Contracts final

Parker v. 20th Century-Fox Films

"Bloomer Girl" was a musical that was going to be filmed in California and it was a women's progressive film "Big Country, Big man" was a western film and was going to be filmed in Australia Produces say she had the duty to mitigate by accepting the substitute offer-- court doesn't agree Duty to mitigate has to be substantially similar; can't have professor be security guard instead for same amount bc it's not substantially similar Duty to mitigate- not to create additional damages that could have been avoided

Consideration

"Quid Pro Quo"- Something for something else Two sides have to be doing something- if it's only one, it's a gift

Expectation damages

"To put the P in as good a position as he would have been in had the D kept his contract" Expectation damages are meant to both compensate the victim of a broken contract for their losses and to place them in the position they would have been in if the contract were completed. Difference between if performed profit and where you're left

Day v. Canton

"When one stands in silence and sees valuable services rendered upon his real estate... such silence, accompanied with the knowledge on his part that the party rendering the services expects payment therefore, may fairly be treated as evidence of an acceptance of it, and as tending to show an agreement to pay for it"

Mutual Assent

"meeting of the minds"-- shared understanding as to what was agreed upon; offer and acceptance

3 DIFFERENT CLAIMS

- Breach of contract - Restatement 90- Hoffman v. Red Owl - Implied in law contract/ Restitution claim

Where forms do not match, common law and UCC handle the issue entirely different

- Common law= mirror image rule- you need identical forms; if there is no meeting of the minds under the mirror image rule, common law says no contract - UCC= even if form 1 and form 2 disagree, you can still have a contract; not stuck by the mirror image rule; applies to the sale of goods (merchants and non-merchants although some sections within it only applies to merchants like 2-207(2)); if any apply from 2-207(2), have to go to 2-207(3)

2.5 types of contracts

- Express- clear specific moment you can turn to that would be the offer and a clear specific moment you can turn to that would be the acceptance (Lucy v. Zehmer and Meyer v. Uber) - Implied-in-fact- course of dealing/ repeated tacit understanding; never said/wrote words, but one could infer an agreement- ex: common law marriage- no official offer and acceptance, but over time, one can assume you are in a relationship, share $, etc. - Implied-in-law- not really a contract

UCC §2-207. Additional terms in acceptance or confirmation

1. You don't have the mirror image rule under the UCC, unless acceptance is expressly made conditional on assent to the additional or different terms- very rare that this will apply to a large company bc they will know- mirror image rule out the window unless expressly mentioned otherwise 2. When party 2 responds, party 2 might have terms that didn't appear originally; only "merchants" (regularly sells goods of the same kind)-- party 2 is now able to sneak their terms in unless 1 of 3 things happens (a) Expressly limits acceptance to the terms of the offer (b) They materially alter it (c) Notification of objection to them has already been given or is given within a reasonable time after notice of terms is received 3. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of the act Custom usage course of dealing- have these companies done business before? If not, what is common in this type of trade?

Commerce & Industry Insurance v. Bayer

2 forms don't match 1 has arbitration, 1 doesn't- don't agree on arbitration How do we choose the terms if there is a disagreement? -Custom usage course of dealing--Arbitration is a usual course of dealing with these issues

Limitation of Recovery: Foreseeability

A breaching party is responsible for paying only those losses that were foreseeable to them at the time of the contracting. A loss is foreseeable if it would ordinarily be expected to result from a breach or if the breaching party had reason to know of particular circumstances that would make the loss likely

Humetrix v. Gemplus

A consulting company sued a foreign manufacturer of data storage card technology and a foreign holder of a data storage card trademark for alleged misconduct arising from the failure to consummate a partnership agreement. The consulting company alleged that the manufacturer breached the agreement to provide data storage technology which the company intended to market to the healthcare industry. Both federal and California state courts recognize that lost profits are necessarily an estimate, and that their amount cannot be shown with mathematical precision. The court upholds awards of lost profit damages so long as they are supported by substantial evidence.

Limitation on the Recovery: Certainty

A party can recover damages only for those losses that he can prove with reasonable certainty. Losses that are purely speculative are not recoverable

Sullivan v. O'Connor

A surgeon performed plastic surgery upon a patient's nose two times. Dissatisfied with the results because the surgery disfigured and deformed her nose, she sued for breach of a contract to improve her appearance. Not like Hawkins bc no promise of a "100% perfect nose"-- not expectation damages RELIANCE INTEREST- Is appropriate in this case- from where you started to where you ended up In this case, big nose (before surgery) to nose as a result of the surgery

PFT Roberson v. Volvo Trucks

A truck fleet operator and truck company and a related transportation services company entered into negotiations concerning a fleet agreement. Although a number of lengthy draft agreements were exchanged, none of them were ever signed. Because there were still negotiations to be made, there was not definitive enough to be a contract-- common practice in the industry Just a mere invitation You can't accept an invitation, you can only accept an offer; if it is not clear, definite, or explicit, it's not an offer, it is just an invitation

