CONTRACTS

KELLER V. CENTRAL BANK OF NIGERIA *Illegality*

FACTS: K got taken for so much money by a "Nigerian prince," paid $29k in bank fees Kull: Poor guy... fraud victim? Court could go either way

Shadwell v Shadwell (1860)

Nephew relies on uncles promise to help him in his marriage, nephew gets married. Huge change in position.

HOLLENBERG MUSIC CO V. BERRY *Illegality*

You can't collect debt when it is against public policy

Edgerton v. Peckham *Specific Performance*

*Facts*: (1) D and R make a contract; miss a payment and you lose the house (2) P --> buys R's share for "valuable consideration" and made improvement there on. D knew of this assignment (3) P doesn't pay on time, D doesn't ask for payment. (4) P calls D and asks when last payment is do "says if you tender the money, I'll accept it"; P attempt; D does not accept. *Court*: P wins/doesn't have to give up his house (1) Unjust (2) The substance of a contract fulfilled (3)When the substance of a contract is fulfilled/the general intention of the parties carried into is fulfilled --> court relieves against any forfeiture or penalty inserted for the purpose of enforcing the contract *Kull*: (1) In legal court, this is a completely enforceable condition/valid contract (2) In equity, consequence of fulfilling this clause is implorable (3) Substance of contract > Form of the contract -Form: forfeit provision -Substance: It was security for the seller + this has been accomplished *Look at the intentions of the clause

Mt. Pleasant Stable Co. v. Steinberg "Clist" Horses *Repudiation and mitigation*

*Facts:* (1) D (trucking business) and P (provides horses) had a contract. P provided the horses for D delivery services (2) D broke the contract (3) D's auditor found a net lose of ~2k, P said he bought 2 new horses for the job that he sold at a loss *Court:* P gets K price minus costs (not overhead) (1) P could have found a buyer and not sold at a loss (2) P is entitled to damages from time of breach to time of sale (~36) (3) P is entitled to the K price MINUS what it would have cost to perform the contract (the horses were a given whether or not you completed the contract) *Kull:* (1) The horses would have been purchased regardless of whether the contract was breached or not. (2) P will be paid twice if allowed to recover for the horses (when you sell them and when you recover for them -> if the contract was not breached you'd have to sell them anyway) (3) D says P could have mitigated his damages but this isn't like the work on an assembly line/the P has nothing limiting his capacity. P did not gain anything when D breached (ex. I gain the ability to get a job when fired from job) **Similar to cotton seed oil price case

Kehoe v. Borough of Rutherford *Rescission for Breach*

*Facts:* (1) D and P enter into a written contract. (2) D agrees to pay P to pave the area around a neighborhood street, but they discover that some of the area is private so work stops (3) P had been paid already (1850) but sues for "Quantum Merit" for the work he had done *Court:* (1) P is entitled to the reasonable value of the work done w/o reference to the contract price (2) But if you completed the contract, you would be worse off (3) You were in a losing contract *Kull:* Court is correct (1) Losing contract/can't rescind b/c work is already done (2) It would have cost him ~5004 to complete, he would have only been paid total 4220. (2a) So far, he had put in 2743, saved ~1894. They already paid him 1850; (2743)-(1891)-(1850) = -998 (3) Every business transaction has a losing parting and a winning party - he was lucky to have the winning party end this contract (4) If it was fraud or misrepresentation - he could sue for restitution (5) But for normal contracts, if there every time there was a material breach, the other party could sue for damages or act like there was never a contract -> it would be impossible to know where you stood Different from Security Store - we can calculate the expectation damages

Shoop v. Burnside *Specific Performance*

*Facts:* (1) D is an old lady who owns a plot of land/she lives ~400 miles aways and has not been back to the area for about 8 years (capable of transacting business by herself0 (2) G'daughter of D wrote her about P -> P wanted to purchase the land. [G'daughter was paid $50 commission for writing her Grandma/said it was a good deal even though was aware it wasn't] (3) P offered a price/D counteroffers. (4) D went back on the deal, saying she decided not to sell the land b/c of increasing property value (5) P wants specific performance *Court:* D wins (new trial) (1) G'daughter influenced her in deterring the amount the G'ma would accept (2) SP is equity NOT a legal right -> contract only needs to be "unfair" for us to refuse SP (3) No necessary for the purchaser to inform buyer of all the reasons he believes he is getting a good deal: (3a) Fudged details/said he had another offer/got her granddaughter to lie to her (4) SP must be to remedy a fair thing *Kull:* (1) Why equity? Possibly a special piece of land, possibly not a perfectly formed contract (2) Equity cares about the fairness of the deal

Neri v Retail Marine *Liquidated Damages*

*Facts:* (1) P (boat buyer) tries to buy a boat, but ends up not wanting to buy it. He says he is repudiating the contract (2) D (boat seller) says, no you breached and refused to give deposit back *Court:* (1) P says "unjustly enriched"/D says deposit minus damages/D says damages are zero *Kull:* (1) We have a different situation here, they would have sold 2 boats instead of 1. (2) Resale is not a substitute for a missed sale (3) Market price minus contract price minus incidentals

Mobil Oil Exploration v. U.S. *Rescission for Breach*

*Facts:* (1) P (oil companies) and D (us government) (2) P & D have a contract and a lease to give them rights to explore and develop oil off the NC coast (*subject to them getting permission from other governmental agencies) (3) Congress passes OBPA which prohibited the P from doing what they were given permission to do. *Court:* (1) This was a contract, the US repudiated and thus the other parties are allow restitution (2) Restitution = whatever benefit the parties would have gotten from contract (3) We can't calculate that so we will allow recision and restitution *Kull:* (1) Probably no oil so their expectation damages were zero (2) They can likely prove this -> which means you don't get reliance damages (Cotton Seed Oil/Security Stone) (3) P says they want rescission and restitution

Missouri Furnance v. Cochran *Repudiation and mitigation*

*Facts:* (1) P and D had a contract; D -> deliver coke to P (2) D breached (3) P forced to make a similar contract w/ another person at a higher price. [At time of delivery: Price of coke falls so low, P is left over with 20k tons of cost] *Court:* D win; (1) Damages = contract price minus price at time of delivery *Kull:* Court is wrong! (1) D and P have a "forward" contract, guessing the requirement. Not a requirements product (which would be "all the coke I need at a certain price) (2) P wants damages = contract price - contract price new; D says damages = contract price - market value (3) P wanted stability so he made a new contract/didn't know this was an expensive option until after it was an expensive option. (4) Damages end up the same for P: (4a) Pays 4/ton now and gets a larger damage payment (4b) Pay less (day-to-day) and get a smaller damage calc. (5) We deprive him the "benefit of the bargain" if we only account for the price at the time of delivery *Acme Mills/Globe Refining/Peerless w/ the cotton

Leingang v. City of Mandan Weed Board *Repudiation and mitigation*

*Facts:* (1) P and D had contract, P was to cut weeds on large city lots (2) D breached contract (3) P sued for damages of contract price minus the cost of performance he avoid due to the breach *Court:* (1) TC was wrong when they included "fixed costs" in expenses (2) Expenses should be restricted to expenses incurred but for the breach of the contract (aka expenses P did not have to pay otherwise) (3) Required P to pay fixed costs twice *Kull:* Expenses "saved" from breach (1) We don't include fix costs/overheard costs in modified net profit (2) We deduct the items we can reuse or recover (3) We don't deduct the items we can't recover from

Oloffson v. Coomer Repudiation and mitigation

*Facts:* (1) P is a merchant, D is a farmer. Make a deal (1.12) (2) D tells P he needs to breach contract and won't be able to perform (3) P waits to make a new deal and ends up paying more than the contract price (1.35) *Court:* D wins; P gets difference b/w contract price and market price (1) Says the P did not wait a reasonable amount of time (he could have gotten the grain much quicker than he did) (2) Says the P did not act in good faith (1) could have informed the D of the normal course of dealing *Kull:* WRONG (1) P thinks D was being mean/D could have discussed with him the terms in which the contract could be settled (2) Basic contract etiquette goes a long way (3) P is a buyer in both cases. They contract for a supply of something in the future (futures deal). (a) You can cover and sue for the difference (b) You can sue for the difference between market value and the contract price. Like Missouri: Why did P lose? Both covered at a time when price was higher than another time they could've covered. How could you possibly know "when" to cover when you have no idea what's going to happen to the market price? U.C.C. says you can choose what to do.

Lumley v. Wagner Injunction *Specific Performance*

*Facts:* (1) P is the lessee of a theater in London, D is a famous singer. (2) P and D have a contract that she will perform at his theater. "D will not use her talent at any other theatre nor in any other concert or reunion w/o permission" (3) D signed a new agreement w/ other guy for more $$ *Court:* (1) The clear intention of the agreement was to exclude you from performing anywhere else during the 3-month agreement (preserve vocal abilities) (2) Broken the "spirit of the contract" (3) We can't enforce you to do something but we can stop you from doing something *Kull:* (1) SP/Injunction makes the most sense here b/c impossible to calculate damages if she were allowed to sing multiple places Injunction cases: Mitchill v. Lath, Doyle v. Dixon, The Ice Case, Marks v. Gates, Mitchell v. Lath

Campbell Soup Co. v. Wentz *Liquidated Damages*

*Facts:* (1) D (Wentz) promised to deliver to P (Campbell) carrots @ $23-30 lb. (2) Price increases and D says no I won't deliver (3) D sold carrots to other farmer and other farmer turned around and sold to P (4) P sues for SP *Court:* (1) Carrots are unique goods (2) Equitable relief seems appropriate except Campbell's didn't act in good faith (2a) Campbell's needed to approve of carrots/could refuse to accept them/had to approve of whomever the P sells the carrots too. *Kull:* (1) This is an output contract (different from requirement contract), future contract (2) These carrots were not a unique good - does not qualify as a unique good/they were likely already consumed which doesn't work with SP (3) Likely the Judge allowed this to be argued via SP b/c he wanted to discuss liquidated damages (The LD in this case were likely not enforceable -> P was not likely thinking of this type of breach, more concerned with the subsidiary promises, the LD were too small and damages were quantifiable) (4) All the subsidiary provisions were normal i. right to refuse (prob won't implied) ii. production limit (ensure quality) iii. don't let other people use land (don't cheat) iv. LD by breach of grower but none for breach of buyer (b/c easily quantifiable) v. "force majore" -> implied to save from any unforeseeable issue like a strike/if Campbell can't accept, just don't go to our competition and sell2

Clark v. Marsiglia *Repudiation and mitigation*

*Facts:* (1) P is an art cleaner and D brings his 2 art piece to be cleaned by P (different prices per piece) (2) P cleans one, D says stop, P continues to clean (3) P says D had not right to countermand the order. (4) D says he had the right to "countermand" his instructions for the work + P could not recover for any work done after the countermand *Court:* (1) D breached his contract/liable for damages that P should sustain (aka labor done and materials used) (2) But P in persisting in the work -> made the damages greater* *Kull:* (1) This is a duty to mitigate, same idea as preventing waste incurred when the D is forced to pay for something he didn't want (2) This is a free country but if you choose to act in way that incurs more damage than otherwise, you may not be able to recover those damages (3) Exception: special skills may lead to less availability to mitigate damages (less likely to find a proper substitute for your particular skill set) example with Shirley MacLaine

Britton v. Turner quantum meruit *Liquidated Damages*

*Facts:* (1) P worked for family/left early (2) D refuses to pay him *Court:* (1) Special Contract w/ term and price (2) Pay him for the work he's done *Kull:* (1) D is not being sue for breach/he is being sued for 'Unjust Enrichment" (2) Restitution/unjust enrichment base but at the time we were still working out this idea (3) He is owed FMV up until the contract price minus damages against the farmer of the breach *Opposite of Herzog

Schnell v. Nell Seal didn't work for a non-contract Greedy relatives *Seals*

*Facts:* (1) Wife of D dies and gives money to relatives (Ps), but she had not money to give (2) D promises to gift Ps 200/each in exchange for [1 cent + love of his wife] (3) D goes back on promise to Ps *Court:* No cause of action (1) Promise to pay 1 cent for $600 is an unconscionable contract (2) She didn't own anything and he has no legal obligation to discharge her bequests (3) Promise was a gift (4) The past service of his wife are no legal considerations for promises (4a) Past consideration *Kull:* (1) The relatives hired a lawyer which indicates a level of seriousness (2) 1 cent was "nominal"/no legal claims (3) The seal was pointless here

Hoffman v. Red Owl Stores *Performance Based Damages*

Case overview: (1) P relied on D; (2) Not a contract cause of action case/No K (3) BUT P listened and acted reliance to D's advice. (4) P never got the store (5) There were no expectation damages b/c no breach in contract P claims recovery of the value of the change in his position

International Milling Co. v. Hachmeister Inc. *Parol Evidence Rule*

D and P signed a contract but it couldn't be changed for FLOUR (1) P wanted to edit to the contract to AIB standards (2) D said all their milling contracts are uniform over the country and they didn't want to violate the normal contract (3) D proposed a "side later" which confirmed the parties understood that flour would meet AIB standard (4) D later delivered to P flour that did not meet AIB standards

Petterson v. Pattberg *Implied Contracts and Terms*

D wrote to Pl agreeing to accept cash for a mortgage he held. Pl went to give D cash for the mortgage, D refused to accept it because he sold it to someone else. Because it's a unilateral K, D can revoke until Pl pays him. Dissent says that because D made it impossible for Pl to give him the money something's wrong.

