Bradley-outline.docx.pdf - OUTLINE\u200b \u200b\u2013\u200b \u200bCONTRACTS Key\u200b \u200bissues\u200b \u200bin\u200b \u200bContracts Issue\u200b \u200b1:\u200b \u200bContext Who\u200b \u200bare\u200b

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Unformatted text preview: OUTLINE​ ​–​ ​CONTRACTS Key​ ​issues​ ​in​ ​Contracts Issue​ ​1:​ ​Context Who​ ​are​ ​the​ ​parties?​ ​What​ ​is​ ​their​ ​sophistication?​ ​Is​ ​there​ ​a​ ​moral​ ​or​ ​legal​ ​obligation? The​ ​three​ ​formal​ ​requirements​ ​of​ ​a​ ​contract​ ​are​ ​offer,​ ​acceptance​ ​and​ ​consideration 1. Offers a. The​ ​offer​ ​has​ ​to​ ​be​ ​intended​ ​to​ ​be​ ​an​ ​offer​ ​(an​ ​objective​ ​standard) b. Three​ ​ways​ ​to​ ​tell​ ​if​ ​there’s​ ​an​ ​offer​ ​(​tone,​ ​specificity,​ ​remaining​ ​open​) Tone -​Leonard​ ​v.​ ​PepsiCo​ ​(the​ ​Pepsi​ ​Points​ ​Case).​ ​Pepsi​ ​made​ ​commercial​ ​to​ ​show​ ​what​ ​points​ ​get and​ ​had​ ​jet​ ​at​ ​end.​ ​P​ ​tried​ ​to​ ​get​ ​the​ ​jet,​ ​Pepsi​ ​said​ ​no.​ ​Court​ ​said​ ​no​ ​binding​ ​contract​ ​because​ ​a reasonable​ ​objective​ ​person​ ​would​ ​not​ ​take​ ​the​ ​ad​ ​as​ ​a​ ​serious​ ​offer​ ​(humorous​ ​one) Specificity -Terms​ ​of​ ​contract​ ​must​ ​be​ ​reasonably​ ​certain​ ​in​ ​order​ ​for​ ​there​ ​to​ ​be​ ​a​ ​contract ​ ​Ex)​ ​“Shoes​ ​for​ ​sale”​ ​vs.​ ​“Buy​ ​One​ ​Pair​ ​of​ ​Nike​ ​Basketball​ ​Shoes,​ ​Get​ ​$50​ ​Off​ ​Any​ ​Pair of​ ​Nike​ ​Air​ ​Jordan’s” The​ ​UCC​ ​will​ ​apply​ ​“gap​ ​fillers”​ ​if​ ​some​ ​of​ ​the​ ​terms​ ​are​ ​left​ ​open​ ​(UCC​ ​§2-204(3)) Remaining​ ​Open -Has​ ​to​ ​be​ ​an​ ​actual​ ​offer -The​ ​offer​ ​remains​ ​open​ ​for​ ​the​ ​amount​ ​of​ ​time​ ​specified​ ​by​ ​the​ ​Offeror -If​ ​there​ ​is​ ​no​ ​specified​ ​time,​ ​the​ ​offer​ ​remains​ ​open​ ​for​ ​a​ ​reasonable​ ​amount​ ​of​ ​time​ ​(depends on​ ​the​ ​circumstances) -Offeror​ ​can​ ​revoke​ ​his​ ​offer,​ ​even​ ​if​ ​he​ ​or​ ​she​ ​has​ ​promised​ ​otherwise,​ ​unless​ ​there​ ​is​ ​reliance (which​ ​also​ ​depends​ ​on​ ​the​ ​circumstances) 2. Acceptance ● Agreeing​ ​to​ ​the​ ​terms​ ​of​ ​an​ ​offer​ ​made​ ​in​ ​a​ ​manner​ ​invited​ ​or​ ​required​ ​by​ ​the​ ​offeror o The​ ​offeror​ ​can​ ​state​ ​the​ ​method​ ​by​ ​which​ ​it​ ​must/can​ ​be​ ​accepted​ ​(ie.