Contracts - Brief Briefing PDF

**Contracts** (1-2 sentence of key facts and 1-2 sentence of rule) **Nature and History of Contract** [Shaheen v. Knight:] Facts: - P. contracted with D. to sterilize him, but the procedure was unsuccessful, so P. now claims damages for additional expenses incurred due to having an uni...

**Contracts** (1-2 sentence of key facts and 1-2 sentence of rule) **Nature and History of Contract** [Shaheen v. Knight:] Facts: - P. contracted with D. to sterilize him, but the procedure was unsuccessful, so P. now claims damages for additional expenses incurred due to having an unintended child. D. claims that there is no "warranty of cure" and cannot get damages for the absence of a contracted result. Rule: - There is no implied warranty of cure. Patients enter into contracts with their doctors but cannot claim damages for the lack of an intended result, although **they can contract for a particular result. \`**In this case, the court found that P. wasn't harmed by the result of having another child. **And no damages will be awarded if P does not suffer a harm from the breach.** **Remedies for Breach:** [Hawkins v. McGee:] Facts: - P. contracted with D. to perform corrective surgery as D. promised "100% good hand." Surgery resulted in a deformed hand with diminished function, so P. seeks damages for breach of contract. Rule: - Law of Contract formation: an enforceable contract is formed when a reasonable person would believe that the defendant was making a firm offer to meet terms stated. - Measure of recovery in damages is based on **expectation interest,** **difference in value between** 100% good hand **(**promised result) and the value of deformed hand (result received) but excludes ~~additional~~ the pain and suffering ~~as that~~ which was part of expected contract. [Nurse v. Barns:] Facts: - P. contracted with D. for the use of iron mills for six months, worth 20 pounds per year, but D. breached, and jury awarded damages of 500pds. Rule: - If P suffered natural and foreseeable losses due to the breach, P. may recover those reliance damages even if they exceed the expectation damages of the agreement. [Hadley v. Baxendale:] Facts: - P. contracted with D. for quick delivery of a replacement mill shaft crank and seeks damages claiming that the delay in receiving the part caused a loss of profits. D. claims that these damages were not "foreseeable" and that they were not aware of the special circumstances of the delivery. Rule: - Breaching party in a contract is only liable for damages that were reasonably foreseeable at the time of contract formation. If special circumstances (here, speed) are communicated, the breach would allow recovery for expectation damages (loss he has sustained and profit which he has been prevented from acquiring...) [Chicago Coliseum Club v. Dempsey] Facts: - P. contracted with D. to fight in a boxing match, later D breached by claiming they had no contract and had agreed to another fight. P seeks damages for loss in profits, pre-signing expenses, cost of litigation for preventing D from fighting, and post-signing expenses. Rule: - In an action for breach of contract, a party can only recover on damages that naturally flow from and are the result of breach and must be proven with reasonable certainty. Here, P. cannot recover damages for lost profits, pre-signing expenses, or cost of litigation, but can recover post-signing expenses under reliance interest. [Winston Cigarette co] Facts: Rule: [Mistletoe Express v. Locke] Facts: - P contracted with D. for a year, but D. breached forcing P. to close her business, incurring \$3,000 in losses while still owing \$9,000+ in startup expenses. P. seeks reliance interest damages due to the breach but D. claims that as P was not making a profit (even though losses were decreasing each month) damages awarded were unjust enrichment and request expectation interest. Rule: - An injured may recover reliance expenditures as damages as here, she was deprived of the opportunity to recoup them due to the breach. However, the injured party should not be in a better position than if the contract had been~~,~~ but the duty was on the D to prove losses and damages with reasonable certainty. [Rockingham County v. Luten Bridge Co] Facts: - P. contracted with D. to build a bridge but due to political factors, P. breached the contract and informed D. that they would not be paying for further work done on the bridge. D. continued working on the bridge until completed and now seeks full expectation interest. Rule: - When a non-breaching party in a contract receives notice that the other party is going to breach, they must mitigate damages and are only entitled to receive damages for work done up until the notice date. Here, D. is entitled to damages at time of giving notice, but they cannot increase damages by continuing work and then recover such damages from other party. [Parker v. 20th Century Fox] Facts: - P. contracted with D. to star in the film for \$750,000 and for certain privileges, but D. breached the contract by not producing the movie. D. claims that damages should