Term
| Leftkowitz v. Great Minneapolis Surplus Store |
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Definition
P was directed to specific subgroup to buy fur coats, so a valid offer.
EXCEPTION: An ad can be an offer if it is "clear, definite, and explicit, and leaves nothing open for negotiation |
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Webb saved McGowin’s life, and was permanently disabled in doing so. McGowin promised to pay Webb for the rest of Webb’s life. McGowin’s estate tried to back out. Court said that there was adequate consideration because McGowin received a substantial material benefit from Webb’s past performance created a presumption that McGowin would have requested the performance had he had the chance.
MATERIAL BENEFIT EXCEPTION: A moral obligation is a sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit. |
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P was promised a 100% perfect hand, got a hairy hand. The court awarded expectation damages: value of 100% perfect hand - value of hairy hand.
Expectation Damages = Value of the promise - value delivered. |
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| Eastern Airlines v. Gulf Oil |
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Definition
Gulf was trying to claim that there was no contract for them to supply Eastern with jet fuel. The court found that there was a requirements contract and as long as Eastern was acting in good faith, and its requirements were not exceeding any estimates, etc. under the UCC, it was enforceable.
RULE: A requirements contract is binding where the purchaser has an operating business. |
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One night while drinking, Zehmer drew up a paper and signed it and had his wife sign it, conveying his land to Lucy. Even though he claimed later that he was drinking and joking, his outward actions would lead a reasonable man to believe that a contract had been formed. Lucy did think that a contract was formed and did rely on it (secured money, consulted an attorney, etc.) and so a contract was found.
RULE: If his outward manifestations of assent otherwise create a contract, the claim that the assenter was not serious is not a defense to a claim on the contract. |
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| Company promised longtime employee a pension in consideration of her years of service (past consideration). Years later they tried to get out of it. Court gave expectation damages because the company should expect that its promise would induce reasonable reliance, and it did—employee retired a year later, and expectation damages were needed to avoid injustice because employee had reached an age where she could not go back to work, also had cancer |
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Brother-in-law writes to sister-in-law, promising that if she came to where he was with her family, he would give her some land. Consideration was found to be lacking because there was a lack of the brother making a promise in order to induce something from his sister-in-law, it seemed more like he was making the promise from the goodness of his heart.
RULE: A bargained for exchange requires consideration on both sides. A one-sided exchange is more of a gratuitous promise. |
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Plaintiff sued for breach when he had begun buying material to work on suite of offices for defendants. The offer said “Upon an agreement…you can begin at once.” Court held that offer was not accepted because it had asked for a return promise, not performance.
RULE: An offer to create a bilateral contract is not accepted by conduct that, in itself, is no indication of an acceptance. |
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Lady Duff-Gordon and Wood entered into an exclusive dealing agreement in which Wood would market her designs. Duff-Gordon argued that it was not an enforceable contract because there was no requirement for Wood to do this, just an illusory promise to do so. The court implied a promise from Wood to use his best efforts, and found a contract, especially since the contract was certain and had definite terms.
RULE: An agreement for exclusive dealing in goods imposes, unless otherwise agreed, an obligation to use best efforts by both parties. |
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Defendant promised to pay good Samaritan plaintiff for caring for D’s son when he was ill. The court found consideration lacking because D was not legally bound to pay his adult son’s debts, and the plaintiff’s actions had taken place before promise was made, which was past performance.
RULE: The general position that moral obligation is sufficient consideration for an express promise is limited to cases where good or valuable consideration previously existed |
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Uncle promises his nephew $5,000 to give up drinking and smoking until the age of 21. At the time, the nephew did have a legal right to do so, and he gave both up to induce his uncle to give him the $5,000. The court found bargained-for consideration in that the uncle promised $5,000 to induce his nephew to give up drinking and smoking, and the nephew gave up his legal right to drink and smoke to induce his uncle to give him $5,000.
RULE: Forbearance of a Legal Right: A waiver of a legal right at the request of another party may serve as sufficient consideration for a promise. |
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advertisement for PepsiPoints not an offer. Also falls under jokes.
RULE: An ad is not an enforceable offer when it could not be considered by an objective reasonable person as a true offer, rather than as an obvious joke. |
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D contracted with P for the re-roofing of their home. Agreement became binding only upon acceptance in writing by an agent of P or upon commencement of the work. When they arrived they found another contractor performing the work.
No unreasonable delay by P in receiving, processing, accepting contract or commencing work. Evidence shows P proceeded with due diligence. D breached contract by having others perform the work.
RULE: If the offer does not specify the mode of acceptance, the acceptance may be given in any reasonable method. |
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| Dodds offered to sell his land to Dickinson, and gave him until Friday to accept (but not an option contract). On Thursday, Dickinson received information that Dodds had offered the land to someone else, and tried to accept the offer. Court held that the offer was revoked, and Dickinson had reason to know that offer was revoked. RULE: An offeree may not bind an offeror by accepting a revoked offer, even if the revocation had not been communicated to him prior to acceptance. |
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Carbolic Smoke Ball Co. placed an ad offering a sum to any person who became ill after using its product, Carlil tried to collect. Trial court found that the offer intimated that it would be sufficient to act on the proposal, performance was the invited form of acceptance, and notification was not necessary.
RULE: A continuing offer may be accepted by performance of the condition named in the offer.
Carbolic Smoke Ball Co. placed an ad offering a sum to any person who became ill after using its product, Carlil tried to collect. Trial court found that the offer intimated that it would be sufficient to act on the proposal, performance was the invited form of acceptance, and notification was not necessary.
