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communicated to offeree)
Mutual Assent
Acceptance (before termination by revocation, rejection, or operation of law)
Bargained-for-Exchange (of something of legal value)
Consideration
Substitute (promissory estoppel, detrimental reliance, good faith modification under
UCC)
Statute of Frauds
Mistake (mutual, unilateral)
No Defenses
Illegality (contract void)
Lack of Capacity (contract void or voidable)
Creation of a contract
Was there mutual assent?
Was there consideration or some substitute for consideration?
Are there any defenses to creation of the contract
Freedom of contract: Each person is a free actor to negotiate whatever you want ability to bargain about the
terms of a deal freedom to decide what you are will to sign up for
Contracts that will not be enforced
Public
RR v MH
Facts:
Held:
Why:
36
Facts: Store published ad on sale of fur coats and said they would be sold on a first
come first serve basis for $1.
Held: An ad for goods is an offer when it invites particular action and when it is (1)
clear (2) definite and (3) explicit and leaves nothing open for negotiation; this is
the exception to the general rule that ads are NOT advertisements.
Why: An advertisement involving a transaction in goods is an offer when it invites
particular action and when it is clear, definite and explicit and leaves nothing open
for negotiation
Gleason v. Freeman (ELVIS HOUSE ON EBAY )
Facts: P bidders sued D sellers alleging breach of contract, fraud, negligent
misrepresentation. D listed Elvis house on ebay, website stated that ads of real
property did not involve legally binding offers to buy and sell, Ds agent included
disclaimer that bid was legally binding contract to deter frivolous bidders. P won
auction but negotiated deposit amount and time of possession. Sellers sold to
another individiaul
Held: Found for sellers
Why: If not sure about what the argument says then look at parties behavior.
Breach of contract failed because website indicated winning was not legally
binding. And the sellers language required bidders to negotiate in good faith.
Continuing to negotiate the contract indicates that you didnt think the ending of
the acution made it a binding contract
Negotiation does not equal mutual assent
Smith v. Boyd Would the reasonable person think mutual assent had occurred?
Facts: House for sale- buyers offered asking price and sellers negotiated trhoguh
broker about sale of furnishings. Both signed purchase and sales agreement forms.
Would be buyers sought specific performance (that the sellers would sell their
house to them)
Held: In real estate, individuals generally do no intend to contract until the
completion of a sales and agreement form signed by both parties; any attempt to
enforce an oral contract in real estate places the burden of proof on the individual
seeking to enforce the existence of an oral contract.
Why: Intent not to be bound until agreement expressed in writing can indicate no
mutual assent, rather mere negotiations
R2d 27 existence of a contract where written memorial is contemplated:
manifestations of assent thata are in themselves sufficient to conclude a contract will
NOT be prevented from so operating by the fact that the parties also manifest an
intention to prepare and adopt a written memorial thereof; but the circumstanes may
show that the agreement are preliminary negotiations
Statute of Frauds: Agreements required to be in writing involve the sale of any interest
in real estate --- the point at which the sale becomes final is the point where both sign
names to a written document talking about the washing machines.
Offer
If immediately accepted it is clear there is a contract
halfway through production they say they have to increase their prices from $2127
Held:
Why:
A letter does contain certain aspects of an offer that when accepted would
constitute a contract
Rule: An offer must be definite and certain. The facts and circumstances along with
piror dealings between the parties and industry custom and usage determine if
there is an offer.
UCC is bing law sale of goods, it is a binding law however the court is still talking about
the common law. UCC section 2-204
(1)
Destroying the Offer
Destroying the offer
Rejection
Revocation
Lapse
Death of Incapacity of the offeror
Rejection
Express rejection the offeree (to whom an offer is made) terminates an offer which cannot be revived
if the offeree changes his mind and tries to accept it
Implied rejection an offer is rejected when the offeror is justified in inferring from the words or
conduct of offeree that the offeree doesnt not intend to accept the offer nor take it under advisement
Implied rejection counter offer a rejection of the offer by the offeree; a counter offer is an offer
made by an offeree to his offeror relating to the same matter as the original offer and proposing a
substituted bargain differing from that proposed by the original offer. Restatement 39
Revocation
Direct revocation The offeror (the party making the offer) retains full control and mastery over his
offer including the right to modify or terminate the offer until the offer is accepted by the offeree
(objective theory); an affirmative statement to the offeree expressly withdrawing the offer
o Exceptions to direct revocation 1. If there is a detrimental reliamce by the offeree upon a
promise not to revoke the offer or reliance upon the offer itself 2. In the case of an offer for a
unilateral contract when the offeree has begun to perform the requested act 3. Or if a statute
precludes revocaiton
Indirect revocation Offeror is the master of the offer. An offerees power of acceptance is terminated
when the offeror (1) takes definite action inconsistent with an offer to enter into the proposed contract
and (2) the offeree acquires reliable information to that effect ( 43; Dickinson v. Dodds)
o use reasonable person standard
o would the reasonable person think that the offer still stands or that the offer is rejected?
o If you hear from a reliable source that an offer is gone then you should take that as an indirect
rejection
Lapse
Lapse terminating an offer because of inaction; time runs out; the offeror has complete control about
how much time there is to make an offer
Death
Dickinson v. Dodds
Facts: On Wed. D signed writing that he agreed to sell P property for $800offer
available until Fri. On THURS P accepted offer in writing and left it innwith Ds
mother who never gave it to D. D then signed contract with X
Held: Contract with P not enforceable an open offer to sell terminated when the
offeree learns that the offeror has already agreed to sell to someone else; absence
of consideration made the offer revocable
Why: No agreement is made until offer is accepted. Time limited, fixed by offeror,
cannot prevent revocation before time limit has expiredno consideration given
for promise not to revoke. Before P attempted to accept offer, he knew that D
had agreed to sell property Xno meeting of minds
The promise to keep the offer open until a specific date was not binding since an
Offeror can revoke his offer at anytime before an agreement has been entered into
Lapse
Minnesota Linseed Oil Co. v. Collier White Lead Co.
Facts: P sent telegram to D saying they would sell oil at $.58. Dispatch was
transmitted Saturday and was not delivered to D until Monday. During time, cost of
oil increase to point that P would take great loss if they sold at .58. Tuesday D
replied saying they accepted terms
Held: Delay by D to response to the offer was too long and the contract should not
be enforced. Acceptance effective on dispatch but at the time od dispatch, offer
had lapse. Delay was too long. If the market did rapidly fluctuate , context to
determine if the necessity of immediate response was probably assumed
Why: An offer for an unstated period lapses after a reasonable time. Reasonable is
determined by industry, subject matters, and parties involved.
Rule: the law will decide this to be that time which as rational men they ought to
have understood each other to have had in mind. The intention or understanding
of the parties is to govern, the controlling question is what are the offerees
reasonable expectations arising from the offerors communication.
Death or Incompetence of the Offeror
If a person dies, the offer dies with them.