​ ​letter, signature,​ ​performance,​ ​etc.) o If​ ​the​ ​terms​ ​of​ ​acceptance​ ​are​ ​not​ ​specified,​ ​“an​ ​offer​ ​invites​ ​acceptance​ ​in​ ​any manner​ ​and​ ​by​ ​any​ ​medium​ ​reasonable​ ​in​ ​the​ ​circumstances” ● A​ ​contract​ ​is​ ​formed​ ​when​ ​acceptance​ ​occurs​ ​(the​ ​light-bulb​ ​is​ ​turned​ ​“on”,​ ​creating obligation) ● An​ ​offer​ ​can​ ​ONLY​ ​be​ ​accepted​ ​by​ ​the​ ​person​ ​in​ ​whom​ ​the​ ​offeror​ ​intended​ ​to​ ​create​ ​a power​ ​of​ ​acceptance ● An​ ​acceptance​ ​is​ ​usually​ ​valid​ ​only​ ​if​ ​the​ ​offeree​ ​knew​ ​of​ ​the​ ​offer​ ​at​ ​the​ ​time​ ​of​ ​his acceptance o Meaning​ ​where​ ​a​ ​reward​ ​is​ ​offered​ ​for​ ​a​ ​particular​ ​act,​ ​a​ ​person​ ​who​ ​does​ ​the​ ​act without​ ​knowing​ ​about​ ​the​ ​reward​ ​cannot​ ​claim​ ​the​ ​reward 3. Consideration ● A​ ​“bargained-for-exchange”​ ​for​ ​something​ ​of​ ​legal​ ​value 1​ ​of​ ​35 ● A​ ​performance​ ​or​ ​return​ ​promise​ ​is​ ​“bargained-for”​ ​if​ ​it​ ​is​ ​sought​ ​by​ ​the​ ​promisor​ ​in exchange​ ​for​ ​his​ ​promise​ ​and​ ​it​ ​is​ ​given​ ​by​ ​the​ ​promisee​ ​in​ ​exchange​ ​for​ ​that​ ​promise ● The​ ​performance​ ​may​ ​consist​ ​of: o an​ ​act​ ​other​ ​than​ ​a​ ​promise o a​ ​forbearance​ ​(of​ ​something​ ​that​ ​the​ ​person​ ​is​ ​legally​ ​allowed​ ​to​ ​do) Issue​ ​2:​ ​Transaction​ ​v.​ ​Litigation ● How​ ​does​ ​the​ ​contract​ ​help​ ​the​ ​parties​ ​avoid​ ​litigation? Issue​ ​3:​ ​Text ● Is​ ​the​ ​agreement​ ​written​ ​or​ ​oral? o Written:​ ​See​ ​Statute​ ​of​ ​Frauds ● Is​ ​the​ ​text​ ​ambiguous​ ​in​ ​its​ ​meaning?​ ​Ex:​ ​What​ ​is​ ​a​ ​“day”? Subjective​ ​v.​ ​Objective​ ​Approaches 1.​ ​Subjective​​ ​–​ ​refers​ ​to​ ​a​ ​person’s​ ​actual​ ​state​ ​of​ ​mind a.​ ​Personal​ ​perspectives,​ ​feelings,​ ​beliefs,​ ​desires 2.​ ​Objective​​ ​–​ ​external​ ​acts​ ​of​ ​a​ ​party​ ​to​ ​the​ ​agreement a.​ ​What​ ​would​ ​a​ ​reasonable​ ​person​ ​in​ ​the​ ​situation​ ​think? Exam​ ​approach​: ● 1)​ ​What​ ​law​ ​governs​ ​the​ ​agreement?​ ​ ​Is​ ​there​ ​a​ ​contract? o If​ ​goods,​ ​UCC.​ ​If​ ​not,​ ​common​ ​law. ● 2)​ ​Analysis ● 3)​ ​Damages:​ ​what​ ​remedies​ ​may​ ​be​ ​available​ ​to​ ​the​ ​parties CHAPTER​ ​1​ ​–​ ​REMEDIES​ ​FOR​ ​BREACHES​ ​OF​ ​CONTRACT A. PROTECTING​ ​THE​ ​EXPECTATION​ ​INTEREST a. Reading​ ​Statutes​ ​&​ ​Application​ ​of​ ​Article​ ​2​ ​of​ ​the​ ​UCC ● Sources​ ​of​ ​Contract​ ​Law o The​ ​Uniform​ ​Commercial​ ​Code​ ​(UCC)​:​ ​primary​ ​source​ ​of​ ​law​ ​for​ ​transactions​ ​involving the​ ​sale​ ​of​ ​goods​ ​(Article​ ​2) o Restatement​:​ ​comprehensive​ ​statement​ ​of​ ​general​ ​common​ ​law​ ​contracts​ ​principles written​ ​by​ ​the​ ​American​ ​Law​ ​Institute;​ ​authority​ ​not​ ​binding ▪ 1​st​​ ​restatement​ ​(1932) ▪ 2​nd​​ ​restatement​ ​(1979) o Common​ ​Law​:​ ​contract​ ​law​ ​is​ ​created​ ​through​ ​case​ ​law o State​ ​Statutes​:​ ​a​ ​lot​ ​of​ ​contract​ ​law​ ​is​ ​governed​ ​by​ ​state​ ​law ● Goods​:​ ​anything​ ​that​ ​is​ ​tangible,​ ​moveable,​ ​such​ ​as​ ​products,​ ​livestock. ● What​ ​laws​ ​govern​ ​the​ ​contract? o If​ ​the​ ​contract​ ​is​ ​for​ ​a​ ​moveable​ ​good,​ ​the​ ​UCC​ ​applies o If​ ​the​ ​contract​ ​is​ ​for​ ​services/experiences,​ ​look​ ​to​ ​common​ ​law​ ​and​ ​the​ ​Restatement o If​ ​the​ ​contract​ ​is​ ​for​ ​a​ ​mix​ ​of​ ​goods​ ​and​ ​services,​ ​apply​ ​the​ ​Bonebrake​ ​test. 2​ ​of​ ​35 Bonebrake​ ​v.​ ​Cox​:​ ​look​ ​at​ ​whether​ ​the​ ​predominant​ ​factor​ ​is​ ​goods​ ​or​ ​the​ ​service, and​ ​then​ ​decide. ● Remedies​:​ ​there​ ​are​ ​two​ ​different​ ​types​ ​of​ ​remedies o 1)​ ​Monetary​ ​damages ▪ Expectation​ ​damages​​ ​–​ ​puts​ ​the​ ​non-breaching​ ​party​ ​in​ ​a​ ​position​ ​they​ ​would​ ​be​ ​in had​ ​the​ ​contract​ ​been​ ​fulfilled ▪ Reliance​ ​damages​ ​–​ ​attempt​ ​to​ ​put​ ​the​ ​non-breaching​ ​party​ ​in​ ​as​ ​good​ ​as​ ​a​ ​position as​ ​they​ ​were​ ​in​ ​prior​ ​to​ ​making​ ​the​ ​contract ▪ Liquidated​ ​damages​ ​–​ ​provision​ ​set​ ​forth​ ​in​ ​a​ ​contract​ ​specifying​ ​the​ ​amount​ ​of damages​ ​in​ ​case​ ​one​ ​of​ ​the​ ​parties​ ​breaches​ ​the​ ​contract ▪ Restitution​ ​–​ ​attempt​ ​to​ ​prevent​ ​“unjust​ ​enrichment”​ ​of​ ​the​ ​breaching​ ​party​ ​by returning​ ​to​ ​the​ ​other​ ​party​ ​who​ ​has​ ​partially​ ​performed​ ​the​ ​value​ ​of​ ​the performance​ ​he​ ​has​ ​rendered​ ​to​ ​the​ ​defendant. o 2)​ ​Specific​ ​performance​ ​–​ ​the​ ​other​ ​party​ ​has​ ​to​ ​do​ ​what​ ​the​ ​contract​ ​required​ ​them​ ​to deliver. ● Statute​ ​of​ ​Frauds:​ ​The​ ​following​ ​contracts​ ​MUST​ ​be​ ​in​ ​writing 1)​ ​contracts​ ​for​ ​the​ ​sale​ ​of​ ​an​ ​interest​ ​in​ ​land, 2)​ ​UCC​ ​§​ ​2-201(1):​ ​goods​ ​with​ ​value​ ​of​ ​$500​ ​or​ ​more ▪ Exception:​ ​Specially​ ​manufactured​ ​goods 3)​ ​contracts​ ​in​ ​consideration​ ​of​ ​marriage, 4)​ ​contracts​ ​that​ ​cannot​ ​be​ ​performed​ ​within​ ​one​ ​year​ ​of​ ​the​ ​contract​ ​being​ ​made​ ​and, 5)​ ​contracts​ ​of​ ​suretyship. B. THE​ ​EXPECTATION​ ​INTEREST:​ ​OF​ ​INFERIOR​ ​SUBSTITUTES,​ ​OTHER​ ​ENDS,​ ​AND OTHER​ ​MEANS Parker​ ​v.​ ​Twentieth​ ​Century-Fox​ ​Film​ ​Corporation​ ​(California​ ​Supreme​ ​Court,​ ​1970) Facts:​​ ​Parker​ ​was​ ​offered​ ​a​ ​contract​ ​by​ ​Twentieth​ ​Century​ ​Fox​ ​to​ ​star​ ​in​ ​the​ ​movie​ ​musical​ ​“Bloomer Girl”,​ ​but​ ​Fox​ ​never​ ​made​ ​the​ ​movie.