RULE: A continuing offer may be accepted by performance of the condition named in the offer. |
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Grandfather promised his granddaughter $2,000 because he didn’t want any of his grandchildren to have to work (wrote a note). Granddaughter quit her job in reliance on the promise, was unemployed for a year, got another job with approval of grandfather. Estate tried to get out of paying the balance on the note due to a lack of consideration, but were estopped because the grandfather reasonably induced his granddaughter’s reliance. Granddaughter got expectation damages.
RULE: When the payee changes her position to her disadvantage, in reliance on a promise, a right of action on the promise arises. |
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Definition
Doctor messed up actresses nose
“The tendency . . . is to put the plaintiff back in the position he occupied just before the parties entered upon the agreement, to compensate him for the detriments he suffered in reliance upon the agreement.”
“Reasons for granting damages for broken promises to the extent of expectancy are at their strongest when the promises are made in a business context.” |
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| a promise or set of promises that the law will enforce or at least recognize in some way. |
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The standard that determines which contracts are legally enforceable
A bargained for detriment |
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| If the promisee changed its position to its detriment in reliance on the promise, the court might award a sum of $ intended to compensate for the loss. Puts the promisee back in the position in which the promisee would have been had the promise not been made. |
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| If promisee conferred a benefit on the promisor in the course of the transaction, court may award the promisee a sum of $ intended to deprive the promisor of this benefit. Put the promisor back in the position in which the promisor would have been had the promise not been made |
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claim of mother against putative father of illegitimate child for support was not “frivolous” or “vexatious” although blood test later showed he was not father
No discussion of mother’s possible bad faith by nondisclosure |
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Sheffield (D) endorsed and delivered a promissory note to Strong (P) as security for a debt owed by Sheffield’s husband to Strong. The only consideration Sheffield received was an agreement to forbear the debt for an indefinite period of time. Strong told Sheffield “I will hold it until such time as I want my money, I will make a demand on you for it.”
Rule
A promise is illusory if a party’s performance of that promise is entirely at the option of that party. |
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Purchaser of land for a shopping center made conditional promise to buy land
The promise was conditioned on his obtaining leases for future occupancy that were “satisfactory to” the purchaser.
The court read the promise as requiring the promisor “to exercise his judgment in good faith,” so that the buyer’s promise was not illusory.
Therefore consider ation for the sellers promise that the buyer could enforce that promise. |
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Physician, seeing an injured and unconscious pedestrian, furnishes medical services worth $1,000 in the belief that the injured pedestrian will be willing to pay for them on regaining consciousness.
The injured pedestrian, however refuses to pay, and the physician sues for $1,000, claiming restitution of the benefit conferred.
No court would condemn physician as “officious intermeddler” or “volunteer”; the right to recover is clear. |
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Guy hired nursery to put plants into landscape for his house that was being built
When the guy died, the nursery tried to come after the home builder because he had been unjustly enriched.
Court did not grant restitution because the benefit had not been bargained for and the guy should go after dead guy’s estate. |
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Husband and wife had an agreement that each would in turn work to provide sole support while the other was obtaining further education.
After the wife had put the husband through law school, he told her that he wanted to dissolve the marriage.
SC of AZ held that his promise was too indefinite to be enforceable but held that wife was entitled to restitution.
The unenforceable agreement evidenced her expectation of compensation. And she had done more than “perform the usual and incidental activities of the marital relationship,” having made “an extraordinary or unilateral effort” that inured solely for the benefit of her husband. |
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Will you sell me your store property . . . for the sum of $6,000.00?”
The owner wrote back that “it would not be possible for me to sell it unless I was to receive $16,000 cash.”
The prospective buyer regarding this as an offer, purported to accept.
The Supreme Judicial Court of ME held that the owner’s letter was not an offer. His language was interpreted to mean, “I will not entertain an offer from you for less that $16,000,” rather than “I will sell to you for $16,000.” |
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Similar result reached as in Owens
Prospective buyer telegraphed the owner of real property who had been negotiating for its sale to the town for £900.
“Will you sell us Bumper Hall Pen? Telegraph lowest cash price . . . .”
The owner telegraphed back, “Lowest price for Bumper Hall Pen £900.”
It was held that this was not an offer. The court reasoned that the owner stated the lowest cash price but did not answer the question of whether he would sell to the buyer at that price. |
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Seller’s answer to a buyer’s inquiry as to prices read, “we quote you Mason fruit jars” at stated prices “for immediate acceptance.”
The court held that ‘there was more than a quotation of prices, although seller’s letter uses the word quote in stating the prices given . . . . We can hardly understand what was meant by the words “for immediate acceptance,” unless the latter was intended as a proposition to sell at these prices if accepted immediately.”
The fact that a proposal is very detailed suggests that it is an offer, while omission of a many terms suggests that it is not. “The more terms the parties have open the less likely it is that they have intended to conclude a binding agreement . . . .”
A proposal that may be insufficient by itself may be fleshed out by incorporation of terms from prior communications. Clauses typical of a legally binding agreement also suggest that a proposal is an offer b/c they indicate that the author understood that there might be no other chance to insert them before the conclusion of the contract.
The proposal that was held to be an offer contained a clause providing “that we make all quotations and contracts subject to . . . delays or accidents beyond our control.” |
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General contractor left out sub-contractor’s amount for plumbing
Most cases which avoidance granted for unilateral mistake have involved errors in calculation of bids by general contractors on construction projects.
