Gordley- Contracts 1Cases 2015

Beanstalk Group, Inc. v. AM General Corp.

AM manufactured Hummer. Beanstalk was its exclusive agent, entitled to 35% commission. AM joined entered into joint venture, GM acquired Hummer trademark. Beanstalk sued for commission. Court held for AM General. Contra terms of contract against the drafter (Beanstalk). If you drafted the document and you left it ambiguous you should've done a better job.

Lonergan v. Scolnick

Ad in newspaper: buyer shows interest: seller responds, saying it's a form letter: buyer responds, "should I desire to buy": seller tells buyer deal sounds good but buyer must act fast as seller is dealing with many potential buyers: sellers sells to another buyer: no firm offer existed

Dougherty v. Salt

Aunt visited her nephew. Issued him a promissory note for $3K payable at her death. Contained the words "value received". Held not enforceable b/c no consideration and was a donative promise. There was no value received. Although a note states that value has been received, if value has not in fact been received, the note is unenforceable as a contract for lack of consideration

Batsakis v. Demotsis

Batsakis (P) & Demotsis (D) made in agreement in 1942 in which D received $2k from P and agreed to repay it w/ 8% interest. D only received 500k drachmae valued at $25. P filed suit to recover principal & interest. Court held D received what she contracted for. The man who loaned her the money did not create the problem, he was not the source of the threat so no duress. Now we would say it was unconscionable.

Morin Building Products Co. v. Baystone Construction

Baystone hired to build an addition to Chevy plant. Hired Morin to supply and erect aluminum walls. Specific siding of walls was required. Work was subject to final approval of GM. GM rejected walls by Morin. Baystone hired another subcontractor to replace walls. GM approved new siding. BAystone refused to pay Morin. Court held for Morin. A reasonable person would've been satisfied with the work done and the rejection was done in bad faith. Subjective v. Objective

Clark v. West

Clark agreed to write series of law books for West for $3k/yr. Contract included clause where Clark promised to abstain from drinking in order to get more than $2 a page. Clark completed book. West refused to pay Clark more than $2/pg b/c Clark did not abstain from drinking. P said D waived objection. Court held abstention was not part of basic consideration bargain but rather a condition precedent to the payment of the additional $4 per page. A condition precedent can be waived, once waived it cannot be revived. West waived a condition, the work didn't change.

Lingenfelder v. Wainwright Brewery

Company entered into contract w/ architect for brewery. Architect also owned refrigeration company. Company awarded refrigerating plant portion of brewery to architect's competitor. Architect said would no longer work. In order to keep him, company promised 5% increase if resumed work. Court held that 2nd promise lacked consideration. Architect was obligated to finish the brewery under the original contract.

Kutzin v. Pine

Contract to sell a house. buyers breach. have given a deposit. Issue is whether breaching party was entitled to benefit conferred on them when they sold the house to someone else.

Walker & Co. v. Harrison

Contracted to have sign installed. monthly payments were to be made of $149.50 per month. Maintenance was to be done on sign as deemed necessary. Someone threw tomato on sign, there were cobwebs, and rust. D contacted company to fix, but got no response. D said would stop paying if didn't come fix sign. P didn't fix sign. P sued. Court held a party may only repudiate an agreement when there has been a material breach of the contract by the other party. There was no material breach here.

Wood v. Lucy, Lady Duff-Gordon

D contracted to give P exclusive right to market & license all of her designs and endorse w/ her name. Split profits. No express clause stating he would perform. D placed endorsements on clothes w/o P's knowledge. P sued. Court held for Wood. There was an implied promise.

Aiello Construction Inc. v. Nationwide Tractor Trailer Training

D contracted to have P level a gravel yard for use in D's business. Installment contract totaling $33k. D paid 1st installment, but not any after that. D made partial payments totaling $10,500. P brought suit. Court awarded P based on reimbursement expenditures already made, minus D's previous payments as well as the profit it would've realized for full performance plus interest.

U.S. v. Algernon

D had contract w/ U.S. to construct naval hospital. D contracted w/ P to perform steel erection. P began performance. D refused to pay for crane rental. P terminated performance after completing 28% of subcontract. D completed job w/ another subcontractor. P sued to recover for labor done. Court held P had right to recover for value of performance already completed.

