Contracts - Cases & Rules

Lucy v. Zehmer (p. 35)

"Lucy" holds parties to their words and acts, regardless of secret interpretation. The rule applies to those who never intended to accept, not just to those who changed their minds later and raised jest as a pretext to back out of a deal. Zehmer owned a piece of property that Lucy wanted to buy. One night at Zehmer's bar, Lucy made an offer which Zehmer allegedly accepted. He and Lucy both signed a napkin which had specific details concerning the price and title of the land. Zehmer also had his wife sign it. Zehmer later contended that he was joking and that he didn't really want to sell. Doesn't matter. Mental reservations that aren't manifested don't impair obligations he purports to take. Rule: Jest has to clear and obvious.

Sylvestre v. Minnesota (p. 103)

Case about the judges and their retirement plan getting changed up... Each began service under one statute, and changes took place. The court had to discuss whether these changes were unconstitutional impairment of the previous contract the old judges were under. RULE: A new promise that modifies a contract doesn't necessarily require more consideration

Vanegas v. AES (p. 97)

Employees and incentive to stay withe the AES company - is the incentive a binding contract. RULE: It doesn't matter if a promise is illusory (indefinite/lack of mutuality) at the time it was made; it matters whether the promise became enforceable at the time of the breach. Holding: Any promise to pay sale or merger proceeds became an enforceable unilateral contracts when the employees performed.

Batsakis v. Demotsis (p. 158)

FACTS: Batsakis (P) and Demotsis (D) executed an agreement in 1942 in which Demotsis received $2000 dollars from Batsakis and agreed to repay it with 8% interest per year when she was able. Demotsis in fact only received 500,000 drachmae valued at approximately U.S. $25. RULE: Consideration need not be equitable to void a contract (as in this case), but it cannot be sham or nominal consideration.

Plowman v. Indian Refining Co. (p. 152)

FACTS: D promised to pay monthly sum to each of 18 Ps, long time employees. After change in management, payments were stopped. RULE: The Act of walking to the office was not consideration, it was a mere condition imposed upon them in obtaining gratuitous pensions. Consideration cannot be based on past performance. Moral duties don't impose legal duties. This constituted a gratuitous arrangement without consideration and was not a valid contract.

Wachter v. DCI (p. 121)

FACTS: DCI & Wachter entered a valid contract for software. DCI helped Wachter install the software. DCI enclosed a shrinkwrap agreement within the software. RULE: The contract was formed before the seller shipped the software with the shrinkwrap agreement. The shrinkwrap agreement was a proposal to modify and unenforceable.

Austin Instrument, Inc. v. Loral Corp. (p. 258)

FACTS: Defendant Loral Corp. (contractor) had placed with plaintiff Austin firm (subcontractor) orders for the purchase of gear parts and assemblies needed for the Navy radar sets (this forming the "first subcontract" between the parties). After Austin had entered upon the performance of that subcontract, Loral was awarded an additional contract by the government for radar equipment and Austin sought to supply Loral with the machine parts to be used by Loral in performing this newly procured contract. About this time Plaintiff subcontractor demanded retroactive price increases on the items agreed to be furnished by it under the first subcontract and also demanded that it be given the right to furnish all of the similar machine parts and assemblies which Loral (defendant contractor) needed in performing the additional Navy contract. Negotiations between the parties continued during which Loral was considering the bids submitted by Austin and others for the parts needed under the second Navy contract. Subcontractor Austin claimed that it was losing a substantial sum on the existing job; that it could not afford this; and that the prices being paid to it were only a fraction of what it was entitled to, so Subcontractor Austin sued to recover the amount owing under subcontracts. The trial court award plaintiff Austin judgment for the full amount of the balance owing under subcontracts with defendant Loral, including agreed upon price increases. Tried at the same time as plaintiff's Austin's action was an action brought by defendant Loral against Austin to recover damages for alleged economic duress in the extorting of price increases for the gear parts and assemblies covered by a first subcontract. The trial court concluded that the contractor Loral had failed to establish its alleged cause of action against Austin and dismissed Loral's complaint. RULE: A threat to break a contract does not constitute economic duress.

Bragg v. Linden Research (p. 341)

FACTS: In 2006, Pennsylvania lawyer Marc Bragg ("Marc Woebegone" in Second Life) brought a lawsuit against Second Life developer Linden Lab when his account was unilaterally disabled by Second Life administrators. Linden Lab claimed that Marc Bragg had violated their Terms of Service by URL-hacking[1] the Second Life virtual land auction website in order to gain access to otherwise-unavailable auctions. As a result, Bragg was able to purchase virtual land within Second Life valued at $1,000 for approximately $300.[2] Bragg's account was suspended while Linden Lab conducted an investigation, and was later closed completely.[2] Bragg argued that by closing his account, Linden Lab also dissolved his virtual assets, which he valued at between US$4,000 and US$6,000. RULE: Found procedural and substantive unconscionability.

United States v. Meadors (p. 144)

FACTS: In January 1977, MJD applied for a loan. It was approved subject to guaranty by the SBA. Guaranty was given in April 1977. On Jan application, list of possible gurantors was Melton Meadors, Judd and wife, Ducote and wife. In April 1977, Melton Meadors and Betty Meadors, the appellant, were married. Betty signed the SBA forms even though there was no space for her signature. MJD defaulted on the loan, and the SBA went after Betty Meador's assets. RULE: No consideration existed. An enforceable obligation is only present if one's assent is required, anticipated, requested, or relied upon... and therefore relevant to the transaction.

Bovard v. American Horse Enterprises, Inc. (p. 352)

FACTS: Plaintiff Robert Bovard sold Defendant corporation, American Horse Enterprises, Inc., to James Ralph, who signed several promissory notes in connection with the sale. Plaintiff sued when Defendant failed to pay on the notes. During the course of the trial, the evidence revealed that Defendant is in the business of manufacturing drug paraphernalia, primarily bongs and roach clips, used to smoke marijuana. RULE: Example of Restatement approach to public policy applied; the sale of the business that supported the use of illegal drugs violated public policy because of existing criminal laws against the sale and use of marijuana.

