CONTRACTS II  (Fall semester 2008) Professor NyeEvening Class Sessions (Tuesday, 6:00-9:00 pm)

  ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Stay 12 cases ahead for next class.In KII we assume a K exists.

Focus on RULES OF LAW in this class…look for them in the cases

When presenting cases, state: NAME OF CASE Court Year Facts Rule of Law

If you fail to raise defense of SOF, then SOF is waived.

Parol evidence rule: (A defense)If there is a writing and if there is any addition or modification of that writing

before it is signed, then the modification cannot be introduced into evidence.

Liquidated evidence clauses:Amount of $ set forth in the K to go to the non-breaching party in the event of

a breach. IL follows CLASSICAL RULE. If clause does not meet certain criteria, clause will

be treated as a penalty and therefore not valid

Squib = summaryFocus on updated IL cases & 7th Federal Circuit (WI, IL, IN)

Remedies (recoverable damages) under breach of K:Expectancy…Reliance interests of innocent party, what they lost by relying on breachers performanceRestitution…returning to the innocent party what was lost

Book - Legal Issues and Business PolicyIntroduction

Philosophy of contract enforcementRelationship of contract law to social policy

Restmt - Unenforceability on Grounds of Public Policy

Casebook, pp. 541-574 Restatement §§ 178-199Casebook, pp. 552, 556, 559, 562, 567, 571

P.541 Legal Issues and Business Policy

Enforceability of contractual relationships and legal liability for failing to honor contractual obligations can be seen as a direct reflection of a country’s economic and industrial practices.

Enforcement does not always mean the non-breaching party receives the performance it bargained for

Courts struggle with ascertaining appropriate monetary compensation for the value of the breaching party’s bargained-for performance.

Too much relief creates windfall for non-breaching party (benefit not bargained for) and may over-penalize breaching party.

May also have an adverse effect on the market if it is more desirable economically to breach a K.

Courts often choose not to create an enforceable legal obligation if the bargaining process contains fraud, over-reaching, or other form of unconscionable conduct.

A Philosophy of Contract Enforcement

p.552 Relationship of Contract Law to Social Policy

Sullivan v. O’ConnorS. Ct. Mass. 1973

Facts: Plaintiff was an entertainer who contracted with a physician to enhance her beauty and improve her appearance by performing plastic surgery upon her nose.  After three surgeries the physician failed to deliver the promised result and in fact the plaintiff was permanently disfigured. Issue: Should the trial court’s jury instructions been directed toward reliance or expectation damages for a breach of contract involving special arrangement with patient/doctor?

2 basic theories of liability: Contract …breach of K based upon dr’s promise that pt would look better

than she did before Tort …professional negligence (aka malpractice) based upon standard of care

for a person of average competency in his profession

Holding: The defendants objections (exceptions) should be overruled and the plaintiff’s exceptions waived as requested in her brief.

Rules:

There is no general rule barring P & S from actions in breach of K

Whether under Reliance or Expectancy Rule, these damages are compensable

Party relied upon promise to his/her damageOut of pocket expenseDirect damages from breachPain and suffering for 3rd surgery

Procedure: Jury trial found breach of contract existed but not malpractice/negligence.

Ct. Rationale: There was a breach of a contract.  Next is the measurement of damages:  

o Since the Plaintiff had to endure pain and suffering as a result of the Defendant’s breach,

o therefore the difference between the p & s she would have experienced during the first, second surgeries,

o Minus the p & s she was caused by the breach or the third surgery.  Damages should be awarded for any worsening of the plaintiff’s condition

resulting from the breach.  A breach of a patient-doctor special agreement should have damages

awarded which place the plaintiff back in the position he occupied just before the parties entered upon the agreement, for the harm suffered in “reliance,” upon that agreement.

The p & s was wasted during the first two surgeries, and because a third was required, due to the breach, this waste is compensable to restore back to status quo.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ p.556Anthony v. Yahoo! Inc.421 F. Supp. 2d 1257 (N.D. Cal. 2006)

Facts:P alleges that Yahoo Dating service breached contract by creating and sending false, expired & non-existent profiles to members.

Procedure:Lower court probably dismissed P COA for this case to be appealed.

Issue:Theory of liability…breach of KDid Yahoo breach the contract with its dating service members by its conduct even though there was no language in the contract addressing creation of false profiles?

Holding:No, but P may argue COA for breach of implied covenant of good faith and fair dealing.

Rules of Law:The elements of a breach of K cause of action are the existence of the K, performance by the P or excuse for nonperformance, breach by the defendant and damages.

Courts may dismiss breach of K claims when the agreement is not reasonably susceptible to any meaning that could support the P’s legal theories.

A promise is a manifestation on intention to act or refrain from acting in a specified way, so made as to justify a promise in understanding that a commitment has been made. Restatement 2d of K § 2

Court’s Reasoning:Yahoo’s license provision does not require Yahoo to remove profiles.This issue was not expressed in the contract.Yahoo’s behavior may not be fair dealing, but there was no breach.Court found that there was no promise and therefore no K.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~p.559People v. Starks1006 Ill. 2d 441, 478 N.E.2d 350 (1985)IL Supreme CourtFacts:D armed robber made deal with State’s Attorney who agreed to dismiss charges if D submitted to and passed a polygraph. D did and SA failed to dismiss charges as promised.Procedure: D convicted of armed robbery. New trial denied at appeal. D appeals to District court.Issue:Is the agreement between a SA and a criminal D an enforceable K?Holding:Yes.Rule of Law:Precedent case law, Butler v. State held that although the state has the right to chose its procedures and weapons of prosecution, the state also has a duty to abide by an agreement it makes with a D.

The majority recognized promises made on both sides.

Dissent: Justice Ward: Prosecution does not need to honor all deals made with Ds. D gave up nothing; no consideration. Giving up his 5th amendment rights against self-incrimination is not consideration because he had nothing to lose.

