Contracts Case Law

Cundick v. Broadbent

Absent fraud or knowledge by one contracting party of a mental deficiency on the part of the other contracting party, the agreement is voidable by the deficient party in accordance with equitable principles. a. Mental incompetence at the time of contracting (a factual question) creates a contract that is voidable at the incompetent party's option.

Graham v. Scissor-Tail, Inc.

Adhesion contract is not enforceable a. Does not fall within reasonable expectations of weaker or adhering party b. Is unduly oppressive or unconscionable, even if expectations are reasonable

Lefkowitz v. Great Minneapolis Surplus Store

An advertisement involving a transaction in goods is an offer when it invites particular action, and when it is clear, definite, and explicit and leaves nothing open for negotiation.

O'Callaghan v. Waller & Beckwith Realty Co.

An exculpatory clause is generally enforced "unless (1) it would be against the settled public policy of the State to do so, or (2) there is something in the social relationship of the parties militating against upholding the agreement." a. Dissent: The majority ignores the facts in evidence, specifically that even though Plaintiff did not negotiate for the removal of the exculpatory clause; Defendant admitted that an apartment would not be rented if a person refused to sign the form lease. The exculpatory clause should not be enforced since the parties occupy vastly different bargaining positions.

Owen v. Tunison

An offer is an act that must express the will or intention to allow an offeree to reasonably believe that the power to create a contract. It excludes situations that evidence intent to deal or open negotiations.

White v. Corlies & Tift

An offer may not be properly accepted by commencing work unless that is the mode of acceptance specifically demanded by the offer. If the offer says "upon agreement" it may require appropriate notice to the Defendant of acceptance in order to form a contract.

Ever-Tite Roofing Corporation v. Green

An offer proposed may be withdrawn before its acceptance and no obligation is incurred thereby. The power to accept is limited by the terms of the contract or at the end of a reasonable time.

International Filter Co. v. Conroe Gin, Ice & Light Co.

Approval does not need to be communicated to the offeror unless the contract says so. The offeror has the power to express the terms and determine the acts which will constitute acceptance. Courts will construe those terms according to their plain meaning.

Hamer v. Sidway

Benefit-detriment test... Valuable consideration may consist either in some right, interest, profit, or benefit accruing to one of the parties or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other party.

Hopper v. All Pet Animal Clinic

Contracts in restraint of trade are disfavored and therefore construed against the party seeking to enforce them by burdening said party with proving that the covenant is reasonable and has a fair relation to, and is necessary for, the business interests for which protection is sought.

Delta Dynamics, Inc. v. Arioto

Court allows extrinsic evidence to explain whether a term of the contract was termination implied or implicitly excluded suing for breach of K; terms not ambiguous, but just need to show that alternative meaning is reasonable susceptible to interpretation.

Fairmount Glass Works v. Crunden Martin

Court will examine the meaning of communication between the parties to determine the intention of the parties.

Austin Instrument, Inc. v. Loral Corporation

Duress can be both personal and economic. The key is the effect on a party's exercise of free will. Austin's threat-to stop deliveries unless the prices were increased-deprived Loral of its free will

Ricketts v. Scothorn

Equitable estoppel bars a party from asserting lack of consideration where reliance was induced by the party asserting there was no requisite consideration.

Bollinger v. Central Pennsylvania Quarry Stripping and Construction Co.

Equity will reform a contract if the parties make a mutual error in reducing their actual agreement into writing. They mean for the term to be in, somehow it gets left out. (DO NOT CONFUSE WITH MUTUAL MISTAKE)... This will only a apply in small amount of cases.

PG&E Co. v. G.W. Thomas Drayage & Rigging Co.

Extrinsic evidence is admissible to explain the meaning of a written agreement if the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. a. Extrinsic evidence may not add to, detract from, or vary the terms of a written contract, but it may be used to interpret the terms of the contract.

Dyer v. National By-Products, Inc.

Forbearance from asserting an unfounded legal claim may act as valuable consideration to create an enforceable contract if that claim is asserted in good faith.

Douglass v. Pfleuger Hawaii, Inc.

General rule that a minor's contracts are voidable is not an absolute rule. Exceptions can include contracts for goods or services necessary for health and sustenance. a. Cognitive - mental illness so bad the could not understand the complexity of the contract its nature and consequences b. Motivational/Volitional - unable to understand in a reasonable manner

ProCD, Inc. v. Zeidenberg

If a buyer is presented with additional terms and offered the opportunity to reject and return the goods and subsequently does not reject the goods, then the buyer will have accepted those terms.