Pop's Cones, Inc. v. Resorts International Hotel, Inc. (p. 208)

FACTS: Pop's is an authorized franchisee of TCBY Systems, Inc. ("TCBY"), a national franchisor of frozen yogurt products. Resorts is a casino hotel in Atlantic City that leases retail space along "prime Boardwalk frontage," among other business ventures. From June of 1991 to September 1994, Pop's operated a TCBY franchise in Margate, New Jersey. Sometime during the months of May or June 1994, Brenda Taube ("Taube"), President of Pop's, had "a number of discussions" with Marlon Phoenix ("Phoenix"), the Executive Director of Business Development and Sales for Resorts, about the possible relocation of Pop's business to space owned by Resorts. During these discussions, Phoenix showed Taube one location for a TCBY vending cart within Resorts Hotel and "three specific locations for the operation of a full service TCBY store." On July 17, 1995, Pop's filed a complaint against Resorts seeking damages. The complaint alleged that Pop's "reasonably relied to its detriment on the promises and assurances of Resorts that it would be permitted to relocate its operation to [Resorts'] Boardwalk location. RULE: Claim was justified. A promissory estoppel claim will be justified if the plaintiff satisfies its burden of demonstrating the existence of, or for purposes of summary judgment, a dispute as to a material fact with regard to, four separate elements which include: (1) a clear and definite promise by the promisor; (2) the promise must be made with the expectation that the promisee will rely thereon; (3) the promisee must in fact reasonably rely on the promise, and (4) detriment of a definite and substantial nature must be incurred in reliance on the promise. The essential justification for the promissory estoppel doctrine is to avoid the substantial hardship or injustice which would result if such a promise were not enforced.

QVC, Inc. v. MJC America, Ltd. (p. 698)

FACTS: QVC bought space heaters from MJC and resold them. The heaters developed problems and QVC recalled them and compensated their buyers. RULE: Lost profit is the classic consequential loss.

Hauer v. Union State Bank of Wautoma (p. 237)

FACTS: The borrower had been formerly adjudicated incompetent. Her guardian was discharged pursuant to a physician's recommendation. A third party induced the borrower to get a loan for him and use her mutual fund as collateral. The third party promised the borrower he would pay the interest and the loan. The borrower and the third party met with a bank employee who explained the terms. When the loan went into default and the bank sought recovery of the loan, the borrower filed a claim to void the loan and return the borrower's collateral, alleging the bank knew or should have known of her mental incapacity to enter into a loan. The circuit court found for the borrower and required the bank to return the borrower's collateral. The bank appealed the case. RULE: The bank failed to show good faith in making the loan to Hauer, so the loan was voidable.

Ortelere v. Teachers' Retirement Board of New York (p. 227)

FACTS: The decedent, mentally ill, died a little less than two months after making her election of maximum benefits, thus causing the entire reserve to fall in. The retirement board sought the revocation of the election of retirement benefits on the basis of capacity. The trial court allowed the revocation of benefits on the ground of mental illness. On appeal, the case was reversed and dismissed. The case was appealed. RULE: The contract was voidable because the school had adequate notice of her mental condition

Hamer v. Sidway (p. 139)

FACTS: The testator and his nephew, William E. Story were attending the golden wedding of the father of the testator, when he said to William: "Willie, I am going to make you a proposition. If you will not drink any liquor, will not smoke, will not play cards or billiards until you are 21, I will give you $ 5,000 that day. Of course, if you want to play for fun, that I don't consider playing cards." William agreed. When the testator passed, his nephew sought to claim the $ 5,000. RULE: A promisee's restriction on a legal right is sufficient consideration, even if restricting on the right technically helps him.

Webb v. McGowin (p. 174)

FACTS: Webb (P), acting within the scope of his employment, was engaged in clearing the upper floor of a mill. P was in the act of dropping a 75-pound block to the ground below when he saw McGowin directly underneath the block. If P had dropped the block, McGowin would have suffered serious bodily harm or death. P could have remained safe on the upper floor of the mill by dropping the block. However, the only way to prevent the block from hitting McGowin was for P to fall with the block and divert its direction. P fell with the block and diverted its direction in such a way the McGowin was not injured. In doing so, P suffered seriously bodily injuries. P was badly crippled for life and unable to do physical or mental labor. McGowin promised to pay P $15 every two weeks for the rest of P's life. McGowin followed through with the payments until his death eight years later. After McGowin's death the payments stopped. P sued McGowin's estate (D). RULE: Where a promise cares for, improves, and preserves the property of the promisor, though done without his request, it is sufficient consideration for the promisor's subsequent agreement to pay for the service, because of the material benefit received.

Landis v. William Fannin Builders (p. 688)

FACTS: Wrong color siding. Builders wanted diminution of market value, husband and wife wanted cost of completion. AJ: Stands for proposition that we do prefer, if possible, the cost of completion, so long as it's reasonable

Advertising Specialty Institute v. Hall-Erickson, Inc. (p. 725)

Facts: Advertising Specialty Institute (ASI) (plaintiff) was a trade-information publisher for the corporate promotional product industry. ASI had more than 24,000 members. It put on about 80 trade shows per year for the buyers and sellers of corporate promotional products. Each year, it held one of its trade shows in Chicago. ASI entered into a contract with Hall-Erickson, Inc. (defendant), the manager of an annual trade show featuring a company doing business as The Motivation Show, each fall in Chicago. Under this contract, Hall-Erickson would give ASI the right of first refusal to participate in any opportunity relating to the promotional product industry. In May 2003, ASI put on its annual Chicago trade show. Later in 2003, Hall-Erickson put on its annual convention in Chicago featuring The Motivation Show, inviting Promotional Products Association International (PPAI) to co-locate its trade show at the convention. PPAI was a direct rival of ASIs in the corporate promotional products industry. Hall-Erickson did not invite ASI to participate. ASI sued Hall-Erickson for breach of contract, alleging that Hall-Erickson had failed to give ASI the right of first refusal to participate in Hall-Erickson's 2003 show. At trial, ASI's expert testified that ASI lost revenues of $500,000 to more than $1,000,000 by not participating in Hall-Erickson's show. ASI did not address the issue of how participating in two trade shows in Chicago in the same year might have affected attendance and revenues. Additionally, ASI did not identify which companies would have likely participated in the second show, nor did ASI get data from PPAI about PPAI's revenues from the show. Also, ASI did not provide evidence of the companies that participated in PPAI's show. Finally, ASI did not address the possible effects of PPAI holding an independent trade show. The trial court found in favor of ASI. However, the district court awarded ASI nominal damages of $1 because ASI had failed to prove damages with reasonable certainty. ASI appealed.