Preserving the Offer
Beall v. Beall
Facts: D owned farm that P purchased. Same day he contracted to buy the farm , P
obtained a 3 year option to purchase the landowners parcel for which he paid a
money consideration. Option was never exercised and the parties executed
new option for five years and for an additional consideration. The later option was
never exercised by the language was apprended to the agreement extending the
option for 3 more years. P attempted to exercise the option, the D had died and
the trial court found that there was no consideration for the extension because no
benefit flowed to the defendants widow
Held: An option contract will be irrevocable if support ed by consideration. There
can be acceptance of an offer contract if no consideration is provided assuming the
offeror has not revoked the offer.
Why: An option is a binding agreement if supported by consideration of which gies
the option its irrevocable character for the period provded in the option, and not a
mere offer to sell which can be withdrawn by the person presenting the option at
anytime before acceptance.
Just because you dont have a valid option contract doesnt mean there isnt an
offer.
Promissory Acceptance
Acceptance by Performance
o Notification typically not necessary Restatement 45
o Start of the performance creates option contract allowing offeree to finish performance within
reasonable time
Marchiondo restatement 45
Acceptance by Silence or Inaction
o Usually no acceptance but see Laredo v. Gordon restatement 69
Imperfect Acceptance
Electronic Acceptances
o Under Art II and the Restatement 2 of contract unless clearly indicated otherwise by the language
or circumstances, all offers are indifferent offers, which means they may be accepted by
promising or beginning performance.
Formation of agreements
Acceptance
o Offeror as king
Be careful of the terms: Ever tite
What is offeror bargaining for? : Davis v. Jacoby
o Promissory Acceptance
Requires notice Hendrick v. Behee
They did nto send the offer back so tey didnt know they had accepted the offer
Mailbox Rule Adams v. Lindsell
o Acceptance by Performance
Offer
Offers are definite and specific enough that a yes from the offeree creates an agreement
o Lonergan v. Scolnik
o Circumstances of the transaction matter
Maryland Supreme v. Blake
Leonard v. Pepsi Co (Leftkowitz)
o Destruction of offers
Rejection
Saying no then have a counter offer
Revocation
Dodds v. Dickinson learning that someone has sold their house to someone else is
effectively revocation
Offerors Control Over the Manner of Acceptance
La Salle National Bank v. Vega
Facts: P filed complaint seeking specific performance by D of a contract for
the sale of real estate. P
Held: Another mode of acceptances may not be substituted when an offer
requires a written acceptance by a specifical party.
Why: An offeror has complete control over an offer and may condition that
acceptance be made according to the terms of the offer. No other mode may
be used when an offer by its terms requires a written acceptance by a
specific person or entity. IN this case the contract between P and D stated
that the contract would not be in full force until signed by the trust. Singing
by the trust was the only permissible mode of acceptance. I this case there
was no acceptance and no contract
The Offeror is the master of the offer and may set the terms of acceptance.
The terms of the offer are the first step in determining the validity of the
acceptance.
Ever-Tite Roofing Corp. v. Green unilateral contract
Facts: P agreed to re-roof Ds home. D signed writing that listed work and
price in monthly installments ps sale representative signed writing , but he
did not have authority to bind P writing Agreement shall become binding
only upon written acceptances by principal/authorized officer or upon
commencing performance of work When P went to Ds house to work,
another company was working on roof
Held: Since contract did not specify time within which it was to be accepted
or work was to begin, reasonable time must be allows (consider
circumstances). Contract was accepted when commencement of work began
( when workers loaded trusk NOT upon arrival at Ds home)
Why:
The court is not clear about what type of work will be deemed acceptane and
in what situations
If an offer prescribes the place, time or manner of acceptance its terms in this
respect must be complied with in order to create a contract. If an offer merely suggests a
permitted place, time or manner of acceptance, another method of acceptance is not
precluded
61 Acceptance which requests change of terms
an acceptance which requests change or addition to the terms of the offer is not
thereby invalidated unless the acceptance is made to depend on an assent to the
changed or added terms.
Dorton v. Collins & Airman Corporation
Facts: The small ptint on the back of acknowledgment form sent in response to
order for carpeting contained an arbitration clause. The face of the form specified
that acceptance was subject to all the terms on the reserves side. Carpet
purchaser sought to avoid application of the arbitrartion clause in order to sue in
Federal court.
Held: Arbitration not a part of the agreement if offeror did nto expressly make clear
the requirement that offeree accept the provision
Why:
Klocek v. Gateway, Inc.
Facts: Because P is not a merchant, P has to expressly agree to the additional
terms for them to become part of the contract. The court found that the five day
acceptance of terms did not constitute express agreement by P. The court holds
that the arbitratrion provision did not become part of the contract because P did
not expressly agree to terms
Held: Per UCC 2-207 a seller must prove sufficient notice and buyers assent to
terms at time of purchase for a shrinkwrap license to be binding.
Why:
Hill v. Gateway 2000, Inc.
Facts: P bought a computer over the phone and paid for it by creditcard. When he
got the computer it included a list of terms which would govern unless the
customer returns the computer within 30 days. P kept the computer beyond 30
days and then complained about its performance and components. P, after trying
to use the warranty to fix the computer, filed suit in federal court alleging that the
D is a racketeer. D pointed out that the terms have an arbitration clause and they
would like ot enforce it.
Held: The terms inside a box bind customers who use it after an opportunity to
read the terms and reject them.
Why:
UCC 2-207
(1)A definite and seasonable expression of acceptance or a written confirmation
which is sent within a reasonable time operates as an 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
(2)The additional terms are to be construed as proposals for addition to the contract.
Between merchants such terms become part of the contract unless
form Bombay to England d thought it was hsip to sail in October, P thought it was
ship to sail in decemebt. D refused to accept later delivery
Held: Contract not enforceable
Why: Ambiguity arose showing that there was no meeting of the minds Parol
evidence admissible to determine whether both parties intended different peerless
to be subject to contract. If different meanings were intended, no contract if
ambiguity related to material term. Since payment was to be made at time of
delivery, and parties could not agree on time of delivery, there was ambiguity
relating to material term.
Note: If both parties were to give same meaning to ambiguity contract is valid. if
you both men something different when you are using the same terms there is
never a mutual assent.
Restatement 20 Effect of Misunderstanding
(1)There is no manifestation of mutual assent to an exchange if the parties attach
materially different meanings to their manifestations and
a. Neither party knows or has reason to know the meaning attached by the
other; or
b. Each party knows or each party has reason to know the meaning attached by
the other
(2)The manifestations of the parties are operative in accordance with the meaning
attached to them by one of the parties if
a. That party does not know of any different meaning attached by the other,
and the other knows the meaning attached by the first party; or
b. That party has no reason to know of any different meaning attached by the
other, and the other has reason to know the meaning attach dby the first
party.
