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1 George Mason School of Law Contracts II Mistake F.H. Buckley

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1 1 George Mason School of Law Contracts II Mistake F.H. Buckley

2 Mistake and Impossibility An regret contingency occurs: what are the possibilities? 2

3 Mistake and Impossibility An regret contingency occurs: what are the possibilities? 1.Breach of contract 2.Condition precedent (subsequent), mistake, frustration 3

4 What are the possibilities? So when should the event give rise to liability by one of the parties See last day on least-cost risk-bearing 4

5 What are the possibilities? So when should the event put an end to obligations under the contract, without any liability? 5

6 Catastrophic Events Force majeure clause A 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. 6

7 Catastrophic Events Force majeure clause Why no least cost risk avoiders here? No one can efficiently reduce the risk No one is better able to evaluate risk Risk not diversifiable 7

8 Non-catastrophic events? Vendor sells goods to Buyer for price $P Vendors subjective valuation of the goods is $V, while that of buyer is $B 8

9 Non-catastrophic events? Vendor sells goods to Buyer for price $P Vendors subjective valuation of the goods is $V, while that of buyer is $B Two states of the world are foreseen: High and Low 9

10 Non-catastrophic events? Vendor sells goods to Buyer for price $P Vendors subjective valuation of the goods is $V, while that of buyer is $B Two states of the world are foreseen: High and Low In the High world, its a good deal for both parties: For the vendor P > V High For the buyer B High > P 10

11 Non-catastrophic events? Vendor sells goods to Buyer for price $P Vendors subjective valuation of the goods is $V, while that of buyer is $B Two states of the world are foreseen: High and Low In the Low world, its a bad deal: For the vendor P < V Low For the buyer B Low < P 11

12 Non-catastrophic events? Vendor sells goods to Buyer for price $P Vendors subjective valuation of the goods is $V, while that of buyer is $B Two states of the world are foreseen: High and Low In the Low world, its a bad deal So wed expect that Low world events would be covered by a condition precedent 12

13 Non-catastrophic events? Vendor sells goods to Buyer for price $P Vendors subjective valuation of the goods is $V, while that of buyer is $B Two states of the world are foreseen: High and Low Its also a bad deal if losses to losers (e.g. the buyer) exceed gains to winners (e.g. the vendor) P – V Low (gain to Vendor) < P – B Low (loss to Buyer) Or B Low > V Low 13

14 Express and Implied Excuses Conditions precedent (subsequent) Mistake Impracticability, Impossibility, Frustration 14

15 Mistake and Impossibility 15 Time Formation of Contract

16 Mistake and Impossibility 16 Time Formation of Contract Mistake, Condition Precedent

17 Mistake and Impossibility 17 Time Formation of Contract Mistake, Condition Precedent Impossibility, Frustration, Condition Subsequent

18 Mistake and Impossibility How to tell them apart? 18 Time Formation of Contract Mistake Condition Precedent Impossibility, Frustration, Condition Subsequent

19 Mistake and Impossibility 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? 19

20 Mistake and Impossibility 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? 20

21 What kind of an event voids a contract? 21

22 What kind of an event voids a contract? Mistake as to the identity of the subject of the contract: Raffles v. Wichelhaus (1864) 22 Peerless IPeerless II

23 What kind of an event voids a contract? Mistake as to the identity of the subject of the contract: Was there any way to enforce this? Restatement 20(1)(a), illustration 2 23

24 What kind of an event voids a contract? Mistake as to the identity of the subject of the contract: What if both had meant the same ship? Illustration 1 24

25 What kind of an event voids a contract? Mistake as to the identity of the subject of the contract: 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 25

26 What kind of an event voids a contract? Mistake as to the identity of the subject of the contract: What if both parties know of the others mistake? 20(1)(b), Illustration 2 26

27 What kind of an event voids a contract? Mistake as to the identity of the subject of the contract: What if one party is mistaken and the other party knows of his mistake? 20(2)(a) 27

28 What kind of an event voids a contract? Mistake as to the identity of the subject of the contract: What if one party is mistaken and the other party knows of his mistake? 20(2)(a) Whats the logic behind this? 28

