Contracts Cases

EnXco v. North States (express conditions)

Facts: A company named enXco Development Corporation executed two contracts with Northern States Power Company to construct a wind-energy project. The parties were required to fulfill the terms of the purchase and sale agreement (PSA) before proceeding with the construction agreement. The PSA required EnXco to obtain a Certificate of Site Compatibility (CSC) by a certain date, which was called the Long-Stop date, and included an express termination clause. EnXco failed to obtain the CSC due to temporary delays caused by a severe snowstorm, a government-hearing location error, and state-law notice requirements, despite having 29 months to do so. Rule: A party to a contract may not use the defense of temporary impracticability to excuse the performance of a condition precedent if the party's own inaction caused the non-performance.

Lucy v. Zhemer (Contracts Formation)

Facts: A contract was written that agreed to sell the Ferguson Farm complete for $50,000 to W.O Lucky and was signed by A.H Zehmer and Ida S. Zehmer. The defendants are arguing that the contract was a joke and was intended to force Lucky to admit that he did not physical have $50,000. Rule: When forming a contract, a person's outward manifestation and actions are what's relevant. His internal intensions are not relevant unless both parties know the intentions.

Thompson v. Libby (4 Corners Approach)

Facts: A vendor (plaintiff) and purchaser (defendant) executed a written contract of sale for logs. The vendor brought an action to recover a sum of money from the purchaser. In his defense, the purchaser claimed that the vendor had breached a warranty of the quality of the logs, and attempted to use extrinsic evidence to demonstrate it. Rule: When the written agreement is intended to be the entire agreement, parol evidence cannot be introduced to establish terms of the agreement or to establish whether the contract is intended to be the entire agreement. Under the 4 corner's approach, integration is determined from the four corners of the writing without resort to extrinsic evidence. If a document appears on its face to be complete, then no outside evidence may be used to challenge it.

Syester v. Banta (Fraudulent misrepresentation (§164))

Facts: A widow who lived alone signed up for dance lessons, and she was lied to about how successful she could have been and charged excessively for dance lessons add. Rule: A contract is voidable for fraudulent misrepresentation if the defendant made one or more misstatement, the defendant relied upon the restatement, and the misstatements induced the making of a contract between the parties.

Aceves v. U.S. Bank (Promises in commercial context)

Facts: Aceves obtained a home loan for option one, which was transferred to U.S bank/defendant. After defaulting, Aceves did not comply with bankruptcy plans in reliance on the bank's promise to work with her.

Odorizzi v. Bloomfield School District (Undue influence (§177))

Facts: After being released from jail, two supervisors visited the plaintiff at his home and urged him to sign a resignation contract. The supervisors told him that he had no time to consult a lawyer and to resign immediately. Rule: A contract may be voidable for undue influence where a dominant party to a transaction uses excessive pressure to persuade a party whose weakened mental state makes him especially susceptible to persuasion.

Alaska Packers' Assocation v. Domenico (Modifcation)

Facts: Alaska packer's contracted with a group of sailors. They agreed to pay each sailor 50 dollars, but upon arriving to Alaska, the sailors stopped working and demanded 100 dollars. Unable to replace the sailors, Alaska Packer's paid the money. However, when they returned to San Francisco, Alaska paid the original price and the sailors sued for the total of the new contract price. Rule: A contract modification is equal to a new contract which requires the same contractual elements (mutual assent and consideration). Where parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, the new agreement is unenforceable for lack of consideration.

Durbin v. Baker (Illusory promises)

Facts: Baker was an employee of Durbin Food Co and the company experienced financial difficulty. Durbin offered an agreement of termination to Baker and compensation for 5 years once a triggering event occurred. Rule: A promise is not consideration if by its terms the promisor reserves a choice of alternative performances. An illusory promise is one that promises nothing and does not bind or confine the freedom of the promisor in any way.

Izadi v. Machado (Contract Formation)

Facts: Based on the belief that the ad offered $3,000 minimum trade-in allowance for any vehicle, Izadi attempted to purchase a 1988 Ford Ranger Pick-up...the vehicle referred to at the foot of the ad, by tendering Gus Machado Ford $3595 in case and an unspecified trade-in. Machado refused to recognize this interpretation of its advertisement and turned Izadi down. Rule: Although, advertisements are not offers, but merely invitations for offers, an enforceable contract may arise form an offer contained in an advertisement. To make an offer by an advertisement, there must ordinarily be some language of commitment or some invitation to take action without further communication.

Berryman v. Kmoch (Option Contract by PE (§87(2))

Facts: Berryman owned a tract of land and purported to enter into an option contract with, but never gave consideration. Defendant sold property to someone else. Rule: An offer which the offeror should reasonably expect to induce action nor forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contact to the extent necessary to avoid injustice.

Brookside Farms v. Mama Rizzo's, Inc. (modification)

Facts: Brookside Farms and Mama Rizzo's entered into a requirements contract whereby Brookside promised to supply fresh basil leaves. The price of basil was seasonally based, and MRI agreed to one price for each season. After contract, MRI requested brookside remove the stems from the basil leaves. Brookside agreed and MRI promised to pay additional money for removal, but the promise was never put into writing. Rule: Oral modifications of a contract that fall under the Statute of Frauds are enforceable. The Statute of Frauds requires that any contract for the sale of goods for the price of $500 or more must be evidenced by some writing sufficient to indicate the contract between the parties and must be signed by the party against whom enforcement is sought. Additionally, any oral agreement that materially modifies a contract under the Statute of Frauds is unenforceable. However, the oral modification may be enforceable, notwithstanding the Statute of Frauds, when there is evidence of promissory estoppel.

