1. 1 George Mason School of Law Contracts II Foreseeability, Third Parties F.H. Buckley fbuckley@gmu.edu

2. Foreseeability 2

3. Hadley v. Baxendale 113 3 The Hadley Mill, Gloucester UK

4. Hadley v. Baxendale Gloucester to Greenwich 4 2.5 hrs, according to Mapquest

5. Hadley v. Baxendale 5 Tel: 011-44-203-188-2100

6. Hadley v. Baxendale 6 Just why do you think Pickfords is out of the business? Milgard Tempering at 117

7. Hadley v. Baxendale 7 Where the damages are astronomical, are you sure who the least cost risk avoider is?

8. Hadley v. Baxendale 8 Where the damages are astronomical, are you sure who the least cost risk avoider is? Qu. Western Industries at 966

9. Hadley v. Baxendale 9 Just what was the Δs told?

10. Hadley v. Baxendale 10 Just what was the Δs told? What if the headnote had been correct?

11. Hadley v. Baxendale 11 Just what was the Δs told? What if the headnote had been correct? Why might this be a rule of efficiency?

12. Just what is on the cards? Sprang Industries 957 12 Battenkill Brudge

13. Just what is on the cards? Fort Pitt Bridge Why did the problem arise? 13

14. Just what is on the cards? Fort Pitt Bridge Fort Pitt breached by delivering late, with the result that Torrington incurred extra damages in pouring cement in cold weather Could Torrington recover for these expenses? 14

15. Just what is on the cards? Fort Pitt Bridge Could Torrington recover for these expenses? Yes, since the alternative of waiting another 8 months would have increased the damages even more A reasonable effort at mitigation 15

16. Increased labor costs in Cricket Alley 962 16

17. Increased labor costs in Cricket Alley What was the promise? 17

18. Increased labor costs in Cricket Alley What was the promise? And what expenses did Cricket Alley incur as a consequence of the breach? 18

19. Increased labor costs in Cricket Alley If increased labor costs are foreseeable, why not lost profits? Same diff… Recall Drews (new restaurant) Cook v. Woornick 965 19

20. Emotional Distress Valentine at 967 Is it foreseeable that one might suffer emotional distress on being fired? 20

21. Emotional Distress Valentine at 967 Is it foreseeable that one might suffer emotional distress on being fired? So why no recovery? Restatement § 353. 21

22. Emotional Distress Is Allen v. Jones consistent with Valentine? 22 Jules et Jim

23. Mitigation Luten Bridge: Building bridges to nowhere 23 Mebane Bridge Road, Eden NC

24. Mitigation Shirley MacLaine 24

25. Mitigation: Shirley MacLaine Which film was the biggest turkey? 25

26. Mitigation: Shirley MacLaine Which film was the biggest turkey? Was she entitled to do nothing? 26

27. Mitigation: Shirley MacLaine Which film was the biggest turkey? Was she entitled to do nothing? What if she had immediately walked in to a better contract? 27

28. Mitigation What if the injured party is a business that gets new clients after the breach? Kersage Computer at 978 28

29. Liquidated damages Restatement § 356 29

30. Lake River v. Carborundum Restatement § 356 30

31. Lake River v. Carborundum Lake River to bag and ship Carborundums Ferro Carbo Why did LR insist on a liquidated damages clause? 31

32. Lake River v. Carborundum Lake River to bag Carborundums Ferro Carbo Why did LR insist on a liquidated damages clause? And why was this a penalty? 32

33. Lake River v. Carborundum And why was this a penalty? So whats wrong with penalties? 33

34. Lake River v. Carborundum And why was this a penalty? So whats wrong with penalties? Lemons and signalling A suitable case for paternalism? The efficient breach argument? 34

35. C and H Sugar 35 MV Moku Pahu

36. C and H Sugar Sun to pay damages of $17K/day after delivery date of June 30, 1981 Sun completed the barge on March 16, 1982 Halter supplies the catamaran tug boat on July 15, 1982 Sun assembles tug to barge in July 82 36

37. C and H Sugar Sun to pay damages of $17K/day after delivery date of June 30, 1981, or $4.4M Was this in excess of the damages actually suffered? 37

38. C and H Sugar Sun to pay damages of $17K/day after delivery date of June 30, 1981 Was this in excess of the damages actually suffered? How does UCC § 2-718 assist? anticipated or actual A problem of concurrent causation 38

39. C and H Sugar Sun to pay damages of $17K/day after delivery date of June 30, 1981 Was this in excess of the damages actually suffered? Qu. Unit Vending v. Tobin at 990 39

40. Third Party Rights A wants to enter into a contract with B in which B agrees to benefit C. How should this be drafted? 40

41. Third Party Rights A wants to enter into a contract with B in which B agrees to benefit C. How should this be drafted? Are we sure that A wants C to have the right to sue B for non-performance? And why might he not? 41

42. Third Party Rights A wants to enter into a contract with B in which B agrees to benefit C. How should this be drafted? Suppose we are sure A wants C to have the right to sue B for non-performance How to do it? 42