Mistake: Meeting of minders to enter agreement and agreement correctly reflects partes intent. Problem is that
at least one party is wrong about unstated factual assumptions ex. Two guys selling and buying a cow, they
thought the cow could nto have calves, they seelte on a price then cow is pregnant and now they want more
money - -both parties said we had an agreement the value of the could should be set at z this cow is now more
profitable
Restatement 151
Mutual misunderstanding: no successful meetingof minds. Agreement contains a word
or terms that the parties reasonably understand differently and keeps the agreement
form being formed at all
Retatement 152 When mistake of both parties make a contract voidable
o (1) Where a mistake of both parties at the time a contract was made as to a
basic assumption on which the contract was made has a material effect on
the agreed exchange of performances, the contract is voidable by the
adversely affected party unless he bears the risk of the mistake under the
rule state in 154
o (2) Determining whether the mistake has a material effect on the agreed
exchange of performances, account is taken of any relief by way of
reformation, restitution or otherwise.
Unilateral Mustake
Restatement 153 When mistake of one party maes a contract voidable
o Where a mistake of one party at the time a contract was made as to a basic
assumption on which he made the contract has a material effect on the
agreed exchange of performance that is adverse to him, the contract is
voidable if he does not bear the risk of the misakte under 154 and
The effect of the mistake is such that enforcement of the contract
would be unconscionable or
The other party had reason to know the mistake or his fault caused the
mistake
Restatement 154 When a party bears the risk of a mistake
A party bears the risk of a mistake when
Indefinite and Incomplete Terms
Varney v. Ditmars (old approach that the courts took to not fill in terms)
Facts: Job working for ditmars at $35 a week. Got fired for not going into work
because he was sick. Trial court denied recovery of a fair profit base don the fact
that fiar is an ambiguous term which cannot be established in money terms
Issue: Whether a promise of a fair reimbursement without further negotiation,
can be claimed as a loss in reliance
Held: Yes, it is too vague, uncertain and indefinite to form a binding contract.
Common law standards are that indefinite contracts are unenforceable
Why:
One cannot claim promissory estoppel, if he cannot show to what extent he was
prejudiced.
Cardozos dissent.
Community Design Corporation v. Antonell
Facts: Employer challenged trial courts award of judgment with attorneys fees and
costs to appellee employee on the grounds that the contract was too indefinite and
uncertain to be valid and there was no agreement on the amound of the bonus,
degree of completion or division among employees. Ct. affirmed decisions and held
Held: Affirmed the judgment in favor of appellee employee in all respect
Why: Appellee employees cross appeal on the amount of attorneys fees was
without merit and substantial competent evidence supported a finding that
appellant employer breached tis duty to appellee and was responsible for feed
incurred in an action to recover wages including bonuses
Antonell sues for bonus etc. Rule for antonell because the company already benefit from his performances so it
would be unfair for him to get money there was an oral contract between the two and Antonell did everything
the company had good faith to pay the bonus yes there is an agreement here we owe him some amount of
money
Restatement (Second) 33 Certainty
(1)Even though a manifestation of intention is intended to be understood as an offer,
it cannot be accepted so as to form a contract unless the terms of the contract are
reasonably certain
(2)The terms of a contract are reasonably certain if they provide a basis for
determining the existence of a breach and for giving an appropriate remedy
(3)The facts that one or more terms of a proposed bargain are left open or uncertain
may show that a manifestation of intention is not intended to be understood as an
offer or as an acceptance.
Longterm Agreements and Relational Contracts
UCC Gap Fillers
Problems of Postponed Agreement
Walker v. Keith
Facts: P leased lot from D for 10 years. Lease agreement between the parties
provided an option to renew for an additional ten years. The option included the
same terms as the original lease but did not set an amount for rent. Least option
provided that the rent would be set in such amount as shall actually be agreed
upon by the lessors and the lessee with the monthly rental fixed on the
comparative basis of rental values as of the date of renewal with rental values at
this time reflected by the comparative business conditions of the two periods. P
gave notice of renewal but parties were unable to reach an agreement as of the
amount of rent.
Held:
Why: Renewal option stnds on the same footing as any other contract right. Renst
is a material term of a lease. The parties failed to enter into a new agreement as
the renewal option provided and thereby their rights were no longer fixed by the
contract. If the parties do not fix it within reasonable certaintiy it is not the
business of the courts to do so. The renewal provision is fatally defective in failing
to specify either an agreed rental or an agreed method by which it could fixed with
certainty B/C of the lack of agreement the lessees option right was illusory
Traditional approach to postponed agreement there must be substantial certainty
as to the material terms for an agreement to be enforceable
Moolenaar v. Co-Build Companies, INc. (Modern courts more willing to find agreements
and plug in terms)
Facts: P filed a declaratory cation against D(lessor) who purchased land subject to
the disputed lease. The lessee sought a declaration of the rights of the parties
under the lease and specifically whether the lease contained a renewal clause and
if so what the rent for the renewal term.
Held: Agreement to agree valid if theres a way to Reasonably read the term into
the contract
Why:
Intention of the parties when the lease option was made must be examined for
determining reasonable price
Are there alt legal theories that a disappointed suiotpr might pursue when the other
party breaks of negotionats before a final agreement can be concluded?
Budget Marketing, Inc. v. Centronics Corporation
Facts:
Held:
Why:
Good faith is indefinite in business; especially during negotiations.
Performance of a legal duty owed to promisor which is neither doubtful nor the
subject of honest dispute is not consideration; but a similar performance is consideration
if it differs from what was required by the duty in a way which reflects more than a
pretense of bargain
Alaska Packers Assn v. Domenico
Facts: P contracted to go form SF to Alaska on Ds ship to work as
sailor/disherman. Once P reached port in AK, P refused to continue working and
demanded that compensation be increase. D drew up ne contract because unable
to hire new crew but refused to honor new contract
Held: Pre-existing duty rule Domenico is not required to pay P higher rate.
Why When a party merely does what he is already obligated to do he cannot
demand an additional compensation. Promise to pay P for doing what he is already
doing under contract to do is not sufficient consideration. Party who refuses to
perform and thereby coerces promise form other party (duress) to pay him
increase compensation for doing that which he is legally bound take unjustifiable
advantage of necessities of other party.
Restatement 89
Promise modifying duty under contract not fully performed on either side is binding
if it is fair and equitable in view of circumstances not anticipated by parties when
contract was made
Exceptions to preexisting duty rule
Unanticipated difficulties
Impracticability
Mutual recission
Material change and injustice (promisory esoppel)
Angel v. Murray
Facts: Trash collecter had contract with city to pick up trash City growing faster
than any party had planned, can we modify the city counsel said yes and modified
on two specific occasions. Tax payer got upset about paying guy moreguy
removing trash says I am supposed to remove trash fmor the houses but the city
added more houses and trash cant be removed for the same amount of money.
Tax payer says you need consideration for modification.
Held: Does not overrule Alaska Pakers prexiting duty
Why: Restatement 89modification of a contract does not require its own
consideration if the modification was made in good faith and voluntarily acdeped
by both
Restatement 89 Modification of executory contract
A promise modifying a duty under a contract not fully performed on either side is binding
(a) if the modification is fair and equitable in view of ircumstances not anticipated by
the parties when the contract was made; or
(b)the extent provided yn statute ; or
(c) to the extent that justice requires enforcement in view of material change of
position in reliance on the promise.