Brown Machine, Inc. v. Hercules, Inc. (Battle of forms)

Facts: Brown Machine sold appellant Hercules a T-100 trim press, a piece of equipment used for manufacturing cool whip bowls. Brown's argument is that a condition of the original sales contract for the trim press required Hercules to indemnify Broach Machine for any claims arising from operation and misuse of the trim press. Rule: When an offer expressly limits acceptance to the terms of the offer, any additional terms of those of the offer will not become part of the contract between merchants. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (1) the offer expressly limits acceptance to the terms of the offer; (2) they materially alter it; or (3) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

Commerce v. Equity (Restitution in commercial context)

Facts: Commerce contracted with World Properties as the general contractor, who contracted with equity to perform work on the office building. When Equity finished the work, Commerce inspected it and asked Equity to do some repairs, however, equity asked for partial payment before starting the repairs, which Equity Refused. Rule: Where an owner has given consideration for the subcontractor's work by paying out the contract price for the work, an unpaid subcontractor's claim that the owner has been unjustly enriched must fail. In order to prove that the enrichment of the owner was unjust, must prove: (1) Subcontractor exhausted all remedies against the general contractor, and (2) Debt still remained unpaid and the owner has given consideration to any person for the improvements furnished by the subcontractor.

Cook v. Coldwell Banker/Frank Laiben Realty Co. (Unilateral Contract)

Facts: D announced a bonus program; P left before March but after the end of the bonus year and requested her bonus; defendants denied her. Rule: In an unilateral contract, the offeree has the power to accept by rendering the performance requested by the offeror. The offeror of a unilateral contract is bound by a contract as soon as the offeree has rendered a substantial part of the requested performance. An offer for unilateral contract may not be revoked where the offeree has accepted the offer by substantial performance.

Normile v. Miller (Counter-offer)

Facts: Defendant Hazel Miller owned real estate located in Charlotte, North Carolina and on August 4, 1980, the property was listed for sale with a local realtor, Gladys Hawkins. At 12:30am on August 5th, the real estate agent went to the home of Plaintiff Segal, who signed an offer to purchase with terms similar to those contained in defendant's counteroffer to Plaintiffs Normile and Kuniawan. Defendant accepted the offer, without change. The same day (at 2:00pm), the real estate agent informed Plaintiff Normile that defendant had revoked her counteroffer by commenting to "Normile, "You snooze you lose; the property has been sold." Rule: A counteroffer acts as a rejection of the original offer and does not contain the terms of the original offer. The counteroffer, like the original offer, must be accepted before it is revoked. A conditional acceptance, sometimes called a qualified acceptance, occurs when a person to whom an offer has been made tells the offeror that he or she is willing to agree to the offer provided that some changes are made in its terms or that some condition or event occurs. This type of acceptance operates as a counteroffer.

Crabby's Inc. v. Hamilton (Expectation damages (Market value))

Facts: Defendant I executed a contract to purchase the restaurant, but then assigned his interest in the contract to Defendant II. According to a contract provision, the contract would terminate unless Defendants provide a written loan commitment within 30 days of obtaining the loan. Defendants obtained a bank loan but never furnished the Plaintiffs with a written loan commitment. After a closing date for the transaction was agreed upon, numerous repairs were made to the restaurant and the utilities were transferred into the Defendants' name. Defendants sent backed out of the transaction entirely. A year later, Plaintiffs sold the restaurant for $235,000. Plaintiffs filed suit against Defendants for breach of contract and claimed as damages the difference between the contract price and the sale price (expectation damages). Reasoning: The measure of damages is the difference between the contract price and the fair market value of the property on the date the sale should have been completed. An essential element of the seller's case is proof of market value, and if he does resell within a reasonable time after the breach, the price obtained is some evidence of market value.

Morin Building Products Co. v. Baystone Construction (Good faith: Party's discretion)

Facts: Defendant hired plaintiff to complete the aluminum walls for the addition to the gate. Plaintiff completed the walls, however, the walls did not have a uniform appearance. General Motors agent rejected the walls and Baystone refused to pay Morin and morin brought suit. Rule: In a contract containing a standard owner's satisfaction clause, satisfaction is judged by a reasonable person standard when the contract involves (1) commercial quality, (2) operative fitness or (3) mechanical utility which other knowledgeable persons can judge; in the alternative, satisfaction depends on the owner's good faith judgment when the contract involves personal aesthetics or fancy.

Handicapped Children's Educ. Brd. v. Lukaszewski (Expectation damages (value received))

Facts: Defendant teacher resigned before her contract with the plaintiff school board expired, claiming that health problems prevented her continued employment. The board was forced to hire a more qualified replacement at a higher rate of pay. The board brought an action for breach of contract and the trial court awarded damages, finding that the teacher had breached her contract because she resigned for reasons other than her health. Reasoning: Any additional value the Board may have received from the replacement's greater experience was imposed upon it and thus cannot be cannot be characterized as a benefit. Thus, the non-breaching party is entitled to full compensation for the loss of the benefit of the bargain.

