Deck File Chapter_06_Slides.pptx ———————————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Mailbox Rule Introduction (Slides 1-18)

Essential for all credit hours

MODULE 2: Mirror Image Rule (Slides 19-30)

Essential for all credit hours

MODULE 3: Battle of the Forms (UCC § 2-207) (Slides 31-48)

Essential for all credit hours

MODULE 4: Ever-Tite Roofing Case (Slides 49-60)

Essential for all credit hours

MODULE 5: Review (Slides 61-64)

Essential for all credit hours

LESSON PLAN: Chapter 6 — Acceptance

This chapter completes the process of contract formation by examining

acceptance---the moment when an offer becomes a binding contract.

Students must understand both what constitutes a valid acceptance and

when it becomes effective. This chapter also introduces key doctrinal

rules, including the Mirror Image Rule at common law, the Battle of the

Forms under the UCC, and the Mailbox Rule for determining when

acceptance takes effect.

A major challenge in teaching this material is clarifying the

distinction between an acceptance and a counteroffer, especially given

that common law and the UCC treat them differently. The timing of

acceptance---particularly under the Mailbox Rule---is another area where

students often struggle. This chapter's cases and problems will help

students analyze these issues in a structured way.

🎧 Listen to Mastering Contracts Podcast Episode 7: Mirror, Mirror -- What

Constitutes Acceptance?

Classroom Approach and Socratic Discussion Strategy

What Is Acceptance?

(15--20 minutes)

Begin with an open discussion:

What does it mean to accept an offer?

Does acceptance always have to be verbal?

Can silence ever constitute acceptance?

Students will likely focus on intent, but guide them toward the legal

standard: an acceptance is a manifestation of assent in the manner

invited or required by the offer.

Introduce R2d § 50(1):

"Acceptance of an offer is a manifestation of assent to the terms

thereof made by the offeree in a manner invited or required by the

offer."

Once students grasp the basic definition, emphasize the two key aspects

of acceptance:

It must match the offer's terms.

It must be communicated effectively to the offeror.

Use a simple hypothetical from the casebook:

Aaron offers to sell Benjamin his Honda Civic for \$10,000, and Benjamin

immediately replies, "I accept."

Ask students: Has a contract been formed? (Yes.)

Now introduce a variation:

Aaron offers to sell his Honda Civic for \$10,000, and Benjamin replies,

"I accept, but I'll pay you next month."

Ask: Is this an acceptance or a counteroffer?

This sets up the next section on the Mirror Image Rule and the

difference between acceptance and counteroffers.

Acceptance Under the Common Law: The Mirror Image Rule

(20--25 minutes)

Introduce R2d § 58:

"An acceptance must comply with the requirements of the offer as to the

promise to be made or the performance to be rendered."

At common law, acceptance must mirror the offer exactly---any deviation

is treated as a counteroffer that terminates the original offer.

Case Application: Minneapolis & St. Louis Railway Co. v. Columbus

Rolling-Mill Co.

The seller offered to sell 2,000 to 5,000 tons of iron rails at a fixed

price.

The buyer tried to accept for only 1,200 tons.

The court ruled that this was not an acceptance, but rather a

counteroffer that rejected the original terms.

Ask students:

Why did the court treat this as a counteroffer rather than an

acceptance?

How does this case illustrate the strictness of the Mirror Image Rule?

Modern Relaxation of the Mirror Image Rule

Modern courts are more lenient. R2d § 61 allows an acceptance to include

a request to change terms, as long as the acceptance is not made

conditional on those changes.

Use the casebook's babysitting example:

An offer proposes 24 hours of babysitting at \$20/hour.

The offeree replies, "I accept, but could we do 20 hours instead?"

Ask: Is this a counteroffer? Or an acceptance with a mere request?

Guide students toward the conclusion that if the offeree unconditionally

accepts but merely requests a modification, the acceptance still stands.

However, if the response is conditional ("I'll accept only if you agree

to 20 hours"), it becomes a counteroffer.

Acceptance Under the UCC: The Battle of the Forms

(25--30 minutes)

The UCC rejects the Mirror Image Rule for the sale of goods and allows

acceptance with additional or different terms under UCC § 2-207.

Introduce UCC § 2-207(1):

"A definite and seasonable expression of acceptance... operates as an

acceptance even though it states terms additional to or different from

those offered, unless acceptance is expressly made conditional on assent

to the additional or different terms."

Case Application: Flender Corp. v. Tippins International Inc.

A buyer sent a purchase order with a forum selection clause requiring

disputes to be resolved in Vienna, Austria.

The seller's invoice included a conflicting forum clause requiring

litigation in Chicago.

The court applied the Knock-Out Rule, eliminating both conflicting

terms.

Ask students:

Why does the UCC take a more flexible approach than the common law?

How does the Knock-Out Rule work?

Discuss the policy rationale behind UCC § 2-207:

Encouraging commerce by preventing minor discrepancies from derailing

deals.

Recognizing that businesses often proceed despite minor disagreements in

their forms.

Summarize the three key rules under the UCC:

If one party is not a merchant, additional terms are mere proposals and

do not automatically become part of the contract.

If both parties are merchants, additional terms become part of the

contract unless:

The offer limits acceptance to its own terms.

The additional terms materially alter the contract.

The offeror objects within a reasonable time.

If terms directly conflict, they "knock each other out" and are replaced

by UCC default rules.

Timing of Acceptance: The Mailbox Rule

(15--20 minutes)

Acceptance is effective upon dispatch, while revocations, rejections,

and counteroffers are effective only upon receipt.

Introduce R2d § 63(a):

"An acceptance made in a manner invited by the offer is operative and

completes the manifestation of mutual assent as soon as put out of the

offeree's possession, regardless of whether it ever reaches the

offeror."

Hypothetical: The Mailbox Rule in Action

On January 5, the buyer mails a letter accepting an offer.

On January 6, the seller mails a revocation of the offer.

On January 7, the seller's revocation arrives.

On January 8, the buyer's acceptance arrives.

Ask: Is there a contract? (Yes---acceptance was effective upon dispatch

on January 5.)

Now introduce exceptions:

The Mailbox Rule does not apply to option contracts (acceptance is only

effective when received).

If the offeree sends a rejection first, then an acceptance, whichever is

received first governs (R2d § 40).

Finally, discuss the modern challenges of applying the Mailbox Rule to

email and electronic communications, using the casebook's discussion of

spam filters and failed transmissions as a jumping-off point.

Key Takeaways

Common law: The Mirror Image Rule requires acceptance to match the offer

exactly.

UCC: Acceptance with additional or different terms can still create a

contract under UCC § 2-207.

Mailbox Rule: Acceptance is effective when sent, but revocations and

rejections are effective when received.

CROSS-REFERENCES

• Slide Deck: Chapter_06_Slides.pptx (64 slides)

• Case Briefs: See Case Briefs section, Chapter 6

• Problem Solutions: See Problem Solutions section, Chapter 6

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 4–6 (Offer and Acceptance)

CHAPTER 7: CONSIDERATION

CHAPTER OVERVIEW

Total Slides 70 slides —————— ———————————————————————- Estimated Time 50-min classes: ~2.8 sessions | 75-min classes: ~2.0 sessions

Major Cases Hamer v. Sidway, Batsakis v. Demotsis, Pennsy Supply v. American Ash

Key Doctrines Bargained-for exchange, Legal detriment, Adequacy vs. sufficiency

Slide Deck File Chapter_07_Slides.pptx —————————————————————————————–

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Bargain Theory (Slides 1-20)

Essential for all credit hours

MODULE 2: Hamer v. Sidway Case (Slides 21-38)

Essential for all credit hours

MODULE 3: Legal Detriment (Slides 39-48)

Essential for all credit hours

MODULE 4: Past Consideration (Slides 49-58)

Essential for all credit hours

MODULE 5: Preexisting Duty Rule (Slides 59-67)

Essential for all credit hours

MODULE 6: Review (Slides 68-70)

Essential for all credit hours

LESSON PLAN: Chapter 7 — Consideration

This chapter introduces consideration, the legal requirement that an

enforceable contract must involve a bargained-for exchange. The doctrine

of consideration is fundamental to contract law because it distinguishes

enforceable promises from gratuitous promises and ensures that

obligations reflect deliberate and voluntary commitment.

While this lesson focuses on consideration, it is important to briefly

introduce promissory estoppel and promissory restitution as alternative

bases for enforcing promises. These doctrines---covered in Lessons 8 and

9---allow courts to enforce promises even when there is no traditional

consideration, based on principles of reliance and fairness. By

contrast, consideration remains the primary mechanism for determining

enforceability, emphasizing efficiency, autonomy, and predictability in

contract law.

The goal of this lesson is to help students understand:

What consideration is and why it matters.

The traditional benefit/detriment theory versus the modern bargained-for

exchange theory.

The distinction between enforceable bargains and unenforceable promises.

Situations where consideration is lacking---such as illusory promises,

conditional gifts, past consideration, and nominal consideration.

This chapter's cases and problems will guide students through these

concepts using doctrinal rules, historical perspectives, and modern

applications.

🎧 Listen to Mastering Contracts Podcast Episode 8: Consideration -- The

Price of Committment

Classroom Approach and Socratic Discussion Strategy

What Is Consideration?

(15--20 minutes)

Begin with a simple question: Why do we enforce some promises but not

others?

Students may instinctively say that promises should be enforced because

they create expectations. Push them further: Should every promise be

legally binding? If not, why not?

Guide students toward the key principle:\

Contract law enforces promises that are part of a mutual, bargained-for

exchange. A promise without consideration is generally not enforceable.

Introduce R2d § 71(1):

"To constitute consideration, a performance or a return promise must be

bargained for."

Explain that consideration serves three major functions:

Efficiency -- Encourages voluntary exchanges that allocate resources

efficiently.

Autonomy -- Ensures promises reflect deliberate, mutual commitment.

Gatekeeping -- Distinguishes enforceable bargains from casual promises.

Now introduce a simple hypothetical:

Alice tells Bob, "I promise to give you \$100 next week."

Ask: Is this promise enforceable? (No---there is no consideration.)

Now modify: Alice says, "I promise to give you \$100 if you mow my

lawn."

Ask: Is this enforceable? (Yes---there is now a bargained-for exchange.)

This naturally leads into the historical evolution of consideration.

Historical Approach: The Benefit/Detriment Test

(20 minutes)

The earliest theory of consideration focused on whether the promisor

received a benefit or the promisee suffered a detriment.

Introduce R2d § 79:

"If the requirement of consideration is met, there is no additional

requirement of equivalence in the values exchanged."

Case Application: Hamer v. Sidway

An uncle promised his nephew \$5,000 if he refrained from drinking,

smoking, and gambling until age 21.

The nephew complied, but when the uncle died, the estate refused to pay.

The court held that the nephew's forbearance constituted a legal

detriment, satisfying the consideration requirement.

Ask students:

Why did the court find consideration here?

Did the nephew "lose" anything by abstaining?

Would it matter if abstaining was actually good for him?

Point out problems with the benefit/detriment test:

Courts struggled with subjectivity---how do we determine if something is

truly a detriment?

Moral and social considerations do not always align with enforceability.

This led to the modern approach.

Modern Approach: The Bargained-For Exchange Theory

(20--25 minutes)

Most courts today reject the benefit/detriment test in favor of

bargained-for exchange.

Introduce R2d § 71(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."

This approach focuses on intent---not whether one party gains or loses,

but whether the exchange was voluntary and reciprocal.

Case Application: Pennsy Supply, Inc. v. American Ash Recycling Corp.

Pennsy accepted free construction materials from American Ash, which

allowed American Ash to avoid costly hazardous waste disposal fees.

When the materials failed, Pennsy sued, arguing that there was a

contract.

The trial court wrongly treated this as a conditional gift.

The appellate court correctly applied the bargained-for exchange theory:

American Ash benefited from avoiding disposal costs.

Pennsy's promise to take the materials was induced by American Ash's

promise to provide them for free.

Ask students:

Why does the bargained-for exchange test work better than the

benefit/detriment test here?

What was the "price" of American Ash's promise?

Why do modern courts favor this test?

Now shift to what does NOT count as consideration.

Situations Where Consideration Is Lacking

(25--30 minutes)

Introduce these common traps where consideration fails:

1\. Gratuitous Promises

A promise made without expecting anything in return is not enforceable.

Example: "I promise to give you my old laptop next week."

No exchange → no contract.

2\. Conditional Gifts

If the condition benefits only the recipient, it is not consideration.

Example: "If you walk to my office, I'll give you a free book."

Walking is incidental, not bargained for.

3\. Past Consideration

A promise cannot be supported by something already given or performed.

Example: "Since you helped me move last year, I promise to pay you

\$100."

The act was done before the promise → not enforceable.

4\. Illusory Promises

A promise that allows one party full discretion to perform or not

perform is not real consideration.

Example: "I promise to drive you to the airport if I feel like it."

The promisor is not bound → no contract.

5\. Nominal Consideration

Courts do not evaluate fairness of the exchange, but sham consideration

is invalid.

Example: A contract states "in exchange for \$1, I will transfer my

house to you."

Courts will see through purely formal exchanges intended to disguise a

gift.

Ask students to apply these tests to real-world contract disputes.

Key Takeaways

Consideration requires a bargained-for exchange, not just

benefit/detriment.

Modern courts use the bargained-for exchange test---each party must be

induced to act by the other's promise.

Lack of consideration makes a promise unenforceable unless an

alternative doctrine (promissory estoppel or restitution) applies.

CROSS-REFERENCES

• Slide Deck: Chapter_07_Slides.pptx (70 slides)

• Case Briefs: See Case Briefs section, Chapter 7

• Problem Solutions: See Problem Solutions section, Chapter 7

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 7–9 (Consideration and Alternatives)

CHAPTER 8: PROMISSORY ESTOPPEL

CHAPTER OVERVIEW

Total Slides 58 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.3 sessions | 75-min classes: ~1.7 sessions

Major Cases Ricketts v. Scothorn, Feinberg v. Pfeiffer Co.

Key Doctrines R2d § 90, Detrimental reliance, Foreseeable reliance

Slide Deck File Chapter_08_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: R2d § 90 Elements (Slides 1-15)

Essential for all credit hours

MODULE 2: Ricketts v. Scothorn Case (Slides 16-32)

Essential for all credit hours

MODULE 3: Reasonable Reliance (Slides 33-44)

Essential for all credit hours

MODULE 4: Charitable Subscriptions (Slides 45-53)

Include for 5-6 credit

MODULE 5: Review (Slides 54-58)

Essential for all credit hours

LESSON PLAN: Chapter 8 — Promissory Estoppel

This chapter introduces promissory estoppel, an equitable doctrine that

enforces certain promises even in the absence of consideration, provided

the promisee has reasonably and detrimentally relied on the promise.

While Lesson 7 focused on consideration as the primary basis for

enforcing contracts, this lesson explores an alternative mechanism:

reliance. Courts invoke promissory estoppel to prevent injustice,

particularly when a party has relied on a promise in a way that leaves

them worse off if the promise is not enforced.

Understanding when promissory estoppel applies---and when it does

not---is crucial. Courts are hesitant to allow promissory estoppel to

supplant consideration entirely. The doctrine remains an exception,

rather than the rule, ensuring that promises are not enforced too

broadly.

By the end of this lesson, students should be able to:

Identify the elements of promissory estoppel under R2d § 90.

Explain how reasonable reliance transforms a promise into an enforceable

obligation.

Analyze the limits of promissory estoppel, particularly when courts

decline to apply it.

Distinguish promissory estoppel from consideration and other contract

doctrines.

This chapter's cases will illustrate where courts draw the line in

applying promissory estoppel and how they balance fairness and

predictability in contract law.

🎧 Listen to Mastering Contracts Podcast Episode 9: Promissory Estoppel --

When a Promise Is Enough

Classroom Approach and Socratic Discussion Strategy

What Is Promissory Estoppel?

(15--20 minutes)

Begin by asking students:

Why do courts enforce contracts with consideration, but not mere

promises?

Should promises always be legally binding?

When, if ever, should courts enforce a promise even when there is no

exchange?

Most students will identify moral obligations as a reason to enforce

some promises, but guide them toward the legal principle: promises are

enforceable only when they create reasonable and foreseeable reliance.

Introduce R2d § 90(1):

"A promise which the promisor should reasonably expect to induce action

or forbearance on the part of the promisee or a third person and which

does induce such action or forbearance is binding if injustice can be

avoided only by enforcement of the promise."

Break down the elements:

A promise -- There must be a clear and definite commitment.

Reasonable and foreseeable reliance -- The promisee must have relied on

the promise in a way the promisor could have predicted.

Detriment -- The reliance must have caused the promisee harm.

Injustice -- Enforcement must be necessary to prevent unfair harm.

Now introduce a basic hypothetical:

Alice tells Bob, "I promise to pay for your graduate school." Bob quits

his job and enrolls in school. Later, Alice refuses to pay.

Ask: Should Bob be able to enforce the promise?

What if Alice made the promise casually, without expecting Bob to act on

it?

This leads into the first key case.

The Classic Case: Ricketts v. Scothorn

(20--25 minutes)

Case Summary

A grandfather gave his granddaughter a promissory note for \$2,000,

stating she "should not have to work."

The granddaughter quit her job in reliance on this promise.

After the grandfather's death, his estate refused to pay.

The court enforced the promise under promissory estoppel, reasoning that

the granddaughter's reasonable reliance made the promise binding.

Socratic Questions

Was the grandfather's promise supported by consideration? (No---there

was no exchange.)

Did he intend for his granddaughter to rely on it?

What if she had not quit her job? Would the outcome be different?

Would the result have changed if the promise had been vague or informal?

This case introduces the reliance principle and its role in promissory

estoppel.

Limits on Promissory Estoppel: Hayes v. Plantations Steel

(20--25 minutes)

While Ricketts shows courts enforcing promises based on reliance, Hayes

v. Plantations Steel demonstrates the limits of promissory estoppel.

Case Summary

A retired employee claimed his employer promised to pay him a pension.

The employer made some payments but later stopped.

The employee sued, claiming promissory estoppel.

The court denied enforcement, ruling that the employee had already

planned to retire before the promise---there was no reliance.

Key Discussion Points

Why did the court refuse to enforce the promise? (No causal link between

the promise and the employee's decision to retire.)

If the employer had promised the pension before the employee decided to

retire, would that change the result?

Why do courts hesitate to apply promissory estoppel in employment cases?

This case highlights why reliance must be induced by the promise---not a

pre-existing plan.

Promissory Estoppel in Charitable Pledges

(15--20 minutes)

Unlike most promissory estoppel cases, charitable subscriptions

sometimes receive special treatment.

Introduce R2d § 90(2):

"A charitable subscription or a marriage settlement is binding under

Subsection (1) without proof that the promise induced action or

forbearance."

This means some courts enforce charitable pledges even without clear

reliance.

Case Application: Salsbury v. Northwestern Bell

A donor pledged \$5,000 to a small college.

The college planned its budget based on expected donations.

The donor later refused to pay.

The court enforced the promise, holding that charitable pledges do not

always require proof of reliance.

Socratic Questions

Why do courts treat charitable donations differently?

Should all charitable pledges be enforced, or only those that induce

reliance?

Would this rule make people hesitant to make charitable commitments?

Compare this to Maryland National Bank v. United Jewish Appeal, where

the court declined to enforce a pledge without clear reliance.

Justice: The Ultimate Requirement

(15--20 minutes)

Promissory estoppel is not automatic---courts must find that enforcement

is necessary to prevent injustice.

Introduce R2d § 90, comment b:

"A promise is not enforceable under this section unless the reliance was

of a definite and substantial character."

Case Application: Otten v. Otten

A divorced husband claimed his ex-wife agreed to settle unpaid child

support for \$4,500 instead of \$7,800.

The ex-wife denied this agreement, and the court refused to enforce it.

The court held promissory estoppel cannot be used when reliance is

unforeseeable or unreasonable.

Ask students:

How does "justice" act as a safeguard in promissory estoppel cases?

Why must reliance be substantial?

Should promissory estoppel always be a last resort?

Key Takeaways

Promissory estoppel enforces promises when reliance makes

non-enforcement unjust.

Reliance must be foreseeable, reasonable, and detrimental.

Courts apply promissory estoppel cautiously---it remains an exception to

consideration.

Justice is the final requirement---not every detrimental reliance

warrants enforcement.

CROSS-REFERENCES

• Slide Deck: Chapter_08_Slides.pptx (58 slides)

• Case Briefs: See Case Briefs section, Chapter 8

• Problem Solutions: See Problem Solutions section, Chapter 8

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 7–9 (Consideration and Alternatives)

CHAPTER 9: PROMISSORY RESTITUTION

CHAPTER OVERVIEW

Total Slides 56 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.2 sessions | 75-min classes: ~1.6 sessions

Major Cases Webb v. McGowin, Mills v. Wyman

Key Doctrines Material benefit rule, Unjust enrichment, Moral obligation

Slide Deck File Chapter_09_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Material Benefit Rule (Slides 1-18)

Essential for all credit hours

MODULE 2: Webb v. McGowin Case (Slides 19-35)

Essential for all credit hours

MODULE 3: Mills v. Wyman Comparison (Slides 36-48)

Essential for all credit hours

MODULE 4: Unjust Enrichment (Slides 49-53)

Essential for all credit hours

MODULE 5: Review (Slides 54-56)

Essential for all credit hours

LESSON PLAN: Chapter 9 — Promissory Restitution

This lesson explores promissory restitution, a doctrine that allows

enforcement of certain promises even when there is no bargained-for

exchange. While Lesson 7 focused on consideration as the primary method

of enforcing promises and Lesson 8 examined promissory estoppel as an

alternative based on reliance, this lesson looks at situations where

fairness and justice demand enforcement of promises made after a benefit

has already been received.

Strictly speaking, this topic is not essential to contract law and could

be skipped if time is short. The matters taught here can be learned in

other courses involving restitution. However, teaching this is contracts

remains useful because it deepens students understanding of

consideration by showing things that are not consideration yet can still

make promises binding.

Promissory restitution operates as an exception to the traditional rule

that past consideration is no consideration. It applies in situations

where:

A benefit was conferred on the promisor by the promisee.

The promisor later acknowledged the benefit and made a promise to pay.

Enforcement is necessary to prevent injustice.

The Restatement (Second) of Contracts (R2d) § 86 codifies this

principle:

"A promise made in recognition of a benefit previously received by the

promisor from the promisee is binding to the extent necessary to prevent

injustice."

However, not all promises to repay past benefits are enforceable. Courts

hesitate to impose liability based purely on moral obligation. This

lesson explores when courts enforce these promises and when they do not,

using classic and modern cases to define the doctrine's scope and

limits.

🎧 Listen to Mastering Contracts Podcast Episode 9: Promissory Restitution

-- Payback Time

Classroom Approach and Socratic Discussion Strategy

The Core Question: Should a Promise Based on a Past Benefit Be

Enforceable?

(15--20 minutes)

Begin by asking students:

Why does contract law require consideration?

If someone receives a significant benefit and later promises to pay for

it, should the promise be enforced?

Should moral obligations ever be legally binding?

Many students will initially believe that a promise should be enforced

whenever a benefit was received, but push them toward the traditional

doctrine:\

Past consideration is generally not enforceable unless a legal exception

applies.

Introduce R2d § 86(1), which rejects purely moral obligations but

enforces promises when justice so requires.

Now present a basic hypothetical:

David's neighbor, Emily, voluntarily shovels his driveway after a

blizzard. Later, David tells Emily, "I should pay you \$50 for that." If

David refuses to pay, can Emily sue?

The answer is no---this is a gratuitous benefit, not a contract. Now

modify:

David is unconscious, and Emily shovels the driveway so paramedics can

reach him. After recovering, David promises to pay her.

This raises a closer question---should David's promise be enforceable

because he received a substantial benefit? This sets up the first key

case.

The General Rule: Mills v. Wyman

(20--25 minutes)

Case Summary

A father promised to compensate a stranger who had cared for his sick,

dying adult son.

The court refused to enforce the promise, ruling that moral obligation

alone is not consideration.

Key Socratic Questions

Would this case have come out differently if the son were a minor?

Why does the law refuse to enforce purely moral obligations?

What policy concerns does this rule protect?

Students should recognize that contract law does not impose liability

for past generosity, even when non-payment feels unfair.

Now transition to exceptions.

Exception 1: Mistakenly Conferred Benefits

(20 minutes)

Sometimes a person receives an unintended benefit and later promises to

pay to correct the situation. Courts enforce these promises under

promissory restitution.

Case Application: Drake v. Bell

A contractor mistakenly repaired the wrong house.

The homeowner, realizing the value of the repairs, promised to pay.

The court enforced the promise---the homeowner would have been unjustly

enriched.

Discussion Questions

How is this different from Mills? (The homeowner received a tangible,

measurable benefit.)

What role does fairness play in this ruling?

Now introduce another exception.

Exception 2: Emergency Situations

(20--25 minutes)

Sometimes, a person cannot negotiate a contract due to an emergency. If

the recipient later promises to pay, courts may enforce the promise.

Case Application: Webb v. McGowin

A worker risked his life to save his employer from being crushed.

The employer promised lifelong financial support in gratitude.

The court enforced the promise, recognizing the substantial material

benefit conferred.

Key Discussion Questions

Why was Webb's promise enforced while Mills's was not?

Would it be fair to let McGowin's estate refuse to pay after his death?

Does this case blur the line between contracts and restitution?

This case illustrates that justice sometimes overrides strict contract

doctrine.

Exception 3: Commercial Contexts

(20 minutes)

In business settings, companies sometimes provide services without an

upfront contract, expecting future compensation. If the recipient later

promises to pay, courts may enforce the promise.

Case Application: Haynes Chemical v. Staples

An advertising firm designed a marketing campaign for free, expecting to

win future business.

The company later promised to pay but then reneged.

The court enforced the promise, recognizing that businesses rarely give

true gifts.

Discussion Questions

Should commercial "gifts" be treated differently from personal ones?

Would a consumer be liable for "free trial" services if they later

promised to pay?

This case highlights how context matters in promissory restitution.

Exception 4: Benefits from a Valid but Unpaid Contract

(15--20 minutes)

Sometimes, a third party receives a benefit from a contract they did not

originally agree to pay for but later promises compensation.

Case Application: Edson v. Poppe

A tenant hired a contractor to build a well.

The landlord received the benefit but never paid.

The landlord later promised to pay, and the court enforced the promise.

Discussion Questions

Why was this promise enforced while Mills was not?

Should third-party beneficiaries always be liable for benefits they

receive?

Exception 5: Reviving Unenforceable Contracts

(15 minutes)

Courts sometimes enforce new promises to pay debts that were previously

unenforceable due to technicalities.

Case Application: Muir v. Kane

A real estate commission agreement was unenforceable under the statute

of frauds.

The seller later promised to pay.

The court enforced the promise, viewing it as a revival of an otherwise

valid obligation.

Key Discussion Questions

Why do courts allow some promises to revive unenforceable debts?

How is this different from enforcing purely moral obligations?

This case reinforces the limits of promissory restitution.

Key Takeaways

Moral obligation alone is not enough to enforce a promise.

Promissory restitution applies when fairness demands enforcement.

Common exceptions include mistaken benefits, emergencies, and commercial

contexts.

Justice, not mere generosity, determines enforceability.

CROSS-REFERENCES

• Slide Deck: Chapter_09_Slides.pptx (56 slides)

• Case Briefs: See Case Briefs section, Chapter 9

• Problem Solutions: See Problem Solutions section, Chapter 9

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 7–9 (Consideration and Alternatives)

CHAPTER 10: THE STATUTE OF FRAUDS

CHAPTER OVERVIEW

Total Slides 71 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.8 sessions | 75-min classes: ~2.0 sessions

Major Cases Crabtree v. Elizabeth Arden

Key Doctrines MYLEGS, R2d § 110, Part performance, Merchant exception

Slide Deck File Chapter_10_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: MYLEGS Categories (Slides 1-20)

Essential for all credit hours

MODULE 2: Writing Requirement (Slides 21-35)

Essential for all credit hours

MODULE 3: Signature Requirement (Slides 36-45)

Essential for all credit hours

MODULE 4: Part Performance Exception (Slides 46-58)

Essential for all credit hours

MODULE 5: Promissory Estoppel Exception (Slides 59-68)

Include for 5-6 credit

MODULE 6: Review (Slides 69-71)

Essential for all credit hours

LESSON PLAN: Chapter 10 — The Statute of Frauds

This lesson introduces the Statute of Frauds, a legislative requirement

that certain contracts must be evidenced by a signed writing to be

enforceable. Unlike previous lessons that focused on substantive

contract doctrines like offer, acceptance, and consideration, this

lesson shifts to a procedural defense---the idea that a contract, even

if valid in substance, may be unenforceable unless it meets certain

formal requirements.

The Statute of Frauds primarily serves three functions:

Evidentiary Function -- It ensures that courts have reliable proof of a

contract's existence and terms.

Cautionary Function -- It encourages parties to take agreements

seriously when formalizing them.

Channeling Function -- It promotes clarity and the use of standardized

contracts in important transactions.

The Statute of Frauds does not make oral contracts void---rather, it

allows a party to assert it as an affirmative defense to prevent

enforcement. This creates an inherent tension:

Does the statute prevent fraud by blocking false claims?

Or does it encourage fraud by allowing dishonest parties to escape real

obligations?

These questions will shape class discussion as students analyze which

contracts fall under the statute, what satisfies its writing

requirement, and what exceptions allow enforcement despite

noncompliance.

🎧 Listen to Mastering Contracts Podcast Episode 11: The Statute of Frauds

-- Sign Here

Time Management: Teaching a Two-Class Lesson

This material is typically taught over two class periods due to its

complexity. If time is short, focus on:

The five major classes of contracts covered by R2d § 110.

The UCC § 2-201 provision for goods over \$500.

The most commonly tested exceptions, such as promissory estoppel,

partial performance, and the merchant's confirmatory memo.

Class 1: Foundational Principles and the Scope of the Statute

What Is the Statute of Frauds and Why Do We Have It?

(15--20 minutes)

Begin with a Socratic discussion:

Why does contract law generally enforce oral contracts?

What risks arise when enforcing an oral agreement?

If two parties verbally agree to a contract, should they be bound?

Students should recognize that requiring a writing reduces litigation

risks but also creates opportunities for strategic bad faith---a theme

that will recur throughout this chapter.

Introduce R2d § 110, which outlines the six major categories of

contracts that typically require a writing:

Marriage

Contracts not performable within one year

Land

Executor promises to pay estate debts

Goods over \$500 (UCC § 2-201)

Suretyship (promises to pay another's debt)

Now introduce the MYLEGS mnemonic, which helps students memorize these

categories by putting them in a different order: Marriage, Year, Land,

Executor, Goods, Surety.

Applying the Statute: Which Contracts Require a Writing?

(30--35 minutes)

The One-Year Rule

Introduce R2d § 130, which states that a contract must be in writing if

it cannot possibly be performed within one year. This rule focuses on

theoretical impossibility, not likelihood.

It is worth spending more time on this provision because it tends to

confuse students.

Example for Socratic Discussion:

Aaron agrees to paint Beverly's house every summer for five years. Does

this require a writing? (Yes, because it cannot be fully performed

within a year.)

Aaron agrees to paint Beverly's house "for the rest of her life." Does

this require a writing? (No---she could theoretically die within a

year.)

Now turn to McIntosh v. Murphy, which involves a long-distance job move

and an alleged one-year oral contract.

Why did the court enforce an oral contract despite the one-year rule?

(It applied promissory estoppel to prevent injustice.)

Was this decision correct? (Contrast the majority and dissent to explore

both views.)

Land Contracts

Introduce R2d § 125, which requires a writing for contracts transferring

an interest in land.

Use Sterling v. Taylor to illustrate the requirements for a sufficient

memorandum.

What was missing from the writing in Sterling? (An unambiguous price

term.)

How do courts interpret ambiguous price terms in land contracts? (Most

require clear certainty.)

Class 2: Satisfying the Statute and Its Exceptions

What Qualifies as a Writing?

(20--25 minutes)

Introduce R2d § 131, which states that a writing satisfies the statute

if it:

Identifies the parties

Describes the subject matter

Indicates a contract exists

Includes essential terms

Is signed by the party to be charged

Socratic discussion:

Does an email signature count? (Yes, under the Uniform Electronic

Transactions Act (UETA).)

Can multiple documents be combined to satisfy the statute? (Yes, under

R2d § 132---see Crabtree v. Elizabeth Arden.)

Discuss Sterling v. Taylor:

What made the memorandum in Sterling insufficient? (The vague price

term.)

Would the court have ruled differently if extrinsic evidence clarified

the price?

Exceptions That Allow Enforcement Without a Writing

(30--35 minutes)

1\. Promissory Estoppel (R2d § 139)

When a party reasonably relies on a promise that should have been in

writing, courts may enforce it to prevent injustice.

McIntosh v. Murphy -- The employee relied on an oral job offer and moved

to Hawaii.

Was the reliance substantial enough to override the statute? (Yes,

according to the majority---but the dissent disagreed.)

2\. Part Performance in Land Contracts (R2d § 129)

Courts enforce oral land contracts if the buyer has taken possession,

made improvements, or paid part of the price.

Example:

If a buyer moves onto a property, makes renovations, and starts farming,

should an oral contract be enforceable? (Yes---actions serve as evidence

of the agreement.)

3\. UCC Exceptions for Goods Transactions

(15--20 minutes)

The UCC Statute of Frauds (§ 2-201) applies to contracts for the sale of

goods over \$500 but has important exceptions.

Ask students to analyze:

If two merchants make an oral contract, when can it be enforced? (If one

sends a confirmatory memo and the other fails to object within 10

days---§ 2-201(2).)

What if the goods are custom-made? (UCC § 2-201(3)(a) allows enforcement

if production has started.)

What if the buyer admits the contract existed? (UCC § 2-201(3)(b)

enforces contracts where the party admits in court that they made the

deal.)

Key Takeaways

The Statute of Frauds is a procedural defense, not a substantive rule of

contract formation.

Some contracts must be in writing, but many exceptions allow enforcement

despite noncompliance.

Promissory estoppel and part performance serve as equitable exceptions.

The UCC introduces merchant-specific exceptions to facilitate commerce.

CROSS-REFERENCES

• Slide Deck: Chapter_10_Slides.pptx (71 slides)

• Case Briefs: See Case Briefs section, Chapter 10

• Problem Solutions: See Problem Solutions section, Chapter 10

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 10–13 (Contract Defenses)

CHAPTER 11: MISTAKE

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Sherwood v. Walker, Lenawee County Board of Health

Key Doctrines R2d § 152, R2d § 153, Basic assumption, Material effect

Slide Deck File Chapter_11_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Mutual vs. Unilateral Mistake (Slides 1-18)

Essential for all credit hours

MODULE 2: Sherwood v. Walker (Barren Cow) (Slides 19-35)

Essential for all credit hours

MODULE 3: Basic Assumption Test (Slides 36-48)

Essential for all credit hours

MODULE 4: Risk Allocation (Slides 49-56)

Essential for all credit hours

MODULE 5: Review (Slides 57-60)

Essential for all credit hours

LESSON PLAN: Chapter 11 — Mistake

This lesson examines the doctrine of mistake, which addresses

fundamental misunderstandings that may justify rescinding or reforming a

contract. Unlike doctrines such as fraud or misrepresentation, which

focus on wrongful inducement, mistake deals with errors made in good

faith by one or both parties.

The key teaching objective here is to help students balance contractual

stability with fairness---when should courts enforce contracts despite

mistaken assumptions, and when should they allow parties to escape

obligations? The cases in this chapter illustrate:

The difference between mutual and unilateral mistakes.

The assumption of risk principle, which often prevents relief.

The practical consequences of applying the mistake doctrine.

🎧 Listen to Mastering Contracts Podcast Episode 12: Oops! When Mistakes

Break Contracts

Time Management

If time is limited, prioritize:

The four elements of mutual mistake and the assumption of risk principle

(R2d § 154).

The contrasting outcomes in Sherwood (rescission granted) and Wood v.

Boynton (no relief).

The higher burden of proof for unilateral mistake.

What Is a Mistake in Contract Law?

(15--20 minutes)

Begin with a Socratic discussion:

If two parties enter a contract based on a shared but incorrect

assumption, should they be bound? Why or why not?

If a buyer and seller both believe a painting is a replica, but it turns

out to be an original worth millions, should the seller be able to

rescind the contract?

Introduce R2d § 151, which defines mistake:

"A mistake is a belief that is not in accord with the facts."

Students often assume all mistakes are legally significant, but mistake

only provides relief if it meets additional criteria.

Mutual Mistake and R2d § 152

(25--30 minutes)

Introduce R2d § 152, which provides that a contract is voidable for

mutual mistake if:

Both parties made a mistake of fact.

The mistake concerns a basic assumption on which the contract was made.

The mistake has a material effect on the agreed exchange.

The adversely affected party did not assume the risk of the mistake.

Case Application: Sherwood v. Walker (The fertile cow case)

A cow was sold under the mutual mistaken belief that it was barren.

The court allowed rescission, holding that the mistake went to the

"substance" of the agreement.

Socratic Discussion:

Was the mistake about the "nature of the thing" or just its "quality"?

Would the decision change if the cow was only slightly more valuable

when fertile?

If Walker, the seller, was a professional cattle breeder, does that

change the outcome?

This case illustrates early judicial approaches to mutual mistake,

emphasizing substance over value.

Assumption of Risk: Who Bears the Burden of a Mistake?

(20--25 minutes)

Introduce R2d § 154, which prevents relief for mistaken parties who

assumed the risk:

By contract (e.g., a quitclaim deed).

By conscious ignorance (a party chooses to proceed despite uncertainty).

By court allocation (courts assign risk based on fairness and

efficiency).

Case Application: Wood v. Boynton (The uncut diamond case)

A woman sold a rough stone for \$1, believing it was topaz.

The stone turned out to be a \$700 diamond, but the court denied

rescission.

Socratic Discussion:

Why was relief granted in Sherwood but denied in Wood?

Did Wood assume the risk by selling the stone without expert valuation?

How would the case change if Boynton (the buyer) had suspected it was a

diamond?

This case highlights modern courts' preference for analyzing risk

allocation rather than metaphysical questions about the nature of goods.

Unilateral Mistake and R2d § 153

(20--25 minutes)

Unlike mutual mistake, unilateral mistake is harder to prove---the

mistaken party must also show that:

Enforcement would be unconscionable, or

The other party knew or caused the mistake.

Case Application: DePrince v. Starboard Cruise Services (The mispriced

diamond case)

A jewelry store mistakenly sold a diamond for \$235,000 instead of \$4.8

million.

The buyer knew the price was suspiciously low but still went through

with the sale.

The court allowed rescission, finding that DePrince likely knew of the

mistake.

Socratic Discussion:

Should buyers have a duty to disclose obvious seller errors?

Would the case be different if DePrince had no expertise in diamonds?

Why is the burden for unilateral mistake higher than for mutual mistake?

This case reinforces why courts are reluctant to undo contracts based on

one party's unilateral error---contract stability is at stake.

Mistranscription (Scrivener's Errors)

(15--20 minutes)

Introduce mistranscription, where a written contract does not match the

parties' true agreement.

Case Application: OneBeacon v. Travelers (insurance policy reformation)

An insurance contract accidentally covered more people than intended.

The court allowed reformation to match the parties' original intent.

Socratic Discussion:

Should courts rewrite contracts if both parties agreed to different

terms?

How do we distinguish between genuine errors and attempts to escape bad

deals?

Reformation is a less extreme remedy than rescission, preserving the

contract while correcting the error.

Key Takeaways

Mutual mistake (R2d § 152) allows rescission if both parties were

mistaken about a basic assumption that materially affects the contract.

Unilateral mistake (R2d § 153) requires a higher burden---either

unconscionability or knowledge by the other party.

Assumption of risk (R2d § 154) often prevents relief---courts expect

parties to investigate material facts before contracting.

Mistranscription errors may justify contract reformation rather than

rescission.

