Contracts Spring 2005 (3 credits) - Bodie - PrawfsBlawg

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Market Street Associates Limited Partnership v. Frey (1991) 681. Reserved Discretion 689. Omni Group, Inc. v. Seattle-First National Bank (1982) 689. Billman v.
CONTRACTS II B

Spring 2005

Hofstra University School of Law Syllabus

Who: Professor: Matthew Bodie Office: Room 108 (located in library) Phone: 463-6162 e-mail: [email protected]

Office Hours: Tuesdays 2:30 to 4:00 p.m. or by appointment

Secretary: Jennifer Hartmann Room 221 463-5878 [email protected]

What: Texts: Murphy, Spiedel & Ayres, STUDIES IN CONTRACT LAW (6th Ed. 2003) Burton & Eisenberg, CONTRACT LAW: SELECTED SOURCE MATERIALS (2003)

Suggestions for additional reading: Chirelstein, Concepts and Case Analysis in the Law of Contracts (4th ed. 2001) Fried, Contract as Promise: A Theory of Contractual Obligation (1981) Gilmore, The Death of Contract (1974) Holmes, The Common Law, lectures VII - IX (1881) Posner, Economic Analysis of Law, chapters 1, 2, 4 (6th ed. 2002)

When & Where: Class Times: Tuesday, 9:10 a.m. to 10:00 a.m. Wednesday, 1:10 p.m. to 3:00 p.m.

Class Room: Room 308

How: Grading: Your grade will be based on your scores for class participation, an advocacy paper, and the final exam. The breakdown is as follows:

Final exam: 60% Advocacy Paper 30% Class Participation: 10%

Final Exam: The final exam will be a three-hour, in-class exam.

Advocacy paper: For this assignment you must discuss a litigation issue from the perspective of an advocate. You will be given the hypothetical facts and the procedural posture. The paper must be no longer than five (5) pages, double-spaced, in Times New Roman 12-point font with one-inch margins. The paper is due to Jennifer Hartmann in Room 221 on or before the last day of classes (Wednesday, April 27). If the paper is late, two points (out of 30) will be deducted for each day it is late.

Class participation and attendance: Your class participation grade will be based on a combination of the quality of your participation, the quantity of your participation, and your class attendance. I will be taking attendance each class. You will also have a brief panel assignment which will be assigned in class on the day of your panel.

Course Coverage:

The syllabus does not include dates for the assignments. At the end of each class, I will indicate what material will be covered at the next class meeting. If you miss a class, please ask your classmates or e-mail me to get the next assignment.

Page numbers refers to Murphy, Speidel, & Ayres, except for those indicated by [B&E #], which denote page numbers in the Burton & Eisenberg sourcebook.



Reading Assignments

IV. Contract Formation Insufficient Agreement: Indefinite, Incomplete and Deferred Terms 391-392 Indefinite Agreements Varney v. Ditmars (1916) 400-405 Lefkowitz v. Great Minneapolis Surplus Store (1957) review Notes 405-407 UCC § 2-204 [B&E 39] Incomplete and Deferred Agreement Metro-Goldwyn-Mayer, Inc. v. Scheider (1976) 407-408 Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher (1981) 408-413 Oglebay Norton Company v. Armco, Inc. (1990) 413-423 Comment: Open Terms Other than Price 423-425 Comment: How Should the Law Set "Default" Rules? 425-427 Empro Manufacturing Co., Inc. v. Ball Co. Manufacturing Inc. (1989) 427-431 UCC §§ 2-305, 2-311 [B&E 48-49, 52-53] Problem: The Case of the Don King/"Buster" Douglas Legal Bout 431-432 Comment: Texaco, Pennzoil and Outposts of Contract Law 432-434 Remedies Where Agreement Incomplete or Indefinite 434-435 Hoffman v. Red Owl Stores, Inc. (1965) 435-443 Copeland v. Baskin Robbins U.S.A. (2002) 443-449