not be awarded because P. did not mitigate damages and provided alternate employment in another film, but multiple contractual provisions were different. Rule: - Employees' rejection of or failure to seek other available employment of different or inferior kind does not amount to a failure to mitigate. Holding/Reasoning: - D's offer of a replacement contract is both different and inferior as the conditions and terms of employment were different (and worse) (subjective theory of value). [Neri v. Retail Marine] Facts: - P. contracted with D. to purchase a boat for immediate delivery and had a deposit, but became hospitalized so wanted to breach contract and get deposit back (restitution interest) D. was able to sell boat to another seller months later, but claims that they lost opportunity to sell two boats/get two profits, seek damages for expectation interest (including incidental damages). Rule: - Lost Volume Rule: volume seller (D.) is entitled to recover the profit (a reasonable overhead + incidentals) he or she would have made on a lost sale, regardless of resale. [Wassenaar v. Towne Hotel] Facts: - P. was hired by D. to be manager of hotel and signed 3-year contract with stipulated damages clause that if P. was fired before term expiration, P. would be paid remainder of his salary for remaining contract period. P was fired and seeks stipulated damages, but D. claims that clause is void as penalty as harm was foreseeable by employee and gives P. windfall recovery. Rule: - Once a stipulated damages clause is determined as enforceable, employee has no duty to mitigate damages. 3-step test to determine enforceability (1) Did parties intend to provide for damages or a penalty (2) Is injury caused by breach one that is difficult or incapable of accurate estimate? (if difficult to determine =\> stipulated damages are reasonable) (3) Are stipulated damages reasonable forecast of harm caused by breach (prospective-retrospective approach) Here, employee's earnings after the breach do not reduce damages awarded as liquidated damages is enforceable. [Lake River] Facts: - P. contracted with D. to supply abrasive for steel and would send 22,500 tons but D. was not able to provide the full amount, and due to a liquidated damages clause was required to pay P. \$241,000. D claims Rule: - Prospective Approach: Liquidation of damages must be reasonable estimate at time of contract formation of the likely damages from the breach. P. was not able to receive liquidated damages as they were much higher than possible loss but was entitled to damages = (contract value -- costs spared by not completing the contract) [Loveless v. Diehl] Facts: - P. contracted with D. to lease their farm for 3 years with option to purchase a farm for \$21,000 during the lease period. During this period, D's enacted promissory note for farm equipment for \$1,400+ from P. and contracted with individual to buy the land for \$22,000, but Ps claimed that they no longer wanted to sell. Now, P. is suing for breach of contract and D. claimed specific performance of awarding land. Rule: - Default remedy for breach of land sale is specific performance. Here, to deny specific performance and award damages below buyer's expenditures would result in unjust enrichment, as D's spent money on improving the land. [Cumbest v. Harris] Facts: - P. contracted for sale to D. for purchase of hifi radio equipment with option allowing P to repurchase equipment with a deadline, but D. received equipment and didn't give it back. P. seeks specific performance as the equipment of such unique value and a 1 of 1 unique item. Rule: - Specific performance will not be granted for goods unless the specific articles are of there is no adequate remedy at law, the item has peculiar sentimental or unique value and is not readily obtainable. Here, due to the irreplaceability of the equipment and unique value, it qualifies for specific performance. [Sedmak v. Charlies Chevrolet Inc.] Facts: - P. contracted with D. to purchase Corvette and put down deposit of \$500 with verbal agreement from D. However, D. breached by preventing P. from purchasing car and told them they paid to have the first bid, now P. requests specific performance. Rule: - Specific performance may be awarded where goods are unique or in other proper circumstances. Competing offers for the car and the considerable amount of work it would take to procure car show the rarity of the item making it eligible for specific performance. [Dallas Cowboys v. Harris] Facts: - P. contracted with D. to play football, but D. breached by agreeing to play for another team and so P. is seeking injunction and specific performance. P. claims that D. testified to his "uniqueness" that makes him subject to injunctive relief. Rule: - Injunctive relief will be granted to restrain violation in a personal service contract if employee is person of exceptional and unique knowledge, skill, and ability. Here, D is unique as there is no market substitute and so is subject to injunctive relief. But P. is not awarded specific performance because you can't force someone to work but can prevent