MECHANCIAL BULLS AND SKYDIVING *Offer & Acceptance: status of non bargained terms*

Drunk girl signs disclaimer of her rights to go on a bull. Get around the disclaimer by her being intoxicated. Sky diving: very clearly tell you what your rights are and disclaim all

Ruxley Electronics v Forsyth Pool heigh case *Forfeiture*

Expectation interest - Loss of amenity Facts: (1) Difference in height of a pool between actual and contractually obligated (2) D wants the correct of the pool/refused to pay (3) P sues for the cost Court (1) The mistake was no intentional (no intentional mistake would be justifiable) (2) P says the height difference is trivial (3) D says it does make a difference to him and he wants the height and it will effect his enjoyment from it Kull: Wrong (1) Whole point was this man wanted to enjoy his pool + dive (2) A "material" term in the breach (3) The "desire" > "cruelty" Compare to "Sherwood I"

RAFFLES V. WICHELHAUS Mistakes case/equivocation (vague language) Peerless *Equivocation*

Facts: (1) D and P made an agreement to sell "125 bales" of cotton to arrive via "Peerless" from Bombay. (2) When goods arrived --> D refused to accept the goods or pay P (3) D says he meant a different ship (different peerless) which sailed in October. (4) P thought he meant a ship called "Peerless" which sailed in December Court: (1) P demurrer so they accept the peerless v. peerless story (2) There was no "meeting of the minds" - If you don't have the parties meeting, we don't have a contract (3) Date of the ships matter b/c of the price Kull: (1) Demurrer b/c P assumed it didn't matter which ship the cotton came on.. he was wrong. (2) We are talking about when the ships "sailed" b/c you don't know when they will arrive. (3) Likely the D doesn't want to buy the cotton b/c price when down on cotton from the "future price" D and P agreed on [spot price < future price] (4) If P can't sell to D, sells to other people and measures the damages from K price - MV price (cover?) **Turkish bathhouse

DAVIS V. JACOBY Mr. & Mrs. Davis visit from Canada *Offer & Acceptance: acceptance by performance*

Facts: (1) P's aunt and uncle were deathly sick → Uncle writes multiples times telling them that they're sick and he's losing his mind and aunt wants P there (2) After many letters, uncle writes a letter offering P inheritance if she comes and takes care of them (3) P accepts → P gets ready to go to aunt/uncle and P's husband gives up his business to go (3) Uncle commits suicide → P takes care of aunt until she dies → turns out inheritance was left to nephews → P sues Court: P (niece) wins (1) Mr. W offered to enter into a bilateral contract (2) Mr. W was desperate and he knew P would perform if she promised. (3) He requested an immediate reply and they replied immediately (4) When an offer indicates the mode and means of acceptance, an acceptance with in the mode and means is binding Kull: Court is wrong! (1) It was a promise to devise her into the will. Not a contract. He could have added her into the will easily (2) Probably wanted to help the niece b/c the nephews were not nice ***They could have argued that Mr. W induced P to leave Canada and argued reasonable reliance/estoppel. But they don't argue this b/c it recovers only their lost business from leaving their home **Acceptance by performance depends on the circumstances. Best if the offeror specifies b/c offeror is the master of his offer

Hurst v Lake and Co *Parol Evidence Rule*

% of protein in meat content, says it must be 50%, D asserts that everyone know 50% actually is 49.5%. Well known and understood amount members of the trade

Doyle v. Dixon *Statute of Frauds*

*Facts:* (1) P took a 5 year leave of D's grocery business (2) D promises to stay out of the grocery business for those 5 years (but they didn't add it to the lease b/c D's lawyer said that would be foolish) (3) D entered grocery business after two years *Court:* (1) If the agreement could be fulfilled with in 1 year and be considered fully performed then not w/ in the statute of fraud (2) The landlord could have died and agreement would be considered fully performed *Kull:* (1) If promise is to do something active -> that can't be completed w/ in 5 years, yes SoF (2) If promise is not to do something -> could be completely within 1 year (if promisor dies), not SoF (3) It is obvious that the promise was made and the Judge wants to side with the P

Goodman v. Dicker Reliance by misrepresentation Estoppel Expenses Awarded *Performance Based Damages*

*Facts:* (1) P relied on D's statement that it would send P a certain number of radios to sell (2) P spent a lot of $$ to set up its radio shop (3) Ended up not getting the franchise/ P sues for damages *Court:* P wins $$ expended (1) D is wrong: D says the deal was terminable by will/imposed no duty upon the manufacturer to sell OR the P to buy; b/c deal was not enforceable, there was no liability to supply radios (2) No promise to sell the franchise BUT we aren't concerned with the terms of the franchise (3) There was a promise and the P incurred expenses in reliance (4) True measure of damage = loss sustained by expenditure made in reliance upon the assurance of a deal *Kull:* Court is correct (1) Impossible to calculate the expectation/so the court compensated on a reliance basis (2) Estoppel (3) No contract has been proven (unlike Security Stove)/unlikely the local dealers even had authority to grant a franchise *Anna work

Security Stove & MFG v. American RY Express Co. *Performance Based Damages*

*Facts:* (1) P wants his stove sent to a convention in NJ for a convention where a possible business connection will be make/not there for a direct dale of good (2) D is a delivery company; P tell him that they need it in NJ no later than 10/8; P asks D how much time they need to assure the delivery. (3) D says by 10/4, will be in NJ by the 8th; (4) P has it ready early and D still failed to deliver the strove (missing parts) (5) D says P asked for no special rate/no special advantage/just the regular package and they delivered it with the ordinary court of events. *Court:* For the P (1) The D knew the shipment was meant for prompt delivery/D admits it was negligent (2) No way to calculate the value/recovery for the loss of opportunity to competitor a price (3) But P is entitled to damaged that = loss in the way of expenses that it sustained and which it would not have put to if it have no been for its reliance upon the D's performing the contract *Kull:* (1) Allowed to "go back" b/c it is impossible to know what the consequential damages would have been (2) Benefit of favorable presumption b/c impossible to quantify (this would be "rebuttable if you have prove what the outcome would have been" (3) We assume they would have at least broke even with their expenditure made in reliance (4) Not estoppel, this was an enforceable contract from day one/not a promise/a 2-way deal (5) Reliance Damages are a second best choice, normally you're want expectancy damages b/c you thought you were gonna make $$ Similar to: Devecmon v. Shaw Opposite to: Cotton Seed Oil (Globe Oil)

Warren v. Lynch *Seals*

*Facts:* (1) Promissory note given by D (Lynch) to Robertson, who sold note to P (Warren). D paid the "proxy" for Robertson/M&S (2) D signed note with L.S. meant to act as a seal. (3) P sues D to enforce the note, but D claims (note was already paid AND) note was note given for consideration (4) Seal is meant to legally bind regardless of consideration *Court:* P Wins (1) The note is definitely considered sealed in Virginia but is was made payable in NYC (2) NYC does not let you use a signature instead of wax (3) letting a signature be a seal would be confusing/the point of a seal is go through the "ceremony" of the execution of the seal leads to less fraud *Kull:*' (1) Most jurisdictions have done away w/ seals but it can lengthen the statute of limitations (2) If we get rid of seals, fraud benefits. The people who want to make firm offers/judge bear the costs formal rules make it easier for judges to decide cases

Real Estate Co of Pittsburgh v. Rudolph *Seals*

*Facts:* (1) D (seller) offers P (real estate company) option to purchase property (so P can sell to someone else for $1 and D get's 3% commission on the sale price) (2) D says to P he can't sell b/c wife would no join in the conveyance/ offered a option to accept a title w/ out the joinder of wife (3) P says no, filed a suit for SP *Court:* (1) The option can be revoked at anytime prior to acceptance if there is no consideration (2)BUT D's option had consideration -> he signed an agreement + he knew P hoped to resell it, so P agreed to render services; Implied consideration that they would try to sell the house *Kull:* Court is correct; (1) Why have an option, the seller could agree to an exclusive listing agreement (pay commission of 3% no matter what) (2) Of course there was consideration but the dollar wasn't important (3) Seal = A dollar

Boone v. Coe *Statute of Frauds*

*Facts:* (1) D made verbal contract P -> Promised to rent his farm to them in Texas for a period of 12 months (*starting the day they arrive) (2) P agreed to leave their homes and businesses and more all their stuff to D's farm (3) D agreed to have the house all completed on the farm and ready for them to occupy (4) P moved to Texas from KY, house isn't finished/went back home to KY *Court:* D wins (1) This K violates the statute of frauds [Comp could be recovered IF i. Services rendered AND at the dead of master, servicer should receive a legacy ii. Purchases/compensation for improvements of land iii. Personal services w/ in the statute based on quantum meruit (2) If D received any benefit then D pays (3) Immaterial is P suffered loss (4) D received no benefit SO P gets nothing *Kull:* (1) No restitution here b/c there was no benefit to the D (2) We need the promissory estoppel rule/they relied on his promise/you left me in a worse place than I started (3) Should have tried to take it out of the statute of frauds b/c we lost/relied on a promise it would be equitable to help us (4) This would need to be argued today to see what happens

Mitchill v. Lath Ice House Oral Agreement *Parol Evidence Rule*

*Facts:* (1) D owned a farm + ice house (2) P didn't like the ice house but wanted to buy the farm (3) D and P orally agreed that D will remove the ice house during the deal to purchase the farm (4) P moved into farm house, great improved the property for use as a summer residence; (5) D did not remove the ice house (6) P wants specific performance/wants the house removed *Court:* (1) Oral agreements can alter written agreements BUT (i.) must inform be a collateral one, (ii.) not contradict express or implied provisions of the written contract (iii) no something you normally put in writing (2) Reciprocal obligation of the parties appear full and complete w/o this (3) If she wanted icehouse removed it would have been included in the contract/ice box is too closely related to the subject in the written agreement *Kull:* (1) Clear that the promise was made but the court used the Parol Evidence rule here to teach people to include promises like this in writing (2) P wanted this done out of spite

Crabtree v. Elizabeth Arden Sales Corp *Statute of Frauds*

*Facts:* (1) P wanted a 3 year contract -> D offered a 2 year contract with an annual salary that would increase 5k after 6mos and another 5k after 1 year (2) D sent via secretary an employment agreement (3) D's VP sent a pay-roll charge card (4) After 1 year D refused to increase Ps pay (5) D denies making an agreement, SoF barred enforcement b/c >1 year without written contract *Court:* (1) 2 payroll documents = signed, contain all essential terms except the duration, signed by the comptroller (2) The unsigned memo does contain a duration (prepared by the secretary) (3) It is sufficient to piece together the if memos reference the same subject matter/transactions *Kull:* (1) There was no doubt that there was an agreement

Acme Mills & Elevator Co. v. Johnson *Expectation Damages*

*Facts:* (1) P and D had a deal where D was to deliver wheat to P - 1.03/future price [D sells wheat a second time @ high price] [Price decreases below K future price] (2) D breached and did not deliver (3) P sues to recover damages ($240 in damages, $80 for the sacks) (4) D admits he breached but says P wasn't damaged b/c it was a losing contract (5) The K price was 1.03, FMV @ delivery was <$1. *Court:* (1) Measure of damages = difference between contract price and market price of the property at the place and time of delivery (2) Threshing was not completed until 7/29 (3) No estoppel *Kull:*[Kull]: Restitution theory: What they could really be saying is that the farmer profited by selling "our wheat." So what? It was "our wheat" at a price of $1.03. At a profit of 13 cents/bushel, that's a pretty respectable restitution argument. 2000 x .13 represents our property misappropriated • This would not have been possible if Farmer Johnson was a huge corporation, selling thousands of bushels of fungible wheat every day. (1) If Johnson wanted to be an a*hole, he could have purchased 2000 bushels at the spot price in July and forced sale with P @ 1.03 (2) The breach of contract was actually the best thing to happen to the P (3) UCC Terms (in sale of goods) what is the damage of breach of contract by a seller: (i) Contract MINUS Market (@time of delivery) (ii) OR damages measured by the cost of cover (4) HYPOS: (i) Johnson had zero assets/if Acme stepped in before they sold to Liberty they could have requested: SP (ii) If Acme decide not to pay and buy wheat at the spot price: owe Johnson Kp - MVp (iii) If there is a special circumstances and Acme is a flour miller + lost a week of flour b/c of Johnson: Consequential damages, the loss acme sustained from not getting the wheat

Hadley v Baxendale *Expectation Damages*

*Facts:* (1) P are millers/the mill stopped b/c their crank shaft broke (mill couldn't function w/o the shaft (2) P Asked D to send shaft to greenwich to be fixed immediately (3) D delayed and P lost profits (4) P sues for lost profits *Court:* (1) Consequential damages need to be foreseeable/may reasonably have in contemplation at time of breach (2) No notice: The circumstances weren't communicated and you deprived the D of accommodating them (aka charging a higher cost) *Kull:* (1) Wrong/facts says P said mill was stopped and shaft is needed ASAP but court doesn't care and trying to teach a lesson (2) 2-719(3) -> you can disclaim just about any consequential damages ***Like the Parcel Room case, where they actually discussed materials/urgency

Globe Refining Co. v. Landa Cotton Oil Co. *Expectation Damages*

*Facts:* (1) P contracts D for cotton seed oil (2) P sends 10 tanks to D to fill em' up (3) D doesn't and P sues for special damages that are above the contract price of oil and the price @ the time of breach (Tank $ + loss of credit customers etc.) (4) D says that P could have covered/mitigated damages but he didn't *Kull:* Correct! (1) Judge trying to undo Hadley v. Baxendale (like Cardozo tried to undo Kingston v. Preston in the Redding pipe case) 2) you can't go backwards when expectation damages are easily calculated. (market K differential) 3) you can't claim consequential damages you could have easily avoided (could've gotten oil from down the street) 4) you can't claim damages for costs you would have incurred had the contract been performed (price of sending the trucks to the ∆) - P claims items that were items he was willing to buy anything -> shouldn't be paid twice the same things