V. Avoidance of Contracts Capacity to Contract: Infancy; Mental Incompetence 450 Infancy 451 Bowling v. Sperry (1962) 451 Problem: The Case of the Bold Graduates 458 Restatement § 14 [B&E 239] Mental Incompetence 458 Heights Realty, Ltd. v. Phillips (1988) 459 CITIFinancial, Inc. v. Brown (2001) 464 Ervin v. Hosanna Ministry, Inc. (1995) 467 Problem: The Case of the Drug Influenced Seller 469 Restatement §§ 12-13, 15-16 [B&E 239-40] Defects in the Bargaining Process 470 Unilateral and Mutual Mistake 471 Boise Junior College District v. Mattefs Construction Co. (1969) 472 Problem: The Case of the Four Million Labels 479 Beachcomber Coins, Inc. v. Boskett (1979) 479 Sherwood v. Walker (1887) 482 Lenawee County Board of Health v. Messerly (1982) 484 Problems: The Cases of the Unknown Oil Deposits, Mestrovic's Drawings, and a Barren Cow 492 Comment: Reformation for Mistake in Expression 493 Ayer v. Western Union Telegraph Co. (1887) 495 Problem: Mistakes in Transmission -- The Outer Fringes of the Objective Test 497 Restatement §§ 151-154 [B&E 276-77] Fraud and the Duty to Disclose 497 Laidlaw v. Organ (1817) 498 Vokes v. Arthur Murray, Inc. (1968) 500 Comment: Misrepresentation, Rescission and Restitution 505 Hill v. Jones (1986) 507 Problems: Uncommunicative Parties and the Duty to Disclose 516 Problem: Release of Unknown Injuries 517 Comment: Misrepresentation of Intent to Perform; Promissory 519 Restatement §§ 159-164, 168, 169 [B&E 278-80] Duress and Undue Influence 523 Rubinstein v. Rubinstein (1956) 523 Austin Instrument, Inc. v. Loral Corp. (1971) 527 Machinery Hauling, Inc. v. Steel of West Virginia (1989) 530 Restatement §§ 175-177 [B&E 281-82] Unconscionability 534 (1) Consumer Transactions 535 Williams v. Walker Thomas Furniture Co. (1964) 536 Williams v. Walker-Thomas Furniture Co. (1965) 538 Notes 541 Comment: Renting to Own as A Modern Method to “Profit on Poverty” 543 Comment: Contracts of Adhesion 546 Jones v. Star Credit Corporation (1969) 548 Fleet v. United States Consumer Council, Inc. (1989) 549 Problem: The Case of the Life Care Contract 552 Ferguson v. Countrywide Credit Industries, Inc. (2002) 553 Problem: Revising UCC 2-302 560 UCC § 2-302 [B&E 46-47] (2) Commercial Contracts 560 Weaver v. American Oil Co. (1971) 561 Zapatha v. Dairy Mart, Inc. (1980) 564 Problem: The Case of Bisko's Computer 571 Illegality: Agreements Unenforceable on Grounds of Public Policy 572 Sinnar v. LeRoy (1954) 575 Problem: The Case of the Green Door Tavern 580 Homami v. Iranzadi (1989) 581 Problems: Impact Upon Contract Formation of Statutory Violations 587 Comment: Validity of a Contract Limiting Liability for Negligence 589 Data Management, Inc. v. Greene (1988) 592 Watts v. Watts (1987) 597 Comment: Baby M -- Are There Some Things Money Can't Buy? 605 Wallis v. Smith (2001) 608 Problem: The Case of Donnis and Benjamin's Cohabitation Agreement 611 Comment: Aleatory, Gambling, and Insurance Contracts 612 Problem: The Case of the Promise to Remain Silent 613 Restatement §§ 178-185 [B&E 283-85]

VI. Problems in Performance Determining Scope and Content of Obligation 614 Integrated Writings and the Parol Evidence Rule 614 Mitchill v. Lath (1928) 615 Masterson v. Sine (1968) 619 Alaska Northern Development, Inc. v. Alyeska Pipeline Service Co. (1983) 624 Luther Williams, Jr., Inc. v. Johnson (1967) 631 Comment: Warranties, Disclaimers and the Parol Evidence Rule 635 Problem: The Case of the Unexpected Spouse 637 Restatement §§ 209-210, 213-217 [B&E 291-92, 293-95] UCC §§ 2-202 [B&E 38] Interpretation 638 Pacific Gas and Electric Co. v. G. W. Thomas Drayage & Rigging Co. (1968) 638 A. Kemp Fisheries, Inc. v. Castle & Cooke, Inc. (1988) 640 Comment: The Hierarchy of Interpretation Rules 644 Frigaliment Importing Co. v. b.N.S. International Sales Corp. (1960) 648 Restatement §§ 201-204, 219-223 [B&E 288-90, 295-96] The Duty of Good Faith 658 Scope and Content of Good Faith Duty 658 Centronics Corporation v. Genicom Corporation (1989) 660 Comment: Contrasting Models of Good Faith Performance: The UNIDROIT Principles 667