CROSS-REFERENCES

• Slide Deck: Chapter_11_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 11

• Problem Solutions: See Problem Solutions section, Chapter 11

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 10–13 (Contract Defenses)

CHAPTER 12: IMPROPER BARGAINING

CHAPTER OVERVIEW

Total Slides 64 slides —————— ———————————————————————- Estimated Time 50-min classes: ~2.6 sessions | 75-min classes: ~1.8 sessions

Major Cases Williams v. Walker-Thomas Furniture, Barrer v. Women’s National Bank

Key Doctrines Unconscionability, Procedural vs. substantive, Duress

Slide Deck File Chapter_12_Slides.pptx —————————————————————————————–

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Misrepresentation Elements (Slides 1-18)

Essential for all credit hours

MODULE 2: Duress Doctrine (Slides 19-30)

Essential for all credit hours

MODULE 3: Undue Influence (Slides 31-42)

Can be condensed

MODULE 4: Williams v. Walker-Thomas / Unconscionability (Slides 43-58)

Essential for all credit hours

MODULE 5: Public Policy (Slides 59-62)

Can be condensed

MODULE 6: Review (Slides 63-64)

Essential for all credit hours

LESSON PLAN: Chapter 12 — Improper Bargaining

Contract law is rooted in the principle of voluntary and informed

consent. However, not all agreements are made on equal footing. Improper

bargaining doctrines---including misrepresentation, duress, undue

influence, unconscionability, and public policy defenses---serve as

checks on unfair agreements, ensuring that contracts are not the product

of deception, coercion, or exploitation.

This lesson focuses on:

When and why courts refuse to enforce contracts based on improper

bargaining.

The distinct functions of misrepresentation, duress, undue influence,

unconscionability, and public policy defenses.

How courts balance the principles of contractual autonomy with the need

to prevent injustice.

These doctrines form the boundaries of enforceable

contracts---demonstrating contract law's dual role in protecting

individual freedom while intervening against exploitation.

🎧 Listen to Mastering Contracts Podcast Episode 13: Secrets and Lies --

When Fraud Invalidates Contracts

Time Management: Adjusting the Lesson for Shorter Class Time

This lesson covers multiple defenses, so if time is limited:

Prioritize:

Misrepresentation and duress---as they involve the most active forms of

improper bargaining.

Unconscionability---as it applies in modern contracts and consumer

transactions.

Trim down:

Discussion on public policy defenses, which can be covered more briefly.

Undue influence, which overlaps with duress.

Misrepresentation: The Role of Deception in Contracts

(25--30 minutes)

Defining Misrepresentation

Introduce R2d § 159, which defines misrepresentation as:

"An assertion that is not in accord with the facts."

Ask:

Should every false statement invalidate a contract?

What if the party making the statement believed it was true?

Why does contract law require more than just an incorrect statement?

Misrepresentation requires:

A false assertion---a spoken, written, or implied statement.

Materiality or fraudulence---it must be important or intentionally

deceptive.

Justifiable reliance---the deceived party must have reasonably relied on

it.

Case Application: Barrer v. Women's National Bank

A borrower misrepresented his financial condition on a loan application,

but the bank failed to verify his claims before issuing the loan.

The court analyzed whether the misrepresentation was material and

whether the bank justifiably relied on it.

Socratic Discussion:

Should a lender be able to void a contract based on false statements it

could have discovered through reasonable due diligence?

What distinguishes an innocent mistake from an actionable

misrepresentation?

This case highlights the intersection of misrepresentation and risk

allocation.

Fraudulent vs. Material Misrepresentation

(15--20 minutes)

Introduce R2d § 162, which distinguishes:

Fraudulent misrepresentation---intentional deception.

Material misrepresentation---an innocent but significant misstatement.

Example for discussion:

A car seller rolls back the odometer (fraudulent misrepresentation).

A seller mistakenly claims a roof is new when it is 5 years old

(material misrepresentation).

Ask students:

Why should contract law treat fraud more harshly than innocent

misstatements?

Should a party's failure to verify a claim impact whether they can void

a contract?

Duress: When Contracts Are Coerced

(20--25 minutes)

Defining Duress

Introduce R2d § 175, which states:

"A contract is voidable if a party's manifestation of assent is induced

by an improper threat that leaves the victim no reasonable alternative."

Case Application: Quebodeaux v. Quebodeaux

A husband threatened to take full custody of the children unless his

wife agreed to an unfair divorce settlement.

The court found duress because her assent was involuntary.

Ask students:

How does duress differ from hard bargaining?

Would the ruling change if the wife had access to legal counsel?

Duress is a subjective test---it considers whether this particular

person felt they had no choice.

Undue Influence: When Trust Is Exploited

(15--20 minutes)

Introduce R2d § 177, which defines undue influence as:

"Unfair persuasion by a party in a dominant position over the victim."

Case Application: Goldman v. Bequai

An elderly widow transferred property to her attorney, whom she trusted

as a family friend.

The court found undue influence because of her vulnerability and his

dominant position.

Discussion Questions:

How does undue influence differ from duress?

Should courts scrutinize agreements more closely when parties have a

special relationship?

Unconscionability: When Contracts Are Too One-Sided

(20--25 minutes)

What Makes a Contract Unconscionable?

Introduce R2d § 208 and UCC § 2-302, which allow courts to refuse

enforcement of grossly unfair contracts.

Unconscionability has two elements:

Procedural unconscionability---unfair bargaining process (e.g., surprise

terms, hidden fees).

Substantive unconscionability---excessively harsh or one-sided terms.

Case Application: Ronderos v. USF Reddaway

A truck driver was forced to sign an arbitration clause on the spot

without time to review it.

The court found both procedural and substantive unconscionability.

Ask students:

Is procedural unconscionability enough on its own, or should the terms

also be unfair?

Should courts treat consumer contracts differently from business

contracts?

Compare Fagerstrom v. Amazon, which upheld Amazon's arbitration clause

because users had reasonable access to the terms.

Public Policy: Contracts That Courts Refuse to Enforce

(15--20 minutes)

Introduce R2d § 178, which makes contracts unenforceable if they:

Violate statutes (e.g., usury laws, illegal contracts).

Harm public interests (e.g., contracts encouraging perjury or fraud).

Examples:

A contract for smuggling goods (unenforceable as illegal).

A non-compete agreement that stifles competition (may be struck down on

public policy grounds).

Ask students:

Should courts refuse to enforce contracts that are unfair but legal?

Where should the line be drawn between freedom of contract and public

welfare?

This section illustrates how contract law interacts with broader

societal values.

Key Takeaways

Misrepresentation voids contracts when deception or material falsehoods

induce assent.

Duress and undue influence invalidate contracts when coercion or abuse

of trust overrides free will.

Unconscionability prevents enforcement of grossly unfair agreements.

Public policy defenses ensure contracts do not undermine the legal

system or harm the public.

CROSS-REFERENCES

• Slide Deck: Chapter_12_Slides.pptx (64 slides)

• Case Briefs: See Case Briefs section, Chapter 12

• Problem Solutions: See Problem Solutions section, Chapter 12

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 10–13 (Contract Defenses)

CHAPTER 13: INCAPACITY

CHAPTER OVERVIEW

Total Slides 56 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.2 sessions | 75-min classes: ~1.6 sessions

Major Cases Kiefer v. Fred Howe Motors, Webster St. Partnership v. Sheridan

Key Doctrines Infancy, Mental incapacity, R2d §§ 12-16

Slide Deck File Chapter_13_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Infancy Doctrine (Slides 1-18)

Essential for all credit hours

MODULE 2: Mental Incapacity (Slides 19-35)

Essential for all credit hours

MODULE 3: Cognitive vs. Volitional Test (Slides 36-45)

Essential for all credit hours

MODULE 4: Necessaries Exception (Slides 46-52)

Essential for all credit hours

MODULE 5: Review (Slides 53-56)

Essential for all credit hours

LESSON PLAN: Chapter 13 — Incapacity

This lesson examines contractual incapacity, which protects individuals

who lack the ability to give meaningful consent due to their legal

status or cognitive limitations. Unlike doctrines like duress or undue

influence, which focus on external pressures, incapacity arises from

internal conditions that render a person unable to contract on fair

terms.

The key objectives of this lesson are to help students:

Understand the categories of incapacity---infancy, mental illness,

intoxication, and guardianship.

Analyze when contracts are void, voidable, or enforceable despite

incapacity.

Examine the policy trade-offs between protecting vulnerable individuals

and ensuring transactional stability.

A quick note on terms:

Void means the contract is null and cannot be enforced by either party.

Voidable means the contract exists until the disadvantaged party decided

to void it.

Time Management Guidance:

If time is short, prioritize infancy and mental illness, as they

generate the most litigation.

Reduce time on intoxication, as courts rarely grant relief.

If additional time is available, emphasize assumption of risk, where

parties contract despite incapacity concerns.

🎧 Listen to Mastering Contracts Podcast Episode 3: Incapacity -- Who Can

Contract?

The Core Principle: Capacity as a Precondition for Enforceability

(15--20 minutes)

Why Does Contract Law Require Capacity?

Start by asking:

Why do we allow most people to enter into contracts, but limit certain

groups?

Should everyone have the same right to contract, or do fairness concerns

justify restrictions?

Introduce R2d § 12(1), which states:

"No one can be bound by contract who has not legal capacity to incur at

least voidable contractual duties."

Then introduce R2d § 12(2), which categorizes incapacity into four

groups:

Guardianship -- Someone legally declared incompetent.

Infancy -- Minors under the age of majority.

Mental illness or defect -- Cognitive impairments that prevent rational

decision-making.

Intoxication -- Severe impairment preventing understanding or reasonable

behavior.

Now introduce the policy debate:

Should incapacity rules favor bright-line rules for efficiency, or

case-by-case assessments for fairness?

This tension recurs throughout the doctrine.

Infancy: Protecting Minors from Their Own Decisions

(25--30 minutes)

The General Rule: Contracts with Minors Are Voidable

Introduce R2d § 14, which allows minors to disaffirm contracts until

reaching majority, and for a reasonable time afterward.

Case Application: Webster St. Partnership v. Sheridan

Two teenagers rented an apartment but later disaffirmed the lease.

The landlord argued that housing was a "necessary", making the lease

enforceable.

The court rejected the landlord's argument, finding that because the

minors could return home, the apartment was not a necessary.

Socratic Discussion:

Why does the law allow minors to void contracts? (Prevents exploitation

but discourages adults from contracting with minors.)

When should minors be bound? (For necessaries---things essential for

survival.)

How does Webster distinguish between "necessaries" and non-necessaries?

Now introduce the necessaries doctrine, which limits disaffirmance when

a contract involves essential goods or services.

Example:

A homeless minor rents an apartment---should this be voidable?

(No---housing is necessary in this case.)

A wealthy 17-year-old leases a luxury car---should this be voidable?

(Yes---luxury is not a necessary.)

This discussion reinforces the policy rationale behind the infancy

doctrine.

Mental Incapacity: Understanding the Sliding Scale of Cognitive

Impairment

(25--30 minutes)

Defining Mental Incapacity

Introduce R2d § 15(1), which states that a contract is voidable if a

party:

Cannot understand the nature and consequences of the contract, or

Cannot act reasonably in relation to the contract, and the other party

knows or should know of the condition.

These two standards reflect different levels of impairment:

Total cognitive incapacity → contract is voidable regardless of the

other party's knowledge.

Impaired judgment → contract is voidable only if the other party knew or

should have known.

Case Application: Estate of McGovern

An elderly man suffering from alcoholism and denial about his wife's

terminal illness selected a disadvantageous pension option before his

death.

His heirs sought to void the contract, claiming he lacked capacity due

to mental illness.

The court denied relief, emphasizing that capacity is judged at the

moment of contracting---prior confusion was not enough.

Socratic Discussion:

Should mental illness always invalidate a contract? (No---capacity

varies by degree and context.)

Why does the law focus on mental state at the time of contracting? (To

prevent retrospective claims based on later cognitive decline.)

Should courts adopt the Restatement's broader test, which includes

impaired decision-making? (Dissent in McGovern argued yes---protects

vulnerable parties better.)

This case highlights the difficulty of proving mental incapacity and the

policy divide over whether to favor certainty or fairness.

Intoxication: When Self-Induced Impairment Voids a Contract

(15--20 minutes)

The High Burden of Proving Intoxication as a Defense

Introduce R2d § 16, which states that a contract is voidable if:

A party is so intoxicated that they cannot understand the contract, and

The other party knows or has reason to know of the intoxication.

Courts rarely grant relief because intoxication is voluntary---parties

should bear the consequences of their actions.

Case Application: LaBarbera v. Wynn Las Vegas

A gambler claimed he was too intoxicated to agree to a \$1 million

casino debt.

The court denied relief, finding that he could not prove the extent of

his intoxication.

Socratic Discussion:

Why does the law set a high bar for intoxication defenses? (Prevents

strategic claims of incapacity.)

Should casinos have a duty to stop intoxicated gamblers from making

high-stakes bets? (Ethical but legally unclear.)

If someone signs a contract while drunk but remembers doing so the next

day, should they be bound? (Yes---awareness post-intoxication suggests

capacity.)

This discussion illustrates why intoxication defenses are difficult to

win.

Guardianship: Contracts Made on Behalf of an Incapacitated Person

(15 minutes, if time permits)

Introduce R2d § 13, which states that a person under legal guardianship

has no power to contract.

Example Discussion:

If an elderly person with dementia is placed under guardianship, can

they enter into new contracts? (No---the guardian must act on their

behalf.)

If they signed a contract before the guardianship was established,

should it be voidable? (Depends on capacity at the time.)

This doctrine illustrates the law's strongest protection against

contractual exploitation.

Key Takeaways

Infants can void contracts, except for necessaries, to protect them from

exploitation.

Mental illness can render contracts voidable, but proving incapacity

requires showing severe cognitive impairment or known decision-making

dysfunction.

Intoxication rarely voids contracts, as the burden of proof is high.

Guardianship eliminates contractual authority to protect vulnerable

individuals.

CROSS-REFERENCES

• Slide Deck: Chapter_13_Slides.pptx (56 slides)

• Case Briefs: See Case Briefs section, Chapter 13

• Problem Solutions: See Problem Solutions section, Chapter 13

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 10–13 (Contract Defenses)

CHAPTER 14: INTRODUCTION TO INTERPRETATION & AMBIGUITY

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Frigaliment Importing Co. v. B.N.S. International Sales

Key Doctrines Plain meaning, Latent vs. patent ambiguity

Slide Deck File Chapter_14_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Plain Meaning Rule (Slides 1-15)

Essential for all credit hours

MODULE 2: Ambiguity Definition (Slides 16-28)

Essential for all credit hours

MODULE 3: Frigaliment (Chicken Case) (Slides 29-50)

Essential for all credit hours

MODULE 4: Objective Interpretation (Slides 51-57)

Essential for all credit hours

MODULE 5: Review (Slides 58-60)

Essential for all credit hours

LESSON PLAN: Chapter 14 — Introduction to Interpretation & Ambiguity

This lesson introduces the interpretation module while covering

ambiguity in contract law. Unlike prior lessons, which focused on

formation and enforceability, the next set of lessons explores how

courts determine the meaning of contract terms after an agreement has

been formed. This transition requires students to shift their

perspective:

Previously, the focus was on whether a contract exists.

Now, the focus is on what the contract means and how disputes over

meaning are resolved.

The interpretation process is central to contract disputes because

language is often imprecise or incomplete. Contract law provides

structured methods for resolving these ambiguities to ensure contracts

are enforceable and predictable.

🎧 Listen to Mastering Contracts Podcast Episode 14: Words in Context --

How Courts Interpret Contracts

Learning Objectives

By the end of this lesson, students should be able to:

Understand the role of interpretation in contract enforcement.

Distinguish between patent and latent ambiguities.

Analyze when courts consider extrinsic evidence to resolve ambiguity.

Recognize strategic incentives for arguing a term is ambiguous or

unambiguous.

Why Does Contract Interpretation Matter?

(15--20 minutes)

Introducing the Interpretation Framework

Start with a Socratic discussion:

What happens if two parties honestly disagree about what a contract term

means?

Should courts enforce the meaning one party intended, or what the other

party understood?

When should external evidence (e.g., industry standards, prior dealings)

influence contract meaning?

Introduce R2d § 200, which defines interpretation as:

"The ascertainment of the meaning of a promise or agreement or a term

thereof."

Now guide students to recognize the practical importance of

interpretation:

Transactional lawyers focus on preventing disputes by drafting clear

contracts.

Litigators resolve disputes by arguing for favorable interpretations.

Judges must determine what contracts mean when disputes arise.

This sets the stage for discussing ambiguity, which drives many contract

disputes.

What Is Ambiguity in Contracts?

(25--30 minutes)

Defining Ambiguity

Introduce R2d § 201, which states:

"Ambiguity exists when a contractual term is reasonably susceptible to

more than one meaning."

Ask:

Should courts always enforce the "plain meaning" of contract terms?

Or should they consider what the parties actually meant?

Now distinguish between patent ambiguity and latent ambiguity:

Patent ambiguity → An unclear term on the face of the contract.

Example: A contract states, "Delivery required on the first and third

Friday of every month."

Issue: Does "first" mean the first calendar Friday or the first business

Friday?

Latent ambiguity → A term that seems clear but becomes ambiguous when

applied.

Example: A contract requires shipment on the vessel Peerless, but two

ships have the same name (Raffles v. Wichelhaus).

Case Application: Frigaliment Importing Co. v. B.N.S. International

Sales Corp. (The "What Is Chicken?" case)

A buyer ordered "chicken" but expected only young broilers.

The seller delivered older stewing chickens.

The court ruled "chicken" was ambiguous and examined extrinsic evidence.

Socratic Discussion:

Why did the court not simply apply the plain meaning of "chicken"?

What types of evidence did the court consider?

Would this case come out differently under modern contract

interpretation rules?

Now transition to how courts determine whether a term is ambiguous.

How Courts Determine and Resolve Ambiguity

(30--35 minutes)

Step 1: Is There Ambiguity?

Before resolving ambiguity, courts must determine if ambiguity exists.

Courts:

Start with the "four corners" of the contract.

Ask whether the language is reasonably susceptible to multiple meanings.

If so, courts classify the ambiguity as patent or latent.

Example:\

A contract states that deliveries will be made to "Approved Location: 56

Branch St., Brooklyn."

If the address has multiple buildings, is the contract ambiguous?

Does the ambiguity exist on the face of the contract (patent), or does

it arise when applied (latent)?

Step 2: What Evidence Can Be Used?

Once ambiguity is established, courts use intrinsic and extrinsic

evidence to resolve it.

Intrinsic Evidence (Within the Contract)

Plain Meaning -- What do words ordinarily mean?

Defined Terms -- If a contract defines a term, that definition governs.

Context & Structure -- How does the contract as a whole clarify meaning?

Extrinsic Evidence (Outside the Contract)

Course of Performance -- How have the parties acted under this contract?

Course of Dealing -- How did the parties interpret similar contracts in

the past?

Trade Usage -- Does the term have an industry-specific meaning?

Case Application: Ezrasons v. Travelers Indemnity Co. (The "Approved

Location" insurance dispute)

An insurance policy listed "Approved Location: 56 Branch St."

The insured argued this covered multiple warehouses at the address.

The insurer argued it covered only the front building.

Socratic Discussion:

Does "Approved Location" have a plain meaning, or is it ambiguous?

How should courts decide if ambiguity exists?

Should trade usage (insurance industry practices) influence the ruling?

Now introduce the strategic reasons for arguing ambiguity.

Strategic Considerations in Ambiguity Disputes

(20 minutes)

Ask:

Why would a party argue a term is ambiguous or unambiguous?

Who benefits from a broad interpretation? A narrow one?

Illustrate strategic considerations with two scenarios:

Scenario 1: A Buyer Wants a Broad Interpretation

A buyer agrees to purchase "organic apples".

The seller delivers both fresh and dried apples.

The buyer claims "organic apples" means only fresh apples.

The seller claims "organic apples" includes dried apples.

Who benefits from ambiguity? (The buyer, if courts interpret "organic

apples" narrowly.)

Scenario 2: A Seller Wants a Broad Interpretation

A software license states, "for use in business operations."

The licensee uses the software for e-commerce, generating millions in

revenue.

The licensor claims "business operations" meant only internal use.

The licensee argues "business operations" includes e-commerce.

Who benefits from ambiguity? (The licensee, if courts adopt a broad

interpretation.)

These scenarios reinforce why ambiguity matters strategically.

Key Takeaways

Contract interpretation ensures clarity and enforceability.

Ambiguity arises when language is susceptible to multiple meanings.

Courts first examine intrinsic evidence, then consider extrinsic

evidence if necessary.

Strategic incentives drive ambiguity disputes---parties argue for the

interpretation that benefits them most.

CROSS-REFERENCES

• Slide Deck: Chapter_14_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 14

• Problem Solutions: See Problem Solutions section, Chapter 14

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 14–17 (Interpretation)

CHAPTER 15: INTRINSIC EVIDENCE & CANONS OF CONSTRUCTION

CHAPTER OVERVIEW

Total Slides 68 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.7 sessions | 75-min classes: ~1.9 sessions

Major Cases In re Motors Liquidation Co.

Key Doctrines Ejusdem generis, Expressio unius, Noscitur a sociis

Slide Deck File Chapter_15_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Intrinsic Evidence Primacy (Slides 1-18)

Essential for all credit hours

MODULE 2: Canons of Construction (Slides 19-35)

Essential for all credit hours

MODULE 3: Ejusdem Generis (Slides 36-45)

Essential for all credit hours

MODULE 4: In re Motors Liquidation (Slides 46-62)

Essential for all credit hours

MODULE 5: Review (Slides 63-68)

Essential for all credit hours

LESSON PLAN: Chapter 15 — Intrinsic Evidence & Canons of Construction

This lesson builds upon the introduction to interpretation by examining

intrinsic evidence---the words of the contract itself---as the primary

tool for resolving disputes over contract meaning. Courts prioritize

intrinsic evidence because it reflects the parties' shared intent at the

time of contracting, making it the first step in contract

interpretation.

This lesson will guide students through:

The primacy of intrinsic evidence in contract interpretation.

The canons of construction---structured tools courts use to clarify

ambiguous terms.

The distinction between semantic and policy canons, and when each

applies.

How courts harmonize seemingly conflicting contract provisions.

The challenge of this lesson is ensuring that students understand how

courts apply multiple interpretive principles together, rather than

treating them as rigid rules. Judges often balance multiple

considerations, favoring consistency, coherence, and fairness in

contract enforcement.

🎧 Listen to Mastering Contracts Podcast Episode 15: Reading Between the

Lines -- How Courts Decode Contract Terms

Time Management: Adjusting the Lesson for Shorter Class Time

If time is limited:

Prioritize:

The Plain Meaning Rule and dictionary meaning---the starting point of

all contract interpretation.

The structural and contextual canons---how courts resolve internal

contract inconsistencies.

The case study of In re Motors Liquidation Co. (the "accidents or

incidents" case)---which illustrates multiple canons in action.

Trim down:

The full range of semantic canons---focusing on the most frequently

applied ones.

The discussion of policy-based canons, which can be expanded in later

lessons.

The Primacy of Intrinsic Evidence in Contract Interpretation (15--20

minutes)

Why Do Courts Prioritize Intrinsic Evidence?

Start with a Socratic discussion:

Should courts always enforce contracts based on their written words, or

should they consider what the parties actually meant?

Why might parties disagree about what a contract means, even when it is

written down?

Should a court look beyond the text if the meaning seems clear? Why or

why not?

Introduce R2d § 202(1):

"A contract should be interpreted as a whole, and if possible, all terms

should be given effect."

Explain that intrinsic evidence---the words of the contract---forms the

foundation of contract interpretation. Courts consider:

Plain meaning---the ordinary meaning of words.

Context---how terms interact with each other in the contract.

Structure---the way provisions are organized and related.

Ask students:

Why do courts start with intrinsic evidence rather than immediately

turning to outside evidence?

What are the risks of relying too much on external evidence?

These questions frame the importance of canons of construction, which

help resolve ambiguities while staying within the four corners of the

contract.

The Canons of Construction: Tools for Interpreting Contract Language

(30--35 minutes)

Semantic Canons: How Courts Clarify Language

Introduce semantic canons, which focus on the meaning of words and how

they interact within the contract.

Plain Meaning Rule -- Courts give words their ordinary meaning unless

the contract defines them otherwise.

Example: If a lease requires a tenant to "maintain" a property, does

that include major repairs? Courts start by applying the plain meaning

of "maintain."

Socratic Question: Should courts ever reject the plain meaning of a term

if it produces an unfair result?

Noscitur a Sociis (Recognition by Association) -- A word's meaning is

informed by surrounding terms.

Example: If an insurance policy covers "fire, flood, and other

disasters," does "other disasters" include theft?

Courts would interpret "other disasters" in line with fire and

flood---suggesting large-scale natural events, not theft.

Socratic Question: Why do courts assume that words take meaning from

surrounding terms?

Ejusdem Generis (Same Kind Rule) -- When a general term follows a list

of specific terms, it is limited to things similar to those listed.

Example: If a contract states, "Tenant may not operate a pool hall, a

bar, or any other objectionable business," does this prohibit a quiet

coffee shop?

Courts would likely limit "other objectionable businesses" to those

similar to a pool hall or bar, rather than extending it broadly.

Socratic Question: How does this rule prevent parties from stretching

general terms too far?

Contra Proferentem (Interpretation Against the Drafter) -- Ambiguous

terms are construed against the party that drafted the contract.

This rule incentivizes clear drafting and protects the non-drafting

party from vague or self-serving language.

Socratic Question: Should contra proferentem apply in contracts between

sophisticated parties?

Whether you go through all 12 or just these four, or something in

between, depends on how much time you have in class. The casebook

presents these very straightforwardly, so you can assign them as

reading, or elaborate them as you choose.

Now transition to a case study where multiple canons interact.

In re Motors Liquidation Co. (The "Accidents or Incidents" Case)

(30--35 minutes)

Facts of the Case

General Motors filed for bankruptcy and transferred assets to "New GM."

The sale contract stated that New GM assumed liability for "accidents or

incidents" occurring after the sale date.

A lawsuit arose when a victim was injured in a car accident before the

sale but died afterward.

The court had to decide: Did the victim's post-sale death count as an

"incident" under the contract?

How the Court Applied the Canons of Construction

Ask students:

Was "accidents or incidents" ambiguous?

If so, what tools should the court use to resolve the ambiguity?

The court applied:

Plain Meaning Rule -- The ordinary meaning of "accident" suggested a

single event, not ongoing consequences.

Noscitur a Sociis -- "Incident" was paired with "accident," suggesting a

similar kind of event.

Contra Proferentem -- The court considered whether ambiguity should be

resolved against the party that drafted the contract.

Socratic Discussion

Why did the court rule that the victim's later death was not a separate

"incident"?

How does this case illustrate the way courts harmonize contract terms?

This case demonstrates how courts use multiple canons together to

interpret contract terms.

Strategic Considerations in Interpretation Disputes

(15--20 minutes)

Why Do Parties Disagree About Contract Meaning?

Ask students:

Why might a party argue that a term is ambiguous?

Why might a party insist that the meaning is clear?

Illustrate with a real-world scenario:

Scenario: A company agrees to provide "full technical support" to a

client.

The client claims this includes 24/7 phone assistance.

The company insists it only meant basic troubleshooting during business

hours.

Who benefits from ambiguity? (The client.)

Who benefits from clarity? (The company.)

This discussion reinforces how contract interpretation is often shaped

by party incentives.

Key Takeaways

Intrinsic evidence is the foundation of contract interpretation.

Semantic canons guide courts in resolving ambiguity within the four

corners of the contract.

Courts balance multiple canons to determine the most reasonable meaning.

Strategic incentives influence how parties frame ambiguity disputes.

CROSS-REFERENCES

• Slide Deck: Chapter_15_Slides.pptx (68 slides)

• Case Briefs: See Case Briefs section, Chapter 15

• Problem Solutions: See Problem Solutions section, Chapter 15

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 14–17 (Interpretation)

CHAPTER 16: EXTRINSIC EVIDENCE

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Columbia Nitrogen Corp. v. Royster Co.

Key Doctrines UCC § 1-303, Course of performance, Trade usage

Slide Deck File Chapter_16_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Course of Performance (Slides 1-18)

Essential for all credit hours

MODULE 2: Course of Dealing (Slides 19-30)

Essential for all credit hours

MODULE 3: Usage of Trade (Slides 31-45)

Essential for all credit hours

MODULE 4: Columbia Nitrogen Case (Slides 46-56)

Essential for all credit hours

MODULE 5: Review (Slides 57-60)

Essential for all credit hours

LESSON PLAN: Chapter 16 — Extrinsic Evidence

This lesson builds on the previous discussion of intrinsic evidence by

shifting the focus to extrinsic evidence---information outside the

contract that courts consider when determining contractual meaning.

While courts prefer to rely on the written terms of a contract,

extrinsic evidence plays a crucial role when ambiguities arise or when

context is needed to understand the parties' intent.

This lesson will guide students through:

The role of extrinsic evidence in contract interpretation---when courts

allow it and why.

Different forms of extrinsic evidence---course of performance, course of

dealing, and trade usage.

How extrinsic evidence interacts with intrinsic evidence---and when

courts privilege one over the other.

Strategic considerations for parties in contract disputes---who benefits

from arguing for or against extrinsic evidence?

A key pedagogical challenge in this lesson is helping students

understand why courts sometimes permit extrinsic evidence but other

times exclude it. Judges must balance ensuring fairness and interpreting

contracts in context against the need for certainty and predictability

in contractual enforcement.

🎧 Listen to Mastering Contracts Podcast Episode 16: Words and Deeds -- How

Parties' Actions Impact Contract Interpretation

Time Management

If time is limited, prioritize:

The three main types of extrinsic evidence---course of performance,

course of dealing, and trade usage.

The UCC framework for extrinsic evidence---students will encounter this

frequently in practice.

The key case of Nānākuli Paving & Rock Co. v. Shell Oil Co. (the "price

protection" case)---illustrating extrinsic evidence in action.

Trim down:

The discussion of implied terms, which can be revisited in later

lessons.

Judicial skepticism of extrinsic evidence, which is explored further in

the Parol Evidence Rule discussion.

Why Do Courts Consider Extrinsic Evidence?

(15--20 minutes)

Introducing Extrinsic Evidence

Start with a Socratic discussion:

Why do courts sometimes look beyond the words of a contract to determine

its meaning?

Does considering extrinsic evidence make contracts more predictable or

less predictable?

Should courts prioritize what the parties actually meant or what the

contract says?

Introduce R2d § 200, which recognizes that contract interpretation

requires understanding the parties' intent. Courts first examine

intrinsic evidence but may turn to extrinsic evidence if the contract is

ambiguous or incomplete.

Extrinsic evidence serves two main functions:

Clarifying ambiguity---resolving disputes over unclear contract

language.

Supplementing the contract---filling in missing terms based on context.

Now transition to the three primary types of extrinsic evidence courts

use.

The Three Main Types of Extrinsic Evidence

(30--35 minutes)

Course of Performance (UCC § 1-303(a))

Definition: How the parties have behaved under the current contract.

Most persuasive form of extrinsic evidence---shows what the parties

actually did.

Relies on repeated conduct---one-time behaviors do not count.

Example Discussion: Delivery Terms in a Supply Contract

A contract states that "delivery will be made to the customer's

facility."

For the first 10 shipments, the supplier delivers to an off-site

warehouse instead.

The buyer accepts all deliveries without objection.

The supplier argues that the off-site warehouse is the "customer's

facility."

The buyer later claims the contract requires delivery to the main

office.

Ask students:

Who has the stronger argument? (The supplier---because repeated

acceptance without objection forms a course of performance.)

If the buyer wanted to enforce delivery to the main office, what should

they have done? (Object immediately to off-site deliveries.)

This example illustrates why courts value course of performance---it

reflects real-world practice.

Course of Dealing (UCC § 1-303(b))

Definition: How the parties have conducted business in prior contracts

with each other.

Less persuasive than course of performance because it applies to past

transactions.

Provides evidence of expectations when a contract is silent or

ambiguous.

Example Discussion: Prior Invoices and Payment Deadlines

A company contracts with a supplier but does not specify payment terms.

In all prior contracts, the supplier required payment within 30 days.

The buyer now claims payment is due in 60 days under the new contract.

The supplier argues course of dealing establishes a 30-day payment

window.

Ask:

Does the supplier have a strong argument? (Yes---past behavior suggests

a shared expectation.)

Why would courts favor course of performance over course of dealing?

(Performance reflects the current contract, not just past practices.)

This highlights how courts use course of dealing to infer missing terms.

Trade Usage (UCC § 1-303(c))

Definition: Practices and customs widely observed in a particular

industry.

Most useful when contracts use specialized terms.

Can clarify meaning or fill in gaps, but cannot override express terms.

Example Discussion: The "Two-by-Four" Lumber Standard

A contract requires "two-by-four" lumber.

The buyer claims this means wood measuring exactly 2 inches by 4 inches.

The seller argues that in the lumber industry, a two-by-four is actually

1.5 inches by 3.5 inches.

Ask:

Who has the stronger argument? (The seller---because trade usage sets

industry norms.)

Should courts rely on trade usage if one party is new to the industry?

(Yes---if trade usage is well established, all participants are expected

to follow it.)

This reinforces how courts use trade usage to promote commercial

stability.

Nānākuli Paving & Rock Co. v. Shell Oil Co. (Price Protection Dispute)

(30--35 minutes)

Facts of the Case

Nānākuli Paving had a long-term supply contract with Shell Oil.

The contract stated that the price was "Shell's posted price at time of

delivery."

However, industry practice included "price protection," where suppliers

honored prior prices for committed projects.

Shell had honored price protection before but refused to do so in 1974.

Court's Analysis:

Course of performance: Shell had previously protected prices, so

Nānākuli reasonably expected it would continue.

Trade usage: Price protection was a standard industry practice.

Holding: The court admitted extrinsic evidence and found that price

protection was part of the contract.

Socratic Discussion:

Did the written contract unambiguously require price protection?

(No---it was silent.)

Why did the court rely on extrinsic evidence instead of just enforcing

"posted price at time of delivery"? (Because prior conduct and trade

norms filled the contractual gap.)

What lesson does this case teach about contract drafting? (If Shell had

explicitly disclaimed price protection, this case might have been

avoided.)

This case demonstrates when and why courts admit extrinsic evidence.

Strategic Considerations in Extrinsic Evidence Disputes

(15--20 minutes)

Ask students:

Why would a party argue that a contract should be interpreted strictly

based on its written terms?

Why would a party argue that extrinsic evidence should be considered?

Illustrate with two strategic scenarios:

A supplier delivers goods late but claims past leniency means late

delivery is acceptable.

The buyer argues the contract's "on-time delivery" clause is absolute.

Who benefits from admitting extrinsic evidence? (The supplier.)

A landlord interprets "premises" as including parking spaces, while the

tenant claims it only covers office space.

Who benefits from extrinsic evidence? (The tenant, if past leasing

history supports their claim.)

This reinforces the practical stakes in interpretation disputes.

Key Takeaways

Extrinsic evidence supplements contract interpretation when intrinsic

evidence is insufficient.

Course of performance, course of dealing, and trade usage provide

crucial context.

Courts balance certainty with fairness when deciding whether to admit

extrinsic evidence.

CROSS-REFERENCES

• Slide Deck: Chapter_16_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 16

• Problem Solutions: See Problem Solutions section, Chapter 16

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 14–17 (Interpretation)

CHAPTER 17: THE PAROL EVIDENCE RULE

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Masterson v. Sine, Mitchell v. Lath

Key Doctrines Integration, Merger clause, R2d §§ 213-216

Slide Deck File Chapter_17_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Rule Statement (Slides 1-15)

Essential for all credit hours

MODULE 2: Integration Test (Slides 16-28)

Essential for all credit hours

MODULE 3: Masterson v. Sine / Mitchill v. Lath (Slides 29-44)

Essential for all credit hours

MODULE 4: Exceptions (Slides 45-55)

Essential for all credit hours

MODULE 5: Review (Slides 56-60)

Essential for all credit hours

LESSON PLAN: Chapter 17 — The Parol Evidence Rule

This lesson introduces the Parol Evidence Rule (PER)---a doctrine that

governs whether evidence of prior or contemporaneous agreements can

supplement or contradict a written contract. This lesson presents a

shift in contract law focus:

Previously, students learned how contracts are interpret ambiguous terms

given both intrinsic and extrinsic evidence.

Now, students learn what evidence courts allow when interpreting

contracts and what evidence is excluded under the PER.

🎧 Listen to Mastering Contracts Podcast Episode 17: The Parol Evidence

Rule -- What's the Deal?

The Parol Evidence Rule serves two key functions:

Preserving the integrity of written contracts by preventing unreliable

claims about prior agreements.

Balancing certainty and fairness, ensuring courts consider relevant

context while protecting final written agreements.

This lesson presents challenges because the rule is deceptively simple

but full of exceptions. Courts must:

Determine if the contract is "integrated" (finalized).

Decide if it is completely or partially integrated (affecting what

evidence is admissible).

Analyze exceptions to decide when parol evidence is still allowed.

By the end of this lesson, students should be able to:

Define the Parol Evidence Rule and its purpose.

Distinguish between complete and partial integrations and understand

their impact.

Analyze exceptions that allow parol evidence despite the rule.

Apply the rule to contract disputes using cases and real-world examples.

Time Management: Adjusting the Lesson for Shorter Class Time

If time is limited:

Prioritize:

The definition and function of the PER.

The integration test---determining whether a contract is fully or

partially integrated.

The case of Mitchill v. Lath (the icehouse case), which provides a

foundational PER analysis.

Trim down:

Collateral agreements and implied conditions, which are nuanced but less

commonly tested.

Theoretical debates on the rule's fairness, which can be addressed in

later discussions.

What Is the Parol Evidence Rule and Why Does It Exist?

(15--20 minutes)

Introducing the Parol Evidence Rule

Start with a Socratic discussion:

If two parties negotiate a contract, but later one party claims they

made an additional oral agreement not included in the contract, should

the court enforce it? Why or why not?

What risks arise if courts consider every prior discussion when

interpreting contracts?

When should courts allow parties to introduce prior discussions as

evidence?

Introduce R2d § 213(1), which establishes the PER:

"A binding integrated agreement discharges prior agreements to the

extent that it is inconsistent with them."

Explain the three core functions of the PER:

Prevents unreliable claims---Excluding evidence of alleged oral

agreements reduces false claims.

Encourages careful contract drafting---Parties should ensure all terms

are included in writing.

Promotes certainty and finality---A final written contract should not be

undermined by later disputes.

Now transition to how courts determine whether a contract is subject to

the PER.

Determining Whether a Contract Is "Integrated"

(25--30 minutes)

Step 1: Is There an "Integration"?

Introduce R2d § 209(1), which defines an integrated agreement:

"An integrated agreement is a writing or writings constituting a final

expression of one or more terms of an agreement."

Ask:

How do courts determine whether a contract is integrated?

If a written contract does not mention a term the parties allegedly

agreed upon, does that mean the contract is incomplete?

Explain that not all writings are integrations:

If the contract is not final, the PER does not apply.

If the contract is final, the next step is to determine whether it is

partially or completely integrated.

Step 2: Complete vs. Partial Integration

Introduce R2d § 210, which distinguishes between:

Completely Integrated Agreements -- A final, exclusive statement of all

contract terms. PER excludes all prior agreements, even if consistent.

Partially Integrated Agreements -- A final agreement but not exhaustive.

PER excludes contradictory prior agreements but allows consistent

additional terms.

Case Application: Mitchill v. Lath (The Icehouse Case)

Facts: Buyer purchased land and claimed the seller orally promised to

remove an ugly icehouse nearby. The written contract did not mention

this promise.

Ruling: The court refused to admit the oral promise because the contract

was completely integrated.

Reasoning:

The promise was related to the subject of the contract (property sale).

If the promise was part of the deal, it would have been included in the

written contract.

Socratic Discussion

Why did the court exclude evidence of the icehouse promise?

Was the contract "completely integrated"? Why or why not?

Should courts be flexible in allowing parol evidence, or does that

undermine written contracts?

This case reinforces how courts analyze integration and decide whether

to admit parol evidence.