Morrison v. Thoelke - MAIL BOX RULE

An acceptance is effective upon mailing, and not upon receipt. Acceptance as soon as it's put in the mail- binding agreement Takeaway: -Under the common law, the moment you put something in the mailbox, it's accepted -Once you accept/put it in the mail you CAN'T REJECT

UCC Doctrine of Accord and Satisfaction

An agreement (accord) between two contracting parties to accept alternate performance to discharge a preexisting duty between them and the subsequent performance (satisfaction) of that agreement. General rule/ principle of accord and satisfaction- if there is a good faith dispute between buyer and seller and the parties agree to accept a good faith lesser amount, that is accord and satisfaction and new consideration

Option contract (1 exception to the general rule that the offeror can revoke an offer any time prior to acceptance)

An agreement in which the offeror promises not to revoke an offer in return for the offeree providing consideration

(LIRR)- Revocation

An annulment or cancellation of a statement or agreement. In the context of contracts, revocation may refer to the offeror canceling an offer. General rule exceptions: Option contract Firm offer rule (UCC) Partial performance

(LIRR)- Rejection

An offer terminates if the offeree receives the offer and rejects it. Once the offeree rejects the offer, she cannot come back later and accept the offer. Any attempt to do so may constitute a new offer to the original offeror Common law- mirror image rule V. UCC- UCC §2-207 "Battle of the forms" It's very different:

Equitable Remedies

Any form of relief that does not involve a request for monetary damages Generally we award $ as damages, but not always true- specific performance Injunction- what P really wants based on the breach is not $, but want D to perform

United States v. Algernon Blair

Blair had entered into a contract to construct a naval hospital and had contracted with Coastal for steel erection and equipment supply. Coastal supplied its own cranes for handling and placing steel. Blair refused to pay for crane rental, claiming it was not obligated to do so, and Coastal stopped work. Blair then hired a new subcontractor to complete the job, and Coastal brought suit to recover for labor and equipment furnished. - Expectation damages= difference between what was promised and what was given - Reliance= from where you started to where you ended up Generally, P will want expectation damages, but in this case, where expectation damages turn out less, court can award restitution damages

Britton v. Turner

Britton (plaintiff) agreed to work for Turner (defendant) for one year for the sum of $120. After nine and a half months, Britton stopped working for Turner, without Turner's consent. Upon Turner's refusal to pay for the work completed, Britton sued Turner alleging, among other things, a claim for quantum meruit. Normal form of damages for breach of contract- expectation damages Expectation damages= won't get anything bc P breached, prefer restitution damages

Forbearance as Consideration & the Illusory Promise

Consideration doctrine requires each party to surrender his or her free will in some meaningful way by either 1- doing (or not doing) something or 2- promising to do (or not do) something But what if a party makes a promise and reserves the right to change their mind? Illusory promise- a promise that is unenforceable due to indefiniteness or lack of mutuality, where only one side is bound to perform

Beard Implement v. Krusa

Contract over purchase of a combine. D signed purchase order- none of P's representatives signed the order; D testified that after discussing with his wife, told P's manager he did not wish to proceed with the transaction- determined price was too high Court concluded that the purchase order in this case required the signature by P's "dealer" in order to be a proper acceptance of D's offer. Bc P's dealer never signed, no contract ever existed.

Allegheny College v. National Chautauqua County Bank

D promised to pay P college $5,000 for a scholarship fund in Defendant's name. Plaintiff accepted part payment and held the money for the fund. Defendant refused to pay the remaining balance of the $5,000. Implied promise: $5,000 for scholarship being named after her- sounds like consideration Cardozo is not sure if promissory estoppel is any more than consideration New York has adopted the doctrine of promissory estoppel as the equivalent of consideration in connection with its law of charitable subscriptions.

Lefkowitz v. Greater Minneapolis Surplus Store, Inc.

Defendant advertised the sale of three fur coats and three fur stoles for $1.00 a piece. The advertisement said "first come, first serve". Plaintiff arrived at Defendant's store wishing to buy the garments. Defendant refused, saying the sale was only for women. Store claims that the ad is a mere invitation- when Lefkowitz or others show up, that is the offer Offer= clear definite, explicit The ad was clear, definite, and explicit, therefore, the ad was an offer- when Lefkowitz goes to the store with the money and wants to accept the offer CLEARLY AN OFFER

ProCd, Inc. v. Zeidenberg

Defendant bought a CD-ROM database with a license restriction, limiting the consumer-purchaser to non-commercial use. The existence of a license restriction was declared by shrinkwrap packaging but the terms were inside the packaging and not on the outside. Defendant ignored the license and resold the information on the CD database. Court found licenses as ordinary contracts and ruled in favor of ProCD ProCD proposed a contract that a buyer would accept by using the software after having an opportunity to read the license at leisure- this Zeidenberg did- software put the license on the screen and would not let him proceed without indicating acceptance Judge says if someone doesn't like these terms in shrinkwrap license, they could return the product

Rockingham County v. Luten Bridge Co.

