1 george mason school of law contracts ii mistake this file may be downloaded only by registered...

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1 George Mason School of Law Contracts II Mistake This file may be downloaded only by registered students in my class, and may not be shared by them F.H. Buckley [email protected]

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  • *George Mason School of Law

    Contracts II

    MistakeThis file may be downloaded only by registered students in my class, and may not be shared by them

    F.H. [email protected]

  • Mistake and Impossibility

    An regret contingency occurs: what are the possibilities?*

  • Mistake and Impossibility

    An regret contingency occurs: what are the possibilities?Both parties want out and write a termination agreement*

  • Mistake and Impossibility

    An regret contingency occurs: what are the possibilities?One party only wants out and argues:Breach by the other partyCondition precedent, mistake, frustration*

  • What are the possibilities?

    So when should the event give rise to liability by one of the partiesSee last day on least-cost risk-bearing*

  • What are the possibilities?

    So when should the event put an end to obligations under the contract, without any liability?*

  • Catastrophic EventsForce majeure clauseA party is not liable for failure to perform the party's obligations if such failure is as a result of Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalization, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity or telephone service, or change in government regulations which makes performance of obligations under this contract impracticable.*

  • Catastrophic EventsForce majeure clauseWhy no least cost risk avoiders here?*

  • Catastrophic EventsForce majeure clauseWhy no least cost risk avoiders here?No one can efficiently reduce the riskNo one is better able to evaluate riskRisk not diversifiable*

  • Express and Implied Excuses

    Conditions precedent (subsequent)

    Mistake

    Impracticability, Impossibility, Frustration*

  • Mistake and Impossibility*TimeFormation of Contract

  • Mistake and Impossibility*TimeFormation of ContractMistake, Condition Precedent

  • Mistake and Impossibility*TimeFormation of ContractMistake,Condition PrecedentImpossibility, ImpracticabilityFrustration, Condition Subsequent

  • How to tell them apart?*TimeFormation of ContractMistake,Condition PrecedentImpossibility, ImpracticabilityFrustration, Condition SubsequentCf. Restatement 152, comment b

  • How to tell them apart?

    A horse is sold for breeding purposes. Unknown to the parties, the horse is sterile. This is only discovered later.Mistake or Frustration?*

  • How to tell them apart?

    A supply contract bases prices on production costs, according to a cost index based on historical experience. Subsequently prices rise unexpectedly.Mistake or Frustration?*

  • Who is mistaken?

    Mutual Mistake: Both parties

    Unilateral Mistake: one party only*

  • What kind of an event voids a contract?

    Error as to identity

    Error as to substance

    Error which has a material effect on the exchange value of the contract*

  • Error as to Identity

    Raffles v. Wichelhaus at 712

    *Peerless IPeerless II

  • Error as to Identity

    Raffles v. Wichelhaus Was there any way to enforce this?

    *

  • Error as to Identity

    Raffles v. Wichelhaus Was there any way to enforce this?Restatement 20(1)(a), illustration 2

    *

  • Error as to Identity

    What if both had meant the same ship?Illustration 1

    *

  • Error as to Identity

    What if objectively it was clear that the contract referred to a particular ship, but one party is mistaken?

    *

  • Error as to Identity

    What if objectively it was clear that the contract referred to a particular ship, but one party is mistaken?20(1)(a): has reason to know

    *

  • Error as to Identity

    What if both parties know of the others mistake?20(1)(b), Illustration 2

    *

  • Error as to Identity

    What if one party is mistaken and the other party knows of his mistake?20(2)(a), Illustration 3

    *

  • Error as to Identity

    Restatement 20Mutual mistake: 20(1)Unilateral mistake: 20(2)*

  • Error as to Identity

    What if one party is mistaken and the other party knows of his mistake?Whats the logic behind this?