​ ​Fox​ ​offered​ ​Parker​ ​another​ ​role​ ​in​ ​a​ ​western.​ ​Parker​ ​sued​ ​for $750,000​ ​(the​ ​amount​ ​she​ ​was​ ​to​ ​be​ ​paid​ ​under​ ​“Bloomer​ ​Girl”​ ​contract) Issue:​ ​Whether​ ​an​ ​actress​ ​must​ ​accept​ ​a​ ​role​ ​in​ ​a​ ​different​ ​film​ ​to​ ​mitigate​ ​damages​ ​from​ ​the​ ​film producer’s​ ​failure​ ​to​ ​produce​ ​the​ ​original​ ​film? Holding:​​ ​No.​ ​There​ ​was​ ​no​ ​failure​ ​to​ ​mitigate​ ​damages​ ​because​ ​Parker’s​ ​second​ ​offer​ ​was​ ​not substantially​ ​similar. Rule​:​ ​The​ ​measure​ ​of​ ​recovery​ ​by​ ​a​ ​wrongfully​ ​discharged​ ​employee​ ​is​ ​the​ ​amount​ ​of​ ​salary​ ​agreed upon. However,​ ​projected​ ​earnings​ ​from​ ​employment​ ​opportunities​ ​not​ ​sought​ ​or​ ​accepted​ ​can​ ​be applied​ ​in​ ​mitigation,​ ​if​ ​the​ ​employer​ ​can​ ​show​ ​that​ ​the​ ​employment​ ​was​ ​substantially​ ​similar​ ​to​ ​that of​ ​which​ ​the​ ​employee​ ​has​ ​been​ ​deprived. Takeaway/Significance:​ ​The​ ​court​ ​found​ ​an​ ​implied​ ​duty​ ​to​ ​reasonably​ ​mitigate. Parker​ ​is​ ​a​ ​great​ ​example​ ​of​ ​transaction​ ​vs.​ ​litigation​​ ​because​ ​Fox​ ​could​ ​have​ ​avoided​ ​litigation​ ​if they​ ​had​ ​just​ ​included​ ​an​ ​express​ ​duty​ ​to​ ​reasonably​ ​mitigate​ ​in​ ​the​ ​contract​ ​-​ ​including​ ​what​ ​would constitute​ ​sufficient​ ​mitigation ▪ 3​ ​of​ ​35 Pay-or-play​ ​clause:​ ​there​ ​was​ ​a​ ​clause​ ​in​ ​Parker’s​ ​contract​ ​that​ ​said​ ​that​ ​Fox​ ​was​ ​either​ ​going to​ ​pay​ ​her​ ​$750,000​ ​or​ ​make​ ​the​ ​movie.​ ​Why​ ​didn’t​ ​this​ ​ever​ ​come​ ​up​ ​in​ ​the​ ​case? This​ ​case​ ​could​ ​also​ ​be​ ​seen​ ​through​ ​the​ ​lens​ ​of​ ​freedom​ ​of​ ​contract​​ ​as​ ​a​ ​theme​ ​because​ ​of​ ​this Are​ ​we​ ​talking​ ​about​ ​Parker’s​ ​objective​ ​or​ ​subjective​ ​expectations​ ​relative​ ​to​ ​the​ ​two​ ​movies​ ​in this​ ​case? a.​ ​ Subjective​ ​-​ ​She​ ​probably​ ​liked​ ​Bloomer​ ​Girl​ ​better​ ​as​ ​a​ ​movie b.​ ​ Objective​ ​-​ ​Her​ ​reputation​ ​might​ ​have​ ​been​ ​damaged​ ​accepting​ ​Big​ ​Country,​ ​Big​ ​Man Fairness​ ​and​ ​Efficiency​ ​- Fairness​:​ ​is​ ​the​ ​court​ ​really​ ​allowing​ ​one​ ​party​ ​to​ ​push​ ​the​ ​other​ ​around? The​ ​Parker​ ​decision​ ​was​ ​based​ ​on​ ​fairness​ ​because​ ​it​ ​protected​ ​both​ ​parties​ ​by​ ​giving them​ ​a​ ​little​ ​bit​ ​of​ ​what​ ​each​ ​wanted: Protecting​ ​Parker’s​ ​expectation​ ​interest​ ​and​ ​it​ ​said​ ​Parker​ ​had​ ​an​ ​implied​ ​duty​ ​to mitigate. ​Efficiency​: i.