Hawkins v. McGee Handkins v. McGee *Expectation Damages*

*Facts:* (1) P had surgery on his hand by the D (2) D botched the surgery (3) P sues for breach of warranty (Did not use skill and care in treatment of his hand/make his hand worse than it was before surgery) *Court:* New trial (1) P says D "guarantees to make hand 100% perfect"; D says no reasonable man would understand that as a contractual relation (2) D repeatedly solicited the P's father for the opportunity to perform the operation/D admitted he wanted to experiment with the skin grafting/opportunity to perform the operation (3) Thus reasonable to say that the 100% guarantee was made to induce the P into surgery (4) Damages should put P in the position if warranty wasn't breached/Pain was part of the deal and not a measure of damages *Kull:* (1) Normally we don't get medical procedures w/ breach of warranty b/c the statute of frauds require medical procedures to have a written agreement --> Likely not the case in New Hampshire (2) Not a tort claim b/c D was compared to Drs. in geographical area and no one was doing this procedure (3) If contract is effective and party is credit worth than the contract is as good as performed to the P. A party giving out promises in legally significant ways that they can offer to sell --> expands your ability to sell thing --> you're now able to sell intangible things

Bader v. Hiscox *Statute of Frauds*

*Facts:* (1) P says she "seduced" by D's son & got pregnant and gave birth to a daughter (2) D offers 40/acres land *if she marries his son + drops civil proceedings (3) D (likely left town) and refused to convey land *Court:* Finds for P; (1) Consideration wasn't marriage/it was release of son from liability to a judgment for damages (2) P performed, D should too (3) Not an engagement or promise to answer for debt b/c this wasn't the debt of the son *Kull:* (1) P had a tort action against

Danann Realty Corp. v. Harris *Parol Evidence Rule*

*Facts:* (1) P sues D for inducing him into a contract for a lease (2) P alleges that the "oral representations were false" (3) D says the written provisions of the contract directly contradict the oral representations *Court:* D wins (1) The P made a bad bargain, he cannot avoid it in this manner (2) If the language in the contract is not sufficient to "estop" a party from claiming that he entered the contact b/c fraud, then no language will be good enough = make it impossible to deal @ arm's length Dissent (Fuld, J.): There is no language you can use in a contract to exclude the possibility of fraudulent inducement. AK: YES, correct! Are you more interested in preventing fraudulent inducement or are you more interested in "keeping the line of cases moving" where anyone can say "oh, I was fraudulently induced to agree to this integration clause?" Here, they were not willing to let this one go to trial. *Kull:* (1) Wrong! You can't induce someone by fraud and then cleverly word the K so that they cannot claim fraudulent inducement. (2) Can it possibly be that, by adding an integration clause, all that was ever discussed and relied on and utilized within the deal is written in the K? This becomes a factual Q again.

GRAY V. GARDNER *Express Condition*

Facts: Seller contracted with buyer to sell whale oil with a price index clause that depended on the scarcity of whale oil supply of that year. Condition of payment of a certain amount dependent on the average price of whale oil during [time]. AK: Price indexing clause in one direction: if more whale oil arrives this year, the base price is 60c/gal; if no more oil arrives this year, the price is 85c/gal. This is a futures bet. Also allocation of risk

Anderson v Backlund There will be water! *From Detriment to Reliance*

Facts P was a tenant on D farm. D tells P to go get cattle and crops to make some money off the land and P says he has no money to pay for water. D promises multiple times he will make sure P has enough water; doesn't follow through → ∆ gets screwed Court Kull Two perspectives: 1) No contract: No bargain/consideration 2) Gratuitous promise enforceable through Promissory estoppel. Multiple affirmations of D's promise/guarantee → detrimental change in position from reasonable reliance (∆ knew π would rely on him) 3) Maybe the reliance was unjustifiable because he was just passing

KYLE V. KAVANAUGH Prospect Street *Equivocation*

Facts: ∆ and π contracts to buy shares of land on "Prospect street" - there were two streets with the same name and parties meant two different street Court: No binding K was ever formed because no meeting of the minds

CHAPMAN V. HALEY *Illegality*

FACTS: C was selling fake $3k for real $300, H got two investors to buy it at $62.50 each, C ran off with H's $300 Kull: H could be a fraud victim if the court finds him really really gullible and sympathetic... but probably not

ARMSTRONG V. M'GHEE (1795) Dead horse case Reliance of one party v. voluntariness of other party *Introduction*

Facts (1) Armstrong frustrated that valuable horse didn't ride well that day. Offers the horse to M'Ghee for "a trifle" of £5. (2) Some knew Armstrong was joking. (3) Later, Armstrong says he was joking and asks for horse back, thinking M'Ghee knew it was a joke too; (4) M'Ghee doesn't give it back. Armstrong sues for replevin ("give my horse back"). Horse dies during proceedings. Court (1) Court found for P (Armstrong) for £8 *damages* - settlement; Kull: Court is weird; (1) Contract may be made by any signs that show agreement of mind (aka "meeting of the minds") - no words or writing is needed (2) This is a complete contract. If contract is complete and there is no fraud, contract can't be annulled • If M'Ghee knew Armstrong was joking and showed Armstrong that he knew he was joking, then there was no contract in the first place and M'Ghee was just a trustee to Armstrong 4 possible scenarios 1) Everyone was joking and knew it → No contract/∆ pays £95 (value of horse) 2) Everyone was serious (Armstrong is just regretting selling his horse) → Contract (∆ pays £0) 3!) Armstrong was joking, M'Ghee was serious (PROBLEM) → do we enforce involuntary obligation? Or enforce loss from reliance? Involuntary obligation v. risk in the loss from reliance/change in position. BIGGEST PROBLEM of the case: Horse died. Case would have been easier if... - Horse is alive - "Alright joke's over, just give the horse back." - If Armstrong said he would deliver the horse the next morning and then ended up regretting it in the morning and decides not to deliver → incomplete contract Remedy Issue: Dead horse Michigan Cent. R. Co. v. State (used up coal) Kehoe Different: Mobil Oil

SYLVAN CREST STAND & GRAVEL CO. & US Gvmt trap rock case "*Cancel any time/Mabley = not made in good faith" *Implied Contracts and Terms*

Facts (1) D (U.S. gvmt) puts out invitation to bid on trap rock needed for airport construction (2) P (trap rock supplier) made a bid (3) D accepted the bid but the last sentence of the contract said "cancellation by the Procurement Division may be effected at any time." (4) D never requests for the agreed amount of rock and refuses to accept any deliveries→ P sues for $10K lost in profits Court Rule: A party's intent to reserve the right to cancel the contract at any time, for any reason, creates an illusory promise, and is unenforceable. Kull 1) IF the government really wanted the right to be able to cancel at any time, the contract should have specified that the government may never buy the rock → BUT this would deter gravel companies from making bids → so couldn't possibly be what the government meant in that last sentence 2) Gravel company is under real obligation → if gravel price increases, then the gravel company is at a loss → people wouldn't involve themselves in a real obligation w/o receiving a return obligation (aka commitment to purchase the product) 3) The disputed sentence probably meant if there is an emergency situation/unforeseen contingency or any other legitimate excuse, then the government would have the freedom to cancel (i.e., there's a war so the funds must be directed towards the war, the bridge isn't being built anymore, etc) *If seller is obligated to sell, the buyer is obligated to buy* *Cancel any time/Mabley

East Providence Credit Union v. Geremia (1968) Loan/insured car that blows up *From Detriment to Reliance*

Facts (1) D borrowed money from P and gave their car as collateral → K req D to maintain insurance on the car (2) D gets letter from insurance company saying insurance would expire because premiums weren't paid (3) P notifies D that they will pay premium and then add the amount to their existing loan if D doesn't pay (3) D calls P and tells them to pay premium (4) Car is demolished → It wasn't insured because P didn't insure it (5) P sues D to collect loan $$ → D counterclaims saying they relied on P to pay insurance premium *(the value of the car > the balance of the loan @ time of crash) Kull (1) It is clear that the D should win. (2) 2 ways to enforce: A) Promissory Estoppel: P made a promise that it would reasonably expected to induce reliance on part of D; D relied on promise and didn't pay insurance premium themselves; P's failure to act on promise led to D's detriment b/c now they're being forced to pay a lot of money B) There was also a bargain/consideration: From P's POV: If I insure your car, you will pay me back the money + interest" (They're getting something that they weren't entitled to before)

Devecmon v. Shaw Uncle promises to pay for nephew's Eurotrip Detrimental Change in position from reasonable reliance *From Detriment to Reliance*

Facts (1) Nephew goes on a trip to Europe because his uncle had promised to cover the expenses. (2) Uncle died. (3) *Nephew brings suit against executor for the money.* (4) Executors say promise is unenforceable b/c it was just gratuitous and no consideration was given (5) The nephew relied on his Uncle's statement that he would pay and would not have taken the trip without the promise Court: Nephew wins (1) Promise enforceable because uncle induced him to make this trip and spend this money under the belief that he would be reimbursed. (2) If he isn't paid, the expenditure will have been procured by a false pretense. (3) Burden incurred at request of his Uncle is sufficient consideration for a promise to pay for the trip. Kull: Court decided correctly (but this is not consideration) (1) **Important case because it is a good example of detrimental loss from reasonable/justifiable reliance --> change in position. Now he has no money! (2) This is NOT consideration (in modern times). It is detrimental reliance on a promise. (3) *Promissory estoppel/detrimental reliance case* Hypo: learns Uncle died during the trip but keeps spending loads of money reliance only matters if he's relying on all available information

JAMES BAIRD CO. V. GIMBEL BROS., INC. Implied terms of contract Firm offer Acceptance by performance *Implied Contracts and Terms*

Facts 1) PA Department of Highways - asks for bids for construction of public building 2) D (subcontractor) sends out bunch of "offers" to general contractors offering sale of linoleum supply for a certain price. (Due to mistaken calculations, D sent out extremely low prices) 3) P is a general contractor that received one of these letters. P submits a bid to PA using D's quotes. On the same day, D revokes offer due to mistake and substituted it with 2x the price 4) P gets awarded the bid from PA. P calls D to accept original offer. D says no. P sues for damages on breach of contract Court Find for ∆; (1) bid NOT enforceable. (2) Offer was made and could only be accepted by π with a formal acceptance and consideration. (3) Π did not accept ∆'s bid by submitting its own bid to PA. (4) This is NOT a firm offer. Kull (1) WRONG! Firm offers must be left open for a reasonable time for an acceptance to be made. "...we are offering these prices for reasonable, prompt acceptance after the general contract has been awarded..." (this was a promise not to revoke the offer if contract is awarded) (2) Implicit consideration for that promise exists: P relied on commitment and passed up other subcontractors' offers No one would use D's numbers in their bid if they could revoke at any time. (3) Bidding system doesn't work without firm offers. The P could not go around and shop for new offers after using Ds (4) Not a transparent clerical error **Implicit consideration: the linoleum people give time to consider, the contractor gives them a higher chance of selling. Both sides are now obligated to each other. A better "firm offer": "You may treat this offer to you as firm, long enough to permit reasonably prompt acceptance following the award of the GC. As is customary, your reliance on our pricing for your bid will indicate your agreement to buy from us on these terms in the event your bid is successful"

DICKINSON V. DODDS Meeting at the RR station/Firm Offer Firm offer *Implied Contracts and Terms*

Facts (1) On Wednesday, D gives a note to P offering to sell his property, gives him until Friday 9AM to accept the offer. (2) D sells the property to someone else on Thursday. (3) P learns of this and goes to D's house and leaves a letter of formal acceptance to buy the property. (4) Friday morning at the railway station, P gave D another letter of acceptance. D says "too late, i've sold the property. (5)P sues for specific performance (sell him property) or make the other buyer give P the property + damages Court (1) Find for D (2) The agreement was an offer to sell and had no consideration. P's notice of revocation terminated the offer and acceptance did not create a binding contract. Kull (1) WRONG!! (2) Firm offer: Partly an offer but it is also a promise -"I offer you something and I might give you time to consider" -"I promise to relinquish my ordinary right to revoke my offer until (specified time)." (3) You need to notify the offeree if you revoke b/c needs to know where they stand (revoke before accept or accept before revoke) (4) There was consideration/bargain/exchange here. Offeror: relinquishes right to revoke offer at any time for a certain amount of time because this gives the offeree time to consider and increases the likelihood that offeree will accept offer. No one will accept an offer that can be revoked at any time (5) Business transactions are ALWAYS for money/consideration (if you don't see the consideration, you don't understand the deal) TODAY: Promise not to revoke = liable to induce reasonable reliance on the part of offeree

Vickery v Ritchie (Turkish Bathhouse) (1909 Mass) Restitution claim Where parties mistakenly thought there was a contract (but there was no contract b/c fraudulent middle man) *Implied Contracts and Terms*

Facts (1) P (contractor) was hired for construction of a Turkish bath house on D's land. (2) Architect in the middle misrepresented contract to both sides -- P thought he was getting paid $33,721 and D thought he was paying $23,200. Added value to the property was $22,000. (3) P sues D for one last hold out payment Court P win (gets the FMV of LABOR) (1) Holding: D pays fair market value of services to P (2) Original contract is void b/c there was no meeting of the minds. (3) Law still implies contract - services were still rendered and supplies used and both parties understood and agreed that work should be paid for (4) No price was fixed. Both prices were subjective. Recovery is based on services rendered, NOT value of benefit to the D. Kull: WRONG! D should have gotten how much he benefited which was 22K. (1) No meeting of the minds → no contract. (2) ∆ must pay FMV because that's what he gained (measured FMV unless there was a price that was agreed on - he has to pay for what he unjustly received) (3) Different than Mich v. State (where there was a fixed price) (4) *There can be no implied contract on price is both parties were defrauded*

OSCAR SCHLEGAL MFG. CO. V. PETER COOPER'S GLUE FACTORY Glue requirements contract UCC 2.306: Reasonable reliance on the course of business dealings. *Implied Contracts and Terms*