    *

  • Error as to Identity of a partyFarmer Macdonald sells his farm to McInerney. Macdonald thinks that McInerney is a principal, but in reality he is an agent for Texas Gulf Sulfur. If TGS had revealed its identity, Macdonald would have realized that there were minerals under his land.*

  • Error as to IdentityFarmer Macdonald sells his farm to McInerney. Macdonald thinks that McInerney is a principal, but in reality he is an agent for Texas Gulf Sulfur. If TGS had revealed its identity, Macdonald would have realized that there were minerals under his land.Restatement 153, comment g on undisclosed principals*

  • *George Mason School of Law

    Contracts II

    MistakeThis file may be downloaded only by registered students in my class, and may not be shared by them

    F.H. [email protected]

  • Next weekFinish MistakeExcuse (plus Scott 84-93)Frustration

    *

  • Regret contingencies

    When should the event put an end to obligations under the contract, without any liability, at the option of one party?*

  • How to tell them apart?The traditional view*TimeFormation of ContractMistake,Condition PrecedentImpossibility, ImpracticabilityFrustration, Condition SubsequentCf. Restatement 152, comment b

  • MistakesWho is mistaken?

    Mutual Mistake: Both parties

    Unilateral Mistake: one party only*

  • Mutual Mistake

    Kinds of mistakes:Both parties make the same mistake: Bargaining over a ship that has sunkParties at cross-purposes: I sell you Rose 2d and you think youve bought Rose 3d*

  • What kind of an event voids a contract?

    Error as to identity

    Error as to substance

    Error which has a material effect on the exchange value of the contract*

  • Error as to Substance*

  • Error as to Substance:Sherwood v. Walker at 712*Hiram WalkerRose

  • Another Hiram Walker product*Hiram Walker Canadian Club

  • *

  • Aberlone, Rose ofBy Brainerd Currie*'T is the middle of night before the exam, And there's nothing to eat but a cold bit of ham. A dismal specter haunts this wake-- The law of mutual mistake; In many a hypothetical With characters alphabetical, In many a subtle and sly disguise There lurks the ghost of her sad brown eyes. That she will turn up in some set of facts is Almost as certain as death and taxes: For students of law must still atone For the shame of Rose of Aberlone.

  • Sherwood v. Walker*Was there a mistake?

  • Sherwood v. Walker*

    What is a basic assumption in 152-53?Substance of the thing vs. quality or accidentError in substantibusError going to the root of the matter

  • Sherwood v. Walker*Barren CowWhat is Roses essence:cowness or barren cownessFertile Cow

  • Mutual Mistake

    Restatement 152Has a material effect on the agreed exchangeComment c: resulting imbalance is so severe that he cannot fairly be required to carry it outIs that the case here?

    *

  • Sherwood v. Walker*

    Did the mistake have a material effect on the exchange of performances?[(1420-50)*0.055 =] $75.35 vs. about $875

  • Sherwood v. Walker*Barren CowAssumption of risk: Was Walker in a better position to know the condition of the cow?Fertile Cow

  • Sherwood v. Walker*

    Should the onus have been on the seller to specify a condition subsequent?

  • Qu. Backus v. MacLaury p. 729*

    Why no mistake here?

  • Qu. Backus v. MacLaury p. 729*

    No mistake: Buyer realized the calf might be sterile and took the risk

  • Qu. Backus v. MacLaury p. 729*

    No mistake: Buyer realized the calf might be sterile and took the riskHow was this different from Hiram Walker?No one took the risk that Rose was fertile

  • Qu. Backus v. MacLaury p. 729*

    No mistake: Buyer realized the calf might be sterile and took the riskHow was this different from Hiram Walker?Was there more of an assumption of risk here?

  • Unilateral Mistake

    Restatement 153Mistake of both as to a basic assumptionHas a material effect on the agreed exchangeParties did not agree that one would bear the riskEither unconscionability or unilateral

    *

  • Unilateral Mistake

    Distinguish two cases:Class A Unilateral MistakeA is mistaken and B is unaware of the mistake: unconscionability needed

    *

  • Unilateral Mistake

    Distinguish two cases:Class A Unilateral MistakeA is mistaken and B is unaware of the mistake: unconscionability neededClass B Unilateral MistakeA is mistake and B is aware of the mistake: unconscionability not needed

    *

  • Anderson v. OMeara 718*Seller sells submarine trenching equipment

  • Anderson v. OMeara 718*Buyer thinks hesbuying a Sweep Dredge

  • Anderson v. OMeara*

    The District Court found a mutual mistake. Why did the Circuit Court disagree?

  • Anderson v. OMeara*

    Was there a unilateral mistake?And of what type, in my classification?

  • Anderson v. OMeara*

    Was there a unilateral mistake?And of what type, in my classification?