Park 100 investors v. Kartes (Misrepresentation as to a Writing (§166))

Facts: Defendants entered into an agreement to lease space at Park 100, but could not move in until the papers were signed. Plaintiff presented a document titled "Lease Agreement" to the defendants for them to sign, which they did. Plaintiff never informed the Defendant that they were signing a personal guaranty of lease. Years later, Defendants later sold their company, including property, to another party that party missed lease payments. Rule: A contract is voidable if a party's manifestation of assent is induced by the other party's fraudulent misrepresentation as to the contents or effect of a writing evidencing an agreement.

Lenawee County Board of Health v. Messerly (Mistake)

Facts: Defendants purchased a tract of land on which an apartment building was located. Prior to the transfer the owner had installed a septic tank on the property without a permit and in violation of the health code. Later the Defendants sold the property to the Pickleses (plaintiffs). The contract for sale stated that "Purchaser has examined this property and agrees to accept same in its present condition. There are no other or additional written or oral understandings." The Pickleses later discovered raw sewage seeping from the land and the Plaintiff condemned the property for violation of the health code. Rule: Rescission is appropriate when the mistaken belief relates to a basic assumption of the parties upon which the contract is made, and which materially affects the agreed performances of the parties, but rescission is not available to relieve a party who has assumed the risk of loss in connection with the mistake. The parties were under a mistake of fact. A contractual mistake is a belief that is not in accord with the facts, held at the time the contract is executed. Mutual mistake occurs when a mistaken belief relates to a basic assumption underlying the agreement. Both parties believed the property was suitable for human habitation and therefore, suitable to generate rental income. That assumption was incorrect, so a mutual mistake of a material fact took place. Courts grant rescission as an equitable remedy on a case-by-case basis. Here, the facts didn't favor rescission. The contract's as-is clause indicated that the parties agreed to allocate any hidden risks related to the property to the buyers. The problem with the septic system was a hidden condition. Neither the sellers nor the buyers knew about the issue. Since the buyers accepted the risk of such a condition when they bought the property, they had to accept the loss when the risk occurred. The buyers are not entitled to rescission.

Donahue v. Federal Express Corp. (Good faith Contract Termination)

Facts: Donahue was an at-will employee. In the months leading up to his termination, he was denied clerical assistance, given additional duties, and he claims he was ordered to falsify data to meet administrative requirements. Donahue was terminated and his termination was upheld, so he filed suit. Rule: An employer that has not violated public policy and has not incurred substantial benefit or caused substantial hardship does not have a duty of good faith and fair dealing when terminating an at-will employee. An at-will employee does not have a cause of action against his employer unless the employer's actions in terminating him threaten clear mandates of public policy. There is no public policy that says a private company cannot terminate an employee for whistleblowing. A duty of good faith and fair dealing may be implied in an at-will employment relationship where (1) the employee has given his employer a substantial benefit other than the services for which he was hired or (2) when the employee has suffered a substantial hardship other than the services that he was hired to perform.

Drennan v. Star Paving Co. (Reliance on an offer)

Facts: Drennan was preparing a bid for a school construction project. He submitted a bid that was too low and when they realized they tried to inform Star that they would only complete the work for more money than the original bid. Rule: An offer which the offeror should reasonably expect to induce definite and substantial reliance by the offeree, and which does induce such reliance is binding on the offeror and enforceable even without consideration if enforcement is necessary to prevent injustice to the offeree. If subcontractor makes it plain it is revocable by subcontractor at any time, the court will respect that. Inequitable conduct by the general contractor may prevent the use of promissory estoppel: (1) Bid shopping: the practice of trying to find another subcontractor who will do the work more cheaply while continuing to claim that the original bidder is bound, and (2) Bid chopping: the attempt to renegotiate with the bidder to reduce the price.

Plowman v. Indian Refining (Moral/Past consideration)

Facts: Employees were let go from Indian Refining Go and they received pension checks. A year later, the payments stopped. Rule: One cannot enforce a promise that has not been supported by consideration. Past Consideration is not consideration.

Valley Medical Specialists v. Farber (Public policy)

Facts: Farber (plaintiff) singed an employed contract containing a restrictive covenant. Rule: Public Policy requires that restrictive covenants between physicians be strictly scrutinized for reasonableness. An employer has a protectable interest in its customer base, but a medical facility's interest is limited by a patient's right to choose her doctor. The scope of a restrictive covenant must be reasonable in duration subject matter geographic area. The restriction may not be (1) greater than necessary to protect the employer's legitimate interest, or (2) cause greater hardship to the employee and the public than the interest it protects.

Sparrow v. Dominico (Mental incapacity (§14))

Facts: First sister sued the second sister and the second sister's estranged husband for one-half interest in a home owned by their mother. Prior to trial, the parties agreed to voluntary mediation. However, the second sister and her husband left the mediation before $100k agreement was met because the second sister was crying uncontrollably and hadn't taken her medicine. Rule: Cognitive Test: A person lacks capacity to enter into a contract if, by mental defect, he is unable to reasonable understand the nature and consequences of the transaction. Volitional test: A person lacks capacity to enter into a contract because he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition.