29 What kind of an event voids a contract? Restatement §20 Mutual mistake both parties mistaken: 20(1)(a) 29

30 What kind of an event voids a contract? Restatement §20 Mutual mistake Unilateral mistake Only one party mistaken: 20(2) 30

31 What kind of an event voids a contract? Restatement §20 Mutual mistake Unilateral mistake The anomalous case: 20(1)(b) 31

32 What kind of an event voids a contract? What if there was no mistake as to the identity of the object of the contract referred to, but there was a mistake about its nature? 32

33 Mistakes as to the nature of goods Sherwood v. Walker 33 Hiram Walker

34 Another Hiram Walker product 34 Hiram Walker Canadian Club

35 Aberlone, Rose of By Brainerd Currie 35 Hiram Walker '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.

36 36

37 37 George Mason School of Law Contracts II Mistake F.H. Buckley

38 Next day Scott Scott

39 Self-enforcing agreements and regret contingencies 39 Time Formation of Contract If no regret contingencies, an agreement is self-enforcing

40 Self-enforcing agreements and regret contingencies 40 Time Formation of Contract If every regret contingency excused performance, what would be legal enforcement add?

41 A regret contingency occurs: what are the possibilities? 41

42 A regret contingency occurs: what are the possibilities? 1.Both parties want out, and write a termination agreement 2.Only one party wants out 42

43 A regret contingency occurs: One party wants out One party expressly or impliedly takes the risk: Breach of contract Restatement §§ 152, 153 (unless he bears the risk of the mistake) 43

44 A regret contingency occurs: One party wants out One party expressly or impliedly takes the risk: Breach of contract Restatement §§ 152, 153 (unless he bears the risk of the mistake) Messerly at p. 725 The presence of an as is clause 44

45 A regret contingency occurs: One party wants out One party expressly or impliedly takes the risk: Breach of contract Restatement §§ 152, 153 (unless he bears the risk of the mistake) Restatement § 154 Express allocation of risk Assumes the risk as to limited knowledge reasonable (least cost risk avoider?) 45

46 A regret contingency occurs: One party wants out One party expressly or impliedly takes the risk: Breach of contract Parties have provided for it as a condition precedent or subsequent 46

47 A regret contingency occurs: One party wants out One party expressly or impliedly takes the risk: Breach of contract Parties have provided for it as a condition precedent or subsequent A gap-filling court voids the contract under doctrines of mistake, impossibility, frustration, etc. Seen as implied conditions precedent, subsequent 47

48 Mutual Mistake Restatement § 152 Mistake of both as to a basic assumption Has a material effect on the agreed exchange Comment c: resulting imbalance is so severe that he cannot fairly be required to carry it out Parties did not agree that one would bear the risk 48

49 Unilateral Mistake Restatement § 153 Mistake of both as to a basic assumption Has a material effect on the agreed exchange Parties did not agree that one would bear the risk Adds a further requirement: Unconscionability or other party had reason to know of the mistake or his fault caused it 49

50 What is a basic assumption 50 Substance of the thing vs. quality or accident Error in substantibus Error going to the root of the matter

51 Sherwood v. Walker 51 Barren Cow What is Roses essence: cowness or barren cowness Fertile Cow

52 Sherwood v. Walker 52 Did the mistake have a material effect on the exchange of performances? And is that the same thing as a basic assumption of the agreement?

53 Sherwood v. Walker 53 Should the onus have been on the seller to specify a condition subsequent?

54 Sherwood v. Walker 54 Barren Cow Was Walker in a better position to know the condition of the cow? Fertile Cow

55 Qu. Backus v. MacLaury p

56 Qu. Backus v. MacLaury p No mistake: Buyer realized the calf might be sterile and took the risk

57 Qu. Backus v. MacLaury p No mistake: Buyer realized the calf might be sterile and took the risk How was this different from Hiram Walker? No one took the risk that Rose was fertile

58 Anderson v. OMeara Buyer wants a Sweep Dredge to lay pipeline

59 Anderson v. OMeara Seller sells submarine trenching equipment

60 Anderson v. OMeara 60 The District Court found a mutual mistake. Why did the Circuit Court disagree?

61 Anderson v. OMeara 61 The District Court found a mutual mistake. Why did the Circuit Court disagree? Buyer thought that the dredge would be suitable for sweep dredging and seller knew better So a unilateral mistake

62 Anderson v. OMeara 62 So a unilateral mistake Would it be unconscionable to hold buyer to the contract?

63 Anderson v. OMeara 63 So why was the contract upheld? Seller didnt know what it was to be used for Buyer should have communicated the purpose Who was the least cost risk avoider?

