Case Law
(Case Name & Answer)
(Case Name & Answer)
Facts: The “bar-napkin farm sale.”
Question: What rule about intent to contract did this case establish?
Case: Lucy v. Zehmer
Answer: Objective theory of assent — a party’s secret intent doesn’t matter if their outward words and acts would make a reasonable person think there was a contract.
A promise to do something you’re already legally obligated to do is not valid consideration. Name this rule.
The Preexisting Duty Rule.
What does Article 2 govern?
Transactions in goods (tangible, movable items).
What is the purpose of the Parol Evidence Rule?
To exclude prior or contemporaneous external evidence that would add to or contradict a final written agreement.
A bakery contracts for custom ovens at $10,000 each; supplier breaches. Comparable ovens now cost $11,000.
What are the buyer's expectation damages?
$1,000 × number of ovens = difference between cover price and contract price.
Facts: The contractor argued an indemnity clause didn’t cover damage to owner's own property.
Question: What interpretive rule did the California Supreme Court announce?
Case: Pacific Gas & Electric Co. v. G.W. Thomas Drayage
Answer: Contextual approach — extrinsic evidence is admissible to show that apparently clear language may have another meaning.
Taylor posts on Instagram: “Selling my espresso machine — first person to Venmo $200 gets it!” Alex Venmos immediately, but Taylor says she changed her mind.
Was Taylor’s post an offer?
It’s likely an offer — specific terms (“first person,” definite price, definite subject matter) and no further negotiation contemplated, so acceptance occurred by performance.
A contract is for installation of commercial carpet — $10,000 for materials, $15,000 for labor. It goes wrong.
UCC or Common Law?
Common law — Predominant purpose test → labor predominates.
What is an integrated agreement?
A writing the parties intended as the final expression of their agreement (partial or complete integration).
A print shop contracts to deliver flyers for a grand opening by Friday. Delivery is late, and the restaurant loses one day of advertising revenue.
Are those lost profits recoverable as expectation damages?
Only if they were foreseeable at the time of contracting. The print shop is liable for losses that naturally arise or that it had reason to know about when contracting.
Facts: Two merchants contract for cotton “to arrive on the ship Peerless.” Unbeknownst to them, two different ships named Peerless are sailing from Bombay at different times.
Question: What legal issue did this case illustrate?
Case: Raffles v. Wichelhaus
Answer: A misunderstanding / latent ambiguity — no “meeting of the minds,” so no contract.
Jesse promises to “try his best” to finish landscaping by May 1 but later claims the promise was too vague to enforce.
Is this an enforceable promise?
Probably not — “try his best” lacks definiteness and consideration (illusory promise) unless performance or reliance makes it binding.
Two merchants agree on a sale but forget to specify price. Seller delivers; buyer refuses to pay.
Is the contract valid under the UCC?
Yes — UCC § 2-305 fills the gap with a “reasonable price at time of delivery.”
What is the difference between course of dealing and course of performance?
Course of dealing = prior transactions between the parties
Course of performance = conduct under the present contract.
A carpenter agrees to build custom cabinets for $20,000. After starting, the homeowner wrongfully cancels. The carpenter had already spent $5,000 on materials and would have made $3,000 profit.
What are the carpenter’s expectation damages?
$8,000 — the expected profit ($3,000) plus costs incurred ($5,000) up to breach.
Facts: A designer gave an agent exclusive rights to market her brand, but the contract didn’t expressly require the agent to do anything.
Question: How did the court find consideration?
Case: Wood v. Lucy, Lady Duff-Gordon
Answer: By implying a duty of reasonable efforts — an implied promise supplied the consideration and mutuality needed for enforcement.
On Monday, Seller mails Buyer an offer to sell a vintage guitar for $1,000. On Wednesday, Buyer mails an acceptance. On Thursday, before receiving Buyer’s letter, Seller emails: “I revoke my offer.” Buyer’s acceptance arrives Friday.
Was a contract formed? If so, when?
Yes — under the Mailbox Rule, acceptance is effective upon dispatch (Wednesday), creating a contract before the revocation (Thursday). Seller’s revocation was ineffective because it was sent after acceptance was already dispatched.
Under UCC § 2-204, when can a contract for the sale of goods be formed even if one or more terms are left open?
When the parties intend to make a contract and there’s a reasonably certain basis for giving a remedy.
A lease says “Tenant responsible for all maintenance.” Tenant claims landlord promised orally to handle structural repairs.
Admissible or barred under PER?
Barred if the lease is completely integrated; allowed if it’s partially integrated and the term doesn’t contradict the writing.
Builder uses a slightly different marble than specified in a $1 million mansion. The substitution doesn’t affect market value but replacing it would cost $50,000.
How should expectation damages be measured, and why?
By diminution in value, not cost to replace.
This is because performance was substantial and full replacement would cause economic waste
Facts: A family deed reserved a right to repurchase but said nothing about assignability. Parol evidence showed the parties intended it to be non-assignable.
Question: Why did the court allow the evidence?
Case: Masterson v. Sine
Answer: Because the deed was only partially integrated and the offered evidence was consistent with the written terms — reinforcing that PER doesn’t bar context showing the parties’ intent.
A café owner tells a supplier, “We’ll buy all the ice cream we need this summer from you.” The supplier accepts and delivers for two weeks, then stops, claiming there was no binding contract because the quantity was indefinite.
Is the café’s promise enforceable?
Hint: UCC
Yes — this is an output/requirements contract under UCC § 2-306. Even though quantity isn’t fixed, it’s made definite by the good-faith requirements of the buyer. The supplier can’t unilaterally back out once performance began.
Under § 2-207, when do additional terms become part of a contract between merchants?
Unless the offer limits acceptance, they materially alter the contract, or the offeror objects within a reasonable time.
Jordan signs a contract to sell “the green house on Maple Street” to Riley for $400,000. Maple Street has two houses owned by Jordan: one painted green, and one that’s energy-efficient with a “green” certification. When Riley shows up to close, Jordan insists the deal was for the painted house; Riley insists it was for the certified eco-home.
Is this contract ambiguous, and what evidence can the court consider to interpret it?
Yes — this is a latent ambiguity: the words appear clear on their face, but external facts reveal multiple possible referents. Because of that, the court may admit extrinsic evidence (prior negotiations, conduct, circumstances, trade meaning of “green”) to determine which house the parties intended.
Under a contextualist approach (Pacific Gas & Electric), courts look beyond the four corners to see whether the term is reasonably susceptible to the asserted meaning.
Under a strict plain-meaning approach, some courts might initially bar such evidence until ambiguity appears on the face of the document.
A concert promoter hires a band for a Saturday show, agreeing to pay $10,000. The band cancels the day before. The promoter scrambles to find a replacement, paying $13,000 for another band and spending $2,000 on last-minute advertising. The show goes on, but ticket sales are lower than expected.
What expectation damages can the promoter recover from the original band?
The promoter can recover foreseeable, provable additional costs caused by the breach — here, the $3,000 difference in band fees and the $2,000 in reasonable mitigation expenses. The lost ticket sales are too speculative unless the promoter can prove they directly resulted from the cancellation.
Total recoverable expectation damages: $5,000.