Sub-C’s try to prevent preaward bid shopping by general-C’s by waiting until the last minute to submit a bid
The resulting haste w/ which general must prepare its own bid is conducive to error.
Courts have granted bidders relief for unilateral mistakes in the calculation of bids but the bidder must show that the mistake went to a basic assumption on which the contract was made and that it had a material effect on the agreed exchange of performances |
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| International Filter v. Conroe Gin |
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Definition
Offeror can impose more stringent requirements of notice.
Offeror may also dispense w/ any req of notice as sometimes happens when an offer is made on a form furnished by offeree.
Seller’s form provided that after signature by the buyer, it “becomes a contract when . . . approved by an executive officer” of the seller at its home office
Held: no notice of approval had to be sent to the buyer |
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| Corinthian Pharmaceuticals Systems v. Lederle Laboratories |
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Definition
If seller ships instead of promising, a promise to ship conforming goods is implied by the shipment, so that the seller is liable if goods non-conforming
Buyer’s offer is taken to seek acceptance by a promise, on that need not be expressed by words but may be manifested by attempt to perform
The seller that wants to avoid this liability can notify the buyer that the shipment of non-conforming goods is “offered only as an accommodation to the buyer.
The shipment will then be taken not as a promise to ship conforming goods but as a counteroffer by the seller that the buyer is free to accept or reject. |
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| Allied Steel v. Ford Motor Co |
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Definition
Even preparation for performance may suffice to manifest the commitment required for acceptance, here the offeror had insisted on signature of an officer
Offeror’s control in this regard is limited by the objective theory, under which the offeror’s language may not have its intended effect if the offeree reasonably understands that the procedure prescribed by the offeror is not mandatory.
“provisions for execution and return of the acknowledgment copy . . . was not to set forth an exclusive method of acceptance but was merely to provide a simple and convenient method by which the assent . . . could be indicated” |
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Buyer sent proposal to buy the “Fork Shop”
Seller said that the only way he’d sell is if buyer had cash at the bank he wanted in CT.
Court held that even though buyer had obtained a loan costing him $7,000 he did not begin performance and was not able to collect against seller who revoked his offer. |
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| Once the offeree’s acceptance is in the mail, the offeror can no longer withdraw the offer. The rule curtails the offeror’s freedom to revoke at the earliest feasible time. Can over take rejection (ex. send rejection by mail on Monday, Fax acceptance Tuesday, rej gets to offeror on Wed, offer is accepted) |
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| requires that acceptance be the mirror image of the offer. |
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| Traditional K doctrine favors the party who fires the “last shot” in the battle of the forms. Performance makes it clear there is a contract, and since each subsequent form is a counter offer, rejecting any prior offer of the other party, the resulting contract must be on the terms of the party who sends the last counteroffer |
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| Columber was employed by Lakeland from 1988 to 2001. During his employment in 1991, he signed a noncompetition agreement. After employment was terminated Columber began his own, competing business. RULE Subsequent employment alone is alone sufficient consideration to support a covenant not to compete agreement with an at-will employee who entered into it after employment had already begun. |
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Rewards Contracts are seen as challenges
Unilateral Contract – seeking performance
Offeror of the reward gets to set the terms. |
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| Requirement v. Output Contract |
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Definition
Requirement
One party to the contract promises to deliver/sell all of a certain product that the other party requires.
Output
One party to the contract promises to buy all of a certain product that the other produces. |
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| promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise, even if the promise was given without consideration. |
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A legal substitute for a contract
It is used when a court wishes to create an obligation upon a non-contracting party to avoid injustice and to ensure fairness. |
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| A person who voluntarily, and without request or pre-existing legal duty, interjects herself into the affairs of another, and then seeks remuneration for services or reimbursement. |
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OFFER = an act where one person confers upon the another the power to create contractual relations between them
Must be an expression of will or intention
Must be an act that leads the offeree to reasonably believe that a power to create a contract is conferred upon him. |
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| An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance |
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| Termination of Accpetance |
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Definition
Once a party has made an offer –
The offer can be terminated by
The lapse of the offer
Revocation (by offeror)
Offeror’s death or incapcity
Rejection (must be done by the offeree) |
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Option contract – offers that are not subject to revocation for a limited time
Irrevocability is the defining characteristic of an option contract.
may be created in three ways – CONSIDERATION, FIRM OFFERS UNDER THE UCC & RELIANCE by offeree |
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| If no period is set for the lapse of an offer, it LAPSES AFTER A REASONABLE TIME |
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Under UCC 2-205
Firm offer is made in writing by a merchant for sale of goods
Merchant – can be someone who holds themselves out as having knowledge or skill peculiar to practices or goods involved in the transaction
These offers cannot last more than 90 days.
They don’t need consideration and are irrevocable |
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| you cannot accept after the death of an offeror, does not apply to options contracts |
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| Rejection of an Irrevocable Offer |
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Rejection does not kill the offer
Under the UCC if you reject the firm offer – it does not necessarily die
The offer remains to be open for the time agreed upon. |
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Removes the mirror image if the acceptance adds terms or varies the offer
UNLESS – acceptance is made EXPRESSLY conditional on the offeror’s assent to the new terms
IMPORTANT – if the acceptance does not take all the offeror’s terms, it is still operative under the UCC. |
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No place for delivery buyer must go to seller. 2-308
If contract does not provide a time for delivery it is a reasonable time 2-309
No time for payment it is due at time of receipt of goods 2-310
No price - court can impose price 2-305
If parties have not agreed on quantity it is NOT A CONTRACT - indefiniteness |
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Dorton did business with Collins many times (bought carpet). This time, Dorton brought action against Collins for fraud and misrepresentation about the quality of the carpets because they learned that the carpets were manufactured from a cheaper and inferior carpet fiber. Collins says that Dorton was bound to an arbitration agreement that appeared on the reverse side of Collins printed sales acknowledgment forms.