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

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

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

67 Mutual Mistake: Jeselsohn p How would you decide this?

68 Mutual Mistake: Jeselsohn p How would you decide this? The buyer could not have discovered the error by consulting the registry of deeds

69 Mutual Mistake: Gartner p Did one person have a special duty to investigate?

70 Unilateral Clerical Mistakes 70 Alcoa at 737

71 Unilateral Clerical Mistakes 71 Elsinore at 728

72 Unilateral Clerical Mistakes 72 Elsinore at 728 Does it matter that the error was only $3K on a $90K bid Cf. Restatement 153, comment d

73 Unilateral Clerical Mistakes 73 Elsinore at 728 Does it matter that the error was only $3K on a $90K bid Does it matter that the bidder notified the school board the next day?

74 Unilateral Mistakes: Irmen v. Wrzesinski at $349 on E-Bay

75 Irmen v. Wrzesinski 75 How is this case like Laidlaw v. Organ?

76 Irmen v. Wrzesinski 76 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.

77 Mutual Mistake: Alcoa 730 What was the deal? 77

78 Mutual Mistake: Alcoa What was the deal? Alcoa to convert alumina (aluminum oxide) for Essex EssexAlcoa 78 Alumina Aluminum

79 Mutual Mistake: Alcoa How was the pricing arrived at? 79 You cant lose, Alcoa. Believe me!

80 Mutual Mistake: Alcoa How was the pricing arrived at? 80 And since housing prices can only go up, we need low interest rates so the improvident can buy second homes

81 Mutual Mistake: Alcoa How was the pricing arrived at? 81 Of course, we all know that the future will resemble the past Non-labor production cost = 0.03/lb.

82 Mutual Mistake: Alcoa How was the pricing arrived at? 82 What happened to non-labor costs?

83 Mutual Mistake: Alcoa Why did Essex want the supply of aluminum 83

84 Mutual Mistake: Alcoa Why did Essex want the supply of aluminum And what did it end up doing with the aluminum it bought? Was this prohibited by the contract? Cf. quantities on p

85 Mutual Mistake: Alcoa Why did Essex want the supply of aluminum And what did it end up doing with the aluminum it bought? Was this prohibited by the contract? Cf. quantities on p. 732 What if this had been seen as a requirements contract under 2-306? 85

86 Mutual Mistake: Alcoa What was the mutual mistake, if any? Basic assumption or material effect or both? 86

87 Mutual Mistake: Alcoa What was the mutual mistake, if any? A present actuarial error or a mistake as to the future? How would you state this as a present fact Should it matter which it is? 87

88 Mutual Mistake: Alcoa What was the mutual mistake, if any? A present actuarial error or a mistake as to the future? Is Leasco different? 88

89 Mutual Mistake: Alcoa Did Alcoa assume the risk? 89

90 Mutual Mistake: Alcoa Did Alcoa assume the risk? Express language Trade custom Implied term: 739 conscious ignorance of the facts: a calculated gamble 90

91 Mutual Mistake: Alcoa Did Alcoa assume the risk? How would you have drafted the contract on Alcoas behalf? 91

92 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… 92

93 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? 93

94 How do you think the parties would bargain to allocate such risks? What about the inclusio unius canon? Or the contra proferentem canon?:

95 Mutual Mistake: Alcoa What kind of a remedy? Why wasnt rescission ordered? 95

96 Mutual Mistake: Alcoa What kind of a remedy? Reformation: how was the new price arrived at? 96

97 Mutual Mistake: Alcoa What kind of a remedy? The practice of foreign countries p. 744 Split the difference? How does fairness cut? 97