Barrer v. Women's National Bank (p. 283)

Facts: After an 11th hour rescission by the bank of its agreement to make a mortgage loan to the borrower, Lester Barrer, the borrower brought an action for damages against Women's National Bank (WNB). WNB defended and moved for summary judgment on the ground that Barrer had made innocent material misrepresentations in his loan application that justified the Bank's avoidance of the contract. The district court granted summary judgment for the bank. Barrer appealed. Rule: Four conditions must be met before a contract may be voided for innocent misrepresentation. The recipient of the alleged misrepresentation must demonstrate that the maker made an assertion: (1) that was not in accord with the facts, (2) that was material, and (3) that was relied upon (4) justifiably by the recipient in manifesting his assent to the agreement. District of Columbia law adds a fifth condition, i.e., that the recipient relied to his detriment.

CAN Int'l Reinsurance Co., Ltd. v. Phoenix (p. 575)

Facts: Arlyn, the representative of River Phoenix's (Phoenix) estate, raised the impracticability defense when Phoenix's death prevented his performance under an acting contract. Rule: A personal services contract becomes impracticable if the person obligated to perform dies.

Sassower v. Blumenfeld (p. 581)

Facts: David Blumenfeld (defendant) entered into an agreement with Michael Sassower (plaintiff) to purchase a property in New Hartford, New York, for $1.8 million. Upon signing the contract, Blumenfeld paid a deposit of $180,000. Under the terms of the agreement, Sassower was entitled to retain the deposit as liquidated damages if Blumenfeld defaulted on the purchase. Additionally, the agreement set the closing date as December 12, 2008. Blumenfeld was allowed to adjourn the closing date to no later than December 31, 2008. The agreement indicated that in regard to any adjournments, time was of the essence. On December 10, 2008, Blumenfeld requested an adjournment of the closing date. On December 11, Blumenfeld learned that he had lost nearly all his financial assets as a victim of a fraudulent scheme perpetrated by a well-known investor. On December 24, 2008, Blumenfeld terminated his purchase agreement with Sassower and demanded that Sassower return the deposit. Sassower sought a declaratory judgment that he was entitled to retain Blumenfeld's deposit as liquidated damages because Blumenfeld failed to close by December 31, 2008. Blumenfeld argued that his performance should be excused on the basis of impossibility. Sassower moved for summary judgment, and Blumenfeld filed counterclaims.

Wood v. Lucy, Lady Duff-Gordon (p. 458)

Facts: Defendant is a fashion designer who entered into an agreement that Plaintiff would in her employment promote her label. In return they were to split the profits. Defendant placed an endorsement without Plaintiff's knowledge and withheld profits from him. In exchange for an exclusive agency he would promote her trademarks, but never exclusively to promise work. Rule: Mutuality can be implied based on the terms of a contract.

Crabtree v. Elizabeth Arden Sales Corp. (p. 376)

Facts: During preliminary negotiations for employment, Plaintiff asked for a 3 year employment contract at $25K per annum. Arden, the Defendant Corporation's President, offered a 2 year contract based on $20K for 6 months. Then $25K for 6 months and $30K for 12 months, plus $5K per year in expenses. Plaintiff replied "interesting." Arden then had her secretary draw up a memorandum - Employment Agreement, on a telephone order blank. A couple of days later Plaintiff telephoned his acceptance and Arden wired back "welcome." When Plaintiff showed up for work a payroll card was made stipulating his salary as above that was initialed by a manager. After 6 months he received the first increase, but not the second increase after 12 months. Plaintiff spoke with the comptroller who agreed to help Plaintiff fix problem and they filled out another payroll card. But, Arden refused to approve the increase so Plaintiff left and sued for breach of contract. Rule: RS 132: Signed and unsigned writings may be read together if they refer to the same subject matter.

Mission Independent School District v. Diserens (p. 766)

Facts: Ethel Diserens (defendant) was an extraordinarily talented music teacher. She entered into a contract with the Mission Independent School District (Mission) (plaintiff) to teach music in Mission's public schools for one year. The contract additionally restricted Diserens from teaching in any other school district in Texas during the same period. On her first day of work, Diserens asked to be released from her contract. Mission refused. Diserens quit and went to work for another school district in Texas. Mission sued Diserens, seeking to enjoin her from working in the other school district. The trial court held that Mission had not been injured by Diserens's breach, and for that reason rejected Mission's request for an injunction. Mission appealed, and the court of appeals affirmed. Mission appealed again.

Tredrea v. Anesthesia & Analgesia, P.C. (p. 625)

Facts: Genesis Medical Center (Genesis) was a hospital in Davenport, Iowa, that employed 15 anesthesiologists. After receiving negative evaluations from the Iowa Board of Medical Examiners, Genesis decided to hire a single anesthesiology group to provide anesthesiology services. Genesis entered into a contract with Anesthesia & Analgesia, P.C. (A & A) (defendant) that made A & A Genesis's exclusive provider of anesthesiology services. Seven of Genesis's on-staff anesthesiologists were employed by A & A, and nine were not. Because A & A did not have enough anesthesiologists in its group to cover Genesis's needs, the contract provided that Genesis could hire Genesis's current anesthesiologists as independent contractors so long as Genesis entered into agreements with those anesthesiologists no later than January 31, 1995. Additionally, the contract provided that A & A could not unreasonably withhold its consent to any extensions that Genesis might request to the January 31 deadline. On January 10, Genesis made offers of employment to its eight on-staff anesthesiologists who did not work for A & A. The deadline for the doctors' acceptance was January 25, 1995. All eight initially refused the terms of their offers. Genesis extended its deadline to February 2, then February 10, then February 15. On February 17, doctors Colin Tredrea and Douglas Wells (plaintiffs) accepted Genesis's offer. A & A agreed to the first two extensions, but refused to consent to the third extension. Doctors Tredrea and Douglas sued A & A and other defendants claiming, among other things, that they were third-party beneficiaries of the contract between Genesis and A & A, and that contract had been breached by A & A. The jury found in favor of Tredrea and Wells, awarding them more than $300,000 each in damages. A & A appealed, arguing that Tredrea and Wells lacked standing to sue because they were not third-party beneficiaries under the contract, and that A & A did not breach the contract.