Promise to Pay for something that happened before the Promise: Moral
Obligations
Harrington v. Taylor
Facts: Taylors wife fled from assault by D and ran to Ps house. D assault wife in
Ps home. Taylors wife was about to hit D with an xe when Harrington cought the
axe with her hand saving D. P suffered severe injuries. D promised to compensate
P for injuries the following day
Held: Past consideration does nto qualify as valid consideration sufficient to create
a binding contract
Why: Gratitude or moral obligations arising from past acts are not sufficient
consideration to create a valid contract, and the promise to compensate P for her
injuries was unenforceable
Mills v. Wyman
Facts: Ds son got sick P cared for him costing p $. D wrote P promising to pay
him back. D did not pay
Held: Promise is NOT enforceable
Why: No consideration. A moral obligation is not sufficient consideration to make a
promise enforceable. Past consideration is not sufficient consideration to make a
promise enforceable. Temporal discontinuity P took care of son THEN D
promised to pay actions not causally connected. A benefit received BEFORE
promise is made is NOT given in exchange for a promise. Moral obligation is not
sufficient consideration. Moral obligation does not create a contract--- moral
obligation is sufficient for consideration for an express promise limited to
application in cases where at some point a consideration existed.
o Exceptions the case of debts by the statute of limitations, or debts incurred
by infants, or debts of bankrupts are generally put for illustration of the rule
that only certain preesiting obligations will justify enforcing a moral
obligation
Restatement 82 Promise to pay indebtness; effect on statute of limitationsb
(1) A promise to pay all or part of an antecedent contractual or quasi-contractual
indebtedness owed by the promisor is binding if the indebtness is still enforceable or
would be except for the effect of a statute of limitations
(2) the following facts operate as such a promise unless other facts indicate different
intention
(a) A voluntary acknowledgment to the oblige, admitting the present existence of the
antecedent indebtedness; or
(b)Voluntary transfer of money, a negotiable instrument, or other thing by the
obligation to oblige, made as interest on part payment of or collateral security for
the antecedent indebtedness; or
(c) A statement to the oblige that the statute of limitations will not be pleased as a
defense.
Restatement 83 Promise to Pay indebtedness discharged in bankruptcy
An express promise to pay all or part of an indebtedness of the promisor,
discharged or dischargeable in bankruptcy proceedings begun before the promise is
made, is binding.
Restatement 85
Webb v. McGowin
Facts: P cleaning upper floor of mill and about to drop block belowsaw D standing
below, only way to avoid hitting D was to fall with block. D uninjured byt P
seriously injured. P and D agree that D would give P $15/week until he died.
Held: Agreement IS enforceable
Why: Life and preservation of body have material, pecuniary values that can be
measured monetarily. D received material benefit constituting valid consideration
for promise.
Note: Restatement 86 Promise made in recognition of benefit previously received
by promisor from promise is beinding to extent necessary to prevent injustice
Reliance and The Legal Concept of Promissory Estoppel
Overview
Promissory estoppel prevents one party from withdrawing a promise made to a second party if the second
party has reasonably relied on that promise. Requires
An unequivocal promise by words or conduct
Evidence that there is a change in position of the promise as a result of the promise (reliance byt not
necessarily to their detriment)
Inequity if the promisor were to go back on the promise.
Reliance promise that is not supported by consideration but can still be enforced
Historical Development
Ricketts v. Scothorn
Facts: D executed promissory note I (D) promise to pay P $2,000 at 6% each
year. In reliance on note, P stopped working. Then D died only paid 1 year
Held: The promise/contract is enforceable even when there is no consideration
when the payee changes his position to his disadvantage in reliance on the
promise but the scope of reliance is really narrow, today used only for actual
damages
Why: Equitable estoppel = P relied on conduct and changed position to her
detriment
Facts: P is radio host contracted by D and told to move to host their radio show and
that she would be given higer salary and two year contract. P moved but never
received contract and was fired. Turns out htat D only meant for her to audition
and knew the only way to have her move was to lie.
Held: Promissory estoppel is not appropriate in this case
Why: In order to establish a claim of promissory estoppel, under Ill law, dargo must
show that (1) the D made an unambiguous promise to her (2) she relied on that
promise (3) her reliance was expected and foreseeable and (4) to her detriment .
Under IL law claims of promissory estoppel only succeed where all other elements
of a contract exist, but consideration is lacking. consideration was possibility of
permanent employment since consideration promissory estoppel does not count.
Falling within the statute of frauds means that the statute of frauds applies in
this case
The three year duration was unreasonable because patients need to see the DR every 6 months
The 5 mile radius was unreasonable because it covered over 235 square miles
Restriction was unreasonable because it did not expressly poivide an exception for emergency medical treatment
Overly broad becyse it is not limited to pulminology
Violates public policy because of the sensitive and personal nature of the doctor-patient relationship
Sherwood v. Walker
Facts: Both parties assumed that a cow was barren and could not breed. P bought
cow based on meight for meat. Before P secured possession of animal D learned
she was preggo and of great value, tried to rescine the sale by refusing to deliver
Held: D had right to refuse to deliver cow
Why: a party who ahs given apparent consent to a contract of sale may refuse to
execute it or he may avoid it after it has been complted it the assent was founded
on the contract made, upon the mistake of material fact such as the subject
matter of the sale. The price or some collateral fact materially inducing the
agreement this can be done when the mistake is mutual -- both thought cow
was barren.
Estate of Nelson v. Rice
Facts: Appraisers hired to appraise personal property in prep for an estate sale.
Appraiser told personal reps that she did not appraise fine after and that if she saw
any they would need to hire additional appraiser. Appraiser did not report finding
any find art, relying on her silence they assumed not fine art and sold property. D
buyer paid asking price of $60 for two oil paintings. Auction house authenticated
paintings to be work of heade and old it for $1,072,000. P sued D alleging sale
contract should be rescinded or reformed on grounds of mutual mistake and
Unconscionability.
Held: Summary Judgment for D
Why: P was victim of its own folly and it was reasonable for trial court to allocate to
it the burden of its mistake. While results of transaction may have seemed
unconscionable to plaintiff in hindsight, ther terms of the contract were not.
Grenall v. United of Omaha Life Insurance Company
Facts: D wanted to rescind an annuity decedent purchased 4 months before dying
based on mistake of fact that decedent did not know at time of contract that she
was terminally ill. Plaintiffs claimed that decedent would not enter into annuity
contract but for mistake of fact
Held: Judgment for United of Omaha
Why: Ct concluded that P failed to establish an essential element for recission
based on mistake of fact. Decedents mistaken belief that she was in good health
and had a reasonable life expectancy did not support a claim for recission.
Decedent bore the risk of the alleged mistake regarding her health and life
expectancy at the time of the annuity contract. Allocation of this risk of the
decedent was reasonable because such a risk was an inherent part of the annuity
contract.