98 How many contracts do you think were affected by the oil crisis 98

99 How many contracts do you think were affected by the oil crisis 99 Why a different result in Eastern Air Lines p. 314 UCC on requirement contracts Held: a binding contract

100 How do you think the parties would bargain to allocate such risks? Who was in a better position to quantify the risk in Eastern Air Lines? 100

101 How do you think the parties would bargain to allocate such risks? What about the case where no one could have foreseen the problem? 101

102 When is a mistake a mistake: Atlas Atlas Corp. uranium tailings pile

103 When is a mistake a mistake What was the mistake? 103

104 When is a mistake a mistake What was the mistake? That the health hazard was much greater than had been thought 104

105 When is a mistake a mistake What was the mistake? That the health hazard was much greater than had been thought And why wasnt that a mistake at law? 105

106 When is a mistake a mistake What was the mistake? That the health hazard was much greater than had been thought And why wasnt that a mistake at law? A mistake is a mistaken belief about an existing fact: Alcoa, Walker. But there is no mistaken belief about a fact whose existence was not known. 106

107 When is a mistake a mistake What was the mistake? That the health hazard was much greater than had been thought And why wasnt that a mistake at law? Is this a sensible distinction, in terms of risk allocation? 107

108 When is a mistake a mistake What was the mistake? That the health hazard was much greater than had been thought And 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? 108

109 Mistake vs. Impracticability and Frustration Should the timing difference have anything to do with what counts as an excuse? 109

110 Mistake vs. Impracticability and Frustration Should the timing difference have anything to do with what counts as an excuse? Cf. Restatement § 266 Mistake or Impossibility/Frustration 110

111 Mistake vs. Impracticability and Frustration Should the timing difference have anything to do with what counts as an excuse? Cf. Restatement 261 on supervening impracticability The possibility of reliance damages? 111

112 Impossibility and Impracticability The old rule: no relief unless a supervening event makes performance impossible: 112

113 Impossibility and Impracticability The old rule: no relief unless a supervening event makes performance impossible However, a person who promises to do something which turns out to be impossible can still be held liable in damages, if he takes the risk Paradine, Stees 113

114 Impossibility and Impracticability The old rule: no relief unless a supervening event makes performance impossible And the modern rule is based on a more generous standard of impracticability, not impossibility 114

115 Taylor v. Caldwell p Surrey Gardens Music Hall

116 Taylor v. Caldwell On the program: piece military band fireworks a wizard tight rope performances aquatic sports. 116

117 Taylor v. Caldwell Of the fire: Blackburn: men would say, if it were brought to their minds, that there should be such a condition 117 Lord Blackburn

118 Taylor v. Caldwell Of the fire: Blackburn: men would say, if it were brought to their minds, that there should be such a condition And why is that? 118 Lord Blackburn

119 Taylor v. Caldwell What contractual gains were lost because of the fire? 119

120 Taylor v. Caldwell What contractual gains were lost because of the fire? Landlord loses rent of £400 Lessee loses Gross profits less rent 120

121 Taylor v. Caldwell What possible allocation of risks can you imagine? 121

122 Taylor v. Caldwell What possible allocation of risks can you imagine? Lessee takes risk and owes LL £400: Paradine LL takes risk and owes lessee damages for foregone net profits Mistake: neither recovers anything 122

123 Taylor v. Caldwell What possible allocation of risks can you imagine? Mistake: neither recovers anything Why might this be the efficient result? 123

124 Taylor v. Caldwell What possible allocation of risks can you imagine? Mistake: neither recovers anything Why might this be the efficient result? LL best person to measure risk of fire and lessee is best person to determine lost profits 124

125 RNJ Interstate p. 88 Why a different result? 125

126 RNJ Interstate p. 88 Why a different result? The contractor shall be responsible … until completion and acceptance of the entire work… 126

127 RNJ Interstate p. 88 Why a different result? The contractor shall be responsible … until completion and acceptance of the entire work… Who should insure against fire? 127

128 Carroll v. Bowerstock p. 756 Is this consistent with RNJ Interstate? What did it mean to say that the allocation of risk could not be settled by contract doctrine? 128