Defendant county hired P to build a bridge. County then voted not to continue with the construction of the bridge and informed the Plaintiff to stop work on the bridge contract. The Plaintiff, however, continued constructing the bridge. The Plaintiff then filed suit to recover damages stemming from The Defendant's breach of contract. Damage amount was not unavoidable; should've stopped building the bridge Duty to mitigate the damages- don't get to continue to ring up costs when it could have been avoided Should get (not $18,301) but the amount they spent + the amount they would've gotten in profits Expectation damages= expected profit + incidental damages

Klocek v. Gateway Inc.

Defendant includes a copy of its Standard Terms and Conditions Agreement with every computer it sells in the box containing the computer battery power cable and instruction manuals. Terms and Conditions mentions disputes will be arbitrated. On top of the first page of Defendant's agreement is a notice that the consumer accepts the terms and conditions by keeping the computer for more than five days. ProCD judge (Easterbrook)- if this was him, he would probably compel arbitration- Easterbrook in ProCD said terms given after the fact is the offer; he would say that in this case that the terms in the box would have been the offer and the acceptance would be keeping and using the computer Vratil (judge in this case) does not have to follow Easterbrook/ProCD- different circuits- Vratil rejects ProCD outcome; to judge Vratil, terms in the box was not an offer- walking out with box is the offer and terms inside was the second set of forms (battle of the forms) Klocek not a merchant-not between merchants so arbitration clause doesn't apply- so not under UCC 2-207(2) but UCC 2-207(3)-- both sides didn't agree on arbitration clause

Universal Computer Systems v. Medical Services Ass'n of PA

Defendant solicited bids for the lease of a computer and Plaintiff prepared a bid proposal subject to the terms of solicitation that it be received at a certain date and time. Defendant's employee Gebert assured the Plaintiff that the proposal would be picked up at the airport and delivered to the Defendant in time to meet the bidding deadline. The bid proposal did not arrive on time, and Defendant rejected the bid as untimely and returned it unopened. Universal changed behavior bc Gebert said he would pick it up- would have had someone else if Gebert never said anything Court ruled for universal- with no consideration, promissory estoppel instead still allowed universal to win Here it is clear that the P incurred a substantial detriment as a result of relying upon the defendant's promise

Wood v. Lucy, Lady Duff-Gordon

Defendant was a fashionable woman and designer capable of increasing the sales of certain goods by her endorsement. Defendant entered into an exclusive agreement with Plaintiff allowing him to place her endorsement and market defendant's designs and keep half of the profits. Plaintiff claimed she broke the contract by placing endorsements without his knowledge and keeping all the profits to herself. Wood won Takeaway- implied duty of good faith and fair dealing An exclusive agent will use good faith efforts to do the job The circumstances supported a promise by implication that Plaintiff would use reasonable efforts to place the endorsements and market the designs. Unless he gave his efforts neither party would gain anything from the contract.

Lingenfelder v. Wainwright Brewery Co.

Defendant, which was under pressure to complete the construction soon, promised Plaintiff five percent on the cost of the ice machines if he would resume work. No consideration- not doing anything extra; no new quid pro quo Fujimoto v. Rio Grande Pickle Co.- Fujimoto was an "at will" employee and could quit at any time- not the same here

Harris v. Watson

During the voyage, when the ship was in danger, Watson promised to pay Harris an extra five guineas Seaman still have legal obligation; if given money, seaman in future might say they're not going to do more than the minimal amount if they don't get paid more

3 types of damages

Expectation- expected a perfect hand Reliance- from where you started to where you ended Restitution- back in same position they were in before

QUESTION ON PG. 365

Expected profit/ revenue: $10,000 Cost: -3,000 -4,000 = 3,000 Incidental damages: 3,000 3,000+3,000= $6,000

Mills v. Wyman

Facts- Plaintiff Mills, cared for the son of Defendant Wyman when he was ill. After Son died, Defendant promised to compensate Plaintiff for the care Plaintiff provided his son. Plaintiff is bringing this action to recover the compensation promised by Defendant. No consideration- son had already passed away Very rare that past consideration could be consideration, but past consideration + moral obligation could be consideration- like in Webb v. McGowin

UCC 2-309 (Absence of Specific Time); UCC 2-306 (Output Contracts); Past Consideration

For a contract to be binding: - Clear - Definite - Explicit At least 2 types of contracts where you don't need exact #'s - Output contracts- buyer agrees to buy all that is needed - Requirements contract- seller agrees to sell all that is needed General rule- No quid pro quo when you're simply being nice/it's a gift- past consideration is not consideration 2 different views of the law: -Most important thing about the law is predictability and certainty -The laws need to change in their interpretation over time; sometimes ensuring fairness means changing wording/meaning