Restatement §§ 205 [B&E 290] UCC §§ 1-201(20), 1-304 [B&E 14, 24-25] Prevention, Hindrance, Cooperation and the Duty of Good Faith 669 Patterson v. Meyerhofer (1912) 670 Iron Trade Products Co. v. Wilkoff Co. (1922) 673 K.W. Plastics v. United States Can Co. (2001) 675 Stockton v. Sowerwine (1984) 677 Problem: The Case of the Uncooperative Vendor 680 Market Street Associates Limited Partnership v. Frey (1991) 681 Reserved Discretion 689 Omni Group, Inc. v. Seattle-First National Bank (1982) 689 Billman v. Hensel (1979) 689 Neumiller Farms, Inc. v. Cornett (1979) 691 Comment: Lender Liability and the Duty to Act in Good Faith 694 Feld v. Henry S. Levy & Sons, Inc. (1975) 697 Problem: The Case of the Uranium Oxide Debacle 701 Comment: Effect of "Best Efforts" Agreement on Contracts for Indefinite Quantity 702 Modification 703 Angel v. Murray (Supreme Court of Rhode Island, 1974) 703 Roth Steel Products v. Sharon Steel Corp. (1983) 703 Allocation of Risk: Warranties and Conditions 723 Representation and Warranties of Quality 721 Restatement §§ 224-228 [B&E 296-98] 1) Express Warranties 721 2) Implied Warranties 726 Problem: The Case of the Disappointed Skier 727 (3) Limitations of Warranties and Remedies 727 Henningsen v. Bloomfield Motors (1960) 728 Murray v. Holiday Rambler, Inc. (1978) 733 Express Conditions 738 (1) Nature and Effect 738 Dove v. Rose Acre Farms, Inc. (1982) 739 Wal-Noon Corp. v. Hill (1975) 743 In re Carter’s Claim (1957) 747 Problem: The Case of the Insolvent Owner 753 Omni Group, Inc. v. Seattle-First National Bank (1982) 753 (2) Excuse of Conditions 754 Clark v. West (1908) 754 Ferguson v. Phoenix Assurance Co. of New York (1962) 760 Problem: Excuse of condition to Avoid Disproportionate Forfeiture 766 Comment: Limitations on the Waiver Doctrine 767 Restatement §§ 84, 89 & 229 [B&E 260, 262-63, 298] UCC §§ 1-306, 2-209 [B&E 25, 43-44] Constructive Conditions of Exchange 767 (1) Historical Development 768 Kingston v. Preston (1773) 769 Goodison v. Nunn (1792) 770 Palmer v. Fox (1936) 772 Problem: The Case of the Defaulting Purchaser 779 Restatement § 234 [B&E 300-301] 2) Avoidance of Forfeiture 779 Jacob & Youngs v. Kent (1921) 780 O. W. Grun Roofing and Construction Co. v. Cope (1975) 784 Problem: Reading Pipe and the Waiver of Conditions 789 Problem: The Case of the Deficient Valve Tester 790 Lowy v. United Pacific Insurance Co. (1967) 790 Problems: Divisible or Entire Contract 795 Britton v. Turner (1834) 795 Comment: Recovery in Restitution by a Plaintiff in Default 800 Problems: Restitutionary Relief and the Wrongdoer 802 UCC §§ 2-106, 2-508, 2-601, 2-602, 2-608, 2-612 [B&E 34-35, 75-76, 79-81, 86-87, 90-92]

