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notes on chrit - C hapter 4(legal duty du ress...

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Chapter 4 (legal duty, duress, unconscionability) The Legal Duty rule and exceptions to (duress and Novation) Schwartz v. Bauman: (Novation) exception to the legal duty rule when the parties effectively rescind the first employment contract and enter into a discussion for a new one at a higher salary to match a competitors offer. The fact that recession of the first contract and formation of the second occurred simultaneously is unimportant, no pre existing duty RST Sec. 73: Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain. 89: A promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or UCC 2-209: no need for consideration as long as modification is in good faith and for a legitimate commercial reason Both the code and RST say that a modification is ineffective if agreed to bc the promisee has acted in bad faith it will be voidable by the promisor Austin v. Loral: Dissenters may have been correct bc subs threat of breech was not based on GC’s vulnerability but subs loss under first contract and expected loss under the second contract, but since they had already invested so much in tooling up for the first they still wanted the second but only at a higher price justified by their increased costs Austin did not act opportunistically like the sailors in Alaska packers. Decision in Loral never mentions UCC 2-209; this may be the kind of situation the code sought to allow: when agreeing to the increased price is less damaging than the delay and loss or reputation would be if Loral had to sue for damages Misrepresentation RST sec 161: non disclosure of a fact that concerns a basic assumption is misrepresentation when done in bad faith Even if seller of a house did not have a duty to disclose termites (probably would today); a seller of an apartment building would have to disclose that it was in fact a single family home being operated as a multi family home w/out a permit and the buyer would be open to litigation from the govt. bc it is implied that a business being sold is operating legally
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Standardized forms Henngingsen: Big 3 had effective monopoly so even if buyer did pay close attention to waiver (i.e. even saw it and then actually realized it didn’t just mean parts but liability for personal injury too) he still had no alternative
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