  • Anderson v. OMeara*

    Was there a unilateral mistake?And of what type, in my classification?Class A: unconscionability needed

  • Anderson v. OMeara*

    Would it be unconscionable to hold buyer to the contract?

  • Anderson v. OMeara*

    So why was the contract upheld?Seller didnt know what it was to be used forBuyer should have communicated the purposeWho was the least cost risk avoider?

  • Duty to Investigate*

    Gartner p. 727Did one person have a special duty to investigate?

  • Duty to Investigate*

    Winkelmans v. Erwin p. 729How would you decide this?Mutual or unilateral?

  • Duty to Investigate*

    Winkelmans v. Erwin p. 729Did one person have a special duty to investigate?Was Thompson the agent of the seller? And did the buyers reasonably rely on her?

  • Duty to Investigate*

    Winkelmans v. Erwin p. 729How would you decide this?Held: Mistake

  • Duty to Investigate*

    Jeselsohn p. 729Held: mutual mistakeThe buyer could not have discovered the error by consulting the registry of deeds

  • Unilateral Clerical Mistakes*

    Elsinore at 728

  • Unilateral Clerical Mistakes*

    Elsinore at 728Does it matter that the error was only $3K on a $90K bid Cf. Restatement 152, comment c and 153, comment d

  • Unilateral Clerical Mistakes*

    Elsinore at 728Does it matter that the error was only $3K on a $90K bidDoes it matter that the bidder notified the school board the next day?

  • As is clauses

    Messerly at p. 725

    *

  • Unilateral Mistakes:Irmen v. Wrzesinski at 724*$349 on E-Bay

  • Irmen v. Wrzesinski*

    Can the doctrine of unilateral mistake be a rule of economic inefficiency?How is this case like Laidlaw v. Organ?

  • Irmen v. Wrzesinski*

    How is this case like Laidlaw v. Organ?Note that the seller has every incentive to acquire the information, as he can command a higher price if he reveals it.While the buyer can only profit from the info he acquires if he is permitted to be silent.

  • Irmen v. Wrzesinski*

    So when does forcing information through the doctrine of unilateral mistake serve efficiency goals?

  • Irmen v. Wrzesinski*

    Does it matter what the buyer believes?Buyer believes that the seller is ignorant of the cards value and is selling it for $12Buyer believes that the seller is aware of the cards value and is selling it for $1200

  • Irmen v. Wrzesinski*

    Does it matter what the buyer believes?Buyer believes that the seller is ignorant of the cards value and is selling it for $12Buyer believes that the seller is aware of the cards value and is selling it for $1200A Class A or Class B unilateral mistake?

  • *George Mason School of Law

    Contracts II

    MistakeThis file may be downloaded only by registered students in my class, and may not be shared by them

    F.H. [email protected]

  • Next day

    Finish Impracticability and Frustration*

  • What kind of an event voids a contract?Error as to identityRestatement 20Error as to substanceHiram Walker, AndersonError which has a material effect on the exchange value of the contract*

  • Mutual Mistake: Alcoa 730

    What was the deal?*

  • Mutual Mistake: Alcoa

    What was the deal? Alcoa to convert alumina (aluminum oxide) for Essex

    EssexAlcoa*AluminaAluminum

  • Mutual Mistake: Alcoa

    How was the pricing arrived at?*You cant lose, Alcoa. Believe me!

  • Mutual Mistake: Alcoa

    How was the pricing arrived at?*And since housing prices can only go up, we need low interest rates so the improvident can buy second homes

  • Mutual Mistake: Alcoa

    How was the pricing formula arrived at?*

  • Mutual Mistake: Alcoa

    How was the pricing arrived at?*Of course, we all know that the future will resemblethe pastNon-labor production cost = 0.03/lb. +/- 0.03

  • Mutual Mistake: Alcoa

    What happened to non-labor costs?*

  • So what happened to oil prices in 1977?*

  • Mutual Mistake: Alcoa

    Why did Essex want the supply of aluminum?

    *

  • Mutual Mistake: Alcoa

    Why did Essex want the supply of aluminumAnd what did it end up doing with the aluminum it bought?

    *

  • Mutual Mistake: Alcoa

    Why did Essex want the supply of aluminumAnd what did it end up doing with the aluminum it bought?Was this prohibited by the contract?What if this had been seen as a requirements contract under 2-306?