Kirksey v. Kirksey

D offered P a home on his property and P accepted. P moved 60 miles and lived in D's home for 2 yrs. Later D forced P to relocate to remote location and later demanded she leave altogether. P sued. Court held gratuitous promise not enforceable even if a party has reasonably relied on that promise. (case was before promissory reliance doctrine)

Chouinard v. Chouinard

Dispute over how much of Arc Comm. each person owned. Arc got into financial difficulties b/c of Fred. Fred obtained financing but company said would not make loan until ownership problem fixed. Fred paid Ed & Al $95 in promissory notes in exchange for them giving up their ownership rights. Fred brought suit to set promissory notes aside. Court said no duress b/c no wrongful act by D's. Mere hard bargaining is not duress.

Louise Caroline Nursing Home, Inc. v. Dix Construction Co.

Dix didn't finish the work: court gave Louise no damages because the cost of completion was less than the unpaid contract price

Embry v. Hargadine, McKittrick Dry Goods

Embry was an employee who's employment ended in December. Met w/ boss and said he would seek work elsewhere unless contract renewed. Boss told him not to worry. Emery was let go in February. Court held a reasonable person would've taken boss's words to be an employment contract.

Weaver v. American Oil Co.

Exculpatory clause in contract saying American Oil would not be liable for any negligence by their own employees. Weaver was a gas station employee who didn't even complete high school. Nothing indicated Weaver read the contract or was aware of the "hold harmless" clause. Court said clause unenforceable. American oil can bear the risk much cheaper than Weaver can. Weaver's "eyes were not open". Contract should put the risk on the party that can bear it the most cheaply.

Feinberg v. Pfeiffer Co.

Feinberg worked for Pfeiffer for 37 yrs. Increased her salary and offered her $200 per month for life after retirement. Feinberg retired a yr and a half later and received the money several yrs after. Later new prez notified Feinberg payments would reduce to $100 and that they were just gratuities. Feinberg sued. Court held a gratuitous promise is enforceable if the promisee justifiably relies on the promise.

Foakes v. Beer

Foakes (P) owed Beer(D) money. Parties agreed if Foakes pays Beer 500 lbs at once and gives remaining principle in installments, Beer would forgive interest on the debt. Beer brings suit, alleging no consideration. Court held D not bound unless consideration. Payment for a lesser amount cannot serve as satisfaction of a larger amount.

Shirley MacLaine Parker v. Twentieth Century Fox Film Corp.

Fox cancels Bloomer Girl musical but offers Big Country western, but with less artistic control and not shot in L.A. but in Australia, she refuses: court says okay as Big Country is different and inferior: dissent says difference and inferiority were matters for the jury

Peevyhouse v. Garland Coal & Mining Co.

Garland promised the landowner to restore the land after the mining, didn't do it, cost of completion = $29,000, change in property value = $300: court gave change in value as two values were grossly disproportionate

Harris v. Time Inc.

Joshua received letter from Time. Offer for a free calculator was visible through envelope. calculator actually only available w/ paid subscription to Fortune magazine. Joshua demanded calculator w/o subscription. Joshua sued. Court said Time is incorrect that the act of opening the envelope was valueless and therefore inadequate consideration. Also said this lawsuit was waste of judicial resources.

Angel v. Murray

Maher was garbage collector. Agreed on 5 yr contract for $137k. # of homes from which Maher collected increased unexpectedly by 20%. Maher requested an additional $10k. City Council accepted. Angel filed suit to get back $20k in excess of original contract. Court held for Maher. Modification was in good faith and obtained w/o extortion. The events were not anticipated or foreseeable at time contract was made. Other party voluntarily agreed to pay additional compensation.

Mattei v. Hopper

Mattei (P) sought to purchase property for shopping center from Hopper (D). D offered to sell for $57,500. Under agreement, P required to deposit $1k w/ real estate agent and had 120 days to examine title. At end of 120 days purchase price due. Personal satisfaction clause included excusing P from performance if unable to arrange satisfactory leases of space. Before 120 days up, D said wouldn't sell land. P sued. Court held for Mattei. The contract was neither illusory nor lacking mutuality.

Kenford CO. v. Erie County

NY domed stadium after Astrodome, despite extensive expert testimony court said too many assumptions had to be made andd damages estimates were too speculative - no damages - also, "rational" is not good enough but "reasonably certain" and directly traceable to breach

Office Pavilion S. Florida, inc. v. Asal prods.