him from working for someone else. [Britton v. Turner] Facts: - P. agreed to work for D. for a year for \$120 but breached after 9.5 months and claims quantum meruit for payment of work completed. D. claims that P. is not entitled to recover anything as he didn't perform the full service under the contract. Rule: - If employee voluntarily breaches contract for labor, employee is entitled under quantum meruit to reasonable value of services provided -- other party's damages from breach. Here, P. was awarded damages of \$95 but D. did not provide evidence of damages, so amount was not reduced. [Vines v. Orchard Hills] Facts: - P. contracted to buy condo from D. and paid downpayment of \$7,000+ as liquidated damages. P. then breached contract and claims restitution interest as breach enriched the defendant by allowing condo to appreciate in value and sell at higher price. D. claims that liquidated damages clause is appropriate as damages. Rule: - Buyer who breaches valid contract may obtain restitution from seller if amount paid exceeds seller's damages or losses, only if breaching party can prove that innocent party has attained a net gain will it be sustained. Basic measure of damages id difference between contract and market price at time of breach + damages, here the market price was unknown at trial time, but breaching parties can seek restitution of unjust enrichment. [Cotnam v. Wisdom ] Facts: - P. contracted with D. to provide medical services to after he fell off streetcar and hit his head. D. passed away but now Ps seek to recover compensation of services, but D. claims that they shouldn't recover as it was not successful. Rule: - Market Value Approach: Ps are allowed to be compensated under a contract **implied in law,** based on reasonable value to other party on what he received (ex. based on standard price of service) and cannot take into account the D's ability to pay. - "Implied in law" \-- fictional component that allows you to claim recovery in restitution, not a real contract you get the value of the benefit. [Martin v. Little, Brown & Co.] Facts: - P. sent plagiarism notice to D. providing plagiarized work and highlighted copy of breach which D. then agreed and pursued a copyright infringement claim. P. claims compensation for his services under implied contract but D. claims that they never entered a contract and are not obligated to compensate him. Rule: - ~~No quasi-contract~~ No contract was found as there was no assent expressed or implied. No quasi-contract because here, P. was a **volunteer**, and D. did not have to pay for unjust enrichment. A close-up of a document Description automatically generated [Quasi Contract -- Contract Implied in **Law**:] "\[T\]he recovery must be sustained by a contract by implication of law... A contract implied by law... has no actual existence. It is simply a mythical creation of the law." *Cotnam v. Wisdom.* - Quantum Meruit is the unjust enrichment theory of recovery; it supports the idea of a quasi-contract. (quasi-K ≠ real K b/c no mutual assent). [Contract implied in **Fact:**] "A contract, implied in fact, is an actual contract which arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from their acts in the light of the surrounding circumstances." *Martin v. Little, Brown.* - A real contract where mutual assent is implied by the circumstances. [Embry v. Hargadine, McKittrick Dry Goods Co] *Facts:* P. was employed by D. for a year long written contract for 2,000 per year. Prior to expiration, P contends that he was reengaged by company president for another year through a verbal agreement, but was let go in March. President said "go ahead you're all right, get your men out and don't let that worry you" which P took as verbal contract of employment. *Rule:* Objective theory of assent: regardless of parties' subjective or actual intent, if a reasonable person could infer from their conduct intent to enter into a binding and enforceable contract, a binding and enforceable contract is presumed to exist. [Lucy v. Zehmer: ] *Facts:* P's brought suit for specific performance, as they contracted to sell the land with D and he verbally agreed and signed for it. D's contend that the contract was a joke as he was drunk and that it is not valid agreement as they did not intend to sell. *Rule:* Restatement § 17: formation of the contract requires a bargain in which there is a manifestation of mutual assent. "If the words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to other party. Here, the D. showed objective assent by the defendants constituting a valid contract (they both signed the document and all their actions showed that they assented.) [Nebraska Seed Co v. Harsh:] *Facts:* P. alleges that D. refused to deliver seed after demand and sending letter to P that offered seed (language was general and may be used in an advertisement). P replied saying it would accept the offer for price quoted, and asked how soon he could load the seed, then sent another letter and payment for seed, to which D refused to deliver. P's claim that the letter was an offer which they accepted, creating a contract