    *

  • Mutual Mistake: Alcoa

    Why did Essex want the supply of aluminumAnd what did it end up doing with the aluminum it bought?Was this prohibited by the contract?Cf. quantities on p. 732

    *

  • Mutual Mistake: Alcoa

    What was the mutual mistake, if any?Basic assumption or material effect or both?*

  • Mutual Mistake: Alcoa

    What was the mutual mistake, if any?A present actuarial error or a mistake as to the future? Restatement 151How would you state this as a present factShould it matter which it is?*

  • Mutual Mistake: Alcoa

    What was the mutual mistake, if any?A present actuarial error or a mistake as to the future?Is Leasco different?*

  • Mutual Mistake: Alcoa

    Did Alcoa assume the risk?*

  • Mutual Mistake: Alcoa

    Did Alcoa assume the risk?Express languageTrade customImplied term: 739conscious ignorance of the facts: a calculated gamble*

  • Mutual Mistake: Alcoa

    Did Alcoa assume the risk?How would you have drafted the contract on Alcoas behalf?*

  • Mutual Mistake: Alcoa

    Did Alcoa assume the risk?How would you have drafted the contract on Alcoas behalf?Essex put in a price cap, so why didnt Alcoa put in a cost cap?

    *

  • Mutual Mistake: Alcoa

    Did Alcoa assume the risk?How would you have drafted the contract on Alcoas behalf?A Gross Inequity clause: Beaver Creek at 775 infra

    *

  • Mutual Mistake: Alcoa

    Did Alcoa assume the risk?How would you have drafted the contract on Alcoas behalf?Recitals: Whereas Essex seeks a supply of aluminum for its own use; and whereas both parties seek to be protected against price and cost fluctuations

    *

  • How do you think the parties would bargain to allocate such risks?

    What about the inclusio unius canon?Or the contra proferentem canon?: 740-41*

  • Mutual Mistake: Alcoa

    What kind of a remedy?Why wasnt rescission ordered?*

  • Mutual Mistake: Alcoa

    What kind of a remedy?Reformation: how was the new price arrived at?*

  • Mutual Mistake: Alcoa

    What kind of a remedy?The practice of foreign countries p. 744Split the difference?How does fairness cut?*

  • How many contracts do you think were affected by the oil crisis*

  • How do you think the parties would bargain to allocate such risks?

    What about the case where no one could have foreseen the problem?*

  • When is a mistake a mistake: Atlas 745

    *Atlas Corp. uranium tailings pile

  • When is a mistake a mistake

    What was the mistake?*

  • When is a mistake a mistake

    What was the mistake?That the health hazard was much greater than had been thoughtAnd why wasnt that a mistake at law?*

  • When is a mistake a mistake

    What was the mistake?That the health hazard was much greater than had been thoughtAnd why wasnt that a mistake at law?A mistake is a mistaken belief about an existing fact: Alcoa, Restatement 151But there is no mistaken belief about a fact whose existence was not known.*

  • When is a mistake a mistake

    What was the mistake?That the health hazard was much greater than had been thoughtAnd why wasnt that a mistake at law?Is this a sensible distinction, in terms of risk allocation?*

  • When is a mistake a mistake

    What was the mistake?That the health hazard was much greater than had been thoughtAnd why wasnt that a mistake at law?Is this a sensible distinction, in terms of risk allocation?Which looks more like a mistake as to a basic assumption?*

  • When is a mistake a mistake

    What was the mistake?Did the court get it right, in any event?*

  • Mistake vs. Impracticability and Frustration*

  • The traditional understanding*TimeFormation of ContractMistakeImpossibility, ImpracticabilityFrustrationCf. Restatement 152, comment b

  • The evolution

    From strict liability to impossibility and frustrationFrom impossibility to impracticabilityBlurring the timing question *

  • Blurring the timing question

    After the contract is madeRestatement 261Restatement 262: deathRestatement 263: destructionRestatement 264: Govt reg.Restatement 265: Frustration

    *

  • Blurring the timing question

    Before the contract is madeRestatement 266(1): ImpracticabilityRestatement 266(2): FrustrationRestatement 152-53: Mistake

    *

  • The Restatement understanding*TimeFormation of ContractMistakeImpracticabilityFrustration

    ImpracticabilityFrustrationCf. Restatement 152, comment b

  • So what is the difference?