Exceptions: When Is Parol Evidence Admissible?

(30--35 minutes)

1\. Evidence to Prove Fraud, Duress, or Mistake

Introduce R2d § 214(d):

"Agreements may be invalidated by fraud, duress, or mistake, even if

they are integrated."

Example: Fraudulent Misrepresentation

A seller falsely claims a house has no termite damage but does not

include this promise in the contract.

The buyer relies on the misrepresentation and later discovers termites.

Courts admit parol evidence to prove fraud, even if the contract is

integrated.

Ask students:

Why does the PER not apply when fraud is involved?

Should fraud always override the PER, or does that create too much

uncertainty?

Resolving Ambiguity

Introduce R2d § 214(c):

"Parol evidence is admissible to explain ambiguous terms in an

agreement."

Case Application: Pacific Gas & Electric Co. v. G.W. Thomas Drayage &

Rigging Co.

Dispute over an indemnity clause---did it cover only third-party damage

or all damages?

Court admitted parol evidence because the term was ambiguous.

Socratic Discussion:

How do courts determine if a contract is ambiguous?

Should courts rely on plain meaning, or should they always consider

external context?

3\. Collateral Agreements

Introduce R2d § 216(2)(b):

"Parol evidence is admissible if the term would naturally be omitted

from the writing."

Example:

A contract for a car sale includes price and delivery terms but does not

mention free oil changes that were promised separately.

Courts may admit evidence of the free oil change agreement if it is

collateral and does not contradict the written contract.

Strategic Considerations in Parol Evidence Disputes

(15--20 minutes)

Why Do Parties Argue About Parol Evidence?

Ask:

Why might a party argue that an oral promise should be admitted?

Why might another party insist that the written contract is final?

Illustrate with a real-world scenario:

A contractor agrees to complete work by December 1.

The client claims the contractor orally promised to include extra

repairs for free.

The contractor insists that the contract is fully integrated and

excludes any extras.

Who benefits from admitting the oral promise? (The client.)

Who benefits from excluding it? (The contractor.)

This discussion reinforces the practical stakes in PER disputes.

Key Takeaways

The Parol Evidence Rule limits what evidence courts can consider when

interpreting contracts.

Complete integrations exclude all prior agreements, while partial

integrations allow consistent additional terms.

Exceptions exist for fraud, ambiguity, and collateral agreements.

Strategic incentives drive disputes over parol evidence---parties argue

based on what benefits them most.

CROSS-REFERENCES

• Slide Deck: Chapter_17_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 17

• Problem Solutions: See Problem Solutions section, Chapter 17

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 14–17 (Interpretation)

CHAPTER 18: WARRANTIES

CHAPTER OVERVIEW

Total Slides 71 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.8 sessions | 75-min classes: ~2.0 sessions

Major Cases Bayliner Marine Corp. v. Crow, Daughtrey v. Ashe

Key Doctrines UCC § 2-313, UCC § 2-314, UCC § 2-315, UCC § 2-316

Slide Deck File Chapter_18_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Express Warranties (Slides 1-20)

Essential for all credit hours

MODULE 2: Implied Warranty of Merchantability (Slides 21-38)

Essential for all credit hours

MODULE 3: Fitness for Particular Purpose (Slides 39-52)

Can be condensed

MODULE 4: Disclaimers (Slides 53-66)

Essential for all credit hours

MODULE 5: Review (Slides 67-71)

Essential for all credit hours

LESSON PLAN: Chapter 18 — Warranties

This lesson introduces warranties, which are promises that goods or

services will meet certain standards. Warranties clarify seller

obligations and buyer expectations, ensuring accountability in

commercial transactions. Courts frequently resolve disputes over

warranty scope and enforceability, requiring students to analyze whether

a statement constitutes a legally binding promise or mere opinion.

This lesson will guide students through:

The different types of warranties---express warranties, the implied

warranty of merchantability, and the implied warranty of fitness for a

particular purpose.

How courts determine whether a seller's statement constitutes an

enforceable warranty or mere "puffery."

How disclaimers and limitations affect warranty enforcement.

How courts assess remedies for breach of warranty.

This material requires students to apply contract interpretation

principles (previously covered) to determine whether a statement made by

a seller creates a binding obligation.

🎧 Listen to Mastering Contracts Podcast Episode 27: Imperfect Tender --

UCC Warranties

Time Management: Adjusting the Lesson for Shorter Class Time

If time is limited, prioritize:

Express warranties and the puffery distinction---central to many

warranty disputes.

The implied warranty of merchantability---one of the most commonly

litigated issues.

Disclaimers of warranties and the role of UCC § 2-316.

Trim down:

Extended discussion of fitness for a particular purpose, as it overlaps

with merchantability.

Complexity of warranty limitations, which can be expanded in later

lessons.

Express Warranties: When a Seller's Words Become a Promise

(25--30 minutes)

What Is an Express Warranty?

Introduce UCC § 2-313, which defines express warranties:

"Express warranties by the seller are created as follows: (a) Any

affirmation of fact or promise made by the seller to the buyer which

relates to the goods and becomes part of the basis of the bargain

creates an express warranty that the goods shall conform to the

affirmation or promise. (b) Any description of the goods which is made

part of the basis of the bargain creates an express warranty that the

goods shall conform to the description. (c) Any sample or model which is

made part of the basis of the bargain creates an express warranty that

the whole of the goods shall conform to the sample or model."

Ask:

Does a seller need to say "I warrant" or "I guarantee" for an express

warranty to exist? (No---what matters is whether the statement becomes

part of the basis of the bargain.)

Why do we enforce these warranties even when sellers don't explicitly

use the word "warranty"? (Because buyers rely on factual statements

about the goods.)

Case Application: Daughtrey v. Ashe

Facts: A jeweler appraised diamonds as "H color and v.v.s. quality." The

buyer relied on this description in purchasing the diamonds.

Issue: Did the jeweler's description create an express warranty, or was

it merely an opinion?

Holding: The court ruled that a specific factual description is an

express warranty.

Socratic Discussion

Why does the UCC presume that factual affirmations become part of the

bargain?

How do courts distinguish between factual descriptions and mere puffery?

Puffery vs. Express Warranties

Sellers often make exaggerated statements about their products. The law

distinguishes:

Enforceable express warranties -- "This car gets 40 miles per gallon."

Mere puffery (non-enforceable opinions) -- "This is the best car on the

market."

Example Discussion:

A seller claims "This boat is unsinkable." Is this an enforceable

warranty or puffery?

If made as a fact-based assurance, it may be an express warranty. (Keith

v. Buchanan)

If vague or exaggerated, it is puffery.

This distinction prevents consumers from relying on exaggerated sales

talk while still holding sellers accountable for factual claims.

The Implied Warranty of Merchantability: Minimum Quality Standards

(25--30 minutes)

What Is the Implied Warranty of Merchantability?

Introduce UCC § 2-314, which states that a merchant automatically

warrants that goods are "merchantable."

Key Requirements (UCC § 2-314(2)):

Pass without objection in the trade---goods meet normal industry

standards.

Of fair average quality---not defective or inferior to expected

standards.

Fit for the ordinary purposes for which such goods are used---a car

should drive, a toaster should toast.

Adequately contained, packaged, and labeled---packaging should not

create issues.

Conform to any promises made on packaging---a product advertised as

"organic" must be organic.

Case Application: Carlson v. General Motors

Facts: Owners of GM vehicles claimed the V8-6-4 engine was defective and

sought a remedy under the implied warranty of merchantability.

Issue: Did the car's defects make it unfit for ordinary use?

Holding: The court ruled that merchantability is not about resale value

but fitness for ordinary use.

Socratic Discussion

If a car has a defect but still drives, does that breach the implied

warranty?

Would a used car have the same warranty standards as a new car? Why or

why not?

Example Discussion:

A customer buys a new blender, but the blade assembly fails after the

first use.

Does this breach the implied warranty of merchantability?

(Yes---blenders must function for their ordinary use.)

The Implied Warranty of Fitness for a Particular Purpose

(20--25 minutes)

What Triggers This Warranty?

Introduce UCC § 2-315, which applies when:

The seller knows the buyer needs goods for a specific purpose.

The buyer relies on the seller's expertise to select suitable goods.

Example:

A hiker tells a store employee that they need boots for extreme cold.

The employee recommends boots that are not insulated.

The boots fail in freezing temperatures.

This is a breach of fitness for a particular purpose.

Case Application: Tyson v. Ciba-Geigy Corp.

Facts: A farmer bought pesticide based on the seller's recommendation.

The pesticide damaged crops instead of protecting them.

Issue: Did the seller's recommendation create an implied warranty of

fitness?

Holding: The court ruled for the farmer, as he relied on the seller's

expertise.

Socratic Discussion

How does this warranty differ from merchantability?

Should sellers be responsible for recommendations that turn out wrong?

Warranty Disclaimers and Limitations

(20--25 minutes)

How Can Sellers Disclaim Warranties?

Introduce UCC § 2-316, which allows sellers to exclude warranties if

done clearly.

Rules for Disclaimer Validity:

To exclude the implied warranty of merchantability, the disclaimer must

mention "merchantability" and be conspicuous.

To exclude the implied warranty of fitness, the disclaimer must be in

writing and conspicuous.

"As is" or "with all faults" language effectively eliminates all implied

warranties.

Case Application: Ardagh Metal Packaging USA Corp. v. Am. CRAFT Brewery

Facts: A seller disclaimed all warranties in a commercial sale of

aluminum cans.

Issue: Was the disclaimer conspicuous enough to be enforceable?

Holding: The court struck down the disclaimer because it was not

prominently displayed.

Socratic Discussion

Should businesses be able to completely disclaim all warranties?

What makes a disclaimer conspicuous enough to be enforced?

Key Takeaways

Express warranties arise from seller affirmations, descriptions, or

samples.

Implied warranties protect buyers when no express assurances are given.

Disclaimers must be clear and conspicuous to be valid.

Courts balance buyer protection with freedom of contract.

CROSS-REFERENCES

• Slide Deck: Chapter_18_Slides.pptx (71 slides)

• Case Briefs: See Case Briefs section, Chapter 18

• Problem Solutions: See Problem Solutions section, Chapter 18

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapter 18 (Warranties, bridges Interpretation and Performance)

CHAPTER 19: CONDITIONS

CHAPTER OVERVIEW

Total Slides 73 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.9 sessions | 75-min classes: ~2.1 sessions

Major Cases Howard v. Federal Crop Insurance, Inman v. Clyde Hall Drilling

Key Doctrines Express vs. implied conditions, Waiver, R2d §§ 224-229

Slide Deck File Chapter_19_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Conditions Defined (Slides 1-20)

Essential for all credit hours

MODULE 2: Precedent vs. Subsequent (Slides 21-35)

Essential for all credit hours

MODULE 3: Howard v. Federal Crop Insurance (Slides 36-52)

Essential for all credit hours

MODULE 4: Waiver Doctrine (Slides 53-65)

Essential for all credit hours

MODULE 5: Satisfaction Clauses (Slides 66-70)

Include for 5-6 credit

MODULE 6: Review (Slides 71-73)

Essential for all credit hours

LESSON PLAN: Chapter 19 — Conditions

This lesson introduces students to the doctrine of conditions, which

governs when contractual obligations arise and when they may be

discharged. A condition is an event that must occur (or not occur) for a

contractual duty to become enforceable. Without understanding

conditions, it is impossible to determine whether a party is obligated

to perform under a contract or whether their duty has been excused.

The discussion will begin with a careful distinction between conditions

and promises, an essential concept for analyzing contract enforcement.

From there, students will learn to classify conditions as express or

implied, with a further breakdown into conditions precedent, subsequent,

and concurrent. The lesson will then explore promissory conditions,

where a condition also serves as a promise, making its failure both a

discharge of duty and a breach of contract.

Beyond classification, the discussion will address what happens when a

condition fails and how doctrines such as waiver and excuse mitigate the

potentially harsh consequences of non-occurrence. Finally, students will

be introduced to conditions of satisfaction, which determine whether

performance meets a party's expectations, raising the question of

whether satisfaction is judged by a subjective or objective standard.

🎧 Listen to Mastering Contracts Podcast Episode 18: Conditions in

Contracts -- When Obligations Depend on Events

Learning Objectives

By the end of this lesson, students should be able to:

Explain the function of conditions in contract law and distinguish them

from promises.

Identify express conditions and implied conditions and explain their

legal significance.

Classify conditions as precedent, subsequent, or concurrent and analyze

their impact on contractual obligations.

Define and evaluate promissory conditions and how they differ from

standard conditions.

Assess the consequences of failure of a condition, including when duties

are discharged.

Apply the doctrines of waiver and excuse to determine when a party may

still be required to perform despite a failed condition.

Analyze conditions of satisfaction and explain when an objective or

subjective standard applies.

Time Management & Prioritization

This lesson must cover the definition of conditions, the distinction

between express and implied conditions, the operation of conditions

precedent, and the legal consequences of failure. These are foundational

principles that will be critical when discussing performance and breach

in subsequent lessons.

If time is limited, the discussion on conditions subsequent and

conditions concurrent may be condensed, as they arise in fewer contract

disputes. The case law on conditions of satisfaction, particularly Morin

Building, can be assigned as reading. The doctrine of good faith is

reinforced in that discussion, but the topic itself is less frequently

tested on the bar exam due to its subjective nature. Waiver and excuse

should be explained, but without excessive analysis, as they are

secondary to the core doctrine of conditions.

Understanding Conditions

To introduce conditions, students should be presented with a simple

contract scenario where an obligation is contingent on an event

occurring. For example, imagine a contractor agrees to build a house,

but only if the buyer secures financing from a bank. The discussion

should begin by asking students what happens if the buyer fails to

obtain a loan. Does the contractor still have to build the house? Why or

why not? This exercise will encourage students to articulate the

underlying concept of conditions before legal terminology is introduced.

Once students have engaged with this problem, they should be introduced

to the formal definition of conditions. A condition is an event that

must occur before a duty to perform arises or remains in force. Unlike a

promise, which creates an obligation, a condition does not create a duty

itself---it merely determines whether an existing duty becomes

enforceable.

At this stage, students should consider whether failure of a condition

means that a party has breached a contract. This distinction is

critical. If a party has merely failed to meet a condition, they are not

in breach; their duty simply never arose in the first place. However, if

a party has failed to perform a promise, then they may be in breach and

subject to damages.

Express vs. Implied Conditions

Conditions may be express or implied. Express conditions are explicitly

stated in a contract, often using language such as "if," "provided

that," or "on condition that." Because these conditions are written into

the contract, they require strict compliance. If an express condition is

not fully satisfied, the duty it governs does not arise.

The case of Dove v. Rose Acre Farms illustrates this principle. An

employee was denied a bonus after missing two days of work, even though

he had otherwise met the requirements of the program. The employer

successfully argued that the contract contained an express condition

requiring perfect attendance. The court enforced the condition strictly,

holding that because the employee failed to meet it, his right to the

bonus never arose. Students should be encouraged to debate whether this

outcome is fair and whether there are circumstances in which courts

might hesitate to enforce express conditions rigidly.

Implied conditions, on the other hand, are not explicitly stated but are

inferred from the nature of the contract or imposed by courts to promote

fairness. Some are implied-in-fact, meaning they arise from the conduct

or circumstances of the parties. Others are implied-in-law, meaning

courts impose them to ensure justice and contract enforceability.

Morrison v. Bare provides an example of an implied condition. The buyer

in that case made his obligation to purchase a house contingent on the

seller providing proof that a furnace had been repaired. When the seller

could not provide that proof, the buyer refused to complete the

purchase. The court held that the seller's failure to satisfy this

condition meant the buyer's duty never arose. The discussion should

focus on how this case differs from Dove and whether implied conditions

should be enforced with the same strictness as express conditions.

Classifying Conditions

Once students understand how conditions function, they should learn to

classify them based on their effect on contractual duties.

A condition precedent is an event that must occur before a duty arises.

Most conditions in contracts fall into this category.

Internatio-Rotterdam v. River Brand Rice Mills provides an example where

a seller's duty to deliver rice was contingent on the buyer providing

shipping instructions. When the buyer failed to provide instructions,

the seller's duty was excused.

A condition subsequent is an event that terminates an already existing

duty. These conditions are less common and often appear in contracts

where obligations depend on ongoing circumstances. For example, an

insurance policy may contain a clause stating that coverage is only

available if a claim is filed within a certain period.

Conditions concurrent require both parties to perform simultaneously. A

standard example is a sale of goods, where the seller's duty to deliver

and the buyer's duty to pay occur at the same time.

Failure of Conditions, Waiver, and Excuse

When a condition fails, the duty it governs is discharged, meaning the

party whose performance was contingent on that condition is no longer

obligated to perform. However, when a condition is also a promise, its

failure may constitute a breach, exposing the non-performing party to

liability.

Waiver occurs when a party voluntarily gives up the right to enforce a

condition. This often happens when a party continues accepting

performance despite knowing that a condition has not been met. Excuse is

a judicial remedy used to prevent unfair forfeiture when strict

enforcement of a condition would result in an unjust outcome. J.N.A.

Realty v. Cross Bay Chelsea illustrates this concept, as a tenant missed

a renewal deadline but had made significant investments in the property.

Conditions of Satisfaction

Some contracts contain conditions of satisfaction, where performance is

contingent on one party's approval. The key question in such cases is

whether satisfaction is judged by a subjective standard (purely personal

approval) or an objective standard (whether a reasonable person would be

satisfied). Morin Building Products v. Baystone demonstrates how courts

typically apply an objective standard in commercial contracts to prevent

abuse of discretion.

Key Takeaways

Conditions determine when contractual duties arise or are discharged.

Express conditions require strict compliance, while implied conditions

may be satisfied by substantial performance.

A condition precedent must occur before a duty arises, a condition

subsequent terminates an existing duty, and conditions concurrent

require simultaneous performance.

Promissory conditions serve as both conditions and promises, meaning

their failure can constitute both non-occurrence and breach.

Waiver and excuse allow for flexibility in enforcing conditions when

fairness demands it.

Conditions of satisfaction may be evaluated under an objective or

subjective standard, depending on the nature of the contract.

CROSS-REFERENCES

• Slide Deck: Chapter_19_Slides.pptx (73 slides)

• Case Briefs: See Case Briefs section, Chapter 19

• Problem Solutions: See Problem Solutions section, Chapter 19

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 19–23 (Performance, Breach, and Modification)

CHAPTER 20: PERFORMANCE AND BREACH

CHAPTER OVERVIEW

Total Slides 64 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.6 sessions | 75-min classes: ~1.8 sessions

Major Cases Jacob & Youngs v. Kent, Walker & Co. v. Harrison

Key Doctrines Substantial performance, Material breach, UCC perfect tender

Slide Deck File Chapter_20_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Substantial Performance (Slides 1-20)

Essential for all credit hours

MODULE 2: Jacob & Youngs v. Kent (Slides 21-38)

Essential for all credit hours

MODULE 3: Material vs. Minor Breach (Slides 39-48)

Essential for all credit hours

MODULE 4: Perfect Tender Rule (Slides 49-59)

Essential for all credit hours

MODULE 5: Review (Slides 60-64)

Essential for all credit hours

LESSON PLAN: Chapter 20 — Performance and Breach

This lesson explores the doctrines of substantial performance and

material breach, which determine whether a party has sufficiently

performed under a contract and whether the other party is excused from

performance. The discussion builds on the previous lesson on conditions,

as the obligation to perform is often conditioned on the other party's

substantial performance.

Historically, contract law treated most promises as independent, meaning

that each party had to fully perform its obligations before seeking

damages for nonperformance by the other side. This approach was rigid

and often led to unjust outcomes. Over time, courts developed a

presumption that contractual promises are mutually dependent, meaning

that one party's duty to perform is conditional on the other party's

substantial performance.

This shift led to the modern doctrines of substantial performance and

material breach. Under these doctrines, a party who has substantially

performed its contractual duties may still recover under the contract,

even if there are minor deviations from perfect performance. However, if

a breach is material, the nonbreaching party may suspend performance

and, in some cases, cancel the contract altogether.

In contrast, contracts for the sale of goods follow a different

framework under the Uniform Commercial Code (UCC). The UCC's Perfect

Tender Rule allows buyers to reject goods that do not fully conform to

the contract, but it also provides exceptions such as the seller's right

to cure and limitations on revocation of acceptance.

The lesson will introduce these doctrines and guide students through the

common law approach to performance and breach, as well as the distinct

rules under the UCC. The goal is to help students analyze when a

contract has been breached, whether that breach is material, and what

remedies are available to the nonbreaching party.

🎧 Listen to Mastering Contracts Podcast Episode 19: Performance of

Contracts -- When Is Good Enough Really Enough?

Learning Objectives

By the end of this lesson, students should be able to:

Explain the evolution of contract law from independent to dependent

promises.

Distinguish between substantial performance and material breach.

Apply the Restatement (Second) of Contracts factors to determine whether

a breach is material.

Analyze when a nonbreaching party may withhold performance, cancel the

contract, or seek damages.

Compare the common law doctrine of substantial performance with the

UCC's Perfect Tender Rule.

Evaluate the seller's right to cure and the buyer's right to revoke

acceptance under the UCC.

Time Management & Prioritization

This lesson must cover the doctrines of substantial performance and

material breach, as they are central to understanding contract

enforcement. The discussion should emphasize the Restatement's

five-factor test for determining whether a breach is material, as this

provides the analytical framework students will need for exams and

practice.

If time is limited, the Perfect Tender Rule under the UCC can be

condensed, as students will revisit UCC concepts in later lessons. The

discussion of waiver and cure can be assigned as reading, as courts tend

to apply these doctrines flexibly based on the facts of each case.

The Common Law Approach: Substantial Performance and Material Breach

To introduce these concepts, students should consider a basic contract

scenario. Suppose a contractor agrees to build a house according to

detailed specifications. The contract states that the pipes must be made

by Reading Manufacturing. The contractor completes the house but

installs pipes from a different manufacturer that are functionally

identical. The homeowner refuses to pay, arguing that the contract was

not fully performed.

This fact pattern raises the key question: Does a minor deviation excuse

the other party from performance? If express conditions require strict

compliance, then any deviation could prevent the contractor from

recovering payment. However, if the contractor has substantially

performed, the homeowner may still be required to pay, with only a

deduction for the minor defect.

The Role of Substantial Performance

The case of Jacob & Youngs v. Kent illustrates how courts balance strict

contract enforcement with fairness. In that case, Judge Cardozo held

that the contractor had substantially performed the contract despite

using the wrong brand of pipe. The homeowner received the functional

equivalent of what was promised, so the court allowed the contractor to

recover payment, deducting only the cost difference.

Cardozo's reasoning is based on avoiding forfeiture---a central theme in

contract law. If a minor breach resulted in a complete forfeiture of

payment, this would be an unfair windfall to the nonbreaching party.

Courts generally prefer to keep contracts intact when possible.

Students should discuss whether they agree with Cardozo's approach.

Would the outcome have been different if the substituted pipes were of

inferior quality? Should the homeowner's subjective preferences matter?

Identifying Material Breach

While Jacob & Youngs illustrates substantial performance, other cases

demonstrate when a breach is material. The Restatement (Second) of

Contracts § 241 provides five factors to determine materiality:

The extent to which the injured party is deprived of the benefit they

reasonably expected.

The extent to which the injured party can be adequately compensated for

the breach.

The extent to which the breaching party will suffer forfeiture if the

breach is deemed material.

The likelihood that the breaching party can cure the defect in a

reasonable time.

The extent to which the breaching party acted in good faith.

Using these factors, students should analyze different breach scenarios.

For example, if a builder installs a roof using a different material

than specified but one that performs just as well, has the owner been

deprived of the benefit of the bargain? What if the builder knowingly

used a cheaper material to save costs?

The case of Sackett v. Spindler provides another useful example. A buyer

of a newspaper business repeatedly missed payments under the contract.

After multiple delays, the seller canceled the deal. The court held that

the buyer's repeated failures amounted to a total breach, justifying

cancellation. Students should discuss at what point delay crosses the

line from a minor breach to a material breach.

Rights of the Nonbreaching Party

If a breach is minor, the nonbreaching party must still perform and may

only seek damages. However, if a breach is material, the nonbreaching

party may withhold its own performance and demand a cure. If the breach

is not cured, the nonbreaching party may cancel the contract.

If a party's breach is total, meaning that performance is no longer

possible or would defeat the purpose of the contract, the nonbreaching

party may immediately cancel the contract and seek full damages.

The UCC's Approach: The Perfect Tender Rule

In contrast to the substantial performance doctrine, the UCC follows a

Perfect Tender Rule for contracts involving goods. Under UCC § 2-601, a

buyer may reject goods if they fail to conform in any respect to the

contract.

At first glance, this seems harsh---any defect, no matter how minor,

allows the buyer to reject the goods. However, the UCC tempers this rule

in several ways:

Right to Cure (§ 2-508): If the seller still has time to perform, they

may correct the defect and deliver conforming goods.

Revocation of Acceptance (§ 2-608): If the buyer initially accepts the

goods but later discovers a serious defect, they may revoke acceptance

only if the defect substantially impairs the value of the goods.

Installment Contracts (§ 2-612): If goods are delivered in installments,

the buyer may only reject an installment if the defect substantially

impairs the value of that installment.

Students should compare the UCC's approach with the common law's

substantial performance rule. Does the UCC provide greater flexibility

to reject goods? Or do its cure provisions make it functionally similar

to common law?

Key Takeaways

Contract law has evolved from treating promises as independent to

treating them as mutually dependent.

Under common law, a party must substantially perform its contractual

duties to recover payment.

A material breach excuses the nonbreaching party from performance, while

a total breach allows for cancellation.

The Restatement's five-factor test determines whether a breach is

material.

The UCC's Perfect Tender Rule allows buyers to reject goods for any

defect but provides rights to cure and limit revocation.

CROSS-REFERENCES

• Slide Deck: Chapter_20_Slides.pptx (64 slides)

• Case Briefs: See Case Briefs section, Chapter 20

• Problem Solutions: See Problem Solutions section, Chapter 20

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 19–23 (Performance, Breach, and Modification)

CHAPTER 21: REPUDIATION

CHAPTER OVERVIEW

Total Slides 62 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.5 sessions | 75-min classes: ~1.8 sessions

Major Cases Hochster v. De La Tour

Key Doctrines Anticipatory repudiation, UCC § 2-609, Retraction

Slide Deck File Chapter_21_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Anticipatory Repudiation (Slides 1-18)

Essential for all credit hours

MODULE 2: Hochster v. De La Tour (Slides 19-33)

Essential for all credit hours

MODULE 3: Adequate Assurance (Slides 34-48)

Essential for all credit hours

MODULE 4: Retraction Rules (Slides 49-58)

Essential for all credit hours

MODULE 5: Review (Slides 59-62)

Essential for all credit hours

LESSON PLAN: Chapter 21 — Repudiation

This lesson explores the doctrine of anticipatory repudiation, which

addresses what happens when one party signals that it will not fulfill

its contractual obligations before performance is due. A contract is

built on the expectation that both parties will perform as promised, but

if one party clearly and unequivocally refuses to perform, the other

party should not have to wait until the performance date to act. The

doctrine of repudiation allows the nonbreaching party to take immediate

steps to protect its interests, including suspending performance,

seeking assurances, or pursuing remedies for breach.

Repudiation can take two primary forms. The first is a direct

repudiation, where a party makes an unambiguous statement or takes an

action that demonstrates an intent not to perform. The second arises

from reasonable insecurity, where one party has legitimate concerns

about whether the other will fulfill its obligations. In such cases, the

insecure party may demand adequate assurances. If assurances are not

provided within a reasonable time, the failure itself can constitute a

repudiation.

The legal framework governing repudiation balances fairness and

predictability. It ensures that parties are not left in prolonged

uncertainty while also preventing unfair penalties based on mere doubts

or misunderstandings. This lesson examines how courts determine when a

party has repudiated a contract, how the demand for assurances works,

and what remedies are available in response.

🎧 Listen to Mastering Contracts Podcast Episode 20: Anticipatory

Repudiation -- Here Comes Trouble!

Learning Objectives

By the end of this lesson, students should be able to:

Define anticipatory repudiation and distinguish it from mere uncertainty

about performance.

Analyze when a statement or action constitutes an unequivocal refusal to

perform under the Restatement (Second) of Contracts (R2d) and the

Uniform Commercial Code (UCC).

Explain how the demand for adequate assurances functions as a safeguard

against premature cancellation.

Determine when failure to provide assurances constitutes a repudiation.

Evaluate the remedies available to a nonbreaching party following

repudiation.

Assess when repudiation can be retracted and when it becomes

irrevocable.

Time Management & Prioritization

The lesson must cover the core concept of anticipatory repudiation,

including the distinction between an actual repudiation and a mere

expression of doubt. It is also critical to discuss the demand for

adequate assurances, as this serves as an important step before treating

insecurity as repudiation.

If time is limited, the discussion of retraction of repudiation can be

condensed, as it is a secondary issue that applies in fewer disputes.

The case law on the McCloskey decision can be assigned as reading, as it

provides historical context on how courts assess repudiation under

economic uncertainty but is not as central to the core doctrine.

Defining Repudiation

To introduce repudiation, students should consider a simple contract

scenario. Suppose a contractor agrees to build a house by July 1. On

June 1, the contractor tells the homeowner, "I will not be able to

finish this project, and I am walking away." This statement is a clear

and unequivocal refusal to perform. The homeowner now faces an important

question: Must they wait until July 1 to take legal action, or can they

immediately seek a replacement contractor and hold the original

contractor liable?

This situation illustrates the purpose of anticipatory repudiation.

Contract law allows the nonbreaching party to act immediately rather

than wait for an inevitable breach.

Unequivocal Statements of Repudiation

The Restatement (Second) of Contracts § 250 and UCC § 2-610 both define

repudiation as a statement or action that clearly demonstrates an intent

not to perform. The key requirement is unequivocal intent---a mere

expression of doubt or concern is not enough.

Consider two contrasting examples:

A supplier tells a retailer, "I have shut down my factory and cannot

fill your order." This is a repudiation because it unequivocally states

that the supplier will not perform.

A supplier tells a retailer, "We are experiencing production delays, but

we are trying to fulfill your order." This is not a repudiation because

it does not definitively state that the supplier will not perform.

The case of Hochster v. De La Tour established that an aggrieved party

does not have to wait for the performance date to sue for breach. Courts

generally allow immediate legal action when the repudiation is clear and

unequivocal.

Actions That Constitute Repudiation

In some cases, a party's actions---not just words---can amount to

repudiation if they make performance impossible. Under R2d § 250(b),

repudiation occurs when a party takes voluntary steps that render

performance impossible.

For example, if a seller promises to deliver a specific car to a buyer

but then sells the car to someone else, this act makes performance

impossible and constitutes repudiation.

Similarly, if a construction company signs a contract to build a house

but then sells all of its equipment and lays off its workers, this could

be seen as an implied repudiation.

Responding to Repudiation

When a party repudiates, the nonbreaching party has several options

under R2d § 253 and UCC § 2-610:

Stop its own performance.

Seek alternatives (e.g., hire another contractor or supplier).

Sue for breach immediately.

If the nonbreaching party waits too long, they may lose the right to

claim damages. The law expects an aggrieved party to act reasonably to

mitigate its losses.

Reasonable Insecurity and the Demand for Adequate Assurances

Not every concern about performance amounts to a repudiation. Sometimes,

one party has reasonable insecurity about whether the other will

perform, but there is no explicit refusal. In such cases, the insecure

party may demand adequate assurances before taking action.

When Can a Party Demand Assurances?

Under R2d § 251 and UCC § 2-609, a party may demand assurances when

there are reasonable grounds for insecurity. However, the insecurity

must be commercially reasonable---mere rumors or minor delays are not

enough.

For example, if a buyer learns that a seller has missed payments to

other suppliers, this could create reasonable insecurity. The buyer may

then demand written assurance that the seller is financially stable.

If assurances are not provided within a reasonable time, the failure

itself can constitute repudiation.

Proportionality of Assurances

The assurance requested must be proportional to the concern. For

instance, asking for a simple bank statement might be reasonable, while

demanding full financial records for the past five years would likely be

excessive. Courts evaluate whether the demand is made in good faith.

Retraction of Repudiation

Under R2d § 256 and UCC § 2-611, a party that repudiates may retract its

repudiation unless the other party has already taken action based on the

repudiation.

For example, if a supplier tells a buyer, "I cannot fulfill the order,"

but then secures the needed inventory and retracts the statement, the

buyer must honor the contract if they have not yet acted in reliance on

the repudiation.

However, once the nonbreaching party relies on the repudiation---such as

by hiring another supplier---the retraction is no longer valid.

Key Takeaways

A party repudiates a contract when it unequivocally refuses to perform,

either through words or actions.

If one party has reasonable insecurity, it may demand adequate

assurances before treating the contract as repudiated.

If assurances are not provided within a reasonable time, the failure to

assure becomes a repudiation.

The nonbreaching party may stop performance, seek alternatives, and sue

for breach without waiting for the performance date.

A repudiating party may retract its repudiation only if the other party

has not yet acted in reliance.

CROSS-REFERENCES

• Slide Deck: Chapter_21_Slides.pptx (62 slides)

• Case Briefs: See Case Briefs section, Chapter 21

• Problem Solutions: See Problem Solutions section, Chapter 21

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 19–23 (Performance, Breach, and Modification)

CHAPTER 22: EXCUSE

CHAPTER OVERVIEW

Total Slides 64 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.6 sessions | 75-min classes: ~1.8 sessions

Major Cases Taylor v. Caldwell, Krell v. Henry

Key Doctrines Impossibility, Impracticability, Frustration, R2d §§ 261-272

Slide Deck File Chapter_22_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Impossibility (Slides 1-18)

Essential for all credit hours

MODULE 2: Taylor v. Caldwell (Slides 19-32)

Essential for all credit hours

MODULE 3: Impracticability (Slides 33-45)

Essential for all credit hours

MODULE 4: Frustration of Purpose (Slides 46-58)

Essential for all credit hours

MODULE 5: Review (Slides 59-64)

Essential for all credit hours

LESSON PLAN: Chapter 22 — Excuse

This lesson introduces students to the doctrines of impossibility,

impracticability, and frustration of purpose---legal mechanisms that

determine when parties may be excused from their contractual obligations

due to unforeseen events. The goal is to teach students not just the

doctrinal rules but also how courts balance the principle of holding

parties to their promises against fairness considerations when

unexpected events disrupt performance.

🎧 Listen to Mastering Contracts Podcast Episode 21: Excuse Me! -- When

Nonperformance Is Legally Justified

Instructors should focus on how and when courts excuse contractual

performance, guiding students through real-world scenarios that test

their ability to apply these doctrines. A key theme is foreseeability:

if an event was reasonably predictable, the performing party is

generally expected to bear the risk.

By the end of the lesson, students should be able to:

Distinguish between impossibility, impracticability, and frustration of

purpose and apply them in hypothetical contract disputes.

Evaluate when an event is foreseeable and how that affects whether a

party is excused.

Analyze how the UCC's commercial impracticability standard differs from

common law doctrines.

Understand the role of force majeure clauses in pre-allocating risk in

contracts.

Classroom Strategy

The lesson should begin with an intuitive introduction---an example that

requires no prior legal knowledge but sets up the need for these

doctrines. From there, the class should move into doctrinal analysis,

using Socratic questioning to draw distinctions between impossibility,

impracticability, and frustration of purpose. Finally, the discussion

should turn to application, where students analyze cases and

hypotheticals to see how these doctrines operate in practice.

Introducing the Concept

Begin by posing a relatable hypothetical to frame the lesson:

"Suppose you rent an apartment with a balcony that overlooks a major

parade. You agree to pay an above-market price because of the incredible

view. A week before the event, the city cancels the parade due to safety

concerns. Should you still have to pay full rent?"

Students will likely have conflicting intuitions---some may argue that

the tenant should not have to pay because the purpose of the lease was

lost, while others may say the contract should still be enforced because

the apartment still exists.

Ask students:

Does it matter whether the landlord knew you were renting the apartment

specifically to view the parade?

Would your answer change if the parade was canceled due to an earthquake

rather than a scheduling change?

What risks should be assigned to the tenant versus the landlord?

After discussing their instincts, introduce them to the three primary

excuse doctrines:

Impossibility -- Performance is literally impossible.

Impracticability -- Performance is still technically possible but has

become excessively difficult or expensive due to unforeseen events.

Frustration of Purpose -- Performance is still possible, but the

underlying reason for the contract has been destroyed.

Tell students that courts apply these doctrines carefully because every

contract faces some uncertainty, and allowing too many excuses would

make contracts unreliable.

Impossibility -- When Performance is Literally Impossible

Explain that impossibility applies only when no one could perform under

the contract, not just the party seeking excuse. Give clear examples:

A concert venue burns down before a scheduled performance (Taylor v.

Caldwell).

A painter dies before completing a commissioned portrait.

A new law bans the contracted activity, making performance illegal.

Use Socratic questioning to push students to define the limits of

impossibility:

What if the venue burned down, but another suitable venue was available?

Would that still be impossibility?

What if the portrait was commissioned from a studio where multiple

artists work? Would the death of one artist excuse performance?

Students should recognize that impossibility is a high bar---courts will

not excuse performance just because it becomes inconvenient or

expensive.

Impracticability -- When Performance is Still Possible, But Unreasonably

Difficult

Introduce impracticability as a more flexible doctrine that allows

excuse when an unforeseen event makes performance excessively

burdensome, even if it's still technically possible.

Give an example:

"A contractor agrees to build a bridge for \$10 million. Before

construction starts, a massive steel shortage occurs due to an

unexpected trade embargo, causing material costs to increase by 500%.

Should the contractor still be required to perform at the original

price?"

This hypothetical forces students to grapple with fairness concerns.

Courts do not excuse contracts just because they become more expensive,

but at some point, the cost increase fundamentally alters the agreement.

Walk students through the three-part impracticability test under

Transatlantic Financing Corp. v. United States:

An unforeseen event occurred.

The non-occurrence of the event was a basic assumption of the contract.

Performance has become commercially unreasonable.

Ask students:

How much cost increase should be enough for impracticability? (A 10%

increase? 100%? 500%?)

Does it matter whether the performing party had insurance or other risk

protections?

Connect this to foreseeability---if the risk was predictable (e.g.,

price fluctuations in commodities), courts typically do not allow

excuse.

Frustration of Purpose -- When the Point of the Contract is Destroyed

Explain that frustration of purpose applies when performance is still

possible, but an unforeseen event has destroyed the value of the

contract.

Use Krell v. Henry as the classic example:

A tenant rented an apartment for the sole purpose of viewing the King's

coronation. When the coronation was canceled, the court ruled that the

tenant was excused from paying rent because the core purpose of the

contract was frustrated.

Ask students:

What if the tenant had other reasons for renting the apartment, like its

location?

Does frustration apply if the event is canceled due to weather versus a

government order?

Students should recognize that frustration of purpose is rare---it

requires that the unforeseen event destroy the contract's entire

foundation.

UCC Commercial Impracticability & Force Majeure Clauses

Explain that the UCC modifies the impracticability doctrine for

contracts involving the sale of goods:

UCC § 2-615 allows excuse if an unforeseen event makes performance

commercially impracticable.

Unlike common law, the UCC requires sellers to allocate remaining

resources fairly if only partial performance is possible.

Ask students to compare the UCC's approach to the common law:

Is the UCC more flexible?

How do sellers and buyers adjust their contracts to account for risk?

Introduce force majeure clauses as a way for parties to pre-allocate

risk. Have students evaluate a sample clause and discuss:

What events should be listed as excuses for nonperformance?

Should economic downturns or labor strikes count?

Key Takeaways

Impossibility applies when no one could perform the contract (e.g.,

destruction of necessary goods, death of a key performer).

Impracticability applies when performance is technically possible but

unreasonably difficult or expensive due to an unforeseen event.

Frustration of purpose applies when an event destroys the principal

reason for the contract, even if performance is still possible.

UCC § 2-615 excuses performance in goods contracts when commercial

impracticability arises, requiring reasonable allocation of remaining

resources.

Force majeure clauses allow parties to pre-allocate risk, supplementing

or overriding default legal doctrines.