A’s promise to B renders B’s promise binding to A

B’s promise to A renders A’s promise binding to B

p. 562Cohen v. Cowles Media Company501 U.S. 663, 111 S. Ct. 2513 (1991)Minnesota…US Supreme Ct

Facts:P gave reporters info in exchange for their promise to keep him unnamed.Procedure:P sued for fraudulent misrepresentation and breach of K. MN state court Jury found for P: $200K compensatory & $500K punitive. MN Court of Appeals Punitive reversed on appeal based on P’s failure to establish fraud claim. MN Supreme Ct reversed compensatory damages after considering breach claim. MN Supreme Ct justice brought up promissory estoppel. Case granted certiorari.Issue:Does the First Amendment prohibit a P from recovering damages, under promissory estoppel, for a newspaper’s breach of confidentiality regarding the identity of an information provider?Holding:No. Rule of Law:It is therefore beyond dispute that the publisher of a newspaper has no special immunity from the application of general laws. He has no special privilege to invade the rights and liberties of others.

Accordingly, the enforcement of such general laws against the press is not subject to stricter scrutiny than would be applied to enforcement against other persons or organizations.

Court Reasoning:o Most problematic element in establishing a COA is whether injustice could be

avoided by enforcing the promise of confidentiality. o Courts must balance the constitutional rights of free press against common law

interest of protected anonymity (MN Supreme)o Applying promissory estoppel will not punish truthful publication because

compensatory damages are not punishment.o MN Supreme Court judgment reversed and case remanded.Dissent:4 justices dissented referring to other First Amendment publishing cases.This leak of information was beneficial to voters.

p.567Texaco v. Penzoil729 S.W.2d 768 (Tex. 1987)Texas Supreme Court

Facts:

Texaco defendant. Getty small oil co with internal strife among board. Approached by Penzoil with a buyout offer. Texaco approached Getty and offered more $. Getty agreed and published next day. Penzoil filed suit.

Procedure:

Issue:Whether the evidence supports the jury’s findings that there was a binding K between Getty entities and Penzoil, and that Texaco knowingly induced a breach of such K….tortuous interference with K…tort theory of liability

Holding:There was a K, Texaco did tortuously interfere with the K.

Rules of Law:Under New York law, if parties do not intend to be bound to an agreement until it is reduced to writing and signed by both parties, then there is no K until that event occurs.If there is no understanding that a signed writing is necessary before the parties will be bound, and the parties have agreed upon all substantial terms, then an informal agreement can be binding, even though the parties contemplate evidencing their agreement in a formal document later.If the parties do intend to contract orally, the mere intention to commit the agreement to writing does not prevent contract formation before execution of that writing, and even a failure to reduce their promises to writing is immaterial to whether they are bound.However, if either party communicates the intent not to be bound before a final formal document is executed, then no oral expression of agreement to specific terms will constitute a binding K.

Reasoning:

Redgrave v. Boston Symphony OrchestraFirst Circuit Federal Court1988

Facts:BSO cancelled Redgrave’s performance due to her affiliation with the PLO.

Procedure: Redgrave filed suit against BSO for breach of K.

Issue: What kind of damages is Redgrave entitled to?

Holding:Redgrave was awarded consequential damages.

Rule of Law:

Massachusetts laws does not permit Ps in breach of K actions to recover consequential damages for harm to reputation.

Hadley v. Baxendale

Introduction: As you read each case ask yourself: Does the court’s decision reflect the true intentions of the parties, OR Is it based on a legal construct of their intentions?

o What impact does this have on the predictability of K-ual obligations?o Are there competing policies that take precedent over predictability in

certain circumstances?

Handout: California Supreme Court rejects the federal “narrow restraint exception” and holds that all non-competition agreements are invalid unless they fall within limited statutory exceptions.

p. 578 Integration -determining the scope of the agreement Parol evidence rule says that when the parties have reduced their agreement to a writing, the writing cannot be modified or contradicted by prior or contemporaneous understandings or documentation. It excludes from testimony, parol evidence that would vary or contradict the terms of the integrated writing. (Generally a common law rule; considered a substantive rule)

First Q when considering parol evidence rule: Is the agreement fully integrated? Is there a merger/integration clause? Did the parties intend the written agreement to contain all necessary terms? Does it look complete? Then the judge may consider it to be integrated.

The defense is that there is a complete integration and the evidence that the opponent is trying to introduce contradicts with the integrated agreement.

Thus, critical issue is…whether the written K embodies the final agreement of the parties regarding the subject at hand.

Mitchell v. Lath1928, Court of Appeals of New York (Highest court in NY)

FACTS: Mrs. Mitchell entered into an agreement with Laths to buy land. Mrs. Mitchell wanted them to remove an icehouse from land across the road from the land she wanted to purchase. Mrs. M relied upon the understanding that the icehouse would be removed and the written agreement did not include any terms regarding the icehouse.

For Sept 2, 2008Casebook, pp. 575-662 Restatement §§ 200-230Interpretation of Agreements: The Meaning of Ks

ISSUE: Should the icehouse terms be considered part of the final K, even though it was not in writing?

RULES: Restatement § 209: Integrated AgreementRestatement § 210: Completely Integrated Agreement

Prof said, “The terms that are found in an integrated K in theory cannot be varied or change by parol evidence”…” Parol evidence is either oral evidence of agreements or discussions prior to or contemporaneous with the signing of the writing. It can also be any written documents that conflict with the terms of the final writing.”

Where…one agreement is entered wholly or in part in consideration of the simultaneous agreement agreement to enter into another, the agreements are bound together. Then, if one agreement is oral and the other in writing, the problem arises whether the bond is sufficiently close to prevent proof of the oral agreement.

Before such an oral agreement as is present is received to vary the written K, at least 3 conditions must exist:

1. The agreement must be in the form of a collateral one2. It must not contradict the expressed written or implied provisions of the

written K, and3. It must be one that parties would not ordinarily expected to embody in that

writing, or, put in another way an inspection of the written K, read in the light of the surrounding circumstances must not indicate that the writing appears “to contain the engagement of the parties, and to define the object and measure the extent of such engagement.”

HOLDING: If there were an agreement made about the icehouse, it would be most natural to find it in the written K. The icehouse issue is collateral and it may not be proved.

DISSENT: Agrees with general rule, but this K even though it is complete on its face in regards to the subject conveyance, does not show that it was intended to embody negotiations or agreements in regard to a matter so loosely bound to the conveyance as the removal of an icehouse from land not conveyed. Collateral, yet connected.*************************************************************************************p. 582Masterson v. Sine1968 Supreme Court of California

FACTS: The Mastersons owned a ranch and conveyed to the Sines via written grant deed allowing Ms an option to repurchase within 10 years of the writing. Cost to be current sale price plus the depreciation value of any improvements the Siness add over the next 2.5 years. Mr. Masterson went bankrupt and his trustee & Mrs. M brought declaratory relief action to establish their right to enforce the option.