Pg 431
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Held: Coal company was liable for damages for the lost equipment . Court rejected
findings that the relevance of negligence issue and remanded case for further
proceedings.
Why:
Parol Evidence Rule
Restatement 213 Effect of intergrated agreement on prior agreements (parol evidence rule)
(1) binding integrated agreement discharged prior agreement to the extent that it is inconsistent with them
(2) binding completely intergrated agreement discharges prior agreements to the extend that they are within
its scope.
(3) An integrated agreement that is not binding or that is voidable and avoided does not discharge a prior
agreement but and intergrated agreement even though not binding, nay be effective to render inoperative
a term which would have been part of the agreement if it had not been intergrated.
Common Law
Nelson v. Elway
Facts: P brought suit against D alleging D did not honor terms of service agreement
which was never signed and was never incorporated into the final agreement
between the parties.
Held: Reversed grant of summary judgment for Ds on Ps promissory estoppel
claim
Why: because it was unreasonable for the petitioners to rely on a contract
containing an unfulfilled condition precedent. Court affirmed the remainder of the
appellate courts order and remanded for the entry of judgment for respondent.
Rogers v. Jackson
Facts: D borrower appealed a summery judgment in favor of P lenders on their
claim for enforcement of a promissory note claiming that his payment obligation
under the note was subject to an unfulfilled oral condition. After borrow did not
make any payments to the lenders pursuant to a written promissory note borrower
contended that pursuant to an oral agreement between the parties he would pay
only if and when he was able.
Held: vacated and remanded for further proceedings
Why: State held that borrowers statement of material facts was not procedurally
defective under civil procedure. It complied with parol evidence rule as the
agreement was only partially intergrated. Agreement imposed no contractual
duties on the lenders. Existence of the oral condition was, thus, a question of fact.
Note Cannot admit parol evidence that contradicts what is in the contract, promise
is not intended to be binding unless something happens.
Uniform Commerical Code
Ucc 2-202
(1) Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set
forth in a writing intended by the parties as a final expression of their agreement with repsect to such
terms are included therein may not be contradicted by evidence of any prior agreement.
Simmons Foods, Inc. v. Hills Pet Nutrition , Inc.
Facts: P manufactures chicken byproduct for animal food, over years they had
output and requirement contracts for one year at a time for hills to buy the by
product of simmons over time hill started to use low ash, simmons continued to
make stuff thinking they would get business. Simmons files a breach of contract
and promissory estoppel they relied on an oral promise to continue relationship for
a longer amount of time P argued these facts
Held: Where UCC applies a party cannot introduce parol evidence to contradict
evidence statute of frauds.
Why:
Exceptions
Using Parol Evidence and Other Extrinsic Evidence to Discover the Meaning of the Terms Used in the
Written Contract
Frigaliment Importing v. International Sales
Facts: D agreed to sell P chickens. D shipped stewing chickens P rejected them, claiming that contract
referred to fryer chickens
Held: Judgment for D
Why: Trade usage is binding on D only if D had actual knowledge of usage or usage was so generally
known in community that Ds actual knowledge could be inferred. Here, D was new to poluntry business
and accnot show that trade usge was well-established
Course of Performance, Course of Dealing and trade Usage (Again)
Ambiguous In contract terms
Random House, Inc. v. Rosetta Books LLC
Facts: copyright infringement action, P publisher sought to enjoin D internet
company and its chief executive officer from selling in digital format eight specific
works on the grounds that the authors of the workds had previously granted the
publisher the right to print, publish and sell the works in book form
Held: Motion for preliminary injunction was denied.
Why: Relying on the language of the contracts and basic principles of contract
interpretation, the court found that the right to print, publish and sell works in
book form did not include the right to public works in a digital formant. Ct found
phrase itself distinguished between pure content the work and the format of
display in book form. Language would not have been necessary if the phrase in
book form encompassed all types of books.
Trident Center v. Connecticut General Life Inc. Co.
Facts: P claimed language of contract was ambiguous and p had option of
prepaying loan if only it was willing to incur the prepayment fee. P also argued that
under CA law even seemingly unambiguous contracts were subject to modification
by parol or extrinsic evidence. P argued that lower court should have granted it an
opportunity to prove that the contract language did not accurately reflect the
parties intentions.
Held: remanded the case for reinstatement of the complaint on the grounds that
California did not follow the traditional rule that barred extrinsic evidence in the
case of unambiguous intergrated contracts.
Why: Ct rejects argument that contract was ambiguous, proffered interpretation
would hav resulted in a contradiction between two clauses of contract; the default
clause would have swallowed the clause prohibiting plaintiff from preparing.
Whether to accelerate repayment o the loan in the event of default was entirely
defendants decision.
Billman v. Hensel
Facts: D selling home to P for case. Parents come over and they change mind and
say they dont have enough moneySellers sued to secure $1000 liquidated
damage deposit required by contract buyers defended upon basis that they were
relieved form performing gin that they could not obtain financing.
Held: Found in favor of the sellers
Why: Buyers were not excused form performance. Subject to financing clause
imposed upon the buyers an implied obligation to make reasonable good faith
effort to satisfy the condition. Evidence supported that sellers carried their burden
of proof by establishing that the buyers had not made a reasonable and good faith
effort to secure the necessary financing and therefore could not rely upon the
condition to relieve their duty to perform.
Terms Implied by Courts to Effectuate Public Policy the implied duty of good
faith and fair dealing
Locke v. Warner Bros., Inc. Clint eastwood case.
Facts: as part of settlement agreement with clint eastwood Eastwood secured a
production agreement between D and P. Agreement gave P non-exclusive first
look deal which allowed P to submit to D any picture in which P was intereste din
developing. D had optio to pass on any project P submitted. P brought action
against D for breach for failing to consider her for any projects and alleged fraud
on the part of D for entering into a contract without intention of honoring the
agreement.
Held: D did not act in good faith found for P
Why: Where one party holds a discretionary power affecting the rihgts of another,
it must exercise such power in good faith. However implied covenant of good faith
will not be used to contradict any express terms of a contract.
Hobin v. Coldwell Banker Residential Affliates, Inc.
Facts: Appealed form superior court which dismissed claims against D for breach of
implied covenant of good faith and fair dealing, breach of contract and
misrepresentation. Ct dismissed claims brought by P a franchise against D related
to Ds placement of additional franchise in Ps territory. Parties agreed the
franchise agreement expressly allowed D to place additional franchises in plaintiffs
area but disagreed as to whether the implied covenant of good faith and fair
dealing limited the extent of its discretion to do so.
Held: Affirmed dismissal of ps claims, finding plaintiff did not allege a breach of
implied term of agreement thus plaintiff failed to state claim for breach of contract
Why: Dismissed for failure to state a claim, finding P failed to allege breach of
implied covenant of good faith and fair dealing, thus, p did not allege an implied
term of the agreement.
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When is Someone Who Made an enforceable deal excused from doing what she agreed to
do?