Facts (1) P contracts with D to buy glue from them for 9¢/lb for 1 year (amount is not set). (2) P is a jobber that needs glue. (3) D does not deliver glue, P sues for breach of contract. Key side points: - Price of glue went up from 9¢ → 24¢ in this year (WWI) - Before this year, P had ordered glue from D before and it had only ordered ~35,000 lbs. Suddenly this year, he ordered 126,100 lbs. Court (1) Find for ∆. (2) Court found no consideration b/c the buyer is not obligated to buy. Schlegel consideration: maybe if he was exclusively buying from cooper's that would be consideration (3)No real requirements = no requirements contract. P was taking advantage of the contract. AK: notice how a REQ K is in some way similar to a firm offer on the part of the seller. Kull: Wrong, there is consideration; However, in requirement contracts, buyers should order good-faith amounts not disproportionate to prior experience or estimates. There is an implied promise/obligation here: Quantity isn't definite, but P will most likely need the glue and P is promising to buy it from the seller when he needs it 5 main points: (1) This is a requirements contract: Seller agrees to deliver all of the good for a year at a fixed price but quantity is not set. (2) In the case seller doesn't deliver, seller says this contract was not enforceable b/c there was no consideration b/c buyer didn't agree to do or not do anything → contract was illusory BUT that's wrong! There WAS consideration - buyer's consideration was IMPLIED - how do we find implied terms?? Ask "WOULD THIS CONTRACT MAKE SENSE WITHOUT IMPLIED TERMS? (Look to circ evidence, but Judge didn't like the speculation on the part of the P) (3) Buyer's Implied consideration/obligation "When we buy the good, we will buy it from you" - this is obvious, it doesn't need to be said OR if they've been doing business together for a while, it's obviously assumed (UCC "course of dealing") NOW there's no issue/question about this; everyone knows from UCC 2-306(2) - how to enforce requirement contracts & implied consideration/obligation; (4) Assuming req. contract is enforceable → is there still a problem? Why does the court not want to enforce this? B/C requirements contract also has implied terms that it isn't a vehicle for financial speculation but has limits; P was not acting in good faith; P has to have really good reasons for orders to suddenly increase. Implied terms = what did the parties have in mind? (Seller CLEARLY didn't intend for nonsensical amt of orders in glue by a buyer who wants to take financial advantage of the K) (5) Even when buyer was making ridiculous demands, Seller accepted the offer, it kept saying glue was on the way but never delivered it (stupid)

LEWIS V. BROWNING (relook) Old view of acceptance Offeror master of his offer Master Lewie *Offer & Acceptance: contract by correspondence*

Facts (1) P made an offer and specified that answer must be received 18th (2) D sent an acceptance on the 17th → Letter was never received/lost in transmission Court (1) Generally - rule is that acceptance is effective upon dispatch (2)Regardless, in this case the D specified terms of acceptance - that it was effective upon receipt - so acceptance is invalid b/c D never received it Kull: (1) Rule: Offeror is the master of his offer. He has the power to propose the terms of the exchange and prescribe the manner and time for effective acceptance. Three things that produce a problem: (1) Revocation of Offer →The offeree has to know where he stands. (2) Revocation of Acceptance (3) Acceptance lost in mail or seriously delayed R2K 63 → Mailbox rule as default would solve these problems.

DRENNAN V. STAR PAVING CO. Stars for elementary school bid *Implied Contracts and Terms*

Facts (1) P was a general contractor/D was subcontractor. (2) D submits bid for paving work. P uses D's numbers (which ends up being miscalculated/too low). (3) P is awarded bid. P goes to D's office. D revokes offer before P "officially accepts." P sues for damages Court Find for π. 1) Unilateral contract: obligation is on offeror, no obligation on offeree. But, once offeree performs (even partially), offeror is bound to obligation / implied promise that if part of requested performance is given, offeror will not revoke offer (acceptance by performance) 2) Even without partial performance, D is liable b/c reasonable reliance/change in position: D should have realized such low prices would have induced P to rely on D's bid Kull: Everything judge said is right. ALSO can be enforced by: (1) No explicit promise not to revoke, but there is an implicit promise not to revoke in the usual course of dealing - whole system/network between contractors and subcontractors will fall apart if there was no implied promise not to revoke b/c otherwise no one would contract w/ a subcontractor retaining right to revoke. Usual course of dealing in the industry UCC 1-205(3) (2) No consideration, but bids like these are firm offers; (3) BUT not estoppel (4) Not a transparent clerical error You can add consideration in implicit promise: I withhold my right to revoke for you to use my bid [D withholding right to revoke to increase likelihood of being used]

Hamer v. Sidway (1891) Sober Nephew **Kull: Conditional gift promise; not a real bargain *From Detriment to Reliance*

Facts (1) Uncle promises nephew (P) to pay him if he refrains from drinking, using tobacco, swearing, playing cards or billiards for money until he becomes 21. (2) P wrote uncle that he fulfilled his part of the promise when he turned 21. (3) Uncle wrote back saying -I have it/it is yours already -I have set it aside -I'll keep it until you are older/more responsible to handle the money -promises $5K + interest. (4) Uncle dies. P sues executors for $ Court Find for π 1) Promise enforceable: waiver of legal right of those actions = sufficient consideration for a promise. 2) Contract is barred by statute of limitation (lapse of time) BUT 3) In the letter, uncle says he has the money for nephew set aside → created himself as a trustee and created a trust → he paid the money already at that time → the money was already the nephew's → court enforces the trust, not the contract Kull: No, conditional gift, not enforceable (1) Definitely the P's money because it was a trust; (2) Conditional Promise of a gift (3) No consideration/bargain: B/c, one side is obligated to give a reward but the other side isn't obligated to fulfill the promise - nephew could have chosen to refrain from doing those things or chosen not to refrain (3) Uncle can't sue him if nephew chooses not to refrain (similar to Hole-in-one case; unilateral contract) This could have been 3 things (1) Bargain promise/contract: No because no consideration (2) Unilateral promise with reliance: No, no change in position (3) Conditional gift, YES! (your wealthy family member tells you contracts is their favorite class and if you get an A they will give you a Tesla) Hamer & Ricketts: promisors really wanted to enforce promises but couldn't because they died so courts are just enforcing what the dead person wanted (like a will—filling in the legal gaps)

FAIRMOUNT GLASS WORKS V. CRUDEN- Mason jar case Opposite of perfectionism; court fills in the blanks with usual course of dealing, outside evidence, implied intentions of parties *Offer & Acceptance*

Facts (1) π asks for a price quote on 10 car loads of mason jars. (2) ∆ responds with certain prices "for immediate acceptance" (3) π accepts and orders 10 car loads → ∆ refuses to deliver/sell/ P wants specific performance: Give me my mason jars Court (1) Find for π. The letter was an offer and π accepted. (2) ∆ argues that π's letter was a counter-offer b/c it asked for "first-quality goods" - violates mirror image rule. NO! Outside evidence shows that in the usual course of trading, first-quality goods mean nothing different than what ∆ offered. (3) ∆ says quantity ordered (10 car loads) was indefinite - Court looks to outside evidence "expression used in trade" (4) Buyer's choice: law of sales - if seller doesn't specify, the buyer chooses specifications of product unless otherwise agreed Kull: Court is correct: Agree with everything. Why is the seller repudiating? They screwed up somewhere, but it's not going to get them out of the contract. (SEE UCC 2-311 - buyer's choice, seller's choice, not every little piece of contract is req if outside evidence can reasonably fill the blanks). Who has the right to specify an assortment? "Unless otherwise agreed...the buyer has a right to specify what quality of good." That's an implied term of the deal. If you're a seller and you don't want the buyer to specify, then say so, but if you say nothing, default rule kicks in. The court will try to fill in the blanks through reasonably known/believed standards within the intention of the parties RULE: "In construing every contract, the aim of the court is to arrive at the intention of the parties." So simple yet so true! Remedies: Damages

Donovan v. RRL Corp. Wrong Jaguar Case (2001) *Introduction*

Facts (1) ∆ put in an ad to sell at Jag in the newspaper. Newspaper made an error and listed it as $25,995 when it was $37,995. (2) π comes to buy it at $25995. ∆ refuses to sell it at the price but offered to pay for P's fuel, time and effort expended in traveling to dealership. (3) π declined this offer. (4) D offers to sell for $37,016. (5) P declines and sues for breach of contract. (6) D sold the car for $38,399 to someone else. Kull: (1) Court was correct. (2) Reliance of one party v. voluntariness of another party •If there wasn't a detrimental reliance of the other party, Court won't force someone into a K that they don't want to be in. •Not unjustified reliance, they discussed condition of used car The court has no sympathy for mistakes in judgment but a clerical error is different → will not be enforced unless π relied to his detriment Remedy that ∆ would give: expenses Remedy π wants: Cover - to buy the car at the same value

THE LAP DANCE CASE *Implied Contracts and Terms*

Facts (1) ∆s get lapdances not realizing that each new song is a new lapdance. Kull (1) No implied contract/terms here. (2) The owner should have made it clear that every lapdance is a new song Two rules: -Implicit terms must be reasonable -Parties have to know about them

JENIKINS TOWEL SERVICE V. FIDELITY-PHIL Selling real estate with sealed bids *Offer & Acceptance*

Facts (1)∆ is trying to sell property and asks for sealed bids and says they will award contract to the highest bidder (reserved the right to approve/disprove any/all offers or to withdraw properties from market) (2)π is tied with another party but they had conditions attached so π says he is entitled to K. π sues for specific performance. (3)∆ says that letter was just invitation to offer, not offer. Court (1)The letter was an offer → find for π b/c only he unconditionally accepted the offer with the highest bid (2)Other parties offer was actually a counteroffer so only P accepted the offer. (3)Sealed bids signify an offer/revoke before they seals are open. Kull:Court is correct; (1)**Sealed bid is important b/c it shows consideration** Consideration from P: offer max bid Consideration from D: gives up right to negotiate/bargain and use the bids for other higher bids. (2)After sealed bids, it makes no sense for Fidelity to have right to negotiate the deals. (3)Kull says: This is an AUCTION -Auction option: invitation for bids/offers + promise to accept highest offer (promise has consideration) -Promising to sell to the highest bidder; the promise has consideration -Consideration is in the sealed bid; consideration is in the nature of the bids - no one would play if they just do whatever they want

Ricketts v. Scothorn, 77 N.W. 365 (Neb. 1898). Gratuitous promise: Grandpa promises granddaughter money so she doesn't have to work *From Detriment to Reliance*

Facts 1) Grandfather gives granddaughter (π) "promissory note" promising her money so "you don't have to work anymore" he doesn't want her to have to work anymore (not a condition) 2) Grandpa died → The promised money $2,000 with 6% interest was not paid 3) π sues executors for the money Court Find for granddaughter (π) 1) No legal bargain 2) There is gratuitous promise. 3) BUT π changed her position to her disadvantage, this precludes promisor from denying enforcement/asserting rights against promisee IF promisee relied in good faith upon the promised conduct and changed his position for the worse → P entitled to remedy. Kull: Sorta Correct; We want to find for the π; 1) We should find for ∆ technically, but court just wants to enforce wishes of dead grandpa 2) No consideration/bargain, Yes reasonable reliance and change in position; NO detrimental change in position (she was easily able to get a job again. She can "go back") 3) For cases concerning wishes of dead people, courts will likely enforce promises that are w/o consideration, w/o reliance, w/o change in position **Key points: (Showing intention of dead grandpa) Hypo: If Grandpa had said 'in exchange for this, quit your job' CONSIDERATION 'If she wasn't able to get a job then' ESTOPPEL **Same year as Prescott v. Jones but this court is saying complete opposite of it. Diff jurisdictions, all of U.S. hasn't been keeping up with the changing law in narrowing definition of consideration

BASEBALL CARD CASE Voluntary/involuntary contract. What did parties intend Agency issue *Introduction*

Facts 12-yr-old card collector who owns about 40,000 baseball cards (aka baseball card pro) finds a valuable card at the store. Price was marked as "1200" and inexperienced sales clerk thinks it means "$12." Owner of the store asks for the card back and kid refuses. Owner sues for either replevin (give it back) or trover (money damages) Kull Mistake case Clerical error v. error in judgment - Store owner didn't intend to sell the card for $12 so this contract was involuntary; mistake was made by clerk (just like Jaguar's newspaper) -No sale/contract because D knew P did not voluntarily sell the card for that reduced price - Remedy = easy b/c card exists (unlike Armstrong) Agency issue (like Clandeboye ship case - owner is the one being sued, not the middle man - goes more towards voluntariness of K) (like Sherwood II cow case - imbalance between parties - parties will never be on equal playing field)

Kirksey v. Kirksey Supreme Court of Alabama (1845) Brother in law makes woman and kids move Inconvenient Change in position from reasonable reliance *From Detriment to Reliance*

Facts: (1) A brother-in-law (D) offers to sister-in-law (P) to come move to his land (2) Brother in law promises to provide P with a place to stay and tells her to leave her present home → She moves with her kids to D's house → two years later he kicks her out into a house in the woods → later he kicks her out again Court: Find for ∆ b/c promise was just gratuitous → unenforceable P isn't at a detriment. She didn't give consideration. D wasn't gaining anything Kull: This was decided wrong. WRONG use of consideration! Consideration has no place in gratuitous promises There are 2 ways to enforce a promise: (1) Consideration (bargained for) (2) And estoppel (detrimental reliance) No consideration here, but nonetheless, she relied on his promise to her detriment. Possible remedy? $ of the house of brother in law, house of brother in law, compensation for moving/waste of time Consideration can be benefit or detriment

Mabley & Carew v. Borden Anna work work work no more: she dead At-will employee *Consideration & Bargain*

Facts: (1) Anna Work was employed at with Mabley & Carew. (2) Mabley & Carew provided her with a group life insurance plan/policy promising her money at her death if she was still an employee at her death. (3) Letter says that it is "purely voluntary and gratuitous" and carries "no legal obligation whatsoever" Court: Find for π (Anna's sister). (1) Consideration: *Inducing* Anna to keep working at the company. (2) Mabley gains benefit of continued services, relief of going through process of hiring new employees, insuring full working force at all times when jobs are plentiful and labor is scarce, etc. (3) Anna working there had no right to the $ b/c her death made it a contract (she fully performed her part of the deal); Kull: Court decided correctly; 1) She was employed at will aka she could quit anytime. So her continued employment = consideration (unlike Davis v. Morgan); She was induced her to continued to work there 2) This is 1935 - Depression - They're broke and can't pay. They need court order making them pay in order to use bank's money 3) All b/c you say it's not "legally enforceable" and it's "purely gratuitous" doesn't really make it that way 4) Cancel at any time but only during Anna's life