Restatement § 209: Integrated AgreementRestatement § 210: Completely Integrated Agreement

PROCEDURE: The trial court determined that the parol evidence rule precluded admission of extrinsic evidence offered by defendants to show that the parties wanted the property kept in the Masterson family and that the option was therefore personal to the grantors and could not be exercised by the trustee in bankruptcy.

The court entered judgment for plaintiffs, declaring their right to exercise the option. D appeals.

ISSUE: Was the option extrinsic evidence and therefore nonassignable and inadmissible?

RULE:

The crucial issue in determining whether there has been an integration is whether the parties intended their writing to serve as the exclusive embodiment of their agreement.

The requirement that the writing must appear incomplete on its face has been repudiated in many cases where parol evidence was admitted "to prove the existence of a separate oral agreement as to any matter on which the document is silent and which is not inconsistent with its terms" -- even though the instrument appeared to state a complete agreement.

In formulating the rule governing parol evidence, several policies must be accommodated. One policy is based on the assumption that written evidence is more accurate than human memory. This policy, however, can be adequately served by excluding parol evidence of agreements that directly contradict the writing.

Another policy is based on the fear that fraud or unintentional invention by witnesses interested in the outcome of the litigation will mislead the finder of facts.

HOLDING: The majority said that The option clause in the deed in the present case does not explicitly provide that it contains the complete agreement, and the deed is silent on the question of assignability.

Moreover, the difficulty of accommodating the formalized structure of a deed to the insertion of collateral agreements makes it less likely that all the terms of such an agreement were included. There is nothing in the record to indicate that the parties to this family transaction, through experience in land transactions or otherwise, had any warning of the disadvantages of failing to put the whole agreement in the deed. This case is one, therefore, in which it can be said that a collateral agreement such as that alleged "might naturally be made as a separate agreement." Trial court erred in excluding evidence that was not included in the writing.

Justice Burke DISSENT:

The majority opinion creates a new rule in California:(1) Undermines the parol evidence rule as we have known it in this state since at least 1872 by declaring that parol evidence should have been admitted by the trial court to show that a written option, absolute and unrestricted in form, was intended to be limited and nonassignable;(2) Renders suspect instruments of conveyance absolute on their face;(3) Materially lessens the reliance which may be placed upon written instruments affecting the title to real estate; and(4) Opens the door, albeit unintentionally, to a new technique for the defrauding of creditors.*************************************************************************************

p. 587 Lee v. Seagram19772nd circuit US Court of Appeals from Southern District of New York

Restatements § 214, Evidence of Prior or Contemporaneous Agreements and Negotiations

FACTS: Lee and Seagram’s entered into an agreement under which Lee agreed to sell their interest in a liquor distributorship to Seagram’s, conditioned on Seagram’s alleged oral offer to relocate Lee to a new distributorship.

PROCEDURE: Lee brought suit when Seagrams failed to relocate them, alleging breach of oral agreement. The court allowed Lee's evidence of the breach to survive the parol evidence rule, because the relationship and the conduct of the parties indicated that there was no expectancy that the oral agreement would be integrated into the parties' written agreement.

ISSUE: Whether the agreement to relocate was a normal and expectable to be included in this kind of a K and therefore, should be allowed as evidence

RULE:Restatements § 216 (2)(b)p. 589 Certain oral collateral agreements, even though made contemporaneously, are not within the prohibition of the parol evidence rule "because [if] they are separate, independent, and complete contracts, although relating to the same subject. . . . they are allowed to be proved by parol, because they were made by parol, and no part thereof committed to writing."

HOLDING:It was expectable that this agreement would not be included in a written instrument. p. 589

Restatement § 217: Integrated Agreement Subject to Oral Requirement of a ConditionWhere the parties to a written agreement agree orally that performance of the agreement is subject to the occurrence of a stated condition, the agreement is not

integrated with respect to the oral condition. (and evidence of that oral agreement is ADMISSABLE)

This case shows that there is another exception to the parol evidence rule: If there is an oral condition precedent to the legal effectiveness of an otherwise integrated written K is not barred by the parol evidence rule.

Under this rule, the professor believes that in a situation like this, if the “oral agreement” is in writing, this restatement should also apply and the writing should be admissible.

Judgment in favor of plaintiffs was affirmed, because oral agreement under which defendant agreed to relocate plaintiffs to new distributorship was not subject to parol evidence rule, and the terms of the oral agreement were sufficiently specific to render the agreement enforceable.

******************************************************************************

p. 592C.L. Maddox, Inc. v. The Benham Group, Inc.19968th Circuit, US Court of Appeals, Appeal from the United States District Court for the Eastern District of Missouri

Restatement § 213 Restatement § 217: see above case

FACTS: Maddox was a general contractor who subcontracted with Benham to remodel a coal processing plant owned by Electric Energy. In April & May 1990, Maddox, Benham and a marketing agent submitted proposals to EE which EE approved.

Maddox and Benham entered oral agreement on June 1, 1990 under which B agreed to complete drawings and specs, provide equipment lists, and quantity information in exchange for $58,200. B’s proj manager recorded this detail in a report.Written K was entered into in mid-September. M relied on B’s estimates in bid. K signed between EE & Maddox on Sept 28.

M & B had problems. B was late with drawings, insufficient drawings, and underestimated work required to complete final design.

ISSUE: Can the evidence of the oral agreement between B & M be admitted?RULE: The parol evidence rule prohibits evidence of prior or contemporaneous oral agreements which vary, add to, or contradict the terms of an unambiguous and complete contract absent fraud, common mistake, or erroneous admission. However, evidence of an oral agreement that is an independent and separate agreement will not be barred by the parol evidence rule, provided that the oral agreement is not inherently in conflict with the written agreement.REASONING: Although the written contract was predated to June 1, it was only signed in mid-September. By this time, the oral contract for bidding services had already been entered into, executed, and paid for. Thus, the oral agreement can be

characterized as a separate agreement, a stand-alone contract that was bargained and paid for by Maddox.HOLDING:It is evident that the parties intended the subcontract to be a complete expression of their intentions. However, we conclude that evidence of the prior oral agreement was admissible at trial, because the oral agreement was a wholly separate and independent contract that did not inherently conflict with the written agreement

(An integration clause or a merger clause says that this written agreement encompasses all terms of the agreement, but there are exceptions, to general rules, this is an exception.)