CROSS-REFERENCES

• Slide Deck: Chapter_22_Slides.pptx (64 slides)

• Case Briefs: See Case Briefs section, Chapter 22

• Problem Solutions: See Problem Solutions section, Chapter 22

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 19–23 (Performance, Breach, and Modification)

CHAPTER 23: MODIFICATION AND DISCHARGE

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Alaska Packers v. Domenico, Angel v. Murray

Key Doctrines Modification, Preexisting duty, UCC § 2-209, Novation

Slide Deck File Chapter_23_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Preexisting Duty Rule (Slides 1-18)

Essential for all credit hours

MODULE 2: Alaska Packers Case (Slides 19-33)

Essential for all credit hours

MODULE 3: UCC § 2-209 (Slides 34-45)

Essential for all credit hours

MODULE 4: Accord and Satisfaction (Slides 46-55)

Essential for all credit hours

MODULE 5: Review (Slides 56-60)

Essential for all credit hours

LESSON PLAN: Chapter 23 — Modification and Discharge

This lesson explores how contracts can be modified or discharged,

balancing the certainty of holding parties to their promises with the

flexibility needed to adapt to unforeseen circumstances. While contract

law traditionally enforced strict adherence to agreements, modern

doctrines allow for good faith modifications, recognizing that business

conditions and expectations often change.

🎧 Listen to Mastering Contracts Podcast Episode 22: The More Things Change

-- Modifying a Contract by Mutual Assent

Students will engage with the evolution of the preexisting duty rule,

moving from the rigid approach in Alaska Packers' Association v.

Domenico to the more flexible standard in Angel v. Murray, where courts

allow modifications without new consideration under fair and equitable

circumstances. The discussion will also cover modification under the

UCC, which eliminates the consideration requirement but imposes a good

faith standard.

The second half of the lesson shifts to contract discharge, where

students will learn how parties can end contractual obligations through

rescission, release, renunciation, and novation. The discussion will

emphasize how contract law accommodates changing circumstances while

preserving enforceability.

By the end of this lesson, students should be able to:

Explain the preexisting duty rule and why modern courts have relaxed it.

Analyze when a contract modification is enforceable, including fair and

equitable modifications under Restatement (Second) of Contracts § 89 and

good faith modifications under UCC § 2-209.

Compare substituted contracts, accord and satisfaction, and novation,

recognizing how each affects contractual obligations.

Understand how contracts may be discharged, either through mutual

agreement or operation of law.

Time Management Considerations

This lesson covers two major topics: modification and discharge. If time

is limited, instructors should prioritize contract modification, as it

is the more heavily tested issue and has broader applications in

commercial practice. The most essential discussions include:

The preexisting duty rule and its evolution from Alaska Packers' to

Angel v. Murray.

UCC § 2-209's approach to modification, particularly the good faith

requirement.

Rescission and novation, as they appear frequently in commercial

transactions.

If teaching in two class periods, consider:

Class 1: Contract modification, focusing on consideration, fairness, and

statutory approaches.

Class 2: Contract discharge, including rescission, novation, and

defenses to modification claims.

If time is short, de-emphasize renunciation and equitable rescission, as

they are less commonly litigated.

Framing the Issue -- Why Modify or Discharge a Contract?

Begin by asking students to think about why contract law should allow

modifications.

"If contract law is based on enforcing promises, why should we allow

parties to modify their agreements after they have been made?"

Students will likely recognize that circumstances change, and it is

often more efficient and fair to allow reasonable modifications rather

than force performance of an impractical contract.

Introduce a real-world scenario:

"A contractor agrees to renovate a kitchen for \$20,000. Halfway

through, material costs triple due to an unforeseen supply chain

disruption. The contractor refuses to continue unless the homeowner

agrees to pay \$30,000. Should the law enforce the original contract,

allow the modification, or provide another remedy?"

Some students may argue that the homeowner should be held to the

original price, while others will say the contractor should not be

forced to absorb extreme cost increases.

Use this discussion to introduce the tension between certainty and

flexibility in contract law, setting the stage for the preexisting duty

rule and its evolution.

The Preexisting Duty Rule -- The Traditional Approach

Explain that historically, contract law required fresh consideration for

modifications to prevent coercion and unfair renegotiations.

Case Study: Alaska Packers' Association v. Domenico

Summarize the case:

Sailors contracted to fish for a set wage.

Upon arrival in Alaska, they refused to work unless paid more.

The employer, having no other option, agreed but later refused to pay

the increased wages.

The court invalidated the modification, applying the preexisting duty

rule---the sailors were already obligated to work under the original

contract, so there was no new consideration.

Socratic Discussion

"Was this a legitimate renegotiation or opportunistic behavior?"

Students should recognize that the sailors exploited the employer's

vulnerability---a key justification for the preexisting duty rule.

"Should contract law allow modifications in extreme circumstances, or

should we always enforce the original agreement?"

This introduces the modern trend toward more flexible modification

rules.

The Modern Approach -- Fair and Equitable Modifications

Explain that modern courts recognize that some modifications are

legitimate responses to unforeseen difficulties.

Case Study: Angel v. Murray

Summarize the case:

A garbage collector had a five-year contract with a city.

Due to an unexpected population increase, the job became much more

expensive.

The city voluntarily agreed to pay more.

The court upheld the modification, holding that unexpected circumstances

and fairness justified the change.

Socratic Discussion

*"What distinguishes this case from Alaska Packers'? Why did the court

enforce this modification?"

Guide students to see that there was no coercion, and the modification

was fair in light of unforeseen circumstances.

"Would this case have come out differently if the city had no choice but

to agree to the increased payments?"

This introduces economic duress as a defense to modification claims.

"Should contract law allow parties to modify an unprofitable contract

simply because one party underestimated costs?"

Lead students to recognize that modifications must be justified by

fairness, not mere regret.

Introduce Restatement (Second) of Contracts § 89, which allows

modifications without new consideration if they are fair and equitable

in light of unforeseen circumstances.

UCC § 2-209 -- Eliminating the Consideration Requirement

Explain that the UCC takes an even more flexible approach, eliminating

the need for consideration altogether.

UCC § 2-209(1): "An agreement modifying a contract within this Article

needs no consideration to be binding."

Ask:

"If the UCC doesn't require consideration for modifications, what

prevents abuse?"

Students should recognize that UCC modifications must be made in good

faith.

Use a hypothetical:

"A supplier increases prices without justification, knowing the buyer

has no alternative. Is this a valid modification under the UCC?"

Students should see that good faith prevents opportunistic

modifications.

Contract Discharge -- When Parties Want to End a Contract

Explain that contracts can be terminated by mutual agreement or

operation of law.

Introduce the four primary ways to discharge a contract:

Rescission -- Both parties agree to cancel the contract.

Release -- One party voluntarily relinquishes rights.

Renunciation -- A party formally surrenders rights, often in writing.

Novation -- A new party replaces an original party, fully discharging

the original obligor.

CROSS-REFERENCES

• Slide Deck: Chapter_23_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 23

• Problem Solutions: See Problem Solutions section, Chapter 23

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 19–23 (Performance, Breach, and Modification)

CHAPTER 24: EXPECTATION DAMAGES

CHAPTER OVERVIEW

Total Slides 73 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.9 sessions | 75-min classes: ~2.1 sessions

Major Cases None (formula-based)

Key Doctrines Expectation formula, Incidental, Consequential, Cover

Slide Deck File Chapter_24_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Formula: Loss in Value + Other Loss – Cost Avoided (Slides 1-25)

Essential for all credit hours

MODULE 2: Direct Damages (Slides 26-38)

Essential for all credit hours

MODULE 3: Incidental Damages (Slides 39-48)

Essential for all credit hours

MODULE 4: Consequential Damages (Slides 49-60)

Essential for all credit hours

MODULE 5: Lost Volume Seller (Slides 61-70)

Include for 5-6 credit

MODULE 6: Review (Slides 71-73)

Essential for all credit hours

LESSON PLAN: Chapter 24 — Expectation Damages

This lesson introduces students to contract remedies, explaining how

courts compensate injured parties when contractual obligations are not

met. It serves two critical functions:

1. A conceptual introduction to remedies -- Students will learn why

contract law prioritizes compensation over punishment and how the

law protects expectation, reliance, and restitution interests.

2. A deep dive into remedies for total nonperformance -- The lesson

covers expectation damages, reliance damages, and restitution as

they apply to cases where a party completely fails to perform.

Time Management Considerations

Because this lesson is long and foundational, consider:

If teaching in one session: Prioritize expectation damages and

introduce reliance/restoration as alternative remedies.

If teaching over two sessions:

Class 1: Introduction to remedies, the three remedial interests, and

efficient breach.

Class 2: Expectation damages, reliance damages, and restitution in

cases of total nonperformance.

If time is short, skip the deep discussion on efficient breach---it can

be revisited in a later lesson.

Framing the Remedies Module -- "We Are Here" Moment

Begin by reminding students of the journey of contract law so far. Up

until now, they have studied:

How contracts are formed (offer, acceptance, consideration).

How terms are interpreted (parol evidence, ambiguity).

How contracts are modified or discharged (modification, rescission,

excuse).

Now, they must answer the final question: *What happens when a contract

is breached?*

Pose the following framing question to the class:

"What is the goal of contract law when a promise is broken? Should the

law force people to perform? Should it punish them for breaking their

word? Or should it simply compensate the injured party?"

Students will likely express different intuitions---some may advocate

for strict enforcement, while others may focus on fairness or

efficiency. Use this discussion to introduce the core idea:

Contract law is compensatory, not punitive. It does not punish

breach but instead ensures the injured party is made whole.

Specific performance is rare. Courts typically award money damages,

not forced performance.

This sets the stage for discussing the three remedial interests

protected by contract law.

The Three Remedial Interests

Expectation Interest -- The Default Remedy

Expectation damages put the injured party in the position they would

have been in had the contract been performed.

Example:

"A bakery contracts to buy 100 pounds of flour for \$3 per pound. The

seller fails to deliver, forcing the bakery to buy substitute flour

for \$4 per pound. What damages should the court award?"

Students should recognize that the bakery should recover \$100, the

difference between the contract price and the cost of cover.

Ask students:

*Why do we focus on the benefit of the bargain rather than punishing

the breacher?* (Guide them to understand that contract law is about

compensation, not retribution.)

*Should courts award punitive damages if the breach was deliberate?*

(Introduce the concept of efficient breach, to be explored later.)

Reliance Interest -- When Expectation Damages Are Uncertain

Reliance damages reimburse the injured party for costs incurred in

reliance on the contract.

Example:

"A homeowner hires a painter for \$5,000. The painter buys \$1,000 in

supplies before the homeowner cancels the job. What damages should the

court award?"

Since expectation damages may be too speculative (the painter cannot

prove lost profits), reliance damages at least reimburse out-of-pocket

costs.

Ask students:

*Why might reliance damages be easier to prove than expectation

damages?* (Help them see that lost profits can be uncertain, but

out-of-pocket costs are provable.)

*Should a plaintiff be able to recover more in reliance damages than

they would have received if the contract had been performed?*

(Introduce the idea that reliance damages are usually capped at the

expected benefit.)

Restitution Interest -- Preventing Unjust Enrichment

Restitution ensures that the breaching party does not unfairly benefit

from the contract.

Example:

"You pay a landscaper \$500 in advance to mow your lawn all summer.

The landscaper never shows up. What should happen?"

Students will recognize that the landscaper must return the \$500. This

is restitution---returning the value of a benefit conferred.

Ask students:

*If the landscaper mowed the lawn once, should they have to return

the full \$500?* (Lead them to consider partial performance and

restitution adjustments.)

Expectation Damages for Total Nonperformance

Now that students understand the remedial framework, introduce how

expectation damages are calculated when there is total nonperformance.

Formula for Expectation Damages:

Expectation Damages = Loss in Value + Incidental Damages +

Consequential Damages -- Costs Avoided

Use the event hall hypothetical from the casebook:

"A nonprofit rents a city event hall for \$5,000 but arrives to find

the hall locked and inaccessible. The nonprofit has to book a

last-minute venue for \$7,500 and loses \$3,000 in non-refundable

deposits."

Ask students to calculate expectation damages:

Loss in Value: \$2,500 (difference in venue costs)

Incidental Damages: \$500 (last-minute logistics)

Consequential Damages: \$3,000 (lost deposits)

Total Damages: \$6,000

Then, challenge students with variations:

*What if the nonprofit could have booked another venue for \$5,200

but chose the \$7,500 option?* (Introduce duty to mitigate, to be

covered in Chapter 26.)

*What if the nonprofit made an extra \$2,000 in ticket sales at the

new venue?* (Introduce offsetting benefits, which reduce damages.)

The Role of Efficient Breach

Efficient breach is a controversial concept:

"A hotel rents its ballroom to a nonprofit for \$5,000 but later books

a corporate client for \$50,000 instead. It breaches, pays the

nonprofit \$10,000 in damages, and still comes out ahead. Should this

be allowed?"

Some students will say no---contracts should be enforced. Others will

say yes---this is economically efficient.

Ask:

*Would forcing performance here be more harmful than awarding

damages?*

*Should the hotel have to pay punitive damages for acting

opportunistically?*

This discussion challenges students to think about the balance between

economic efficiency and fairness.

Key Takeaways

At the end of the lesson, reinforce:

Contract remedies compensate rather than punish.

Expectation damages are the default remedy, designed to give the

injured party the benefit of their bargain.

Reliance damages reimburse costs incurred in reliance on the

contract.

Restitution prevents unjust enrichment, ensuring fairness even when

expectation damages are unavailable.

Courts rarely force performance; instead, they award money damages,

even in cases of efficient breach.

CROSS-REFERENCES

• Slide Deck: Chapter_24_Slides.pptx (73 slides)

• Case Briefs: See Case Briefs section, Chapter 24

• Problem Solutions: See Problem Solutions section, Chapter 24

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 24–28 (Remedies and Third Parties)

CHAPTER 25: DEFECTIVE PERFORMANCE

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Peevyhouse v. Garland Coal, Jacob & Youngs revisited

Key Doctrines R2d § 348(2), Economic waste, UCC §§ 2-706 to 2-719

Slide Deck File Chapter_25_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Cost of Completion vs. Diminution (Slides 1-18)

Essential for all credit hours

MODULE 2: Peevyhouse v. Garland Coal (Slides 19-38)

Essential for all credit hours

MODULE 3: Economic Waste (Slides 39-48)

Essential for all credit hours

MODULE 4: UCC Buyer/Seller Remedies (Slides 49-56)

Essential for all credit hours

MODULE 5: Review (Slides 57-60)

Essential for all credit hours

LESSON PLAN: Chapter 25 — Defective Performance

Teaching Objectives

This lesson builds directly on the concepts from Lesson 24, reinforcing

the principles of expectation damages while introducing a more nuanced

analysis of defective performance. Whereas Lesson 24 dealt with total

nonperformance, this lesson asks students to consider what happens when

some performance is given, but it falls short of the contract's

requirements. The key issue is how courts decide whether to award the

full cost of repair (cost of completion) or a reduced sum (diminution in

value) to compensate for the defect.

[Listen to Mastering Contracts Podcast Episode 24: Alternative Money

Damages]](https://youtu.be/vgXfYozf65w?si=DN-_4ZLprMCtH7QW)

By the end of this lesson, students should be able to:

Distinguish between total nonperformance and defective performance

and explain why the latter requires a different damages calculation.

Apply the cost of completion vs. diminution in value framework to

determine when full repair costs should be awarded and when economic

waste concerns justify a different measure of damages.

Analyze the role of substantial performance and material breach in

determining remedies.

Understand how economic waste factors into judicial decisions, using

cases like *Peevyhouse v. Garland Coal* and *Jacob & Youngs v. Kent*

to illustrate key principles.

Compare common law approaches with the UCC's treatment of defective

performance, focusing on the Perfect Tender Rule and a buyer's right

to reject or revoke acceptance.

Because this lesson deepens concepts introduced in Lesson 24,

instructors should focus on reinforcing key ideas through case analysis

and student discussion. If time is short, prioritize cost of completion

vs. diminution in value, as this is the most heavily tested issue.

Time Management Considerations

If teaching in one session:

Focus on cost of completion vs. diminution in value, using

*Peevyhouse* and *Jacob & Youngs*.

Cover the Perfect Tender Rule briefly.

If teaching over two sessions:

Class 1: Expectation damages for defective performance

(*Peevyhouse*, *Jacob & Youngs*).

Class 2: UCC remedies for defective goods (*Ramirez v. Autosport*).

If time is short, minimize discussion of economic waste and

foreseeability, as these will be revisited later.

Framing the Issue -- What Makes Defective Performance Different?

Begin by asking students:

"What is the difference between a contract where a party completely

fails to perform versus one where a party performs, but does so

imperfectly?"

Students should recognize that total nonperformance means the promisee

receives nothing, whereas defective performance means something was

provided, but it falls short of expectations.

Introduce a simple hypothetical:

"Imagine you hire a contractor to build a deck, but when the work is

finished, you realize the deck is two feet smaller than promised. You

paid for a deck, and you got a deck---but it's not exactly what you

agreed to. What should your remedy be?"

Some students may immediately say, *"The contractor should pay to

rebuild it!"* Others may say, *"The contractor should just pay for the

difference in value between the smaller deck and the original plan."*

At this point, introduce the two key approaches to calculating

expectation damages for defective performance:

1. Cost of Completion -- The breaching party pays the cost of fixing

the defect, restoring the promisee to the exact position they

expected.

2. Diminution in Value -- The breaching party pays the difference in

market value between what was promised and what was delivered,

rather than paying for full reconstruction.

Explain that courts must balance fairness and economic efficiency in

deciding which measure to use.

Ask students:

"Should a contractor always have to rebuild a structure from scratch

if there is a minor defect? Would that be fair? What if it would cost

\$50,000 to fix a problem that only reduces the house's value by

\$2,000?"

This discussion introduces the economic waste principle, which helps

courts decide when cost of completion is excessive and when diminution

in value is a more appropriate remedy.

Case Study -- Peevyhouse v. Garland Coal

Introduce *Peevyhouse*, a controversial but foundational case.

Case Summary:\

The Peevyhouses leased land to a coal company, which promised to restore

the land after mining. The company breached, leaving the land in a

damaged state. The cost of restoring the land was \$29,000, but the

actual decrease in property value was only \$300. The court awarded only

the diminution in value, rather than the cost of repair.

Socratic Discussion

1. *"Should the court have awarded the full \$29,000?"*

2. Students will likely be divided. Some will argue that contracts

should be enforced as written; others will say that forcing a

\$29,000 repair for a \$300 loss is unreasonable.

3. *"What if the Peevyhouses had a personal, non-economic reason for

wanting the land restored?"*

4. Lead students to recognize that courts typically prioritize market

value over subjective preferences, except in rare cases (like unique

property).

5. *"If the coal company knew that the Peevyhouses valued restoration

highly, should the court have enforced the full repair cost?"*

6. This introduces foreseeability and reliance, foreshadowing

discussions in later lessons.

Tie this discussion back to the opening deck hypothetical---should the

builder have to rebuild the entire deck, or just pay for the reduced

value?

Case Study -- Jacob & Youngs v. Kent

Now introduce *Jacob & Youngs v. Kent*, where a contractor used the

wrong brand of pipe in a mansion. The owner sued, demanding the full

cost of replacing the pipes, which would have required tearing down and

rebuilding parts of the house. The court instead awarded only diminution

in value, because replacing the pipes would have been economically

wasteful.

Socratic Discussion

1. *"Would the outcome have been different if the pipes were lower

quality?"*

2. Guide students toward seeing that courts weigh the severity of the

defect in deciding which remedy applies.

3. *"Does it matter that the owner specifically requested the Reading

brand of pipes?"*

4. Introduce the doctrine of substantial performance---if the breach is

minor, the remedy should be proportional.

5. *"What if the contractor deliberately ignored the specifications?"*

6. Raise the issue of bad faith breaches and whether punitive damages

should ever apply in contract cases.

This discussion reinforces that not all breaches are equal---some

justify full repair, while others warrant only a price adjustment.

The UCC's Approach -- Perfect Tender and Buyer's Remedies

Shift the discussion to defective performance in sales of goods under

the UCC.

Perfect Tender Rule (UCC § 2-601) -- A buyer can reject goods if

they fail in any respect to conform to the contract.

Buyer's options for defective goods:

Reject the goods entirely.

Accept the goods and seek a price reduction.

Revoke acceptance if the defect substantially impairs the value.

Use Ramirez v. Autosport to illustrate how buyers can reject goods that

don't conform to the contract.

Ask students:

"Should a buyer be allowed to reject goods for minor defects, or does

that create unfairness for sellers?"

Guide them toward recognizing that the UCC tries to balance buyer

protection with commercial practicality, giving sellers a right to cure

defects.

Key Takeaways

Courts balance making the injured party whole with avoiding waste in

defective performance cases.

Cost of completion is awarded when full repair is reasonable, but

diminution in value applies when full repair would be economically

excessive.

Under the UCC, buyers have strong rights to reject defective goods,

but sellers may have a right to cure.

CROSS-REFERENCES

• Slide Deck: Chapter_25_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 25

• Problem Solutions: See Problem Solutions section, Chapter 25

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 24–28 (Remedies and Third Parties)

CHAPTER 26: LIMITS ON DAMAGES

CHAPTER OVERVIEW

Total Slides 60 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.4 sessions | 75-min classes: ~1.7 sessions

Major Cases Hadley v. Baxendale

Key Doctrines Foreseeability, R2d § 351, Certainty, Mitigation, R2d § 356

Slide Deck File Chapter_26_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Foreseeability (Slides 1-18)

Essential for all credit hours

MODULE 2: Hadley v. Baxendale (Slides 19-35)

Essential for all credit hours

MODULE 3: Certainty Requirement (Slides 36-44)

Essential for all credit hours

MODULE 4: Mitigation Duty (Slides 45-52)

Essential for all credit hours

MODULE 5: Liquidated Damages (Slides 53-58)

Essential for all credit hours

MODULE 6: Review (Slides 59-60)

Essential for all credit hours

LESSON PLAN: Chapter 26 — Limits on Damages

This lesson introduces students to the doctrines that limit contract

damages, refining their understanding of expectation damages by

exploring foreseeability, certainty, and mitigation. These doctrines

ensure that damages are reasonable, predictable, and based on provable

losses, preventing excessive awards that might discourage commercial

activity.

[Listen to Mastering Contracts Podcast Episode 27: UCC Damages --

When Good Go

Bad]](https://youtu.be/yeMecz49oHs?si=gsB6SgQvSljyqAqO)

This lesson builds directly on Lessons 24 and 25, which established how

expectation damages are calculated and applied in cases of total

nonperformance and defective performance. Here, students will refine

their understanding by considering when those damages may be reduced or

denied altogether. The casebook's treatment of these issues,

particularly *Hadley v. Baxendale*, helps students see how courts

balance compensating the injured party with ensuring fairness to the

breaching party.

By the end of this lesson, students should be able to:

Explain the foreseeability limitation on contract damages and apply

it to cases involving consequential damages.

Understand why certainty is required in proving damages and

recognize when damages become too speculative to be recoverable.

Analyze the duty to mitigate and determine when a nonbreaching party

has failed to take reasonable steps to reduce their losses.

Apply these doctrines to contract disputes, ensuring that damage

awards remain fair and economically rational.

Time Management Considerations

This lesson is conceptually dense, requiring students to engage with

multiple doctrines that interact in complex ways. If class time is

limited, instructors should prioritize foreseeability and mitigation, as

these concepts appear frequently in commercial disputes. Certainty

should be addressed, but cases dealing with speculative damages may be

condensed if necessary.

If teaching in two class periods, consider the following breakdown:

Class 1: Foreseeability (*Hadley v. Baxendale*), certainty, and the

requirement that damages be tied to reasonable expectations.

Class 2: Mitigation, including its application under common law and

the UCC, and policy considerations underlying limits on damages.

If time is short, instructors can assign discussion of mitigation under

the UCC as reading and focus the in-class discussion on foreseeability

and certainty, using *Hadley* as the primary vehicle for analysis.

Framing the Issue -- Why Are Damages Limited?

Begin by asking students to recall the primary goal of contract remedies

from Lesson 24:

"What is the purpose of contract damages?"

Students will likely answer compensating the injured party for their

lost expectation interest.

Follow up with:

"Should a breaching party be liable for all harm that results from the

breach, no matter how extreme?"

This will generate discussion. Some students may argue that breachers

should be fully responsible, while others will note that unlimited

liability would make contracts too risky.

Introduce the three doctrines that limit damages:

1. Foreseeability -- Prevents awarding damages for losses the breaching

party could not have anticipated.

2. Certainty -- Requires damages to be proven with reasonable

precision, preventing speculative awards.

3. Mitigation -- Ensures that the injured party takes reasonable steps

to reduce their own losses.

Explain that these doctrines exist because contract law does not punish

breach---it compensates for reasonably expected harm. These limits

ensure that damages are predictable and commercially rational,

encouraging economic activity rather than deterring it.

Foreseeability -- The Rule of Hadley v. Baxendale

Introduce the foreseeability doctrine, which limits damages to those

losses that the breaching party knew or should have known about at the

time of contracting.

Case Study: Hadley v. Baxendale

Summarize the case:

Hadley's mill broke down, and he hired Baxendale to deliver a

replacement crankshaft.

Baxendale delayed delivery, causing the mill to remain shut down for

extra days.

Hadley sued for lost profits, arguing that Baxendale's delay caused

significant financial harm.

The court rejected Hadley's claim for lost profits, holding that

Baxendale could not have foreseen that Hadley lacked a spare shaft

and would lose profits as a result.

Socratic Discussion

1. *"Why did the court deny Hadley's claim for lost profits?"*

2. Students should recognize that Baxendale was unaware that Hadley

lacked a spare crankshaft.

3. Guide them toward understanding that contract damages require

reasonable foresight at the time of contract formation.

4. *"Would the outcome change if Hadley had told Baxendale, 'We have no

spare shaft, so if you delay, we'll lose significant revenue'?"*

5. This introduces the idea that special circumstances must be

communicated to be recoverable.

6. *"What are the policy reasons behind this rule?"*

7. Help students see that unlimited liability would discourage

contracts and increase transaction costs, as parties would have to

protect against unknown risks.

Tie this back to the opening hypothetical: if a factory loses a \$10

million contract because of a small delivery delay, should the supplier

be liable? Likely not---unless they knew about the risk when forming the

contract.

Certainty -- Preventing Speculative Damages

Now introduce the certainty doctrine, which requires damages to be

reasonably provable rather than speculative.

Ask:

"If a new startup claims they lost \$50 million in profits due to a

supplier's breach, should a court award those damages?"

Most students will say no. Ask:

"What if they provide expert testimony saying they *expected* to make

that much?"

Now students should recognize that expectations alone are not

enough---damages must be proven with reasonable certainty.

Use a contrasting example:

"A restaurant sues a supplier for failing to deliver ingredients,

claiming lost profits. They show financial records proving they make

\$5,000 per day. Should the court award damages?"

Here, students should agree that established businesses can prove

damages more easily than speculative startups. This illustrates why

certainty is required---courts do not want to guess at damages.

Mitigation -- The Duty to Avoid Losses

Explain that mitigation prevents a nonbreaching party from sitting back

and allowing damages to accumulate.

Introduce a simple employment hypothetical:

"An employer wrongfully fires an employee under a one-year contract.

The employee sits at home for the rest of the year and sues for the

full salary. Should they recover?"

Most students will say no---the employee should have looked for another

job. This leads into the requirement to take reasonable steps to reduce

losses.

Discuss common examples of mitigation:

A fired employee must seek comparable work.

A landlord must attempt to re-rent an abandoned apartment.

A buyer must try to cover by purchasing substitute goods under the

UCC.

Ask:

"How far does a party have to go in mitigating damages? Should they

have to take *any* job, even one that pays much less?"

Students should see that mitigation requires reasonable efforts, but not

extreme sacrifices.

Key Takeaways

Foreseeability limits damages to losses the breaching party could

have anticipated at the time of contracting.

Certainty requires damages to be provable---speculative lost profits

are not recoverable.

Mitigation ensures that injured parties take reasonable steps to

minimize their losses.

These doctrines balance compensating the injured party with ensuring

fairness and economic efficiency.

CROSS-REFERENCES

• Slide Deck: Chapter_26_Slides.pptx (60 slides)

• Case Briefs: See Case Briefs section, Chapter 26

• Problem Solutions: See Problem Solutions section, Chapter 26

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 24–28 (Remedies and Third Parties)

CHAPTER 27: ALTERNATIVE REMEDIES

CHAPTER OVERVIEW

Total Slides 58 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.3 sessions | 75-min classes: ~1.7 sessions

Major Cases None (remedy-focused)

Key Doctrines Specific performance, R2d § 357, UCC § 2-716, Injunctions

Slide Deck File Chapter_27_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Specific Performance (Slides 1-18)

Essential for all credit hours

MODULE 2: Adequacy Test (Slides 19-30)

Essential for all credit hours

MODULE 3: Unique Goods Doctrine (Slides 31-40)

Essential for all credit hours

MODULE 4: Injunctions (Slides 41-50)

Essential for all credit hours

MODULE 5: Equitable Defenses (Slides 51-56)

Include for 5-6 credit

MODULE 6: Review (Slides 57-58)

Essential for all credit hours

LESSON PLAN: Chapter 27 — Alternative Remedies

This lesson introduces students to alternative remedies beyond monetary

damages, focusing on specific performance, replevin, injunctions,

restitution, liquidated damages, and rescission/reformation. While

contract law typically relies on expectation damages to compensate

injured parties, there are situations where money is inadequate or

inappropriate. Students will learn when courts grant equitable remedies,

how restitution operates to prevent unjust enrichment, and when parties

can predefine remedies through liquidated damages provisions.

[Listen to Mastering Contracts Podcast Episode 25: Equity's Enforcers

-- When Money Can't Buy

Justice]](https://youtu.be/DFMjHPaeFlw?si=ySu-e_-7Gc7NxgqM)

This lesson builds directly on Lessons 24-26, which focused on monetary

damages as the primary remedy for contract breach. Now, students will

see how courts handle cases where monetary damages fail to provide

adequate relief. Through case analysis and Socratic questioning,

students will grapple with why specific performance is reserved for

exceptional cases, why restitution is often available even to breaching

parties, and why courts scrutinize liquidated damages clauses to ensure

fairness.

By the end of this lesson, students should be able to:

Understand why money damages are the default remedy but specific

performance is granted only in special circumstances.

Explain when replevin is available as a remedy for recovering

specific goods.

Analyze injunctions, particularly in employment agreements and

restrictive covenants.

Understand the difference between reliance, restitution, and

expectation interests in the context of alternative remedies.

Distinguish liquidated damages clauses from unenforceable penalties

and evaluate their enforceability.

Recognize when courts allow rescission and reformation to correct

contractual mistakes.

Time Management Considerations

This lesson covers a broad range of remedies beyond expectation damages,

so instructors should prioritize the most commonly tested and debated

remedies: specific performance, restitution, and liquidated damages

clauses. If class time is limited, focus on:

Specific performance and its limitations (including the uniqueness

requirement).

Restitution as an alternative remedy, including its availability to

breaching parties.

Liquidated damages and the distinction between reasonable estimates

and penalties.

Less time can be spent on replevin, injunctions, and

rescission/reformation, as these topics are less frequently tested but

can be assigned as reading.

If teaching in two class periods, consider the following breakdown:

Class 1: Specific performance, replevin, injunctions, and policy

justifications for equitable remedies.

Class 2: Restitution, liquidated damages, and

rescission/reformation, with case analysis of enforceability

concerns.

Framing the Issue -- When Are Money Damages Inadequate?

Begin by reminding students that contract remedies overwhelmingly favor

monetary damages.

Ask:

"Why do courts almost always award money damages instead of forcing

parties to perform their contracts?"

Students will likely respond that money damages are easier to

administer, less intrusive, and avoid the need for ongoing court

supervision.

Then ask:

"But what if the contract involves something unique---like land, a

rare painting, or a custom-built yacht? Can money really replace the

exact thing the injured party expected?"

This introduces the idea that monetary damages are sometimes inadequate,

leading courts to consider alternative remedies such as specific

performance, replevin, and injunctions.

Specific Performance -- The Exceptional Remedy

Explain that specific performance compels a party to perform their

contractual obligations rather than paying damages. However, courts

rarely grant it because money damages are typically sufficient.

Case Study: Van Wagner Advertising v. S&M Enterprises

Summarize the case:

Van Wagner leased billboard space in a prime location but was later

evicted by the landlord.

Van Wagner sued for specific performance, arguing that the

billboard's unique location made damages inadequate.

The court denied specific performance, reasoning that while the

space was physically unique, it could be assigned a market value,

making money damages sufficient.

Socratic Discussion

1. *"Why did the court refuse to order specific performance even though

the billboard space was unique?"*

2. Students should recognize that courts prefer money damages when they

can be easily calculated.

3. *"Would the outcome have been different if the lease had involved a

historic landmark rather than an advertising billboard?"*

4. This introduces the uniqueness requirement---specific performance is

more likely for real estate or truly one-of-a-kind goods.

5. *"What are the risks of forcing someone to perform a contract rather

than allowing them to breach and pay damages?"*

6. Lead students to see that specific performance can be costly,

inefficient, and create enforcement challenges.

Takeaway: Specific performance is reserved for cases where no adequate

substitute exists---such as real estate transactions or custom-made

goods under UCC § 2-716.

Restitution -- Recovering Benefits Conferred

Now introduce restitution, which prevents unjust enrichment by restoring

the value of benefits conferred.

Use a hypothetical:

"A contractor is hired to build a garage for \$50,000. The contractor

completes half the work but then breaches. The homeowner refuses to

pay anything, arguing that the contractor didn't finish the job.

Should the contractor recover something?"

Students will likely say yes, leading to a discussion of how restitution

allows a breaching party to recover the value of their partial

performance.

Introduce *Britton v. Turner*, where a breaching employee was still

entitled to payment for work completed, reinforcing that even breaching

parties may claim restitution if they provided a benefit.

Takeaway: Restitution is based on the benefit conferred, not on

enforcing expectations. It often applies when contracts fail entirely

and neither party fully performs.

Liquidated Damages -- Enforceable Estimates vs. Penalties

Explain that parties can predefine damages through liquidated damages

clauses, but courts strike down unreasonable penalty clauses.

Case Study: Bauer v. Sawyer

Summarize the case:

A doctor signed a non-compete agreement as part of a partnership.

The agreement included a forfeiture clause if he violated the

non-compete.

The court enforced the non-compete but refused to enforce the

penalty clause.

Socratic Discussion

1. *"Why do courts allow liquidated damages but reject penalties?"*

2. Guide students to see that reasonable estimates of harm are valid,

but punitive damages violate contract principles.

3. *"What factors determine whether a liquidated damages clause is

enforceable?"*

4. Courts consider whether the damages were difficult to estimate at

the time of contracting and whether the amount is a reasonable

forecast of harm.

Takeaway: Courts uphold liquidated damages if they reflect a reasonable

estimate of actual harm, but penalties are unenforceable under

Restatement § 356 and UCC § 2-718.

Rescission and Reformation -- Undoing or Fixing Contracts

Introduce rescission, which cancels a contract, and reformation, which

corrects mistakes in contract terms.

Ask:

"If both parties make an honest mistake about a contract's terms,

should they be forced to abide by it?"

Students should recognize that rescission restores parties to their

pre-contract state, while reformation fixes errors to reflect their true

intent.

Use *Sherwood v. Walker* (the "pregnant cow case") to illustrate mutual

mistake as grounds for rescission.

Takeaway: Rescission is available when fundamental mistakes occur, while

reformation is used when contract terms need correction.

Key Takeaways

Specific performance is an exceptional remedy for unique goods and

real estate.

Replevin allows recovery of specific goods, while injunctions

prevent breaches of non-compete agreements and other contractual

obligations.

Restitution prevents unjust enrichment and can be claimed even by

breaching parties.

Liquidated damages clauses must reflect a reasonable estimate of

harm, or they will be struck down as penalties.

Rescission and reformation allow courts to undo or correct contracts

when fairness requires it.

CROSS-REFERENCES

• Slide Deck: Chapter_27_Slides.pptx (58 slides)

• Case Briefs: See Case Briefs section, Chapter 27

• Problem Solutions: See Problem Solutions section, Chapter 27

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 24–28 (Remedies and Third Parties)

CHAPTER 28: THIRD-PARTY BENEFICIARIES

CHAPTER OVERVIEW

Total Slides 56 slides —————— —————————————————————— Estimated Time 50-min classes: ~2.2 sessions | 75-min classes: ~1.6 sessions

Major Cases Lawrence v. Fox, Frescati Shipping Co. v. Citgo Asphalt

Key Doctrines R2d § 302, Intended beneficiary, Assignment, Delegation

Slide Deck File Chapter_28_Slides.pptx ————————————————————————————-

TEACHING WITH SLIDES — MODULE BREAKDOWN

MODULE 1: Intended vs. Incidental (Slides 1-18)

Essential for all credit hours

MODULE 2: Creditor vs. Donee Beneficiaries (Slides 19-32)

Essential for all credit hours

MODULE 3: Vesting of Rights (Slides 33-42)

Essential for all credit hours

MODULE 4: Assignment and Delegation (Slides 43-52)

Essential for all credit hours

MODULE 5: Review (Slides 53-56)

Essential for all credit hours

LESSON PLAN: Chapter 28 — Third-Party Beneficiaries

This lesson introduces students to the doctrine of third-party

beneficiaries, which challenges the traditional privity requirement in

contract law. Ordinarily, only parties to a contract can enforce it, but

in specific cases, courts allow non-parties to claim rights when they

were intended beneficiaries of the agreement. This lesson examines when

and why courts grant enforcement rights to non-parties, emphasizing how

contract law balances the autonomy of contracting parties with the

interests of outsiders who may be significantly impacted.

[Listen to Mastering Contracts Podcast Episode 28: Three's Company --

When Contracts Benefit Third

Parties]](https://youtu.be/sZ6Zxd0EB0Y?si=e2DdbYyVUcm0bAEo)

This lesson fits within the broader remedies module by demonstrating who

can enforce contractual rights. In Lesson 24, students learned that

contract law compensates injured parties rather than punishing breach.

Here, students will see how courts decide who qualifies as an injured

party when a non-party seeks enforcement. The discussion also connects

to previous lessons on contract formation and interpretation,

reinforcing that contract rights arise from the intent of the

contracting parties.

By the end of this lesson, students should be able to:

Distinguish between intended beneficiaries (who can enforce a

contract) and incidental beneficiaries (who cannot).

Apply the Restatement (Second) of Contracts § 302 intent test to

determine whether a third party has enforceable rights.

Differentiate between creditor beneficiaries (who receive a benefit

to satisfy a debt) and donee beneficiaries (who receive a gift).

Recognize how third-party rights vest and when contracting parties

can modify or rescind a contract before vesting.

Analyze the defenses available to promisors against third-party

claims, including contract modification, failure of conditions, and

non-formation defenses.

Time Management Considerations

This lesson introduces a major exception to privity, so instructors

should ensure students fully grasp why contract law sometimes allows

third-party enforcement. If class time is limited, instructors should

prioritize:

The intent test for distinguishing intended and incidental

beneficiaries (*Frescati Shipping v. Citgo Asphalt*).

The creditor vs. donee distinction, reinforcing how intent shapes

third-party rights.

Defenses to third-party claims, particularly modification before

vesting.

Less time can be spent on equitable defenses or historical development,

as these are less frequently tested.

If teaching in two class periods, consider the following breakdown:

Class 1: The intent test, creditor and donee beneficiaries, and the

scope of third-party rights.

Class 2: Defenses to enforcement, contract modification, and complex

third-party relationships in modern commerce (*Sovereign Bank v.

BJ's*).

Framing the Issue -- When Can a Non-Party Enforce a Contract?

Begin by asking students:

\"Ordinarily, contract law enforces agreements between the parties who

made them. Why should an outsider---who never signed the contract---be

allowed to sue to enforce it?\"

Students will likely respond with mixed intuitions. Some may argue that

contracts are private agreements and third parties should have no

rights. Others may recognize that some contracts are clearly intended to

benefit third parties, such as life insurance policies or business

agreements protecting third-party interests.