Kafka v. Hess

George Kafka's (plaintiff's) mother deeded him her house, reserving only a life estate for herself. When Kafka arrived for his mother's funeral, he noticed that most of the valuables in his mother's house had disappeared, and his aunt, Gladys Hess (defendant), demanded that he leave. . Kafka later learned Hess was trying to sell the house even though she admitted a title search showed the deed had been transferred to Kafka. Kafka tried to sell the prospective buyers the property, but a second deed recorded in 2011 made the title uninsurable. Bc no mutual assent, not a breach of contract case Up until this point, Hoffman v. Red OWL (promissory estoppel) was only case not a breach of contract Not a promissory estoppel case nor breach of contract 3 DIFFERENT CLAIMS: - Breach of contract - Restatement 90- Hoffman v. Red Owl - Implied in law contract ALL MEAN THE SAME THING: - Implied in law contract - Unjust enrichment - Disgorgement - Restitution (as claim) - Quantum meruit- "as much as he deserves" If claim is brought for restitution, the way of awarding damages is take away the wrongful benefit When you take away benefit= restitution damages Someone was unfairly benefited? We'll take that benefit away Aunt Hess did not act in good faith

Article 2 of the UCC

Governs the sale of goods

An Introduction to Promissory Estoppel ("Reliance")

If someone makes a promise on which there is foreseeable reliance, that person is forbidden ("estopped") from bringing up many traditional defenses to the enforcement of the promise (no consideration, no acceptance, no written agreement) "A doctrine that a substitute for consideration or an exception to its ordinary requirements can be found in what is styled "a promissory estoppel" Triangle- fairness, economic efficiency, certainty= promissory estoppel is more concerned with fairness It is RARE that promissory estoppel cases prevail

Forbearance

If you give up something you have the legal right to do What if offered 18 year old $100 not to drink? Is there consideration? NO bc they didn't have a legal right Offering a Mormon $500 not to drink- still consideration bc they still have legal right to but choose not to

Princess Cruise Lines v. General Electric

In this case, GE provided a few parts (goods) and services Pg. 127- "Hinges on the predominant purpose of the transaction... whether the contract primarily concerns the furnishing of goods or the rendering of services" -Services more evident here than goods- primarily services, so under common law If predominant purpose test says it's primarily services- ONLY COMMON LAW!!! NOT UCC -Mirror image rule (common law)- if you're given an offer and your response is not a mirror image of it, it's a counter offer -Under common law's mirror image rule, GE's rules apply here

Invitation vs. an offer

Invitation/discussion= preliminary negotiations Offer= clear, definite, explicit

1464-Eight, Ltd v. Joppich

Joppich was to purchase an undeveloped residential lot for $65,000.00 from the defendants. At the time of closing, Joppich and the defendants executed an option agreement, by which Joppich agreed to allow the defendants to purchase the lot back from her in the event she failed to begin constructing a residence on the land within 18 months. The option agreement recited Joppich's receipt of a $10 option fee paid by the defendants. Joppich failed to commence construction of a residence within the requisite time. A false recital of nominal consideration is sufficient to support the irrevocability of an offer so long as the underlying exchange is fair and the offer is to be accepted within a reasonable time.

Termination of the Power of Acceptance/ terminating an offer (LIRR)

Lapse of time Incapacity/death Revocation Rejection

Damages by Agreement (Liquidated Damages Provisions) & Punitive Damages

Liquidated damages- damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach Punitive damages- damages exceeding simple compensation and awarded to punish the defendant

Northrop Corp. v. Litronic Industries

Litronic Industries (Litronic) (defendant) sent a written offer to Northrop Corporation (Northrop) (plaintiff) to sell Northrop printed wire boards. The offer contained a 90-day warranty on the boards. Northrop received the boards but did not complete its testing of the boards until six months later. Northrop returned the boards to Litronic, claiming they were defective. Litronic refused to accept the returned boards because its 90-day warranty had lapsed. Northrop claimed it had an unlimited warranty under the terms of its purchase order. Court said under Uniform Commercial Code (UCC) § 2-309, which provides that nonconforming goods may be rejected within a reasonable time, and held that Northrop rejected the boards within a reasonable time because of the complexity of Northrop's testing.

Stepp v. Freeman

Lottery Group In implied-in-fact contracts the parties' meetings of the minds is shown by surrounding circumstances, including the conduct and declarations of the parties, that make it inferable that the contract exists as a matter of tacit understanding; it is possible to have a binding contract that is not in writing No specific moment when Stepp was offered membership in group; can't point to a specific moment when accepted group membership so this is not an expressed contract bc you need to show a specific moment of offer and acceptance in an express contract This is a case of an implied contract- there was mutual assent bc of repeated course of dealing

2949 Inc. v. McCorkle

McCorkle's (D) made an offer and then revoked their offer- can take it back anytime before acceptance Court says this is not an option contract bc no consideration Firm offer rule? goods (yes), merchants (yes), signed writing (no) Does the firm offer rule apply? No. No signed writing Bc firm offer rule does not apply, ruling in favor of McCorkle's (D)