BENCH V. SHELDON (NY 1852) Where my sheep go? Explicit fraud misrepresentation *Introduction*

Facts: (1) Bench (P) loses his flock of sheep → Dixon finds them → Dixon asks Sheldon (D) bros if they know of anyone that lost sheep (2) Sheldon goes to Bench and asks if he found his sheep and "supposes he never would find them" (3) Offers to buy the title over sheep from Bench → Bench sells for $10 → Sheldon bros go to Dixon and claim sheep → Someone finds them Court: P wins; Fraud misrepresentation. Kull: Court decided correctly! Sheldon bros guilty. Unequal footing + induced Bench by fraud. Fraudulent statement= "Supposed he would never find them" Why Fraud?? This statement was false, Sheldon knew it was false, it was made to deceive Dixon [They wanted the sheep at a low price (10 dollars vs 80)], it did deceive Dixon, and Dixon was harmed from the false statement [Misleads to the parties detriment - 80 dollars was the actual worth of the sheep]-- fraud test Takeaway - Circumstances can amount to fraud

Clandeboye ship case (1895) Double the tug, double the fun Tacit misrepresentation *Introduction*

Facts: (1) Clandeboye breaks down and its mate requests for services from Morse. (2) Lomm (∆) finds out about this and beats Morse to rescuing the boat to steal benefits. (3) Lomm tows Clandeboye to destination and doesn't tell the owners about the original deal the mate had made with Morse (Tows to wrong place). (4) Morse had still made a trip to where Clandeboye and charges owners. Contract with Lomm is binding unless invalidated by conduct of Lomm in concealing the fact that Morse had already been acquired for services. (Lomm committed fraud like behavior) Kull: *If you tell someone "A,B,C," but not "D,E,F" then that's fraud, with the intention to mislead. *Only argument against fraud that it wasn't a misrepresentation, the Georgian guy didn't lie about another ship coming down to tug the boat

Stilk v Myrick [1809] EWHC KB J58 Crew Deserts or Crew's Duress At-will *Consideration & Bargain*

Facts: (1) Crew contracted to be paid £5 each. 2 seamen abandon ship halfway into the trip. (2) Captain promises the rest of the crew the division of the 2 seamen's wage if the rest of the crew sticks with him until the end of the trip. (3) He doesn't give them the money at the end. (4) *Crew sues for pay* Court: (1) Pre-existing duty rule. Seamen contracted to take on any work that may arise in emergencies. Also, court thinks there was duress (promise made b/c change of position/situation due to the 2 seamen's abandonment) (2)The pre-existing duties "argument could have been a way for judges to dismiss these hard to solve issues" Kull: We don't know if the modification was made under good faith because we weren't there. Two ways we can see this: (find for crew) 1) There WAS consideration - extra work by the two seamen 2) No duress (maybe a hint); modification made within good faith dispute → promise/K should be enforced 3) Public policy concern, 2-edged sword, if the ship is in trouble or there is a particularly difficult voyage, crew won't join or they all abandon the ship because they know they won't get the extra pay. 4) AND Everyone benefits when sailors don't leave the ship 5) BUT More likely than that the sailors will hold the ship hostage

CARLILL V. CARBOLIC SMOKE BALL CO. *Offer & Acceptance: acceptance by performance*

Facts: (1) D advertised in paper that it would pay $$ to anyone who got sick while using their product (2) P used their product and got sick (3) P sues Court: P Wins (1) Not "puff" b/c they offered money in a sincere matter (unlike Pepsico) (2) Ad was for anyone who performs and accepts (like Fur Coat Case) (3) This is a case is an exception to the rule that acceptance needs to be notified. It is okay if you get your notice of acceptance at the time of performance as long as the offer hasn't been revoked (unlike Prescott v. Jones) (4) There was consideration here b/c D get people to this the remedy works and this produces a sale Kull: Court is correct (1) This wasn't puff, sales talk is not specific statements (2) It was bidding because the people who read the ad are the "specific offerees" (3) She notified them at the earliest relevant moment (4) There was consideration (she was helping increase their popularity but in return she was inconvenienced) (5) Not detrimental reliance, but still reliance nevertheless. Cf. Star Paving—Implied subsidiary promise that offeror will not revoke offer once anyone has started performing; cannot revoke the offer for reasonable amount of time it takes for offeree to complete performance. Judge Traynor's flagpole hypo. **We could argue for Mrs. Carhill that it had warranty; D and P agreed to a project + 100 if defective

WOOD V. LUCY, LADY DUFF GORDON (1917) fashionista Kim K Implied terms of contract •UCC 1-205(3): If you can show course of dealing, there is good evidence of a deal *Implied Contracts and Terms*

Facts: (1) D contracted with P to use P as sole marketer of D's endorsements/designs and she receives 50% of profit but relinquishes her right to market herself (2) D markets herself → P sues for breach of contract (3) D says no contract b/c no consideration b/c P didn't promise to do anything Court Holding: Find for P 1) Acceptance of exclusive agency (consideration by D was an assumption of its duties (consideration by P) 2) Terms of contract: She gets paid through P's successful contracts → implied that w/o his duties/efforts, she gets no money. So OBVIOUSLY he promised to fulfill his duties/efforts or else there's no point in the whole agreement. 3) Both parties must have intended a bargain. No other possible explanation for relationship besides contractual (unlike Hertzog v Hertzog) Kull Court was correct (1) Although an express promise is lacking, if the context indicates that the parties intended to contract, the parties are bound. (2) Without this implied consideration to each other, there's no point in the agreement in the first place so OBVIOUSLY there is a contract with obvious consideration (3) If P has proof of accounts showing profits being shared with D, even easier to enforce contract (unlike Hertzog) (4) Or if P can show usual course of dealing in this industry is like how they made the agreement → you can show a contract (like in Drennan v. Star Paving)

RHODE ISLAND TOOL CO. V. US Bolt case *Offer & Acceptance: contract by correspondence*

Facts: (1) D put out an invitation to bid on bolts (2) P made at offer (but calculated the price for machine bolts with stud bolts value and stud bolts are a lot cheaper) → (3) D sent P letter of acceptance on 10/4 (4) P notices error (10/1) and revokes offer on 10/4 (5) D said offer cannot be revoked b/c bid was already accepted Court: (1) Find for P (error maker) (2) rule should be changed, acceptance is effective upon receipt b/c the sender has control over the letter until it is received by the other party so it can revoke/ask for return of the mail at any time before receipt of the mail Kull: Court is incorrect (1) WRONG! Gen rule is still mailbox rule (effective upon dispatch) (2) Rule: In the absence of specification by offeror, acceptance is effective upon dispatch (mailbox rule = default rule) (3) Why can't offeree revoke acceptance before it is received by offeror? B/c it allows offeree to speculate at offeror's expense (enjoying the benefit of an option he has not paid for) → gives offeree option and extra time to look at other options for free and just revoke acceptance at any time before receipt (Heads I win, tails you lose). (4)Also, in POV of offeree, offeror cannot revoke offer during the time it takes for offeree's acceptance to arrive (dependable basis for his decision whether to accept)

MOULTON V. KERSHAW Rupture in Salt *Offer & Acceptance*

Facts: (1) D sends letter to P saying "we are authorized to offer" salt for 85c per bbl. (2) P accepts and orders 2,000 car loads (which P claims is reasonable amt for his business and D knew it) (3) D withdraws offer upon receipt of order (4) P insists on delivery → D refuses → P sues Court: D won. (1)**Example of a court that wants to achieve purified contract law/perfectionism** (2)∆ says 2,000 car loads is not a reasonably accepted/ordered amount so it can't deliver (3) Court does not want to bring in outside evidence to show that this is a reasonable amount in the industry and within the π's reputation (4) This is an invitation for offer Kull: (1) WRONG! (2) BIG CONTRAST from modern day (UCC) motives: needing evidence and trying to see what parties meant (i.e. course of dealing, etc.) **We have to find intentions and implied intentions of the parties** (3) When someone makes an offer there is a reasonable quantity associated in the offer. The offer is only good if supplies last, can't force someone to honor a contract beyond the reasonable expectation. (4)Reasonableness comes from outside sources. (2k salt for individual is crazy, but not crazy for a wholesaler) 1st come 1st serve.

YOUNG AND ASHBURNHAM'S CASE (1587 England) ∆ stays at π's inn *Implied Contracts and Terms*

Facts: (1) D stayed at Young's inn multiple times during the sessions (business and social occasion), ate his food, used his services, etc. and Young never asked for payment nor did they discuss a price for those services; (2) Young dies. (3) Executors are going around to collect debts and pursues action of debt Court: (1) D argues: "you cannot prove that he ever promised to pay." [AK: early days of K law in the CL system was crude—an enforceable debt was not ever created until the other party agreed to pay. They had not worked out what would be taken for granted until not long thereafter. ] (2) No liability by D; There was never any agreement on price Kull: Correct is incorrect; (1) There was no explicit agreement to pay. (2) Today, courts would find implied contract - obviously you would pay for your stay and use of services at a hotel Cf. Bezoar stone case. AK: exact same thing. Goldsmith said "I never promised you that it was a bezoar." In other words, "I never warranted that it was a bezoar." Cf. Wood v. Boynton: implied warranty if he had said "this is a topaz I am certain." Cf. Bartender hypo: D: "I'll have a Gin and Tonic." B: "Coming right up." D: *drinks G&T* B: "That will be $10, please." D: "Who said anything about paying?" AK: we start talking about what everybody understands very quickly here. Things that go without saying will not be said.

MILLS V. WYMAN Wy-man did my son die? [and leave me with the bill] *Moral Consideration*

Facts: (1) D's son was extremely sick so P took him in and cared for him as a good Samaritan without charging him. (2) Later on, D found out about this and promised to pay for those services. (3) Never paid. P suing for compensation. Court: 1) Find for ∆ 2) No consideration; P never asked for anything at the time; Promise was just a gratuitous promise and can't be legally enforced → this is an issue in foro conscientiae (moral obligation) 3) Argument that moral obligation is sufficient consideration for express promise is WRONG. There must be some pre-existing legal obligation that became inoperative by positive law (i.e. statute of limitations, etc.) Kull: Court is Correct: The sequence is out of order here. (1) [Request] (2) Performance (3) Promise of Payment → gratuitous promise -If the son was a minor, father has legal obligation to fund him (even without a promise, he must pay b/c P performed D's legal obligation on his behalf. But, this is not even a K case, *it's a restitution case* Change the Facts: son is a minor. Then, father is legally obligated to support his son for necessities (food, water, shelter, medical care) so if somebody performs his legal obligation for him, even though it's not strictly contractual, there might be a legal claim for reimbursement.

Hurley v. Eddingfield Bad Doctor *Introduction*

Facts: (1) Family physician called upon in the middle of the night to render services to a dying man → money is tendered → physician denies him → person dies (2) Physician demurrers (no test of the factual allegations) (3) P sued for 10k in damages Court: D wins (1) Alleged wrong act is the failure to enter into a contract of employment and you can't face someone to enter into a contract; (2) ∆ not liable; obtaining state's license to practice medicine ≠ require him to practice Kull: (1) Court is Correct (2) Contracts must be voluntary; There is no obligation to enter a contract; A party is only liable for obligations it voluntarily undertook; (3) BUT, in this case: if there was a preexisting contract (or implied contract) from their contract of being a family doctor → physician may have had duty to perform → then it would have been a breach of K case

Prescott v. Jones Insurance company - building burns down Unreasonable reliance Compare: Armstong v. M'Ghee (if there's no fire, then it's like Armstrong but the horse didn't die) *From Detriment to Reliance*

Facts: (1) Insurance company says they would insure P's building for a year "unless notified otherwise." (2) P doesn't notify them otherwise and assumes his building his insured. His building burns down. His building wasn't insured. (3) P never paid premium either (no contract technically) Court: Found for insurance company. (1) No mutuality (2) Party can't turn absence into acceptance. (3) There has to be a mutual obligation Kull: There does not have to be a mutual obligation; [D forgot to renew the contract/o] (1) Acceptance of an offer must be an overt act by the offeree and cannot be found in silence or a failure to act. (2) Back then → An estoppel cannot arise from a promise as to future action with respect to right to be acquired upon an agreement not yet made. (3) There does not have to be a mutual obligation, there can be a contract where one party is obligated and the other is not (unilateral contract) (If you do x, I will do y) (4) You can have an implicit agreement based upon historic business relationship (5) Should be an estoppel case

MILLER V. STANICH (1930/Wis) The illiterate Landlord Option lease renewal Disappointed expectation v. Detrimental reliance *Introduction*

Facts: (1) Landowner leases property to tenant for 5 years with option to renew for another 5. Tenant chooses to renew for another 5 and requests for the same option again in the new contract. (2) Landowner's lawyer says it will not be likely but he will try. Gives tenant two contracts to sign - one with option, one w/o option → sends both to landowner (3) Landowner accidentally signs one w/ option b/c he is illiterate → (4) landowner asks tenant to enforce the contract w/o option → tenant refuses → landowner (P) sues for *reformation* Court: Landlord (P) wins b/c it was a mistake and no intention existed. No meeting of the minds. . Kull: Court Decided Correctly. (1) Expectation v. Reliance Disappointed expectations = I expected something, so now I'm disappointed AKA no loss Detrimental Reliance = I'm at a loss because I relied on you (2) If tenant had made improvements on the property, then change in position resulting from reasonable reliance to make contract enforceable. (3) The tenant would take the deal either way so there was no reliance. No change of position/short period of time when the landlord revoked)