McReynolds v. Krebs (p. 86)

Facts: Krebs offered to settle her claims against McR. for the bodily injury limit available under McR's insurance policy, specifying that the offer would expire on a certain date. RULE: A purported acceptance of a plaintiff's settlement offer which imposes conditions will be construed as a counteroffer.

Mills v. Wyman (p. 168)

Facts: Nursing alcoholic son back to health. Rule: The general position that the moral obligation is a sufficient consideration for an express promise is to be limited in its application to cases where good or valuable consideration has existed.

K.A.L. v. Southern Medical Business Services (p. 779)

Facts: On December 12, 1998, K.A.L., who was incarcerated in the Saraland city jail, attempted suicide by hanging herself from the neck with a bedsheet. When jail personnel found her, K.A.L. had no pulse, and cardiopulmonary resuscitation was begun. By the time paramedics arrived, K.A.L. had a "thready" pulse and an agonal respiratory effort. She was immediately transported by ambulance to Springhill Memorial Hospital. Upon her arrival at the hospital, K.A.L. was comatose and her pupils were fixed and dilated. She was intubated and admitted to the intensive-care unit for treatment. K.A.L. responded positively to treatment during her hospitalization, and she was discharged on December 21, 1998. Residual symptoms from the December 12 incident, during which her brain was deprived of oxygen, consisted of speech difficulties and tremors in her upper extremities. The costs associated with K.A.L.'s December 1998 hospitalization have not been paid. On December 1, 2001, Southern Medical Business Services ("Southern Medical"), as Springhill Memorial Hospital's assignee, sued K.A.L. and the City of Saraland ("the City") to obtain payment of the medical expenses arising from K.A.L.'s December 1998 admission. The trial court entered a summary judgment in favor of the City and directed the entry of a final judgment pursuant to Rule 54(b), Ala. R. Civ. P.; however, no appeal was taken from that judgment. On July 2, 2002, the trial court entered a summary judgment in favor of Southern Medical and against K.A.L. for $21,562. K.A.L. appeals from that judgment.

Zigas v. Superior Court (p. 631)

Facts: Petitioners are tenants in a building that was financed by a mortgage pursuant to the National Housing Act. They are suing their landlord for raising rents in violation of regulation from the Department of Housing and Urban Development (HUD).Synopsis of Rule of Law. A party may sue as a third party beneficiary of a contract with the government when it is clear that the party was intended to be a third party beneficiary under of the contract with the government.

King v. Trustees of Boston University (p. 202)

Facts: Plaintiff, wife of the late Martin Luther King, Jr., initiated this action to recover some of King's papers from Defendant Boston University. King provided the papers and other items to Defendant along with a letter indicating that upon his death they would become the property of Defendant. Rule: Where there is donative intent and evidence that could support a finding of a promise supported by consideration or reliance, the case is properly submitted to the jury.

Rossetti v. New Britain (p. 653)

Facts: Supreme Court of Connecticut163 Conn. 283 (1972) Facts The city of New Britain (defendant), Connecticut, entered into a contract with the architectural firm of Rosetti, DiCorcia and Mileto to develop plans for a new police station and courthouse. One of the firm's partners, Andrew Rosetti (plaintiff), was the lead architect on the project. Approximately six months later, another of the firm's partners, Philip DiCorcia, left the firm. At this time, the firm had completed 30 percent of the blueprints for the project. Prior to DiCorcia leaving, Rosetti notified the chairman of New Britain's building committee that the architectural firm was restructuring with Rosetti and William Mileto as the only partners. New Britain made no objection. New Britain did not pay Rosetti for the services his firm had completed, and ended its contract with Rosetti by hiring new architects. Rosetti sued New Britain for breach of contract, seeking payment for his firm's services. A jury found that Rosetti was owed $12,300 for his firm's services. New Britain appealed. On appeal, New Britain argued that its contract with Rosetti, DiCorcia, and Mileto was not assignable to Rosetti's firm because it was a contract for personal services, making it impossible for the original partnership to perform on its contract with the city.

Solar Applications Engineering v. T.A. Operating Corp. (p. 496)

Facts: T.A. Operating Corporation (TA) (defendant) hired Solar Applications Engineering, Inc. (Solar) to build a truck stop. Under the terms of TA's contract with Solar, TA would pay Solar monthly in accordance with Solar's progress on the project. Once the project was substantially complete, Solar would notify TA, and TA would inspect the project. TA would then provide Solar with a list of items needing correction or completion, called a "punch list." Once Solar addressed the punch list, Solar could make a final application for payment. The contract specified that the final application for payment should be accompanied by a lien-release affidavit. When Solar had substantially completed construction of the truck stop, TA provided Solar with a punch list. Solar disputed some of the items that TA insisted must be completed before final payment. TA and other subcontractors filed liens against the property. TA terminated its contract with Solar. Solar then submitted a final application for payment, but did not submit a lien-release affidavit. TA refused to pay Solar, claiming that because Solar had failed to submit a lien-release affidavit, Solar had failed to satisfy a condition precedent for payment. Solar sued TA, and the trial court awarded Solar $392,000 in damages. TA appealed. The appellate court reversed the trial court, holding that the lien-release provision of the parties' contract was a condition precedent of payment that Solar had failed to satisfy. Solar appealed.

Lenawee County Board of Health v. Messerly (p. 309)

Facts: The Appellees/vendees, Mr. and Mrs. Pickles (Appellees), purchased a 600 square-foot tract of land with rental property upon it, from the Appellants/Vendors, Mr. and Mrs. Messerly (Appellants). Shortly after buying the property, the Lenawee County Board of Health (BOH) brought suit against the Appellees and Appellants of the property and condemned it because there was a defective sewage system on the property. Rule: While mutual mistake can serve to void a contract, the determination of rescission must be undertaken on a case-by-case basis, taking into consideration the full terms of any agreement.