so his failure to deliver was a breach. D claims that there was no mutual assent because the initial letter was not an offer. *Rule:* Restatement § 26: Manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent. Factors include: terms of any previous inquiry, completeness of terms, number of persons to whom communications is addressed. Here, the court found there was no binding contract because the correspondence did not make a complete contract (the number and price of the bushels was not determined) [Lefkowitz v. Great MN Surplus Store:] *Facts:* D had advertised sale of furs in newspaper which offered them \$1 each, to first come first served. P appeared at the store that day and requested to purchase the item but D refused to sell saying that it was intended for women only. D's TOC: Advertisement offering items for sale is a unilateral offer which can be withdrawn, the advertisement was not an offer. *Rule:* Advertisement is not typically an offer as it creates power of acceptance in everyone who reads the ad, was not filtered or made for a specific audience. Here, the ad implied a quantity of people who can accept so it was a unilateral offer that was clear, definite, and explicit, leaving nothing open for negotiation, so P. was entitled to performance. [Leonard v. Pepsico:] *Facts:* P. brings suit for specific performance of Harrier Jet, which he claimed he earned through the Pepsi stuff promotional ad. D. claims that the ad was not an offer. *Rule:* Existence of an offer depends on the objective reasonableness of alleged offerees belief that the ad was intended as an offer. Here, this was an act done in jest and an objective/reasonable person would not find this offer to be serious. [Empro Manufacturing vs. Ball-Co Manufacturing] *Facts:* P drafted letter of intent to buy D, which contained general terms and conditions and stated that agreement was subject to approvals by board, etc but there was a divisive term. D. started negotiations with other company and P issued restraining order from continuing. *Rule:* Parties reached mutual assent without signing on dotted line. Open terms were cirtical component that showed the court the agreement was not determined. Intent must be determined from the language used in the writing and the language here, showed that P had the ability to walk at any point, so neither party intended to be bound and it is not a binding contract. [Arnold Palmer v. Fuqua] *Facts:* P and D entered into a deal to licenses/sell products but ultimately D. pulled out. P sued for breach and stated that the Parties had entered into an agreement/demonstrated intent to be bound. *Rule:* Parties reached mutual assent without signing on dotted line. Court needed more evidence through trial to determine parties intent and resolved by fact finder. Mutual assent could not be determined from the contract alone. [Dickinson v. Dodds] *Facts:* P contracted to buy D's house and as part of the agreement the D. left the offer open until Friday at 9 am on June 12th. P accepted offer before it was revoked by bringing offer in writing by Friday at 9 am. D revoked offer and sold house to someone else before P's acceptance. *Rule:* D made a promise *nudum pactum* (bare promise that is not legally binding). Here, the court found that there was no offer as P was aware of D changing his mind -- there was no existence of the "same mind" at any point in contracting and an offeror is free to revoke their offer. [Ardente v. Horan] *Facts:* P attempted to purchase D's house by making a bid of \$250,000. They sent back a letter and a check for \$20,000 which included a request for more information on the option to purchase furniture. D's refused to sell the furniture and refused to contract with Ps, so P seeks specific performance. *Rule:* Mirror Image Rule: Acceptance must mirror original offers terms and anything else is a counter offer, acceptance may not impose additional conditions or add limitations to the original offer. Here, P's letter was a qualified acceptance (formed a counter offer) and terminated the original offer, so they were not in a contract. [Carlil v. Carbolic Smoke Ball] *Facts:* D published an advertisement that offered a reward to be paid to anyone who gets sick while using their product and to show their intent, they deposited 1000 into a bank account for this purpose. P performed on this agreement, bought a ball and used as directed, but got the flu and now claims recovery but D claims this was not a serious offer/never accepted it. *Rule:* Restatement § 54: no acceptance is required in situations where performance is requested. Here, no notice was requested in the advertisement and they asked to perform the act (unliateral contract) so P's action was sufficient to constitute an acceptance and D. owes her. [Petterson v. Pattberg] *Facts:* P. claims damages of breach as D. sold mortgage to third party but D. claims that they had not contracted so he was able to revoke offer without notice. (P had arrived to D's house and stated "I am here to pay off the mortgage" but D had already contracted with someone else) *Rule*: Restatement § 