    Mistake 152-53: Basic Assumption, material effect on exchange

    Impracticability 261, 266: Impracticable, Basic assumption

    Frustration 265, 266: Principal purpose substantially frustrated, basic assumption

    *

  • From Strict Liability to Impossibility

    *

  • From Strict Liability to Impossibility

    Just what is impossibility?ParadineStees

    *

  • An Impossibility Defense SucceedsTaylor v. Caldwell p. 84*Surrey Gardens Music Hall

  • Taylor v. Caldwell

    On the program:35-40 piece military bandfireworks a wizard tight rope performancesParisian games (?!?)*

  • Taylor v. Caldwell

    In what sense was performance impossible (as compared to Paradine?)*

  • Taylor v. Caldwell

    The birth of the frustration doctrine*

  • Taylor v. CaldwellOf the fire:Blackburn: men would say, if it were brought to their minds, that there should be such a conditionAnd why is that?*Lord Blackburn

  • Taylor v. Caldwell

    What contractual gains were lost because of the fire?*

  • Taylor v. Caldwell

    What contractual gains were lost because of the fire?Licensor loses license fee of 400Licensee loses gross profits less rent*

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?*

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?Licensee takes risk and owes Licensor 400 for the license fee: Paradine*

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?Licensee takes risk and owes Licensor 400 for the license fee: ParadineLicensor takes risk and owes lessee damages for foregone net profits

    *

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?Licensee takes risk and owes Licensor 400 for the license fee: ParadineLicensor takes risk and owes lessee damages for foregone net profitsFrustration: neither recovers anything*

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?Frustration: neither recovers anythingWhy might this be the efficient result?*

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?Frustration: neither recovers anythingWhy might this be the efficient result?Who is in the best position to value the cost of the lost rental?*

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?Frustration: neither recovers anythingWhy might this be the efficient result?Who is in the best position to value the lost profits from the performance?P*L*

  • Taylor v. Caldwell

    What possible allocation of risks can you imagine?Frustration: neither recovers anythingWhy might this be the efficient result?Licensor is the best person to measure risk of fire and licensee is the best person to determine lost profits*

  • *Where one party is better able to reduce the risk or the harmWhere one party is better able to value the lossAssuming risk aversion, where one party is wealthier than the otherAssuming risk aversion, where one party is a better insurer because he can diversify the riskFour kinds of Least-Cost Risk Avoiders

  • The expansion of excuses

    A person who promises to do something which turns out to be impossible can always be held liable in damages, if he takes the riskBut not if the contract is frustrated

    *

  • The expansion of excuses

    And the modern rule is based on a more generous standard of impracticability, not impossibility*

  • Carroll v. Bowerstock p. 756

    Is this consistent with either Stees or Taylor?

    *

  • Carroll v. Bowerstock p. 756

    Is this consistent with either Stees or Taylor?Cf. the work before pay rule of Stewart v. Newbury at 626 and Restatement 234(2)

    *

  • Carroll v. Bowerstock p. 756

    Is this consistent with either Stees or Taylor?Is the test on 757 consistent with the doctrine of unjust enrichment?

    *

  • Carroll v. Bowerstock p. 756

    Is this consistent with either Stees or Taylor?If liability lay in unjust enrichment, where was the enrichment?*

  • RNJ Interstate p. 88

    Why a different result?*

  • RNJ Interstate p. 88

    Why a different result?The contractor shall be responsible until completion and acceptance of the entire work*

  • RNJ Interstate p. 88

    Why a different result?The contractor shall be responsible until completion and acceptance of the entire workWho should insure against fire?*

  • RNJ Interstate p. 88

    Why a different result?The contractor shall be responsible until completion and acceptance of the entire workWho should insure against fire?But what about the Contractors loss?*

  • *George Mason School of Law

    Contracts II

    MistakeThis file may be downloaded only by registered students in my class, and may not be shared by them

    F.H. [email protected]

  • Next week (after the break)

    FrustrationBreach (Anticipatory Breach)*

  • The evolution

    From strict liability to impossibility and frustrationTaylor v. CaldwellFrom impossibility to impracticabilityRestatementBlurring the timing question *

  • The Restatement understanding*TimeFormation of ContractMistakeImpracticabilityFrustration

    ImpracticabilityFrustrationCf. Restatement 152, comment b

  • How does one keep them apart?