(Some states pull the Restatements in to law, rather than merely persuasive secondary authority, by stating that this particular restatement reflects the current law in this state)

**********************************************************Interpreting the parties’ wordsp. 601 E.I. Du Pont de Nemours Powder Co. v. Schlottman1914 2nd Federal Circuit, US Court of Appeals

No Restatement in 1914Restatement § 202 :

FACTS: Grubb & DuPont negotiated for whole stock of fuse company to DuPont. After purchase, DuPont was to pay $25,000 after a year and if some financial benchmarks were met. This was recorded in a letter, but not the formal agreement. Du Pont sold the company to someone else before the year was up. PROCEDURE: Grubb’s assignor sued DuPont for breach of implied promise to operate plant for one yearISSUE: Is the letter and formal agreement 2 parts of one K?RULE: Parol Evidence Rule objection was not asserted in this case to strike the admission of the letter as evidence.

Collateral agreements are not barred by the Parol Evidence Rule since this letter may contain terms that are not expectable in the written agreement.

p. 602 There is no particular formula of words, or technical phraseology, necessary to the creation of an express obligation to do, or forbear to do, a particular thing or perform a specified act…It is a cardinal principle that every agreement or covenant must be interpreted according to its particular terms, and so as to carry out the intent of the parties.HOLDING: The letter implies a promise on the DuPont Company’s part to operate the plant for one year, and that promise must be taken as part of the consideration for which Grubb sold the capital stock.

Restatement § 214: Evidence of prior or Contemporaneous Agreements and NegotiationsAgreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish

(a) That the writing is or is not an integrated agreement(b) That the integrated agreement, if any, is completely or partially integrated(c) The meaning of the writing, whether or not integrated(d) Illegality, fraud, duress, mistake, lack of consideration, or other invalidating

cause(e) Ground for granting or denying rescission, reformation, specific performance,

or other remedy.

p. 602Gianni v. R. Russel & Co., Inc. 1924Pennsylvania Supreme Court

Restatement § 213 is closest one

FACTS: Gianni ran a store selling soft drinks and other things. Russel bought the property where G rented space for the store and its agent negotiated with Gianni for further leasing of the space. Gianni signed a 3-year lease that provided that he could "use the premises only for the sale of fruit, candy, soda water," etc. but could not sell tobacco. Gianni agreed not to sell tobacco and to pay increased rent, but in consideration he would have the exclusive right to sell soft drinks in the building. This stipulation was not included in the written lease. Soon after this, Russel rented an adjoining space in the building to a drug company without restricting that company's right to sell soda water and soft drinks.PROCEDURE: G sued R for damages for breach of the alleged oral contract, alleging that the sale of soft drinks by the drug company had greatly reduced his profits. The trial court held for Gianni.ISSUE: Is evidence of an oral contract admissible under the parol evidence rule when the written contract is the complete contract of the parties and covers the subject matter of the oral contract?RULE: Where parties, without any fraud or mistake, have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only evidence of their agreement.

All preliminary negotiations, conversations and verbal agreements are merged in and superseded by the subsequent written contract…and unless fraud, accident, or mistake be averred, the writing constitutes the agreement between the parties, and its terms cannot be added to nor subtracted from by parole evidence.

Where the cause of action rests entirely on an alleged oral understanding concerning a subject which is dealt with in a written contract, it is presumed that the writing was intended to set forth the entire agreement as to that particular subject.

HOLDING: No. As the written lease is the complete contract of the parties and covers the subject matter of an alleged oral contract, evidence of the oral contract is inadmissible under the parol evidence rule.

p. 605Grace and Nino, Inc. v. Orlando1996 Massachusetts Appellate Court Relevant Reststament § 206 Interpretation against the draftsmanIn choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds.

FACTS: Orlando settled a case for Grace & Nino. Attorneys argue that they are entitled to approx $50K as fee agreed upon orally if case was settled after 30 days but before a suit. Grace & Nino argues that the fee should be $10K as they interpret their written agreement. Orlando argues that K was partially integrated b/c it did not include provisions if the case was settled after 30 days, but before a suit was brought.

PROCEDURE:Trial court allowed admission of parol evidence of oral agreement & gave Orlando 16.6%ISSUE: How to deal with an obscurity in a KRULE: Any obscutities in the agreement will be taken against the attorney who drafted it.HOLDING:

p. 606Steuart v. McChesney1982Pensylvania Supreme CourtRestatement § 201Restatement § 202

Facts: The Steuarts gave the McChesney’s a right of first refusal on farm under which “should said Steaurts obtain a Bona Fide Purchaser for Value, the said M‟s may exercise their right to purchase said premises at a value equivalent to the market value of the premises acc. to the assessment rolls as maintained by the County of Warren.” In 1977, a broker appraised the farm at market value of $50K. Later S‟s received two offers of $35K and $30K for farm and Ms sought to exercise right by tendering $7,820 the assessed value acc. to rolls. Ss said no and that agreement should be read to require that exercise price be that of the third party offer or fair market value determined independently of assessed value. Ms sought

specific perf. and failed, but Superior Ct. held that plain language of agreement required that assessed market value determine the exercise price. S‟s appealed. Rule/Issue: Language here is plain and clear and is not in need of interpretation by reference to extrinsic evidence. Even if it is unfair to one party, a court must apply the plain meaning of the language in a K. Rationale: Plain meaning rule reinforces the reliability of K and minimizes the fear that a court may later construe the k to mean something else than what parties clearly expressed. It prevents a party from fabricating a new meaning. Start here on Sept 9

Parol evidence is prior or contemporaneous oral agreements or prior written agreements that would vary, contradict, add to or subtract from the terms and conditions of an integrated written agreement.

-If a written side agreement is signed at the same meeting as a contract is signed, is not parole evidence because it does not satisfy the definition of parol evidence

parol evidence: The oral or verbal testimony of a witness. Precisely, evidence of matters not contained in the writing, whether oral utterance or other writing, offered as proof of terms and conditions of a contract in writing.