​ ​ ​ ​Goal​ ​of​ ​Mitigation​ ​=​ ​maximize​ ​the​ ​efficient​ ​use​ ​of​ ​resources ii.​ ​ ​Parker​ ​is​ ​an​ ​actress​ ​who​ ​we​ ​want​ ​acting.​ ​Don’t​ ​want​ ​to​ ​incentivize​ ​her​ ​to​ ​do​ ​nothing because​ ​her​ ​acting​ ​is​ ​better​ ​for​ ​everyone. iii.​ ​This​ ​favors​ ​upper-class​ ​jobs​ ​(not​ ​“commodity​ ​based”​ ​or​ ​“doable​ ​by​ ​anyone”) Parker’s​ ​position​ ​allows​ ​an​ ​easier​ ​argument​ ​that​ ​other​ ​employment​ ​is​ ​not​ ​equal​ ​than​ ​a​ ​bus driver/fry​ ​cook​ ​etc. People​ ​in​ ​Parker’s​ ​position​ ​aren’t​ ​going​ ​to​ ​be​ ​able​ ​to​ ​say​ ​that​ ​their​ ​employment​ ​isn’t comparable​ ​because​ ​everyone​ ​can​ ​be​ ​a​ ​bus​ ​driver,​ ​but​ ​not​ ​everyone​ ​can​ ​be​ ​Parker. Neri​ ​v.​ ​Retail​ ​Marine​ ​Corporation Facts:​​ ​Neri​ ​was​ ​going​ ​to​ ​buy​ ​a​ ​boat​ ​from​ ​Retail​ ​Marine​ ​(RMC).​ ​Neri​ ​breached​ ​because​ ​of​ ​an​ ​illness and​ ​wanted​ ​to​ ​recover​ ​his​ ​deposit. Issues: 1)​ ​How​ ​much​ ​of​ ​the​ ​$4,250​ ​deposit​ ​can​ ​Neri​ ​recover? 2)​ ​Is​ ​Retail​ ​Marine​ ​a​ ​lost​ ​volume​ ​seller? Holdings: 1)​ ​Neri​ ​is​ ​entitled​ ​to​ ​recover​ ​$997 o Method​ ​the​ ​court​ ​used:​ ​$4250​ ​(initial)​ ​-​ ​$2579​ ​(lost​ ​profit)​ ​-​ ​$674​ ​(incidental​ ​fees) =​ ​$997​ ​back​ ​to​ ​Neri o Bradley​ ​believes​ ​Neri​ ​should’ve​ ​received​ ​$497. o $4250​ ​-​ ​$500​ ​(UCC​ ​§2-718(2)​ ​-​ ​$500​ ​or​ ​20%​ ​rule,​ ​whichever​ ​is​ ​less)​ ​-​ ​$2579 (lost​ ​profit)​ ​-​ ​$674​ ​(incidental​ ​damages)​ ​=​ ​$497​ ​(what​ ​Neri​ ​should​ ​recover) 2)​ ​Retail​ ​Marine​ ​is​ ​a​ ​lost​ ​volume​ ​seller o Lost​ ​volume​ ​seller​:​ ​a​ ​person​ ​who​ ​would’ve​ ​had​ ​the​ ​benefit​ ​of​ ​additional​ ​sales had​ ​the​ ​first​ ​buyer​ ​had​ ​not​ ​breached o If​ ​Neri​ ​had​ ​not​ ​breached,​ ​RMC​ ​could​ ​have​ ​sold​ ​another​ ​boat​ ​to​ ​another customer,​ ​thus​ ​RMC​ ​could​ ​have​ ​sold​ ​two​ ​boats,​ ​and​ ​they​ ​lost​ ​the​ ​sale​ ​of​ ​the second​ ​due​ ​to​ ​Neri’s​ ​breach. o RMC​ ​also​ ​wouldn’t​ ​have​ ​incurred​ ​incidental​ ​fees. 4​ ​of​ ​35 Rule​s:​ ​1)​ ​UCC​ ​§2-708 o If​ ​it​ ​is​ ​inadequate​ ​to​ ​put​ ​the​ ​seller​ ​in​ ​as​ ​good​ ​a​ ​position​ ​as​ ​if​ ​the​ ​contract​ ​wasn’t breached​ ​by​ ​the​ ​buyer,​ ​then​ ​the​ ​measure​ ​of​ ​damages​ ​is:​ ​profit​ ​(including reasonable​ ​overhead)​ ​made​ ​from​ ​full​ ​performance​ ​+​ ​incidental​ ​damages​ ​& expenses. 