129 Carroll v. Bowerstock p. 756 Is this consistent with RNJ Interstate? What did it mean to say that the allocation of risk could not be settled by contract doctrine? No duty for builder to perform, and recovery in quasi-contract 129

130 Carroll v. Bowerstock p. 756 Is this consistent with RNJ Interstate? If liability lay in unjust enrichment, where was the enrichment? 130

131 131 George Mason School of Law Contracts II Mistake F.H. Buckley

132 Next Day Contractual Measure of Damages Specific Performance 132

133 An frustrating set of rules surround mistake and frustration… 133

134 An frustrating set of rules surround mistake and frustration… The timing question What is a basic assumption When is risk assumed by one of the parties? 134

135 The timing question: The traditional view 135 Time Formation of Contract Mistake Condition Precedent Impracticability Frustration, Condition Subsequent

136 The timing question: Restatement Time ??? Mistake Condition Precedent Impracticability Frustration, Condition Subsequent

137 What is a basic assumption? Hiram Walker vs. Backus Alcoa vs. Leasco Alcoa vs. Eastern Air Lines (below) 137

138 When is a risk assumed? Hiram Walker vs. Backus Alcoa vs. Leasco Alcoa vs. Eastern Air Lines (below) 138

139 Mimicking the market If mistake and impracticability are like implied conditions, and if implied conditions are what the parties are assumed to have intended… Then when would they bargain for mistake or impracticability? 139

140 140 So why bargain for a Force Majeur Clause? Neither party shall be liable in damages or have the right to terminate this Agreement for any delay or default in performing hereunder if such delay or default is caused by conditions beyond its control including, but not limited to Acts of God, Government restrictions (including the denial or cancellation of any export or other necessary license), wars, insurrections and/or any other cause beyond the reasonable control of the party whose performance is affected. 140

141 Mimicking the market Consider the alternatives: Risk borne by party A Risk borne by party B No one bears the risk: force majeur, clause, mistake, impracticability etc. 141

142 Mimicking the market Consider the alternatives: On assumption of risk, refer to our discussion of least cost risk bearing Suppose that we can measure the risk, and that it imposes a cost of 100 on A and 200 on B. Anderson v. OMeara 142

143 Mimicking the market What if the risk can be quantified (eg 100) and is the same for both parties. Assume risk neutrality for both Assume that risk is diversifiable for both Do we care who assumes the risk in such a case? 143

144 Mimicking the market What if the risk is enormous, to the point where the parties are risk averse? Non-diversifiable risks E.g. war, nuclear disaster, Katrina 144

145 Mimicking the market What if the risk is enormous, to the point where the parties are risk averse? Non-diversifiable risks E.g. war, nuclear disaster, Katrina Does this fit in Restatement ? Is this how were to understand Alcoa? 145

146 Mimicking the market Where risk-sharing economizes on information costs Taylor v. Caldwell Under frustration, the owner of the theatre does not have to value the promoters lost profits and the promoter does not insure against fire (or pay the performers). 146

147 Howell v. Coupland p.750 Was this a sale of goods? 147

148 Howell v. Coupland Was this a sale of goods? UCC § 2-105(1),

149 Howell v. Coupland What was the frustrating event? Not an absolute contract 149 Lord Coleridge

150 Howell v. Coupland Could the seller have substituted other potatoes? 150

151 Howell v. Coupland Could the seller have substituted other potatoes? And why do you think he didnt? 151

152 Howell v. Coupland How would UCC handle this? When risk of loss passes to buyer: UCC 2-509(3) Why isnt applicable? 152

153 Jack Sherman hypothetical p. 756 Is this a sale of goods? Is applicable? 153

154 Aluminum v. Essex 770 Cf. p. 730: The choice of Greenspans non-labor production cost factor constituted a mistake Now were looking at the same issues under the rubric of impracticability and frustration. 154

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

156 Impracticability and Frustration Impracticability: focus on greatly increased costs Restatement § 261 Death or Incapacity of a person: 262 Res extincta etc.: 263 Govt reg:

