3/9/2006Class 261 Class 26, Thursday, March 9, 2006 Announcements Friday455-78, including Problem 6-1 Today’s agenda Q & A, Problem 5-1 Implied obligations Wood v. Lucy, Lady Duff-Gordon Leibel v. Raynor Locke v. Warner Bros., Inc.

3/9/2006Class 262 Today is a good day to learn about Ratboy, a film that even Netflix does not carry.

3/9/2006Class 263 Wood v. Lucy, Lady Duff-Gordon New York Court of Appeals 222 N.Y. 88, 118 N.E. 214 (1917)

3/9/2006Class 264 Who is suing whom? For what kind of damages? What is the subject matter of the transaction? What is the legal basis for the claim? What is the duty that P is claiming that D breached?

3/9/2006Class 265 What is the factual basis for the claim? Arguments/defenses? Who won at the trial court level? Appeal? This appeal?

3/9/2006Class 266 Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore?

3/9/2006Class 267 What duty is Wood claiming that Lucy, Lady Duff-Gordon breached?

3/9/2006Class 268 What is Lady Duff-Gordon’s defense?

3/9/2006Class 269 Cardozo A promise may be lacking, and yet the whole writing may be “instinct with obligation,” imperfectly expressed.... If that is so, there is a contract.

3/9/2006Class 2610 Illusory promises revisited

3/9/2006Class 2611 What if Lady Duff-Gordon claimed that she believed, at the time of contract formation, that the contract was unenforceable because of a failure of consideration?

3/9/2006Class 2612 Note 4 If Lady Duff-Gordon had not breached the contract, but instead, was dissatisfied with Wood’s performance, on what basis could she sue?

3/9/2006Class 2613 Leibel v. Raynor Manufacturing Co. Kentucky Court of Appeals 571 S.W.2d 640 (1978)

3/9/2006Class 2614 Who is suing whom? For what kind of damages? What is the subject matter of the transaction? What is the legal basis for the claim? What is the duty that P is claiming that D breached?

3/9/2006Class 2615 What is the factual basis for the claim? Arguments/defenses? Who won at the trial court level? This appeal?

3/9/2006Class 2616 Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore?

3/9/2006Class 2617 UCC Article 2 sale of goods?

3/9/2006Class 2618 § Absence of Specific Time Provisions; Notice of Termination. (1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.contract (2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.contract (3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.Terminationcontract agreement

3/9/2006Class 2619 Percentage leases Hypo: A psychotherapist leases office space from L. Under the terms of the lease, she is to pay on a monthly basis rent calculated as 25% of her gross receipts. After a few months, with the practice not going well, she stops seeing clients and starts paying nothing in rent. If L sues, what duty can L claim that the psychotherapist is breaching?

3/9/2006Class 2620 Compare with CW leases land to operate a car wash from O. Under the terms of the lease, CW is to pay each month the greater of 10% of gross receipts for that month or $750. After a few months, CW closes down the business but continues to pay $750 a month. Can O claim that CW breached a duty owed under the lease?

3/9/2006Class 2621 Compare with CW leases land from O to operate a car wash business with rental based on 10% of gross receipts. In the beginning, gross receipts are high because CW operates a high volume car wash—CW washes a lot of cars but makes little net profit. CW then realizes that car detailing, which has lower gross receipts, is more profitable. CW then shifts the focus of the business to car detailing, which results in lower gross receipts and pays O less in rent.

3/9/2006Class 2622 Locke v. Warner Bros., Inc. California District Court of Appeal 57 Cal. App. 4th 354, 66 Cal. Rptr. 2d 921 (1997), review denied (Nov. 19, 1997)

3/9/2006Class 2623

3/9/2006Class 2624

3/9/2006Class 2625 Who is suing whom? For what kind of damages? What is the subject matter of the transaction? What is the legal basis for the claim? What is the duty that P is claiming that D breached?

3/9/2006Class 2626 What is the factual basis for the claim? Arguments/defenses? Who won at the trial court level? This appeal?

3/9/2006Class 2627 Issue? Authorities/Rule? Application to facts in case? What policies does it further/ignore?

3/9/2006Class 2628 discretionary rights “satisfaction” clauses

3/9/2006Class 2629 comparing and contrasting cases Carma Developers v. Marathon Development Third Story Music v. Waits

3/9/2006Class 2630 End of Class Friday455-78, including Problem 6-1