Conditions: Non Occurrence of Something that Contract Expressly Provided Must Occur as an excuse
for not Doing What you Agreed to Do
Occurrence of Express Conditions and Strict Compliance
Luttinger v. Rosen
Facts: P contract to buy Ds property conditional upon him obtaining a mortgage
financing in the amount of $45k for interest rate not more than 8.5% per annum. P
promised to use due diligence. Ps attorney handled the financing process and he
only knew of one lending institution that met Ps rqs. He applied for loan at
institution and loan was offered but above 8.5% -- refused loan asked d for deposit,
offered to fund the interest rate difference but P refused.
Held: P is entitled to return of his deposit
Why: Under the contract, P used due diligence. P didnt have to apply to lending
institutions where he knew his loan was not going to get approved. Law does not
required the performance of a futile act Contract clearly stated the condition upon
which the parties promised to purchase.
Recognizing Language of Express Condition
Peacock Construction Company v. Modern Air Conditioning, Inc.
Facts: D subcontractors enter into agreement with P contractor to work on a
construction project. After Ds completed work, P refused to make final payment
contending that it had not received final payment from owner. D initiated breach of
contract action and were granted summary judgment. P contended parties
agreement provided that the owners payment was condition precedent to
petitioners duty to perform
Held: Intent in most cases is that payment by the owner to the general contractor
is not a condition precedent to the general contractors duty to pay the sub
contractors.
Why: Parties agreement was ambiguous regarding the payment provision so that
such ambiguity was resolved in Ds favor. Ds were small subcontractors who would
usually not assume the risk that the owner would not pay them. This is because
small subcontractors who must have payment for their work in order to remain in
business will not ordinarily assume the risk of owners failure to pay the general
contractor. If parties wanted to shift burden of risk from p to d the parties
agreement could have provided such provision.
Excusing Conditions (Eliminates the Excuse)
Avoidance of Forfeiture as a Reason for Eliminating a Condition
Acme Markets, Inc. v. Federal Armored Express, Inc.
Facts: P grocery chain and D armored car service entered into contract for amored
car service and the agreement was later amended to provide for timely
reimbursement of service related issues. P brought breach of contract after it
allged robber stole one of Ps cash bags in Ds possession and d refused to
reimburse P. P claims D was in possession of bag when stolen but there was no
receipt issued this is immaterial and d claims that although they were in
possession they were not responsible for the bags until the bags had been
accepted and rexipted for but its employees
Held: Receipt provision was a condition precedent, but it could be excused if it was
not a material part of the contract.
Why: Remanded for a determination of the materiality of the receipt provision.
Court also remanded to determine whether the forfeiture (not enforcing the receipt
condition) would be disproportionate
Rule: to the extent that the nonoccurrence of a condition would cause
disproportionate forfeiture a court may excuse the non-occurrence of that
condition unless its occurrence was a material part of the agreed exchange
(restatement 229)
Prevention as a Reason for eliminating an express condition
Moore Brothers Co. V. Brown & Root, Inc.
Facts: Ps were subcontractors contracts to D general contract to help build parts of
road for toll road. Subcontracts between brown and root and plaintiffs contain a
general pay when paid clause which said in party, payment by owner to general
contract is a condition precedent to any obligation of general contractor to make
payment to subcontractor and the general contractor shall have no obligation to
make payment to subcontractor, and the general contractor shall have no
obligation to make payment to subcontractor for nay portion of work which general
contractor has not received payment form the owner. The contract also contained
provision for additional payment if the owners ordered design changes that
constitute chance in scope P was asked to make a thicker payment and they did
so which cost them more. An arbitrator ordered the owner to pay D more who
would then pay p more. Owner did not have funds to get more money because the
lenders were not made aare that it would be possible that more funds would be
needed partly because of the acts of D. P sued to recover additional money
Held: D may not rely on the non-occurrence of a valid pay when paid condition
precedent in the subcontract as a defense to liability where the general contractor
was partly responsible for the failure of condition precedent. D is liable to Ps for
payment for the additional change in scope work.
Why: B& R contributed to the non-occurrence of condition precedent, thus the
district court applied the prevention doctrine to waive the condition precedent and
held that brown and root is liable to the plaintiffs for payment for the additional
change in scope work notwithstanding the pay when paid clause in the
subcontract.
Note: court may excuse to avoid disproportionate forfeiture. Party
seeking to enforce the condition is prevented form happening.
579-612
Modications, Waiver or Estoppel as an Excuse for Not Doing what you Agreed to do
Waiver one party
Modificaiton needs both parties.
Dynamic Machine Works Inc v. Machine & Electrical Consultants, Inc.
Facts: P purchased a lathe machine from D. After a delany in its manufacture the
parties agreed to an extension of the deadline for the installation and
commissioning of the lathe. Once delivered, the lathe required significant
readjustments in connection with its final commission. The buyer wrote the seller
granting one last extension of the final commission date. Next say buyer realized
lathe would not be able to meet required specifications. Buyer rescinded the
extension within 48 hours of giving it. Seller had not relied on the extension ot is
detriment
Held: If a written extension constituted a modification of an agreement to purchase
a product then the buyer might not retract it unilaterally . If on the other hand the
wrrten extension constituted a waiver of an executory portion of the agreement,
the buyer might retract it by reasonable notification received by the seller that
strict performance will be required unless the retraction would be unjust in view of
a material change of position in reliance on the waiver.
Why: If both parties agree and they agree to the terms of the contract
then you remand it back for further consideration
May Centers Inc v. Paris Croissant of Enfield Square, Inc Et Al.
Facts: Parties entered into a 10 year lease and the guarantors agreed to guarantee
the lease payments for the first 2 years. Guarantors agreed to extend their liability
for the duration of the lease if the tenant was in default of the lease during the first
two years. Tenant normally paid rent after the 15th of each month. Tenant received
notices of default on its rent payments after the two year guaranty period had
expired landlord claimed tenatnwas in default during the month that guaranty
expired.
Held: ct found in favor of the guarantors in the landlords claim against them
finding that the landlord did not prove that the tenant was in default of its rent
prior to the expiration of the guaranty period. Landlords acceptance of the rent
check after the 15th of the month during which the guaranty period expired
discharged the rent and waived any right to claim default in that month.
Why:
Clark v. West
Facts: Contract for book if you write it sober we will pay you $6/page if you write
it drunk we will give you $2/page. P argued that they had waived this condition
(past expericen with company paid him $6 last time even though they knew he
was drinking) while he was writing West knew he was dirnking and said we are
going to give you $6 anyways.