Kelsey-Hayes Co. v. Galtaco (modification)

Facts: Galtaco entered into an agreement to sell castings to Kelsey Hayes for brake assemblies. Galtaco offered Kelsey Hayes a 30% price increase, and said if they did not pay it, that they would discontinue production of castings. Kelsey contacted 6 other manufacturers and was unable to find one, so they agreed to the price increase. Kelsey-Hayes believed that a halt in castings supply would cause Ford and other manufacturers to have to halt their production. Kelsey-Hayes also believed that such a halt in production would lead to an injured business reputation and subject it to large monetary damages. Rule: A party may establish a claim for breach of contract even though the party has entered into an inconsistent agreement that covers the same subject matter as the previous contract. If the parties enter into a superseding, inconsistent agreement that covers the same subject matter as a previous contract, it will operate as a waiver of any claim of breach of the previous contract that is not expressly reserved.

James Baird v. Gimbel Bros

Facts: Gimbel submitted a subcontractor bid to James Baird Co offering to supply linoleum. Gimbel retracted its offer because its offer the quantity was too low, but Baird already submitted his bid using Gimbel's bid. Rule: The doctrine of promissory estoppel cannot be asserted to compel performance when the promissee has not provided consideration to the promissory

Buffaloe v. Hart (Parol evidence: Merchant exception/admission exception (UCC §2-201))

Facts: Here, a tobacco farmer who rented tobacco and barns for using was negotiating the sale of the barns. Buffaloe orally offered and Hart orally accepted. Buffaloe sold the barn to someone else, and Hart was seeking enforcement of the contract on the grounds of partial performance under the UCC. Rule: One can enforce a contract falling under the Statute of Frauds when there has been partial performance of the contract.

DePrince v. Starboard Cruise Services (Mistake: Court ruled in favor of DePrince)

Facts: In this case, Plaintiff visited an onboard jewelry store. A diamond was sold to him for significantly less than the actual price because the seller made a mistake. Starboard informed DePrince of the error and reversed the charges on DePrince's credit card to refund all monies paid. DePrince filed suit against Starboard, alleging claims for breach of contract, specific performance, and conversion. Rule: A defense of unilateral mistake to a breach-of-contract claim requires evidence that the breaching party did not act negligently or with undue care. Under the 2 Prong Test, a court may rescind an agreement based on unilateral mistake if 1) the mistake did not result from an inexcusable lack of due care, and 2) defendant's position did not so change in reliance that it would be unconscionable to set aside the agreement. Under the 4 Prong Test for unilateral mistake, a court may rescind an agreement based on unilateral mistake if (1) the mistake was induced by defendant; (2) plaintiff did not act negligently or with a want of due; (3) the denial of plaintiff's request to be released from the contract would be inequitable; and (4) defendant's position has not changed, such that granting plaintiff relief would not be unjust.

J.N.A Realty v. Cross Bay (express conditions)

Facts: J.N.A. Realty Corp. (JNA) (plaintiff) leased commercial property to a restaurant for a 10-year term, with an option to renew for another 10-year term. The lease required the restaurant to inform JNA at least six months prior to the end of the lease term if it wished to exercise the option. JNA informed Chelsea approximately two weeks prior to the end of the lease term that the option had expired and Chelsea would need to vacate the premises at the end of the lease term. Chelsea shortly after provided notice of its intention to exercise the option, but JNA refused to honor the option. Rule: A notice exercising an option is ineffective if not given within the time specified.

Jacobs and Youngs v. Kent (express conditions)

Facts: Jacobs and Youngs built a country residence for Kent. The contract stated that all pipes use must be manufactured in Pennsylvania. Later, Kent noticed some of the pipes were manufactured in other places. Kent demanded the pipe be replaced, but replacement would require substantial additional work and expense for Jacob. Additionally, the existing pipe was of the same quality and Jacob innocently mistaked the pipes. Rule: If a party substantially performs its obligations under a contract, that party will not be forced to bear the replacement cost needed to fully comply with the agreement but instead will owe the non-breaching party the difference in value between full performance and the performance received.

Stechshulte v. Jennings (Nondisclosure/Fraud by silence)

Facts: Jennings hired several professionals to repair leaks in his home's roof and windows that caused damage. Jennings, upon selling the house, failed to disclose the repairs that had been made to correct the water damage. Rule: A contract is voidable for non-disclosure if there is: (1) omission of known fact that is material, (2) duty to disclose such known facts that are material, (3) intentional failure to disclose of a known fact that is material, and (4) justifiable or reasonable reliance for communication of a known fact that is material.

Dodson v. Shrader (Minority doctrine (§14))

Facts: Joseph Dodson, a minor, purchased a used truck from the Shraders. After 9 months the car had mechanical problems. Because plaintiff could not afford repairs, he continued to drive the truck until the engine exploded a month later. Rules: In reference to a contract of a minor where the minor has (1) not been overreached in any way, (2) there has been no undue influence, (3) the contract is a fair and reasonable one, and (4) the minor has actually paid money on the purchase price, and (5) taken and used the article purchased, the minor may not recover the amount actually paid, without allowing the vender of the goods reasonable compensation for the (1) use of, (2) depreciation, and (3) damages to the article purchased, while in his hands. Benefit Rule 1: Upon rescission, recovery of the full purchase price is subject to a deduction for the minor's use of the merchandise. Benefit Rule 2: The minor's recover of the full purchase price is subject to a deduction for the minor's "use" of the consideration he received under the contract, or for the "depreciation" of the consideration in his possession.

