1. 1 George Mason School of Law Contracts II Specific Performance F.H. Buckley fbuckley@gmu.edu

2. Next day 2

3. We’re against “economic waste”…  But just what does that mean? 3

4. Is it economic waste when Newt Gingrich goes shopping? 4

5.  You wouldn’t ask that if you knew Callista…  I don’t even want to go there…  There is no evidence of force or fraud or a want of capacity…  All of the above. 5

6. 6 Pareto-Superiority was our definition of waste Mary Bess A   B C D E   

7. 7 Which implies subjective value Mary Bess A   B C D E   

8. How would we apply Paretian criteria to the law of damages? 8

9. Give them the remedy specified in the contract (absent externalities)  Globe Refining at 93 9 Oliver Wendell Holmes 1841-1935

10. What happens when the contract is silent about the penalty? 10 Give them what they “probably would have said if they had spoken about the matter.”

11. Would the parties have bargained for the expectation interest?  The expectation interest sets the measure for compensatory damages It seeks to put the parties in the position they would have been in had the contract been enforced 11

12. Would the parties have bargained for the expectation interest?  The expectation interest sets the measure for compensatory damages And what do we need to know to do that in Peevyhouse? 12

13. Would the parties have bargained for the expectation interest?  The expectation interest sets the measure for compensatory damages And what do we need to know to do that in Peevyhouse?  How much money would Garland have to pay the Peevyhouses to make them indifferent between the money and the repair 13

14. Would the parties have bargained for the expectation interest?  Problems in calculating subjective valuations Condition vs Warranties Cost of Repair and “waste” Specific Performance 14

15. Would the parties have bargained for the expectation interest?  Condition vs Warranties Jacob & Youngs Grun Roofing 15

16. Would the parties have bargained for the expectation interest?  Cost of Repair and “waste” A $300 award in Peevyhouse amounts to undercompensation  Does this give Garland an inefficient incentive to breach? 16

17. Would the parties have bargained for the expectation interest?  Cost of Repair and “waste” Is there overcompensation in American Standard?  Does this deter an efficient breach? 17

18. When would the parties bargain for specific performance? 18

19. When would the parties bargain for specific performance?  Things of idiosyncratic value to a purchaser Subjective value to Π exceeds market value  Courts would flub subjective value 19

20. When would the parties bargain for specific performance?  Things of idiosyncratic value to a purchaser Land: Lucy v. Zehmer at 17 20 “Tis the only thing worth fighting for, worth dying for”

21. When would the parties bargain for specific performance?  Why Land? 21

22. When would the parties bargain for specific performance?  Why Land? Idiosyncratic? Ease of Enforcement 22

23. When would the parties bargain for specific performance?  Why Land? Idiosyncratic? Ease of Enforcement Ease of renegotiation to a higher-valued third party 23

24. When would the parties bargain for specific performance?  Things of idiosyncratic value to a purchaser Heirlooms 24 The Pusey Horn

25. When would the parties bargain for specific performance?  Things of idiosyncratic value to a purchaser Beyond that? Sedmak at 880 25 1978 Corvette Pace Car

26. When do damages not suffice?  What kind of a doctor would want seven Corvettes? 26

27. When do damages not suffice?  Sedmak  Deposit paid, sale at MSRP with options  After the changes, dealer to provide a “contract” 27

28. When do damages not suffice?  Sedmak Was there a contract? What about the Statute of Frauds? 28

29. When do damages not suffice? Was there a contract? What about the Statute of Frauds? What about Specific Performance? 29

30. When do damages not suffice?  Specific Performance UCC § 2-716(1): “unique goods or in other proper circumstances”  Comment 1 30

31. When do damages not suffice?  Specific Performance UCC § 2-716(1): “unique goods or in other proper circumstances” Is this like Boeving at 882? 31

32. When do damages not suffice?  Why “proper circumstances” in Sedmak? 32

33. When do damages not suffice?  Why “proper circumstances” in Sedmak? Limited production and availability problems Rise in price? 33

34. When do damages not suffice?  Why “proper circumstances” in Sedmak? Limited production and availability problems Rise in price?  Why wouldn’t damages cover it? 34

35. When do damages not suffice?  Why “proper circumstances” in Sedmak? Limited production and availability problems Rise in price?  Why wouldn’t damages cover it?  What might the buyer have done? 35

36. When do damages not suffice? Klein v. Pepsico 107 36 The Law School’s Gulfstream G-II The “Efficient Breach”

37. When do damages not suffice? PepsiCo (Rashid) Universal Jet Sales (Janas) Klein 37

38. When do damages not suffice?  So why did PepsiCo back out? 38

39. When do damages not suffice?  Klein v. Pepsico 39 Donald Kendall pours Nikita Khrushchev a Pepsi as Richard Nixon observes greedily, 1959