Allied Steel and Conveyors, Inc. v. Ford Motor Co.

If a form of acceptance is plainly worded, then the offeree may accept in another manner, such as commencement of performance and be bound by the offer's stated terms.

Lucy v. Zehmer

In determining whether a party has made a valid offer, the words and actions of the party are interpreted according to a reasonable person standard. The court looks to the objective, outward expression of a person and not to their secret and unexpressed subjective intent.

Vokes v. Arthur Murray, Inc.

In order to bring a cause of action to rescind based on fraud, the facts must justify the allegations. a. His puffing became fraudulent when he caused her to make expenditures in reliance of non-existent abilities

Gianni v. R. Russell & Co.

In the absence of fraud or mistake, a written agreement is the only evidence of the agreement between two parties. a. If the writing appears to be a contract complete within itself, then it is conclusively taken to be complete (the four corners rule) i. if the language is not found within the written words of the contract, then outside evidence will not be considered. This includes any oral agreement you've made. b. Natural thing to have included within the agreement (pp.409) - relevant to the scope of the writing

Williams v. Walker-Thomas Furniture Co.

Look at the following factors a. Purpose: prevent oppression and unfair surprise b. Procedural element: Problems in bargaining process, lack of meaningful choice, need of person bargaining, vitality of service, alternatives, lack of education, sophistication, legalese, fine print, deceptive sales practices c. Substantive element: Terms unreasonably favorable to one party d. Determination: At time of contract e. Decision for judge: May enforce clause to some extent or not at all

Crabtree v. Elizabeth Arden Sales Corp.

More than one document may be linked together either expressly or impliedly by the subject matter and occasion to supply a memo to satisfy the statute of frauds. i. Because the contract cannot be performed in under a year, it falls under the statute of frauds.

Kenai Chrysler Center, Inc. v. Denison

Must honor guardianship especially when person in guardian's ward does not have capacity to form a contract.

Wood v. Lucy, Lady Duff-Gordon

Mutuality or a return promise may be implied from the circumstances surrounding the contract and the nature of the whole writing. (Here, exclusivity was important)

Diamond Fruit Growers, Inc. v. Krack Corp.

One of the principles underlying §2-207 is neutrality. If possible, the section should be interpreted so as to give neither party to a K an advantage simply b/c it happened to send the first or in some cases the last term. (This disposes of the common law Last Shot Rule.) i. Behavior is not enough to assent to proviso language

Feinberg v. Pfeiffer Co.

P's decision to retire resulted from D's promise, thereby triggering promissory estoppel. i. Three theories at play for gifting: 1. Theory of act for promise in that the induced action or forbearance is the consideration for the promise. 2. Theory of promissory estoppel wherein the induced action or forbearance works an estoppel against the promissor . 3. The theory of bilateral contract: when the induced action or forbearance is commenced, a promise to complete is implied and an enforceable bilateral contract is formed, the implied promise being the consideration for the original promise

Dickinson v. Dodds

Promise to keep an offer open until a certain time will be only a promise unless made binding by consideration and acceptance necessary to form a binding agreement. a. Offer in a face-to-face conversation only goes until the end of the conversation. b. In general an offer will terminate, if and when an offeror dies. This is also true when an offeror loses his mental capacity. It doesn't matter if the offeree knows about the death or incapacity of the offeror. Same is true for the reverse situation.

Hoffman v. Red Owl Stores

Promises that a party can reasonably expect will be relied upon, are relied upon may be enforced to prevent injustice even if the promise itself would not be sufficiently definite to meet the requirements to form an offer for a binding contract.

Jones v. Star Credit Corp.

Section 2-302 of the Uniform Commercial Code, (UCC) "authorizes a court to find, as a matter of law, that a contract or a clause of a contract was 'unconscionable at the time it was made,' and upon so finding the court may refuse to enforce the contract, excise the objectionable clause or limit the application of the clause to avoid an unconscionable result." a. weigh in favor of reforming contract to amend payment to amount already paid

Greenfield v. Philles Records, Inc.

The Court concluded that although the contract was silent as to the issue of new recording technology and third party licensing, it was complete on its face and unambiguous a. Test = the plain meaning rule: (pp. 427 "¶ Despite) An agreement that is written, clear and unambiguous on its face must be construed through its plain meaning

Milau Associates v. North Avenue Development Corp.