RULE: Under UCC 2-207, if an arbitration provision materially alters an existing agreement, it will not be incorporated into the contract unless expressly agreed to by both parties. |
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Offeror and offeree provided different terms as to the length of a warranty.
They knock out the two differing terms and choose the applicable term from the UCC. So, neither party really gets what they want but the result is, in UCC terms, fair and just. The warranty will last for a “reasonable” time. |
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No conditional acceptance. It cannot be determined form the fact that D intended the transaction to be based on P’s acceptance of the box-top terms.
Ct’s ruling: “We are not convinced that TSL’s unilateral act of repeatedly sending copies of the box-top license with its product can establish a course of dealing between TSL and SS that resulted in the adoption of the terms of the box-top license.”
Ct. found that the additional terms found on the box materially altered the K and therefore under UCC 2-207(2)(b), did not become part of the K |
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Here there was a notice on the outside that the use of the product was restricted…but the outside notice did not specify what the restriction was. The restriction was only fully explained on the inside of the package of software in a manual and the user program that the buyer only discovered after he bought the CD-ROM. The term forbade him from using making commercial use of the database.
Court here apparently says that the Contract was not fully formed until the buyer opened the package and kept the software without returning it. |
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Hills order the computer and pay for it over the phone. Gateway ships the computer and inside are certain terms, among them a provision that all disputes are to be settled by arbitration in Paris. Also, the terms read that the Hills have to send the computer back for a refund within 30 days if they don’t want to do the deal along Gateway’s terms…if not, they are bound to the arbitration provision.
The Hills are NOT MERCHANTS. |
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| Pre-Contractual Liability |
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| Even if there is no offer you can get damages for the benefit given to the other party. |
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| Guy relied on Red Owl’s promises to his detriment (no contract). He is allowed to recover out of pocket expenses. |
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Drennan used Star Paving’s bid of $7,100.00 to prepare his final bid and was awarded the contract. The next day Star Paving informed Drennan that it had underestimated the cost of the project and refused to do the work for less than $15,000. Drennan hired another subcontractor to do the work.
An offer that the promissor should reasonably expect to induce action or forbearance of a definite and substantial character by the promisee, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcing the promise. See Restatement (2d) of Contracts 90. |
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Age of majority is 18
GEN RULE – Contracts made by minorities for non-necessities are voidable for a reasonable time after the minor reaches majority (can ratify by continuing to make payments)
To void –
minor must return goods
If they received a benefit – they must pay restitution
Minors are responsible for neccessities |
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Guy is a few weeks from minority.He is married w/ kids and emancipated
Needed it for his kids and work. He signs a purchase contract saying he is over 21. Car had a cracked block. He sought to disaffirm the contract. He can, but must return the car. |
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Old lady school teacher, clinical depression and she unilaterally changed her retirement fund.
Restatement 331 – allows for rescinding of a contract for lacking of mental capacity
She was unable to act in a reasonable manner AND
The other party had reason to know of it |
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| Rancher and his wife make a contract to sell their ranch to a man who had sometimes bought their lambs for about ½ the ranch’s market value. Because they sought a lawyer there was no mental incapacity. |
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| If you have already obligated yourself to do something, then your promise to do that which you’ve already contracted to do can’t be consideration for an additional promise on the part of the other party. More=more money. But UCC 2-209(1) says that any agreement modifying a contract within this article (sale of goods) needs no consideration to be binding |
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Issues
1.Is a promise to pay more for doing what the other party had already contracted to do enforceable?
2.Is a contract modification enforceable without new consideration?
Holding and Rule
1.No. A promise to pay more for doing what the other party had already contracted to do is not enforceable.
2.No. A contract modification is not enforceable without new consideration. |
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Plaintiff contracted to excavate a cellar for Defendant at a fixed price. After commencing performance, Plaintiff learned that the area where the cellar was to be excavated was solid rock, requiring much higher costs. Plaintiff and Defendant orally agreed that, in light of the circumstances, Defendant would pay 9 times the previously agreed upon contract price. Defendant waived his right to enforce the first contract and is bound by the second contract.
The Rst 2d of Contracts section 89 allows parties to modify a duty arising under an agreement when: that duty has not been fully performed and the modification is fair under circumstances not contemplated when the original agreement was made. |
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Articles of agreement were entered into by defendant and his wife with a person who was affianced to and was to be married to their daughter. In consideration of that fact, the father promised the husband to pay a certain sum annually to the daughter. This action is brought by the assignee of the daughter and the husband to recover an unpaid installment.