Held: Court sides with drunk law professor this is wests discretion this only
effects wests duties under the contract so they have the right to waive this
Why:
Impossibility, Impracticability, Frustration of Purpose: Occurrence of Something Not Provided for in the
Contract as an Excuse for Not doing what you agreed to do
Taylor v. Caldwell
Facts: P and D had contracted for use of Music Hall in July. In June Hall burned
down. P sued D for not allowing him to use hall in July
Held: D is excused from performance
Why: For contracts in which performance depends on continued existence of
something, condition is implied that impossibility of performance arising from
perishing of that thing exucses performance
Note: When there is post contract occurrence that makes performance more
expensive, it is NOT an excuse it is risk assumed when entering into contract
Repudiation that is not accompanied by breach by nonperformance and occurs before time for
performance has arrived.
o Ex. I will not perform is anticipatory repudiation if made before performance is due
o Ex. I doubt I will be able to perform is NOT repudiation, so suit CANNOT be brought
immediately under doctrine of anticipatory repudiation
UCC 2-610
o (1) When either party repudiates contract with respect to performance not yet due, agrrieved
party may
a. Await performance by repudiating party for commercially reasonable time
b. resort to any remedy for breach, even though he has notified repudiating party that he
would await performance and has urged retraction
c. suspecnd own performance or proceed in according with UCC for sellers right to
identify goods to contract notwithstanding breach or to salvage unfinished goods.
Held: In a promise for a pomrise a party need not perform before recovery on the
contract is allowed
Why: Agreement was promise for a promise and P was entitled to sue f for
performance without showing that he himself had performed. The pomises (not the
performance) must be exhcnaged at one instant otherwise the agreement will be
construed as unenforceable (nuda pacta an agreement not clothed with
consideration)
Kingston v. Preston
Facts: D would serve P for 1 year and a as a servant in his trade for 200lbs a
year and inconsideration for the business premises the d covenanted that at the
end of the period he would give up the business to P or some other person named
by D give them his stock in his trade at a fair value and that between the young
traders deeds of parternship for 14 years would be executed. At end of period D
did nto surrender the premises because P did nto offer security.
Held: Ps tender of sufficient security was a condition precedent to D surrendering
the premises and stock
Why: Covenants called conditions and dependent in which the performance of
wone depend on the prior performance of another and until the prior condition is
performed the other party is not liable to an action on his covenant. Essence of the
agreement was that D should not trust to the personal security of P but before he
delivered up his stock and business, he should have good security of the payment
of the money. Giving of security must necessarily be a condition precedent.
Substantial performance fulfillment of obligations agreed to in a contract, with only
slight variance with the extact terms and or unimportant omissions or minor defects.
Simple test is whether the omission, variance or defect can easily be compensated for
money
Rule of substantial performance the condition of complete performance may be
excused if the party has rendered substantial performance. In this case, the other partys
duty f counter performance becomes absolute --. The court generally applies this
doctrine where a CONSTRUCTIVE condition is involved. They will not apply it in an
express condition for fear this would defeat the express intent of the parties.
Constructive Conditions of Exchange in Current Practice
Pullmanm Comley, Bradley and Reeves v. Tuck-It-Away, Bridgeport
Fact: Parties signed contract for sale of real property, D seller and V buyer, v
deposited $100l in escrow with Ds lawyers, P. This is the money in dispute.
Contract stated that the closing date was Dec 10. Allowed to extend the closing
period for fee and they did four time, as closing date approached they were short
on funds and refused to allow another extension on Dec 10 nothing took place four
days later D received letter attempting to cancel contract, the size of the plot of
land was not accurately represented. Neither party knew of the incorrect
description of the land. Both parties claim the other violated the contract
Issue: Whether Ds agreement to deliver title was simultaneous with the delivery of
the money
Held: Express language of the contract evidence the parties intent that the buyers
duty to tender full payment of the purchase price was a condition precedent of the
sellers obligation to convey title to it.
Why:
Interplay between constructive and express conditions:
Implied conditions regulate the order of performance
o Express conditions attempt to do the same
MXL Industry Inc. v. Mulder
o Lease had an early termination clause (tenant could elave early upon the
condition that he pays all the sums due pluse 4 months rent)
o Condition precedent one which must be performed either before a contract
becomes effective or which is to be performed by one party to an existing
contract before the other party is obligated to perform.
o Constructive conditions of exchange
Allow the court to supply terms under which a partys dutie to perform
are conditioned on the performance to be given in return.
What Constitutes Material Breach
Jacob & Young, INc v. Kent
Fact: P build house for Dreading pipe was supposed to be used. After house was
complete, D learned that pipes were not reading, but were of equal quality. P
refused to change pipes so D refused to pay him
Held: D must pay P
Why: Dailure to install reading pipe was breach but was not sufficient enough to
allow D to pay. Measure of damages should not be replacing all pipestoo grat.
Instead, should be different between swelling as specified and dwelling s
constructed, even though it may be nominal or nothing.
O.w. Grun Roofing & Construction Co. v. COPE
Facts: Cope sued Grun to set aside a mechanics lien filed by D for damages of
breach of contract alleging that Grun failed to install a new roof on Copes house
rook looked ugly and patchy. Grun filed a cross claim alleging Cope breached
contract by failing to pay.
Held: Gruns actions did not constitute specific performance under the contract
and thus there was a material breach
Why: Grun failed to perform on contract looked like a patch job so Cope doesnt
have to paycope wanted specific shingle on roof, new roof looked streaky then
patchyexternal factor (opposed to pipes_ might affect property value. Functional
v. decorative.
Divisible Contracts
Tendency on the part of legal scholars to look for ways to avoid/mitigate harsh
consequence
Divisible contract
o A mitigating doctrine that reduces the harsh consequences in a class of
cases
Filet Menu Inc. V. CCL & G
Divisible contract is one under which the whole performance is
divided into two sets of partial performances, each part of each
set being the agreed exchange for a corresponding part of the
set of performances to be rendered by the other promisor
Perfect Tender
Material breach concept is not a part of law governing sale of goods
Sale of goods follow perfect tender
o Any breach by a seller will excuse the buyer from performing
UCC 2-601 buyers rights on impropert diverlery (Perfect tneder rule)
Subject to provisions of this article on breach in installment contracts (Section 2-612) and unless
otherwise agreed under the sections on contractual limitaions of remedy (secitions 2-718 and 2-719, if
the goods or the tender of delivery fail in any respect to conform to the contract the buy may
o Reject the whole
o Accept the whole
o Accept any commercial unit or units and reject the rest.
Does not care if the breach was material and the power shifts to the buyer
Alaska Pacific Trading Company v. Eagon Forest Products, Inc.
Facts: Log purchaser and log seller entered into a contract to buy and sell raw logs.
After months of communications between the parties, the delivery date passed
with no shipment. The purchaser canceled the contract alleging that the seller had
breached. Seller brough an action for breach.
Held: Buyer did not breach the contract by cancelling it.
Why: Following perfect tender rule the seller breached its duty under the contrat
and released the purchaser form its duty to accept the logs.
Material Breach and Election of Remedies
ESPN, Inc v. Office of the Commissioner of Baseball
Facts: Contract dispute between plaintiff sports cable television network and major
legal baseball. Parties TV contract allowed plaintiff to preempt baseball for
significant sports events and required defendant to permit such preemptions if
they were reasonable. In April 1999 basebal terminated the 1996 agreement
contending that ESPN had materially beached.