Merry Gentlemen v. GLP

Merry Gentleman, LLC (Merry Gentleman) (plaintiff) produced a movie called The Merry Gentleman. Michael Keaton (defendant) starred in and directed the movie. The movie was commercially unsuccessful but was shown at the Sundance Film Festival and critically acclaimed. Merry Gentleman brought suit against Keaton and Keaton's professional contracting company, George and Leona Productions, Inc. (defendant). Merry Gentleman alleged that Keaton breached his contract by, among other things, failing to submit the movie's first cut on time, submitting a second cut that was incomplete, and not adequately promoting the movie. Merry Gentleman claimed that Keaton's breach caused the movie's lack of commercial success. Merry Gentleman sought a return of the entire $5.5 million it spent producing the movie. In support, Merry Gentleman filed an affidavit stating that it spent over $5 million in reliance on the Keaton contract. Reliance damages are not insurance. Courts will not knowingly put the plaintiff receiving a reliance recovery in a better position than he would have occupied had the contract been fully performed.

Meyer v. Uber Technologies

Meyer is saying there was never mutual assent/ he didn't agree to the Terms and Services Reasonable person- smartphone users should know how these apps work; court treats this as if Meyer did understand the Terms and Services As long as the hyperlink text was itself conspicuous, a reasonably prudent smartphone user would have constructive notice of the terms. While it may be the case that many users will not bother reading it, that is the user's choice; the user is still on inquiry notice Objective behavior of the parties is what will be looked at

Norcia v. Samsung Telecommunications

Norcia purchased a Samsung Galaxy S4 phone; Receipt stated: "I understand that I am agreeing to... settlement of disputes by arbitration..." As a general rule, "Silence or inaction does not constitute acceptance of an offer... there are exceptions to this rule, however" This case encourages companies (like Samsung) to not just put arbitration clause in the box and maybe put it more up front and obvious

Maglica v. Maglica

Not married couple; worked together in business; Claire developed a successful flashlight and soon the business was worth hundreds of millions of dollars Not in divorce/ family court bc they were not married Jury awarded Claire $84 million - Not a breach of contract case - Not a Restatement 90 case Court agreed Anthony was unjustly benefitted; but not $84 million worth- what would have been the fair value of the services/ ideas she provided?

Dickinson v. Dodds

Offer for property would be open until 9AM on June 12. At 7AM on the morning of June 12, Dickinson (P) and his agent both found Dodds (D) at a train station and provided him with duplicate copies of the document accepting Dodds' offer to sell. Dodds stated that it was too late and he had already sold the property to Allen. GENERAL RULE: The offeror can revoke an offer any time prior to acceptance 3 EXCEPTIONS- 1. Option contract 2. Firm offer rule (UCC) (UCC 2-205) 3. Partial performance

Adequacy v. Sufficiency of Consideration; Option Contracts

Option contract- An option contract is a type of contract that protects an offeree from an offeror's ability to revoke their offer to engage in a contract.

Schnell v. Perlmon

P sold onions to the D for an agreed price but part of the shipment was rotten and decayed- D had them examined and paid for the onions that were in good condition while deducting a certain sum for those that had been decayed Common law view of accord and satisfaction P cashes the check before he sues for the rest Buyer wins in the end- does not have to pay remainder Check constituted a second offer; acceptance was cashing the check THIS CASE IS THE GENERAL RULE OF ACCORD AND SATISFACTION AND THE HORN CASE IS THE EXCEPTION Accord and Satisfaction: Only comes into play where there is a good faith dispute Perfect onions were not received- some good, some bad Buyer made a new offer= accord Check for lesser amount was sent- seller had choice: "No I'm not cashing this, I want the full amount" OR Accept the check with the new amount as a settlement= satisfaction Even though every state applies the UCC, some interpret it different Under common law, every state recognizes accord and satisfaction the same

Horn Waterproofing Corp. v. Bushwick Iron & Steel Co.

Parties entered into an oral agreement where P was to repair a leaking roof on D's building. After working two days, P determined that a new roof was needed. D disputed the amount charged and P revised the bill from $1,241 to $1,080. D was still not satisfied and sent the P a check for $500 This case is an application of the UCC, but not every court agrees it should apply the same way Wrote "under protest" on the check- SOME courts say if you write "under protest" before you cash a check, you can still come after rest of the $ Not every case applies Horn, some courts say if they write "under protest" before cashing it, they may be able to go after the rest General rule/ principle of accord and satisfaction- if there is a good faith dispute between buyer and seller and the parties agree to accept a good faith lesser amount, that is accord and satisfaction and new consideration

Preexisting Duty Rule

Performance of a duty you are obligated to do under the law is not consideration. Performance of an existing contractual duty is not good consideration If a party to a contract is under a pre-existing duty to perform, then no consideration is given for any modification of the contract and the modification is therefore voidable.