The court held that there was sufficient consideration for the promise; that although the promise was to the husband it was intended for the benefit of the daughter, and when it came to her knowledge she had a right to adopt and enforce it, and in doing so she made herself a party to the contract. |
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| Frigaliment v. BNS (CHICKEN CASE) |
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| P thought he was getting smaller/younger chickens. Tried to apply narrower definition of "chicken". Had to prove he had reason to think his definition applied. Failed to meet that burden b/c: negotiations prior to K, TU (need no amiguity for TU), govt' regulations, impossibility, COP. P's subjective meaning doesn't matter --> Modified Obj Approach |
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Facts: Loral got a contract to make some radar stuff for the Navy. They subcontracted to Austin to produce about half of some required precision gear components. When they got another Navy contract, Austin bid again and wanted to make all the components. Loral refused and said they would only be able to produce the components that they had the low bid on. Austin threatened to stop delivery on the components under the original subcontract unless they got to make all 40 components in the new contract and get a substantially higher price for all the past and present components. Loral looked for another supplier, but was eventually forced to accede to Austin’s demands because otherwise they wouldn’t have been able to meet the Navy’s deadline. Austin sued Loral to recover money still due on the second subcontract, but Loral also sued Austin for the amount of the price increases, claimed they were exacted illegally under duress and shouldn’t be enforced. The lower courts found for Austin, and Loral appealed to the Court of Appeals of New York.
Issue: Was Loral forced to agree to the price increases under circumstances that amount to economic duress as a matter of law?
Rule: “A contract is voidable on the ground of duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding the exercise of his free will.”
Analysis: The court finds that what happened to Loral is a “classic case” of economic duress. Austin’s actions left Loral with no choice because its government contract was so big and important. |
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| Undue Influence -Teacher signed next year's K, got criminal charges for homosex'l activity. Straight out of jail, boss at his house said that if he didn't sign resignation papers, they would put it in the paper and fire him. He resigned. Charges later dropped and sought reemployment. Should have gone to jury. Not fraud b/c the party did not know the falsity of their action. Not mistake b/c both parties knew all the facts. |
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| Undue Influence is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature, and which overcomes the will w/o convincing the judgment. In essence it involves excessive pressure to persuade one vulnerable to such pressure, pressure applied by a dominant subject to a servient subject. U I may consist of total weakness of mind, physical condition, emotional anguish/turmoil, exhaustion, or a combination. Thus weaknesses determine that a lessened capacity of the object to make a free K exists. The application of excessive strength by a dominant over a servient subject is the second element |
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Definition
Two types:
1. Fraud by Concealment
Depends on the subject of non-disclosure.
Basically, it needs to be material.
In other words, it would affect a reasonable person’s decision to enter into the contract.
2. Fraud by Misrepresentation
You might be able to get tort damages – more money!!!
However, you will have to prove scienter – knowledge or recklessness with regards to the truthfulness of the statement. |
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| Whitinsville Savings Bank (D) sold a house to Swinton (P, appellant) in September 1938. Two years later a termite infestation forced Swinton to make costly repairs to prevent further damage to the house. Swinton’s complaint alleged that he did not know of the termite infestation when he purchased the house, he could not observe the condition when he inspected the house, and that Whitinsville Savings Bank knew of the infestation and did not inform him. Swinton alleged that the defendant fraudulently concealed the termite infestation. The trial court granted the defendant’s motion to dismiss and the plaintiff appealed. Unless there was a duty the seller had no obligation to disclose the infestation. In this case the defendant did not have a fiduciary duty to the plaintiff and therefore did not have a duty to disclose. The caveat emptor rule applies in arms-length transactions. |
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Term
| Vokes v. Artuher Murray (DANCING CASE) |
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Definition
Vokes (P) decided to become an accomplished professional dancer at age 51. Arthur Murray (D) was the franchisor of Arthur Murray Dance Schools. Vokes alleged that Arthur Murray’s employees used flattery, cajolery, and awards to lead her to believe that she was a promising student capable of a career as a professional dancer.
1) Statements made by parties having superior knowledge to parties without such knowledge can be regarded as statements of fact.
2) In order to amount to fraud, a representation as to value must be coupled with some untrue or misleading statement of fact used to reinforce the opinion. |
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Term
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Definition
Contracts are construed as a whole
Look at intent of contract as a whole, individual clauses are construed based on this overall intent
Ordinary meaning/Plain meaning
Words mean what they ordinarily do (their plain meaning)
Custom and Usage (UCC 1-103)
Looks at business and locale
Preference to construe contracts as valid and enforceable.
Make the deal work!
Ambiguities construed against the party that drafted the contract.
This is the preference of the courts.
You drafted the contract, you’re stuck with what you messed up. |
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Definition
| P. G & E entered into a contract with Drayage, who would furnish the labor and equipment to remove and replace the upper metal cover of the plaintiff’s steam turbine. The trial ct found that the language used was “classic language for a 3rd party indemnity provision AND one could very easily conclude its intent is to indemnify 3rd parties, it nevertheless held the plain language of the agreement also required df to indemnify pl for injuries to pl property. |
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Term
| Greenfield v. Philles Records |
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Definition
Pl claims that her original agreement with DEF no longer controls those later revenues. Pl also says wants to adduce evidence to prove that it was never the intent of the parties that the original agreement should cover the use of the new technologies available in the 80s.
Court uses strict 4 corners approach, P loses. |
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Term
| Peerless (Raffles v. Wichelhaus) |
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Definition
A contract for the sale of cotton aboard the “Peerless.”
But one “Peerless” is coming in October and another “Peerless” is coming in December.
Court: There was a latent ambiguity (“Peerless” actually meant two ships), so there is no contract. It doesn’t state the essential terms of the contract.
Reading between the lines: if the court enforces this contract it is going to be unfair to one of the parties even though this was an honest mistake the two parties made. |
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Definition
A contract for a “collection” of Swiss coins.
But is the “collection” all of the Swiss coins the guy owns, or just the Swiss “collection” of coins?