Leibel v. Raynor Manufacturing Co. (Implied obligation to provide reasonable notice)

Facts: Leibel (plaintiff) orally agreed to be the distributor of garage doors manufactured by Raynor (defendant) for the Lexington, KY area. Leibel borrowed money to do the tasks necessary to perform under the agreement. The parties did not agree to a specified time when the agreement would end. After two years, Raynor notified Leibel by letter that it was terminating the agreement. The letter stated that termination was effective immediately. Plaintiff filed suit arguing that he was entitled to reasonable notice before termination Rule: Under the UCC, when a contract does not provide a specified duration, the party terminating the agreement must provide reasonable notice of termination.

Mills v. Wyman (Moral obligation)

Facts: Levi was ill when he got back from see, and was cared for by Mills. When Levi died, his father, Wyman, wrote to Mills and promised to pay for the expenses he incurred while taking care of Levi Rule: A promise based on a moral obligation but made without legal consideration does not constitute an enforceable contract unless it is tied to a preexisting legal obligation.

Locke v. Warner Bros (Good faith: Party's discretion)

Facts: Locke (plaintiff) entered into an agreement with Warner Bros., Inc. (defendant), which included a "non-exclusive first look deal." This deal required Locke to submit to Warner any picture she was interested in developing. Warner had 30 days to approve or reject the picture. Defendant never hired plaintiff to direct any films and never developed any of her projects. Plaintiff filed suit, alleging that Warner breached the contract by refusing to consider Locke's proposed projects and thereby deprived her of the benefit of the bargain. → synonymous to fruits of contract Rule: Where a contract confers on one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing.

Nanakuli Paving v. Shell Oil (UCC/Contextual approach (UCC § 2-202))

Facts: Nanakuli entered into two long-term contracts with Shell to purchase asphalt it required. Nanakuli brought suit when Shell later increased the price, claiming that Shell violated the price protection agreement. Rule: Course of performance, course of dealing, and trade usage will be implied into contracts if there is evidence that it is consistent with the terms of the contract, and the purported trade usage is so prevalent that the parties would have intended to incorporate them. A commercial agreement is broader than the written paper and its meaning is to be determined not just by the language used by them in the written contract, but by their action, read and interpreted in the light of the commercial practices and other surrounding circumstances. 3 Types of factual inquiry: Course of performance: This is the action of the parties in carrying out the contract at issue. Course of Dealing: Consists of relations between the parties prior to the Contract. Usage of Trade: The customs of the market in which the parties are dealing

Feldman v. Google, Inc. (Clickwrap Agreements)

Facts: On or about January 2003, Plaintiff Feldman purchased advertising from Defendant Google, Inc.'s "AdWords" program. If the searcher clicked on the Plaintiff's add, Defendant would charge Plaintiff for each click made on the ad. Rule: A "clickwrap" internet agreement will be enforced if it sufficiently provides the user reasonable notice of the agreement's applicable terms and conditions

Katz v. Danny Dare (Promises in commercial context)

Facts: One day when Katz opened the store (he worked for dare), someone stole a bag of money off the counter. Katz gave up working a full time job and full time in reliance on the pension. Rule: A promise to pay a pension can be enforced under the doctrine of promissory estoppel where the defendant made a promise, the Plaintiff's action communicates a reliance on that promise, the Plaintiff's action forbearance was foreseeable.

Harvey v. Dow (Promissory estoppel)

Facts: Parents allowed and even helped daughter to build home on property. Daughter refused to give them deed to house. Rule: A promisor's actions and surrounding circumstances may manifest an intent to conform to a general promise to convey real property to a promisee. Under the doctrine of promissory estoppel are, a promise may be enforceable where: (1) D made a promise to P, (2) P action or forbearance that communicates reliance on promise, (3) P action or forbearance was foreseeable to the promisor and was reasonable, and (4) Injustice can be avoided only by enforcement of promise (subjective).

Credit Bureau v. Pelo (Restitution)

Facts: Pelo left his residence and purchased a shotgun and called his wife making threats. He was taken the hospital. This was over emergency hospitalization and paying for the services. Rule: One can be required to pay for hospital services when one did not request or voluntarily consent to them. Where a person performs services for another which are known to and accepted by the latter, the law implies a promise to pay for those services. A contract implied in law is an obligation imposed by the law without regard to either party's expressions of assent either by words or acts

Pennsy v. American Ash (Reciprocal Inducement)

Facts: Pennsy entered into a contract to pave driveways and a parking lot for a school, and they were required to aggregate. The pavement developed defects due to the AggRite. Rule: There may be sufficient consideration to form an enforceable contract even though the parties have not bargained for the specific terms of the agreement. Additionally, the promise must induce the detriment and detriment must induce the promise. Do not have to actually bargain for consideration.

E.C. Styberg Engineering Co. v. Eaton Corp. (UCC Contract formation)

Facts: Plaintiff began selling prototype I-brake units to Eaton and in November, Eaton began purchasing limited quantities of I-brakes so it could test the product in the marketplace. Defendant sent Plaintiff a proposal for a 60,000 unit order. . In April 2000, Defendant told Plaintiff that it expected delivery of 240 units. Defendant never ordered more. Rule: To constitute an enforceable contract for the sale of goods, the UCC requires that it be specific as to the essential terms such as the identity of the parties, the subject matter of the contract, consideration, a quantity term, and a price term.