Office Pavilion distributes office supplies & furniture. Asal is office supply wholesaler. Asal negotiated contract for keyboard w/ Pavilion. Contract said Pavilion would provide within 30 days as many keyboards as Asal ordered up to max of 2k/mo. Asal required to order 1k units per year. Asal wanted to amend contract to include chairs. Parties agreed. Delivery & quantity terms not specified! Asal ordered 2,48- chairs. Pavilion informed Asal would not fulfill order. Court held not enforceable b/c acceptance involved no promised performance and therefore didn't constitute consideration to support the contract modification for the chairs.

Osteen v. Johnson

Ostend paid Johnson $2,500. Johnson agreed to promote Osteen's daughter for a period of 1 yr as a singer/composer. Osteen's daughter made a record. Of 1,000 record made, Johnson sent 340 to DJ's. Also promoted daughter nationwide through mailings and other ads. Osteen sued. Court held D should return $2500 fee minus the actual benefit his actions provided.

Williams v. Walker-Thomas Furniture

P entered into installment contracts with D for purchase of household goods. Buyer was not wealthy. Contract stated if you default on 1 payment, they will repossess everything she ever bought regardless of how much had been actually paid off. Court held there was a lack of bargaining power held by P and unreasonable terms in the contract. Was remanded to determine if unconscionable.

Walgreen Co. v. Sara Creek Property Co.

P had 30 yr lease with D. Lease contained exclusivity clause to prevent D prom leasing to another pharmacy. D wanted to bring in a pharmacy. P sued for BOC. Court held a damages remedy for the remainder of the lease would be highly speculative and costly to determine, and if cost to P were higher than D's costs as the result of the injunction, then the market would resolve the problem. Specific Performance here.

Security Stove & MFG Co. v. American Rys. Express Co.

P manufactured furnace equipped w/ special combo oil & gas burner. P wanted show product at trade show. D agreed to transport furnace. D failed to deliver 1 of the packages (the one w/ the new innovation). P sued D for breach. Court held D had notice of peculiar circumstances under which the shipment was made and that delay in delivery would result in unusual losses for P. May be entitled to reliance damages.

London Bucket Co. v. Stewart

P sued D on contract to install a heating system. P said installation was incomplete and a bad job. P wanted specific performance and $8,250 in damages. P later dropped damages. Court said general rule is that building construction contracts will not be specifically enforced b/c ordinary damages are an adequate remedy.

Ganley v. G & W Limited Partnership

P was a broker. P's commission negotiated after P procured buyer. D's agreed to accept offer on condition that P accept 4% commission instead of previously discussed 8%. P responded w/ silence. Court found P had agreed to 4% by silence b/c duty to speak had arisen.

Gray v. Martino

P was police office. possessed knowledge concerning the theft of certain diamonds & jewelry of the D, who had advertised an award for the recovery of the property. D agreed to pay P $500 if he could find the thieves. P brought suit to recover award. Court held P can't get the reward b/c of pre-existing legal duty.

Lucy v. Zehmer

Parties were at a bar, contracted to sell farm to Lucy for $50k. Zehmer later said he was intoxicated and thought deal was a joke. Wife signed the agreement too. Zehmer said he was bluffing to get Lucy to admit he didn't have $50k. Court said Zehmer's acts and words could reasonably be interpreted by Lucy as an offer to sell his farm.

Raffles v. Wichelhaus

Raffles sells Wichelhaus cotton from the ship Peerless: Raffles thinks ship Peerless coming in Dec., Wichelhaus ship Peerless coming in Oct.: no contract

1484-Eight & Millis Mgt Corp. v. Joppich

Real estate contract that included a $10 option. Joppich never paid the $10 option. Court said failure to deliver nominal consideration recited in an option contract does not preclude its enforcement.

Post v. Jones

Richmond was a cargo full of whale oil. Cargo was run aground. Other ships appeared days later. Bidding began on oil and the other ships took as much oil as they could. Court said a contract where you have no choice but to submit to the vendor and take what is offered or get nothing is not a valid contract.

Spaulding v. Morse

Ruth & George got a divorce. Created a trust for their kids to support in college. one kid went into army after high school. Ruth sued George for funds to provide for kid's college education even though he was in military, not college. Court held kid's education was interrupted by being in military and George not required to pay while in the army.

Mills v. Wyman

Son returned from voyage at sea and became sick. Mills gave the son shelter and comfort until death. After death, the father wrote to Mills and told him he would pay for the expenses. Father later refused to pay. Mills sued. Court said it was past consideration and there was no reliance. Father had no duty to support his son since he was 25.

Morales v. Sun Constructors, Inc.