Dougherty v. Salt (p. 149)

Facts: The boy's aunt told his guardian, who was a witness for him at trial, that she loved the boy and wanted to take care of him, so she gave him a note payable at her death, which had the words "value received" on it. She died. RULE: Past consideration and merely recited consideration is not valid consideration. An executory gift is not enforceable.

Cohn v. Fisher (p. 385)

Facts: Two individuals entered into an oral agreement for the purchase and sale of a boat. This agreement was memorialized by a notation on a check. Rule: For a memoranda to satisfy the Statute of Frauds ("SOF"), [t]here must be "1) a writing indicating a contract for sale, (2) signed by the party to be charged, and (3) the quantity term must be expressly stated."

135 East 57th Street, LLC v. Daffy's Inc. (p. 506)

Facts:Daffy's Inc. (Daffy's) (defendant) was a popular discount clothing retail chain in New York City. One of Daffy's locations was on 57th Street, where it leased space from 135 East 57th Street LLC (135 East) (plaintiff). Daffy's executed a lease with 135 East in 1994. Under the terms of the lease, Daffy's had an option of two five-year renewal terms. The first of these options had to be exercised by January 31, 2010, in writing. Although Daffy's intended to exercise its option to renew the lease, Daffy's corporate controller accidentally missed the option date. Daffy's verbally notified 135 East of its intent to renew on February 4, 2010, then notified Daffy's in writing on February 9, 2010. 135 East sought a declaratory judgment that Daffy's had failed to timely renew its lease. At trial, Daffy's late renewal was found to be a mistake made in good faith, and Daffy's delay was found to have not prejudiced 135 East. Daffy's presented evidence that it painted the retail space when it first entered into the lease with 135 East. The trial court issued a declaratory judgment that Daffy's was entitled to equitable relief because Daffy's had made improvements to the property that would cause Daffy's to suffer a forfeiture if the lease were terminated. Consequently, the trial court excused Daffy's late renewal. 135 East appealed.

Parker v. Twentieth Century-Fox Film Corp. (p. 708)

Facts:P entered into a contract with D in which P was to play the female lead in Fox's musical film Bloomer Girl, guaranteeing her compensation of $750,000. D decided not to produce the film and offered P the female lead in the Western film Big Country, Big Men. P did not accept the offer and brought suit to recover the guaranteed compensation under the original contract. Rule:The measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon, less the amount which the employee has earned or with reasonable effort might have earned from substantially similar employment. R2K § 350(1)

Clark v. Wallace County Cooperative Equity Exchange (p. 588)

Facts:Ray C. Clark (Clark) sued Wallace County Cooperative Equity Exchange for full payment owed in a contract to deliver 4,000 bushels of corn after Clark delivered 2,207.41 of the 4,000 bushels. Rule: If a seller contracts to deliver goods from an unspecified source and the seller's performance is compromised by inclement weather, the seller is not excused from delivering the goods to the purchaser.

Starchem Labs., LLC v. Kabco Pharms., Inc. (p. 564)

Facts:Starchem Laboratories, LLC (Starchem) (plaintiff) developed and sold nutritional supplements. Starchem special ordered some of its products from Kabco Pharmaceuticals, Inc. (Kabco) (defendant) and Futurebiotics, supplement manufacturers under the same ownership. Starchem paid Kabco late for some orders, and owed Kabco $3,000. Additionally, Starchem owed Futurebiotics nearly $28,000. Notwithstanding these unpaid balances, Starchem sent Kabco a purchase order for supplements costing $190,000. Under the terms of the purchase order, Starchem had 30 days to pay Kabco. Although Kabco procured the ingredients for Starchem's order, Kabco did not begin manufacturing the supplements. Instead, Kabco sent Starchem a letter stating that Starchem must pay $165,000 up front and pay the balance it owed Futurebiotics prior to Kabco beginning production. Starchem responded with a request that Kabco extend it more credit. Kabco sent an email to Starchem again requesting that Starchem pay the balance it owed Futurebiotics. Starchem did not respond. Starchem filed suit against Kabco for, among other things, breach of contract. Starchem argued that Kabco unilaterally changed the terms of the contract, the purchase order, by limiting Starchem's credit to $25,000 and requiring Starchem to pay Futurebiotics. Kabco filed counterclaims against Starchem and moved for summary judgment dismissing Starchem's complaint.

Tolar Construction v. Kean Electric Company (p. 673)

Facts:Tolar Construction (Tolar) (defendant) hired Kean Electric Company (Kean) (plaintiff) to perform the electrical work for an elementary school renovation. Under the contract, the electrical work was required to be completed by January 18, 2001, and Kean would receive $230,000 upon its completion. During the renovation, the elementary school's roof had to be reinstalled, delaying Kean's work for more than a month. Tolar's general manager became impatient with Kean when it missed the January 18 deadline, and work continued into April. Tolar ordered Kean to complete work by May 14. When Kean failed to do so, Tolar ordered Kean to cease work. Tolar paid Kean just $3,000 for Kean's work. Kean sued Tolar for breach of contract, and Tolar counterclaimed. At trial, Kean presented evidence of the contractual price the parties had agreed to for Kean's services. Additionally, Kean presented evidence of how much money it would have paid subcontractors had Kean been permitted to complete the work. A jury found in favor of Kean, awarding it compensatory damages of $89,000. Tolar moved for a new trial, but the trial court denied Tolar's motion and entered final judgment in favor of Kean. Tolar appealed. On appeal, Tolar argued that the damages award was excessive because the jury failed to consider the payments Tolar made to subcontractors in order to complete the electrical work that Kean was forced to leave unfinished.

Toto We're Home, LLC v. Beaverhome.com, Inc. (p. 681)

Facts:Toto We're Home, LLC (Toto) (plaintiff) ordered wood flooring from Beaverhome.com, Inc. (defendant) for $15,125. Toto paid the price in full. However, Beaverhome.com was unable to timely deliver the flooring because the flooring was out of stock. Toto canceled its order and immediately purchased similar flooring from another company for $19,166. Toto sued Beaverhome.com to recover its loss. The trial court found in favor of Toto, awarding Toto damages equal to the price Toto paid Beaverhome.com for the flooring, or $15,125. However, the trial court denied Toto cover damages for the additional $4,041 Toto paid to promptly buy replacement goods from a different supplier. Toto appealed, seeking cover damages.