Parol evidence rule and reliance on the written wordp. 615Eskimo Pie v. Whitelawn Dairies1968 Southern District of New York (a trial judge’s opinion; not appellate)

-when the terms of the agreement are clear, the rules of interpretation are not generally used-usage is a means of interpreting certain words-sometimes there is a gap in a written document -usage in an industry can fill a gap-other rules can be applicable, such as ambiguity in terms, the contra profurentum, the terms are interpreted against the writer when the terms are ambiguous-the more interpretive rules that you can assert in your client’s favor, the stronger your defense

§ 220. Usage Relevant To Interpretation

(1) An agreement is interpreted in accordance with a relevant usage if each party knew or had reason to know of the usage and neither party knew or had reason to know that the meaning attached by the other was inconsistent with the usage.

(2) When the meaning attached by one party accorded with a relevant usage and the other knew or had reason to know of the usage, the other is treated as having known or had reason to know the meaning attached by the first party.

Whitelawn/SAS purchaser of Eskimo Pie products entered into a K which was a nonexclusive agreement. Whitelawn has refused to accept & pay for products. Dispute is to the meaning of “non-exclusive”

Extrinsic evidence means evidence outside the terms of the agreement itselfParol evidence is a type of extrinsic evidence

Whitelawn-SAS argues that parol evidence should be admitted on the ground that the term ‘non-exclusive’ is ambiguous, and that even if it in fact lacks ambiguity such evidence may be received to show that the parties gave the term special or particular meaning not to be gathered from the language by a reasonably intelligent person having knowledge of the custom, usage and surrounding circumstances. Cites Sec 202 of NY UCC (p.616)

Court rejected UCC rule Since the Package Deal predated the effective date of the UCC, and since the UCC was not intended to have retroactive effect, § 2-202 does not apply and the Court must look to prior law: Mitchell v. Lath

(per diversity of citizenship…this federal court is citing to a state court rule because the federal court must apply the substantive rules of laws of the state in which the contract sits, if there is a conflict of laws rules, they are applied too, which may cause another state’s substantive rules to be applied)(if the attorneys do not request that diversity laws be applied, then the court assumed that it applies the rules of the state in which it sits, that right may be deemed to be waived)

(federal courts have no rules on contracts, it applies the rules of the state in which it sits)

(FYI…Article 2 deals with sales)

Rules from Mitchell v. Lath The cardinal principles forming the cornerstone of those standards are (1) that the meaning to be attributed to the language of such an instrument is that which a reasonably intelligent person acquainted with general usage, custom and the surrounding circumstances would attribute to it; and (2) that in the absence of ambiguity parol evidence will not be admitted to determine the meaning that is to be attributed to such language….

But plain meanings may not be changed by parol, and the courts will not make a new contract for the parties under the guise of interpreting the writing….

An "ambiguous" word or phrase is one capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business

Court conclusion and application of rule: In the absence of proof that the term "non-exclusive" could possibly have the meaning, among others, attributed to it by Whitelawn-SAS, parol evidence must be excluded.

Court Ruling: Nevertheless, although the term "non-exclusive" as used in the Package Deal does not on its face appear to be ambiguous, Whitelawn-SAS will be afforded the opportunity to offer proof showing that the term is ambiguous, and Eskimo the opportunity to rebut such proof.

In accordance with the principles hereinabove outlined, proof on the issue of ambiguity may encompass the terms of the Package Deal itself, the surrounding circumstances, common usage and custom as to the meaning attributed to it, and subsequent conduct of the parties under the Package Deal, but evidence of the subjective understanding of the parties as to the meaning attributed by them to the term "non-exclusive" will not be received.

Parole evidence can be introduced to explain an ambiguity. First, the possibility of an ambiguity must be proven.

********************************p. 620Columbia Nitrogen Co. v. Royster Co.4th Circuit… federal court of appeals1971

Restatement § 221. Usage Supplementing An Agreement

An agreement is supplemented or qualified by a reasonable usage with respect to agreements of the same type if each party knows or has reason to know of the usage and neither party knows or has reason to know that the other party has an intention inconsistent with the usage.

Facts: Royster Guano Co contracted to sell a minimum of 31,000 tons of phosphate each year for 3 yrs. to Columbia. The K stated that the price per ton, subject to an escalation clause related to production costs. The market price of phosphate plunged and Columbia ordered less than one-tenth of the K amount, although it would have ordered the full amount at current market price. Royster sold phosphate elsewhere at a price significantly below K price, and sued for breach of damages. Columbia tried unsuccessfully to introduce evidence on usage of trade and course of dealing between parties. D appeals, and wins. The district court relied on Eskimo pie rule.

Rule/Issue: Whether the evidence of usage of trade and course of dealing may be admitted to show that a specific K price was not binding on parties.

Rationale: The test of admissibility is not completeness but whether evidence can reasonably be construed as consistent. K does not prohibit use of such extrinsic evidence.

We hold, therefore, that a finding of ambiguity is not necessary for the admission of extrinsic evidence about the usage of the trade and the parties' course of dealing.

Nor can we accept Royster's contention that the testimony should be excluded under the contract clause: "No verbal understanding will be recognized by either party hereto; this contract expresses all the terms and conditions of the agreement, shall be signed in duplicate, and shall not become operative until approved in writing by the Seller."Course of dealing and trade usage are not synonymous with verbal understandings, terms and conditions. draws a distinction between supplementing a written contract by consistent additional terms and supplementing it by course of dealing or usage of trade. Evidence of additional terms must be excluded when "the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement." Significantly, no similar limitation is placed on the introduction of evidence of course of dealing or usage of trade. Indeed the official comment notes that course of dealing and usage of trade, unless carefully negated, are admissible to supplement the terms of any writing, and that contracts are to be read on the assumption that these elements were taken for granted when the document was phrased.

We conclude, therefore, that Columbia's evidence about course of dealing and usage of trade should have been admitted. Its exclusion requires that the judgment against Columbia must be set aside and the case retried.

************************************p. 625 Nanakuli Paving & Rock v. Shell Oil1981.. 9th Circuit…federal court of appeals

§ 222. Usage Of Trade

(1) A usage of trade is a usage having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to a particular agreement. It may include a system of rules regularly observed even though particular rules are changed from time to time.