32: If offer is ambiguous in terms of acceptance, either by performance or promise, offeree is able to choose. Here, D chose full performance and the offer to sell may be withdrawn before acceptance without formal notice. D's offer was withdrawn before it became a binding promise and no contract was made. [Hobbs v. Massasoit Whip Co.] *Facts:* P consistently previously contracts with D to send eelskins, sends as expected but did not receive notice from D of accepting the offer. D eventually destroys the skins. *Rule:* UCC 2-206: Order or other offer to buy goods shall be construed for inviting acceptance either by prompt promise to ship or by prompt/current shipment of conforming goods. P was entitled to take D's failure to act as acceptance. Restatement § 69 also states that silence and inaction operate as acceptance when offeree takes benefit of offered services with reasonable opp to reject them or where because of previous dealings it is reasonable that the offeror accepts. [Nguyen v. Barnes and Noble] *Facts:* P contracted to purchase tablets from D, but D later cancelled his order. P brought class action suit against D which D claims he is bound to arbitrate his claim due to agreeing to their terms of use. *Rule:* User assents to terms when they affirmatively express assent (ex. clickwrap), when user has actual notice of terms or is subjectively aware, and the website provides constructive notice that makes prudent user aware of terms. Here, the terms were found at the bottom of the site and there was no required expressed assent to the terms so P did not assent to terms. [Raffles v. Wichelhaus] *Facts:* Parties agree for sale of cargo of cotton to arrive from Peerless from Bombay. D. meant the Peerless which departed in October, and P. meant the Peerless which departed in December. Defendant refuses to accept delivery of plaintiff's cotton in Dec. Peerless. *Rule:* Restatement § 201: When parties have attached the same meaning to a promise or agreement term thereof, it is interpreted in accordance with that meaning. When parties have attached different meanings, it is interpreted in accordance with meaning attached by one of them if at the time of agreement 1) the party did not know of different meaning attached by the other and the other knew of attached meaning OR 2) the party had no reason to know of any different meaning attached by the other, and other had reason to know the menaing attached by first. We hold parties to other parties terms if it was reasonable to know of other party's terms. Here, there was a failure of mutual assent and there was no contract as the parties subjectively disagreed and no way to break the tie. [Oswald v. Allen] *Facts*: P and D disagree on definition of "swiss coins" in contract for sale. P seeks specific performance but D states that minds of parties never met ≠ contract, and if an oral contract existed it is barred by Statute of Frauds. *Rule:* Subjective agreement of terms is always controlling, but here there is no way to break the tie as it is a failure of mutual assent. [Weinberg v. Edelstein] *Facts:* P leased space for a retail store which operated in same building as D, entitling him to sell ladies, dresses, coats, but D was entitled to sell blouses skirts and beachwear. P's lease contained restrictive covenant for retail store that sold ladies dresses, coats, and suits but D started selling two piece sets which P then sued to enforce. *Rule:* Restatement § 202: writing is interpreted as a whole and all writings that are part of same transaction are interpreted together. Intention of parties to a promise are interpreted as consistent with each other... with any relevant course of performance or usage of trade. Here, Interpretive dispute on terms that hinges on what is possible range of meaning of the term "dress." Dress is a narrow term that is not the same as a two piece set, and P could not enforce restrictive convenant. [Frigaliment Importing Co v. BNS International Sales Corp] *Facts:* D. contracted for the importing of chickens but received stewing chicken. P says chicken means a young chicken, suitable for boiling and frying and brought action as goods should have corresponded with the description. *Rule:* UCC § 1-303: Course of Performance is probative and involves repeated occasions for performance. Other party accepts with knowledge of the nature and has opportunity to object. If one party is new, requires higher level of proof that the D. should have known. Here, Defendant accepted performance without an exception. The contract specified the definition of the chicken as US Dept of Ag as including different types, evidence didn't establish that government def was what parties intended/stated. [Sun Printing v. Remington Paper] *Facts:* P agreed to buy 1,000 tons of paper for a year and to make payment on the 20th of each month, but the price increased in October. P is suing for breach as the price was to be established, D says there was too much left open in terms. *Rule:* Duration matters as parties are allocating risk and court is not sure how to allocate risk = impossible tasks for court