DAVIS & CO V. MORGAN (1903) Term-employee *Consideration & Bargain*

Facts: (1) P (Morgan) was a term-employee of D (Davis). (2) P is offered a higher paying job in FL. (3) D offers him extra at end of term if he doesn't go to FL. (4) P goes to FL, D fires P, and *P filed a suit for the extra pay.* Court: D wins; Found for company - the ∆ was not getting anything they weren't already entitled to → no consideration; just a gratuitous promise Nudum pactum = promise that is not legally enforceable due to lack of consideration Kull: Pre-existing duty rule: "I'm not getting something that I'm not already entitled to" How can we change the facts so P can claim money? 1) If he was working at will rather than term employment contract → his continued employment would be consideration 2) Change his duties in the orig contract (i.e. workload, hours, etc) 3) Rescind original contract and write a new contract; You can argue that this is what they kind of did BUT Court probably saw the hint of duress and refused to enforce (duress = Morgan was threatening to breach contract → coercing company into a new agreement) *clearly a business transaction but courts can't acknowledge this because then term employees could hold their employees under "duress"

POSTAL TELEGRAPH V. WILLIS telegraph co. messes up cotton acceptance letter Even w/o explicit specifications, don't default to mailbox rule if there are implied specifications within regular course of trading *Offer & Acceptance: contract by correspondence*

Facts: (1) P (cotton seller) offers Knight, Yancey & Co to sell them cotton (2) Knight telegraphs an acceptance (3) Telegram arrives in P's town but isn't delivered to P (4) Knight calls and asks if P received acceptance yet → P says no → Knight revokes offer and they renegotiate prices to a cheaper price and P loses $218 (5) P finds out telegram had arrived but was never delivered to his office → sues telegraph company for messing up Court Holding: Find for D (Telegraph) (1) P argues: Contract not binding until P receives the acceptance - this is usual custom/practice in the cotton industry b/c no contract (and D should pay for the damages) (2) D argues: acceptance effective upon dispatch thus P liable for cancelling his original contract/not enforcing the original contract; Says P gave KYC a gift. Court: Usual customs/practices are irrelevant when there are express terms aka the mailbox rule; Maybe if the contract was uncertain. Kull: Court is incorrect. (1) Rule: If there are implied terms of acceptance in the industry, mailbox rule is not default rule. (2) U.C.C. says parties of the certain industry can set their own condition that suits their trade better - we want to let them do things their own way (3) Offeror = master of the offer → SO if usual practices of industry specifies terms of offer (aka implied terms of offer), this is the term of the offer even if offeror doesn't explicitly state them (4) It would have worked both ways (he could have rescinded the offer before the acceptance was received physically) (5) Industry standards are the evidence of meeting of the minds (all implied)

CLARK V. WEST PUBLISH Drink and Law *Express Condition*

Facts: (1) P and D had a K. P agreed to write and prepare a series of law books [you get 3000/yr + 2/pg. if he drinks OR 4/pg. if he doesn't drink] (2) P completed the 3 volume works. Did drink but completed his work regardless (3) P says there was a waiver saying they didn't care if he drank and got the job done Court: D wins (1) This is inequitable: The contract ran for years not necessarily when the defendant was even writing (2) This was an incidental condition aka it was not the consideration here (3) Doctrine of implied waiver applies here. (4) They knew he was drinking and they let him do it and continue to work; P believed and relied on those statements Kull: (1) Implied waiver and estoppel (/relying on someone's statements) are almost the same thing and there isn't a good reason here to make the distinction

HERTZOG V. HERTZOG (1857 PA) Talentless son that works for/lives with dad his whole life Restitution! Unjust enrichment *Implied Contracts and Terms*

Facts: (1) P (son) worked on his father's farm until he was over 50 years old. His father gave him and his wife/kids a place to stay. (2) Son never got paid. (3) Father expressed wishes to pay him. (4) Father died. P didn't get money --> P sues for money (Kull thinks his brothers probably got most of the inheritance and now P wants money) Court: *Find for ∆. (TC found for P on implied contract* but really they though found for him on a restitution theory) 3 categories of Contracts: 1) Express contracts 2) Implied contracts: (Implied in Fact) circumstances show mutual intention to contract (though not expressed) - shown thru ordinary course of dealing, common understanding of women, etc. (Young & Ashburnham) 3) Constructive contracts: (Implied in Law) Contract created to avoid injustice and ensure fairness where there "should have been" a contract/restitution/quasi-contract Kull: Court decided correctly; (1) There is another probable/possible explanation for the relationship than a contractual relationship. This was a family relationship - filial duties - no contract (2) Not an implied contract: implied contract is wrong because of the familial relationship (There could be multiple explanations for him helping his father vs. a stranger helping him, only explanation is that he is an employee) [*If it was an implied contract than the damages would have been the actual market value of the work.] (3) No express contract (I promise to make a promise does not equal a contract) AK: why does the "constructive contract" (he is correct in saying this is NOT a contract) get dragged in here? Lowry is saying we should NOT call these restitution issues, which we are currently calling contracts "implied at law" contracts AT ALL. It just leads to confusion.

HILL V. GATEWAY 200 INC. Computer fine print Material changes/conditions to a contract must be made openly. *Arbitration clause is unreasonable x no communication → unenforceable* *Offer & Acceptance: status of non bargained terms*

Facts: (1) P buys a computer w/ a list of terms in box. [Terms include arbitration clause + 30 day return policy] (3) P tries to return it after 30 days and is rejected (4) P sues and D asks judge to enforce arbitration clause (5) P says it never knew about arbitration clause Court: Holding for D (Computer company) Reasoning: 1) K does not need to be read to be effective for practical reasons 2) D is master of the offer = sets term of acceptance → terms of acceptance was if you keep it after 30 days, you have accepted 3) UCC 2-207 irrelevant b/c arbitration clause wasn't an addition to contract after acceptance b/c they were presented from the beg when P received box (aka at 30 day point) Kull: Court is incorrect; 1) If acceptance was effective upon paying with credit card on the phone, the arbitration clause was an addition → unenforceable b/c P didn't agree to it 2) If acceptance was effective after 30 days, then D had to explain this to P. This was what was being proposed/agreed upon (effort v. no effort; reasonable v. unreasonable terms) - it's not egregiously unreasonable b/c it didn't say something like "Acceptance effective upon 30 days and then we'll start charging you $20/month so court was still able to enforce this. **side notes: This case is about attempted class action. Court protecting Gateway *You don't have to reach the terms over the phone but still have to "draw attention to it*

WEBB V. MCGOWIN (1935) Web me get this pine block for you So many things the judge says here is wrong. "I'm the judge, I can do anything" case - agreement is enforced by brute force (Kull's opinion) *Moral Consideration*

Facts: (1) P dropped pine block/sees McGowin below and tries to catch the block and falls. (2) P is crippled for life and unable to do work (3) McGowin promises to pay P $15/two weeks for the rest of his life → Payment continues for 10 years → McGowin dies → payment stops → P sues Court: P wins damages; (1) ∆ demurred: "have it your way, π, even if everything you say is true you still have no case because the consideration is out of sequence." Cf. Hurley v. Eddingfield (just like this case) (2) Find for π. McGowin received material benefit and that is SUFFICIENT CONSIDERATION for the promisor's subsequent agreement to pay for the service [Kull thinks this outcome makes sense: Rules that govern these sorts of cases are unclear, but justice is clear. Let's enforce justice (feel bad for the poor guy] Kull: Court found consideration by *brute force* 1. Moral obligation is not a thing we should count on as consideration 2. Past consideration is not sufficient consideration for a new deal 3. Statute of limitations does not apply here, moral consideration exists when we have a contract and the statute of limitations is about to run out, but you promise me you're good for the money so I don't sue. You are still obligated to pay. 4. Consideration is not benefit-detriment, it is bargained for 5. Services were gratuitous, gratuity is not consideration 6. Not in the statute of frauds (He could have died within a year so it is possible it could have been completed within a year) *7. Volunteers don't get paid* Restatement of Contracts § 86. Sometimes enforce a promise on the basis of a benefit previously received. -The court wanted p to get his money = find some consideration. Thought McGowin intended to pay so wanted to continue his intent. -POSSIBLE Solution to this problem: If McGowin had made a contract with P. (i.e. "If you do_____(i.e. be a consultant, give up rights to sue, etc), I'll pay you $15/two weeks for the rest of your life") -Another solution: Illegitimate, surreptitious will case; McGowin clearly intended for him to get paid -Another solution if he could prove "I'll pay you if you promise not to sue"

Daughtrey v. Ashe (1992 Virginia) UCC 2-313: a seller's representation is a warranty if it is the basis of the bargain. Representation not the basis, not a warranty. *Introduction: Warranty*

Facts: (1) P goes into buy a diamond bracelet for his wife from D. P calls D to say he'll buy the bracelet → D has asst make appraisal form; appraisal form described bracelet as v.v.s. quality → P paid, D put the appraisal form into the box and P didn't see it until way later (2) Later, another jeweler tells P the bracelet isn't v.v.s quality → P demands D to replace bracelet with one that is v.v.s. quality → D says no but offers to refund purchase price upon return of bracelet (3) *P sues for SP*/replevin (v.v.s. bracelet) or trover ($ difference between v.v.s. and D's bracelet) Court: Find for P saying that D's affirmations classified as warranty that was the basis of the sale under UCC Kull: Court decided wrong (1) Buyer is buying what he thinks he's buying: He thinks he is buying a "nice" bracelet. D didn't say anything about v.v.s. during bargaining. Mere opinions are not warranties. (2) Appraisal (D's attention to appraisal) was not the basis of the bargain and it came after the contract was formed and sale complete. (3) The non-vvs diamond bracelet is already worth with more than 15

Matta v katsoulas *Illegality*

Facts: (1) P gives ticket to D and says let her know if she wins. (2) Wins car but D refuses to give it up. Court says its illegal. Kull:The important thing to know about this case is that external constraints on enforceability are imposed on the immediate parties to the contract only. There are two contracts in play here: the contract between the hosts and P, and the contract between P and D. Illegality would only apply as to an action to enforce the transfer of the car to P because she won the raffle. Interestingly, note that there was a blue law prohibiting the formation of contracts on Sunday evenings; how does the court get around this? They classify the claim as a tort - a suit for replevin.

PALO ALTO TOWN V. BBTC CO. Lease renewal option K *Offer & Acceptance: contract by correspondence*

Facts: (1) P leases out space to D for 5-year term→ (2) P gives D option to renew for 5 years and another option to renew for 5 years after that/P says acceptance of renewal must be given more than 6 months prior to end of contract (3) D sends acceptance more than 6 months prior/ improvements to property (4) P never gets the acceptance (5) P sues to make D move out Court: Holding: (1) Finds for D b/c court thinks landowner knew that the tenant was renewing his lease (implied reason) (2) Court's explicit reason: D put the letter in the mail → acceptance effective upon dispatch/Concluded that the contract was sent Kull: (1) This is an option contract. (2)Rule: In terms of option contracts, acceptances are NOT effective upon dispatch. Acceptance is effective upon receipt by offeror. (3) One of the main reasons acceptances are effective upon dispatch is b/c it provides dependable basis on offeree's decision to accept (aka offeror won't revoke while the acceptance is reaching him). BUT, in an option contract, it is all in the offeree's hands - he knows that the offeror will not revoke for a definite time limit. (4) Notification that option has been exercised must be received by the offeror before the time limit given.

COTNAM V. WISDOM (1907 Arkansas) Services rendered by Medical Professional Restitution claim/unjust enrichment claim *Implied Contracts and Terms*

Facts: (1) P performed surgery on Harrison in the middle of the street when he was unconscious from being hit by a car. (2) Surgery was unsuccessful and Harrison died (never regaining consciousness aka no contract was formed). (3) Ps sued to receive compensation ($2K) for services from Harrison's executors. $2K was determined by the fact that Harrison was a wealthy bachelor (usual course of dealing in the field at the time to charge rich people more) Court: Find for π. 1) No contract (express or implied)/Legal right = right of physicians and nurses who render services to those incapable of contracting to sustain recovery aka compensation (2) Compensation does not depend on the result. Whether or not surgery was successful, service was still given. *Find for D on appeal* (b/c they told the jury the financial condition of the dead guy) (3) His wealth is irrelevant because there was no contract. When we are enforcing restitution, wealth cannot be a factor [even if it is in the usual course of dealing/usual contracts]. (4) This quasi contract only requires a reasonable compensation for the services rendered (Kull half disagrees - usual course of dealing) (5) *Restitution = Fair Market Value added* Kull: Court was correct (1) Parties cannot enter implied or express contracts when unconscious. This is a restitution/unjust enrichment case (2) There can be a restitution claim with no promise, no agreement, no meeting of the minds, etc. Can I recover $$ if I save a drowning student? No. There is no "fair market value" for saving someone from drowning

JACOB & YOUNGS V. KENT Reading Pipe case *Forfeiture*

Facts: (1) P wants payment for the remaining cost of building a house for the D (2) D filed complaint ~1 year after he began to occupy house (3) D requested "Redding pipe" and P used a different pipe of like quality. D wants P to replace the entirety of the piping which would require the entire demolition of the pipes (4) P wants $$, D says he breached the contract and wants SP Court: P wins (b/c cost of difference is $0) 1.) Contracts require full performance but an omission that is trivial and innocent can remedied with damages/not a cause for forfeiture 2.) Is literal fulfillment implied by law, must weight: (1) purpose to be served (2) desire to be gratified (3) excuse of deviation from the letter (4) cruelty of enforced adherence 3.) We measure the allowance by the difference in value NOT the cost of replacement Kull: (1) Likely there was some fight before the P and D to cause this fight (2) Could have been explained via "Express Conditions" which said anything not right will be replaced but we use trade usage and this brand is equivalent (3) If it is a "Implied covenant" you are owed damaged vs. "Implied conditions" you can walk away from the contract/material breach (4) Expectation damages are not estoppel; Expectation damages = what you expected to get out of the deal, put you in the place where you'd have been if the D had upheld his side of the deal (5) 2 ways to measure damages here, how much it will cost to change the pipes (cost of cure) vs. difference in value b/w the 2 different types of pipes. (5a) Cost of cure was too much. Usually we pick whichever calculation makes the most sense *Kingston v. Preston

KLAR V. H&M PARCEL ROOM INC Parcel Room case *Offer & Acceptance: status of non bargained terms*

Facts: (1) P's errand boy checks a plain looking package with very expensive furs for 10¢ into D's parcel room @ a railroad station. (2) D gives P a small ticket which also has a statement about D's limitation of liability and that max of $25 will be given if any items are lost. (3) P goes to pick up package; item has been lost; P sues for damages (Says he did not read the receipt) Court: (1) Holding: Find for P (owner of property) (2) Common law obligation of bailee (parcel room): exercise ordinary care in keeping and safeguarding the property unless he made a special contract. (3) ∆ did not make an effort to communicate terms of limitations of liability/π never consented/cannot be enforced Kull: Court is incorrect. (1) It's crazy to think that the customer would stop in rush hour in the middle of NYC and read all of the fine print (2) The fine print is not unreasonable → $25 limitation of liability for a 10¢ parcel check fee is very reasonable (3)It's too costly to sit and read all of the fine print in every single transaction. Also, we have to consider the fact that if any company has ridiculously unacceptable terms, people will eventually find out and consumers would not want to do business with them anymore (word of mouth) Similar cases: Lap Dance Case; Assumed knowledge.