2)​ ​UCC​ ​§2-718:​ ​buyer’s​ ​right​ ​to​ ​restitution o Offsets​ ​the​ ​extent​ ​that​ ​the​ ​seller​ ​establishes​ ​a​ ​right​ ​to​ ​recover​ ​damages ● The​ ​UCC​ ​isn’t​ ​clear​ ​about​ ​how​ ​2-708​ ​and​ ​2-718​ ​interact​ ​with​ ​one​ ​another. In​ ​Re​ ​Worldcom​ ​(NY​ ​Bankruptcy​ ​Court,​ ​2007) Facts:​​ ​In​ ​1995,​ ​MCI/Worldcom​ ​entered​ ​into​ ​an​ ​endorsement​ ​agreement​ ​with​ ​Jordan.​ ​Jordan​ ​gave MCI​ ​a​ ​10-year​ ​license​ ​to​ ​use​ ​his​ ​services​ ​to​ ​advertise​ ​MCI​ ​products.​ ​Under​ ​the​ ​agreement,​ ​Jordan​ ​was free​ ​to​ ​advertise​ ​other​ ​products​ ​as​ ​long​ ​as​ ​they​ ​were​ ​different​ ​from​ ​MCI’s.​ ​In​ ​July​ ​2002,​ ​MCI​ ​filed​ ​for bankruptcy​ ​and​ ​rejected​ ​the​ ​agreement.​ ​Jordan​ ​filed​ ​a​ ​claim​ ​for​ ​$8​ ​million​ ​for​ ​breach​ ​of​ ​contract. Issue​:​ ​Is​ ​Jordan​ ​a​ ​lost​ ​volume​ ​seller​ ​with​ ​a​ ​duty​ ​to​ ​mitigate,​ ​or​ ​is​ ​he​ ​an​ ​exception? Holding​:​ ​Jordan​ ​is​ ​not​ ​a​ ​lost​ ​volume​ ​seller​ ​and​ ​had​ ​a​ ​duty​ ​to​ ​mitigate​ ​damages. Rule​:​ ​To​ ​claim​ ​lost​ ​volume​ ​seller,​ ​the​ ​non-breaching​ ​party​ ​must​ ​show​ ​that​ ​they​ ​could​ ​have​ ​and would​ ​have​ ​entered​ ​into​ subsequent​ ​agreements. ● Two-part​ ​test​ ​for​ ​lost​ ​volume​ ​seller​ ​exception: 1)​ ​Objective​ ​capacity​​ ​to​ ​enter​ ​other​ ​agreements​ ​ ​(could​ ​he) 2)​ ​Subjective​ ​intent​​ ​to​ ​enter​ ​other​ ​agreements​ ​(will​ ​he) How​ ​is​ ​Worldcom​ ​different​ ​from​ ​Parker​?​ ​The​ ​same? ● Different​ ​-​ ​ Parker​ ​did​ ​have​ ​both​ ​the​ ​capacity​ ​and​ ​subjective​ ​intent​ ​to​ ​enter​ ​into​ ​more​ ​work contracts,​ ​whereas​ ​Jordan​ ​did​ ​not. o Parker​ ​was​ ​an​ ​employee;​ ​Jordan​ ​was​ ​a​ ​subcontractor o If​ ​Jordan​ ​isn’t​ ​an​ ​employee,​ ​then​ ​the​ ​“substantially​ ​similar”​ ​requirement​ ​might​ ​not apply​ ​to​ ​him o Jordan​ ​could​ ​have​ ​been​ ​in​ ​multiple​ ​contracts​ ​at​ ​once,​ ​but​ ​Parker​ ​really​ ​could​ ​not o Jordan​ ​has​ ​more​ ​money​ ​than​ ​Parker. ● Same​ ​-​ ​ Both​ ​Parker​ ​and​ ​Jordan​ ​had​ ​a​ ​duty​ ​to​ ​mitigate​ ​damages o Jordan​ ​-​ ​because​ ​he​ ​was​ ​not​ ​a​ ​LVS,​ ​even​ ​though​ ​he​ ​tried​ ​hard​ ​to​ ​argue​ ​that​ ​he​ ​didn’t have​ ​this​ ​duty o Duty​ ​to​ ​mitigate​ ​damages​ ​means​ ​that​ ​the​ ​non-breaching​ ​party​ ​can’t​ ​do​ ​nothing​ ​and expect​ ​the​ ​breaching​ ​party​ ​to​ ​compensate​ ​them​ ​fully​ ​just​ ​because​ ​of​ ​the​ ​breach How​ ​is​ ​Worldcom​ ​different​ ​from​ ​Neri​?​ ​The​ ​same? ● Different​ ​-​ ​ RMC​ ​did​ ​have​ ​subjective​ ​intent​ ​to​ ​resell​ ​but​ ​Jordan​ ​did​ ​not.