Then ask:

\"What kinds of third parties should be able to enforce contracts?

Should courts allow enforcement whenever a third party benefits, or

only in specific circumstances?\"

Guide students toward understanding that courts only allow enforcement

when the contracting parties clearly intended to confer enforceable

rights on the third party. This introduces the intent test, which

distinguishes between intended and incidental beneficiaries.

The Intent Test -- Distinguishing Intended vs. Incidental Beneficiaries

Explain that courts use the Restatement (Second) of Contracts § 302 to

determine whether a third party has enforceable rights.

Rule: A third party is an intended beneficiary if:

1. Recognition of their right effectuates the intent of the parties;

and

2. Either:

3. The promisee owes a pre-existing obligation to the third party

(creditor beneficiary); or

4. The promisee intended to give the third party a gift (donee

beneficiary).

All other third parties are incidental beneficiaries, who have no

rights.

Case Study: Frescati Shipping Co. v. Citgo Asphalt

Summarize the case:

Frescati Shipping owned an oil tanker that hit a submerged anchor at

a Citgo facility, spilling oil and causing millions in damages.

Frescati sued under a safe-berth clause in a contract between Citgo

and Star Tankers---even though Frescati was not a party to the

contract.

The Third Circuit ruled that Frescati was an intended beneficiary,

because the safe-berth clause was meant to protect shipowners

docking at the facility.

Socratic Discussion

1. *\"Why was Frescati considered an intended beneficiary?\"*

2. Guide students to see that the safe-berth clause's purpose was to

protect ships---making shipowners intended beneficiaries.

3. *\"Who else might benefit from a safe-berth clause? Could a nearby

fisherman sue if his boat was damaged?\"*

4. This introduces incidental beneficiaries---people who benefit

indirectly but lack enforcement rights.

5. *\"Should courts expand third-party rights whenever an outsider

benefits from a contract?\"*

6. Lead students to see that courts must balance fairness with contract

certainty---if third-party claims were unlimited, it would create

uncertainty in contract enforcement.

Takeaway: Only intended beneficiaries---whose rights align with the

contract's purpose---can sue to enforce contractual promises.

Creditor vs. Donee Beneficiaries

Explain that intended beneficiaries fall into two categories:

Creditor beneficiaries receive a contract benefit to satisfy an

existing obligation.

Donee beneficiaries receive a contract benefit as a gift.

Use a simple hypothetical:

\"Alice owes Bob \$5,000. Instead of paying Bob directly, Alice agrees

to build a website for Bob's business. If Alice breaches, can Bob sue

to enforce the contract?\"

Students should recognize that Bob is a creditor beneficiary because

Alice's performance satisfies a pre-existing debt.

Now change the hypo:

\"Alice agrees to build a website for Bob's son as a birthday gift. If

Alice breaches, can Bob's son sue?\"

Students should recognize that the son is a donee beneficiary because

Bob intended to give him a gift.

Ask:

\"What if Bob changes his mind and tells Alice to cancel the

website---before work starts? Can Bob's son still sue?\"

This introduces the vesting of third-party rights, leading into contract

modification and defenses.

Defenses Against Third-Party Beneficiaries

Explain that third-party rights are not absolute.

\"If a third-party beneficiary can enforce a contract, can the

original parties still modify or cancel it?\"

Students should recognize that parties can modify the contract until the

beneficiary's rights vest. Rights vest when:

1. The beneficiary relies on the contract.

2. The beneficiary brings a lawsuit to enforce it.

3. The beneficiary manifests assent to the contract.

Introduce *Sovereign Bank v. BJ's Wholesale Club*, where the court

denied enforcement because the contract did not clearly confer

third-party rights.

Ask:

\"What happens if the contract explicitly says 'No third-party

beneficiaries'? Should courts enforce that disclaimer?\"

This introduces contractual limits on third-party rights, reinforcing

party autonomy.

Key Takeaways

Only intended beneficiaries can enforce contracts---incidental

beneficiaries cannot.

Courts use the intent test to determine if enforcement aligns with

the contracting parties' intent.

Creditor beneficiaries enforce contracts to satisfy a pre-existing

obligation; donee beneficiaries enforce contracts as recipients of

gifts.

Third-party rights vest upon reliance, assent, or lawsuit, limiting

modification.

Defenses include non-formation, failure of conditions, and contract

modification before vesting.

CROSS-REFERENCES

• Slide Deck: Chapter_28_Slides.pptx (56 slides)

• Case Briefs: See Case Briefs section, Chapter 28

• Problem Solutions: See Problem Solutions section, Chapter 28

• Quick Start Guide: See Quick Start Guide (9 slides)

• Deep Dive Manual: See Deep Dive Manual (40 slides)

• Related Chapters: Chapters 24–28 (Remedies and Third Parties)

APPENDIX: COMPLETE SLIDE REFERENCE

Chapter 1: Introduction to Contract Law (60 slides)

Slides 1-15: Historical Foundations

Slides 16-25: Law vs. Equity [optional]

Slides 26-40: Theories of Contract Law

Slides 41-55: Objective vs. Subjective

Slides 56-60: Course Overview and Review

Chapter 2: What Is a Contract? (68 slides)

Slides 1-20: Promise, Agreement, Bargain Definitions

Slides 21-35: Bilateral vs. Unilateral Contracts

Slides 36-50: Common Law vs. UCC Scope

Slides 51-65: Steinberg v. Chicago Medical School

Slides 66-68: Review

Chapter 3: Mutual Assent (73 slides)

Slides 1-18: Objective Theory Introduction

Slides 19-38: Lucy v. Zehmer Case Narrative

Slides 39-58: Raffles v. Wichelhaus (Peerless)

Slides 59-68: Embry v. Hargadine [optional]

Slides 69-73: Mastery Checklist

Chapter 4: Offers (65 slides)

Slides 1-15: Definition of Offer (R2d § 24)

Slides 16-25: Preliminary Negotiations

Slides 26-40: Leonard v. Pepsico (Harrier Jet)

Slides 41-55: Lefkowitz v. Great Minneapolis

Slides 56-62: Certainty Requirement

Slides 63-65: Review

Chapter 5: Termination of the Offer (60 slides)

Slides 1-15: Methods of Termination

Slides 16-28: Revocation Rules

Slides 29-43: Dickinson v. Dodds Case

Slides 44-52: Option Contracts

Slides 53-58: Firm Offers (UCC § 2-205) [optional]

Slides 59-60: Review

Chapter 6: Acceptance (64 slides)

Slides 1-18: Mailbox Rule Introduction

Slides 19-30: Mirror Image Rule

Slides 31-48: Battle of the Forms (UCC § 2-207)

Slides 49-60: Ever-Tite Roofing Case

Slides 61-64: Review

Chapter 7: Consideration (70 slides)

Slides 1-20: Bargain Theory

Slides 21-38: Hamer v. Sidway Case

Slides 39-48: Legal Detriment

Slides 49-58: Past Consideration

Slides 59-67: Preexisting Duty Rule

Slides 68-70: Review

Chapter 8: Promissory Estoppel (58 slides)

Slides 1-15: R2d § 90 Elements

Slides 16-32: Ricketts v. Scothorn Case

Slides 33-44: Reasonable Reliance

Slides 45-53: Charitable Subscriptions [optional]

Slides 54-58: Review

Chapter 9: Promissory Restitution (56 slides)

Slides 1-18: Material Benefit Rule

Slides 19-35: Webb v. McGowin Case

Slides 36-48: Mills v. Wyman Comparison

Slides 49-53: Unjust Enrichment

Slides 54-56: Review

Chapter 10: The Statute of Frauds (71 slides)

Slides 1-20: MYLEGS Categories

Slides 21-35: Writing Requirement

Slides 36-45: Signature Requirement

Slides 46-58: Part Performance Exception

Slides 59-68: Promissory Estoppel Exception [optional]

Slides 69-71: Review

Chapter 11: Mistake (60 slides)

Slides 1-18: Mutual vs. Unilateral Mistake

Slides 19-35: Sherwood v. Walker (Barren Cow)

Slides 36-48: Basic Assumption Test

Slides 49-56: Risk Allocation

Slides 57-60: Review

Chapter 12: Improper Bargaining (64 slides)

Slides 1-18: Misrepresentation Elements

Slides 19-30: Duress Doctrine

Slides 31-42: Undue Influence [optional]

Slides 43-58: Williams v. Walker-Thomas / Unconscionability

Slides 59-62: Public Policy [optional]

Slides 63-64: Review

Chapter 13: Incapacity (56 slides)

Slides 1-18: Infancy Doctrine

Slides 19-35: Mental Incapacity

Slides 36-45: Cognitive vs. Volitional Test

Slides 46-52: Necessaries Exception

Slides 53-56: Review

Chapter 14: Introduction to Interpretation & Ambiguity (60 slides)

Slides 1-15: Plain Meaning Rule

Slides 16-28: Ambiguity Definition

Slides 29-50: Frigaliment (Chicken Case)

Slides 51-57: Objective Interpretation

Slides 58-60: Review

Chapter 15: Intrinsic Evidence & Canons of Construction (68 slides)

Slides 1-18: Intrinsic Evidence Primacy

Slides 19-35: Canons of Construction

Slides 36-45: Ejusdem Generis

Slides 46-62: In re Motors Liquidation

Slides 63-68: Review

Chapter 16: Extrinsic Evidence (60 slides)

Slides 1-18: Course of Performance

Slides 19-30: Course of Dealing

Slides 31-45: Usage of Trade

Slides 46-56: Columbia Nitrogen Case

Slides 57-60: Review

Chapter 17: The Parol Evidence Rule (60 slides)

Slides 1-15: Rule Statement

Slides 16-28: Integration Test

Slides 29-44: Masterson v. Sine / Mitchill v. Lath

Slides 45-55: Exceptions

Slides 56-60: Review

Chapter 18: Warranties (71 slides)

Slides 1-20: Express Warranties

Slides 21-38: Implied Warranty of Merchantability

Slides 39-52: Fitness for Particular Purpose [optional]

Slides 53-66: Disclaimers

Slides 67-71: Review

Chapter 19: Conditions (73 slides)

Slides 1-20: Conditions Defined

Slides 21-35: Precedent vs. Subsequent

Slides 36-52: Howard v. Federal Crop Insurance

Slides 53-65: Waiver Doctrine

Slides 66-70: Satisfaction Clauses [optional]

Slides 71-73: Review

Chapter 20: Performance and Breach (64 slides)

Slides 1-20: Substantial Performance

Slides 21-38: Jacob & Youngs v. Kent

Slides 39-48: Material vs. Minor Breach

Slides 49-59: Perfect Tender Rule

Slides 60-64: Review

Chapter 21: Repudiation (62 slides)

Slides 1-18: Anticipatory Repudiation

Slides 19-33: Hochster v. De La Tour

Slides 34-48: Adequate Assurance

Slides 49-58: Retraction Rules

Slides 59-62: Review

Chapter 22: Excuse (64 slides)

Slides 1-18: Impossibility

Slides 19-32: Taylor v. Caldwell

Slides 33-45: Impracticability

Slides 46-58: Frustration of Purpose

Slides 59-64: Review

Chapter 23: Modification and Discharge (60 slides)

Slides 1-18: Preexisting Duty Rule

Slides 19-33: Alaska Packers Case

Slides 34-45: UCC § 2-209

Slides 46-55: Accord and Satisfaction

Slides 56-60: Review

Chapter 24: Expectation Damages (73 slides)

Slides 1-25: Formula: Loss in Value + Other Loss – Cost Avoided

Slides 26-38: Direct Damages

Slides 39-48: Incidental Damages

Slides 49-60: Consequential Damages

Slides 61-70: Lost Volume Seller [optional]

Slides 71-73: Review

Chapter 25: Defective Performance (60 slides)

Slides 1-18: Cost of Completion vs. Diminution

Slides 19-38: Peevyhouse v. Garland Coal

Slides 39-48: Economic Waste

Slides 49-56: UCC Buyer/Seller Remedies

Slides 57-60: Review

Chapter 26: Limits on Damages (60 slides)

Slides 1-18: Foreseeability

Slides 19-35: Hadley v. Baxendale

Slides 36-44: Certainty Requirement

Slides 45-52: Mitigation Duty

Slides 53-58: Liquidated Damages

Slides 59-60: Review

Chapter 27: Alternative Remedies (58 slides)

Slides 1-18: Specific Performance

Slides 19-30: Adequacy Test

Slides 31-40: Unique Goods Doctrine

Slides 41-50: Injunctions

Slides 51-56: Equitable Defenses [optional]

Slides 57-58: Review

Chapter 28: Third-Party Beneficiaries (56 slides)

Slides 1-18: Intended vs. Incidental

Slides 19-32: Creditor vs. Donee Beneficiaries

Slides 33-42: Vesting of Rights

Slides 43-52: Assignment and Delegation

Slides 53-56: Review

Contract Law: Rules, Cases & Problems

Second Edition

Teacher’s Manual

PART III: CASE BRIEFS

With Cross-References to Lesson Plans & Slide Decks

Seth C. Oranburg

Professor of Law, University of New Hampshire Franklin Pierce School of Law

PART III: CASE BRIEFS

In addition to the lesson plans, this Teacher's Manual includes detailed case briefs designed to support your instruction of the key cases covered in Contract Law: Rules, Cases, and Problems. These case briefs provide clear, concise summaries of the pivotal cases in the course, highlighting the essential facts, issues, holdings, and reasoning that form the foundation of each case's contribution to contract law.

Each case brief is structured to make the critical legal principles easily digestible for students, while also offering valuable teaching insights. The briefs are intended to guide classroom discussion, serve as reference points for legal analysis, and help students focus on the most important takeaways. By offering well-organized, step-by-step breakdowns of each case, these briefs not only save you time in preparation but also provide a consistent method for students to learn how to brief cases on their own.

You can use the case briefs to reinforce lessons, structure class discussions, or provide additional support during review sessions. They are particularly helpful in illustrating how specific rules of contract law are applied in real-life cases, thereby giving students a practical understanding of the doctrines at play. The briefs are also a great resource for helping students refine their legal reasoning skills, as they guide students in dissecting complex judicial opinions and connecting them to broader contract law concepts.

By incorporating these case briefs into your teaching, you ensure that your students gain a deep understanding of contract law while developing essential skills in legal analysis and case briefing.

Each case brief in this Part is cross-referenced to the corresponding chapter lesson plan in Part II and, where applicable, to the specific slide ranges in the accompanying slide decks that cover the case. This allows you to move seamlessly between the case brief, the lesson plan, and the slides when preparing for class. The standard brief format used here—Citation, Parties, Procedural Posture, Issue, Holding, Rules, Facts, Application, and Conclusions—mirrors the structure students should develop when briefing cases on their own, making these a useful teaching model as well as a preparation tool.

Case Brief Index by Chapter

Chapter Cases Briefed Slides ————- ———————————————————————————————————————————————— ————- Ch 2 Steinberg v. Chicago Medical School; Pappas v. Bever 68

Ch 3 Raffles v. Wichelhaus; Lucy v. Zehmer 73

Ch 4 Lefkowitz v. Great Minneapolis Surplus Store, Inc.; Leonard v. Pepsico, Inc.; Academy Chicago Publishers v. Cheever 65

Ch 5 Smaligo v. Fireman's Fund Insurance Co.; Yaros v. Trustees of University of Pa. 60

Ch 6 State Department of Transportation v. Providence & Worcester Railroad Co.; Flender Corp. v. Tippins International, Inc. 64

Ch 7 Hamer v. Sidway; Pennsy Supply, Inc. v. American Ash Recycling Corp. 70

Ch 8 Ricketts v. Scothorn; Conrad v. Fields; Otten v. Otten; Maryland National Bank v. United Jewish Appeal Federation of Greater Washington, Inc. 58

Ch 9 Mills v. Wyman; Drake v. Bell; Webb v. McGowin; Haynes Chemical Corp. v. Staples & Staples; Edson v. Poppe; Muir v. Kane 56

Ch 10 McIntosh v. Murphy; Taylor v. Caldwell 71

Ch 11 Wood v. Boynton; Sherwood v. Walker; DePrince v. Starboard Cruise Services, Inc. 60

Ch 12 Barrer v. Women's National Bank; Hill v. Jones; Quebodeaux v. Quebodeaux 64

Ch 13 Webster St. Partnership, Ltd. v. Sheridan; Estate of McGovern v. Commonwealth State Employees' Retirement Bd. 56

Ch 14 Frigaliment Importing Co., Ltd., v. B.N.S. International Sales Corp 60

Ch 15 In re Motors Liquidation Co. 68

Ch 16 Wood v. Lucy, Lady Duff-Gordon; Fisher v. Congregation B'Nai Yitzhok; Nānākuli Paving & Rock Co. v. Shell Oil Co. 60

Ch 17 Gianni v. R. Russel & Co.; UAW-GM Human Resource Center v. KSL Recreation Corp.; Sierra Diesel Injection Service, Inc. v. Burroughs Corp. 60

Ch 18 Daughtrey v. Ashe; Carlson v. General Motors Corp.; Tyson v. Ciba-Geigy Corp.; Ardagh Metal Packaging USA Corp. v. American Craft Brewery, LLC 71

Ch 19 Morrison v. Bare; Internatio-Rotterdam, Inc. v. River Brand Rice Mills, Inc.; Morin Building Products Co., Inc. v. Baystone Construction, Inc. 73

Ch 20 Kingston v. Preston; Jacob & Youngs, Inc. v. Kent; Khiterer v. Bell 64

Ch 21 McCloskey & Co. v. Minweld Steel Co.; Hornell Brewing Co., Inc. v. Spry 62

Ch 22 Taylor v. Caldwell; Krell v. Henry; Transatlantic Financing Corp. v. United States; Adbar, L.C. v. New Beginnings C-Star 64

Ch 23 Alaska Packers Association v. Domenico; Angel v. Murray; Birdsall v. Saucier 60

Ch 24 Hawkins v. McGee 73

Ch 25 Peevyhouse v. Garland Coal & Mining Co.; North American Foreign Trading Corp. v. Direct Mail Specialist; Ramirez v. Autosport 60

Ch 26 Hadley v. Baxendale 60

Ch 27 Bauer v. Sawyer; Van Wagner Advertising Corp. v. S & M Enterprises 58

Ch 28 Sovereign Bank v. BJ's Wholesale Club, Inc. 56 —————————————————————————————————————————————————————————-

CHAPTER 1: INTRODUCTION TO CONTRACT LAW

Lesson Plan: See Part II, Chapter 1 | Slide Deck: Chapter_01_Slides.pptx (60 slides) | Problem Solutions: See Part IV, Chapter 1

None.

CHAPTER 2: WHAT IS A CONTRACT?

Lesson Plan: See Part II, Chapter 2 | Slide Deck: Chapter_02_Slides.pptx (68 slides) | Problem Solutions: See Part IV, Chapter 2

Steinberg v. Chicago Medical School

Slide Deck Reference: Chapter 2, Slides 51–65

Teaching Note: This case reviews the definition of contract. Students might find it relatable because it regards applying to graduate school. The court finds that that application is an offer to contract which the school accepts by cashing the applicant's check. I recommend using this case to introduce students to the case law method, which includes going over all the elements of a case brief (see the template and below). Students should attempt to extract the rules from this case. In class, you can compare these rules to the restatement's.

Citation

Steinberg v. Chi. Med. Sch., 69 Ill. 2d 320, 13 Ill. Dec. 699, 371 N.E.2d 634 (1977)(https://plus.lexis.com/api/document/collection/cases/id/3S11-V7W0-003C-B0YY-00000-00?cite=69%20Ill.%202d%20320&context=1530671)

The citation shows that this case is decided by the Illinois Supreme Court.

Parties

Robert I. Steinberg, Plaintiff and Appellee

Chicago Medical School, Defendant and Appellant

Other Entities

This is a class action so Steinberg is the named plaintiff representing a class of similarly situated applicants to Chicago Medical School.

Procedural Posture

The trial court dismissed the complaint for failure to state a cause of action. The appellate court reversed and permitted the contract claim to move forward as a class action.

The Supreme Court of Illinois is reviewing the motion to dismiss so this case does not decide whether a contract was actually formed and breached; rather, the procedural posture limits the court to deciding whether a contract may have been formed given the veracity of the plaintiff's statement of facts.

Issue

The issue is whether Chicago Medical School (CMS) entered into contracts with Plaintiffs where CMS published a bulletin describing standards by which applicants were to be evaluated, where Plaintiffs submitted applications pursuant to the Bulletin, and where CMS cashed Plaintiffs' application checks.

Holding

Yes, the parties created a contract when CMS received applicant's applications and cashed applicants' $15 check.

Rules

A contract, by ancient definition, is an agreement between competent parties, upon a consideration sufficient in law, to do or not to do a particular thing.

An offer, an acceptance and consideration are basic ingredients of a contract.

In the formation of contracts, it was long ago settled that secret intent was immaterial, only overt acts being considered in the determination of such mutual assent as that branch of the law requires.

Facts

CMS posted a bulletin where it solicited applications (offers) by describing standards by which candidates were to be evaluated. Steinberg, and others similarly situated, applied by completing CMS applications and sending in checks to pay the application fee. CMS cashed these checks.

It is debated whether CMS proceeded to review applicants pursuant to the standards in its bulletin.

Application

Steinberg contents that the application fee was sufficient consideration to enforce CMS's promise to review the applicants pursuant to the terms in the bulletin.

CMS contents that contract formation requires a meeting of the minds.

Conclusions

A contract does not require a meeting of the minds in the sense that no subjective understanding is requisite. "Meeting of the minds" is an outdated cliché. These parties entered into a contract by agreed to the same set of external signs.

Pappas v. Bever

Slide Deck Reference: Chapter 2, Slides 36–50

Teaching Note: This case is useful for demonstrating that promises are not necessarily enforceable. In fact, gratuitous promises like the one made in this case are generally not enforceable. Students will later learn the technicality that this unenforceability is due to a lack of consideration, and then will learn that some jurisdiction have exceptions to the consideration doctrine especially regarding charitable pledges like this one. You can preview those lessons here, but the main purpose of this case is defining whether a certain manifestation constitutes a promise. In this case, the court finds that the pledge was not a promise, even thought it might seem like it should be according to common usage of the term "promise." This case is thus a good opportunity to remind students that legal terms might not have common meanings, and through this course they will essentially learn how to discern and apply the legal meaning, even (and especially) where that conflicts with common meaning. You might also point out that how something is styled (e.g., whether some document calls itself a "contract" or whether, as here, a pledge card has language like "I intent") does not necessarily mean courts are required to interpret it that way.

Citation

Pappas v. Bever, 219 N.W.2d 720, 721 (Iowa 1974)

Parties

Plaintiff/Appellant William Pappas, receiver for Charles City College

Defendant/Appellee Sondra Bever, executor of the estate of Philip Bissonnette, Jr.

Other Entities

Charles City College, beneficiary of the fundraising pledge

Procedural Posture

Plaintiff appeals trial court's judgment denying enforcement of a fundraising pledge.

Issue

The issue is whether the pledge card constitutes the manifestation of an enforceable promise and not just a mere statement of unenforceable intention, where the fund-raiser drafted and printed the language on the pledge form.

Holding

The pledge instrument alone was insufficient to show the pledge was obligatory.

Rules

"A statement of intention is the mere expression of a state of mind, put in such a form as neither to invite nor to justify action in reliance by another person. A promise is also the expression of a state of mind, but put in such a form as to invite reliance by another person." 1 Corbin on Contracts § 15 at 35 (1963)

Facts

Philip Bissonnette filled in the blanks and signed a pledge card which said "I/we intend to subscribe to the College Founder's Fund the sum of Five Thousand \-- no/100 Dollars. I intend to pay \[\] Monthly \[\] Quarterly \[\] Semi-Annually \[/\] Annually over \[60\] / \[36\] months beginning 1967. Name \[signature\]. Address 301 - 2nd Ave."

The form was pre-printed by the College except for the blanks designating the amount of the pledge, terms of payment, signature and address of the pledgor. Bissonnette paid $ 1,000 on the pledge in 1967 and $ 1,000 in 1968. The college closed in May 1968, and he made no further payments prior to his death May 15, 1969.

Application

Plaintiff contends the fact two payments were made proves the pledge was obligatory.

Defendant contents that the pledge card is at best inconclusive. The language of the pledge form in this case, standing alone, shows nothing more than a statement of intention. There is no evidence the pledge was intended to be obligatory.

Conclusions

It was plaintiff's burden to prove the pledge was intended to be obligatory. Plaintiff must do this via intrinsic evidence, e.g., what the pledge card says, not what Bissonnette did. Plaintiff failed to maintain this burden.

CHAPTER 3: MUTUAL ASSENT

Lesson Plan: See Part II, Chapter 3 | Slide Deck: Chapter_03_Slides.pptx (73 slides) | Problem Solutions: See Part IV, Chapter 3

Raffles v. Wichelhaus

Slide Deck Reference: Chapter 3, Slides 39–58

Teaching Note: Our next case is the famous case of "two ships peerless." Reading the case is challenging because its language is arcane. Pedagogically, I chose to include the original case with much of its arcane language because I want students to get experience working with case law that may feel unfamiliar to them. This is not a high stakes case in that we can infer its lessons based on the material surrounding it in the book. This gives students a good opportunity to practice reading cases from foreign jurisdictions that may feel unintuitive to them. I encourage students to look up terms they do not understand in Black's Law Dictionary. The key learning from this case is to help students distinguish between the contract formed in Lucy and the contract not formed in Peerless. What makes these two cases different? I think the cases are distinguishable because in the case of *Lucy v. Zehmer* the two parties said the same thing and that thing could be identified by an objective person, namely waitress. But in *Raffles*, the parties said the same thing, the ship Peerless, but court has no good reason to decide whether the October peerless was intended and the December peerless was not, or vice versa. Although the party said the same words they did not manifest the same intention and there is no way of determining which of the expressed intentions is more accurate. Both positions have equal validity and therefore there is no common position that the court can ascribe to both parties. This is an example of a failure of mutual ascent where the parties have said the same thing but meant a different thing. Neither is joking but neither is objectively correct either.

Citation

2 EWHC Exch 119 (1864)

Note that this is a foreign (UK) jurisdiction. The case is over 150 years old.

Parties

Raffles, "claimant" (plaintiff), cotton seller in Bombay, India.

Wichelhaus, "respondent" (defendant), cotton buyer in Liverpool, England.

Other Entities

The "October" Peerless.

The "December" Peerless.

Procedural Posture

"Joinder with dismissal within" suggests a compulsory joinder of claims, which were then all dismissed, presumptively on similar grounds.

The case was dismissed by the Exchequer of Pleas, an equitable court.

Issue

The issue is whether the parties formed an enforceable bargain where they both agreed to sell and buy cotton via the ship Peerless, but they had two different ships of the same name in mind?

Holding

The parties did not manifest mutual assent because the court cannot determine "which" Peerless both parties mutually intended.

Rules

No consensus ad idem, no binding contract.

Facts

Plaintiff-seller Raffles believed goods would ship on the ship called "Peerless" bound to sail from Bombay in December.

Defendant-buyer Raffles believed goods would ship on the ship called "Peerless" bound to sail from Bombay in October.

When the goods arrived on the December Peerless, buyer refused to pay.

Application

There is nothing on the face of the contract to shew that any particular ship called the "Peerless" was meant. Neither party introduced evidence regarding whether one definition of the ship "Peerless" is better than another one.

Conclusions

The parties did not contract because their written instruments suggests no meeting of the minds regarding a material term.

Lucy v. Zehmer

Slide Deck Reference: Chapter 3, Slides 19–38

Teaching Note: Many colleagues will remember the facts of this colorful case: two doggone fools walk into a backwater bar where they drink whiskey and eventually agree to buy and sell the Ferguson Farm. This case is firmly established as modern Contract Law canon. I include the *Lucy* case in this section on mutual assent as opposed to the section on offers. In truth it could go in either because the manifestation in question, the "joke," refers to Zehmer's offer. But the rule that manifestation of mutual assent should be judged objectively is indifferent as to whether the manifestation is in the form of an offer and acceptance. This case illumines both concepts of offer and acceptance and therefore is located in the more general chapter preceding the specific ones. You can watch (and/or suggest students watch) my skit with students acting out *Lucy v. Zehmer* on YouTube: [[https://youtu.be/RpSfxWvnmHM]{.underline}](https://youtu.be/RpSfxWvnmHM)

Citation

Lucy v. Zehmer, 196 Va. 493, 84 S.E.2d 516 (1954)

This is a state (Virginia) supreme court decision.

Parties

Plaintiffs W. O. Lucy and J. C. Lucy, brothers engaged together in the lumber trade.

Defendants A. H. Zehmer and Ida S. Zehmer, a married couple.

Other Entities

The waitress, who witness the purported contracting.

Procedural Posture

The Circuit Court of Dinwiddie county "dismissed" Lucy's right to specific performance. Despite language reminiscent of a motion to dismiss, the Opinion says that depositions (discovery) were taken, implying that the case as resolved as a matter of summary judgment. Virginia, a commonwealth, had some quirky civil procedures that are not worth focusing on for this Contracts lesson.

Appealed to the Supreme Court of Virginia

Issue

The issue is whether Zehmer is legally bound to sell his Ferguson Farm where he was "just joking" when he signed a memorandum purporting to sell it to Lucy? or

The issue is whether the contract to sell the Ferguson Farm was a binding contract of sale between the parties, where defendant claimed they had not intended to sell their farm and that the sale contract had been intended as a joke?

Holding

Yes, Zehmer is legally obligated to sell the farm.

Rules

We must look to the outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention.

The law imputes to a person an intention corresponding to the reasonable meaning of his words and acts.

The mental assent of the parties is not requisite for the formation of a contract. If the words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to the other party.

The law judges of an agreement between two persons exclusively from those expressions of their intentions which are communicated between them.

A person cannot set up that he was merely jesting when his conduct and words would warrant a reasonable person in believing that he intended a real agreement.

(You might introduce this rule even though we are not yet focusing on remedies.) Specific performance is not a matter of absolute or arbitrary right, but is addressed to the reasonable and sound discretion of the court.

The case does not address consideration but you ask the class why Lucy offered Zehmer $5 to bind the deal? This $5 is superfluous if the farm sale agreement is supported by consideration Yes, there is consideration. $50,000 cash for a farm is a deal supported by consideration. Each promise ($50,000/farm) is supported by each other's. This is a typical bilateral mutual agreement.

Facts

W.O. Lucy, a lumberman, and A. H. Zehmer, a farmer, met in a restaurant and talked over several drinks about Zehmer selling his Ferguson Farm to Lucy. A waitress who watched the discussions testified that they appeared to be earnest and in depth. Negotiations concluded with Zehmer writing out a memorandum of sale and revised that memo for his wife to sign. He signed the memorandum and gave it to Lucy. Lucy offered Zehmer $5 to bind him to the deal

There are several versions of the facts. Lucy and Zehmer separately testify, and the waitress and another neutral observer also testify. As to Zehmer joking, "Both of the Zehmers testified that when Zehmer asked his wife to sign he whispered that it was a joke so Lucy wouldn't hear and that it was not intended that he should hear." Many facts point to the discussion appearing serious. Nothing suggests that Lucy knew or should have known that Zehmer was joking. At no time prior to the execution of the contract had Zehmer indicated to Lucy by word or act that he was not in earnest about selling the farm. T

Application

Plaintiff contends he was merely bluffing. Plaintiff argues that contract liability requires a "meeting of the minds." Here, the parties did not actually agree, because Zehmer was bluffing, and Lucy did not know he was bluffing. Therefore, there is no contract.

Defendants contents that he was serious and that he reasonably believed Zehmer was serious. Moreover, contract law does not require an actual (subjective) meeting of the minds. Rather, contract law requires two people to say the same thing (objectively). Here, Zucy and Zehmer literally said the same thing by agreeing to a common set of written words in a memorandum that Zehmer signed. Therefore, the court should construe the memorandum objectively, it light of what it actually says: Zehmer sells the Ferguson Farm to Lucy for $50,000 cash.

Defendants request specific performance. Defendant urges that it is not inequitable to enforce this agreement with specific performance. No circumstances suggest that equity makes enforcement unjust: the two parties were drinking but not to an extent that they were unable to understand fully what they were doing (no incapacity.) There was no fraud, no misrepresentation, no sharp practice and no dealing between unequal parties. Zehmer admitted that the purchase price was a good price. There is in fact present in this case none of the grounds usually urged against specific performance. Therefore, the Court should grant specific performance of the Ferguson Farm from Zehmer to Lucy for $50,000 cash.

Conclusions

Lucy called Zehmer's bluff. Zehmer, objectively complying, bound himself to the deal. It was a fair deal, reinforcing the conclusion that justice requires enforcement of the deal: Zehmer, you have sold your farm.

Not only did Lucy actually believe, but the evidence shows he was warranted in believing, that the contract represented a serious business transaction and a good faith sale and purchase of the farm.

On defenses: The parties understood what they were doing \[capacity\]. These circumstances disclose some drinking by the two parties but not to an extent that they were unable to understand fully what they were doing. There was no fraud, no misrepresentation, no sharp practice and no dealing between unequal parties. The farm had been bought for $11,000 and was assessed for taxation at $6,300. The purchase price was $50,000. Zehmer admitted that it was a good price. There are no defenses. There is in fact present in this case none of the grounds usually urged against specific performance, either.

CHAPTER 4: OFFERS

Lesson Plan: See Part II, Chapter 4 | Slide Deck: Chapter_04_Slides.pptx (65 slides) | Problem Solutions: See Part IV, Chapter 4

Lefkowitz v. Great Minneapolis Surplus Store, Inc.

Slide Deck Reference: Chapter 4, Slides 41–55

Teaching Note: This classic case analyzes what is an offer. It is also useful for foreshadowing some special rules regarding when a general offer is modified or terminated. There is little factual debate in this case, so students can focus on understand the rule of law, especially why the Supply Store got the law wrong. You might ask, what does the Supply Store wish the law to be? What consequences or problems might arise if the law were different in the manner that the Supply Store wants?

Citation

Lefkowitz v. Great Minneapolis Surplus Store, Inc., 251 Minn. 188, 86 N.W.2d 689 (1957).

Minnesota Supreme Court case.

Parties

Morris Lefkowitz, plaintiff.

Great Minneapolis Supply Store, Inc., defendant.

Procedural Posture

Defendant appealed from a judgment awarded to plaintiff for breach of contract and an order of the Municipal Court of Minneapolis (Minnesota) denying defendant's motion for amended findings of fact or, in the alternative, for a new trial.

Issue

The issues are: (a) whether the Supply Store's advertisement constituted offers, where the ads have language of limitation, and (b) whether a "house rule" applies to the offer, where the Supply Story told the house rule to Lefkowitz after he attempted to purchase one item and before he attempted to purchase a second one?

Holding

\(a\) Yes, the Supply Store's ads constituted offers.

\(b\) No, the house rule does not apply to either offer.

Rules

The test of whether a binding obligation may originate in advertisements addressed to the general public is whether the facts show that some performance was promised in positive terms in return for something requested. Where the offer is clear, definite, and explicit, and leaves nothing open for negotiation, it constitutes an offer, acceptance of which will complete the contract.

Whether in any individual instance a newspaper advertisement is an offer rather than an invitation to make an offer depends on the legal intention of the parties and the surrounding circumstances.

Facts

This case grows out of the alleged refusal of the defendant to sell to the plaintiff a certain fur piece which it had offered for sale in a newspaper advertisement. It appears from the record that on April 6, 1956, the defendant published the following advertisement in a Minneapolis newspaper:

"Saturday 9 a.m. sharp\ 3 Brand New\ Fur Coats\ Worth to $ 100.00\ First Come\ First Served\ $ 1 Each"

On April 13, the defendant again published an advertisement in the same newspaper as follows:

"Saturday 9 a.m.\ 2 Brand New Pastel\ Mink 3-Skin Scarfs\ Selling for $ 89.50\ Out they go Saturday.\ Each \-- $ 1.00\ 1 Black Lapin Stole\ Beautiful, worth $ 139.50 \-- $ 1.00\ First Come\ First Served"

On each of the Saturdays following the publication of the above-described ads, the plaintiff was the first to present himself at the appropriate counter in the defendant's store and on each occasion demanded the coat and the stole so advertised and indicated his readiness to pay the sale price of $ 1. On both occasions, the defendant refused to sell the merchandise to the plaintiff, stating on the first occasion that by a "house rule" the offer was intended for women only and sales would not be made to men, and on the second visit that plaintiff knew defendant's house rules.

Application

The plaintiff claims that he met the terms of the offer and thus is legally entitled to receive it.

The defendant contends that a newspaper advertisement offering items of merchandise for sale at a named price is a "unilateral offer" which may be withdrawn without notice.

Conclusions

The offer by the defendant of the sale of the Lapin fur was clear, definite, and explicit, and left nothing open for negotiation. The plaintiff having successfully managed to be the first one to appear at the seller's place of business to be served, as requested by the advertisement, and having offered the stated purchase price of the article, he was entitled to performance on the part of the defendant. We think the trial court was correct in holding that there was in the conduct of the parties a sufficient mutuality of obligation to constitute a contract of sale.

The defendant contends that the offer was modified by a "house rule" to the effect that only women were qualified to receive the bargains advertised. The advertisement contained no such restriction. This objection may be disposed of briefly by stating that, while an advertiser has the right at any time before acceptance to modify his offer, he does not have the right, after acceptance, to impose new or arbitrary conditions not contained in the published offer.

Leonard v. Pepsico, Inc.

Slide Deck Reference: Chapter 4, Slides 26–40

Teaching Note: This case fast became a modern classic. Its inclusion in the canon was cemented by Netflix's mini-documentary series, "[[Pepsi, Where's My Jet?]{.underline}](https://www.netflix.com/title/81446626)" At this point in the course, students know enough case law to begin making analogies and distinctions. The argument of "just joking," which succeeded here, should remind students of Lucy v. Zehmer, where that argument failed. The difference is likely in the obviousness of the joke. This is also the first instance of a summary judgment motion in this case. Students might appreciate some insight into what that means from a civil procedure perspective.

Citation

Leonard v. Pepsico, Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999)

Parties

John D. R. Leonard, Plaintiff.

PepsiCo., Inc., Defendant.

Procedural Posture

Plaintiff brought an action for specific performance by a soft drink corporation to enforce an alleged contract to sell plaintiff a jet as advertised in a commercial. Defendant filed a motion for summary judgment. This opinion regards that motion for summary judgment.

Issue

The issue is whether PepsiCo made an offer the sell a Harrier jump jet that Leonard accepted, where PepsiCo featured an ad showing the jet worth 7 million points and where Leonard sent in a check for that amount of points?

Holding

No, PepsiCo did not make an offer. Catalogs generally are not offers but invitations for offers. Additionally, here, the "offer" was clearly fanciful and in jest.

Rules

Advertisements of goods by display, sign, handbill, newspaper, radio or television are not ordinarily intended or understood as offers to sell. The same is true of catalogues, price lists and circulars, even though the terms of suggested bargains may be stated in some detail. It is of course possible to make an offer by an advertisement directed to the general public, but there must ordinarily be some language of commitment or some invitation to take action without further communication.

It is quite possible to make a definite and operative offer to buy or sell goods by advertisement, in a newspaper, by a handbill, a catalog or circular or on a placard in a store window. It is not customary to do this, however; and the presumption is the other way. Such advertisements are understood to be mere requests to consider and examine and negotiate; and no one can reasonably regard them as otherwise unless the circumstances are exceptional, and the words used are very plain and clear.

An advertisement is not transformed into an enforceable offer merely by a potential offeree's expression of willingness to accept the offer through, among other means, completion of an order form.

The exception to the rule that advertisements do not create any power of acceptance in potential offerees is where the advertisement is "clear, definite, and explicit, and leaves nothing open for negotiation," in that circumstance, "it constitutes an offer, acceptance of which will complete the contract." See Lefkowitz.