The Predominate Purpose Test is used to determine the controlling law: Does the service or the good predominate the contract? If goods predominate then apply the UCC Article 2. If services predominate, apply common law.

Monarco v. Lo Greco

The Statute of Frauds cannot defeat the enforcement of an oral contract where the aggrieved party so seriously changed his position in reliance upon the contract that he would suffer an unconscionable injury were the contract not enforced.

Lake Land Employment Group of Akron v. Columber

The at-will employee has no expectation to continued employment. The employee's assent to not compete after termination is given in consideration of the employer's forbearance of the right to terminate the employee.

Step-Saver Data Systems, Inc. v. Wyse Technology

The box-top license would not be considered a conditional acceptance because the software producer did not clearly express an unwillingness to proceed unless the additional terms were incorporated into the agreement.

Beaver v. Brumlow

The statute of fraud does not bar the specific performance of an oral contract for the sale of land, where the terms of contract other than the purchase price have been proved, part performance to the agreement by both parties have occurred, the part performance refers unequivocally to the sale of the land through possession and the making of improvements and a remedy of law would not be adequate.

Alaska Packers' Ass'n v. Domenico

There can be no consideration for a modified contract that arises from a coerced promise for increased compensation for performing what one is already obligated to perform. i. A party who refuses to perform and coerces a promise from the other party to pay increased compensation takes an unjustifiable advantage of the necessities of the other party.

Feinberg v. Pfeiffer Co.

Trial court finds that there was no consideration because the pension had been given for past acts.

Trident Center v. Connecticut General Life Ins. Co.

Under California state law "it matters not how clearly a contract is written, nor how completely it is integrated, nor how carefully it is negotiated, nor how squarely it addresses the issue before the court: the contract cannot be rendered impervious to attack by parol evidence."

Northrop Corporation v. Litronic Industries

Under the majority view, is that the presence of different terms in the acceptance suggests that the offeree didn't really accede to the offeror's terms, yet both parties contracted. i. If offeror does not want to conduct business, he/she can specify that the North must conform to all aspects of the deal. ii. Majority rule = knockout rule, this applies to the original terms. What ever does not match up gets knocked out, whatever it at odds gets knocked out and gap-filled by UCC iii. Material alteration: This applies to additional terms. Just treat the terms as additional terms in the contract. (But like.. don't do this) iv. Minority rule "fall out rule": if there is now a proposal for modification the different term in the acceptance drops out unless the offeror expressly agrees to it.

Odorizzi v. Bloomfield School District

Undue influence consists of (1) undue susceptibility of the vulnerable person and (2) excessive pressure by the dominant person. i. Other factors include, among other things: discussion of the contract at an unusual or inappropriate time or place, more persuaders than persuaded people, the absence of an attorney and the encouragement not to seek one out. All of these factors are present, so the court is willing to let the complaint proceed

Swinton v. Whitinsville Sav. Bank

Unless there was a duty the seller had no obligation to disclose the infestation. Swinton's complaint did not provide sufficient facts to show that Whitinsville Savings Bank knowingly made false statements or misrepresentations. The complaint did not offer proof that the plaintiff had asked whether there was a termite infestation or whether the defendant had been aware of one.

Analysts Int'l Corp. v. Recycled Paper Products, Inc.

Was the purchase of the software system a good or service? This court said it was a good. AIC was expected to do a lot of work to produce the program, but so does any supplier of a specifically designed item. This doesn't make the undertaking a "service." i. service: Special knowledge and skill was used to create/manufacture a certain type of software for the client. ii. good: This is a specially manufactured good, which is still a good, and it is movable because it will be on a disk or computer hard drive.

Masterson v. Sine

When only part of an agreement is integrated parol evidence may be used to prove elements of the agreement not in the writing.

Mattei v. Hopper

When parties attempt to make a contract where promises are exchanged as the consideration, the promises must be mutual in obligation. Both must assume some legal obligation. If the satisfaction clause of the agreement leaves P free to perform or to withdraw from the agreement at P's own unrestricted pleasure, the promise is illusory and provides no consideration. A contract making the duty of performance conditional upon a party's satisfaction seems to give that party wide latitude in avoiding any obligation under the agreement. In contacts where the condition calls for satisfaction as to commercial value or quality, operative fitness, or mechanical utility, the standard of a reasonable person is used in determining whether satisfaction has been received. However, the factors in determining whether a lease is satisfactory to a lessor are too numerous and varied to permit the application of the reasonable man standard.

Stees v. Leonard

Where a party contracts to undertake a duty that in itself is possible, short of an act of God, the law, or the other party to the contract, he must perform.