Changes Circumstances: Impracticability 802 Existing Impracticability 805 United States v. Wegematic Corp. (1966) 808 Problems: A Builder in the Quagmire of Impracticability 812 Supervening Impracticability 813 Taylor v. Caldwell (1863) 813 Canadian Industrial Alcohol Co. v. Dunbar Molasses Co. (1932) 818 Problems: Casualty to Identified Goods 820 Dills v. Town of Enfield (1989) 821 United States v. Winstar (1996) 827 Bolin Farms v. American Cotton Shippers Association 833 Comment: ALCOA Can’t Wait 834 Kaiser-Francis Oil Co. v. Producer's Gas Co. (1989) 836 Comment: Take-or-Pay Contracts 840 Comment: Reopener Clauses in Long-Term Supply Contracts 841 UCC § 2-615 [93-96] Restatement §§ 261-266 [B&E 309-310]

VII. A Return to Remedies Right to Suspend Performance or Cancel Upon Prospective Liability for Breach 862 Hochster v. De La Tour (1853) 863 Taylor v. Johnston (Supreme Court of California, 1975) 868 Problem: The "Safe Harbor" Defense 876 AMF, Inc. v. McDonald's Corp. (1976) 876 Plotnick v. Pennsylvania Smelting & Refining Co. (1952) 882 Comment: Post-Breach Conduct Affecting the Cancellation Remedy 887 Restatement §§ 250, 251, 253, 256 [B&E 305, 306-307] UCC §§ 2-609 – 2-612 [B&E 87-92] Compensatory Damages 889 (A) An Introduction to Contract Remedies 889 (B) Breach or Repudiation by Payor 889 John Hancock Mutual Life Insurance Co. v. Cohen (1958) 890 Problem: Seller's Remedies Under the UCC 896 UCC §§ 2-703, 2-706, 2-708 – 2-710 [B&E 97-98, 100-03] Restatement § 371 [B&E 339-40] American Mechanical Corp. v. Union Machine Co. of Lynn, Inc. (1985) 897 Lowy v. United Pacific Insurance Co. (1967) 901 New Era Homes Corp. v. Forster (1949) 901 Comment: Breach of Construction Contract and the “Components Approach” 904 Comment: Reliance Damages or Restitution in Losing Contracts 905 Bernstein v. Nemeyer (1990) 908 Problem: Restitution as a Remedy for Breach 914 Problem: Seller's Remedies under the UCC -- UCC 2-708(2) 915 Locks v. Wade (1955) 916 Comment: The Lost Volume Seller Under the UCC Article 2 918 Problem: Seller's Remedies under UCC 2-708(2) Continued 920 Problem: The Scope of UCC 2-708(1) 921 Comment: Employee's Remedies for Breach of Employment Contract 922 Inchaustegui v. 666 5th Avenue Limited Psh. (2000) 924 (C) Breach or Repudiation by Supplier of Goods, Services, or Construction 927 Reliance Cooperage Corp. v. Treat (1952) 927 Problem: The Case of the Recalcitrant Manufacturer Revisited 932 Jacob & Youngs v. Kent (1921) 933 Rivers v. Deane (1994) 933 Peevyhouse v. Garland Coal & Mining Co. (Supreme Court of Oklahoma, 1962) 936 American Standard, Inc. v. Schectman (1981) 941 Comment: Buyer's Remedies for Seller's Breach of Warranty under the UCC 946 Problem: Seller's Post-Acceptance Liability for Defective Goods 947 Comment: Restitution of Down Payment by Payor as Remedy for Breach by Performer 948 UCC §§ 2-612, 2-711 – 2-715, 2-717 [B&E 90-92, 103-107, 108] Effect of Agreement Liquidating Damages or Altering the Scope of Liability or Remedy 1000 Liquidated Damages 1000 Southwest Engineering Co. v. United States (1965) 1003 Leeber v. Deltona Corp. (1988) 1013 Comment: Disclaimer, Exculpation and Under-Liquidated Damage Clauses 1018 Problem: The Case of the "Big Ship" Deal 1019 UCC § 2-718 [B&E 109-110]

VIII. Third Party Interests Assignment and Delegation 1077 Handout on Assignment of Legal Claims Third Party Beneficiaries 1102 A. Creation of Rights 1103 KMART Corporation v. Balfour Beatty, Inc. (1998) 1103 Hale v. Groce (1987) 1110 B. Nature of Rights1121 Tweeddale v. Tweeddale (1903) 1121 UCC § 2-318 [B&E 60-61]

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