Court says that the parties attached different meanings. So, no contract.
Just like Raffles and Rst. 201(3). |
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Term
| McKinnon (Trailer Parker) |
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Definition
| Plaintiff Roderick McKinnon and Defendants Mr. and Mrs. Roy Benedict entered into an agreement providing that Plaintiff would help getting a resort business of Defendants off the ground, said help includes a $5,000 loan, and in return, Defendants promised to cut no trees between Defendant’s camp and Plaintiff’s property and make no improvements closer to Plaintiff’s property than the present buildings. When the resort business did not prosper, Defendants decided to add a trailer park and tent camp, and Plaintiff sued to enjoin construction.RULE.Oppressive contracts will not be enforced in equity, and restrictions on the use of land are not favored in the law |
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Term
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Definition
P Black enters a contract with D Bush. Plaintiff is to act as a middle man and find a purchaser for Bush's products. Bush agrees to pay Black a very profitable percentage of the mark-up price. Black finds purchasers for Bush and negotiates a significant mark-up. The purchasers are buying parts in order to service government contracts. Bush fails to supply Black with the necessary parts. Black sues for breach. Bush moves for Summary Judgment claiming that the contracts should be void on public policy grounds because Black has passed his profits onto the government.
RULE. Voiding a contract with the government for public policy reasons will be constrained to 3 narrow circumstances. 1) Contract to pay a official to act; 2) Contract to do an illegal act ; and 3) Contract which contemplates collusive bidding on contract. If the government wants to regulate price then it needs to be done up front by the legislature, not ex ante by the judiciary. |
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Definition
| Boilerplate terms. allows for calculated risks, the ability to control the risks, and helps to keep matters from juries |
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Term
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Definition
| P’s injured by faulty steering mechanism RULE/ANALYSIS: The attempted disclaimer by the manufacturer of an implied warranty of merchantability and of the obligations arising from that would be inimical to the public good and therefore made the express warranty invalid, with the court questioning the validity of the contract. |
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Definition
| The Shutes went on a cruise. On the ticket, there was a forum selection clause that said any litigation related to the cruise must be tried in Florida. They departed for their cruise from Los Angeles and the ship sailed to Mexico and back to Los Angeles. Mrs. Shute slipped on the ship and hurt herself.Courts have the responsibility to determine whether forum selection clauses in form passage contracts are fair. Pro-Business Opinion |
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Term
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Definition
Procedural Unconscionability-Deals with HOW the agreement was made.
Substantive Unconcsionability-Deals with the CONTENT of the agreement/OUTCOME of the deal |
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Term
| Williams v. Walker-Thomas |
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Definition
D purchased a number of household items form D, for which payment was to be made in installments. The titles for the purchased items would remain with D until the total of all of the monthly payments equaled the stated value of the items.
•There was a provision in the contract which gave P the right to repossess all items bought by their customers if the customer defaulted on a payment.
•In 1962, D bought items from P. Upon default, P sought to repossess all items the D had bought and paid for since 1958.
RULE:If unconscionability is present at the time a contract is formed, the court can choose not to enforce the contract. |
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Definition
| Sold Freezer for a ton more than it was actually worth to needy people. According to the court, the concern for the protection of the poor uneducated consumers against overreaching by merchants who would prey on them is not novel. |
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Term
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Definition
Damages = Cost of cover – contract price
What is “cover?”
refers to an act to mitigate damages by a buyer when there has been a breach of a contract by a seller.
Damages = Market Price – Contract Price
Market Price?
Refers to the amount a product is worth on the open market to a seller when there has been a breach of a contract by a buyer.
Resale situation (where subsequent sale nets less than the contract price) = Contract Price – Resale price |
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Term
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Definition
Cowboy promised a horse. More specifically, a horse he had broken.
Why was specific performance granted?
equity will grant specific performance of a contract for the sale of chattels if there are special and peculiar reasons money damages are inadequate |
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Term
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Definition
| Plaintiff processes cotton in the virgin islands. Defendant contracts to supply Plaintiff with cotton, in return Plaintiff contracts to process that cotton for Defendant. In reliance on the contract Plaintiff invests in reopening a processing plant that had been closed. Defendant fails to supply the cotton. The sole issue in this case is whether overhead costs will be included in expectation damages. This case holds that overhead will not be included when calculating expectation damages. |
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Definition
| Plaintiff Laredo Hides Co., Inc. and Defendant H & H Meat Products Co., Inc., entered into a contract for the sale of cattle hides, which the Court found Defendant had repudiated. Plaintiff purchased substitute hides for substantially more than the contract price and requested damages for purchasing more expensive hides to cover its loss. the proper measure of damages is the difference between the market price at breach or the cost of cover and the contract price plus incidental and consequential damages. The burden is on the seller to prove that cover was not properly obtained. Here, Plaintiff obtained cover, and Defendant offered no evidence that cover was not properly obtained |
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Term
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Definition
| Rockingham County, North Carolina (D) contracted with Luten (P) to construct a bridge. Luten had completed very little work on the bridge when Rockingham County provided a notice of cancellation of the contract. The plaintiff must mitigate damages. It is wasteful to complete a bridge when changed circumstances have rendered it worthless to the party who contracted for its construction. The law seeks to avoid creating disincentives for efficient breach. Therefore, the plaintiff’s remedy is limited to the amount that it would have been able to recover as of the time notice of repudiation was given. |
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Term
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Definition
| D, a farmer, made a K with P to sell his sunflower seeds. P had a K to deliver the seeds to Bambino Bean & Seed for the price it paid to D plus 55 cents handling charge, P’s only profit. Due to some circumstances, the sunflower seed price went up dramatically and D refused to deliver the seeds to P. According to the court, awarding only profit damages to P would encourage breaches of Ks in the marketplace. While the application of 2-713 may not reflect the actual loss to a buyer, it encourages a more efficient market and discourages the breach of Ks. |
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Term
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Definition