157 Impracticability and Frustration Frustration: focuses on a partys severe disappointment caused by circumstances that frustrate his purpose in entering into the contract Restatement § 265 Illustration 3: Hotel destroyed Qu. 263? Illustration 4: Govt reg Qu. 264? 157

158 In general, however, conservatism rules 158

159 Seitz v. Mark-O-Lite 752 Was this a sale of goods? 159

160 Seitz v. Mark-O-Lite 752 Why didnt the force majeur clause apply? What is the eiusdem generis canon? 160

161 Seitz v. Mark-O-Lite Why not Restatement § 262? What gloss is added? See comment b 161

162 Seitz v. Mark-O-Lite Why not Restatement § 262? What gloss is added? If the existence of a particular person is understood to necessary by both parties 162

163 Seitz v. Mark-O-Lite Why not Restatement § 262? What gloss is added? Why does this make sense? 163

164 Canadian Industrial Alcohol Why did an industrial alcohol company need molasses?

165 Canadian Industrial Alcohol 165 Why did an industrial alcohol company need molasses? + =

166 Canadian Industrial Alcohol 166 Suppose that Dunbar had supplied the molasses from another refiner. Would that have been a breach?

167 Canadian Industrial Alcohol 167 Suppose that Dunbar had supplied the molasses from another refiner. Would that have been a breach? What would Cardozo have Dunbar do?

168 Bobby Murray Chevrolet

169 Bobby Murray Chevrolet Is this a sale of goods? UCC

170 Bobby Murray Chevrolet Is this a sale of goods? UCC Were the new regs forseeable? And if so, does that mean that Bobby Murray assumed the risk? 170

171 Transatlantic 760 July 26: Egypt nationalizes Sues canal July 30: PM Eden informs Nasser that Britain will prevent the takeover 171

172 Transatlantic July 26: Egypt nationalizes Sues canal July 30: PM Eden informs Nasser that Britain will prevent the takeover Aug. 2: Britain mobilizes Sept 12: US, Britain, France announce intention to impose a solution 172

173 Transatlantic July 26: Egypt nationalizes Sues canal July 30: PM Eden informs Nasser that Britain will prevent the takeover Aug. 2: Britain mobilizes Sept 12: US, Britain, France announce intention to impose a solution Oct. 2: Charterparty executed 173

174 Transatlantic July 26: Egypt nationalizes Sues canal July 30: PM Eden informs Nasser that Britain will prevent the takeover Aug. 2: Britain mobilizes Sept 12: US, Britain, France announce intention to impose a solution Oct. 2: Charterparty executed Oct 29: Israel invades Egypt 174

175 175

176 Transatlantic July 26: Egypt nationalizes Sues canal July 30: PM Eden informs Nasser that Britain will prevent the takeover Aug. 2: Britain mobilizes Sept 12: US, Britain, France announce intention to impose a solution Oct. 2: Charterparty executed Oct 29: Israel invades Egypt Nov. 29: Under US pressure, invading forces withdraw 176

177 Transatlantic What is the doctrine of deviation 177

178 Transatlantic What is the standard for commercial impracticability? 178

179 Transatlantic What is the standard for commercial impracticabilty? Regret contingency Risk not allocated Commercial impracticability 179

180 Transatlantic Why did it make sense to assume that the carrier assumed the risk? 180

181 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 This might already have been factored into the price. Risk of closure a matter of public notice 181

182 Transatlantic How would the case have been decided under UCC 2-614? 182

183 A movement to conservatism? Williamette

184 A movement to conservatism? Wegematic

185 A movement to conservatism? Wegematic 766 We 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. 185

186 A movement to conservatism? Mishara 766 A 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. 186

187 Eastern Air Lines 767 Requirements contract upheld at

188 Eastern Air Lines Now: Impracticability under UCC ? 188

189 Eastern Air Lines Now: Impracticability under UCC ? Those cases offer little encouragement… We will not allow a party to escape a bad bargain because it is burdensome Even great hardship not enough since the events were foreseeable 189

190 Beaver Creek p. 775 Did the parties seek to bargain out of the conservative trend in their inequity clause? 190

191 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? 191


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