What kind of act creates a power of acceptance and is therefore an offer? It must be an expression of will or intention. It must be an act that leads the offeree reasonably to conclude that a power to create a contract is conferred. This applies to the content of the power as well as to the fact of its existence. It is on this ground that we must exclude invitations to deal or acts of mere preliminary negotiation, and acts evidently done in jest or without intent to create legal relations.

Facts

Instead of describing the commercial in detail (as the case does), you can watch it here: https://youtu.be/ZdackF2H7Qc(https://youtu.be/ZdackF2H7Qc) The ad says: "HARRIER FIGHTER 7,000,000 PEPSI POINTS."

Plaintiff consulted the Pepsi Stuff Catalog. The Catalog includes an Order Form which lists, on one side, fifty-three items of Pepsi Stuff merchandise redeemable for Pepsi Points. Conspicuously absent from the Order Form is any entry or description of a Harrier Jet. The amount of Pepsi Points required to obtain the listed merchandise ranges from 15 to 3300 .

The rear foldout pages of the Catalog contain directions for redeeming Pepsi Points for merchandise. These directions note that merchandise may be ordered "only" with the original Order Form. The Catalog notes that in the event that a consumer lacks enough Pepsi Points to obtain a desired item, additional Pepsi Points may be purchased for ten cents each; however, at least fifteen original Pepsi Points must accompany each order.

Although plaintiff initially set out to collect 7,000,000 Pepsi Points by consuming Pepsi products, it soon became clear to him that he "would not be able to buy (let alone drink) enough Pepsi to collect the necessary Pepsi Points fast enough." Reevaluating his strategy, plaintiff "focused for the first time on the packaging materials in the Pepsi Stuff promotion," and realized that buying Pepsi Points would be a more promising option. Through acquaintances, plaintiff ultimately raised about $ 700,000.

On or about March 27, 1996, plaintiff submitted an Order Form, fifteen original Pepsi Points, and a check for $ 700,008.50. Plaintiff appears to have been represented by counsel at the time he mailed his check; the check is drawn on an account of plaintiff's first set of attorneys. At the bottom of the Order Form, plaintiff wrote in "1 Harrier Jet" in the "Item" column and "7,000,000" in the "Total Points" column. In a letter accompanying his submission, plaintiff stated that the check was to purchase additional Pepsi Points "expressly for obtaining a new Harrier jet as advertised in your Pepsi Stuff commercial."

On or about May 7, 1996, defendant's fulfillment house rejected plaintiff's submission.

Application

Plaintiff argues that he reviewed the video tape of the Pepsi Stuff commercial, it clearly offers the new Harrier jet for 7,000,000 Pepsi Points, and that he followed PepsiCo's rules explicitly. Plaintiff objects to the implication that because an item was not shown in the Catalog, it was unavailable.

Defendant argues that the Harrier jet in the Pepsi commercial is fanciful and is simply included to create a humorous and entertaining ad. It is hard to believe that Plaintiff is of the opinion that the Pepsi Stuff commercial really offers a new Harrier Jet. The use of the Jet was clearly a joke that was meant to make the commercial more humorous and entertaining. No reasonable person would agree with Plaintiff's analysis of the commercial.

Conclusions

The present case is distinguishable from Lefkowitz. First, the commercial cannot be regarded in itself as sufficiently definite, because it specifically reserved the details of the offer to a separate writing, the Catalog. The commercial itself made no mention of the steps a potential offeree would be required to take to accept the alleged offer of a Harrier Jet. The advertisement in Lefkowitz, in contrast, "identified the person who could accept."

Second, even if the Catalog had included a Harrier Jet among the items that could be obtained by redemption of Pepsi Points, the advertisement of a Harrier Jet by both television commercial and catalog would still not constitute an offer. As the Mesaros court explained, the absence of any words of limitation such as "first come, first served," renders the alleged offer sufficiently indefinite that no contract could be formed. "A customer would not usually have reason to believe that the shopkeeper intended exposure to the risk of a multitude of acceptances resulting in a number of contracts exceeding the shopkeeper's inventory." There was no such danger in Lefkowitz, owing to the limitation "first come, first served." The Court finds, in sum, that the Harrier Jet commercial was merely an advertisement, not an offer.

Third, the Harrier Jet commercial did not direct that anyone who appeared at Pepsi headquarters with 7,000,000 Pepsi Points on the Fourth of July would receive a Harrier Jet. Instead, the commercial urged consumers to accumulate Pepsi Points and to refer to the Catalog to determine how they could redeem their Pepsi Points. The commercial sought a reciprocal promise, expressed through acceptance of, and compliance with, the terms of the Order Form. The Catalog contains no mention of the Harrier Jet. Plaintiff states that he "noted that the Harrier Jet was not among the items described in the catalog, but this did not affect \[his\] understanding of the offer." It should have.

Fourth, in light of the obvious absurdity of the commercial, the Court rejects plaintiff's argument that the commercial was not clearly in jest.

Academy Chicago Publishers v. Cheever

Slide Deck Reference: Chapter 4, Slides 56–62

Teaching Note: This case focuses on the concept of certainty. It is a tough case, where lower courts determine that the contract is sufficiently certain to be enforced, while higher courts refuse to imply terms to such an indefinite agreement. Students can make arguments on both sides of this case. For more grist for that mill, consider the lower court opinions, which provide alternative reasoning in favor of construing the contract and sufficiently definite.

Citation

Acad. Chi. Publishers v. Cheever, 144 Ill. 2d 24, 161 Ill. Dec. 335, 578 N.E.2d 981 (1991). Illinois Supreme Court case.

Parties

Academy Chicago Publishers, Plaintiff-Appellant.

Mary W. Cheever, Defendant-Appellee.

Procedural Posture

Trial court judged a publishing agreement between a publisher and the widow of a widely published author to be binding.

The appellate court reversed the trial court's declaration regarding control of the potential publication in the publisher's action for declaratory judgment for the exclusive right of publication, but it maintained that the contract was binding.

Appellant publisher brings this appeal to the Supreme Court in an effort to regain control of the publication.

Issue

The issue is whether a publishing agreement between a publisher and the widow of a widely published author is binding, where it lacks terms including the number of pages and stories, the design and format of the work, the length of time the publication would be in print, etc.

Holding

No, this agreement is not sufficiently definite to constitute a binding contract. Courts may not imply sufficient terms to make this contract binding because that would be imposing a deal to which the parties did not voluntarily agree.

Rules

In order for a valid contract to be formed, an "offer must be so definite as to its material terms or require such definite terms in the acceptance that the promises and performances to be rendered by each party are reasonably certain." Although the parties may have had and manifested the intent to make a contract, if the content of their agreement is unduly uncertain and indefinite no contract is formed.

A contract is sufficiently definite and certain to be enforceable if the court is enabled from the terms and provisions thereof, under proper rules of construction and applicable principles of equity, to ascertain what the parties have agreed to do.

A contract may be enforced even though some contract terms may be missing or left to be agreed upon, but if the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken, there is no contract.

It is not uncommon for a court to supply a missing material term, as the reasonable conclusion often is that the parties intended that the term be supplied by implication. However, where the subject matter of the contract has not been decided upon and there is no standard available for reasonable implication, courts ordinarily refuse to supply the missing term.

Facts

Trial testimony reveals that a major source of controversy between the parties is the length and content of the proposed book. The agreement sheds no light on the minimum or maximum number of stories or pages necessary for publication of the collection, nor is there any implicit language from which we can glean the intentions of the parties with respect to this essential contract term. The publishing agreement is similarly silent with respect to who will decide which stories will be included in the collection. Other omissions, ambiguities, unresolved essential terms and illusory terms are: No date certain for delivery of the manuscript. No definition of the criteria which would render the manuscript satisfactory to the publisher either as to form or content. No date certain as to when publication will occur. No certainty as to style or manner in which the book will be published nor is there any indication as to the price at which such book will be sold, or the length of time publication shall continue, all of which terms are left to the sole discretion of the publisher.

Application

Plaintiff argued that Defendant had a good faith obligation to deliver a manuscript of at least 10 to 15 stories aggregating at least 140 pages. Plaintiff further argued that industry custom dictates that the publisher shall exercise control over format, price, etc.

Defendant argues that the contract does not discuss any number of stories, so defendant could theoretically offer zero stories. This promise is clearly illusory and thus unenforceable.

Conclusions

The pertinent language of this agreement lacks the definite and certain essential terms required for the formation of an enforceable contract. The provisions of the subject publishing agreement do not provide the court with a means of determining the intent of the parties.

It is our opinion that the trial court incorrectly supplied minimum compliance terms to the publishing agreement, as the agreement did not constitute a valid and enforceable contract to begin with. As noted above, the publishing agreement contains major unresolved uncertainties. It is not the role of the court to rewrite the contract and spell out essential elements not included therein.

CHAPTER 5: TERMINATION OF THE OFFER

Lesson Plan: See Part II, Chapter 5 | Slide Deck: Chapter_05_Slides.pptx (60 slides) | Problem Solutions: See Part IV, Chapter 5

Smaligo v. Fireman's Fund Insurance Co.

Slide Deck Reference: Chapter 5, Slides 16–28

Teaching Note: Smaligo illustrates how an offer can be **implicitly rejected** through conduct inconsistent with acceptance. The case is valuable for teaching students that rejection does not always have to be explicit---actions that signal non-acceptance can terminate the power of acceptance. This principle, codified in Restatement (Second) of Contracts § 38, is fundamental in contract law. The case also highlights the importance of understanding the legal consequences of a party's strategic choices, particularly in settlement negotiations and dispute resolution settings.

Citation

Smaligo v. Fireman's Fund Insurance Co, 432 Pa. 133 (1968)

Parties

Plaintiffs: Michael and Mary Smaligo (parents of the deceased, Elizabeth Smaligo)

Defendant: Fireman's Fund Insurance Co. (the insurer)

Other Entities

American Arbitration Association (AAA): The arbitration body before which the Smaligos initiated proceedings. While not a party to the case, the arbitration process plays a crucial role in the dispute, as the Smaligos' decision to arbitrate was deemed an implicit rejection of the settlement offer.

Procedural Posture

After arbitration, the Smaligos argued that they had accepted the $7,500 settlement offer and sought to enforce it. The trial court ruled that by proceeding with arbitration rather than accepting the settlement, the Smaligos had implicitly rejected the offer. The Pennsylvania Supreme Court affirmed this decision.

Issue

Did the Smaligos reject Fireman's Fund Insurance Company's settlement offer by proceeding to arbitration?

Holding

Yes. The Smaligos implicitly rejected the offer by filing for arbitration before formally accepting the settlement.

Rules

An offer is rejected when the offeror is justified in inferring from the words or conduct of the offeree that the offeree does not intend to accept or take the offer under further advisement (R2d § 38).

Facts

On March 27, 1967, Elizabeth Smaligo was struck and killed by a hit-and-run driver during a weekend visit with her parents, Michael and Mary Smaligo. The Smaligos made a claim under their Uninsured Motorist Provisions in an automobile liability policy issued by Fireman's Fund Insurance Company. The insurer offered $7,500 to settle the claim, explicitly stating that if this offer was not acceptable, the Smaligos should proceed with arbitration, as no further increases in the settlement amount would be made.

On August 30, 1967, before formally responding to the settlement offer, the Smaligos initiated arbitration proceedings with the American Arbitration Association. The arbitrator ultimately awarded them only $243.

Application

The court determined that the Smaligos' initiation of arbitration was inconsistent with an intent to accept the settlement offer. The insurance company's letter had made it clear that arbitration was an alternative to settlement, not part of it. The Smaligos' actions demonstrated that they did not intend to accept the offer or leave it open for further consideration.

Key Takeaways

Rejection of an offer can be either explicit or implied through conduct. Here, the Smaligos' decision to proceed with arbitration rather than accept the settlement constituted an implied rejection, terminating their power of acceptance .

Yaros v. Trustees of University of Pa.

Slide Deck Reference: Chapter 5, Slides 29–43

Teaching Note: This case is useful if only to point out to future litigators that contracts is important even in trial work. Here, the parties seem confused about the rule of lapse of a settlement offer, kicking off an ancillary litigation. The court eventually determines that the settlement off was accepted, despite Defendant's voluminous argumentation to the contrary, perhaps because of policy preferences for settling instead of litigation cases.

Citation

Yaros v. Trs. of the Univ. of Pa., 1999 PA Super 303, 742 A.2d 1118 (1999)

Parties

Nancy Yaros, Plaintiff-Appellee

Trustees of the University of Pennsylvania, Defendant-Appellant

Procedural Posture

A negligence trial resulted in verdict for Defendant. Plaintiff then filed a Motion for Post-Trial Relief and a Motion to Enforce Settlement. A trial judge granted Plaintiff's Motion to Enforce Settlement. Defendant appealed.

Issue

The issue is whether Defendant's offer for settlement lapsed, where Defendant made the offer during a ten-minute recess before closing arguments and where Plaintiff did not accept the offer until after closing argument concluded.

More technically, the issues upon review are:

Whether the Trial Court erred in granting Plaintiff's Motion to Enforce Settlement, which overturns a unanimous jury verdict for \[the University\], even though the Trial Court failed to apply the proper legal standard for determining whether there was a valid and enforceable settlement agreement between the parties?

Whether the Trial Court erred in granting Plaintiff's Motion to Enforce Settlement, even though, as a matter of law, Plaintiff's conduct constituted a rejection of the settlement offer?

Whether the Trial Court erred in granting Plaintiff's Motion to Enforce Settlement, even though, as a matter of law, Plaintiff's did not accept the settlement offer within a reasonable time under the circumstances, and therefore allowed the offer to lapse?

Whether the Trial Court's factual finding that Plaintiff's accepted the University's offer within a reasonable period of time was against the weight of the evidence, capricious and erroneous as a matter of law?

Holding

No, Defendant's offer did not lapse before it was accepted by Plaintiff; therefore, the settlement agreement is binding.

Rules

Where an offer does not specify an expiration date or otherwise limit the allowable time for acceptance, it is both hornbook law and well-established in Pennsylvania that the offer is deemed to be outstanding for a reasonable period of time.

Direct negotiations. Where the parties bargain face to face or over the telephone, the time for acceptance does not ordinarily extend beyond the end of the conversation unless a contrary intention is indicated. \[The "Conversation Rule."\] A contrary intention may be indicated by express words or by the circumstances. For example, the delivery of a written offer to the offeree, or an expectation that some action will be taken before acceptance, may indicate that a delayed acceptance is invited.

What is a reasonable time for acceptance is a question of law for the court in such commercial transactions as happen in the same way, day after day.

Facts

Dr. Yaros fell at one of the University of Pennsylvania ice skating rinks.

She brought a negligence action against the University.

January 26, 1998: Trial testimony began on. The University offered Dr. Yaros a settlement offer of $750,000.00. Attorney for Yaros stated that Yaros would accept $ 1.5 million in settlement up until the time she testified, after which she would not settle for any amount. The trial continued, two defense witnesses took the stand, and then Dr. Yaros testified. No settlement was reached at that time.

January 29, 1998: After the conclusion of testimony, during a ten minute recess prior to closing arguments, the attorney for the University offered Dr. Yaros $750,000.00 in settlement. At the close of the conversation, University's attorney (Orlando) told Yaros's attorney (Haaz), "you've got to get back to me." When he made this statement, Attorney Orlando looked at the clock and placed his palms sideward. No time limitations regarding the offer were communicated, nor was it indicated that the offer was only open until closing arguments began. Attorney Haaz stated he would talk to his client now.

After the offer was made Attorney Haaz left the courtroom to speak to his client. Attorney Orlando also left the courtroom to go to the men's restroom. Attorney Haaz returned to the courtroom without Dr. Yaros, who was in the restroom. Attorney Haaz asked the trial court for two minutes to speak to his client before closings, to which the court agreed. At that time Attorney Orlando assumed Attorney Haaz had not discussed the offer with Dr. Yaros. Upon Dr. Yaros's return, Attorney Haaz did not confer with her and closing arguments commenced immediately.

Earlier that day, Judge Ribner informed both counsel he expected closing arguments to be finished by 5:00 p.m. so he could charge the jury the next day. During the University's closing, Dr. Yaros authorized Attorney Haaz to accept the offer. After the University ended its closing, Attorney Haaz gave his rebuttal. At a sidebar conference following closings Attorney Haaz stated Dr. Yaros accepted the University's settlement offer. Attorney Orlando replied by stating, "I don't know if it's still there, judge."

The next day, prior to jury deliberations Dr. Yaros orally moved to enforce the settlement. Judge Ribner denied the motion pending evidentiary hearings on the matter and the jury's verdict. The jury came back with a defense verdict.

Application

Plaintiff argues that it timely accepted the settlement offer.

Defendant maintains it intended its settlement offer to be only open until the beginning of closing arguments, and such intention was clear. Although Attorney Orlando did not articulate explicitly a definite time limit for Dr. Yaros's acceptance, its intention was manifested by the fact closing arguments were imminent, the established pattern of including an event condition with a settlement offer, and the verbal and non-verbal expressions used.

Defendant argues, arguendo, that even if it did not state a term for lapse, the offer lapsed after a reasonable time as a matter of law. In support of this claim, Defendant submits that it took Dr. Yaros seventy minutes to accept the offer.

Conclusions

The offer by the University clearly extended beyond the end of counsels' conversation, during the court recess when Attorney Haaz walked out of the courtroom to speak with his client about the settlement offer. A contrary intention was clearly indicated by Attorney Orlando when he ended the conversation with Attorney Haaz by stating "get back to me." Thus, the time for acceptance by Dr. Yaros extended beyond the end of the conversation between the parties' attorneys. The question that then arises is how long was the offer open.

The University's assertion that its intention regarding the time limitation of the offer was clear is preposterous. No time or event conditions were ever placed on the settlement offer. Here, the duration of the offer was not even clear to its trial counsel Attorney Orlando. After Dr. Yaros accepted the offer Attorney Orlando stated, "I don't know if it's still there, judge." Certainly, if Attorney Orlando, the offeror, was unclear of whether the offer was still open after closing arguments were complete, it's incredulous to argue the offeree, Dr. Yaros, was clearly aware that the offer would lapse once closing arguments began.

The verbal and non-verbal conduct did not make the time limitation of the offer apparent. The University argues Attorney Orlando's statement "you've got to get back to me" can only be interpreted as "you've got to get back to me with an answer as soon as possible - which is, when we both come back into the courtroom: you from your discussion with your client and I from the Men's Room, so we can conclude this negotiation in the next few minutes before closings."

Dr. Yaros had earlier during the trial imposed an event condition on a settlement offer: During trial Attorney Haaz informed Attorney Orlando that Dr. Yaros would accept a settlement in a certain dollar amount only up until the time she testified. The prior course of dealings between the parties cuts against the University's argument. In the parties' prior course of dealings, Dr. Yaros and her counsel explicitly informed the University of the event condition. There was no such explanation when the University made its offer just prior to closing arguments. Moreover, the offer remained open during the course of several witnesses' testimony. Under such circumstances, the prior course of dealing between the parties did not establish closing argument was an event which would terminate the offer. For these reasons, the court concludes that the Defendant did not establish a clear time for expiration of its settlement offer. Since the offer did not lapse at a set time, it lapses after a reasonable time.

The trial court found the offer was accepted within a reasonable amount of time under the circumstances. We will not disturb that finding. Under the facts of this case, we cannot say the trial court erred in finding Dr. Yaros accepted the offer within a reasonable amount of time or such a finding was against the weight of the evidence.

CHAPTER 6: ACCEPTANCE

Lesson Plan: See Part II, Chapter 6 | Slide Deck: Chapter_06_Slides.pptx (64 slides) | Problem Solutions: See Part IV, Chapter 6

State Department of Transportation v. Providence & Worcester Railroad Co.

Slide Deck Reference: Chapter 6, Slides 31–48

Teaching Note: This case shows how the mirror image rule operates under common law. More critically, it examines the extremes where the mirror image rule does not make sense to strictly apply. Students should read this case to understand the rationale behind the mirror image rule and its limits and exceptions. A key point in this case is that the defendants were trying to exploit a formal legal rule to get around a statutory requirement. This sets them up to next understand how the Battle of the Forms does away with the Mirror Image Rule.

Citation

State Dep't of Transp. v. Providence & Worcester R.R., 674 A.2d 1239 (R.I. 1996).

This is a Rhode Island Supreme Court case.

Parties

State Department of Transportation, plaintiff, who wants to buy the railroad property pursuant to statutory authority

Providence and Worcester Railroad Co. ("P&W"), defendant and seller of the railroad property

Promet Corp., co-defendant and would-be buyer of the railroad property

Other Entities

None

Procedural Posture

Defendant railroad sold land to defendant company. The Providence County Superior Court (Rhode Island) declared the conveyance void and ordered the railroad to convey the parcel to plaintiff State of Rhode Island Department of Transportation. The State was ordered to pay prejudgment interest and the railroad was required to reimburse the company for interest on the purchase price and for taxes paid. Both the State and the railroad appealed.

Issue

The issue is whether the State accepted P&W's offer to sell railroad land, where the state replied with some corrections to the deed and would not require P&W to remove railroad tracks from the land?

Holding

Yes, the State accepted the offer. The court sustained the State's appeal and denied and dismissed the railroad's appeal. The court affirmed the judgment of the superior court except that it vacated the requirement that the State pay interest to the railroad.

Rules

A valid acceptance must be definite and unequivocal.

An acceptance which is equivocal or upon condition or with a limitation is a counteroffer and requires acceptance by the original offeror before a contractual relationship can exist.

It is not equivocation, however, if the offeree merely puts into words that which was already reasonably implied in the terms of the offer.

An acceptance must receive a reasonable construction and that the mere addition of a collateral or immaterial matters will not prevent the formation of a contract.

To transmogrify a purported acceptance into a counteroffer, it must be shown that the acceptance differs in some material respect from the offer.

Facts

P&W acquired property subject to an order of the Special Court under the Regional Rail Reorganization Act of 1973, 45 U.S.C. §§ 719(b) and 745(d). That order required P&W to "guarantee rail service \[on the property\] for four years from the date" of conveyance on May 1, 1982, and stipulated that P&W could "not seek to abandon or discontinue rail service for such four-year period." It is undisputed that P&W never petitioned the Interstate Commerce Commission (ICC) to abandon or to discontinue rail service pursuant to the provisions of 45 U.S.C. § 744 prior to its efforts to sell that property.

P&W wrote to the State, stating:

Dear Mr. Arruda:

You are hereby notified, pursuant to Section 39-6.1-9 of the Rhode Island General Laws, that this company proposes to sell a certain parcel of land situated at East Providence, Rhode Island for $ 100,000 with a closing to be held on January 17, 1986.

Pursuant to statute, the State of Rhode Island has a period of thirty (30) days from the date of this notification within which to accept this offer to sell under the same terms and conditions as outlined in the enclosed Real Estate Sales Agreement.

If the State's rights are not exercised within such period, we shall deem ourselves free to sell the property to Promet Corp. in accordance with the terms of the enclosed Real Estate Sales Agreement.

This notice is sent to you although this company is of the opinion that the property in question is not covered by the provisions of Section 39-6.1-9."

State responded to P&W in pertinent part:

Pursuant to Rhode Island General Law, Section 39-6.1-9, I am writing to you on behalf of the State of Rhode Island to exercise its right to accept the offer to purchase 6.9 acres of land.

Of course, you understand that certain wording in the Real Estate Sales Agreement \[referring to the agreement between P&W and Promet\] relating to 'buyer' and obligations concerning the removal of track would be inappropriate to the purpose of the State's purchase.

Please contact Mr. Joseph F. Arruda of this department to arrange for a meeting to revise the existing offer to conform the State's acceptance.

Application

State (Plaintiff) claims that P&W wrongfully refused to convey title to the property to the State and sought a temporary restraining order preventing P&W from conveying the property to Promet. Plaintiff claims the eventually conveyance from P&W to Promet was null and void because State previously accepted P&W's offer to purchase the property.

P&W and Promet (Defendents) argued that the State failed to accept the offer because the purported acceptance was not a mirror image of the offer in two ways: first, it changed the name on the deed from Promet to State; and, second, it required P&W not to remove railroad tracks already on that land. Furthermore, P&W argued that State failed to accept because it failed to tender payment within the requisite 30-day time period.

Conclusions

The state's letter of acceptance points out that the name of the buyer in the original agreement would have to be changed. In our opinion, this statement simply reflected the obvious necessity to replace "the state" for "Promet" as the named buyer in the deed. Moreover, the letter's reference to P&W's obligation to Promet to remove tracks from the property as "inappropriate to the purpose of the State's purchase" did not add any terms or conditions to the contract but, instead, constituted a clear benefit to P&W. In pointing out that the "wording" that obligated P&W to remove tracks would be "inappropriate" in an agreement between P&W and the state, the state, in fact, relieved P&W from the obligation and expense it otherwise would have incurred in selling the property to Promet. When an offeree, in its acceptance of an offer, absolves the offeror of a material obligation, the "rules of contract construction and the "rules of common sense'" preclude construing that absolution as an additional term that invalidates the acceptance. Moreover, DeSimone explicitly and unequivocally stated, "I am writing to you on behalf of the State of Rhode Island to exercise its right to accept the offer to purchase 6.9 acres of land," and requested the meeting with Arruda in order "to revise the existing offer to conform the State's acceptance."

Therefore, we concur, with the trial justice who found that the state validly accepted the option extended to it by P&W. Because the contract was valid, we need not address P&W's contention that the parcel was not rail property within the meaning of § 39-6.1-9.

Flender Corp. v. Tippins International, Inc.

Slide Deck Reference: Chapter 6, Slides 49–60

Teaching Note: This case demonstrates the Battle of the Forms. Students are often confused by this doctrine, so an illustration is often necessary to help them conceptualize how BotF issues play out. In this case, there is a an obvious conflict between the Purchase Order and the Invoice regarding forum and method for resolving disputes. Students should readily identify how arbitration in Vienna, Austria, is radically different from litigation in Chicago, Illinois. The question is how should courts resolve this discrepancy? If this were a mirror image rule case (and you might present that counterfactual as a hypothetical), then there may not have been any acceptance at all. But, at a BotF case, with goods were shipped pursuant, courts might find some way to construe meaning in this agreement.

Citation

Flender Corp. v. Tippins Int'l, Inc., 2003 PA Super 300, 830 A.2d 1279 (2004)

Parties

Flender Corporation, Appellee, seller

Tippins International, Inc., f/k/a Tippins Inc., Appellant, buyer

Procedural Posture

The Court of Common Pleas, Allegheny County, Civil Division (Pennsylvania), denied Defendant's preliminary objections (like a Motion to Dismiss) opposing a motion compel arbitration of a dispute between the purchaser and appellee parts seller that arose from the purchaser's default in payment. The dispute concerned differing terms in the offer and acceptance, and the interpretation thereof under 13 Pa. Cons. Stat. § 2207. Appellant parts purchaser sought review from the Superior Court.

Issue

The issue is, first, whether Flender and Tippins have a contract, where the purported acceptance included a different term from the offer; and, if so, whether the contract includes the term from the offer, the different term from the acceptance, or something else? Or:

Did the Trial Court err in ruling that neither Flender's nor Tippins' forum selection provision became a part of their contract thus finding that the appropriate forum for Flender to bring this action was in Pennsylvania?

Holding

Flender and Tippins have a contract where the differing terms are "knocked out."

Rules

§ 2207. Additional terms in acceptance or confirmation (a) General rule.\--A definite and seasonable expression of acceptance or a written confirmation which is 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 additional or different terms. (b) Effect on contract.\--The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (1) the offer expressly limits acceptance to the terms of the offer; (2) they materially alter it; or (3) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. (c) Conduct establishing contract.\--Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this title.

Section 2207 provides a remedy for the shortcomings of common law contract theory, which required parties entering a contract to reach agreement on all material terms. In the absence of such "mirror-image" correspondence between the terms, the offeree's "acceptance" would be deemed a mere counter-offer subject to acceptance by the original offeror. Because this "mirror-image rule" did not comport with the typical course of dealing in business transactions, the American Law Institute promulgated section 2207 as part of the Uniform Commercial Code (numbered 2-207) and recommended its adoption by the states. Pennsylvania has since adopted that provision.

Section 2207(a) provides that an expression of acceptance may operate to accept an offer even if it contains terms additional to or different from those stated in the offer. Thus, mere non-conformance between competing forms will not undermine the formation of a contract, so long as the parties demonstrate their mutual assent to essential terms. Under such circumstances, a written contract is deemed to exist consisting of the essential terms of the offer, to which the offeree's response has established its agreement. The formation of a written contract is defeated only where the offeree responds with different or additional terms and "explicitly communicates his or her unwillingness to proceed with the transaction" unless the offeror accepts those terms.

Facts

Tippins, a Pittsburgh company then engaged in the construction of a steel rolling mill in the Czech Republic, sought to purchase gear drive assemblies from Flender Corporation for installation at the new facility. In January 1998, Tippins mailed a purchase order to Flender specifying terms of sale. The order limited the form in which Flender could acknowledge and accept Tippins's offer and required that the parties' disputes under any resulting contract be submitted to arbitration. The order stated Tippins's terms as follows: "Tippins\['s\] purchase order is expressly limited to acceptance of 'Standard General Conditions Nova Hut Purchase Order' and special conditions of purchase, which take precedence over any terms and conditions written on the back of the purchase order." The "Standard General Conditions Nova Hut Purchase Order" included the arbitration clause at issue here, requiring that all claims or disputes arising out of the contract must be submitted to arbitration before the International Chamber of Commerce in Vienna, Austria, and would be governed by Austrian law.

Flender did not sign the attached acknowledgment form or issue any other written acceptance of Tippins's offer, but instead manufactured and shipped the finished drive assemblies. Flender's invoice, which accompanied the drive assemblies, provided "Conditions of Sale and Delivery" that attached conditions to Flender's acceptance of Tippins's order.

The invoice also provided a mechanism for dispute resolution. The dispute resolution clause required that "exclusive jurisdiction and venue of any dispute arising out of or with respect to this Agreement or otherwise relating to the commercial relationships of the parties shall be vested in the Federal and/or State Courts located in Chicago, Illinois."

Tippins accepted and installed the gear drives but, subsequently, failed to pay the balance due on the shipment. Flender then commenced this action in the Court of Common Pleas of Allegheny County seeking to recover an amount outstanding of $238,663.15, plus $76,372.16 in service charges.

Application

Flender filed suit in Pennsylvania courts, implying the argument that the contract did not contain either the Vienna, Austria or the Chicago, Illinois forum selection clause. Flender urges the Court to apply the "knockout" rule in this case

Tippins filed preliminary objects to Flender's complaint asserting that the parties' contract required Flender submit its claim to arbitration in Vienna, Austria.

Conclusions

In this case, Flender, through its course of conduct and subsequent invoice, accepted the essential terms of Tippins's offer. Although the invoice provided terms that did not appear in Tippins's offer, Flender did not communicate its unwillingness to proceed without them or condition the transaction on Tippins's acceptance of those terms. Consequently, we agree with Tippins that the parties did form a written contract under section 2207(a).

However, the content of that contract, beyond essential terms, and whether it includes the arbitration clause on which Tippins relies, remain to be determined.

Applying the "knockout" rule espoused in the majority approach to the facts before us, it is apparent that the arbitration clause upon which Tippins relies is not part of the parties' contract. The dispute provision in Flender's acceptance, requiring resolution of the parties' disagreements in state or federal courts in Chicago, is clearly at odds with and quite "different" from the clause in Tippins's offer requiring arbitration of disputes before the International Chamber of Commerce in Vienna. By operation of the rule we adopt today, those provisions are both, quite clearly, "knocked out." Neither became a part of the parties' contract. Accordingly, the trial court did not err in refusing to compel arbitration in response to Tippins's preliminary objections.

CHAPTER 7: CONSIDERATION

Lesson Plan: See Part II, Chapter 7 | Slide Deck: Chapter_07_Slides.pptx (70 slides) | Problem Solutions: See Part IV, Chapter 7

Hamer v. Sidway

Slide Deck Reference: Chapter 7, Slides 21–38

Teaching Note: This case is included in part because it is famously part of the contract law canon. This is that famous case about the Uncle who promises money to his Nephew if his Nephew gives up drinking, gambling, and playing cards for money. The Nephew does this, but the Uncle's estate refuses to pay on grounds that the Uncle's promise lacks consideration. The court applies the benefit/detriment test, which is outdated, but is still worth teaching because some jurisdictions still employ it. Moreover, the benefit/detriment test and the more modern bargained-for exchange test are similar in that both consider reasonable inducement. This case is also useful because you can ask students whether the legal outcome would chance if the legal standard charged from the benefit/detriment test of consideration to the bargained-for exchange test of consideration.

Citation

Louisa W. Hamer, Appellant and Plaintiff representing the interests of the Nephew.

Franklin Sidway, Executor, Respondent and Defendant, representing the interests of the Estate of the Uncle.

Parties

William E. Story, Sr., the Uncle.

William E. Story, 2d, the Nephew.

Procedural Posture

The Supreme Court of New York (which, counterintuitively, is a trial court) determined an Uncle's promise to his Nephew was unenforceable as a matter of law because it was unsupported by consideration.

Issue

The issue is whether by virtue of a contract defendant's testator William E. Story became indebted to his nephew William E. Story, 2d, on his twenty-first birthday in the sum of five thousand dollars.

Holding

Yes, the parties entered into a binding contract.

Rules

A valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.

Courts will not ask whether the thing which forms the consideration does in fact benefit the promisee or a third party, or is of any substantial value to anyone. It is enough that something is promised, done, forborne or suffered by the party to whom the promise is made as consideration for the promise made to him.

In general a waiver of any legal right at the request of another party is a sufficient consideration for a promise.

Any damage, or suspension, or forbearance of a right will be sufficient to sustain a promise.

Facts

On the 20th day of March, 1869, William E. Story agreed to and with William E. Story, 2d, that if he would refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he should become 21 years of age then he, the said William E. Story, would at that time pay him, the said William E. Story, 2d, the sum of $5,000 for such refraining, to which the said William E. Story, 2d, agreed," and that he "in all things fully performed his part of said agreement."

Application

The Plaintiff argues that the contract was binding and fully performed such that Uncle owes $5,000 plus interest to Nephew.

The Defendant contends that the contract was without consideration to support it, and, therefore, invalid. The Nephew was not detrimental and indeed benefited by his own promise not to drink, smoke, or gamble; therefore, the Nephew's promise cannot constitute valid consideration for the Uncle's return promise.

Conclusions

The right of the promisee to use tobacco and drink liquor, he abandoned for a period of years upon the strength of the promise of the testator that for such forbearance he would give him $5,000. We need not speculate on the effort which may have been required to give up the use of those stimulants. It is sufficient that he restricted his lawful freedom of action within certain prescribed limits upon the faith of his uncle's agreement, and now having fully performed the conditions imposed, it is of no moment whether such performance actually proved a benefit to the promisor, and the court will not inquire into it, but were it a proper subject of inquiry, we see nothing in this record that would permit a determination that the uncle was not benefited in a legal sense.

Pennsy Supply, Inc. v. American Ash Recycling Corp.

Slide Deck Reference: Chapter 7, Slides 39–48

Teaching Note: This case demonstrates how the benefit/detriment test, at least in terms of how it is colloquially framed, leads to erroneous legal results. In this case, Pennsy Supply takes from American Ash some toxic waste product that it repurposes as "AggRite" for paving. The material does not work as intended, and Pennsy brings a breach of merchantability claim. This claim depends on whether this is a contract, and whether there is a contact depends in turn on whether American Ash's promise to give the AggRite in exchange for some consideration by Pennsy. American Ash claims that it gave away the AggRite for free, so there cannot be consideration. Pennsy prevails, however, in arguing that American Ash "bargained for" this removal of waste. This case pushes your students to internalize the bargained-for exchange test of consideration. You can also use to inquire whether the case should result in a different legal conclusion under the benefit/detriment test. In my opinion, the result is the same, because removal of a bad (toxic waste) is in effect a double negative and thus a positive. Giving something positive is valid consideration, thus, removing a bad is also valid consideration.

Citation

Pennsy Supply, Inc. v. Am. Ash Recycling Corp., 2006 PA Super 54, 895 A.2d 595

Parties

Pennsy Supply, Inc., Plaintiff-Appellant, subcontractor.

American Ash Recycling Corp. of Pennsylvania, Defendant-Appellee, material supplier.

Procedural Posture

The Court of Common Pleas of York County (Pennsylvania) granted preliminary objections in the nature of a demurrer in favor of Defendant-Appellee material supplier. \[Effectively, the trial court granted a motion to dismiss the claim.\] Plaintiff-Appellant subcontractor appealed.

Issue

The issue is whether American Ash's promise to supply AggRite to Pennsy Supply was supported by consideration, where Pennsy agreed to haul away the AggRite at no cost.

Holding

Yes, there was consideration. American Ash owes an implied warranty of merchantability on the AggRite to Pennsy.

Rules

Consideration is an essential element of an enforceable contract.

Consideration must actually be bargained for as the exchange for the promise. \[This rule is not strictly true, from a literal sense: consideration does not requiring literally bargaining.\]

Consideration consists of a benefit to the promisor or a detriment to the promisee. It is not enough, however, that the promisee has suffered a legal detriment at the request of the promisor. The detriment incurred must be the 'quid pro quo', or the 'price' of the promise, and the inducement for which it was made

"If a benevolent man says to a tramp: 'If you go around the corner to the clothing shop there, you may purchase an overcoat on my credit,' no reasonable person would understand that the short walk was requested as the consideration for the promise, but that in the event of the tramp going to the shop the promisor would make him a gift." Williston on Contracts.

"If the promisor made the promise for the purpose of inducing the detriment, the detriment induced the promise. If, however, the promisor made the promise with no particular interest in the detriment that the promisee had to suffer to take advantage of the promised gift or other benefit, the detriment was incidental or conditional to the promisee's receipt of the benefit. Even though the promisee suffered a detriment induced by the promise, the purpose of the promisor was not to have the promisee suffer the detriment because she did not seek that detriment in exchange for her promise." Murray on Contracts.

"As to the distinction between consideration and a condition, it is often difficult to determine whether words of condition in a promise indicate a request for consideration or state a mere condition in a gratuitous promise. An aid, though not a conclusive test, in determining which construction of the promise is more reasonable is an inquiry into whether the occurrence of the condition would benefit the promisor. If so, it is a fair inference that the occurrence was requested as consideration. On the other hand, if the occurrence of the condition is no benefit to the promisor but is merely to enable the promisee to receive a gift, the occurrence of the event on which the promise is conditional, though brought about by the promisee in reliance on the promise, is not properly construed as consideration." American Jurisprudence.

Facts

Pennsy Supply, a subcontractor, was involved in a state project and was hired to do paving of driveways and a parking lot . Pennsy contracted with American Ash, a materials supplier, for paving material called "AggRite," which was supplied for free.

After the work was completed, the subcontractor had to ultimately replace the materials that were provided because the pavement cracked and requested the supplier reimburse it for remediation work and disposal of the material.

Application

Plaintiff argues that this is not a situation where garbage is left on the curb for anyone to retrieve. American Ash actively promotes the use of AggRite as a building material to be used in base course of paved structures. American Ash's technical data sheets, describing AggRite, indicate that it can be used as a roadbed material meeting the requirements of PennDOT specifications. American Ash's literature \[attached as Ex. H to the Complaint\] also indicates that AggRite can be used as a replacement for type 2A aggregate base course material. This demonstrates that American Ash warranties AggRite for the purpose of roadbed material.

Defendant argues that consideration is lacking because American Ash's avoidance of disposal costs was not part of any bargaining process between the parties. The parties never discussed or even understood that Pennsy's use of the AggRite would allow American Ash to avoid disposal costs. Defendant further argues that Pennsy received American Ash's promotional material regarding AggRite's technical uses only after the cracking occurred.

Conclusions

American Ash's promise to supply AggRite free of charge induced Pennsy to assume the detriment of collecting and taking title to the material, and critically, that it was this very detriment, whether assumed by Pennsy or some other successful bidder to the paving subcontract, which induced American Ash to make the promise to provide free AggRite for the project. American Ash did not offer AggRite as a conditional gift to the successful bidder on the paving subcontract for which American Ash desired and expected nothing in return. Therefore, the promise to supply AggRite was supported by consideration.