40. When do damages not suffice?  Why did Klein want the plane? 40

41. When do damages not suffice?  Klein v. Pepsico Was the plane unique? 41

42. When do damages not suffice?  Klein v. Pepsico Was the plane unique? What about the price increase?  Could money damages make the Π whole with respect to the price increase? 42

43. When do damages not suffice?  Klein v. Pepsico Was the plane unique? What about the price increase?  Could money damages make the Π whole with respect to the price increase?  So why didn’t Klein cover under UCC §§ 2- 712, 2-715? 43

44. When do damages not suffice?  Klein v. Pepsico Was the plane unique? What about the price increase?  Is cover risk-free for the buyer? 44

45. When do damages not suffice?  Why a different result in King v. Lane at 883? 45

46. When do damages not suffice?  Why a different result in King v. Lane at 883? What does “unique” mean? Is “other proper circumstances” all about cover?  If one can’t cover, could damages still suffice? 46

47. When do damages not suffice?  Triple A Baseball Club at 884 47 The Maine Phillies

48. When do damages not suffice?  Are people always unique? 48

49. When do damages not suffice?  Triple A Baseball Club 49 Doug Jones, 303 saves in the majors

50. Special Issues  Monetary Specific performance  Marketing Contracts  Performance Contracts  Personal Services Contracts 50

51. Monetary Specific Performance  Bander v. Grossman at 884 51 Aston Martin DB-5

52. Monetary Specific Performance  Bander v. Grossman Purchase price of $40,000 Price at breach of $60,000 Resale for $225,000 Price at trial of $80,000 How would a constructive trust work and is it applicable here? 52

53. Monetary Specific Performance  Bander v. Grossman Purchase price of $40,000 Price at breach of $60,000 Resale for $225,000 Price at trial of $80,000 Why did the court award damages of $20,000? 53

54. Monetary Specific Performance  Monetary Specific Performance: Bander v. Grossman Purchase price of $40,000 Price at breach of $60,000 Resale for $225,000 Price at trial of $80,000 Why did the court award damages of $20,000? 54

55. Monetary Specific Performance  Monetary Specific Performance: Bander v. Grossman What makes a car unique?  The only Aston Martin the dealer has?  The only one in the state?  What about the Ferrari and the Lamborghini? 55

56. Marketing Contracts 56

57. Marketing Contracts  Playgirl at 886 57 Playgirl Centerfold Winner Sen. Scott Brown (R. MA)

58. Marketing Contracts  Did the court agree that “Playgirl alone and uniquely provides an advertising audience composed of young, malleable and affluent females”? 58

59. Marketing Contracts  Did the court agree that “Playgirl alone and uniquely provides an advertising audience composed of young, malleable and affluent females”? The Court: We think there are lots of other magazines that cater to this market 59

60. Marketing Contracts  Whom do the equities favor? 60

61. Marketing Contracts  Can you distinguish Playgirl from Davis v. Ziff? 61

62. Marketing Contracts  Can you distinguish Playgirl from Davis v. Ziff? Life and death for PC Brand? 62

63. Performance contracts 63

64. Performance contracts  Why might SP be inappropriate in a case like Jacob & Youngs v. Kent or Peeyhouse? 64

65. Performance contracts  Why might SP be inappropriate in a case like Jacob & Youngs v. Kent or Peeyhouse? Costs of judicial supervision 65

66. Performance contracts  Why might SP be inappropriate in a case like Jacob & Youngs v. Kent or Peevyhouse? Recall condition vs warranty: overcompensation 66

67. Performance contracts  Why might SP be inappropriate in a case like Jacob & Youngs v. Kent or Peevyhouse? Recall condition vs warranty: perverse incentives 67

68. Performance contracts  Why might SP be inappropriate in a case like Jacob & Youngs v. Kent or Peevyhouse? Recall condition vs warranty: transaction costs 68

69. Personal Service Contracts 69

70. Personal Services Contracts http://www.youtube.com/watch?v=iXw9olWJ0Ak 70 Anita Baker

71. Personal Services Contracts?  How was the application for injunctive relief like SP? 71

72. Personal Service Contracts  Why no specific performance? 72

73. Personal Service Contracts  Why no specific performance? Cost of judicial spervision Incentive to underperform Liberty interest (remember non- competes) 73

74. Personal Services Contracts?  Why wasn’t Mellon v. Cessna at 885 a personal services contract? 74

75. 75 George Mason School of Law Contracts II Reliance Damages F.H. Buckley fbuckley@gmu.edu