Wood v. Lucy, Lady Duff-Gordon (Implied obligation of best efforts = consideration)

Facts: Plaintiff entered into a contract with Lucy, Lady Duff-Gordon. Defendant agreed to grant Wood the exclusive right to place her endorsement on others' clothing designs. She also granted Wood the exclusive right to market her designs and sell them. In return, defendant would receive 50 percent of the profits from Plaintiff efforts with regard to her endorsements and designs. Later, defendant entered into a contract with another company whereby she placed her endorsement on others' clothing designs. Woods filed suit and Lucy claimed the no contract for lack of consideration. Rule: A contract may be enforced when there is no evidence of a promise exchanged as consideration in the explicit terms of the contract. A promise to use reasonable efforts may be implied from the entire circumstances of a contract.

Walker v. Keith (Contract Formation)

Facts: Plaintiff lessee, entered into a 10 year lease agreement with the Defendant lessor. The lease agreement included an option to renew the lease for an additional ten years, but did not set the rent amount for the additional ten years. Rule: In contracts or agreements for a lease, the provision for a renewal must be certain in order to render it binding and enforceable. However, agreements to agree are not enforceable, and indefiniteness, vagueness, or uncertainty will render a contract void.

American Standard, Inc. v. Schectman

Facts: Plaintiff owned property that had been the site of various industrial operations. Plaintiff entered into a contract with defendant to demolish all existing structures, remove equipment, and grade the property as specified in the contract. Defendant failed to grade the property as specified in the contract but argued that American Standard sold the property for only $3,000 less than fair market value. The lower court rendered a jury verdict for the Plaintiff, in the amount of $90,000, based on the cost of completing the grading. Rule: The cost of completion, not the difference in value, was the proper measure of damages.

Bayliner Marine Corp v. Crow (Express Warranty)

Facts: Plaintiff purchased a boat manufactured by Bayliner to be used for offshore fishing. The boat that Crow purchased proved to have a maximum speed of 23-25 miles per hour, and as a result, Crow found the boat unsuitable for offshore fishing. Crow's boat had different specifications than the boat described in the promotional materials. Plaintiff claimed that the promotional materials created an express warranty that the boat he purchased would reach the maximum speed of 30 mph. Rule: Express warranty is a guarantee by the seller or manufacturer of goods regarding the quality or performance of those goods, which is expressly stated by the parties in a written or oral agreement. A merchant's opinion about a product's potential performance does not create an express warranty that the product will conform to that description.

DeFontes v. Dell, Inc. (Shrinkwrap)

Facts: Plaintiff purchased her computer, in which a portion was taken out for tax. Another plaintiff also opted for a service, in which a portion was taken out of his. The defendant's argued that the arbitration provision (which says that all of their disputes must be handled with a third party court) was part of a terms and conditions agreement. Rule: Under the UCC, additional terms in a shrinkwrap agreement will only become part of the contract for the sale of goods if the agreement explicitly provides that the consumer can reject the terms of returning the goods.

Hines v. Overstock.com, Inc. (Browsewrap)

Facts: Plaintiff returned vacuum Defendant and was reimbursed the full amount she had paid minus 30 dollars for restocking fee. When she accessed overstock's website to purchase the vacuum, she was never made aware of the terms and conditions about the restocking fee. Rule: An Internet purchase agreement must provide a consumer with actual or constructive notice of term & conditions must be given for a website user to assent to clauses within terms & conditions of website.

Seidenberg v. Summit Bank (Good faith)

Facts: Plaintiffs formed two successful brokerage firms that dealt with insurance benefit plans, then sold their stock to defendant. As part of the agreement to sell, defendants remained as executives and were placed in charge of daily operations. The agreement provided that, unless terminated by Summit, defendants could expect employment until retirement age. Two years after entering into the agreement, Summit fired Seidenberg and Raymond. Rule: One may introduce parol evidence when claiming that a party breached the duty of good faith and fair dealing. The duty of good faith and fair dealing is implied in all contracts. This duty prohibits either party from doing anything that would destroy or injure the other party's right to receive the fruits of the contract.

Jannusch v. Naffziger (UCC contract formation)

Facts: Plaintiffs owned Festival Foods, a concessions business. Plaintiffs contended that they had as enforceable oral contract with Defendants to buy Festival Foods because essential terms were identified, i.e., price and the goods to be conveyed, and the Defendants breached that contract. Rule: Under UCC § 2-204, a contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties, which recognizes the existence of such a contract.

Quicken Loans, Inc. v. Brown (Unconscionability)

Facts: Quicken loans approved an appraisal that inflated the value of Brown's home to over $181,000 when her home was only $46,000. Although they assured Brown that she could refinance the loan after several months, they refused to respond to Brown's repeated written and verbal inquires to refinance after she defaulted. Rule: A mortgage is unconscionable if the lender conceals important loan terms form the borrower with the intent to mislead and induce the borrower into executing the mortgage.

Ray v. William G. Eurice & Bros., Inc. (Mutual Assent)

Facts: Ray and his wife built a home and entered into, Eurice refused to build after signing. Rule: One who signs a document is bound to that document if the person is capable of understanding the document, absent fraud, duress, or mutual mistake, whether the document was read or not. A contract may still be enforced even though one of the parties made a unilateral mistake in interpreting the agreement.

Doughtery v. Salt (Reciprocal inducement)

Facts: Salt's aunt wrote a note promising to pay him $3,000 at the aunt's death or before if he was a "good boy." Aunt's estate refused to pay. Rule: A promise becomes an enforceable contract only when some consideration is provided by all the parties involved. Recital of benefit or detriment is not consideration.