Kannavos v. Annino

While a party is not required to speak at all regarding a transaction, if he does speak, he must speak honestly and divulge all material facts bearing on the point that lie within his knowledge.

Klocek v. Gateway, Inc.

You can use 2-207 even if there is just one form. Terms received with a product do not become part of the contract unless the non-merchant buyer expressly agrees to them.

Anthony Pools v. Sheehan

i. Consumer good: A good is a consumer good under §9-109 if they are used or bought for use primarily for personal, family, or household purposes. ii. The Graveman Test: This test looks at the actual thing that went wrong under the K. Ask was it dealing with goods or services? Where consumer goods are sold as part of a commercial transaction and retain their character as consumer goods after completion of the service contracted for, and later cause monetary loss or personal injury because of defect, the UCC's implied warranty applies, even if the transaction was predominantly one for rendering service.

Bayway Refining v. Oxygenated Marketing and Trading

(1) the party opposing the inclusion of an additional term under 2-207(2)(b) bears the burden of proving that the term amounts to a material alteration (which OMT failed to do); (2) the district court properly granted summary judgment in favor of Bayway, b/c the additional term did not materially alter the K; (3) the district court properly admitted evidence of custom and practice in the industry despite that fact that it was first proffered in the moving party's reply papers. Simple performance is not enough to constitute an acceptance to a counter offer. Offeror must expressly assent (USING WORDS) specifically and clearly i. A material alteration is one that would "result in surprise or hardship if incorporated without express awareness by the other party." (1) Subjective (what the party actually knew) or (2) Objective (what the party should have known). To carry the burden of showing surprise, a party must establish that, under the circumstances, it cannot be presumed that a reasonable merchant would have consented to the additional term.

Callano v. Oakwood Park Homes Corp.

A Plaintiff cannot use quasi-contract or theory of unjust enrichment to substitute a known promisor or debtor for another. Quasi-contract will only be applied where no other remedy exists.

Hill v. Gateway 2000, Inc.

A contract can be effective even if it is not read. Those who accept without reading the terms of a contract assume the risk that the terms will be unfavorable. As the master of the offer, the Defendant could limit the actions required for acceptance.

Watkins and Son v. Carrig

A contract changed to meet changes in circumstances and conditions is valid.

C.R. Klewin, Inc. v. Flagship Properties, Inc.

A contract is not within the statute of frauds (SOF) unless its terms are so drawn that it cannot by any possibility be performed fully within one year.

Renner v. Kehl

A contract may be rescinded where there is a mutual mistake of material fact that constitutes "an essential part and condition of the contract."

X.L.O. Concrete Corp. v. Rivergate Corp.

A contract that is legal on its face and does not call for unlawful conduct in its performance is not voidable simply because it resulted from an antitrust conspiracy. a. In order for a contract to be voidable by reason of illegality, the illegal conduct must be that which has been contracted to be performed. The contract cannot merely be ancillary to or have arisen because of the illegal conduct.

Bovard v. American Horse Enterprises, Inc.

A court will not enforce a contract to undertake illegal activities, nor will a court enforce a contract to undertake legal activities if they are contrary to public policy.

Strong v. Sheffield

A creditor's promise to forbear the collection of a debt "until such time as I want my money" is illusory and the agreement is not enforceable against either party. An illusory promise is a promise in form, but not in substance. An illusory promise is not consideration for the other promise.

Drennan v. Star Paving Co.

A general contractor may enforce a subcontractor's bid where there is reasonable detrimental reliance under a theory of promissory estoppel. i. Mistake: we will let people out of their obligations if (1) there is a mistake and the other side knew or should have known about the mistake and (2) we can place that person in status quo

Kirksey v. Kirksey

A mere gratuitous promise is without the consideration necessary for enforcement as a contract.

Harvey v. Facey

A mere statement of the minimum selling price is an invitation to treat and not an offer to sell.

Ortelere v. Teachers' Retirement Bd.

A person entering into a contract by reason of mental illness incurs only voidable contractual duties provided he cannot act in a reasonable manner and the other party had reason to know of his condition.

Cotnam v. Wisdom

A quasi-contract or implied contract is a legal fiction where although there is no promise or contract in fact, one will be implied by the law to remedy unjust enrichment.

St. Ansgar Mills, Inc. v. Streit

A reasonable time is a flexible standard. Must look at the entire circumstances, (History of doing business this way, Amicable relationship both relevant considerations)