Petterson v. Pattberg

Petterson owned a property upon which the defendant owned a bond secured by a mortgage. The mortgage was payable to the defendant in quarterly installments, but the defendant offered to grant Petterson a $780 reprieve on the total mortgage if he paid it off in full by a certain date. Petterson went to defendant's house with cash prepared to pay off the entire mortgage before the date. Before Peterson tendered any money, the defendant informed him that he had sold the mortgage to a third party and thus revoked his offer. Until the act requested was performed, the D might undoubtedly revoke his offer

Walker v. Keith

Plaintiff lessee, entered into a 10 year lease agreement with the Defendant lessor. The lease agreement included an option to renew the lease for an additional ten years, but did not set the rent amount for the additional ten years. Like Lefkowitz case- offers need to be clear, definite, and explicit This case is saying a contract needs to be clear, definite, and explicit

Webb v. McGowin

Plaintiff promisee was permanently injured while saving the promisor's life. The promisor agreed to pay plaintiff a monetary amount every two weeks during the remainder of plaintiff's life. The promisor complied with this agreement up to the time of his death. Past consideration + moral obligation could be consideration Moral duty + subsequent promise is enough for consideration (one side) A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit. Takeaway- narrow exception; certain circumstances where past moral duty + subsequent promise is enough for one side of the quid pro quo

Batsakis v. Demotsis

Plaintiff, Batsakis, loaned Defendant, Demotsis, 500,000 drachmae. In exchange for the loan, Defendant signed an instrument promising to pay Plaintiff $2,000 in U.S. currency. The 500,000 drachmae were worth approximately $25.00 at the time. Willing to make whatever deal bc of the circumstances; court decides there was consideration Bad deals DO NOT mean lack of consideration

Limitation of Recovery: Avoidability

Plaintiffs injured by a breach of contract have the duty to mitigate (avoid or minimize) damages. A party cannot recover for losses that he could have avoided without undue risk, burden, or humiliation.

Peevyhouse v. Garland Coal & Mining

Plaintiffs leased their farm to Defendant, a mining company for five years. Defendant performed strip mining. The contract included a provision where Defendant would do remedial work to fill in the holes caused by Defendant's mining after the mining was complete. This work involved moving substantial amounts of dirt. Defendants did not do the remedial work. The trial court established that the remedial work would cost more than $29,000.00 and that the value of the farm would increase by $300.00. The court awarded Plaintiffs $5,000.00. Not a very substantial breach, but there is still a breach Only pay difference between land with holes and land without holes- holes are not worth $25,000

Hadley v. Baxendale

Plaintiffs operated a mill, which they were forced to shut down when the crank shaft of their steam engine broke. They contacted the manufacturer of the engine, W. Joyce & Co. (Joyce), and Joyce agreed to make a new shaft from the pattern of the old one. Plaintiffs' servant told Defendants' clerk that the mill was shut down and the shaft must be sent immediately. The clerk informed Plaintiffs' servant that if the shaft were given to them by twelve o'clock any day, it would be delivered by the next day. Plaintiffs took the shaft to Defendants the next day before noon. Due to Defendants' neglect, the delivery to Joyce was delayed, and Plaintiffs did not receive the new shaft for several days after they should have received it. The damages to which a nonbreaching party is entitled are those arising naturally from the breach itself or those that are in the reasonable contemplation of the parties at the time of contracting.

Phillips v. Moor

Purchased hay that was destroyed in fire Default rule- if you accept the goods, you become the owner of the goods before it gets to you

Hoffman v. Red Owl Stores

Red Owl promised a couple that if they invested a total sum of $ 18,000, Red Owl would establish a new grocery store for them. Upon reliance to the agreement and representations, the couple sold their bakery building and business and their grocery store and business, as well as bought a new lot, only to find Red Owl continuously increased the price the parties had originally agreed upon. Consequently, the couple were induced to sell the store's fixtures and inventory on the promise that they would be in their new store in a few months. The deal never went through and couple sued Red Owl LEGAL QUESTION Is the relationship between Red Owl and Hoffman one of promissory estoppel (plaintiff being hurt from acting upon false promises of defendant). REASONING OF THE COURT Yes, because Red Owl told Hoffman to take certain measure so the promise was reasonably expected. Hoffman sold his bakery and inventory for a $2000 loss. PRECEDENT If a formal contract is absent, then promissory estoppel can still be applied. No mutual assent No consideration THIS CASE TAKES RESTATEMENT SECTION 90 In certain circumstances, the court will allow promissory estoppel as a substitute Here- promissory estoppel is used as a stand alone claim; very strange, not common at all

Rego v. Decker

Rego and his wife (D) leased land to Decker (P) and the lease contained an option to purchase provision. Decker notified the Regos that he was exercising the option to purchase provision. The Regos refused to convey the land and instead sold it to another purchaser. No formula given in Walker v. Keither- "we agree to agree" is not a contract- "Current price times interest rate," etc. is a formula The remedy of specific performance requires a reasonable certainty as to terms, an obligation to which the parties probably would have agreed on, and fulfillment of the reasonable expectations of the parties.