Spanish-speaking welder required to sign agreement given in English. Sun had bilingual employee translate. Morals understood 85%. There was an arbitration clause. Morales was fired. Morales brought suit for wrongful termination. Court held this was a valid contract.

Transatlantic Financing Corp. v. United States

Suez Canal crisis made voyage more costly to shipper who had to go through Cape of Good Hope: enforceable as "more difficult" is not impracticable, and shipper knew situation was risky and made contract anyway, was better able to bear it

Linder v. Mid-Continent Petroleum Corp.

Terminating lease w/o notice is not consideration. Here, 10 day notice is enough for consideration.

Donovan v. RRL Corp.

Typo in newspaper for an ad for a used sapphire blue jaguar. P attempted to buy vehicle for advertised price ($26k). D refused to sell at that price. Meant to have price be $38k. Court said this was a mechanical error, not an error in judgment so held ad was not enforceable. The mistake was made in good faith.

Hamer v. Sidway

Uncle & nephew agreed that the uncle would pay his nephew $5k if nephew would refrain from drinking, using tobacco, swearing, and gambling until he turned 21. When nephew turned 21 uncle sent him a letter saying he earned it and would hold money w/ interest until nephew was responsible to care for it. Nephew accepted. Uncle died w/o transferring funds. Nephew assigned funds to Hamer who sued executor of estate. Court held under the bargain test for consideration, P's forbearance was arguably both a benefit to D and a detriment to P. D benefited by having his nephew refrain from certain conduct and P suffered a detriment by denying himself the enjoyment of that conduct.

Maxwell v. Fidelity Financial Services

Water heater was purchased by Maxwell for $6,512. Never functioned properly. Purchase was financed through a loan from Fidelity which was $15k including interest. Lien was put on water heater and Maxwell's house. Payments were made on water heater despite it not working. Maxwell's took out 2nd loan. Continued to make payments until 1990. Court held substantively unconscionable and possibly procedurally. Price could be considered grossly excessive. Gordley said maybe shouldn't be unconscionable b/c could've checked prices of other water heaters. Question mark on this case.

Webb v. McGowin

Webb & McGowin worked at a mill. Webb was releasing a 75 pound block of wood to the floor when he noticed McGowin standing where block would've fallen. Webb chose to fall w/ the block in order to save McGowin's life, leaving him permanently crippled. McGowin promised to pay Webb $15 every 2 weeks for rest of Webb's life. Webb received payments until McGowin died 8 yrs later. Webb sued. Court held enforceable b/c McGowin received a material benefit. McGowin became morally bound. Otherwise would be unjust enrichment

Schell v. Nell

Wife's will named 3 beneficiaries to give each $200 upon death. Consideration stated was wife's love & 1 cent. One of the beneficiaries sued husband for nonpayment. Court held not sufficient consideration and husband had no legal obligation to honor wife's request.

Vertex, Inc. v. City of Waterbury

Year 2000 Problem. Unjust enrichment

Rhode Island Dep't of Transportation v. Providence & Worcester R.R.

acceptance by state to buy property w/ railroad track on it that relieved the train company of the obligation to remove the track conferred a benefit on the company and the other changes were immaterial

Lefkowitz v. Great Minneapolis Surplus Store

ad stated that first three people to come to store could buy a mink coat for $1: offer existed as sufficiently detailed

Academy Chicago Publishers v. Cheever

contract for book didn't include number of pages or stories, date for completion, etc. that was material to performance: no contract

Rockingham County v. Luten Bridge Co.

county cancels bridge construction contract, Luten keeps building, incurring costs: court gave it damages only for what it'd done before cancellation

Klockner v. Green

fact that two people would've cared for old lady even if she hadn't promised them money is no reason why they shouldn't recover the money

Ardente v. Horan

guy agrees to buy house, but in letter says needs furniture as well: court says counteroffer

Kukuska v. Home Mut. Hail-Tornado Ins. Co.

guy applies for insurance and insurance company takes his application money and sits silent during hail season, then rejects on day of big hail storms which destroy his crops: court found silent assent and enforced

Hoffman v. Red Owl Stores, Inc.

guy did everything Red Owl told him to do to get his store, taking on loans and such, then they told him he wouldn't get a store: court said promissory estoppel can apply to preliminary agreements that are still too vague to be considered enforceable contracts and whacked Red Owl with damages

Wired Music v. Clark

guy orders music service, moves, replacement tenant wants to take over contract but has to pay more: court gave damages equal to the value of the rest of the first contract as Wired was a lost volume seller and would've had two contracts instead of just one