Kel Kim Corp. v. Central Markets, Inc (p. 595)

Force Majeure Clause: plaintiff leased supermarket for defendant for ice skating rink, K required ins and they get it 8 months late; impracticability not an excuse - impossibility is a very high standard; force majeure clause excludes performance due to circumstances beyond the control of the parties

Angel v. Murray (p. 188)

Garbage collector no consideration. Modifications to contracts made (1) voluntarily and fairly by both parties, (2) before the original action was completed, (3) in light of unforeseen events, and (4) not under coercion or duress, do not necessarily need additional consideration and can be found legal.Modern view on amendment in Restatement § 89: A promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or (b) to the extent provided by statute; or (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise (detrimental reliance).

Random House v. Rosetta Books (p. 412)

Overview: Preliminary injunction on copyright infringement due to publishing different formats of the books than what was established in the contract.

Nirvana v. ADT Introduction (p. 110)

P - Niravana, hired D - ADT to install a alarm in their jewelry store. There was a clause saying that they were not responsible for all losses if robbery occurred (limitations on liability), which was a contractual provision. The P said they didn't sign that page but the court didn't care - acceptance by silence. RULE: Example of acceptance by silence; the plaintiff accepted benefits of the defendant's performance and had the opportunity to consider/reject.

Herzog v. Irace (p. 641)

RULE: For an assignment to be valid and enforceable against the assignor's creditor (the obligor), the assignor must make clear his intent to relinquish the right to the assignee and must not retain any control over the right assigned or any power of revocation. The assignment takes effect through the actions of the assignor and assignee and the obligor need not accept the assignment to render it valid. FACTS: Defendants' client was injured in an accident and sued for damages. Later, plaintiff performed surgery on the client for a condition unrelated to the accident. In lieu of payment, plaintiff agreed to accept from the client an "assignment of benefits" of any settlement the client might receive. Plaintiff notified defendants of the assignment. When the client's case was settled, defendants followed the client's instructions not to pay plaintiff, as the client indicated he would pay plaintiff directly. Payment was never received, and plaintiff sued defendants. Judgment in plaintiff's favor was affirmed.

Sunnyland Farms v. Central New Mexico (p. 718)

RULE: The Hadley v. Baxendale standard has been interpreted as an objective foreseeability test: A defendant is liable for losses that were foreseeable at the time of contracting, regardless of whether the defendant actually contemplated or foresaw the loss. Restatement (Second) of Contracts § 351 cmt. a (1981). This foreseeability standard is more stringent than "proximate cause" in tort law; the loss must have been foreseeable as the probable result of breach, not merely as a possibility. The Restatement asks whether there were "special circumstances, beyond the ordinary course of events, that the party in breach had reason to know." In the absence of such circumstances, the breaching party is liable only for general damages. Restatement (Second) of Contracts § 351 cmt. b (1981). FACTS: A fire destroyed a hydroponic tomato facility belonging to plaintiff-petitioner Sunnyland Farms. The day before the fire, Sunnyland's electricity had been shut off by its local utility, defendant-respondent Central New Mexico Electrical Cooperative (CNMEC), due to nonpayment. Sunnyland sued CNMEC, alleging both that CNMEC had wrongfully suspended service, and if its electrical service had been in place, firefighters and Sunnyland employees would have been able to stop the fire from consuming the facility. The trial court found the utility liable for negligence and breach of contract. The trial court awarded damages but reduced them for Sunnyland's comparative fault. It also awarded $100,000 in punitive damages. The appellate court reversed the contract judgment, vacated the punitive damages, held that the lost profit damages were not supported by sufficient evidence, affirmed the trial court's offset of damages based on CNMEC's purchase of a subrogation lien, and affirmed the rulings on pre- and post-judgment interest. Sunnyland appealed.

Wright v. Newman (p. 196)

Rule: A legally enforceable obligation to provide child support can be based upon parentage or contract. Facts: A mother sought to recover child support for her daughter and her son against her ex husband. The ex husband admitted his paternity only as to the daughter and DNA testing subsequently showed that he was not the father of her son. The trial court nevertheless ordered him to pay child support for both children. The case was appealed to the Supreme Court of Georgia.

Mel Frank Tool & Supply, Inc. v. Di-Chem Co. (p. 600)

Rule: A party's performance under a lease may not be excused when a law or ordinance restrict use of the premises, but does not completely render the premises unusable by the party.

Myskina v. Conde Nast Publications, Inc. (p. 436)

Rule: A person who is illiterate in the English language is not automatically excused from complying with the terms of a contract simply because he or she could not read it." Facts: Pl - Myskina Df - Conde Nast Publications What happened? Myskina won the 2004 French open. She was 20 year old at the time the pictures were taken. The court then held that the tennis player's claims under N.Y. Civ. Rights Law 50 and 51 failed because she signed a release allowing the unrestricted editorial use of her photographs by the company, magazine, photographer, and studio, and the alleged oral agreement limiting the tennis player's consent to publication of her photographs was barred by the parol evidence rule. She alleged the photographs were for GQ. Mark Seliger asked Myskina if he could keep the additional photos outside of the Lady Godiva on a Black Horse. o The photographs were also published by Russian magazine Medved.

Seaver v. Ransom (p. 618)

Rule: In New York the right of the beneficiary to sue on contracts made for his benefit is at present confined to: 1) cases where there is a pecuniary obligation running from the promisee to the beneficiary; 2) cases where the contract is made for the benefit of the wife, affianced wife or of a party to the contract; 3) public contract cases where the municipality seeks to protect its inhabitants by covenants for their benefit and; 4) cases where, at the request of a party to the contract, the promise runs directly to the beneficiary although he does not furnish the consideration. Facts: Respondent niece brought suit in contract to recover property that her late aunt contracted with her late uncle to deliver. It appears that the late aunt asked the late uncle (her husband), to prepare a will for her. A will was prepared, which included, among others, a provision that the use of a house is being left to the decedent uncle for life. The aunt expressed that she wanted the house left to respondent niece. However, since she was very infirm with the possibility that she could not live long enough for the revised will, the uncle convinced his wife to sign the will and promised to make up for it in his own will by giving the niece $6,000, which is the value of the house. Both the uncle and the aunt died with both wills making no provision for the respondent niece. The trial court found for respondent niece, that the right of a third party to recover upon a contract made by other parties for the third party's benefit was determined by the circumstances of the particular case.