Leonard v. PepsiCo (1999) Reliance of one party v. voluntariness of other party Clearly reliance is unreasonable; can't enforce involuntary obligations here *Introduction*

Facts: (1) Pepsi TV commercial (a joke) about promotional items if you drink Pepsi drinks. Mentions a Harrier fighter jet for 7mil points. (2) P gets a Pepsi Stuff Catalog, gets a lawyer and then mails 15 pepsi points + $700,008.50 check + Order form. Pepsi says the commercial was a joke and they don't have that product as a prize and gives some free coupons **Note: Harrier jet is millions of $ Court: Eventually PepsiCo won but after a very expensive lawsuit Kull: Correct decided correct No contract when a buyer attempts to accept an offer he knows is not being made. 1) Reliance was unreasonable (unjustified?) 2) Pepsi never entered into a contract with him 3) Can't force Pepsi to enter into this contract b/c they never intended for it b/c ad was mere puff/a joke (Unlike smokeball case or lefkowitz) 4) Reliance was unreasonable b/c a person whose reliance was reasonable wouldn't hire a lawyer ahead of time before entering into the contract (further proof) 5) You can't enforce a joke because that would be enforcing an involuntary contract

MICHIGAN CENT. R.R. V. STATE (1927) Prison Coal case Restitution in Business transaction "You benefitted from my mistake. You need to pay for your unjustly received benefit"

Facts: (1) State (D) contracted for a year's supply of coal (required contract) at $3.40/ton. (2) Michigan railway company (P) mixed up the carloads of coal and delivered coal that was at market value ($6.85/ton). (3) Prison used the coal. P found out about mistake and paid the coal company the market value and asked for reimbursement from D. (4) P sued to recover market value of coal. Court: Find for π but D only pays $3.40/ton. (aka the amount they agreed to pay) •Court held measure of recovery to be state's contracted price, and not the market value of the coal at the time and place of misdelivery. •Recovery = value of benefit received by defendant. Kull: (1) This case only got complicated b/c coal was consumed (like dead horse in Armstrong). Simple remedy = just give coal back. (2) How to measure the restitution amount: Unjust enrichment: If D (or recipient) is innocent, they will not be liable to a point that leaves them worse off than if the mistaken transaction had never taken place. They cannot be left worse off. ∆ just pays the contract price (normally FMV but that had a contract price!) (3) If they had known (if it was a transparent mistake) then like the Raisin Case

Laidlaw v. Organ (1817) Tobacco case Tacit misrepresentation *Introduction*

Facts: (1) War of 1812 ends, treaty of peace is signed → No more naval blockade depressing price of tobacco (2) Buyer (π) hears about treaty and goes to seller shortly after sunrise (3) Seller asks if anything has happened to influence price of tobacco and Buyer remains silent (4) Seller delivers tobacco on Monday morning even though he knew about the news (5) Later, seller takes it back → Buyer sues to obtain possession; *Sues for specific performance* *Buyer and Seller had been negotiating for a long time Court: Find for buyer (P). The case goes to the Jury to decide whether his silence was misrepresentation. (1) Buyer was not bound to communicate the info he had. (2) Parties will always be on unequal footing. As long as a party doesn't say or do anything that tends to impose on the other, it's not unlawful. Kull: Parties are not obligated to communicate all of their knowledge 1) Impractical - No time; unrealistic 2) There would be no incentive to find new knowledge → lack of progress of economy/society. Society benefits from people trying to get ahead (3) *Parties will always be on unequal footing*; that's just the reality/laws of economy (4) But, in this case there was (maybe) fraud b/c tacit misrepresentation (buyer was asked but he didn't answer) (5) the winning argument is "there are circumstances in which silence might be equal to a fraudulent misrepresentation." Hypo: Fraud- saying "no there isn't any info!" Non-fraud- saying "I'm not going to tell you!"

Balfour v Balfour

Facts: (1) π and ∆ are a married couple. (2) π (wife) stay in England b/c doctor said so. ∆ went to work overseas. (4) Husband (∆) agrees to pay his wife (π) £30 monthly. (π says agreement made by a couple in amity). (5) ∆ said they should remain apart. π commenced proceedings for restitution of conjugal rights (requiring to live together). π obtains order for alimony (payment one person in a couple must pay to another) Court: ∆ wins; (1) Not all agreements are contracts; even if agreements had consideration; (2) No contract if parties did not intend that they should be attended by legal consequences (3) Agreements between married couple have no place in the Court/Law (4) Husband bound himself to pay money, wife bound herself to be satisfied with that sum (not ask for more) and do whatever the money was to be used for Kull: Court decided right (BUT) (1) Legally enforceable contracts require that the agreement be entered with the intention that they be attended by legal consequences (2) Yes there was consideration, meeting of the minds, quid pro quo, exchange, consideration. But, unenforceable because they did not intend that they should be attended by legal consequences. B/C agreement made "by a couple in amity." (3) The court misunderstood this arrangement. If we wanted to find the consideration in exchange for the husband's support, what would it be? The discharge of the husband's responsibility to support her. Change the facts: Mrs. Balfour wins if they are already estranged, not in amity, when they make the agreement. Then they would have been at "arm's length" and the contract would have been enforceable. [The wife messed up when she said they were still a happy couple/should argued that this was a "transaction" in consideration of the fulfillment of his material duties/not a gift] *Parol Evidence example

UNITED STATES V. BRAUNSTEIN bad raisins case Clerical error that was OBVIOUS to ∆ (like baseball case) Perfectionism court *Offer & Acceptance*

Facts: (1) π puts out an invitation to offer for bad raisins → ∆ makes an offer (2) π drafts a letter confirming their contract but makes a clerical error as to price: says 10¢/box, not 10¢/lb (difference: $24,000). (3)∆ doesn't respond. (4) π has to sell to someone else at a loss sues for damages Court: (1)Find for ∆. (2) Π's letter was a counter offer b/c it had different numbers than what was agreed upon ("foreign price"). Perfectionism AGAIN: You shouldn't have made a mistake. Enforce mirror image rule. Kull (1) Issue of transparent mistakes and implied intentions** (2) Intention of π was clear b/c the price in original acceptance was grotesquely disproportionate/detrimental to the seller → ∆ clearly knew this was a clerical error but wanted to use this as an excuse to get out of the K. (3) The mistake was too grotesque to be uncertain/ambiguous. (4) The P didn't have to add those terms into the acceptance

BULTER V. FOLEY *Relook at this stock case/kill me *Offer & Acceptance*

Facts: (1) ∆ and π contract to buy/sell stocks to be shipped that day. (2) ∆ doesn't deliver (3) π buys in open market to cover and sues for damages. (4) ∆ says his counter offer was supposed to include "subject" in it meaning "subject to prior sale/to my not having sold it to anyone else first." "Firm immediate acceptance" → right now, probably within a few hours in that day. (5) Seeks expectation damages/cost of cover Court: (1) Court enforces contract → Offerer takes the risk as to the effectiveness of communication if he chooses the manner of communication (i.e. he chose the telegraph company). (2) π's actions/reliance is a factor in determining enforceability of K even if mistake was not made in bad faith Kull: (1) Wrong way of enforcing contract: (2) Consideration from P: Not looking for stocks elsewhere Consideration from D: Give up right to negotiate with other people (3) Court said this was detrimental reliance but court could have said this was just a normal contract **Doesn't make sense for D to just sell to other people in the course of making negotiations with P Why do they say this "firm immediate acceptance?" Because it's consideration: we will not buy from anyone else.

LEFKOWITZ V. GREAT MINNEAPOLIS SURPLUS fur come first serve Acceptance by performance; one of a kind *Offer & Acceptance*

Facts: (1) ∆ puts ad in the newspaper - first come first serve (for a fur coat and a fur scarf/$1 each) (2) π goes and stands in line and is first. (3) ∆ refuses to sell b/c "house rule" = only sell to women./P goes back the next week and demanded coat. (4) P sues for damages from breach of K Court: Found for π. (1)There was sufficient mutuality of obligation - if you come first, I'll sell to you; You can't change the terms of the offer after acceptance, only any time before acceptance. (2)When an offer is clear, definite,explicit,and leaves nothing open for negotiation =offer, acceptance of will complete the contract (3) Not an invitation to make an offer "House for sale" or "Help Wanted" Kull: (1)The ads were offers. An ad can be an offer or an invite, but it depends on the legal intentions of the parties and the surrounding circumstances. (2)The first ad -- ∆ must give the item. (3)But, the second ad - you can't accept an offer not being made to you (he knew "house rules") → no recovery How can you sell only to women? Hey chill, you can do anything you want unless there is a statute that tells you otherwise. In MN, there probably is one now because they're like that up there

LANGELLIER V. SHAEFER Too Lannng Acceptance selling lot for improvements Real estate contract Perfectionism *Offer & Acceptance*

Facts: (1)Π sends a letter to ∆ asking him to sell his land so π can make improvements or buy π's lot. (2)∆ agrees to sell his lot. π accepts but also makes proposals and requests in the same letter (3)∆ doesn't sell Court: (1)K unenforceable b/c acceptance violates Mirror Image Rule: (2) Acceptance is only valid if the offeree accepts the offer exactly as it was offered. If anything is changed, it becomes a counter-offer Kull: (1)Court sending a lesson to the Lawyers of Minnesota "you guys pull your socks up because this kind of sloppy negotiating will not work in MN" (2)worried if they allow a contract here then next time there will be a far more material error that slips through the cracks due to sloppy lawyering. Kull2: (1)WRONG. π's letter was an acceptance + proposals +requests +other miscellaneous things that are commonplace in a standard real estate transaction; NOT a counter-offer Remedies: SP Another example of a court trying to achieve perfectionism

VOKES V. ARTHUR MURRAY, INC. She can't dance *Undue Influence*

Facts: 1) P took dance classes at D's studio 2) D used sales "puffery" to get her to buy more classes etc. 3) P didn't actually improve/sues for fraud and wants $$ damages Court: P wins (1) D lied to her about her dancing skills (2) An opinion is treated like a false fact when one party has superior knowledge over the other (3) The parties didn't deal with each other at arms length Kull: (1) Undue influence is vague (a combination of fraud/duress/interference with her rational judgment)

Wood v. Boynton (1885 - Wisconsin) Topaz (Later compared to Sherwood case - mutual mistake) *Introduction*

Facts: 1) π goes to ∆'s jewelry store to get a little pin mended. Takes out the stone and asks him to identify it. He says he doesn't know but would buy it for $1. She doesn't sell it. 2) Two months later, she needs money really badly and goes to sell him the stone for $1. 3) It ends up being a $700 diamond. 4) She tenders ∆ $1 and 10¢ for interests and asks for it back. ∆ refuses COURT: D wins; 1) Title has passed to D & sale is completed. 2) People are the same (equal opportunity to investigate the value of stone) 3) Who is to say who deserves the windfall here 4) How to rescind the sale and revest the title in P? 4 ways 1. D is guilty of fraud in the process of acquisition (If D knew it was not a Topaz and lied about it.) 2. Mistake by the P (if P gave him another item that was not the item they agreed to sell/buy then no sale took place, no passing of title) 3. Warranty/breach of warranty No warranty (seller gives warranty, not the buyer so this does fit)*Only way this works is if you say "if you resell this item within a certain period then you owe me $ of the resale" but you have to say this at the time of sale. 4. Mistake as to the value led to massive disparity and gross unfairness KULL: Correct Decided Right. (1) Mistake case: Error in judgment case (2) Law has no sympathy here: only time a sale can be rescinded and the title revested in the vendor so that he maintains an action at law for the recovery of the possession against his vendee are (1) fraud, (2) mistake in delivery, or (3) warranty. **simplifying assumption: Everyone in contracts is the same. *Remedy: Restitution case where you rescind (rescission - a seller who has sold something and complete transaction can rescind)* •Why do we care who is fortunate owner of the item; no contractual reason to care b/c no terms •No K reason, no obvious social reason (so Court doesn't want to deal with it) Note: Courts often reluctant to undo a completed deal or compel performance for an executory agreement; Result may be different if P did not yet delivered •Wood v. Boynton → Completed Deal → Is this contract rescindable? → not subject to rescission → restitution case •Sherwood I → incomplete deal (no delivery) → Is this agreement enforceable? → pure contract case; subject to not being enforced

Chandelor v. Lopus "Bezar Stone" 1603 *Introduction: Warranty*

Facts: D is a goldsmith that sells a bezar stone (supposed to have medicinal effects) to P. P says it turned out not being a bezar stone. P sues Court: Find for ∆. "Bare affirmation" that it was a bezar stone is insufficient for cause of action. Sale and warranty = separate; warranty may not be something you are getting in the sale Kull: In 1625, you have to sell stone + promise; No implied warranty here; good ≠ warranty. Must say "I warrant" to create a warranty. A seller today can indeed waive all warranties, implied or express, but he needs to make it explicit. He can say, "I can't give you a warranty, but this is what I think." This is the opposite of how it is now. **side note: it might have really been a bezar stone but bezar stones probably didn't really have medicinal effects (it didn't work, so P thought it wasn't bezar stone)