43. Third Party Rights A wants to enter into a contract with B in which B agrees to benefit C. How should this be drafted? Suppose we are sure A wants C to have the right to sue B for non-performance Join C as a party to the contract 43

44. Third Party Rights A wants to enter into a contract with B in which B agrees to benefit C. How should this be drafted? Suppose we are sure A wants C to have the right to sue B for non-performance Suppose C has just departed in a hot air balloon and has left his BlackBerry behind? 44

45. Third Party Rights A wants to enter into a contract with B in which B agrees to benefit C. How should this be drafted? Suppose we are sure A wants C to have the right to sue B for non-performance Suppose C has just departed in a hot air balloon and has left his BlackBerry behind? Did he leave an agent behind? 45

46. Third Party Rights A wants to enter into a contract with B in which B agrees to benefit C. How should this be drafted? Suppose we are sure A wants C to have the right to sue B for non-performance Suppose C is not yet born or identified the winner of the 2012 Booker Prize 46

47. Third Party Rights Trust relationships AB C 47 settlortrustee beneficiary cestui que trust

48. Third Party Rights Trust relationships AB C 48 settlortrustee beneficiary cestui que trust trust res Legal Interest Beneficial Interest

49. Restatement 302 So when would you rely on it? appropriate to effectuate the intention of the parties Either: Satisfies an obligation of the promisee to pay money to the beneficiary; or Circumstances indicate that the promisee intends to give the beneficiary the benefit of the promise 49

50. Restatement 302 So when would you rely on it? appropriate to effectuate the intention of the parties Either: Satisfies an obligation of the promisee to pay money to the beneficiary; or Circumstances indicate that the promisee intends to give the beneficiary the benefit of the promise 50

51. Lawrence v. Fox 51

52. Lawrence v. Fox HollyFoxΔ Lawrence Π 52 $300

53. Lawrence v. Fox Was the promise revocable? Was Fox an agent of Lawrence? 53

54. Lawrence v. Fox Was the promise revocable? Was Fox an agent of Lawrence? Why didnt Lawrence sue Holly? Restatement 304 54

55. Lawrence v. Fox Does every externality give rise to third party rights? Eisenbergs hypothetical bargain 55

56. Donee Beneficiaries Restatement 302(1)(b) 56

57. Donee Beneficiaries: Seaver 1009 Restatement 302(1)(b) 57

58. Donee Beneficiaries: Seaver 1009 Mrs BemanJudge Seaver (niece) 58

59. Donee Beneficiaries: Seaver 1009 Why didnt a trust relationship arise? 59

60. Donee Beneficiaries: Seaver 1009 Why didnt a trust relationship arise? Natural obligations to family members 60

61. Donee Beneficiaries: Drake 1012 Why shouldnt the child be able to sue? 61

62. Donee Beneficiaries: Drake 1012 Why shouldnt the child be able to sue? Whats the distinction between a promise to pay college tuition and a promsie for periodic support? 62

63. Donee Beneficiaries: Drake 1012 Why shouldnt the child be able to sue? Whats the distinction between a promise to pay college tuition and a promise for periodic support? The duty ceases when the adult child refuses to heed to parents reasonable restrictions and leaves the custodial home 63

64. Creditor Beneficiaries Restatement 302(1)(a) 64

65. Creditor Beneficiaries: Hamill 1017 Hamill Gunnell Maryland (performance bond) 65 Operating capital

66. Creditor Beneficiaries In what sense was Maryland a third party beneficiary? 66

67. Creditor Beneficiaries In what sense was Maryland a third party beneficiary? Hamill promised to finance Gunnell and must have known about the need for a performance bond Gunnell owed Maryland 67

68. Creditor Beneficiaries: Pierce 1020 Pierce Gilbane subcontractorcontractor Nemours owner 68 HVAC

69. Summing up 69 An understanding of the common law…

70. Blackstone at the DC Circuit 70

71. Blackstone at the DC Circuit 71

72. Blackstone at the DC Circuit 72 Commentaries I.14 (1765) The law of England abhors, and will not endure the existence of, slavery within this nation: so that when an attempt was made to introduce it, by statute … the spirit of the nation could not brook this condition, even in the most abandoned rogues; and therefore this statute was repealed in two years afterwards. And now it is laid down, that a slave or negro, the instant he lands in England, becomes a freeman; that is, the law will protect him in the enjoyment of his person, his liberty, and his property.

73. R. v. Somerset (1772) 73 Granville Sharp

74. R. v. Somerset (1772) 74 Granville Sharp

75. R. v. Somerset (1772) 75 Wm Murray, Earl Of Mansfield

76. R. v. Somerset (1772) 76 The state of slavery is of such a nature, that it is incapable of being introduced on any reasons, moral or political, but only by positive law, which preserves its force long after the reasons, occasion, and time itself from whence it was created, is erased from memory. It is so odious, that nothing can be suffered to support it, but positive law. Whatever inconveniences, therefore, may follow from the decision, I cannot say this case is allowed or approved by the law of England; and therefore the man, James Somerset, must be discharged.