Reliance Interests

Reliance damages are calculated by asking what it would take to restore the injured party to the economic position occupied before the party acted in reasonable reliance on the promise Where you started and where you're left Reliance interest is not different from a tort claim

Restitution in the Absence of Contract

Restitution is used in contractual situations where one party has conferred a benefit on another party but cannot collect payment because the contract is defective or no contract exists When you take away benefit= restitution damages Someone was unfairly benefited? We'll take that benefit away

Hawkins v. McGee- Hairy Hand Case

Rule/Holding: When one party breaches a contract, the non-breaching party may recover damages based on the difference between the value of the contract as fully performed and the actual value of the non-breaching party's present condition, plus any incidental damages reasonably foreseeable to all parties at the time of contract formation. A perfect hand is what was promised to him- father probably wouldn't have agreed to surgery had the Dr. not promised a perfect hand Expectation damages: "To put the P in as good a position as he would have been in had the D kept his contract" Father and child reasonably expected a perfect hand Difference between what was promised (expectation) and what was given=contractual measure Expectation damages: difference between 100% perfect hand and hairy hand

Santorini Cab Co. v. Banco Popular

Santorini Cab Corporation (plaintiff) contracted to purchase two medallions with Banco. Medallions were readily available for sale at the time of the breach. $66,775 was the average market price at the time of breach. Santorini appealed, arguing that the court should have measured damages as the difference between the contract price and the price of medallions by the time of trial some four years after the breach. Proper measure of damages is the difference between the market price at the time Santorini learned of the breach Unless it is an item that can't be purchased on the free market, you value it at the time of the breach

Fiege v. Boehm

Settlement of an invalid claim is consideration if plaintiff asserts a claim in good faith AND has a reasonable basis (b/c then the claim is valid). At the moment of acceptance, we determine if there is quid pro quo Before Fiege accepted the offer, he should've made sure the kid was his At the moment of agreement/acceptance In this case- there was a possibility he was the father; forbearance- had legal right to proceed in bastardy proceedings at the time The forbearance from asserting a good faith legal claim constitutes a valid consideration Generally, there is a requirement that a claim be asserted in good faith. Forbearance in asserting a good faith claim constitutes a valid consideration

Stilk v. Myrick

Stilk was contracted to work on a ship owned by Myrick for £5 a month, promising to do anything needed in the voyage regardless of emergencies. After the ship docked at Cronstadt two men deserted, and after failing to find replacements the captain promised the crew the wages of those two men divided between them if they fulfilled the duties of the missing crewmen as well as their own. Lack of consideration- no quid pro quo; already had obligation to do work

Teradyne Inc. v. Teledyne Ind.

Teradyne (plaintiff) entered into a contract with Teledyne (defendant) for the sale of a T-347A transistor test system. The price of the system was $98,400 less a discount of $984. Teledyne cancelled and offered to purchase another transistor system worth $65,000. Teradyne refused and sued for breach of contract. Teradyne was able to sell the T-347A to another purchaser. Buyer breached contract- buyer argues no bc they were able to "cover" and get $984 more UCC §2-703 buyer breached- read literally, seller in case couldn't recover Court says there's a misinterpretation here bc saying seller is a volume seller- sells large quantities of non-specialized goods- volume seller selling 1 less- losing a profit; sold 1 instead of 2; volume seller can still recover Volume seller sells in large quantity- when a buyer breaches contract, seller is making 1 less sale Wages for testers- every time you sell a transistor, you have to pay these testers; only sold 1 so should have subtracted that- would be getting more- need to subtract labor cost Price -Minus fixed costs -Minus variable costs Supposed to be put in position before breach, not in a better position

Lucy v. Zehmer

The Defendant, Zehmer (Defendant), writes a contract to sell land on a napkin for $50,000 and when the Plaintiff, Lucy (Plaintiff), tries to enforce it, Defendant claims he was only joking. Mutual assent- based on objective manifestation of behavior (reasonable person) Objective reasonable person would assume there would be mutual assent here- nobody thought Zehmer was so intoxicated that that could be a defense

Freund v. Washington Square Press

The injured party should not recover more from a breach of contract than he would have gained had the contract been performed. Plaintiff and defendant had entered into a contract in which plaintiff was to receive royalties from the published work. Plaintiff completed the manuscript of a modern drama. The contract allowed defendant to terminate the agreement if the manuscript was unsuitable. Unless terminated, defendant was required to publish the manuscript within 18 months. Defendant did neither.

Hibschman Pontiac v. Batchelor

The purchaser bought a used car from the car dealership. The car had a warranty and required extensive repair work, with the problem never being rectified. After the warranty ended the purchaser was forced to pay for additional repairs to the car. The purchaser sued the car dealership and car company for breach of contract and oppressive conduct. Asking for expectations damages and punitive damages As a general rule, punitive damages are not a thing in contract cases This case is the exception Court awards expectation damages and punitive damages Still have obligation not to make things worse

Remedies

The relief given to an innocent party to enforce a right or compensate for the violation of a right.

Fujimoto v. Rio Grande Pickle Co.