    Mistakes origin is in differences in the nature of the bargain (cowness)But need it be restricted to that?Alcoa*

  • Mistake in the Restatement

    Mistake 152-53: Basic Assumption, material effect on exchange

    *

  • So what is the difference?

    Mistake 152-53: Basic Assumption, material effect on exchange

    Impracticability 261, 266: Impracticable, Basic assumption

    *

  • So what is the difference?

    Mistake 152-53: Basic Assumption, material effect on exchange

    Impracticability 261, 266: Impracticable, Basic assumption

    Frustration 265, 266: Principal purpose substantially frustrated, basic assumption

    *

  • The casebook doesnt help

    Taylor and Howell as frustration cases*

  • Howell v. Coupland 750

    What was the contract?*Lord Coleridge, C.J.

  • Howell v. Coupland

    What was the frustrating event?*

  • Howell v. Coupland

    Could the seller have substituted other potatoes?

    *

  • Howell v. Coupland

    Could the seller have substituted other potatoes?And why do you think he didnt?

    *

  • Howell v. Coupland

    Was this a sale of goods?*

  • Howell v. Coupland

    Was this a sale of goods?UCC 2-105(1), 2-107(2)*

  • Howell v. Coupland

    How would UCC 2-615 handle this?*

  • Howell v. Coupland

    What about UCC 2-613?*

  • Howell v. Coupland

    What about UCC 2-613?When are goods identified?*

  • Howell v. Coupland

    What about UCC 2-613?When are goods identified?UCC 2-501(1)(c)*

  • Howell v. Coupland

    The Jack Sherman hypothetical on p. 756Are the are goods identified under UCC 2-613 and 2-501(1)(c)*

  • Seitz v. Mark-O-Lite 752*

  • Seitz v. Mark-O-Lite 752

    Why didnt the force majeurclause apply?What about the inclusio unius canon?*

  • Seitz v. Mark-O-Lite

    Why not Restatement 262?What gloss is added?*

  • Seitz v. Mark-O-Lite

    Why not Restatement 262?What gloss is added?If the existence of aparticular person is understood to necessary by both parties*

  • Seitz v. Mark-O-Lite

    Why not Restatement 262?What gloss is added?See comment b and 318*

  • Canadian Industrial Alcohol 758*Why did an industrial alcohol company need molasses?

  • Canadian Industrial Alcohol*Why did an industrial alcohol company need molasses?+=

  • Canadian Industrial Alcohol*Suppose that Dunbar had supplied the molasses from another refiner. Would that have been a breach?

  • Canadian Industrial Alcohol*

    Why did Cardozo hold as he did?

  • Canadian Industrial Alcohol*

    Why might this be an efficient allocation of risk?

  • The Modern Doctrine*

    TransatlanticEasternAlcoa

  • Transatlantic 760

    What happened in 1956*

  • Transatlantic 760

    July 26: Egypt nationalizes Suez canalJuly 30: PM Eden informs Nasser that Britain will prevent the takeover

    *

  • Transatlantic

    July 26: Egypt nationalizes Sues canalJuly 30: PM Eden informs Nasser that Britain will prevent the takeoverAug. 2: Britain mobilizesSept 12: US, Britain, France announce intention to impose a solution

    *

  • Transatlantic

    July 26: Egypt nationalizes Sues canalJuly 30: PM Eden informs Nasser that Britain will prevent the takeoverAug. 2: Britain mobilizesSept 12: US, Britain, France announce intention to impose a solutionOct. 2: Charterparty executed

    *

  • Transatlantic

    July 26: Egypt nationalizes Sues canalJuly 30: PM Eden informs Nasser that Britain will prevent the takeoverAug. 2: Britain mobilizesSept 12: US, Britain, France announce intention to impose a solutionOct. 2: Charterparty executedOct 29: Israel invades Egypt, Anglo-French forces land, Nasser blocks canal

    *

  • The blocked canal*

  • Transatlantic

    What is the doctrine of deviation*

  • Transatlantic

    What is the doctrine of deviationWhat was the added burden on the carrier?*

  • Transatlantic

    What is the standard for commercial impracticability?*

  • Transatlantic

    What is the standard for commercial impracticabilty?Unexpected regret contingencyRisk not allocatedCommercial impracticability*