Held: Courts split the breaches, 1998, Baseball continued the performance so they
waived their right to terminate (election of remedies is not a definitive right, it is a
choice between both remedies AND YOU CANT CHOOSE BOTH, by performing
shows the waiver) 1999 breach not barred by the election of remedies, baseball
did not force ESPN to stop showing baseball even though they wanted to terminate
the contract. They allow showing of baseball for the rest of season.
Why:
Election of remedies Party has two options (1) terminate the contract OR continue
to perform and sue later ESPN argues that Baseball accepted full performance. -
Must choose between termination because of material breach OR Continuing
performance and suing later (performing not waiving right to sue)
--------------------------------------------------------------------------------------------------------------------
Why: liquidated damages- agreed upon dangers in the contact, must look at the
clauses individually to see if it is enforceable, if looks like penalty NOT likely to
enforce, if making up for a loss
Kvassy v. Murray
Facts: P seller appealed from trial courts decision that the liquidated damages
clause in the contract with defendants, purchasing corporation and corporate
principals, was not enforceable and that lost profits were not recoverable in the
breach of contract action
Held: There was disproportionate damage to the buyer, seller would have made
more from the liquidated damages than this profits from last year.
Why: The liquidated damages clauses in sales contracts are governed by UCC: 1)
Damages for breach by either party may be liquidated in the agreement but only
at an amount which is reasonable in the light of the anticipated or actual harm
caused by the breach, the difficulties of proof of loss, and the inconvenience or
nonfeasibility of otherwise obtaining an adequate remedy. A term fixing
unreasonably large liquidated damages is void as penalty.
709
Limitation of Remedies to Repair, Replacement or Return of Money paid
Judicial Determination of Money Damages
General Measure of Money Damages: Expectation Interest
Hawkins v. McGee
Facts: Ps hand was injured d promised 100% perfect hand. Surgery did not work,
so P did not get perfect hand
Held: P entitled to expectation damages + incidental losses resulting from breach
Why: P was expecting no breach and perfect hand instead he has scarred and
hairy hand. Money value of perfect hand is $ difference between perfect hand and
scarred/hairy hand this is expectation damages
Panorama Village Homeowners Assn v. Golden Rule Roofing, Inc.
Facts: D put roofs in but they were described as poor workmanship. Damages
awarded we the cost of replacing the roof.
Held: trial courts calculation for damages was correct
Why: Court rest on the damage as simply replacing the roof because the D has the
burden of proof of showing if there are other alternatives for giving calculation. P
met the burden of showing one way of showing how they could be made whole
Groves v. John Wunder Co.
Facts: P leased land to D and let D use the land and take sand and gravel from it. D
supposed to pay P $103k and leave property at uniform grad. P intentionally
breached and didnt leave uniform grde. It would cost $60k to fix grade property
itself if defendant had performed woul have only been worth $12k.
Held: Proper measure of damages is the cost of remedying the defect.
Why:
It would cost P $60,000 to have someone come in and fix it (type 2) If
the ground was uniform, it would only be worth $12,000 more (type 1) The TC goes
with the $12,000 value court ends up focusing on bad fiath of D
under same terms except film was to be western filmed in Australia. P declined and
sued to recover guaranteed compensation under contract
Held: P NOT under duty to mitigate
Why: For P to be under duty to mitigate, substitute offer must be of comparable
employment or at least substantially similar to that which she was deprived but D
offered different/inferior employment
Note: CA rule = before projected earnings from other employment opportunities
not sought/accepted can be applied in similar to that which employee has been
deprived employees rejection of/failure to seek other available employment of
different/inferior kinds may not be used to mitigate damages
Note: If discharged employee obtains new job which, except for compenstation is
comparable, he must still deduct wages from his claim for damges. If new
employment is not comparable, old employer is not entitled to claim deduction
from his liability equivalent to earnings from new employment.
Note: Employee usually not required to accept employment unreasonably far from
original location. Employee does nto have to accept position of lesser rank or lower
salary
Note: If employee takes job that he could nto have done in addition to breached
contract that will be cost avoided.
R. R. Donnelley & Sons Co. v. Vangaurd Transportation Systems, Inc.
Facts: p makes flyers for a macys department store, d was carrier that was
supposed to transport brochures to macys post Christmas sale. D gets them to ATL
but not specific place P has contract with macys for 81,000 sues D for $ because
they didnt get brochures on time
Held: Ct sides with D
Why: Mitigating party doesnt have to put a lot of effort in it doesnt have to be
an undue burden
Hadley v. Baexdale
Facts: P contracted to have Ds shipping company take broken mill shaft to get
repaired in reasonable time. D did not know mill was closed whil P awaiting fixed
shaft. D did not deliver shaft in reasonable time so reopening of mill was delayed. P
sued for lost profits during extra days closed.
Held: P cannot recover lost profits
Why: Ps damages were not consequent that in usual course of things would flow
from delay in shipment of shaft. Damages must either (1) arise naturally according
to usual course of things, from breach of contract itself OR (2) arise from special
circumstances under which contract was actually made if and only if these special
circumstances were communicated by P to D. Only damages that may fairly and
reasonably be considered arising from breach itself may be awarded.
with X. P commenced performance D refused to pay for crane rental because not
obligated to so under contract . P termindated contract and brough action to
recover for labor and equipment furnished P would have lost money if contract
was fully performed
Held: P can recover for equipment and labor if supplied, despite fact that it would
have lost money on contract and would have been unable to recover for suit on
contrract
Why:
Britton v. Turner
Facts: P contracted to work for one year and would receive $125 at end of year for
services. P stopped working after 9.5 monthsand did not receive compensation
form D. no evidence that D suffered any damage as result of Ps departure.
Held: P can recover (recovers $95 for time worked)
Why: K law reuires that a victim of a breach become whole again. To deny P
benefits from working would be unfair and unjust in its operation if the party
performs over tha damages suffered by the failure to complete services.
Restatment 374 Restitution
Unjust enrichment
One who without intent to act gratiutiously, confers a measurable benefit upon
another, is entitled to restitution, if he afford the other an opportunity to decline
the benefit or else have reasonable excuse for failing to do so. If the other refuses
to receive the benefit, he is not required to make restitution unless the actor
justifiably performs for the other a duty imposed upon him by law.
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Promisory Restitution
Webb v. McGowin
Facts:
Held:
Why:
Restatment 86
Other Remedies for Unjust Enrichment
Pull v. Barnes
Facts:
Held:
Why: Golden Press doctrine and doctrine of estoppel were inapplicable. Trial court
entered judgment for land owarners . TC correct in determining golen press
doctrine was inapplicable because the problems arising from the situation were not
due to bad faith on party of any parties and the tc erred in granting judgment for
the landowners because it was the trial courts duty to rant the relief in equity that
the situation remanded and the adjoining owners who had in good faith erected
improvements on the landowners property had a right to remove the
improvements if feasible and if not they were entitled to an equitable lien on the
property for the value of the improvements.