(2) The existence and scope of a usage of trade are to be determined as questions of fact. If a usage is embodied in a written trade code or similar writing the interpretation of the writing is to be determined by the court as a question of law.

(3) Unless otherwise agreed, a usage of trade in the vocation or trade in which the parties are engaged or a usage of trade of which they know or have reason to know gives meaning to or supplements or qualifies their agreement.

Restatement § 223. Course Of Dealing

(1) A course of dealing is a sequence of previous conduct between the parties to an agreement which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

(2) Unless otherwise agreed, a course of dealing between the parties gives meaning to or supplements or qualifies their agreement.

Facts: P was asphalt paver that bought all of the asphalt it needed from Shell. The supply contracts between them specified that the price would be Shells posted price at the time of delivery.

On 2 prior occasions Shell had provided price protection. Shell suddenly raised the price of asphalt from 44 to 76 after P already had K for which it needed 7,200 tons of asphalt.

Issue: Nanakuli argued that price protection was incorporated into all K’s because of the trade usage of price protection.

Nanakuli sued, claiming that Shell breached K. Jury returned a verdict for $220 K for Nana.

Shell appeals, and appellate court ruled that because the jury could have found for Nanakuli on its price protection claim … we reverse the judgment of the District Court and reinstate the jury verdict for Nanakuli in the amount of $ 220,800, plus interest according to law.

p. 631 Trident Center v. Connecticut General Life Ins1988 9th Circuit…federal court of appeals

§ 212. Interpretation Of Integrated Agreement

(1) The interpretation of an integrated agreement is directed to the meaning of the terms of the writing or writings in the light of the circumstances, in accordance with the rules stated in this Chapter.

(2) A question of interpretation of an integrated agreement is to be determined by the trier of fact if it depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence. Otherwise a question of interpretation of an integrated agreement is to be determined as a question of law.

Facts: P (Trident)borrowed 56.5 million from D (Connecticut) for construction of an office building; terms were $56.5 at 12.25% interest for a term of 15 years, and in the case of default in years 1-12, D has the option of accelerating the note and adding a 10% prepay fee; contract stated that P could not (were not allowed) prepay the principal for the first 12 years; the K was entered into in 1983 when this rate was reasonable; in 1987, this rate compared very unfavorably; P started

looking for way of refinancing the loan to take advantage of the lower rates and the D was unwilling to oblige, insisting that loan could not be pre-paid for the first 12 years; P claims that the K language did not accurately reflect the parties intentions, and that they are entitled to prepay the loan immediately, subject to the 10% fee.P/S:  District court dismissed P’s claim and sanctioned P for filling a frivolous lawsuitIssue: Whether P can introduce extrinsic evidence to determine the parties intention behind the prepay terms.

Rule:  California does not follow the traditional rule. Binding California case law: Pacific Gas …If one side is willing to claim that the parties intended one thing but the agreement provides for another, the court must consider extrinsic evidence of possible ambiguity.

Holding:  The P must be given an opportunity to present extrinsic evidence as to the intention of the parties in drafting the K; REVERSED, for P.  REMANDED for further proceedings to allow P to introduce evidence

************************p. 635Dellcar & Co. v. Hicks1988 Northern District of Illinois (not appellate court)

Restatement § 214. Evidence Of Prior Or Contemporaneous Agreements And Negotiations

Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish(a) that the writing is or is not an integrated agreement;(b) that the integrated agreement, if any, is completely or partially integrated;(c) the meaning of the writing, whether or not integrated;(d) illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause;(e) ground for granting or denying rescission, reformation, specific performance, or other remedy.

Hicks, Continental’s president, has Carson, who is general partner with Dellcar write a check to Hicks and a promissory note for Hicks signature the check would be used to pay Import.

Carson assured Hicks that Hicks would not be held personally responsible for the $, but later Dellcar demanded that Hicks pay (after Hicks signed off on 2 more notes & checks)

Dellcar argues that Hicks is barred from presenting evidence of fraudulent inducement by parole evidence rule.

The court held that, under applicable state law, the parol evidence rule did not preclude the maker from presenting evidence that he was fraudulently induced into

executing the agreement, even though the false promise was inconsistent with the express terms of the note.

**********************************

p. 636Benyon Building Corporation v. National Guardian Life Insurance1983Illinois Appellate

Restatement § 214. Evidence Of Prior Or Contemporaneous Agreements And Negotiations

Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish(a) that the writing is or is not an integrated agreement;(b) that the integrated agreement, if any, is completely or partially integrated;(c) the meaning of the writing, whether or not integrated;(d) illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause;(e) ground for granting or denying rescission, reformation, specific performance, or other remedy.

Benyan appealed a judgment denying its complaint for a release deed from a mortgage lien held by National.

National claimed there was a mistake in fact on the mortgage and note, that 2 digits were transposed.

Parol evidence rule is no bar to the admission of evidence on the question of mutual mistake.

Reformation is a remedy. The court can reform the contract to reflect the intention of the parties. The court is making the written document reflect the agreement accurately.

is well settled that the parol evidence rule is no bar to the admission of evidence on the question of mutual mistake, and this is so even when the instrument to be reformed is clear and unambiguous on its face. ( Ballard v. Granby (1980), 90 Ill. App. 3d 13, 16.) Thus parol evidence may be used to show the real agreement between the parties when a mistake has been made and the evidence is for the purpose of making the contract conform to the original intent of the parties. ( Stoerger v. Ivesdale Co-op Grain Co. (1973), 15 Ill. App. 3d 313, 317 .) Since National alleged that a mutual mistake was made on the mortgage document as to the correct amount of the monthly payments, the note was admissible as extrinsic evidence to establish the real intention of the parties.

Judgment of the trial court was affirmed and the K reformed to reflect the accurate amount of the payments.

Heart-balm statutes: Legislation which abolishes causes of action for alienation of affections, breach of promise to marry, criminal conversation, or seduction. Clark, The Law of Domestic Relations in the United States vol. I, 659 (2d ed. 1988).

Eskimo Pie v. WhitelawnWe had restatements 201, 219, 220, and 222.  We did not discuss 201 or 222 in class, although the subject matter of 222, "Usage of Trade", was suggested by Professor Nye.

Columbia Nitrogen v. RoysterWe had restatement 213, but 220 and 221 were brought up in class.