Truman v. Schupf (Direct repudiation)

Facts: Schupf, Neiswander, and American National Bank and Trust Co. of Chicago (defendants) agreed to sell a parcel of land to Truman Flatt & Sons Co. (plaintiff). The parties entered into a contract which contained an express condition with language that put power in the buyer's hand. Rule: One may rescind anticipatory repudiation if the other party has neither materially relied upon it nor provided notice that it considers the contract repudiated.

Speights v, Walter Development Co. (Implied warranty of workmanlike construction)

Facts: Sleights bought a home in 2000 built by Walters in 1995. Before buying it was owned by two other parties. Sometime after purchasing the home, Speight's notice water damage and mold that was the result of defective roof and rain gutters. No previous owners indicated knowledge of defectiveness. S brought suit claiming breach of implied warranty and workmanlike construction - asking court to take precedent one step further to allow recovery for subsequent purchasers. Rule: Under the warranty of workmanlike conduct, a builder-vendor warrants that the home was constructed in a workmanlike manner and that it will be fit for habitation. Subsequent purchasers may recover for breach of implied warranty of workmanlike construction against a builder-vendor. A builder-vendor breaches the implied warranty of workmanlike construction if: (1) the house was constructed for occupation by the buyer; (2) the buyer purchased the home from a builder-vendor, who constructed the home for the purpose of selling it; (3) the house, when sold, was not reasonably fit for its intended purpose or had not been constructed in a reasonably good and workmanlike manner; (4) the buyer, at the time of purchase, was unaware of the defect and could not reasonably have discovered it; and (5) the buyer suffered damages due to the defect.

Watts v. Watts (Contract implied in fact/marriage)

Facts: Sue and James lived together in a marriage like relationship. Sue quit her job and gave up her plans to become a nurse. They shared expenses and bank accounts, but the couple broke up, and sue was not compensated Rule: Unmarried cohabitants may each be entitled to a share of the wealth jointly accumulated during the cohabitation. A contract implied in fact is one form of an enforceable contract; it is based on a tactic promise, one that is inferred in whole or in part from the parties' conduct. A party must benefit for it to be implied in fact

Taylor v. State Farm Mutual Automobile (Contextual approach)

Facts: Taylor purchased a car insurance policy and was later involved in an accident involving several other vehicles. The drivers sued Taylor for money above his policy limits. Taylor filed suit against State Farm, claiming that they failed to settle with the other drivers within the policy limits, and that State Farm acted in bad faith in connection with the release. Rule: Under the contextual approach, the writing itself cannot provide its own completeness. As such, a court should consider evidence of all the facts and circumstances surrounding the execution of the contract as well as the writing, to discover the parties intent. If the court finds that the contract language is reasonably susceptible to the interpretation asserted by its proponent, the evidence is admissible to determine the meaning intended by the parties.

Longergan v. Scholnick (Contract Formation)

Facts: The defendant placed an ad in the LA paper. The plaintiff responded to the ad, but there was an issue as to whether the plaintiff and defendant entered into a contract. The defendant sold the property to a third party because the defendant did not respond within the time frame outlined by the plaintiff (due to how long it takes for letters to come in the mail). Rule: If the promissee knows or has reason to know that the promisor does not intend it as an expression of his fixed purpose until he has given a further expression of assent, the promisor has not made an offer. There was no contract unless the minds of the parties have met and mutually agreed upon some specific thing.

Mel Frank Tool and Supply, Inc. v. Di Chem (frustration)

Facts: The lease required Di-Chem to comply with all city ordinances. At some point during the lease period, the city changed the fire code to prohibit the storage of hazardous material. After this change, the city inspected the premises and determined that hazardous materials were being stored in violation of the city's fire code. Di-Chem informed Mel Frank that it would be relocating due to the city's ordinance. An October 23 letter to Mel Frank indicated that the city's enforcement of the ordinance prohibited Di-Chem from storing all of its chemicals on the premises, but that some would be allowed. Mel Frank filed suit using the affirmative defense of impossibility. Rule: In the cases of leases, a subsequent governmental regulation prohibiting a tenants principle purpose substantially frustrates the purpose and relieves the party from performance. However, the tenant is not relieved from performance if there is still a serviceable use of the premises available consistent with the provisions of the lease. Here, the court believed that there was still a serviceable use of the premises available consistent with the provisions of the lease.

Hamer v. Sidway (legal detriment)

Facts: The uncle said that if the nephew didn't drink, smoke, or do drugs until age 21 and he would get 5000. Rule: Adequate consideration sufficient to form a valid and enforceable contract may consist of either a right, interest, profit, or benefit accrued to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. More simply, conferral of a benefit to offeror or detriment to offeree is consideration.

Frigaliment Importing Co. v. B.N.S. (Ambiguous Word)

Facts: This dispute was over whether the word chicken meant young chickens (broiler), instead of the German word, which included stewing chickens (fowl). Rule: When the parties to a contract subjectively, but in good faith, construe an ambiguous term differently, courts may look to external factors to determine the proper interpretation of the term. When assessing whether one party knew or had reason to know, of the other party's meaning, you should start with: Language of the contract (ordinary meaning) Conduct of the parties Industry Custom Pricing Reasoning: The court were unable to determine what the parties meant, so the the case was resolved on the basis of the burden of proof.

King v. Boston University (Charitable subscriptions)

Facts: This was a dispute over whether MLK's papers would be preserved at BU. BU spent resources taking care of papers and building new building to store them in. Rule: A charitable pledge is enforceable if there is a promise to give property to a charitable institution and consideration or reliance on the promise.