CHAPTER 8: PROMISSORY ESTOPPEL

Lesson Plan: See Part II, Chapter 8 | Slide Deck: Chapter_08_Slides.pptx (58 slides) | Problem Solutions: See Part IV, Chapter 8

Ricketts v. Scothorn

Slide Deck Reference: Chapter 8, Slides 16–32

Teaching Note: This case illustrates a classic example of a promise unsupported by consideration. According to the court's facts (and you can turn those facts to produce different results), Grandpa Ricketts gave Granddaughter Scothorn a promise and sought nothing in return. Yet his promise was likely to produce her reliance. This reliance element, which we have not yet explored in contract law, turns out to be at the heart of many contract matters. We see the concept of reliance most clearly in these promissory estoppel cases, but reliance also shapes doctrines includes rejection and repudiation. I recommend using this case to first illustrate the meaning of contractual reliance and then to discuss the importance of reliance to meeting contract law's goals.

Citation

Ricketts v. Scothorn, 57 Neb. 51, 77 N.W. 365 (1898).

Supreme Court of Nebraska.

Parties

Katie Scothorn, Plaintiff ("Granddaughter")

Andrew D. Rickets, Defendant, Executor of Estate of John C. Ricketts.

Other Entities

John C. Ricketts, Decedent ("Grandpa").

Procedural Posture

The District Court of Lancaster County (Nebraska) ruled in favor of plaintiff payee in an action based upon a promissory note made by the decedent.

Defendant executor sought review of the judgment awarded.

Issue

Whether a granddaughter gave consideration for her grandfather's promise to give her money, where the grandfather implied he wanted his granddaughter to quit working?

Whether a granddaughter can enforce her grandfather's promise to give her money, where she relied on that promise by quitting work?

Holding

No, the granddaughter did not give consideration for her grandfather's promise.

Yes, the granddaughter can enforce the grandfather's promise again his estate because she reasonably and detrimentally relied on it.

Rules

Ordinarily, promises without consideration are not enforceable even when put in the form of a promissory note.

But it has often been held that an action on a note given to a church, college, or other like institution, upon the faith of which money has been expended or obligations incurred, could not be successfully defended on the ground of a want of consideration. In this class of cases the note in suit is nearly always spoken of as a gift or donation, but the decision is generally put on the ground that the expenditure of money or assumption of liability by the donee, on the faith of the promise, constitutes a valuable and sufficient consideration. It seems to us that the true reason is the preclusion of the defendant, under the doctrine of estoppel, to deny the consideration.

Where a note, however, is based on a promise to give for the support of the objects referred to, it may still be open to this defense \[want of consideration\], unless it shall appear that the donee has, prior to any revocation, entered into engagements or made expenditures based on such promise, so that he must suffer loss or injury if the note is not paid. This is based on the equitable principle that, after allowing the donee to incur obligations on the faith that the note would be paid, the donor would be estopped from pleading want of consideration.

An estoppel in pais is defined to be a right arising from acts, admissions, or conduct which have induced a change of position in accordance with the real or apparent intention of the party against whom they are alleged.

Equitable estoppel is the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed, either of property, or contract, or of remedy, as against another person who in good faith relied upon such conduct, and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right either of property, of contract, or of remedy.

Facts

John C. Ricketts, the maker of the note, was the grandfather of the plaintiff. Early in May,\--presumably on the day the note bears date,\--he called on her at the store where she was working. What transpired between them is thus described by Mr. Flodene, one of the plaintiff's witnesses:

A. Well the old gentleman came in there one morning about 9 o'clock,\--probably a little before or a little after, but early in the morning,\--and he unbuttoned his vest and took out a piece of paper in the shape of a note; that is the way it looked to me; and he says to Miss Scothorn, "I have fixed out something that you have not got to work any more." He says, "None of my grandchildren work and you don't have to."

Q. Where was she?

A. She took the piece of paper and kissed him; and kissed the old gentleman and commenced to cry.

It seems Miss Scothorn immediately notified her employer of her intention to quit work and that she did soon after abandoning her occupation.

The mother of the plaintiff was a witness and testified that she had a conversation with her father, Mr. Ricketts, shortly after the note was executed in which he informed her that he had given the note to the plaintiff to enable her to quit work; that none of his grandchildren worked and he did not think she ought to. For something more than a year the plaintiff was without an occupation; but in September 1892, with the consent of her grandfather, and by his assistance, she secured a position as bookkeeper with Messrs. Funke & Ogden.

On June 8, 1894, Mr. Ricketts died. He had paid one year's interest on the note, and a short time before his death expressed regret that he had not been able to pay the balance. In the summer or fall of 1892 he stated to his daughter, Mrs. Scothorn, that if he could sell his farm in Ohio, he would pay the note out of the proceeds. He at no time repudiated the obligation.

Application

Plaintiff alleges that the consideration for the execution of the note was that she should surrender her employment as bookkeeper for Mayer Bros. and cease to work for a living. She also alleges that the note was given to induce her to abandon her occupation, and that, relying on it, and on the annual interest, as a means of support, she gave up the employment in which she was then engaged.

Defendant denies these allegations. Defendant argues that the note was freely given.

Conclusions

First, there is no consideration for the promissory note. Upon this evidence there was nothing to submit to the jury, and that a verdict should have been directed peremptorily for one of the parties. The testimony of Flodene and Mrs. Scothorn, taken together, conclusively establishes the fact that the note was not given in consideration of the plaintiff pursuing, or agreeing to pursue, any particular line of conduct. There was no promise on the part of the plaintiff to do or refrain from doing anything. Her right to the money promised in the note was not made to depend upon an abandonment of her employment with Mayer Bros. and future abstention from like service. Mr. Ricketts made no condition, requirement, or request. He exacted no quid pro quo. He gave the note as a gratuity and looked for nothing in return. So far as the evidence discloses, it was his purpose to place the plaintiff in a position of independence where she could work or remain idle as she might choose. The abandonment by Miss Scothorn of her position as bookkeeper was altogether voluntary. It was not an act done in fulfillment of any contract obligation assumed when she accepted the note. The instrument in suit being given without any valuable consideration, was nothing more than a promise to make a gift in the future of the sum of money therein named.

Second, the note might still be enforced on the basis if equity. According to the undisputed proof, as shown by the record before us, the plaintiff was a working girl, holding a position in which she earned a salary of $10 per week. Her grandfather, desiring to put her in a position of independence, gave her the note, accompanying it with the remark that his other grandchildren did not work, and that she would not be obliged to work any longer. In effect he suggested that she might abandon her employment and rely in the future upon the bounty which he promised. He, doubtless, desired that she should give up her occupation, but whether he did or not, it is entirely certain that he contemplated such action on her part as a reasonable and probable consequence of his gift. Having intentionally influenced the plaintiff to alter her position for the worse on the faith of the note being paid when due, it would be grossly inequitable to permit the maker, or his executor, to resist payment on the ground that the promise was given without consideration. The petition charges the elements of an equitable estoppel, and the evidence conclusively establishes them. If errors intervened at the trial they could not have been prejudicial. A verdict for the defendant would be unwarranted. The judgment is right and is affirmed.

Conrad v. Fields

Slide Deck Reference: Chapter 8, Slides 33–44

Teaching Note: Conrad functions like a modern version of Ricketts, with some twists. Once again, we see a promise unsupported by consideration, and once again reliance is the key factor in deciding whether the promise should be enforceable. Students should recognize the similarities in the facts, because in both cases a wealthy person made it possible for another not to work by promises to pay something akin to charity. The differences include the fact that Conrad and Fields are friends, not family. Does this change the character of reliance in this case? Once again, we see that reliance is the key concept for this chapter, and this case provides ample opportunities to talk about when it's reasonable to rely on strangers, friends, and family.

Citation

Conrad v. Fields, 2007 WL 2106302, 2007 Minn. App. Unpub. LEXIS 744 (July 24, 2007)

Parties

Marjorie Conrad, Plaintiff-Respondent (Appellee).

Walter R. Fields, Defendant-Appellant.

Procedural Posture

Hennepin County District Court (Minnesota) ruled in favor of respondent former law student, awarding her damages in the amount of the cost of her law school tuition and books. Appellant challenged the judgment and also challenged the denial of his posttrial motions.

Issue

The issue is whether the doctrine of promissory estoppel precludes Defendant from claiming that his promise to Plaintiff to pay for law school was not supported by consideration, where Defendant intentionally and repeatedly induced Plaintiff to attend law school?

Holding

Yes, Defendant is precluded from defending against the contract claim on grounds of lack of consideration because promissory estoppel precludes this argument.

Rules

Promissory estoppel implies a contract in law where no contract exists in fact.

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." R2d § 90(1).

The elements of a promissory estoppel claim are:

1. a clear and definite promise,

2. the promisor intended to induce reliance by the promisee, and the promisee relied to the promisee's detriment, and

3. the promise must be enforced to prevent injustice.

Judicial determinations of injustice involve a number of considerations, including the reasonableness of a promisee's reliance. The court considers the injustice factor as a matter of law, looking to the reasonableness of the promisee's reliance and weighing public policies (in favor of both enforcing bargains and preventing unjust enrichment). When the facts are taken as true, it is a question of law as to whether they rise to the level of promissory estoppel.

Facts

Plaintiff alleges: in 2000, based on the assurance and inducement of Fields to pay for \[respondent's\] legal education, Conrad made the decision to enroll in law school at Hamline University School of Law (Hamline) in St. Paul, Minnesota, which she did in 2001. That but for the inducement and assurance of Fields to pay for Conrad's legal education, Conrad would not have enrolled in law school. Fields was aware of this fact.

The Court finds: Fields encouraged Conrad to go to law school, knowing that she would not be able to pay for it on her own. He knew that she was short on money, having helped her pay for food and other necessities. He knew that she was working at Qwest and would need to quit her job to go to law school. He offered to pay for the cost of her going to law school, knowing that she had debts from her undergraduate tuition. He made a payment on her law school tuition after she enrolled. Conrad knew that Fields was a wealthy philanthropist, and that he had offered to pay for the education of strangers he had met in chance encounters. She knew that he had the wealth to pay for her law school education. She knew that he was established in society, older than she, not married, without children, an owner of a successful company, an owner of an expensive home, and a lessor of an expensive car. Moreover, Fields was a friend who had performed many kindnesses for her already, and she trusted him. Field's promise in fact induced Conrad to quit her job at Qwest and enroll in law school, which she had not otherwise planned to do.

Application

Plaintiff-Respondent argues, factually, that she relied on appellant's promise to pay her education expenses. She gave up the opportunity to earn income through full-time employment and enrolled in law school because of Field's repeated assurances that he would pay for her education.

Defendant-Appellant (Fields) argues, factually, that because he advised respondent shortly after she enrolled in law school that he would not be paying her law-school expenses as they came due, respondent could not have reasonably relied on his promise to pay her expenses to her detriment after he repudiated the promise. Appellant contends that the only injustice that resulted from his promise involved the original $ 5,000 in expenses that respondent incurred to enter law school.

Appellant argues, legally, that the doctrine of promissory estoppel is not a substitute for consideration and that respondent had no basis for claiming an enforceable contract given the total lack of consideration. Fields argues that Conrad's reliance, even if actual and even if reasonable, is insufficient to merit enforcement of his promise.

Conclusions

As to the factual matter, Appellant's statement that he would not pay the expenses as they came due did not make respondent's reliance unreasonable because appellant also told respondent that his financial problems were temporary and that he would pay her tuition when she graduated and passed the bar exam. This statement made it reasonable for respondent to continue to rely on appellant's promise that he would pay her expenses.

As to the legal matter, consideration is required for recovery under the promissory-estoppel doctrine.

The circumstances support a finding that it would be unjust not to enforce the promise. Upon reliance on Field's promise, Conrad quit her job. She attended law school despite a serious health condition that might otherwise have deterred her from going.

Otten v. Otten

Slide Deck Reference: Chapter 8, Slides 45–53

Teaching Note: As students might have surmised already, promissory estoppel claims are often found in personal and not commercial circumstances. *Ricketts* involved a promise between a granddaughter and her grandfather, and *Conrad* involved a promise between friends. This *Otten* case really drives home the point that promissory estoppel is most frequently available regarding personal promises. This case involves a divorce settlement, and students should easily recognize how agreements regarding matters such as alimony and child support are not arms' length commercial transactions between disinterested parties. Additionally, this case emphasis the "injustice" prong of the promissory estoppel analysis. A deadbeat husband, who's failed to pay child support for years, asks for an equitable resolution in his favor. Courts grant equitable remedies only where justice requires, and the husband does not merit this remedy here. This case thus presents an excellent opportunity to discuss the role of justice in the contract law system. In my classroom, I use this case to distinguish "real" contracts like this one from "smart" contracts, which are automatically enforced by computers. The need for equity in contracts become apparent on the facts of this case. There is also an obvious opportunity to introduce accord and satisfactions, as the husband claims that the parties had a substitute contract and not an accord and satisfaction. We cover this topic later in the book, so it might be worth merely pointing out here. The rules of accord and satisfaction are not essential here, because both an accord and satisfaction and a contract require sufficient consideration or reliance. We can thus test for consideration and/or reliance regardless of whether we are evaluating whether the purported agreement is an accord and satisfaction or a substituted contract.

Citation

Otten v. Otten, 632 S.W.2d 45 (Mo. Ct. App. 1982)

Parties

A. Lee Otten, Plaintiff-Appellant

Ramona Faye Otten, Defendant-Respondent

Procedural Posture

The husband sought to enforce specifically an alleged settlement agreement. The Circuit Court of Pettis County (Missouri) granted defendant wife's motion to dismiss the husband's petition on the ground that it failed to state a cause of action. Plaintiff husband appealed.

Issue

The issue is whether Husband can enforce Wife's promise to reduce his alimony obligation to her and their children, where Husband relied on that promise by taking out a business loan?

Holding

No, husband gave no consideration for wife's alleged promise, and husband is not entitled to promissory estoppel.

Rules

A promise without consideration may be enforced if the elements of estoppel are present, but the promissor is affected only by reliance which he does or should foresee.

In situations where traditional consideration is lacking, reliance which is foreseeable, reasonable, and serious will require enforcement if injustice cannot otherwise be avoided.

Facts

In 1976, as part of a decree dissolving the marriage between the parties, the wife (defendant here) was granted $200 per month as a single sum for the support of two minor children. On January 13, 1981, the husband (plaintiff here) filed a motion to modify the decree on the ground that one of the children had become emancipated. The next day, January 14, 1981, the wife filed execution for $7,800 which she alleged to be accrued in unpaid child support and ordered garnishment on Third National Bank. The garnishment papers were served upon the bank on January 16, 1981. The bank paid $7,830 into court, and disbursement of that sum to the wife was ordered by the court on February 26, 1981.

Husband alleged that the wife had called his attorney on January 21, 1981, offering to settle all questions with respect to back child support for the sum of $4,500 and further offering that the decree of divorce be amended to provide child support on and after February 1, 1981, of only $100. Husband further alleged that the attorney told the wife he would have to consult his client; and that after consultation, the attorney advised the wife that the husband could raise $1,000 in cash immediately and would deliver to her his note for $3,500 in full satisfaction of back child support payments. Husband goes on to allege that the wife then stated that she would accept the proposal and would stop in the attorney's office the following Wednesday to pick up the check for $1,000 and the $3,500 note and that she would at that time sign a stipulation for modification of the decree. The husband alleges that he performed his part of the agreement by executing his check and note and by signing the agreed stipulation.

Subsequently, Husband borrowed money to pay off business debts.

Application

Plaintiff-Respondent (Husband) argues that he relied to his detriment upon the fact that a compromise agreement the he and his wife had reached on or about February 1981. Specifically, Husband claims his actions in reliance include borrowing a substantial sum of money in order to meet business obligations incurred by him. He relied upon the fact that a compromise agreement had been made satisfying the judgment for all child support payments due respondent through January 31, 1981 in making this loan application. He caused loan proceeds to be temporarily deposited in a business account in his name alone at Third National Bank, Sedalia, Missouri.

Conclusions

There is no consideration for wife's alleged promise to husband. Husband proposes two basis for consideration, but neither is valid, because both relate to his pre-existing duties.

The first possible basis upon which to claim consideration would be the husband's promise to pay $4,500. That must be considered, however, in the light of the fact that Wife was claiming $7,800 in past due child support. Nowhere in his petition does the husband deny that he was delinquent in the amount of $7,800. An agreement on his part to pay the partial sum of $4,500 out of a total undisputed amount due of $7,800 cannot be acceptable consideration.

Nor can the husband's promise to pay $100 child support on and after February 1, 1981, be accepted as legal consideration. The husband was already under a continuing obligation to pay $200 per month. Even though one of the children may have become emancipated, that did not automatically result in a reduction of the $200 figure. The law in this state is clear that when support is awarded for more than one child in a single lump sum for all of them, the same total amount continues for the remaining child or children even after the emancipation of any one of the children, until reduction of that amount by court order.

Reliance can serve as a substitute for consideration under the doctrine of promissory estoppel. The basis for a reliance claim is husband's allegation that he had borrowed money for his general business purposes and in reliance upon the wife's promises had deposited the borrowed sum in Third National Bank.

However, law requires such reliance to be reasonable. Such a promise will be enforced only where the promissor should have expected or reasonably foreseen the action which the promisee claims to have taken in reliance upon the promise. Here, the nature of the situation would not impel a reasonable expectation by the wife that the oral agreement allegedly made by her would lead the husband to borrow money for his business and deposit it in Third National Bank. Nor does the husband's petition allege any special facts which would support a conclusion that the wife expected or should have foreseen such borrowing and deposit by the husband. Accordingly, the present case is not within the doctrine of promissory estoppel.

The husband has not carried the burden of pleading consideration for the alleged contract of settlement. The trial court therefore properly sustained the motion to dismiss.

Maryland National Bank v. United Jewish Appeal Federation of Greater Washington, Inc.

Slide Deck Reference: Chapter 8, Slides 45–53

Teaching Note: This case presents a great opportunity to explore policy and to show how common law evolves based on different views regarding policy. The *UJA* case explores the specific rule regarding charitable subscriptions and is useful not only to demonstrate this point of law but also to show how some states deviate from the R2d approach. R2d adopted the rule that charitable subscriptions are enforceable without consideration and without reliance. Maryland disagrees, requiring proof of reliance even for promises to give charity. Reading this case carefully not only makes sure students become well aware of the special exception to the reliance requirement for promissory estoppel under the R2d approach for charitable subscriptions. It also reminds students that the R2d is not law but merely a comment on the law. And this case often provokes interesting discussions on what the law should be.

Citation

Md. Nat'l Bank v. United Jewish Appeal Fed'n, Inc., 286 Md. 274, 407 A.2d 1130 (1979)

Parties

Maryland National Bank ("MNB"), Defendant-Appellant

United Jewish Appeal Federation of Greater Washington, Inc. ("UJA"), Plaintiff-Appellee

Other Entities

Milton Polinger, Decedent

Procedural Posture

UJA, a charitable organization, submitted a claim against MNB, the representative of the decedent's estate, to collect the balance of a pledge made by the decedent. The Orphans' Court for Montgomery County (Maryland) granted summary judgment in favor of UJA. MNB filed an appeal to the intermediate appellate court and filed a petition for a writ of certiorari.

Issue

The issue is whether a charity is entitled to enforce a pledge, where that pledge is unsupported by either consideration or reliance?

Holding

No, under Maryland law (but not under R2d), even charitable organizations must demonstrate reliance on a promise to merit promissory estoppel.

Rules

(Note! This Maryland case does NOT follow the R2d approach. Consider asking students to compare the law in these "jurisdictions.")

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

In whatever uncertainty the law concerning voluntary subscriptions of this character may be at this time, in consequence of the numerous decisions pronounced upon the subject, it appears to be settled, that where advances have been made, or expenses or liabilities incurred by others, in consequence of such subscriptions, before notice of withdrawal, this should, on general principles, be deemed sufficient to make them obligatory, provided the advances were authorized by a fair and reasonable dependence on the subscriptions.

Facts

The short version of these facts effectively amount to this: Milton Polinger made a large pledge to a charitable organization. The organization did not rely on that pledge to its detriment, but seeks to enforce it regardless. Details:

UJA, chartered in the District of Columbia, is a public non-profit corporation: a charity. UJA makes allocations to various beneficiary organizations based upon pledges made to it, and the beneficiary organizations incur liabilities based on the allocations.

UJA organized a "mission" to Israel in the fall of 1974. The mission was in no sense a tour. It was at the time of the missile crisis in Israel, and the members of the mission were to meet with Golda Meir, then Prime Minister, and with other government leaders to be briefed on the problems the country faced. It was to be involved with "people in the troubled settlements."

Certain community leaders, including Milton Polinger, went on the mission. Polinger had been active in the affairs of UJA and had regularly made substantial contributions to it.

Polinger was selected to be an example on the Israel mission. He had pledged $65,000 for 1973. He had "participated willingly" in such a meeting in connection with the 1974 fund raising campaign and had pledged $150,000. He was one of those it was "felt was ready to do something unusual. . . ."

UJA and Polinger agreed that his 1975 pledge would be made in a "caucus" at the King David Hotel in Jerusalem. The caucus was held and Polinger "came into the caucus," as Brissman said, "so we could announce all the gifts and influence other people of different levels." Polinger was to be a "pacesetter."

There were about thirty men at the caucus. About four of them had pledged an amount as large as $200,000 before Polinger made his announcement. Brissman thought that "there was an emotional impact that develops when a man has seen things that influence him to believe that there is something desperate and earth-shaking going on and he could do something about it beneficially, and he responds." When Polinger said he would give $200,000, he indicated that he wanted everybody to give as much as they could. He thought he was giving the greatest amount that he possibly could find himself able to so do. Of course, Polinger was only one of many people who spoke and made a pledge. Whether anyone in fact increased his pledge because of Polinger was never discussed at the meeting, and Brissman was unable to say whether anyone was influenced by Polinger's pledge.

On November 8, 1974, Polinger signed a pledge card, which essentially recited:

In consideration of the obligation incurred based upon this pledge, I hereby promise to pay to the United Jewish Appeal the amount indicated on this card: $100,000 for "UJA including local national and overseas," and $100,000 for "Israel Emergency Fund."

Polinger died on December 20, 1976. At the time of his death, there was $133,500 unpaid on the pledge.

Application

Plaintiff UJA argues, legally, that the Court should view traditional contract law requirements of consideration liberally in order to maintain a judicial policy of favoring charities. Private philanthropy serves a highly important function in our society. Whether projected for literary, scientific or charitable purposes, they address themselves to the favorable consideration of those whose success in life may have enabled them, in this way, to minister to the wants of others, and at the same time promote their own interests, by elevating the character of the community with whose prosperity their fortunes may be identified. In some cases, the courts, in furtherance of what they deemed a recognized public policy, have felt themselves warranted in relaxing, to some extent, the rigor of the common law, and have held the subscribers liable, when, perhaps, upon strict principles, there was not a legal consideration for the contract.

Defendant MNB argues, legally, that Maryland law does not forego the requirement of reliance in claims of promissory estoppel even where the claimant is a charitable organization. UJA has not demonstrated actual reliance here; therefore, UJA is not entitled to a remedy based on promissory estoppel.

Conclusions

The Maryland Court of Appeals is not persuaded that they should, by judicial fiat, adopt a policy of favoring charities at the expense of the law of contracts which has been long established in this state. The Court does not think that this law should be disregarded or modified so as to bestow a preferred status upon charitable organizations and institutions. It may be that there are cases in which judgments according to the law do not appear to subserve the purposes of justice, but this, ordinarily, the courts may not remedy. It is safer that a private right should fail, or a wrong go unredressed, than that settled principles should be disregarded in order to meet the equity of a particular case. If change is to be made it should be by legislative enactment, as in the matter of the tax status of charitable organizations.

CHAPTER 9: PROMISSORY RESTITUTION

Lesson Plan: See Part II, Chapter 9 | Slide Deck: Chapter_09_Slides.pptx (56 slides) | Problem Solutions: See Part IV, Chapter 9

Mills v. Wyman

Slide Deck Reference: Chapter 9, Slides 36–48

Teaching Note: This is a classic, historical case that sets up the discussion on promissory restitution by establishing the general rule that promises without consideration are unenforceable. I use this case as the starting point because it establishes the general principle that a promise unsupported by consideration is unenforceable. The case presents facts that are close to but do not rise to the level of promissory restitution. In this case, a father promises to pay a benevolent man for prior care tendered to the father's son. This is a promise to pay for a benefit received which, without more, is unenforceable. The rest of the chapter covers the "more" that would make this promise enforceable. You can thus use this case to prelude the entire chapter by changing the hypothetical facts of this case so that some plus factor exists. It thus becomes a useful instrument to review the general rule of consideration and to begin exploring exceptions to the rule of consideration under the doctrine of promissory restitution.

Citation

Mills v. Wyman, 20 Mass. 207 (1825)

Parties

Daniel Mills, Plaintiff and a "good Samaritan"

Seth Wyman, Defendant and father of deceased Levi Wyman

Other Entities

Levi Wyman, deceased son of Seth Wyman

Procedural Posture

Plaintiff, a "good Samaritan" named Mills, sued to enforce Seth Wyman's promise to pay Mills for caring for Seth's son, Levi Wyman. The court of common pleas (Massachusetts) issuing a judgment (a "nonsuit", like a motion to dismiss) in favor of Defendant for lack of consideration upon Defendant's promise.

Issue

The issue is whether Seth Wyman's promise after the fact to pay for care rendered by Daniel Mills to Seth's son Levi Wyman is enforceable, where Seth was not legally obligated to support his adult son Levi?

Holding

No, Seth Wyman is not legally obligated to pay Mills. There was no consideration for defendant's promise to pay plaintiff's expenses. Without consideration, defendant's promise had no legally binding force.

Rules

A mere verbal promise, without any consideration, cannot be enforced by legal action. This principle is universal in its application and cannot be departed from to suit particular cases in which a refusal to perform such a promise may be disgraceful.

Facts

Levi Wyman, age 25 (an adult) returned from a voyage at sea poor, in distress, and sick. Daniel Mills provided board, nursing, and care to Levi Wyman for a two week period, until Seth Wyman died. Afterward, Seth Wyman, Levi's father, a letter to Mills promising to pay Mills for his expenses. When Wyman did not pay as he promised, Mills sued.

Application

Plaintiff argues that Defendant has a legal obligation to uphold Defendant's promise to pay Plaintiff for care rendered to his son.

Defendant argues that he has no legal obligation to pay where his promise to pay for a benefit previously received by a third person is unsupported by consideration.

Conclusions

The promise declared on in this case appears to have been made without any legal consideration. The kindness and services towards the sick son of the defendant were not bestowed at his request. The son was in no respect under the care of the defendant. He was twenty-five years old, and had long left his father's family. On his return from a foreign country, he fell sick among strangers, and the plaintiff acted the part of the good Samaritan, giving him shelter and comfort until he died. The defendant, his father, on being informed of this event, influenced by a transient feeling of gratitude, promises in writing to pay the plaintiff for the expenses he had incurred. But he has determined to break this promise, and is willing to have his case appear on record as a strong example of particular injustice sometimes necessarily resulting from the operation of general rules.

The kindness and services provided for defendant's son were not bestowed at defendant's request, and defendant was not legally obligated to support his son in any way. Thus, because defendant's son was an adult who was responsible for his own debts, any debt he incurred created no obligation upon defendant.

Drake v. Bell

Slide Deck Reference: Chapter 9, Slides 19–35

Teaching Note: This case illustrates one exception to the consideration doctrine, where there is a promise to correct a mistake. Another way of understanding the Drake exception to the consideration doctrine is the promise Bell makes to Drake regards payment on an existing contract. You might ask students to distinguish this case from *Mills*, where no exception existed and where the contract failed for want of consideration. You might also turn the hypothetical in this case to reflect a situation more like that in *Edson*, where a landlord's subsequent promise to pay for a well his tenants bargained for was enforceable. This case is useful

Citation

Drake v. Bell, 26 Misc. 237, 55 N.Y.S. 945 (Sup. Ct. 1899)

Parties

Josephine C. Drake, Plaintiff, who contracted with a repairman to repair her vacant house.

Edward C. Bell, Defendant, homeowner of the vacant house that was repaired by mistake.

Other Entities

The repairman ("mechanic") who mistakenly repaired the wrong house.

Procedural Posture

A third-party repairman assigned his mechanic's lien to plaintiff, who sued to forclose on the property that secured the lien.

Issue

The issue is whether Bell should be legally required to pay for repairs done to his house, where the repairs were done by mistake but which added value to his property and for which he subsequently agreed to pay?

Holding

Yes, Bell is liable for his promise to pay for the repairs.

Rules

Moral obligation is of itself a sufficient consideration for a promise in those cases in which a prior legal obligation or consideration had once existed.

Facts

The plaintiff, Drake, made a contract with a mechanic to repair her vacant house for $210. By his own mistake he went into the vacant house of the defendant (Bell) next door and repaired it instead. He discovered his mistake after the work was done. He then informed Bell. The work was done without the Bell's knowledge. It was all of an irremovable character like plastering and painting. Bell looked over the work. He initially disclaimed responsibility, but eventually had the contractor reduce his bill to $194 and orally promised to pay him that sum. The work was of that value. Bell refused to pay, and the mechanic filed a mechanic's lien again Bell. The mechanic then assigned that lien to Drake, who, in turn, filed this action to foreclose the lien.

Application

Plaintiff argues that Defendant should be obligated to pay on his promise because the Defendant benefited from the work for which he subsequently promised to pay.

Defendant argues that a promise to pay for a benefit previously received is unenforceable for want of consideration.

Conclusions

The Defendant's promise is binding. Plaintiff should be allowed to foreclose the lien. Drake's promise to pay for antecedent value that he received from the mechanic was binding.

Such a case is not one of mere moral obligation. The case is one of moral obligation created by a past valuable consideration derived from another.

The defendant's house which had stood vacant for lack of repair was benefited by such work to at least the value thereof, and by reason thereof was immediately let and became salable. The contractor filed a mechanic's lien against the house and the defendant as owner for the said work after the said promise, and assigned his claim against the defendant and his lien to the plaintiff.

Under these facts, the promise to pay for antecedent value, received by the promisor from the promisee, was binding.

Webb v. McGowin

Slide Deck Reference: Chapter 9, Slides 19–35

Teaching Note: This is the classic case frequently used to demonstrate the exception to the consideration doctrine where one party performs an emergency service for another. When I teach this course, I invite students to imagine what the parties would have agreed to do if they could have frozen time and negotiated during the emergency. It's my opinion that McGowin would have bargained to pay Webb what he later promised to give him to save his life, if he had that option, and I think this helps the court reach the decision that McGowin's estate should continue to pay Webb.

Citation

This case demonstrates another exception to the consideration doctrine. Moreover, it shows courts struggling to provide a formal logical rationale for the equitable principles. This decision is, quite frankly, confusing, and students should read it if only to see how the law is not always clear. The court acknowledges that a mere moral obligation is not binding; yet it goes on to assert that a moral obligation is sufficient consideration where the promisor received a material benefit. This "rule" is seemingly in conflict the doctrine saying that "past consideration" is not consideration. I encourage you to use Socratic dialogue to encourage students to puzzle through this. As for the answer, in my opinion, this case is an artifact of the benefit/detriment test for consideration, and serves as further evidence that the benefit/detriment test is not as useful or accurate as the bargained-for exchange test of consideration. The obvious problem with the benefit/detriment test, highlighted by the Webb case, is that its concept of "benefited" as applied to consideration seems indistinguishable from "received a past benefit" which is categorically not consideration. The solution that I (and, more important, the R2d and most courts) adopted is to conceptualize consideration as bargained-for exchange. Then we create the Webb exception as the events here show something that the parties would have bargained-for but for an emergency that did not give the parties time to bargain. We can imagine that McGowin would have paid $15/month in return for Webb to save his life. From this we derive the Webb exception, which is, promissory restitution offers a substitute for consideration in cases of emergencies and necessaries where the parties likely would have bargained for the exchange but where time and need made it impossible to do so in advance.

Webb v. McGowin, 168 So. 196, 27 Ala. App. 82 (1935)

Parties

Joe Webb, Plaintiff-Appellant.

N. Floyd McGowin and Joseph F. McGowin, Defendants-Appellees, as executors of the estate of J. Greeley McGowin, deceased.

Other Entities

J. Greeley McGowin, deceased.

Procedural Posture

Trial court granted nonsuit (dismissal) to Defendants for lack of consideration. Plaintiff appeals.

Issue

This issue is whether McGowin's estate is legally required to perform McGowin's promise to pay Webb, where McGowin promised to pay Webb after and because Webb saved McGowin's life during an emergency?

Holding

Yes, McGowin's estate is bound to continue to pay Webb based on McGowin's promise because McGowin benefitted and Webb detrimented from Webb's performance, and then McGowin subsequently promised to pay Webb for saving McGowin's life to Webb's physical detriment.

Rules

A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit, although there was no original duty or liability resting on the promisor.

Where the promisee cares for, improves, and preserves the property of the promisor, though done without his request, it is sufficient consideration for the promisor's subsequent agreement to pay for the service, because of the material benefit received.

Facts

Joe Web was in the employ of the W. T. Smith Lumber Company and acting within the scope of his employment by clearing the upper floor of mill No. 2 of the company. In performance of his employment duties, he was in the act of dropping a pine block from the upper floor of the mill to the ground below; because this was the usual and ordinary way of clearing the floor, and it was the plaintiff's duty in the course of his employment to drop the block. The block weighed about 75 pounds.

As Webb was dropping the block to the ground, he was on the edge of the upper floor of the mill. As he started to turn the block loose so that it would drop to the ground, he saw J. Greeley McGowin, testator of the defendants, on the ground below and directly under where the block would have fallen if the appellant turned it loose. Had he turned it loose it would have struck McGowin with such force as to have caused him serious bodily harm or death. Appellant could have remained safely on the upper floor of the mill by turning the block loose and allowing it to drop, but had he done this the block would have fallen on McGowin and caused him serious injuries or death. The only safe and reasonable way to prevent this was for appellant to hold on to the block and divert its direction in falling from the place where McGowin was standing and the only safe way to divert it so as to prevent its coming into contact with McGowin was for appellant to fall with it to the ground below. Webb did so and was injured in the process of protecting McGowin.

On September 1, 1925, in "consideration" (not used in the technical legal sense) of appellant having prevented him from sustaining death or serious bodily harm and in consideration of the injuries appellant had received, McGowin agreed with him to care for and maintain him for the remainder of appellant's life at the rate of $15 every two weeks from the time he sustained his injuries to and during the remainder of appellant's life. McGowin died and the payments stopped. Webb sued McGowin's estate.

Application

Webb argues that Webb saved J. McGowin from death or grievous bodily harm; that in doing so Webb sustained bodily injury crippling him for life; that in consideration of the services rendered and the injuries received by appellant, McGowin agreed to care for him the remainder of appellant's life, the amount to be paid being $ 15 every two weeks; that McGowin complied with this agreement until he died on January 1, 1934, and the payments were kept up to January 27, 1934, after which they were discontinued; and that McGowin's promise constitutes an obligation to Webb that is legally enforceable upon McGowin's estate.

Defendant argues that the promise was without consideration; in particular, Plaintiffs fail to allege that McGowin had, at or before the services were rendered, agreed to pay appellant for them.

Conclusions

The case at bar is clearly distinguishable from that class of cases where the consideration is a mere moral obligation or conscientious duty unconnected with receipt by promisor of benefits of a material or pecuniary nature. Here the promisor received a material benefit constituting a valid consideration for his promise.

Had McGowin been accidentally poisoned and a physician, without his knowledge or request, had administered an antidote, thus saving his life, a subsequent promise by McGowin to pay the physician would have been valid. Likewise, McGowin's agreement as disclosed by the complaint to compensate appellant for saving him from death or grievous bodily injury is valid and enforceable.

In saving McGowin from death or grievous bodily harm, Webb was crippled for life. This could have constituted consideration had it been bargained for before promises and performances issued. McGowin was benefited. Webb was detrimented. Benefit to the promisor or detriment to the promisee is a sufficient legal consideration for the promisor's agreement to pay.

Haynes Chemical Corp. v. Staples & Staples

Slide Deck Reference: Chapter 9, Slides 49–53

Teaching Note: Haynes Chemical came to my attention because the R2d report's notes cites it as the basis for one of the illustrations. Accord to R2d, this case supports the exception for a "benefit conferred as a gift." Here the R2d is confusing, because elsewhere (§71) we learn that promises to give gifts are unsupported by consideration. In fact, the famous "Williston's Tramp" example illustrates the difference between enforceable promises and unenforceable promises to give conditional gifts. This case is therefore useful because we need to read it closely to understand what the R2d actually means. It turns out that treatises can be unclear as well as cases. Upon a close reading, we learn that the *Haynes* court interpreted an implied mutual bargain between the parties. There was no "gift" in this case. In brief, ad advertising agency prepared an advertising plan in hopes that a client would hire the agency. The plan was not a gift in the familiar sense; rather, the plan was a lost leader expected to generate business revenue if it succeeded. In my opinion, the R2d comment e to § 86 overcomplicates this rather straightforward "exceptions." The R2d states, "\[M\]arginal cases arise in which both parties understand that what is in form a gift is intended to be reimbursed indirectly, or in which a subsequent promise to pay is expressly contemplated. Enforcement of the subsequent promise is proper in some such cases." This seems to me to be a very convoluted way of expressing what could be a much simpler proposition; namely: that bargains can be implied as well as expressed. Under my understanding, the analysis of this case is relatively clear: the bargain was that the ad agency would prepare a proposal in exchange for the client giving it full consideration. Sharp students recognize these facts, cast in this light, resemble the facts of *Steinberg*, where the applicant paid the application fee in exchange for fair consideration of his application. Therefore, I teach students through this case that there is a quasi-exception where courts will find a bargain as a matter of law even where parties did not express this as a matter of fact. This concept of implied bargain dovetails with many other concepts in contract law about implications and fits neatly within the modern consideration doctrine.

Citation

Haynes Chem. Corp. v. Staples & Staples, Inc., 133 Va. 82, 112 S.E. 802 (1922)

Parties

Staples & Staples, Inc., Plaintiff, an advertising firm ("Advertising Counsellors")

Haynes Chemical Corporation, Defendant, who manufactures the insecticide "Preventol"

Other Entities

None

Procedural Posture

An advertising agency sued to collect the amount due on a bill for services rendered for the corporation. The Law and Equity Court of the City of Richmond (Virginia) found for Plaintiff (advertising agency). Defendant corporation appealed by filing a writ of error to review the judgment.

Issue

The issue is whether Haynes's promise to pay Staples for expenses incurred in Staples developing an advertising plans for Haynes is legally enforceable, where Haynes promised to pay after Staples completed its work and Haynes rejected its plan?

Holding

Yes, Haynes must pay Staples because the parties had an implied bargain.

Rules

Where one renders service for another at the latter's request, the law, in the absence of an express agreement, implies a promise to pay what those services are reasonably worth, unless it can be inferred from the circumstances that those services were to be rendered without compensation.

A person cannot request another to pay out money, or perform services for him, upon his agreement to render certain services for that person, and then, after the money is paid, or the services performed, refuse to keep his agreement and escape liability for the amount of money or labor so expended at his request.

An express promise, therefore, as it should seem, can only revive a precedent good consideration, which might have been enforced at law through the medium of an implied promise, had it not been suspended by some positive rule of law, but can give no original right of action if the obligation on which it is founded never could have been enforced at law, though not barred by any legal maxim or statute provision.

An act of an agent from which he derives no personal benefit, but which is done in good faith for the benefit of his principal, and which was apparently necessary and would redound to his benefit, will be held to have been ratified and acquiesced in, and thereby rendered valid upon slight evidence."

Facts

The plaintiff and defendant are both corporations duly chartered under the laws of the State of Virginia. The defendant, Hayes Chemical Corp., is engaged in the manufacture and sale of an insecticide product known as "Preventol." The plaintiff, Staples & Staples, Inc., is engaged in the advertising business, styling themselves "Advertising Counsellors."