Jordan v. Knafel (p. 297)

Rule: In order for a representation to constitute fraud that would permit a court to set aside a contract, the party seeking such relief must establish that the representation was: (1) one of material fact; (2) made for the purpose of inducing the other party to act; (3) known to be false by the maker, or not actually believed by him on reasonable grounds to be true, but reasonably believed to be true by the other party; and (4) was relied upon by the other party to his detriment. Facts: Karla Knafel and Michael Jordan, a renowned basketball player who was married, had unprotected sex, which allegedly resulted in pregnancy. Before the child was born, the parties discussed possible resolutions of their dilemma, and in the spring of 1991, Jordan offered and urged Knafel to accept $5 million in return for her agreement not to file a paternity suit. Jordan also asked Knafel to keep their romantic involvement confidential. Jordan failed to pay the $5 million under the alleged agreement, and denied that he had promised to pay Knafel that amount of money. Obtaining knowledge thereafter of a mutual mistake about the child's paternity, Jordan filed an action to declare the aforementioned agreement between him and Knafel as unenforceable.

Dodson v. Shrader (p. 248)

Rule: In reference to a contract of a minor where the minor has not been overreached in any way, and there has been no undue influence, and the contract is a fair and reasonable one, and the minor has actually paid money on the purchase price, and taken and used the article purchased, that he ought not to be permitted to recover the amount actually paid, without allowing the vender of the goods reasonable compensation for the use of, depreciation, and willful or negligent damage to the article purchased, while in his hands. Facts: The minor was 16 years of age at the time of purchase and used the vehicle for nine months without incident. After nine months, the vehicle had mechanical problems, but the minor continued to drive the truck until the truck's engine "blew up" and the truck became inoperable. At the time of the purchase, there was no inquiry by defendant sellers and no misrepresentation by plaintiff minor concerning his minority. Based on previous common-law decisions, the trial court reluctantly granted rescission of the contract.

Feld v. Henry S. Levy & Sons, Inc. (p. 482)

Rule: N.Y. U.C.C. § 1-203 states that every output contract imposes an obligation of good faith in its performance. The commercial background and intent must be read into the language of any agreement and good faith is demanded in the performance of that and, it is the general rule that good faith cessation of production terminates any further obligations thereunder and excuses further performance by the party discontinuing production. Facts: Plaintiff operated a wholesale bread baking business. The parties entered into a written contract in which defendant agreed to sell and plaintiff agreed to purchase all the bread crumbs produced by defendant. There was a cancellation clause in the contract that required six months notice to the other party. After making the agreement, a substantial quantity of bread crumbs was sold by defendant to plaintiff, but defendant stopped its bread crumb production because the contract was unprofitable. Plaintiff sued to compel defendant to complete the contract. The trial court ruled that economic feasibility was not a factor that justified cancellation of the contract without notice. The appellate courts agreed. On appeal, the court affirmed.

Truman L. Flatt & Sons Co. v. Schupf (p. 554)

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.

Valley Medical Specialists v. Farber (p. 360)

Rule: Public policy requires that restrictive covenants between physicians be strictly scrutinized for reasonableness.

Leibel v. Raynor Manufacturing Co. (p. 463)

Rule: Reasonable notification is required in order to terminate an on-going oral agreement for the sale of goods in a relationship of manufacturer-supplier and dealer-distributor or franchisee. Facts: Appellant sought review of the summary judgment dismissing one count of appellant's complaint, in an action brought by appellant following the termination, by appellee, of appellant's dealer-distributorship agreement. The court vacated the judgment and remanded the case. The court held that reasonable notification was required in order to terminate an on-going oral agreement for the sale of goods in a relationship of manufacturer-supplier, dealer-distributor, or franchisee. The court also held that appellant's distributorship agreement should have been recognized as an agreement for the sale of goods and subject to provisions of U.C.C. art. 2.

Sedmak v. Charlie's Chevrolet (p. 761)

Rule: The court sustains the judgment of the trial court unless the judgment is not supported by substantial evidence, unless it is against the weight of the evidence or unless it erroneously declares or applies the law. In conducting the court's review, the court does not judge the credibility of witnesses. That task quite properly rests with the trial court. Fed. R. Civ. P. 73.01(c) (2). Facts: Plaintiffs sued defendant on a contract for the purchase of a car. The trial court ordered defendant to specifically perform on the contract. Defendant contended that (1) the existence of an oral contract was not supported by the credible evidence; (2) if an oral contract existed, it was unenforceable because of the Statute of Frauds; and (3) specific performance was an improper remedy because plaintiffs did not show their legal remedies were inadequate. The court affirmed, holding that failure to specify the selling price did not render the contract void or voidable.

Alaska Packers' Association v. Domenico (p. 179)

Rule: 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. (Preexisting Duty Rule) Facts: Sailors who agreed to work for a company refused to adhere to the orig. contract terms and demanded increased compensation.

Sumerel v. Goodyear (p. 322)

Rule: There is no offer properly capable of acceptance where the purported offeree knows or has reason to know that the person making the purported offer does not intend to conclude a bargain until he has made a further manifestation of assent. Indeed, if the addressee of a proposal has reason to know that no offer is intended, there is no offer even though he understands it to be an offer. Reason to know depends not only on the words or other conduct, but also on the circumstances, including previous communications of the parties and the usages of their community or line of business. Thus, it has been held that a letter proposing to supply certain goods but recognizing that further negotiations between the parties were necessary did not constitute an offer capable of acceptance. Instead, it constituted preliminary negotiations soliciting an offer from the opposing party. Facts: The consumers prevailed in a products liability suit against the tire company and were awarded prejudgment interest. A discrepancy arose when counsel for the respective parties tried to calculate the total judgment amount. Defense counsel sent an e-mail message setting forth his calculation and asked plaintiffs' counsel to contact him to discuss it. Noting an error in the calculation that resulted an overstatement of damages by more than $550,000, plaintiffs' counsel deemed the e-mail to be a settlement offer, accepted it, and thereafter filed a motion to enforce.