| Groves leased some land to Wunder. Groves let Wunder use the land and take sand and gravel from it. Wunder was supposed to pay Groves $105,000 and leave the property at a “uniform grade”. Wunder intentionally breached and didn’t leave a uniform grade. It was found it would cost about $60,000 to fix the grade, however, the property itself if the defendant had performed would only have been worth about $12,000. At trial, the plaintiff recovered the $12,000 plus interest. Rule: The proper measure of damages is the cost of remedying the defect. |
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Term
| Consequential Damages v. Incidental Damages |
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Definition
Consequential v. Incidental Damages
Incidental
Are the things that the buyer may have to do to reject the defective goods/services or to obtain substitute goods/services
Incidental damages are SPECIFIC to the particular contract in question
Consequential
Arise in the normal course or if they are extraordinary, the seller has to know of them before they can be recovered
Consequential damages are damages that occur in GENERAL when this sort of breach occurs. |
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Definition
| RULE- An injured party may recover those damages reasonably considered to arise naturally from a breach of contract, or those damages within the reasonable contemplation of the parties at the time of contracting. |
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Definition
Standards
Restatement = reasonable certainty
UCC = mathematical certainty |
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Definition
| RULE: Courts only allow recovery for loss of profits for a business that can show them (from operations that have been going on for some time) what they have actually lost. NEW businesses may not recover lost profits. |
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Term
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Definition
Liquidated damages are damages whose amount the parties designate during the formation of a contract (PRE-SET!) for the injured party to collect as compensation upon a specific breach.
GOOD...Penalties=Bad |
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Term
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Definition
| P and D made a leasing K. The difference between liquidated damages and penalty is that liquidated damages are good faith effort to estimate actual damages and penalty is not actual damages, but punishment for breach. The current law accepts liquidated damages in Ks where the amount is reasonable. Reasonableness should appear at the time the K is made or is breached. The greater the difficulty of estimating or proving damages, the more likely the stipulated damages will appear reasonable. D has the burden to prove to the court that the damages are unreasonable. In the current case, the receipts compensation clause seems to award P more than he suffered due to the breach |
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Term
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Definition
| contracted to buy D’s property conditional upon him obtaining a mortgage. Under the K, P used due diligence. P didn’t have to apply to lending institutions where he knew that his loan was not going to get approved. “The law does not require the performance of a futile act" |
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Term
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Definition
| Express conditions are strictly construed…the buyer had bargained for this condition on his duty to perform. Strict compliance with the condition is therefore required. |
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Term
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Definition
| Modern Air Conditioning and Overly Manufacturing subcontracted with Peacock Construction to perform heating/air conditioning and swimming pool work for a condominium construction project. RULE: Unless expressly agreed, a subcontractor’s payment is not conditioned upon payment to the contractor by the owner |
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Term
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Definition
Guy ordered a portrait and wasn't satisfied with it. Artist was like, why? And he just said he wasn't satisfied.
This only works in three instances
Painting of a portrait.
Services of a recording artist
Making of a wedding dress |
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Term
| Constructive Conditions of Exchange |
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Definition
Unless otherwise specified, each party must perform its obligations under the contract to be able to demand performance from the other side. Such mutual conditions precedent are constructive conditions of exchange.
The doctrine of substantial performance provides that if a party substantially performs, he or she can recover on the contract even though full performance has not been tendered. What constitutes "substantial performance" varies from case to case, but it means something like "almost fully performing." |
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Term
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Definition
At C/L the buyer had the right to reject goods unless he got precisely what he bargained for…in terms of quality, quantity, and all the details of shipment
UCC - The buyer has to give the seller a chance to cure the defect.
The buyer can revoke his acceptance and return goods after he accepts them only if the non-conformity substantially impairs their value to him.
There is the same rule for rejection of goods delivered in installments. |
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Term
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Definition
| It allows a pro rata recovery based on the contract price for the portion of the contract performed. |
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Term
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Definition
| Mr. Gill made a contract with a lumber company to drive logs down river. Then there was a flood. But high court says that this contract is divisible and Gill can recover as to the unit price for the logs that he drove to their final destination but will get no compensation for the lost logs b/c they didn’t benefit PL |
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Term
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Definition
| If the lack of proper performance is so significant that it is a material breach, you can stop performing yourself and treat it as a total breach. |
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Term
| Walker v. Harrison "The Tomato Stain Case" |
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Definition
Walker owned a sign company. Harrison was a drycleaner. They made an agreement that held:
Walker was going to build a big sign to advertise Harrison’s business.Walker agreed to maintain the sign, keep it clean and repaired in first class condition. Shortly after the sign was installed, someone hit it with a tomato.
Guy called to get signed cleaned and they didn't so he stopped paying rent. Court said this was NOT a matieral breach and guy had to pay up. |
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Term
| K&G Construction v. Harris |
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Definition
| K &G contracted Harris to do excavation work and said that they would pay in monthly progress payments and said that the work had to be done in a workmanlike manner.If a breach is a material breach, the party breached against has 2 options: continue performance and treat the breach as a partial breach (can recover for the breach) or stop performing and treat the breach as a total breach (in this case, he can recover damages for the remainder of the contract or for breach of contract), but if the party elects to treat it as a partial breach and elects to continue the contract, he can never elect to terminate the contract based on that breach. |
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Term
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Definition
An anticipatory repudiation gives the injured party an immediate right to sue.