COBAUGH V. KLICK-LEWIS (Hole-in-one case) Expectation v. Reliance *Introduction*

Facts: P playing in a Golf Tournament → saw a sign saying "hole-in-one wins a car → P got the hole-in-one and attempted to claim the prize → D refused to give him the car because the sign was for a charity gold tournament 2 days earlier and someone had forgotten to remove the sign/car P sues for *SP* Court/Kull: Mistake case Reliance of golf player v. voluntariness of Vendor Disappointed expectation; no detrimental reliance π never changed his position in reliance on the promise (Hole-in-One, similar to the wrong jag, pretty close but a clerical error. He didn't really change his position; He "accepted via performance")

GREGORY V. LEE College Student ups and leaves *Incapacity*

Facts: (1) D agreed to lease a room in house to P (2) D broke the lease but paid for time her stayed in the room (3) D was minor; P sues Court: D wins (1) The room was a necessary during the period he occupied it Kull: He was a minor (1) Only needs to pay the fair value of the necessities furnished (2) You can't require an infant to pay the executory portion of a contract (3) He only needs to pay for the executed part but only @ MV (max the contract amount) (4) 1-way street, LL is fully obligated to pay

Williams v. Walker-Thomas Furniture Co. Re-po Furniture *Unconscionability*

Facts: (1) D is a rental furniture store; rent household items and make payments (2) P purchased items from D and made monthly payments. You buy multiple items, and the title of all items remains with the D until you pay off the total balance. If you default, they take back everything (3) P defaulted/P says contract is unconscionable/unenforceable Court: P (remanded to TC) (1) Contracts that are unconscionable have been unenforceable for a long time (2) UCC SS 2-302 (3) We need to ask if the P had a "meaningful choice"; No meaningful choice if there is a "gross inequality of bargaining power" (4) Manner in which the contract was entered into = "little power of bargain + little knowledge of terms" = unlikely this party gave consent to the deal. (5) In cases such as these courts need to consider whether the terms of the contract are so unfair that enforcement should be withheld Kull (1) Court didn't like how you allocate payments when paying off the balance; First in first out (FIFO rule) (2) P likely understood what happened b/c her neighbors had the defaulted on payments with the D and she saw them get their furniture taken away (3) D likely did this so that the P (and similar customers) would pay their bill first; If you can't pay your bills every month, prioritize ours first

SUN PRINTING & PUB V. REMINGTON PAPER Paper contract; Set price, no set time *Offer & Acceptance: agreement to agree*

Facts: (1) P (Sun) makes contract with D (printing). (2) They set price to Canadian max. but fail to set the length they place to use the price. (3) D says it doesn't have obligation to sell anymore b/c indefinite terms of contract (aka how long each period will be for prices) (4) P keeps demanding paper and says it will pay price of Canadian Export Paper Company (5) D doesn't deliver → P sues Court : D wins; not a valid contract; (1) Contract needs a price and time the price is to be used (2) D would never know where he stands if you don't specify the price timeline (3) No an option contract without an agreement to the time the option can be used, this would place the seller at the mercy of the buyer (12 options instead of one) (4) An agreement to agree on a price is not sufficient **Example of a court that is unwilling to help read between the lines to enforce contract; similar to Salt case (different from mason jar case) Kull: Court is correct (1) (1) P and D failed to add the term. (2) P should attempted to set a term for the price and upon refusal could have argued It was bad faith **Side fact: Prices of paper probably went up and Canadian Standard didn't go up with it, so D doesn't want to sell for that term anymore when it can sell for more somewhere else

KINGSTON V. PRESETON Silk apprentice needs a loan *Implied Condition*

Facts: (1) P (covenant servant) servent to a silk merchant. He has not assets. (2) D (silk merchant) promises that at 1.25 years, he'll give P (+ his nephew + a random person) and stock-in-trade (inventory) and place business; (3) P promises to execute deeds of partnership w/ nephew + get a loan/security in order + to pay for inventory over time (the loan is to secure for this payment) (4) D doesn't get security/P doesn't give up his business Court: D wins (1) P argued that the D still needs to go ahead with the deal (2) D says no, the security was a condition of the obligations, which is very clear b/c P was broke. (3) Court: 3 kinds of covenants (1) independent; (2) dependent (performance of one is dependent on the prior performance of another); (3) mutual conditions (same time/same place) (4) This is a dependent covenant, the security was a condition precedent Kull: Court was correct: (1) Commercial transactions have terms of obligations on both sides, the idea is that is doesn't matter how trivial conditions are, the conditions are NEVER too small, if I can show a breach, I can still collect damages (2) If breach is so big, no longer obligated to perform

GOEBEL V. LINN Detroit Brewery *Duress and modification*

Facts: (1) P (ice company) has a K w/ D (brewery). (2) P says failure ice crop, can't furnish ice at K price, so they set a new price, D negotiated it down (still higher the K price), D has no choice b/c all their beer would go bad if they don't have ice (3) D continues to pay P (w/ promissory notes) (4) D refused to pay P at end of K Court: Finds for P (1) There was consideration (2) The new contract at the moment it happen, maybe made under "Duress", the D could have sued over the original K at time of breach and P would have been responsible for all the damage legally attributable to the breach of its K (3) BUT D chose to pay (maybe avoid injury to business/maybe there was a shortage in ice) (4) D abided by new K for 8 months/any complusion was broken the moment they could obtain a supply of ice elsewhere Kull: (1) This is a "Wrongful Pressure" case with a "requirements contract" with a price indexing clause that account for a shortage in the ice crop (2) BUT the run super short and have to get a new price (3) D sign a promissory note and paid all the invoices with a promissory note b/c money was more sage in their own pockets and it is better to be the D (vs. pay invoices and then sue for restitution) ***Davis v. Morgan ***Stilk v. Myrak

TRAVELERS INSURANCE CO. V. BAILEY REFORMATION of a mistake *Mistake in integration*

Facts: (1) P (insurance company) issues a mistaken policy to D (Bailey) @ age 19, doesn't notice mistake until 49. (2) P tendered to D a new policy, D refuses (3) P doesn't even sell the policy that D; His Premiums were applicable to the correct plan Court: (1) The only agreement was for the original policy not the mistaken one. (2) Error of "subsequent erroneous recording (so the contract in fact was agreed upon) (3) Equity will act to bring the "erroneous writing in conformity" with the agreement (4) Mutual mistake (clerical error + mistaken belief of the the correctness of the written error): Policy holder knew that the policy was wrong, to insist on the enforcement is unconscionable Kull: (1) Reformation: we enforce what the parties ACTUALLY agreed upon (2) If this was a unilateral mistake: D says it was P's fault --> Not correct (3) If this was a mutual mistake: Both parties in error about something. When does the law step in? Depends on whether this is an involuntary agreement and the other party knew about it? (a.) NO-A party was mistaken and the other party knew about the mistake (Raisins/baseball card case) (b) YES; mistake but there was an error in judgment (unilateral mistake/someone is smart/better and benefits (4) Not Estoppel: He would have to show he passed up other opportunities

ITEK CORP. V. CHICAGO AERIAL *Offer & Acceptance: agreement to agree*

Facts: (1) P is selling the assets (2) P signs letter of intent to D (3) P sells to a 3rd party instead and D sues for breach (4) P (Itek) says it's an agreement to agree. Kull: (1) Contract isn't final until it has been signed/voted on by the board of directors (2) We need to have something left over to negotiate vs. some time we maintain the right to walk away (3) Excuse: write letter of intent, it is meaningful but also something my guys will accept

CURTIS V. RYDER TRS, INC. Warranty of Merchantability *Offer & Acceptance: status of non bargained terms*

Facts: (1) P rent truck from D w/ a lot of of issues. (2) Truck brakes down and P sues for breach of implied warranties of fitness/merchantability Court : (1) D could have disclaimed the implied warranty if it was "conspicuous" (2) It was not/It was located in a completely different section of the contract. (3) Violates the "boiler plate" rule; Only agreed to (1) bargained terms (2) Terms that aren't unreasonable Kull: Court was correct; (1) You can make the terms, but, as a seller, you have to make an attempt to establish tacit/explicit agreement on the terms (2) The more likely the term is to be objectionable → the more likely it is necessary for the party to try to bring it to receiver's attention (3) Again, think about intentions of parties and what they're agreeing to and the scale

SHERWOOD V. WALKER *Mistake by basic assumptions*

Facts: (1) P wanted to buy a cow from D (2) D says "go take a look" P picks a cow; Both parties think it won't breed (according to the court, but P probably hoped it would) (3) D finds out cow is pregnant, says no deal (4) P sues for replevin (says title of the cow has already passed to him) Court: (1) Mutual mistake: both parties thought the cow was barren/sold on relation to her value for beef (2) A party may refused to execute a contract IF the assent was based on a material fact that was a mistake and it was mutual (3) Difference between a mistake on quality vs. a mistake on substance of the whole agreement (3a) A barren cow is a different thing then a cow that can breed Kull: Court is wrong: (1) Sherwood I: Mutual mistake both though cow was barren; Different from Wood v. Boynton b/c the contract here executory vs. Wood v. Boynton is asking you to undo a executed contract (2) Sherwood II: Unilateral mistake; Seller thought this cow would breed/Buy did not think it would (3) Why would the P buy a cow and now think it could breed? As a pet? ***Similar to the violin case where it was a mutual mistake and "let loses lie where they may. -Unilateral mistake: clear/there is no concern where we are in the transaction -Mutual mistake: depend where we are in the transaction (if executed then it is harder to undo)

MARKS V. GATES Alaska Explorer *Unconscionability*

Facts: (1) P wants SP of a K from D; Says D owed him money so in return for cancelling debt, D gave him 20% interest in any and all property which D shall acquire in Alaska (2) D acquires $750K, P wants 150K Court: (1) Contract "made in the dark", inadequacy of consideration is not alone grounds for w/ holding SP unless the K is unconscionable (2) Consideration here is grossly inadequate/made w/o knowledge/no equitable principle applies here -> If contract is too one-sided, equity will not enforce it (3) Go to the legal courts Kull: (1) The courts of equity tell you to so something as opposed to the courts of law which tell you "do what you want and we will take damages" -> Asks "What is fair" as opposed to "was this fraud/duress/illegal" (2) $1 consideration was meant for make this a real K, the debt was likely gambling debt which wouldn't hold up in court (3) K is legally binding BUT P wants SP b/c it can force D to continue to perform and he wants the $$ from future investment in Alaska (4) Court got it wrong when they said this was too one-sided. You need to compare the debt to "probable gold found in Alaska" (5) This was "Grubstake contract" - I'll up up the $$ and you put up your life

LINGENFELDER V. WAINWRIGHT BREWING CO. *Duress and modification*

Facts: (1) π is the executor of the architect that was doing construction for ∆. (2) ∆ ends up using π's competitor's refrigerators so π says he won't work for him anymore → they negotiate and decide on a 5% commission. (3) π is trying to collect the 5% Court: (1) Unenforceable b/c modification was made under duress and no consideration in the modification b/c ∆ was not getting something he wasn't already entitled to Kull: Wrong! (1) Imagine the scenario. π is pissed b/c his refrigerators are not used (he thought it was an implied consideration to use his fridges), (2) ∆ doesn't want to go find another architect last minute → they negotiate/compromise. (There is consideration in the new agreement) (3) Both guys 100% believe their stories which indicates good faith (4) *IF this were not extorted by duress, the consideration would be the relinquishment of a legal claim against D for breach of implied condition*AK: note that the contract dispute was not being litigated, but if he is right about it, then he was perfectly justified in walking off the job. Modifications and reasonable settlements made by good faith dispute during the course of their contract are okay. Ultimate merit of the dispute does not matter. No one wants to pursue an expensive trial to figure out whether there a party used duress to make this modification/settlement or not. Cf. Silk Mercer Case—the "evidence, sense and meaning of the transaction" shows that use of my refrigerators was an implied condition. (Like the loan in the Silk Mercer Case)

Lampleigh v Braithwaite (1615) Convicted man asks friend to get him King's pardon *From Detriment to Reliance*

Facts: D was a murderer; asked P to obtain pardon from the King; P rode back and forth to do so; D afterwards promised P to give him £100 for his services; D never paid; P sued Court Find for P. Even though promise was given after performance (consideration), if the performance was done upon request of promisor, then promise still binds Kull: Correct is Wrong This is an "Out of sequence" contract; 1) Performance then promise made 2) Still enforceable if request by promise preceded the performance. 3) If no request, and it was just a voluntary act, then no enforceable promise.

NICHOLS V. RAYNBRED Cow or $$ *Implied Condition*

Facts: (plaintiff) contracted to sell a cow to (defendant) in exchange for 50 shillings. D did not pay and P brought suit even though he did not prove that he delivered the cow. Rule:In a contract exchanging a promise for a promise, a party does not have to perform before he can recover.

PORRECO V. PORRECO Fake ass diamond ring *Introduction*

Facts: P (wife) and D (husband) are getting a divorce. P wants to pre-nup invalidated because diamond ring was fake and D listed it as real in the assets on the pre-nup. Court Says: Send back to TC for retrial on "confidential relationship" (1) Court said was unjustified in her reliance/usual an argument that someone is not justified in relying on a misrepresentation typically involve statements of opinion (usually for sales puffery) Kull: ? (1) She did not marry him for money, this marriage wasn't a business transaction (2) Court didn't want to talk about it that way, so they find a way to make the prenup enforceable (reverse lower court) by changing the definition of fraud Change the facts: suppose there was no prenup. How do we settle this case? The property would be divided in accordance with law of Pennsylvania, whether that's a CP or SP state.

THE HIGHWAYMEN'S CASE *Illegality*

One thief sues the other for not splitting their earnings evenly--they're both hung. Never award for forbidden/illegal activity: gambling, selling drugs, alcohol during prohibition