Ramirez v. Autosport (p. 542)

Rule: To the extent that a buyer can reject goods for any nonconformity, the New Jersey Uniform Commercial Code, N.J. Stat. Ann. § 12A:1-101 et seq., retains the perfect tender rule. N.J. Stat. Ann. § 12A:2-106 states that goods conform to a contract when they are in accordance with the obligations under the contract. Facts: A buyer agreed to buy a camper van from a seller. The buyer sought the rescission of the sale for the van. The seller argued that the buyer had breached a contract for the sale of a camper van by rejecting the tender of the van because it had minor defects, and that the buyer was not entitled to rescind the contract. The trial court held that the buyer rightfully rejected tender of a defective van under New Jersey Uniform Commercial Code and awarded plaintiffs the fair market value of their trade-in. The case was appealed.

Williams v. Walker-Thomas Furniture Co. (p. 336)

Rule: When an element of unconscionability is present at the time of contract formation, the resulting contract is not enforceable.

Frigaliment Importing Co. v. B.N.S. International Sales Corp. (p. 424)

Rule: When one of the parties is not a member of the trade or other circle, his acceptance of the standard must be made to appear by proving either that he had actual knowledge of the usage or that the usage is so generally known in the community that his actual individual knowledge of it may be inferred. Facts: Defendant state sales corporation had two contracts with plaintiff foreign corporation for the sale of "chicken". After plaintiff received one shipment of stewing chicken and another was stopped, plaintiff brought a breach of warranty action, alleging that the goods sold should have corresponded to the description because the chicken was not suitable for broiling and frying. Plaintiff says 'chicken' means a young chicken, suitable for broiling and frying. CHICKEN CASE

Odorizzi v. Bloomfield School District (p. 265)

Rule: Where a dominant party to a transaction uses excessive pressure to persuade a party whose weakened mental state makes him especially susceptible to persuasion, the weaker party may rescind the agreement as obtained by undue influence.

Jacob & Youngs, Inc. v. Kent (p. 517)

Rule: Where, by inadvertence or mistake, a minor deviation has been made by a building contractor in the use of pipe, which involves no damage to the owner, and the latter takes possession of and continues to use the building without seeking to disturb in any respect the work done by the contractor, the latter in an action to recover a balance due is entitled to prove that he had substantially performed; that the owner suffered no damage through such innocent mistake, and that what the owner received is what he had the right to expect to get under his contract. Facts: Plaintiff brought action to recover the balance of $ 3,483.46 due upon a building contract. Plaintiff alleged that he had duly performed all the terms and conditions of the contract. However, the contract specifications provided that all wrought iron pipe should be a grade known as "Standard pipe" of "Reading" manufacture. A small amount of the iron pipe was of another manufacture. Plaintiff claimed that it had substantially performed the contract, but that through mistake and inadvertence, and not willfully, a minor deviation had been made through which defendant suffered no damage. The trial court entered judgment for defendant based on a directed verdict. The case was appealed.

Bayliner Marine Corp. v. Crow (p. 473)

Rule:Va. Code Ann. § 8.2-314 provides that, in all contracts for the sale of goods by a merchant, a warranty is implied that the goods are merchantable. In order to prove that a product is not merchantable, the complaining party must first establish the standard of merchantability in the trade. Facts: An individual bought a sport fishing boat from a manufacturer. Unhappy with the performance and the low speed of the boat, he returned the boat and filed a case against the manufacturer. The buyer argued that the particular purpose for which the boat was intended was use as an offshore fishing boat capable of traveling at a maximum speed of 30 miles per hour, which the boat was not doing. The trial court held that the manufacturer breached an express warranty and implied warranties of merchantability and fitness for a particular purpose to the buyer. On appeal to the Supreme Court of Virginia, the manufacturer alleged that there was insufficient evidence to support the lower court's ruling.

Karimi v. 401 North Wabash Venture (p. 742)

Summary: Liquidated damages provision in condominium purchase agreement (with purchase price of $2.188 million), which allowed seller to retain an amount equal to earnest money deposit (which was 15% of purchase price) is an enforceable penalty. Seller sent buyers a letter terminating the contract after sale did not close by agreed extended date for closing, and seller sold the unit to a third party. Liquidated damages in amount of 15% of purchase price is a reasonable amount, considering the potential loss each party faced at time of contracting, and both parties agreed to accept the inherent risk that the set amount could exceed actual damages.

Tierney v. Four H Land Company Limited Partnership (p. 774)

Summary: Specific performance was an appropriate remedy for Four H's and Westerns breach and the Court should have ordered it. Reverse the district court and remand the cause. Facts/Background: James Tierney and Jeffrey Tierney brought this action against Four H Land Company Limited Partnership (Four H Land); Western Engineering Company, Inc. (Western Engineering); Frank Aloi, trustee of the Aloi Living Trust; and the Aloi Living Trust (collectively the defendants) to compel them to lower the elevation of a lakeside housing development adjoining the Tierneys' land. The district court granted summary judgment in favor of the defendants, and the Tierneys appealed. While their appeal was pending, the Tierneys discovered that the district court judge who issued the order harbored a personal prejudice against their attorney. We reverse, and remand with directions.

Trademark Properties v. A&E Television Networks

This case involves a substantial business deal that the parties never reduced to a written agreement. The parties produced an entire season of the TV show before their disagreement over how to compensate the creator of the series led to a parting of the ways. Summary: Davis, "a flipper", conceived the idea for a flipping TV show. He said he would assume all financial risk of real estate and split the profit 50/50 to which A&E director, Nordlander, said "ok ok I get it." They confirmed the terms of the contract and began filming after getting board approval. The oral agreement fell apart because they could not agree on compensation. Davis signed with another company and A&E continued to film his show. Davis sued for breach of contract.. A&E denied ever being in a contract. Davis won and was awarded half of the revenue. Appealed. Davis understood the statement as acceptance, a contract was formed. The two extensively negotiated and Nordlander never specified an issue with the revenue split. Affirmed.

Wood v. Boynton (p. 317)

Wood brought stone to D, a jeweler, to have it appraised. Pl eventually sold it for $1 and then found out it was an uncut diamond. D honestly didn't know what it was. Ct. says that because there's no evidence of bad faith or fraud, the K will stand. Pl simply made a bad bargain, and Ct. won't step in to fix that.