  • Transatlantic

    Did it make sense to assume that the carrier assumed the risk?*

  • Transatlantic

    Why did it make sense to assume that the carrier assumed the risk?They are in the best position to calculate the cost of performance by alternate routes*

  • Transatlantic

    Why did it make sense to assume that the carrier assumed the risk?They are in the best position to calculate the cost of performance by alternate routesRisk of closure a matter of public notice*

  • Transatlantic

    Why did it make sense to assume that the carrier assumed the risk?They are in the best position to calculate the cost of performance by alternate routesRisk of closure a matter of public noticeIn which case the risk might have been factored into the price*

  • Transatlantic

    How would the case have been decided under UCC 2-614?*

  • Transatlantic

    Was the carrier put to its election on damages vs quantum meruit?*

  • Aluminum v. Essex 770

    Cf. p. 730: The choice of Greenspans non-labor production cost factor constituted a mistake*

  • Aluminum v. Essex 770

    Cf. p. 730: The choice of Greenspans non-labor production cost factor constituted a mistakeNow were looking at the same issues under the rubric of impracticability and frustration.*

  • Aluminum v. Essex 770Cf. p. 730: The choice of Greenspans non-labor production cost factor constituted a mistakeNow were looking at the same issues under the rubric of impracticability and frustration.Can it be all three at the same time?Cf. Restatement 266*

  • Aluminum v. Essex 770

    Whats the difference between them?*

  • Impracticability and FrustrationImpracticability: focus on greatly increased costsRestatement 261Death or Incapacity of a person: 262Res extincta etc.: 263Govt reg: 264*

  • Impracticability and FrustrationFrustration: focuses on a partys severe disappointment caused by circumstances that frustrate his purpose in entering into the contractRestatement 265*

  • Impracticability and FrustrationFrustration: focuses on a partys severe disappointment caused by circumstances that frustrate his purpose in entering into the contractRestatement 265Illustration 3: Hotel destroyedQu. 263?Illustration 4: Govt regQu. 264?*

  • When does a party assume the risk of the event?

    Williamette 765*

  • When does a party assume the risk of the event?

    Wegematic 766

    *

  • When does a party assume the risk of the event?

    Wegematic 766We see no basis for thinking that when an electronics system is promoted by its manufacturer as a revolutionary breakthrough, the risk of the revolution's occurrence falls on the purchaser per Friendly J.*

  • When does a party assume the risk of the event?

    Mishara 766*

  • When does a party assume the risk of the event?

    Mishara 766A picket line might constitute a mere inconvenience and hardly make performance "impracticable." Likewise, in certain industries with a long record of labor difficulties, the nonoccurrence of strikes and picket lines could not fairly be said to be a basic assumption of the agreement.*

  • *Where one party is better able to reduce the risk or the harmWhere one party is better able to value the lossAssuming risk aversion, where one party is wealthier than the otherAssuming risk aversion, where one party is a better insurer because he can diversify the riskFour kinds of Least-Cost Risk Avoiders

  • Eastern Air Lines 767Requirements contract upheld at 314*

  • Eastern Air Lines

    Now: Impracticability under UCC 2-615*

  • Eastern Air Lines

    How had Gulf protected itself against price increases (and why didnt this work?)*

  • Eastern Air LinesNow: Impracticability under UCC 2-615?*

  • Eastern Air LinesNow: Impracticability under UCC 2-615?The Suez cases offer little encouragement*

  • Eastern Air LinesNow: Impracticability under UCC 2-615?Those cases offer little encouragementWe will not allow a party to escape a bad bargain because it is burdensome*

  • Eastern Air LinesNow: Impracticability under UCC 2-615?Those cases offer little encouragementWe will not allow a party to escape a bad bargain because it is burdensomeEven great hardship not enough since the events were foreseeable*

  • Eastern Air Lines

    Now: Impracticability under UCC 2-615?Is this case inconsistent with Alcoa?*

  • Beaver Creek p. 775

    Did the parties seek to bargain for a broader doctrine of impracticability in their gross inequity clause?Is this what the parties in Alcoa wanted?*

  • Beaver Creek p. 775

    Did the parties seek to bargain out of the conservative trend in their inequity clause?What about the price adjustment clause?*

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