You don’t have to wait until the time of performance to sue. |
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Term
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Definition
| where both parties to the contract are mistaken as to the same basic assumption, accepted basis for recission |
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Term
| Renner v. Kohl (YUMA CASE) |
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Definition
| Buyers wanted the land to grow jojoba bushes that produce seeds that have valuable oils. Both thought there was ample water, there wasn't. Mutual mistake allowed recision. Damages = Restitution plus anything necessary to avoid unjust enrichment |
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Term
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Definition
| An aleatory contract is a contract in which the performance of one or both parties is contingent upon the occurrence of a particular event. Fullfillment depends on chance. |
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Term
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Definition
| an excuse for the nonperformance of duties under a contract, based on a change in circumstances (or the discovery of preexisting circumstances), the nonoccurrence of which was an underlying assumption of the contract, that makes performance of the contract literally impossible (usually an act of God) ex. Taylor v. Caldwell, place burned down, didn't have to perform contract. |
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Term
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Definition
Supervening - after the contract is formed
Existing - existed @ time of contract formation but unknown to the parties.
Realized performance costs are substantially greater than anticipated costs...undue hardship to perform |
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Term
| Transatlantic Financing v. US (SUEZ CANAL) |
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Definition
| Ship couldn't make it through Egypt b/c canal closed and they wanted more $$ b/c they had to go around Africa. Factors for a plea for impossibility (1) Contingency (something unexpected must have occurred) (2) contingency not allocated for (3) rendered performance commercially impracticable. |
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Term
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Definition
| Performance will be excused when the purpose of a contract is frustrated by an unforeseeable supervening event and the purpose was within the contemplation of both parties when the contract was executed. A contract’s purpose may be inferred from surrounding circumstances. |
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Term
| Third Party Beneficiaries |
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Definition
| Eligible because a TPB or by virtue of transfer. Only intended beneficiaries are legally recognized not incidental beneficiaries. |
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Term
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Definition
Guy loaned his buddy money and promised to pay because also owes thid part money
Rule: Any third person, for who direct benefit a contract was intended could sue on it. ESTABLISHES CREDITOR BENEFICIARY |
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Term
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Definition
| Expands Lawrence v. Fox to cover donees, creates DONEE BENFICIARY |
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Term
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Definition
Expectation - value of what is promised (usual measure of damages, particularly in a commercial situation, give the promisee the benefit of her bargain) Promisee gets $ to compensate her for what she has been promised
Reliance - loss that promisee suffers in some way because of the breach Promisee gets compensated for being made worse off by the promisor's actions (sometimes called out-of-pocked interest, tort-like)
Restitution - promisee gets back what she has paid to the promisor. Value of Benefit Conferred. Promisee gets back what she paid to promisor |
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Term
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Definition
| the requirement is implicit in the principle that the promisee’s expectation interest is to be protected. The terms of a contract “must provide a basis for determining the existence of a breach and for giving an appropriate remedy.” |
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Term
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Definition
| impermissible pressure exerted by one party over another either during pre-contractual bargaining, or, as is often the case, during the attempted renegotiation of an existing deal. |
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Term
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Definition
- Signed union summary because it believed it would benefit, but when he gets the final four agreement it has no benefit at all and he refuses to be bound by the agreement.
□ If both parties are not blameable for the mistake or both are blameable then it is all the same and there is no nonarbitrary basis for deciding which party's understanding to enforce, so they are allowed to abandon the contract without liability. |
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Term
| Whats good about Standard Forms & Contracts of Adhesion? |
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Definition
§ Virtue in standard form contracts?
- Allow manufacturers to calculate the risks and control them. Makes things practicable and helps pricing. |
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Term
| Duty to Read and Disclose |
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Definition
| Common Law Rule: in the absence of fraud, one who signs a written agreement is bound by its terms whether he read and understood it or not, or whether he can read or not. An individual's inability to understand a contract is not a sufficient basis for concluding a contract is unenforceable. |
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Term
| Unconscionability - Two Types |
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Definition
Procedural Unconscionability - fault or unfairness in the bargaining process
Substantive Unconscionability - fault or unfairness in the bargaining outcome -- that is, unfairness of the terms. |
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Term
| Incidental v. Consquential Damages |
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Definition
® Incidental Damages - incidental damages are a seller's commercially reasonable expenses incurred in stopping delivery or in transporting and caring for goods after a buyer's breach of contract, (UCC Sec. 2-710) or a buyer's expenses reasonably incurred in caring for goods after a seller's breach of contract. (UCC Sec. 2-715(1)
® Consequential Damages - Consequential damages are those that are not a direct result of an act, but a consequence of the initial act |
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Term
| Liquidated Damages v. Penalties |
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Definition
□ 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 PRE-SET DAMAGES (good)
□ Penalties - While liquidated damages are a priori calculations of expectation loss under the contract, penal damages go further and seek to penalise a party in some way for breach of a clause above and beyond the loss suffered by the innocent party as a result of this breach. Many clauses which are found to be penal are expressed as liquidated damages clauses but are seen by courts as excessive and thus invalid. (bad)
- Rule: Liquidated damages have to be reasonable approximations of a party's actual or anticipated losses |
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