​ ​ Jordan​ ​has​ ​the dilution​ ​issue​ ​here,​ ​however,​ ​that​ ​Neri​ ​does​ ​not​ ​have ● Same​ ​-​ ​both​ ​claiming​ ​lost​ ​volume​ ​seller​ ​and​ ​unlimited​ ​supply C. THE​ ​EXPECTATION​ ​INTEREST:​ ​PERFORMANCE​ ​RATHER​ ​THAN​ ​DAMAGES. To​ ​ensure​ ​specific​ ​performance​,​ ​Court​ ​would​ ​have​ ​to​ ​continue​ ​supervising​ ​ongoing​ ​relationships. ● Difficulty​ ​to​ ​calculate​ ​damages​ ​is​ ​not​ ​a​ ​bar​ ​to​ ​specific​ ​performance. 5​ ​of​ ​35 ● Convention​ ​on​ ​the​ ​international​ ​sale​ ​of​ ​goods​ ​(CISG):​ ​prefers​ ​specific​ ​performance ● When​ ​specific​ ​performance​ ​is​ ​appropriate o Land:​ ​Usually​ ​yes. o Personal​ ​Service/Employment:​ ​Usually​ ​no. o Unique​ ​products:​ ​Usually​ ​yes. ● Arguments​ ​for​ ​specific​ ​performance: o Cannot​ ​otherwise​ ​“cover”​ ​goods/goods​ ​are​ ​unique​ ​or​ ​appropriate​ ​under​ ​UCC​ ​§2-716 ▪ Cover​:​ ​substitute​ ​goods o Persuade​ ​court​ ​to​ ​exercise​ ​power​ ​of​ ​specific​ ​performance. Compare​ ​to​ ​lack​ ​of​ ​interest​ ​in​ ​continued​ ​supervising. Copylease​ ​Corporation​ ​of​ ​America​ ​v.​ ​Memorex​ ​Corporation Facts:​​ ​Memorex​ ​(D)​ ​manufactures​ ​photocopier​ ​supplies.​ ​Copylease​ ​(P)​ ​contracted​ ​to​ ​buy​ ​toner. Copylease​ ​promised​ ​to​ ​buy​ ​specified​ ​minimum​ ​quantities.​ ​Memorex​ ​gave​ ​Copylease​ ​a​ ​favorable price​ ​and​ ​exclusive​ ​dealership​ ​for​ ​Memorex’s​ ​toners​ ​in​ ​the​ ​Midwest.​ ​However,​ ​the​ ​contract​ ​did​ ​not incentivize​ ​Copylease​ ​to​ ​push​ ​Memorex​ ​products,​ ​so​ ​Copylease​ ​instead​ ​pushed​ ​cheaper​ ​off-brand. Memorex​ ​considered​ ​the​ ​terms​ ​of​ ​the​ ​contract​ ​unduly​ ​favorable​ ​to​ ​Copylease​ ​and​ ​wanted​ ​to​ ​modify the​ ​contract​ ​to​ ​receive​ ​more​ ​control.​ ​Copylease​ ​was​ ​willing​ ​to​ ​consider​ ​contract​ ​changes​ ​if​ ​Memorex gave​ ​an​ ​attractive​ ​incentive.​ ​Memorex​ ​notified​ ​Copylease​ ​it​ ​was​ ​unilaterally​ ​changing​ ​contract​ ​terms, and​ ​Copylease​ ​would​ ​no​ ​longer​ ​be​ ​the​ ​exclusive​ ​dealer.​ ​Copylease​ ​sued​ ​for​ ​breach​ ​and​ ​sought specific​ ​performance. Issue:​​ ​Is​ ​specific​ ​performance​ ​an​ ​appropriate​ ​remedy? Holding:​​ ​If​ ​Copylease​ ​has​ ​no​ ​adequate​ ​alternative​ ​source​ ​of​ ​toner,​ ​Memorex’s​ ​product​ ​may​ ​be considered​ ​unique​ ​for​ ​the​ ​purposes​ ​of​ ​UCC​ ​§2-716(1)​ ​or​ ​the​ ​situation​ ​may​ ​be​ ​an​ ​example​ ​of​ ​other proper​ ​circumstances​ ​where​ ​specific​ ​performance​ ​is​ ​appropriate. Rule:​ ​UCC​ ​§2-716 (1)​ ​Specific​ ​performance​ ​may​ ​be​ ​decreed​ ​where​ ​the​ ​goods​ ​are​ ​unique​ ​or​ ​in​ ​other​ ​proper circumstances (2)​ ​The​ ​decree​ ​for​ ​specific​ ​performance​ ​may​ ​include​ ​such​ ​terms​ ​and​ ​conditions​ ​as​ ​to​ ​payment of​ ​the​ ​price,​ ​damages,​ ​or​ ​other​ ​relief​ ​the​ ​court​ ​may​ ​deem​ ​just (3)​ ​The​ ​buyer​ ​has​ ​a​ ​right​ ​of​ ​replevin​ ​for​ ​goods​ ​identified​ ​to​ ​the​ ​contract​ ​if​ ​after​ ​reasonable effort​ ​he​ ​is​ ​unable​ ​to​ ​effect​ ​cover​ ​for​ ​such​ ​goods​ ​or​ ​the​ ​circumstances​ ​reasonably​ ​indicate​ ​that​ ​such effort​ ​will​ ​be​ ​unavailing​ ​or​ ​if​ ​the​ ​goods​ ​have​ ​been​ ​shipped​ ​under​ ​reservation​ ​and​ ​satisfaction​ ​of​ ​the security​ ​interest​ ​in​ ​them​ ​has​ ​been​ ​made​ ​or​ ​tendered. Rationale​:​ ​The​ ​exclusivity​ ​aspect​ ​alone​ ​is​ ​not​ ​enough​ ​to​ ​warrant​ ​specific​ ​performance.​ ​Copylease argues​ ​that​ ​other​ ​brands​ ​of​ ​toner​ ​are​ ​distinctly​ ​inferior​ ​to​ ​Memorex’s​ ​product,​ ​and​ ​the​ ​fact​ ​that​ ​the UCC​ ​specifically​ ​contemplates​ ​requirements/output​ ​contracts​ ​make​ ​the​ ​claim​ ​for​ ​specific performance​ ​liable. Efficient​ ​breach​​ ​-​ ​the​ ​price​ ​you​ ​pay​ ​to​ ​walk​ ​away​.​ ​If​ ​we​ ​think​ ​a​ ​contract​ ​is​ ​no​ ​longer​ ​efficient,​ ​we want​ ​to​ ​give​ ​one​ ​of​ ​the​ ​parties​ ​the​ ​ability​ ​to​ ​pay​ ​damages​ ​and​ ​get​ ​out. -​ ​ Holmes:​ ​“Breaching​ ​contracts​ ​constitutes​ ​a​ ​morally​ ​neutral​ ​act.​ ​You​ ​must​ ​pay​ ​damages​ ​and nothing​ ​else.” -​ ​ We​ ​don’t​ ​require​ ​people ​to​ ​keep​ ​their​ ​promises​ ​for​ ​the​ ​sake​ ​of​ ​keeping​ ​their​ ​promises.​ ​We​ ​care more​ ​about​ ​them​ ​keeping​ ​their​ ​promises​ ​or​ ​not​ ​based​ ​on​ ​the​ ​principles​ ​of​ ​fairness​ ​and​ ​efficiency​. 6​ ​of​ ​35 Takeaway:​​ ​Although​ ​courts​ ​are​ ​hesitant​ ​to​ ​award​ ​specific​ ​performance,​ ​they​ ​would​ ​if​ ​the​ ​goods​ ​are unique/no​ ​cover​ ​could​ ​be​ ​obtained. D.​ ​ ​THE​ ​EXPECTATION​ ​INTEREST:​ ​BREACH​ ​DETERRENCE​ ​VERSUS​ ​LIQUIDATED DAMAGES ● UCC​ ​§2-718:​ ​Liquidation​ ​or​ ​Limitation​ ​of​ ​Damages ● There​ ​must​ ​be​ ​a​ ​fixed​ ​damages​ ​amount​ ​or​ ​formulation​ ​in​ ​the​ ​contract. ● The​ ​amount​ ​must​ ​be​ ​reasonable​ ​in​ ​the​ ​light​ ​of: o The​ ​anticipated​ ​or​ ​actual​ ​harm​ ​caused​ ​by​ ​the​ ​breach​ ​AND o The​ ​difficulties​ ​of​ ​proof​ ​of​ ​loss​ ​AND o The​ ​inconvenience​ ​or​ ​non-feasability​ ​of​ ​otherwise​ ​obtaining​ ​an​ ​adequate​ ​remedy ● If​ ​conditions​ ​are​ ​met,​ ...
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