to fill the gap. [N.Y. Cent. Iron Works v. US Radiator] *Facts:* P and D had a standing contract, but P surpassed the number that was typically ordered. D claims that quantity should be interpreted as what was done/sold previously, was implied that P's demands would be similar to those in the past. *Rule:* UCC § 2-306: term which measures quantity by the output of seller or by requirements of buyer means actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate. Here, parties intentionally left the contract open and indefinite as to the quantity of goods that the plaintiff might order. Allocation of risk theory -- Plaintiff should be entitled to the benefit, you can't get out of an agreement because its unfavorable. Plaintiff could not use the contract for speculation purposes. [Eastern Air Lines v. Gulf Oil Corp] *Facts:* P brought suit against D for breach of longstanding requirements contract for fuel. P claims entitlement to specific performance because the circumstances were known. D rejects the contract under the commercial impracticality doctrine (would be too much \$\$ to perform). *Rule:* Valid requirements contract: 1) fix for indefiniteness in quantity and 2) there is mutuality, both parties made a promise (buyer to buy from seller, and seller to supply fuel). In situations of loss, refusal based on loss itself is not a valid reason, good faith reductions are permissible even if reduction is unreasonably disproportionate to previous demands. [Diamond v. Krack] *Facts:* P claims they are entitled to specific performance because circumstances were known, D claims that 2-207 is inapplicable as the disclaimer was not part of the contract. Buyer sent purchase order on form with it's terms Metal Matic made a CL counter offer with additional or different terms Parties perform (seller ships goods, buyer pays) (Krack agreed to MM's counter offer). *Rule:* Restatement § 2-207 (3) : a definite and seasonable expression of acceptance operates as acceptance even though it states terms additional to or different from those offered or agreed upon unless acceptance is expressly made conditional on assent to the additional or different terms... Conduct by both parties which recognizes existence of a contract is sufficient to establish a contract.. although the writings don't establish a contract. In such cases the terms of the contract consist of those terms on which terms the parties agree. Aka When communications do not establish assent (no matching offer and acceptance) -- use 2-207(3). Here, M.M. made acceptance expressly conditional on Krack's acceptance of terms so it is viewed as counter offer but Krack's acceptance ≠ assent (need specific and unequivocal indication of assent). They are bound because parties went on to perform. MM's disclaimer was not part of contract, Krack is liable for foreseeable damages aka MM is liable. [Step-Saver Data Systems v. Wyse Tech] *Facts:* P seeking relief for breach of warranty, damages as customers are suing P. D supplied component part for system and included a box top warranty. P contends that contract was formed over the phone and was finite in its terms, box top warranty was material alteration that didn't become part of final agreements. D wants boxt top to be final confirmation, claims contract was formed when they opened the box, having seen the license (Offer=sending the product, Accepted = when opened, boxtop license is conditional acceptance) *Rule:* Restatement § 2-207(2): Informal Assent followed by written confirmations. Additional terms are to be construed as proposals for addition to the contract, between merchants such terms become part of contract unless 1) offer limits acceptance to terms of the offer, 2) they materially alter it or 3) notification of objection to them has been given or is given within a reasonable time after notice of them is received. Here, the parties agreed on price, quantity, type which are sufficient terms that express their intent. The box top license is written confirmation that contained additional term. P. never agreed to proposal for modification and TSL materially altered the agreement (2), and P vocally rejected the terms. [ProCD v. Zeidenberg] *Facts:* P would engage in price discrimination, selling products at different prices for different groups. P states that you cannot sell this information/license to anyone else. D says the later arriving terms are not part of the agreement. *Rule:* 2-207 could apply here (but Judge said it didn't) If it applied.. there was written confirmation of the terms and there was acceptance with written confirmation. D. would be bound. [Hill v. Gateway] *Facts:* P orders computer on phone claims that he did not agree to terms, D put arbitration agreement in the box, claims that if you keep the computer, you consent to the terms in the box. *Rule:* There is no express assent here and P was not on notice that there were terms attached. [Klocek v. Gateway] *Facts:* *Rule:* 2-207 does not apply, shipping goods is act of acceptance, additional terms do not stick as there was no agreement on modification and both parties are not merchants)