Reference no: EM133895054

Assignment:

Fact Pattern:

As we have seen parties "bargain in the shadow of the law" (see Bargaining in the Shadow of the Law: The Case of Divorce) Download Bargaining in the Shadow of the Law: The Case of Divorce). Parties who are negotiating a contract will thus bargain in the shadow of contract law.

You are the Chief Purchasing Officer of Region Power, Inc., a public utility company with 15 power plants. The public utility is about to embark on a major updating of all of its power plants. This will require purchasing 15 new power generators and turbines over a 5 year period. The company is about to embark on negotiations to with Generators & Turbines, Inc. on the purchase of the first power generator and turbine. The board of directors has asked you to review the following sections of the Restatement of Contracts and to answer the questions below.

Restatement (Second) of Contracts (1981)Download Restatement (Second) of Contracts (1981)

§ 1 - Contract DefinedDownload § 1 - Contract Defined

§ 2 - Promise; Promisor; Promisee; BeneficiaryDownload § 2 - Promise; Promisor; Promisee; Beneficiary

§ 90 - Promise Reasonably Inducing Action or ForbearanceDownload § 90 - Promise Reasonably Inducing Action or Forbearance

Questions:

1. What types of negotiation tactics are likely to trigger application of Section 90 of the Restatement?
2. What types of precautions should a bargaining party take in order to avoid triggering Section 90?
3. Suppose that here is a bargaining breakdown and the parties fail to reach a contract AND suppose further that Regions Power, Inc. has triggered application of Section 90 of the Restatement.
4. Can Generators &Turbines, Inc. sue for damages?
5. If so, what are reliance damages? How does one calculate reliance damages?