Advertising counsellors or ad agencies are in a sense advisors to the manufacturers of the country as to how to market their products. A manufacturer desiring to put a product upon the market selects an agent and directs him to map out plans for marketing his product. The agent's remuneration for handling the advertising campaign usually consists of a commission of 15 per cent. on the space which the manufacturer buys and is paid by the publishers. The cost of drawings, displays and matters of that kind is invariably paid for by the manufacturer of the goods.

In August, 1919, C. P. Hasbrook, treasurer and a director of the defendant Haynes, had an interview with H. L. Staples, president, and J. W. Fawcett, vice president, of the plaintiff corporation, and commissioned them to prepare an advertising plan for the defendant, showing them how to put "Preventol" on the market, promising them their plans would receive the heartiest consideration on the part of his people, and, if satisfactory, the advertising under such plan would go to them.

Acting under instructions of Director Hasbrook, the plaintiff proceeded to make the plans without expectation of payment therefor, if satisfactory, as in that event the plaintiff would be selected to handle the campaign and make his commission out of the publishers; and if unsatisfactory, it would be entitled to nothing, provided, in either event a decision in good faith was made on the merits of the plan.

Later on Hasbrook requested the plaintiff to speed up the plan and on October 12, 1919, Staples and Fawcett presented the plan to C. P. Hasbrook, treasurer and director, L. G. Larus, director, and Roger Topp, vice president and general manager of the defendant corporation, all three of whom expressed themselves as satisfied with the campaign plan in all respects.

Hasbrook and Larus left the room, stating that Topp, as general manager, was the man to sell, and would have the last say; and at their suggestion the plans were left at defendant's office for their study. Later Hasbrook attended a meeting of the board of directors of his company in New York, taking with him the proxy of Larus. Having no notice of the meeting, no representative of the plaintiff was present to explain the plan, nor was the plan itself, the sketches, statistics, merchandise data, or results of trade investigations, there. At the close of the meeting, Hasbrook telegraphed Topp: "Our president deems it necessary to have a New York agent. Advise Staples."

The plaintiff spent a large sum of money to produce a satisfactory plan, and there is nothing in the telegram to indicate that the plan was not satisfactory. Later Topp said to Staples and Fawcett, in discussing what happened at the New York meeting, "It looks like you got the rough end of the poker; however, you did a good job; your work was fine, and we feel you ought to be recompensed, and we would like for you to send us a bill for your expenses."

The bill was sent, but not paid, and this suit was brought to collect it.

Application

Plaintiff advertising agency argues that Defendant client corporation promised to pay Plaintiff for expenses Plaintiff incurred in developing an advertising plan for Defendant.

Defendant argues this promise is unenforceable since it is unsupported by consideration. Defendant made this promise after Plaintiff gave Defendant the "gift" of an advertising proposal, gratis.

Conclusions

Defendant made an implied promise to give Plaintiff's proposal full and fair consideration. Yet Defendant appeared not to do as promised. It is plausible under these facts that Defendant client did not consider Plaintiff ad agency's proposal as thoroughly as promised because Plaintiff was not located in New York City.

Instead of breach this implied bargain, Defendant offered a substituted contract, under which Defendant would pay the Plaintiff the amount expended by the Plaintiff at the defendant's request. This appears to be a contract substituted for the original promise by Defendant to give Plaintiff full consideration. The consideration for this new promise is release for the old one.

Thus, this is not a case of no consideration. Rather, Defendant had a pre-existing obligation to consider Plaintiff's proposal fully and fairly. In lieu of fulfilling this obligation, Defendant offered to pay Plaintiff's expenses in preparing the proposal.

Admitting that the making of the contract was irregular, in its inception, those who governed the corporation will be held, by their conduct, to have waived such irregularity, and the corporation is estopped to rely on it as a defense to this action.

Edson v. Poppe

Slide Deck Reference: Chapter 9, Slides 49–53

Teaching Note: R2d uses the facts of *Edson* as Illustration #10 to § cmt. f, "Benefit conferred pursuant to contract." This comment might be better titled as "antecedent promise to pay for benefit received pursuant to another's contract." The key learning from this case is this: where a contract at law is properly formed (with offer, acceptance, and consideration), where that contract is performed by one side and not the other, where some third party benefits from the performance, and where that same third party offers to render the as-yet unperformed exchange promise under the original contract, that otherwise gratuitous promise is binding. This rule seems to derive from equitable concerns about unjust enrichment: where a third party is enriched by some performance, and where that enrichment is unjust because the performing party was not paid for that performance as bargained for, and where the enriched party promises to pay for the amount of enrichment, it is inequitable to permit the promising party to use consideration as a defense against this promise. Even without the promise, a court sitting in equity might use the doctrine of unjust enrichment to require the benefitting party to disgorge the value of the benefit; here, with the addition of a promise to do precisely that, there is little doubt that courts should enforce that promise to make restitution as a matter of equity.

Citation

Edson v. Poppe, 24 S.D. 466, 124 N.W. 441(1910)

Parties

George F. Edson, Plaintiff-Appellee

William Poppe, Defendant-Appellant

Other Entities

George Poppe, tenant of Defendant

Procedural Posture

In an action by plaintiff tenant to recover from defendant owner under an oral contract, the owner sought review of a judgment of the Circuit Court, Turner County (South Dakota), which, upon a jury verdict, entered judgment in favor of the tenant.

Issue

The issue is whether the defendant's antecedent promise to pay for a well that plaintiff build on his land is binding, where the plaintiff built that well pursuant to a contract with defendant's tenant?

Holding

Yes, defendant's promise is binding.

Rules

The general rule is that past services are not a sufficient consideration for a promise to pay therefor, made at a subsequent time, and after such services have been fully rendered and completed; but in some courts a modified doctrine of moral obligation is adopted, and it is held that a moral obligation, founded on previous benefits received by the promisor at the hands of the promisee, will support a promise by him.

The authorities are not so clear as to the sufficiency of past services, rendered without previous request, to support an express promise; but, when proper distinctions are made, the cases as a whole seem to warrant the statement that such a promise is supported by a sufficient consideration if the services were beneficial, and were not intended to be gratuitous.

Facts

George Poppe leased land in Turner County, South Dakota, from William Poppe. During the term of the lease (in 1904), George Poppe hired George Edson to drill and dig a water well upon the land in exchange for $250. Such a well constitutes an improvement upon the land, which was owned by William Poppe.

On August 5, 1905, William Poppe examined the well and promised to pay George Edson $250 for digging it. William Poppe later refused to pay George Edson, and Edson brought this lawsuit.

Application

Plaintiff claims that Defendant promised to pay him $250 and failed to do it. George Edson's digging and casing of the well in question inured directly to the benefit on William Poppe, who owned the land; and that, after he had seen and examined the same, William Poppe expressly promised and agreed to pay George Edson the reasonable value thereof. Plaintiff argues that said well was made under such circumstances as could not be deemed gratuitous on the part of plaintiff, or an act of voluntary courtesy to defendant.

Defendant claims that Defendant is not obligation to pay $250 because the "consideration" for that promise is a "past consideration," which is no consideration for any promise.

Conclusions

Under the circumstances alleged, the subsequent promise of defendant to pay plaintiff the reasonable value for digging and casing said well was binding, and supported by sufficient consideration.

Muir v. Kane

Slide Deck Reference: Chapter 9, Slides 49–53

Teaching Note: This case provides an opportunity to introduce the statute of frauds specifically and the concept of formed yet unenforceable contracts generally. Many states, including the State of Washington, where this case occurs, require agreements for real estate commission to be in writing.

Citation

Muir v. Kane, 55 Wash. 131, 104 P. 153 (1909)

Parties

B.L. Muir & Co., Plaintiff-Respondent (Appellee), a general real estate business in Seattle, Washington, broker regarding purchase and sale or real estate in King Country, Washington.

M. Francis Kane, Defendant-Appellant, and Ida Kane, his wife, seller of real estate in King County, Washington.

Other Entities

Paul Bush, purchaser of real estate in King County, Washington

Procedural Posture

Appeal from a judgment of the superior court for King county, Griffin, J., entered May 15, 1908, upon findings in favor of the plaintiff, after a trial on the merits before the court without a jury, in an action to recover a broker's commission.

Issue

The issue is whether property seller's promise to pay a real estate broker is enforceable, where the seller promised to pay after the sale was completed and where the seller had previously promised to pay this broker's fee under a prior unenforceable agreement?

Holding

Yes, the subsequent promise to pay the commission revived the prior and unenforceable obligation to do same.

Rules

The statute governing contracts for commissions for buying or selling real estate provides that any agreement authorizing an employee, an agent or broker, to sell or purchase real estate for compensation or a commission, shall be void unless the agreement, contract, or promise, or some note or memorandum thereof, be in writing.

The court, it will be observed, makes a distinction between contracts formerly good but on which the right of recovery has been barred by the statute, and those contracts which are barred in the first instance because of some legal defect in their execution, holding that the former will furnish a consideration for a subsequent promise to perform, while the latter will not.

Facts

On November 21, 1906, Kane and Bush entered into a purchase agreement for real estate in King County, Washington, for $9,6000, payments to be made as follows: $500 down; $3,000 on November 22, 1906; $1,900 on November 22, 190; and $4,000 according to a to-be executed mortgage. The contract also stated:

"The vendor agrees to furnish an abstract of title made by a reliable abstract company, for said real estate showing a marketable title of record in the vendor free from encumbrances to date of conveyance except the street assessments amount to about two hundred dollars ($200) and if over $200 the surplus to be deducted from the nineteen hundred payment which the purchaser assumes and agrees to pay as a part of the above named purchase price, and the vendor further agrees to transfer said property to the purchaser by a good and sufficient warranty deed to the said vendee or his assigns and pay two hundred dollars ($200) of the purchase price to B.L. Muir & Co. for services rendered."

The purchase and seller consummated the transaction, but the parties did not pay Muir its $200 commission. Muir

Application

Plaintiff argues that moral obligation makes the Defendant's promise to pay brokerage commission enforceable.

Defendant replies that moral obligation is not consideration. The promise was made after the service was rendered, so the promise was not supported by consideration.

Defendant-Appellants (seller) contend that the writing relied upon by the Plaintiff-Respondent (broker) is insufficient under the Washington statute of frauds; that it is not an agreement authorizing the Plaintiff-Respondent (broker) to sell the real property described for compensation or commission, nor does it authorize or employ the Plaintiff-Respondent (broker) to sell real estate at all. Manifestly, if the writing sued upon was intended as an agreement authorizing the Plaintiff-Respondent (broker) to sell real estate of the Defendant-Appellants (seller), it is faulty in the particulars mentioned, and so far deficient as not to warrant a recovery even if a sale had been made thereunder.

Moreover, this writing was not intended as an agreement authorizing the respondent to sell the real property mentioned. In fact, it was executed after that service had been performed, and is an agreement in writing to pay a fixed sum for a past service, not a service to be performed in the future. The question for determination is its validity as a promise to pay for a past service.

Conclusions

The moral obligation to pay for services rendered as a broker in selling real estate, under an oral contract where the statute requires such contract to be in writing, is just as binding as is the moral obligation to pay a debt that has become barred by the statute of limitations, and there is no reason for holding that the latter will support a new promise to pay while the former will not.

Believing as we do that the better rule is with the cases holding the moral obligation alone sufficient to sustain the promise, it follows that the judgment appealed from should be affirmed. It is so ordered.

CHAPTER 10: THE STATUTE OF FRAUDS

Lesson Plan: See Part II, Chapter 10 | Slide Deck: Chapter_10_Slides.pptx (71 slides) | Problem Solutions: See Part IV, Chapter 10

McIntosh v. Murphy

Slide Deck Reference: Chapter 10, Slides 21–35

Teaching Note: This case teaches three lessons. First, it explains the one-year provision of the statute of frauds, which is quite useful to illustrate through this case because that provision tends to confuse students. Second, it tests their factual analysis skills, as students must test the facts to see if they meet the criteria for the one-year provision. Third, the case demonstrates an equitable exception to the statute of frauds provision. This case specifically discusses the judicial circumvention of the statute of frauds by courts' equitable powers. This third purpose dovetails nicely with the prior case, Muir, which likewise demonstrated an equitable exception to the statute of frauds. Moreover, this case sets up a contract with the next one, where the equitable exception was not granted.

Citation

McIntosh v. Murphy, 52 Haw. 29, 469 P.2d 177 (1970)

Parties

Dick McIntosh and Martha McIntosh, Plaintiffs

George Murphy and Murphy Motors, Limited, A Hawaii Corporation, Defendants

Other Entities

None

Procedural Posture

Plaintiff, a former employee, sued his former employer in a claim for breach of a one-year oral employment contract. The First Circuit Court (Hawaii) entered judgment for plaintiff. Defendant employer sought review from an order of

Issue

The issues are, first, whether Plaintiff and Defendant entered into a contract for a year or more, such that the statue of frauds applies; and, second, if the statute of frauds applies, whether plaintiff merits an equitable exception, such that the oral contract should be enforced? Or

\(1\) whether the contract was for a year's duration or was performable on a trial basis, thus making it terminable at the will of either party; (2) whether the plaintiff was discharged for just cause; and (3) if he was not discharged for just cause, what damages were due the plaintiff.

Holding

Regardless of whether or not the contract terminable at will or for a year from the time Plaintiff started working, Plaintiff is entitled to enforce this contract because Plaintiff reasonably relied on Defendant's promise and injustice could be avoid only by enforcement of the contract.

Rules

The statute of frauds requires that any agreement that is not to be performed within one year from the making thereof to be in writing in order to be enforceable.

The time of acceptance of an offer, and the duration of the resulting contract, is a question of fact for the jury to decide.

The doctrine of estoppel to assert the statute of frauds is consistently applied by the courts to prevent fraud that would result from refusal to enforce oral contracts in certain circumstances. Such fraud may inhere in the unconscionable injury that would result from denying enforcement of the contract after one party is induced by the other seriously to change his position in reliance on the contract.

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the statute of frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires.

In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant: (a) the availability and adequacy of other remedies, particularly cancellation and restitution; (b) the definite and substantial character of the action or forbearance in relation to the remedy sought; (c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence; (d) the reasonableness of the action or forbearance; (e) the extent to which the action or forbearance is foreseeable by the promisor.

Facts

Defendant George Murphy was in southern California during March, 1964 interviewing prospective management personnel for his Chevrolet-Oldsmobile dealerships in Hawaii. He interviewed the plaintiff twice during that time. The position of sales manager for one of the dealerships was fully discussed but no contract was entered into. In April, 1964 the plaintiff received a call from the general manager of Murphy Motors informing him of possible employment within thirty days if he was still available. The plaintiff indicated his continued interest and informed the manager that he would be available. Later in April, the plaintiff sent Murphy a telegram to the effect that he would arrive in Honolulu on Sunday, April 26, 1964. Murphy then telephoned McIntosh on Saturday, April 25, 1964 to notify him that the job of assistant sales manager was open and work would begin on the following Monday, April 27, 1964. At that time McIntosh expressed surprise at the change in job title from sales manager to assistant sales manager but reconfirmed the fact that he was arriving in Honolulu the next day, Sunday. McIntosh arrived on Sunday, April 26, 1964 and began work on the following day, Monday, April 27, 1964.

As a consequence of his decision to work for Murphy, McIntosh moved some of his belongings from the mainland to Hawaii, sold other possessions, leased an apartment in Honolulu and obviously forwent any other employment opportunities. In short, the plaintiff did all those things which were incidental to changing one's residence permanently from Los Angeles to Honolulu, a distance of approximately 2200 miles. McIntosh continued working for Murphy until July 16, 1964, approximately two and one-half months, at which time he was discharged on the grounds that he was unable to close deals with prospective customers and could not train the salesmen.

Application

Plaintiff argues that Defendant promised to employ him for one year but fired him after only two and a half months; thus, Defendant is liable for damages for the remainder of the contracts.

Defendant argues that his promise of employment was guaranteed for one year but only on an at-will basis. Moreover, even if the promise was for one year, that promise falls within the Statute of Frauds and thus is unenforceable without evidence of a writing signed by the party to be charged. The parties agree there was only an oral agreement here; thus, even if the contract guaranteed employment for a year, it is unenforcable.

Conclusions

The plaintiff moved 2200 miles from Los Angeles to Hawaii. This move was foreseeable by the defendant. In fact, it was required to perform his duties.

As a result of this action in detrimental reliance, the plaintiff found himself residing in Hawaii without a job. Injustice can only be avoided by the enforcement of the contract and the granting of money damages. No other remedy is adequate.

It is also clear that a contract of some kind did exist. The plaintiff performed the contract for two and one-half months receiving $3,484.60 for his services. The exact length of the contract, whether terminable at will as urged by the defendant, or for a year from the time when the plaintiff started working, was up to the jury to decide.

In sum, enforcement of the contract was warranted by virtue of the plaintiff's reliance on the defendant's promise.

There is considerable discretion for a court to implement the true policy behind the Statute of Frauds, so the Supreme Court affirms the judgment of the trial court on the ground that the plaintiff's reliance was such that injustice could only be avoided by enforcement of the contract.

Taylor v. Caldwell

Slide Deck Reference: Chapter 10, Slides 36–45

Teaching Note: This is the classic case of impossibility, a doctrine which has since grown to encompass impracticability as well. We begin with this case because it is the simpler example: the subject matter of the contract burned down, such that there is no way that the contract can be performed. The court asks whether either party bore the risk for this event; since neither party assumed this risk, then both parties' performance under this contract is excused. The reasoning for Justice Blackburn's decision is that the parties' contract had a mutually implied condition, that the gardens would remain in continued existence. The doctrine of impossibility (which later broadened into impracticability) is thus related to the doctrine of conditions.

Citation

122 E.R. 309 (1863)

This is an English decision by the Queen's Bench.

Parties

Caldwell & Bishop, Owners of Surrey Gardens & Music Hall and Defendants.

Taylor & Lewis, Concert Producers and Plaintiffs.

Procedural Posture

The historical (19th century) and foreign (English) procedural related to this case are beyond the scope of this course.

Issue

This issue is whether a party has to perform its obligation to rent the Surrey Music Hall and Gardens, where the property was subsequently destroyed?

Holding

No, the party is excused from performance by virtue of destruction of a thing necessary for performance.

Rules

Common law authorities establish that in a contract the condition of the continued existence of the thing is implied by law.

These are instances where the implied condition is of the life of a human being, but there are others in which the same implication is made as to the continued existence of a thing. For example, where a contract of sale is made amounting to a bargain and sale, transferring presently the property in specific chattels, which are to be delivered by the vendor at a future day; there, if the chattels, without the fault of the vendor, perish in the interval, the purchaser must pay the price and the vendor is excused from performing his contract to deliver, which has thus become impossible.

Facts

The parties executed a contract for the use of the Surrey Gardens & Music Hall. The written contract did not allocate risk of the hall's destruction, other than including the phrase "God's will permitting."

After signing the contract but before holding the concern, the Surrey Gardens burned down in an accidental firing, so it because impossible to give the concerts.

Application

Plaintiffs argued that Defendants promised to let them use the Surrey Music Hall and gardens, then failed to do so. Plaintiffs lost moneys paid by them for printing advertisements of and in advertising the concerts, and also lost sums expended and expenses incurred by them in preparing for the concerts and otherwise in relation thereto, such that Defendants are labile for these damages.

Defendants submit that there was a general custom of the trade and business of the plaintiffs and the defendants, with respect to which the agreement was made, known to the plaintiffs and the defendants, and with reference to which they agreed, and which was part of the agreement: that in the event of the Gardens and Music Hall being destroyed or so far damaged by accidental fire as to prevent the entertainments being given according to the intent of the agreement, between the time of making the agreement and the time appointed for the performance of the same, the agreement should be rescinded and at an end. When the Gardens and Music Hall were destroyed and so far damaged by accidental fire as to prevent the entertainments, or any of them, being given, according to the intent of the agreement, between the time of making the agreement and the first of the times appointed for the performance of the same, and continued so destroyed and damaged until after the times appointed for the performance of the agreement had elapsed, Defendants must be excused from their obligation to let this property.

Conclusions

The Music Hall having ceased to exist, without fault of either party, both parties are excused, the plaintiffs from taking the gardens and paying the money, the defendants from performing their promise to give the use of the Hall and Gardens and other things.

CHAPTER 11: MISTAKE

Lesson Plan: See Part II, Chapter 11 | Slide Deck: Chapter_11_Slides.pptx (60 slides) | Problem Solutions: See Part IV, Chapter 11

Wood v. Boynton

Slide Deck Reference: Chapter 11, Slides 19–35

Teaching Note: This famous case is colorful, literally, as it involves the sale and purchase of what turned out to be a very valuable yellow diamond. The facts make this case memorable, and what students should mainly remember after reading this case is that a "mistake" as defined in contract law is not just some improvident act. Students may feel quite bad for Ms. Wood, who sold a valuable diamond for a fraction of its value, and so you might turn the hypothetical when teaching this case by counterfactually positing that instead of selling a valuable diamond for the price of a less-valuable topaz, what if the Boyntons purchased a not-so-valuable topaz for the price of a rare diamond? For there to be equal justice under the law, the case must come out the same either way, and so students will hopefully see that the law of mistake is not designed to protect one party from making an improvident bargain.

Citation

64 Wis. 265 (1885)

Parties

Clarissa E. Wood, plaintiff and seller, who sold a stone to Defendant.

Samuel B. Boynton and Charles M. Boynton, defendants and buyers, jewelers who purchased a stone from Plaintiff.

Other Entities

While not technically an entity in this case, the issue involves what turned out to be the Eagle diamond, a 16-carat gemstone discovered in Eagle, Wisconsin, in 1876. The stone was stolen from the American Museum of Natural History in 1964 by a band of "surfer dudes," and it remains at large today.

Procedural Posture

Seller brought an action to recover a valuable stone she sold to buyers in an action for specific restitution. The court directed a verdict for defendant buyers. Seller appealed.

Issue

The question in the case is whether seller's mistake regarding the identity of the thing she sold entitled her to rescind the sale and so revest the title in her, where she thought she was selling a stone of unknown quality and it turned out to be a valuable diamond.

Holding

No, as a factual matter, the parties did not make a mistake, as they both were ignorant of the precise nature of the stone at the time of the sale and concluded the sale in light of its uncertain nature.

Rules

See the restatement provisions defining "mistake" and note that the question here is whether a mistake was made:

"A mistake is a belief that is not in accord with the facts." Restatement (Second) of Contracts § 151 (1981)

Comments to the restatement clarify what is meant by "mistake" in the legal sense is not the same as the common speech:

"The word 'mistake' is not used here, as it is sometimes used in common speech, to refer to an improvident act, including the making of a contract, that is the result of such an erroneous belief." Restatement (Second) of Contracts § 151 cmt. A.

Facts

The facts in this case were not unequivocally resolved because the plaintiff's testimony was sufficient for the court to rule for defendant.

The parties agree that plaintiff sold the stone in question to the defendants, and delivered it to them in December, 1883, for a consideration of one dollar.

According to the plaintiff: "The first time Boynton saw that stone he was talking about buying the topaz, or whatever it is, in September or October. I went into his store to get a little pin mended, and I had it in a small box,\--the pin,\--a small ear-ring; . . . this stone, and a broken sleeve-button were in the box. Mr. Boynton turned to give me a check for my pin. I thought I would ask him what the stone was, and I took it out of the box and asked him to please tell me what that was. He took it in his hand and seemed some time looking at it. I told him I had been told it was a topaz, and he said it might be. He says, 'I would buy this; would you sell it?' I told him I did not know but what I would. What would it be worth? And he said he did not know; he would give me a dollar and keep it as a specimen, and I told him I would not sell it; and it was certainly pretty to look at. He asked me where I found it, and I told him in Eagle. He asked about how far out, and I said right in the village, and I went out. Afterwards, and about the 28th of December, I needed money pretty badly, and thought every dollar would help, and I took it back to Mr. Boynton and told him I had brought back the topaz, and he says, 'Well, yes; what did I offer you for it?' and I says, 'One dollar;' and he stepped to the change drawer and gave me the dollar, and I went out. Before I sold the stone I had no knowledge whatever that it was a diamond. I told him that I had been advised that it was probably a topaz, and he said probably it was. The stone was about the size of a canary bird's egg, nearly the shape of an egg,\--worn pointed at one end; it was nearly straw color,\--a little darker."

According to defendant who conducted the purchase, at the time he bought this stone, he had never seen an uncut diamond; had seen cut diamonds, but they are quite different from the uncut ones; "he had no idea this was a diamond, and it never entered his brain at the time."

Plaintiff also testified that before this action was commenced, she tendered the defendants $1.10, and demanded the return of the stone, which they refused.

Application

Plaintiff argues that she made a mistake in selling a valuable diamond for the price of a not-so-valuable topaz. Plaintiff claims she made a mistake in assessing the nature of the stone. Moreover, plaintiff claims that either the defendants made this same mistake or they knowingly defrauded her; in either case, she is entitled to restitution of the stone.

Plaintiff further claims that, that although she sold the stone to defendant, title became re-vested her when she tendered to the Boyntons the purchase money, with interest, and a demand of a return of the stone to her. She argued that since the stone turned out to be immensely more valuable than the parties at the time of the sale supposed it was, such fact alone is a ground for the rescission of the sale, and that fact was evidence of fraud on the part of the vendee.

Defendants argue that a bad bargain is not prima fasciae evidence of fraud upon the deal. Moreover, there was no mistake, because both parties thought they were buying and selling a stone of uncertain value, and that is what the object was.

Conclusions

There was no mistake in this case. Both parties were entirely ignorant at the time of the character of the stone and of its intrinsic value at the time of the sale. Both thought the stone was of uncertain value, and so both took a risk is buying and selling it. The buyers took the risk they paid too much, and the seller took the risk she sold for too little. It turned out that seller simply made a bad bargain, and courts will not rescind a transaction on such ground.

The appellant had the stone in her possession for a long time, and it appears from her own statement that she had made some inquiry as to its nature and qualities. If she chose to sell it without further investigation as to its intrinsic value to a person who was guilty of no fraud or unfairness which induced her to sell it for a small sum, she cannot repudiate the sale because it is afterwards ascertained that she made a bad bargain.

However unfortunate the plaintiff may have been in selling this valuable stone for a mere nominal sum, she has failed entirely to make out a case either of fraud or mistake in the sale such as will entitle her to a rescission of such sale so as to recover the property sold in an action at law.

As to other defenses as aside from the defense of mistake, none will avail this seller. She was not induced to make the sale she did by any fraud or unfair dealings on the part of Mr. Boynton.

Mr. Boynton was not an expert in uncut diamonds, and had made no examination of the stone, except to take it in his hand and look at it before he made the offer of one dollar, which was refused at the time, and afterwards accepted without any comment or further examination made by Mr. Boynton.

Sherwood v. Walker

Slide Deck Reference: Chapter 11, Slides 19–35

Teaching Note: This is the famous case of the barren cow. Not only is it famous, it is also rich with opportunities to apply the law of mistake and to review much of the contract law we learned so far. This is a rich case well worth spending significant class time discussing. First and foremost, *Sherwood* demonstrates the test for mutual mistake. It makes the critical distinction of, on the one hand, where the thing delivered or received is substantively different from what was bargain for (a misunderstanding that results in no contract), and, on the other hand, where the thing is what was bargained for except from some quality (which is a mistake that could but does not necessarily allow a party to avoid the contract.) Upon a vigorous dissent, the majority finds that the vendor of a cow that both parties though was barren but turns out to be fertile can avoid this contract. Students can take either side of this case: whether the cow's fertility goes to its essential nature (and thus the parties were mistaken), or whether cow's essential nature is in its identity (and both parties knowingly and accurately bought and sold the cow identified as Rose 2d of Aberlone), reasonable minds can disagree on this. It may be worth noting that a cow is a good and thus this contract would be subject to the U.C.C., but the case was decided far before the U.C.C. was promulgated or adopted. You could explore this further by asking students whether it should come out different under the U.C.C. You can also use this case to review offer and acceptance, the mirror image rule, the battle of the forms, the mailbox rule, and/or the statute of frauds: Another way to explore this case is to look at the letter the buyer wrote when "accepting" the seller's offer. He said, "Send halter with cow, and have her weighed." Although the parties did not raise this issue, one could imagine an argument for seller that this was not an acceptance because it stated a change in terms, where the original offer did not mention the halter. Under the common law mirror image rule, this change could be interpreted to mean that this was not an acceptance but a counter-offer (which the seller probably accepted by tendering the cow.) Under the U.C.C., this change is probably not material such that the contract was formed upon dispatch of the acceptance. Additionally, this contract was subject to the statute of frauds in force at the time, which required a memorandum signed by the party to be charged to enforce contracts for sale of more than \$50. One interesting way to explore the modern statute of frauds (which requires a memo for sales of more than \$500) in this case is to ask the students whether that statute applies where, as here, the cow was sold for \$80 but worth \$1000? This is probably not within the modern statute, because the sale was for less than the statutory amount, even though the value was for more. I hope you have some fun with this heifer of a case.

Citation

66 Mich. 568 (1887)

Parties

Hiram Walker, importer and breeder of polled Angus cattle with a farm in Greenfield, Michigan, the seller, and Plaintiff.

Theodore C. Sherwood, a farmer and banker from Plymouth, Michigan, the buyer, and Defendant.

Other Entities

None.

Procedural Posture

Plaintiff sued for replevin, which is an action similar to the modern one for specific restitution, meaning return of a thing wrongly taken or held by another. The trial court ruled for Plaintiff. Defendant appealed.

This procedure is a bit confusing because seller did not tender the cow the defendant. To clear this up: plaintiff claims he gained title to the cow, so that defendant wrongfully possesses her. Plaintiff thus seeks to specifically enforce the contract by requiring defendant to tender the cow. Defendant defends by claiming the contract is voidable due to mutual mistake.

Issue

The issue is whether a seller of a cow named Rose 2d of Aberlone can avoid that contract, where the parties believed she was barren but she turned out to be fertile?

Holding

Yes, the seller can avoid this contract on the grounds of mutual mistake, because a barren cow and a fertile cow are essentially different things.

Rules

A party who has given an apparent consent to a contract of sale may refuse to execute it, or he may avoid it after it has been completed, if the assent was founded, or the contract made, upon the mistake of a material fact, such as the subject-matter of the sale, the price, or some collateral fact materially inducing the agreement; and this can be done when the mistake is mutual.

(This rule different from the Restatement's, so you might ask the students whether the case would come out differently if the court applied the Restatement test instead, where the restatement only permits recission by a party who does not bear the risk of mistake.)

Facts

The contract at issue concerns a certain polled Angus cow, which is bred for beef. The cow's name was "Rose 2d of Aberlone," and she weighed 1,420 pounds at the time of sale.

The Seller offered cows for sale to the Buyer with the statement that "they were probably barren, and would not breed." Buyer visited Seller's farm and, after some discussions, agreed to purchase Rose for $0.055 per pound, which was in accord with the current rate for beef cattle to be slaughtered. The parties entered into a written agreement which clearly identified the cow to be bought and sole as "Rose 2d of Aberlone, lot 56 of our catalogue." The parties agreed to this price calculate, which turned out to be $80 (apparently the parties rounded up).

After the correspondence but before the transfer of the cow, the seller realized that Rose was fertile, not barren, and thus worth a lot more: a breeding Angus cow is worth over $750.

The court finds that the parties would not have made the contract of sale except upon the understanding and belief that she was incapable of breeding.

Application

Plaintiff argues that the contract is valid and binding because the parties agreed to buy and sell a cow named Rose 2d of Aberlone, and that is precisely what this cow was.

Defendant argues that he can avoid the contract because the parties were mistaken as to the cow's essential nature: they thought she was barren, yet she was fertile.

Conclusions

(The majority rules for Defendant.)

Rose is the identical animal that the parties thought her to be when the contract was made; there is no mistake as to the identity of the creature. Yet the mistake was not of the mere quality of the animal, but went to the very nature of the thing. A barren cow is substantially a different creature than a breeding one. There is as much difference between them for all purposes of use as there is between an ox and a cow that is capable of breeding and giving milk. If the mutual mistake had simply related to the fact whether she was with calf or not for one season, then it might have been a good sale; but the mistake affected the character of the animal for all time, and for her present and ultimate use. She was not in fact the animal, or the kind of animal, the defendants intended to sell or the plaintiff to buy.

Rose was not a barren cow, and, if this fact had been known, there would have been no contract. The mistake affected the substance of the whole consideration, and it must be considered that there was no contract to sell or sale of the cow as she actually was. The thing sold and bought had in fact no existence. She was sold as a beef creature would be sold; she is in fact a breeding cow, and a valuable one.

Dissent

(The Dissent would rule for Defendant.)

It is not the duty of courts to destroy contracts when called upon to enforce them, after they have been legally made. There was no mistake of any such material fact by either of the parties in the case as would license the vendors to rescind. There was no difference between the parties, nor misapprehension, as to the substance of the thing bargained for, which was a cow supposed to be barren by one party, and believed not to be by the other. As to the quality of the animal, subsequently developed, both parties were equally ignorant, and as to this each party took his chances. If this were not the law, there would be no safety in purchasing this kind of stock.

When a mistaken fact is relied upon as ground for rescinding, such fact must not only exist at the time the contract is made, but must have been known to one or both of the parties. Where there is no warranty, there can be no mistake of fact when no such fact exists, or, if in existence, neither party knew of it, or could know of it; and that is precisely this case.

If the owner of a Hambletonian horse had speeded him, and was only able to make him go a mile in three minutes, and should sell him to another, believing that was his greatest speed, for $300, when the purchaser believed he could go much faster, and made the purchase for that sum, and a few days thereafter, under more favorable circumstances, the horse was driven a mile in 2 minutes 13 seconds, and was found to be worth $20,000, I hardly think it would be held, either at law or in equity, by any one, that the seller in such case could rescind the contract.

DePrince v. Starboard Cruise Services, Inc.

Slide Deck Reference: Chapter 11, Slides 36–48

Teaching Note: This case presents a modern spin on the *Wood* case, supra. This case also involves the purchase and sale of a diamond, but the "mistake" is of a different nature. Unlike *Wood*, where there was an improvident decision but no technical mistake, *DePrince* illustrates a situation where one party clearly had a belief not in accord with the facts. This case demonstrates how to apply the test for a unilateral mistake. In this case, a store manager who apparently was not well trained in his wares misunderstood a price chart regarding a diamond. Diamonds are priced by carat, so that the price of a diamond listed as "EC 20.64 D VVS2 GIA VG G NON selling price \$235,000" means the price is 20.64 carats times \$235,000, or \$4,850,400. Students are likely to make the same mistake, since this way of pricing stones is not obvious to someone who is not in that trade. But, as it turned out, the buyer knew that this price was adherently low, and he took advantage of the seller's ignorance. The result is a rare instance where courts should rescind an otherwise-valid transaction due to a mistake. This opinion also clarifies that inducement is not an element of the mistake defense, which is in line with the Restatement's position.

Citation

271 So. 3d 11

Parties

Thomas DePrince, the buyer, plaintiff, and appellant.

Starboard Cruise Services, Inc., the seller, defendant, and appellee.

Other Entities

Mr. Rusan, Starboard's jewelry store manager, who transacted with DePrince.

Ms. DePrince, Thomas DePrince's sister and a graduate gemologist.

Mr. Crawford, Thomas DePrince's partner as a certified gemologist.

Procedural Posture

The procedural posture is a bit complex in this case, because it involved state procedural rules included en banc proceedings, and these details are not included in the edited case. The important thing to convey to students about procedure is that the appellate court re-heard this case to determine what is the law of mistake in Florida. It thus put Florida's law in line with the Restatement on this point. The court then resolved the case at the summary judgment stage.

Issue

Can Starboard set aside a contract for the sale of a diamond, where its manager agreed to that sale upon incorrect information from his home office that resulted in quoting a price that was a fraction of the diamond's cost?

Holding

Yes, Starboard can set aside this contract because the manager's mistake was excusable, denial of the release would be inequitable because DePrince knew something was wrong with the aberrantly low price, and where Starboard rescinded the transaction promptly.

Rules

A contract may be set aside on the basis of a unilateral mistake of material fact if: (1) the mistake was not the result of an inexcusable lack of due care; (2) denial of release from the contract would be inequitable; and (3) the other party to the contract has not so changed its position in reliance on the contract that rescission would be unconscionable.

Inducement is not an element of unilateral mistake.

Facts

Mr. Thomas DePrince visited a jewelry shop abord a cruise ship during a voyage and indicated his interest in purchasing a fifteen to twenty carat loose diamond, emerald cut, high quality, color D, E, or F, with a G.I.A. certificate. The store manager, Mr. Rusan, did not have such a stone and so he emailed his corporate office. The corporate office responded with an inventory listing which included this listing:

EC 20.64 D VVS2 GIA VG G NON selling price $235,000.

Mr. Rusan had never sold a large loose diamond before, and he did not realize that this price was per carat, not total, such that the selling price should be $4,850,400. He offered the stone to Mr. DePrince for $235,000.

Mr. DePrince was with his partner, Mr. Crawford, a certified gemologist. Mr. Crawford contacted Ms. DePrince, a graduate gemologist, who warned that something was not right and recommended that Mr. DePrince not buy that diamond.

Mr. DePrince disregarded his sister's advice and purchase the stone anyway using his credit card. Shortly after the sale, Starboard notified DePrice of the error and reversed the charges to his credit card. DePrince then filed suit seeking to enforce the parties' contract.

Application

Plaintiff argues that Defendant is not entitled to the defense of mistake because Plaintiff did not induce Defendant's mistake. Although DePrince did not share his knowledge of the potential mispricing of the diamond with Starboard, his omission is not the type of action that counts as inducement.

We might assume that Plaintiff argued for the jury instruction that the trial court gave: "To establish this defense Starboard must prove . . . the mistake was induced by the party, here Mr. DePrince, seeking to benefit from the mistake. Inducement may occur through misrepresentations, statements, or omissions which cause the contracting party to enter into a transaction."

Defendant argues that the law does not require inducement as an element of mistake.

Conclusions

Inducement is not an element of unilateral mistake for three reasons. First, the Florida Supreme Court did not require inducement in precedent cited by Plaintiff. Second, the Florida Supreme Court did not require inducement in its most recent precedent regarding unilateral mistake. Third, four other Florida districts do not read precedent to require inducement in unilateral mistake. Since the only factual issue remaining in this case is whether DePrince induced Starboard's mistake, this case should be resolved in favor on Starboard on summary judgment.

CHAPTER 12: IMPROPER BARGAINING

Lesson Plan: See Part II, Chapter 12 | Slide Deck: Chapter_12_Slides.pptx (64 slides) | Problem Solutions: See Part IV, Chapter 12

Barrer v. Women's National Bank

Slide Deck Reference: Chapter 12, Slides 1–18

Teaching Note: This is a relatively modern case that may tug on students' heartstrings, and thus is provides an effective way to discuss the sometimes conflict between equal justice (and the certainty it provides in general) and equity (and the justice it can do in the specific instance). Lester A. Barrer is a distraught widower, a point that can be emphasized to press on the equality/equity distinction. Barrer made five representations to Women's National Bank, each of which should be evaluated independently for whether they are assertions, and, if so, whether they are false, and, if so, whether they are material. The Bank does not allege fraud, which would require evidence of Barrer's intention (scienter). And so this makes for a very effective case to teach students how to judge when a material misrepresentation permits avoidance of a contract. According to the appellate court, the trial judge got the law wrong in this case, thus making summary judgment for the bank inappropriate. This demonstrates how important it is to get the law right! This case's five "misrepresentations" include three or four omissions. This presents opportunities to discuss when a party has disclosure obligations. There is also a hint of tortious interference with contract in this case. The man who purchased Barrer's tax lien from the IRS called the Bank and provided information that moved the bank not to honor its agreement with Barrer. That issue is not raised in this case, and you may not have time for it in the contracts classroom, but students may note the vulture-like behavior of the tax lien purchaser and inquire as to whether his behavior is permitted under law. That answer is dubious.

Citation

761 F.2d 752 (D.C. Cir. 1985)

Parties

Lester A. Barrer, a widower, plaintiff, and appellant

Women's National Bank, defendant and appellee