Nankuli Paving v. Shell OilWe had 223 and 213. 220 was suggested in class.  As well, 222 was mentioned in paragraph 2 on pg 628.

Trident Center v. Connecticut General Life Ins. Co.We had 202(2) and 213.  I think those were in line with what was discussed in class.

Dellcar v. HicksWe were right on with 214, or at least what was mentioned in class.  I think 205 was also mentioned, but Nye did not seem terribly...*excited* about that restatement in this case.

Beynon v. National Guardian Life Ins.214 again :)

A few more things:1) There were three more postings to legalease right before class tonight.2) He stated that definitions 'are law' so we should be sure to keep an eye on those3) Our question about UCC seems to have been answered (Yes.  He likes common law better, but the UCC should not be forgotten).  Specifically, know how the UCC and Restatement 213 differ.4) Scrivener's error: basically a clerical error in a legal document5) Contra Proferentem: Wikipedia explains it quite well, and better than the black's law definition so just use this URL -http://en.wikipedia.org/wiki/Contra_proferentem

Start here on September 16

Statute of Frauds can be satisfied by a memorandum in writing signed by the party who being charged with not complying with the K; the memo must contain sufficient terms

Unilateral K…at the time the K comes into existence, only one party is under obligation for performance; the offer for a unilateral K becomes a K when the party substantially performing, offeror is bound not to revoke promise when substantial performance…an offer in return for a performance…cannot be accepted by words, only by performance

Bilateral K..at the time the K comes into existence, both parties are under yet unperformed contractual duties

In every K of a bilateral nature, there is an implied covenant of good faith and fair dealing.In most states, there is no cause of action in breach of the covenant of good faith and fair dealing,

A necessary element to establish a breach of K is DAMAGES resulting from the breachBreach requires (1) a K (2) a breach (3) damages caused by the breach

Doctrine of mitigation is important

Proving the meaning of particular termsp. 644Frigaliment Importing Company v. B.N.S. International Sales1960 Southern District of New York, trial court, not appellate

Restatement § 212 Interpretation of an Integrated Agreement

Facts: D contracted to sell “chicken” to P. D shipped stewing chicken under both contracts instead of the boiling and frying chicken that the P wanted. D wins. Issue: What was meant by the term “chicken”

Rule/: p. 644 “The making of a K depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs-not on the parties having meant the same thing, but on their having said the same thing

p. 645

The court found the term “chicken” to be ambiguous and looked into the K for its interpretation. The court considered witness testimony which was conflicting. The court looked at dictionary meaning, definition in Dept of Agriculture regulations, usage in the trade and realities of the market.

In a civil case, the P has the burden of proving the preponderance of evidence of a cause of action.

p. 646Morin Building Products v. Baystone Construction1983 7th Circuit

p. 649Joyce Beverages of New York v. Royal Crown Cola1983 Southern District of New York

Material breach (a breach that goes to the essence of the K) v. Immaterial breach

Filling in the gapsp. 652Haines v. City of New York1977New York

Developer sued the city of NY.

The role of good faithp. 654 Wood v. Lucy Lady Duff-Gordon1917 New York

FACTS: Lucy, the Defendant, is a fashion designer well-known for her creations. Her favor can increase sales of clothing. She contracts with Plaintiff Wood, a marketer, to have exclusive right [subject always to her approval] to place her endorsements on the designs of others in an effort to make a profit from her popularity. Wood was also to have the exclusive right to place Lucy’s own designs on sale, or to license others to market them. In return, Lucy was to have one-half of ‘all profits and revenues’ derived from any contracts Wood might make. This exclusive right was to last at least one year from April 1, 1915 and thereafter from year to year unless terminated by notice of 90 days.

Wood finds out that Lucy went behind his back, placing her endorsement on fabrics, dresses, and millinery without his knowledge, keeping the profits. Wood sues for damages.

Lucy’s claim is that the agreement lacks the elements of a contract, as Wood was not bound to do anything.

HISTORY: Appeal from a judgment entered April 24, 1917 upon an order of the Appellate Division of the Supreme Court, which reversed an order of Special Term denying a motion by defendant for judgment in her favor upon the pleadings and granted said motion.

ISSUE: Can a contract be formed by an implied promise in exchange for compensation as consideration?

HOLDING: Yes.

RULE/ANALYSIS: A bilateral contract can be express, implied in fact, or a little of both. The finding of an implied promise within a contract (for the purpose of establishing sufficient consideration to support an express promise) can be used to uphold agreements, which may appear to be illusory. While an express promise may be lacking, the whole writing may be an implied promise and may form a valid contract.

SUMMARY: While the contract did not specifically state that Wood had promised to use reasonable efforts to place Lucy’s endorsement and market her designs, such a promise can be implied. Without his efforts, neither Lucy nor Wood could receive a profit and therefore the circumstances created an implied promise. Wood also promised to make monthly accountings and acquire patents and copyrights as necessary, showing his intention and duties. Additionally, Lucy gave Wood exclusive right to her endorsement – an express promise. The contract, therefore, is valid.

Expressed promise…it’s expressed

Implied in fact promise…treated the same as an expressed promise, but it is not expressed, it’s implied by actions

Implied in law promise…no actions that amount to an expressed promise, but placed self in a situation where the law provides

p. 655Fortune v. National Cash Register Co.1977 Massachusetts

p. 658Thompson v. St. Regis Paper Co1984 Washington

FACTS:PROCEDURE:ISSUE:RULE:HOLDING:

p. 660Patterson v. Meyerhofer1912 New York

The Implied Covenant Against Prevention

Restmt - The Scope of Contractual Obligations: Topics 1-5

Casebook,

pp. 665, Jones Associates v. Eastside properties1985, Washington state appellate courtRestatement § 227 mentioned in text§ 206 draftsman error p.667

Jones, an engineering firm & Eastside, a real estate development corporation entered into a professional services agreements and later a change order. Jones claims all required services were performed. Eastside claims a contract provision created a condition precedent to payment.

For September 9, 2008Book - pp. 663-724 Restatement §§ 231-260Conditional Contracts

Express conditionsPromise v. conditionConditions of satisfactionPolicy considerations and underlying principles:

Waiver, estoppel, and electionAvoidance of forfeiturePrevention

Constructive conditionsRestmt - Performance and Non-Performance: Topics 1-4

Trial court had dismissed Jones claim. This appellate court ruled that the provision was a promise rather than a condition precedent and the dismissal was error.