Two individuals entered into an employment contract with a company after threatening to leave. The parties signed their contracts, but failed to return them to the company- it was not specified how the offer could be accepted. Continued to work but did not receive bonus. Rio Grande said the individuals never accepted the the offer bc they never returned the contract. "Law requires only that there be some clear and unmistakable expression of the offeree's intention to accept" P's threatened to leave before the contract and they stayed- should be obvious they accepted the offer bc otherwise they would've left- "If the overt act is one that clearly expresses an intention to accept the specific offer and is in fact known by the offeror, there is an effective acceptance" Takeaways- If you're going to make an offer, make mode of acceptance clear; generally silence is not acceptance, but silence PLUS is- P's threatened to leave and they didn't General rule is silence is not accepted, but there are few reasons where silence is accepted

Damages under the UCC

UCC §2-712. "Cover"; buyer's procurement of substitute goods PAGE 400- SELLER BREACHED -What buyer must do if seller breached? Buyer is encouraged to "cover"-- find a substitute Ex: 100 notebooks= $200; seller backs out; buy 100 notebooks for $300- can recover $100 from seller UCC §2-713. Buyer's damages for non-delivery or repudiation PAGE 401 UCC §2-703. Seller's damages for non-delivery or repudiations PAGE 403- BUYER BREACHED- Teradyne case UCC §2-708. Seller's damages for non-acceptance or repudiation PAGE 403

Hamer v. Sidway

Uncle agreed with nephew that if nephew would refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until he became 21, D would pay him $5,000. Uncle died No disagreement that there was mutual assent between uncle and nephew Quid Pro Quo- something for something else - Act - Forbearance - Creation/ destruction of legal relation This case= forbearance- abandoned something that was legally his right

Davis v. Jacoby

Uncle asked niece and her husband to leave home and come take care of him and his wife in CA and if they agreed, they would "inherit everything." Uncle died, but they did go out and take care of his wife and other things but P's were not mentioned in the will. If it's clear what the mode of acceptance would be (moving to CA), they will look at what the reasonable person would do for the mode of acceptance

Predominant Purpose Test

Under this test, we ask whether the good or the service play a bigger role, in order to determine whether it is either the Common Law, or the UCC that is applicable to the given contract. (i.e. what are you MOSTLY contracting for?) Can't apply UCC to half and Common Law to half

Loring v. City of Boston

When the city of Boston suffered numerous acts of arson, the mayor of the city caused an advertisement to be published, for about a week, in the daily papers of the city. Four years later, the claimants apprehended the suspect and produced witnesses that resulted in conviction of the arsonist. The city refused to pay the reward and the claimants brought suit for breach of contract. Lapse of time- if specific amount of time is mentioned, after that time, no more offer; if no specified time, then "reasonable amount/ period of time"-- "reasonable time" is a question of law for a judge/jury to decide and depends on many circumstances An offer, to be binding upon the party making it, must be accepted within a reasonable time

Limitation on the Recovery

You can only recover if the amount is certain, foreseeable, and unavoidable

Lake River Corp. v. Carborundum

he Plaintiff, Lake River. Corp (the "Plaintiff"), contracted with the Defendant, Carborundum Co. (the "Defendant"), to distribute "Ferro Carbo". Plaintiff was required to bag and ship the powder. The Defendant guaranteed the Plaintiff that it would ship a minimum of 22,500 tons of powder, and if that minimum was not met, the Defendant would still be obligated to pay "the going rate for bagging and shipping of the unshipped quantity." Demand for the powder diminished, and the Defendant could not ship the 22,500 tons and based on the agreement would have had to pay the Plaintiff $241,000. A liquidated amount is a set amount/ a set amount that can be calculated Parties generally are allowed to agree to a liquidated amount but it has to be reasonable- generally binding if in good faith Not going to have a liquidated clause to punish- if liquidated clause is meant to be a punishment clause, it's not okay Sometimes we should not be opposed to breaching and thus, we don't want to always punish parties Liquidated damage clauses are generally upheld, but most states have adopted the Restatement section 356(1) ad to not punish parties

Schnell v. Nell

husband agreed to pay each of the heirs $ 200.00 because his deceased wife had made such a provision in her will but did not have the money to make the gifts. The contract stated that in consideration for the husband's promise to pay, the heirs would give him one penny Not that it was a bad deal, there was no objective intent- no real reason for the 1 cent Gift will not have consideration/ quid pro quo

Partial performance (1 exception to the general rule that the offeror can revoke an offer any time prior to acceptance)

once work is put in, can't revoke; class demonstration of naming all supreme court justices

Firm offer rule (UCC) (UCC 2-205) (1 exception to the general rule that the offeror can revoke an offer any time prior to acceptance)

when a merchant is selling goods in a signed writing promising to keep an offer opened for a reasonable period of time, that offer must be kept open; firm offer rule= goods, merchant, signed writing

Common law- mirror image rule

you need identical forms; if there is no meeting of the minds under the mirror image rule, common law says no contract

Acceptance

§ 50. Acceptance of offer defined; acceptance by performance; acceptance by promise (1) Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer (2) Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise (3) Acceptance by a promise requires that the offeree complete every act essential to making of the promise