Hutchinson v. Tompkins

guy pays $10k deposit on $125k house - hard at start, easy at end: court says okay as limiting damages at deposit amount provides both parties with certainty about transaction, because otherwise it could be large or volatile

Taylor v. Caldwell

guy rents music hall for concert but it burns down: not enforceable as both parties assumed its not burning down

Dickinson v. Dodds

guy tries to tender acceptance within specified time offer was to remain open, knowing from other people that offeror had revoked his offer: acceptance no good, revocation good

Akers v. J.B. Sedberry

guys offer resignation in conversation, boss rejects, conversation ends, boss accepts: too late

Lenawee County Board of Health v. Messerly

home sold as-is as rental unit but inhabitable: enforceable. court found that the risk should be allocated to purchasers, who bought the property "as is" and had adequate opportunity to inspect the property

Channel Home Centers v. Grossman

if there is an intention to bind two parties in a preliminary agreement to negotiate in good faith, as opposed to wanting to remain completely free, then the terms of that initial agreement form a contract. If later, the parties can't in good faith agree to a complete contract, then they can call it off, but if one party acts in bad faith to cancel the agreement, then he can be bound to it or be forced to pay damages

Lee Oldmobile Inc. v. Kaiden

lady puts down $5k deposit on $30k car: despite good faith, deal breaks down and she breaches by canceling: Lee keeps deposit as liquidated damages - hard at start, easy at end: court says not okay as deposit amount wasn't an estimate of what damages would be, because Lee knew at the time of the contract what they would more likely be

Wasserman's Inc. v. Middletown

liquidated damages were based on gross revenue instead of net revenue: court said if mistake then okay but the court will then enforce the net revenue and not the gross, but if guy meant gross then not okay as penalty and not reasonable estimate of real damages

Hadley v. Baxendale

mill shaft breaks, guy tells shipper mill stopped but court ignores this fact and pretends he didn't, but also says hurry, shipper misships and replacement arrives late, guy seeks damages for consequential damages of lost profit from idle factory in interim: court says consequential damages must be foreseeable at K creation and these weren't so no damages: but perhaps rule is first fact wasn't ignored and although they were foreseeable they were disproportionate and so no damages

Contemporary Mission v. Famous Music Corp.

music company knew probabilities of a song reaching various levels in the charts if it made it to the top 60 and wanted to estimate based on those probabilities and average profit from each level what damages would be: court said okay

Nursing Care Services Inc. v. Dobos

old lady put in hospital in emergency, doctors save her, and she has at-home care as well, she thought Medicare would cover it, but it won't: court said there was no express contract or contract implied-in-fact but one implied-in-law under the emergency rule for the in-hospital care, and the third rule for the at-home care, as Nursing's usual fees were known - otherwise Dobos would get unjust enrichment - but what about this case, when she knew money had to be paid but thought another was going to pay it?

Sherwood v. Walker

parties thought cow was barren - beef cow - but it turned out to be fertile - breeding cow: not enforceable as difference went to the substance of the deal - buying and selling a beef cow; dissent: buyer thought cow was fertile, so that was not substance of the deal, so enforceable

Rombola v. Cosindas

really good race horse hadn't run in a while: court estimated with average money horse had won in past years from racing and gave damages

Krell v. Henry

room sold to watch coronation before it was cancelled: not enforceable as changed circumstances went to heart of deal

Ragosta v. Wilder

seller wants to sell "The Fork Shop" and tells buyer he will sell to him if he goes to the bank and gives him the money; buyer secures a loan: court says loan was preparation, not beginning of performance

Vogt v. Madden

sharecropper had contracted twice with landowner to work land for one year and then wanted to work a third year, but didn't contract and landowner was silent: court said no assent as there hadn't been past dealings as each year the parties had contracted anew

Kofus (sugar case)

sugar boat comes in late to harbor and prices have fallen as part of usual fluctuation: captain wasn't given specific date to arrive on but court said he could've thought about it, and, if he had he would have realized that there was an even 50-50 probability of prices going down: court held that 50% probability is reasonably foreseeable, and that 25% probability likely also would have been foreseeable enough

Bishop v. Eaton

two parties very far apart, offeror promises offeree to pay him back if he will help out offeror's brother, offeree does so and mails a letter telling offeror of it but the letter never arrives: court said that offeree had done his part - mailbox rule

Drennan v. Star Paving Co.

winning general contractor relied on subcontractor's bid in making his own: sub's bid enforceable because general is now bound to the numbers in sub's bid