Totem Marine Tug and Barge, Inc. v. Alyeska Pipeline Service Co. (Duress)

Facts: Totem entered into a contract where it agreed to transport pipeline construction materials. Totem experienced numerous delays and Alyeska terminated the Contract, which was followed by Totem settling for 1/3 of the contract price because they needed the money. Rule: A contract is voidable for duress where there is a threat by one party that actually induces the plaintiff's manifestation of assent to a contract and the plaintiff had no reasonable alternatives.

Joyner v. Adams (Interpretation process/Rule of ambiguity (§201))

Facts: Under the lease, if the defendant failed to develop all lots by a specified date, Adams would then be required to pay rent under the base lease, rather than pay the fixed rate. By the specified date, Adams had developed all but one lot. Rule: Interpretation refers to the process by which a court gives meaning to contractual language when the parties attach materially different meanings to that language. Under the subjective approach, when parties have attributed different meanings to a contract term, there is no "meeting of the minds" regarding the provision and neither party's meaning will be enforced. However, when the first party knows or has reason to know of the second party's meaning, and the second party does not know or have reason to know of the first party's meaning, the second party's meaning will be enforced. Ambiguity should be construed against the party who drafted the contract.

Alaska Democratic Party v. Rice (Parol Evidence: Promissory estoppel exception (§139))

Facts: Wakefield was advised by the Party that he could not hire Rice, after rice had already orally accepted. Rule: A promise can be enforced under promissory estoppel even if it does not comply with the SOF if injustice may only be avoided by enforcement of the promise. Basically, the doctrine of promissory estoppel can be invoked to enforce an oral contract that is subject to the Statute of Frauds

Williams v. Walker-Thomas Furniture Co. (Unconscionability)

Facts: Walker owned a retail furniture store. All Walker's lease agreements also contained a unique provision that every time a new item was leased by a customer, a balance would become due on all items previously leased by that costumer until the entire balance for all items was liquidated. Rule: Unconscionability is an absence of meaningful choice on the part of one of the parties to a contract, combined with contractual terms which are unreasonably favorable to the other party. When determining whether a contract is voidable for unconscionability the court looks to both procedural and substantive unconscionability, considering: (1) Procedural unconscionability: whether there is an absence of meaningful choice or bargaining power on one party's part; and (2) Substantive unconscionability: whether the contract reasonable is or fair.

Webb v. McGowin (Moral obligation)

Facts: Web avoided dropping a large block onto McGowin and McGowin agreed to pay Webb 15 dollars every two weeks to sustain him since he couldn't work. Rule: A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material and substantial benefit. This does not mean that such an obligation will be created by a merely courteous or generous act. The benefit must be both material and substantial. If a benefit of this class was conferred to the promisor, not the promisor's estate, the promisor has the right to compensate the one who conferred that benefit. The promisor may do so by making payment or an executory promise to pay.

Waddy v. Riggleman (impracticability)

Facts: William Waddy IV (plaintiff) entered into a contract to purchase a 30-acre tract of land from Denver Riggleman III and his wife (defendants) for $22,500, with closing to occur on or before a certain date over two months later. The agreement required the Rigglemans to convey title to the land free and clear of all liens and defects. An attorney, John Ours, prepared the land-sale contract and was charged with obtaining the relevant mortgage releases. Later, the parties amended the contract to add an additional 18 acres to the sale, and extended the closing date by 15 days. Ours failed to timely secure the two mortgage releases by the closing date. The Rigglemans backed out of the agreement. Waddy filed suit against the Rigglemans. Rule: The doctrine of impossibility may not be used by a party to avoid a contract if he failed to take virtually every action within his power to perform the duties required by the agreement. The doctrine of impossibility may only be used to avoid a contract when the party took virtually every action within his power to perform the duties required by the agreement.

Crabtree v. Elizabeth Arden Sales Corp. (Parol Evidence: Multiple Document Exceptions (§131))

Rule: Multiple documents taken together may constitute a signed writing sufficient to fulfill the statute of frauds if all documents refer to the same subject matter or transaction and at least one is signed by the party to be charged with contractual obligations. The court also ruled that parol evidence can be introduced which serves only to connect the separate documents and to show that there was assent, by the party to be charged, to the contents of the one unsigned. The signed writing must establish a contractual relationship between the parties and the unsigned writing must, on its face, refer to the same transaction as that set forth in the one that was signed.

Princess Cruises, Inc. v. General Electric Co. (UCC Contract formation)

Rule: Price Quotation is generally an invitation to offer or preliminary negotiations. Purchase Order is generally what constitutes an offer. Acknowledgment letter/receipt/confirmation letter are generally some type of offer. Rule: To determine the predominately purpose of a contract, the court looks to (1) the language of the contract, (2) the nature of the business of the supplier, and (3) intrinsic worth of the materials when determining the purpose of the contract.

Beaver v. Brumlow (Parol evidence: Part performance exception (§ 129))

Rule: Where an oral agreement not enforceable under the statute of frauds has been performed to such an extent as to make it inequitable to deny enforcement, equity may consider the contract as removed from the statute of frauds and decree specific performance. Also, a claim for specific performance of a contract involving land will not fail for failure to specify a price where the contract is otherwise complete, and there has been part performance of the contract by a transfer or possession