670, Chirichella v. Erwin1973 Maryland Court of AppealsRestatement §§ 224, 225

Erwins contracted to buy Chirichella’s home “to coincide with settlement of new home” handwritten term by C. New home never came into existence. C’s refused to sell home to E. E sued for specific performance. Chancellor ruled in favor of E. C appealed.

Appellate court held that the disputed clause did not add a condition precedent to the settlement of the house.

C could not use that provision to avoid the K indefinitely, but only for a reasonable period of time.

672, Peacock Construction v. Modern Air Conditioning1997 Florida Supreme CourtRestatement §§ 222, 226, 227

Peacock claimed that it could withhold payment to 2 subcontractors b/c owner did not pay Peacock in full. Trial court disagreed with Peacock’s claim that full payment from owner was not a condition precedent to Peacock’s duty to perform. Peacock appeals

This court overruled Garret which held that general contractor does not have to pay subs until owner pays general.

Subcontractors win.

675, Masconi v I.B. Miller1933 New York Supreme Court Restatement §§ 224, 226, 227, 230

Masconi is sub contractor who signed a K with a provision that specified that “payments to be made as received by owner.” Work was done. Owner did not pay. Trial court ruled for P. Miller appeals.

This court reversed and ruled for Miller reasoning that the term shifted the risk to Masconi. The term was a condition precedent. On its face, the K was open to that interpretation, no language was ambiguous.

This case illustrates a shift from a promise over a condition in cases of ambiguity.

(678), 683, Gibson v Cranage1878 Michigan Trial CourtRestatement § 228

Assumpsit (a breach of an implied promise…was a tort)

Gibson, an artist offered to enlarge a photo of Cranage’s dead daughter. Cranage understood that he was not required to pay if “it was not perfectly satisfactory in every particular.” No risk on his part. Cranage did not like or want picture. Gibson wanted to be paid.

Court ruled that Gibson did not have to purchase the picture. The parties freely entered into an agreement where one side assumes all risk and that is enforceable as long as it is free of fraud or mistake, and violates no rule of public policy.

684, Devoine v. International1927 Court of Appeals of MarylandRestatement §§ 205, 228

Devoine contracted with International to purchase 400 barrels of cherries “quality satisfactory.” Devoine found quality not satisfactory after 97 barrels and refused further shipments. Trial court ruled for Devoine. International appeals.

I do not understand this ruling!

692, Anderson-Ross Floors v. Scherrer

698,

701, 709, 713, 716-1, 716-2, 718

Book - Repudiation, Default and BreachMaterial BreachSubstantial performanceDivisible contractsBreach by anticipatory repudiation

Casebook, pp. 725-803Casebook, pp. 727, 733, 739, 745, 749, 754, 762, 766, 770, 772, 782 , 793, 800

Book - Defenses to Alleged BreachImpossibility and impracticabilityCommercial frustrationWaiver and excuseRestmt - Impracticability of Performance and Frustration of Purpose

Casebook, pp. 805-855 – Restatement §§ 261-272Casebook, pp. 807-1, 807-2, 810, 814, 822, 826, (831), 835, 838, 841, (846), 850,

852

Book - Remedies for Breach - Money Damages - Expectancy (benefit of the bargain) Damages

General expectancy damages rulesSpecial expectancy damages situations -- lost profits; cost to repair vs.

diminution in value; lost volume sellersReliance DamagesRestitution DamagesDamage Rules and the Uniform Commercial CodeDefenses to Damage Claims – Insufficient proof; Avoidability and mitigationMental Distress Damage ClaimsAttorney Fees Damage ClaimsStipulated Contract Damages – Liquidated damage agreements; Limitation of

liability agreementsStatutory Mandates & Limits—Contract Damages

Contract damage statutory mandates; Limitation of Liability LawsPunitive (Exemplary) Damages

Restmt - Remedies: Topics 1-2

Casebook, pp. 857-875, 879-936, 940-953, 961-988, 996-1038 – Restatement §§ 344-356

Casebook, pp. 861, 866, 869, 875, 879, 885, 890, 896, 906, 914, (918), 922, 926, 932, (940), 947, 949, 961, 963, 970, 979, 983, 996, 1002, 1011, 1018, (1020), 1022, 1030, 1035

Book - Remedies for Breach - Restitutionary Relief and Equitable RemediesRestitutionary Relief

Availability of Restitution – Value ProvidedRestitution and Promissory EstoppelRestitution and Rescinded or Discharged ContractsRestitution for a Party in Breach

Equitable RemediesSpecific Performance of Contracts

Inadequate remedies at law -- irreparable harmDiscretion and specific performanceDamages in addition to specific performanceSpecific performance—some special situations

Requirements contracts – the public interestImpossibility of performanceSpecific performance in arbitration awards

Specific performance--additional considerationsImpracticability; Lack of specificity;Personal services contracts; Mutuality of remedy; Laches; Unclean hands and equitable estoppel

Rescission of Contracts—Rescission for mistake; Rescission for breach of implied warranty

Injunctions In Contract CasesForeclosures in Contract CasesConstructive Trusts in Contract CasesEquitable Liens in Contract CasesReceivers in Contract CasesDeclaratory Judgments in Contract Cases

Restmt - Remedies: Topics 3-5Casebook, pp. 1039-1060, 1069-1078, 1103-1145 – Restatement §§ 357-385Casebook, pp. 1039, 1043, 1046, 1051, 1056, 1069, 1075, (1103), (1107), (1113),

(1116), 1123, (1132), (1138), 1140

Book - Third Party InterestsThird Party Beneficiary Contracts

Privity vs. Non-PrivityTypes of Proper PlaintiffsConstruction CasesInsurance – Unborn PlaintiffsReal Estate and Break In AssumptionsRescission of Contract – “Vesting”

Assignment and DelegationOverviewAssignment – Its Nature and FunctionEffective Transfers

Non-Assignable RightsDelegation of Duties

Casebook, pp. 1147-1184, 1185-1219 Restatement §§ 302-315, §§ 316-343Casebook, pp. (1149), (1150), 1152, 1157, 1161, 1167, 1171, 1174, 1182, (1186),

1189, 1191, 1195, 1200, (1204), 1210, 1214