Contracts - Brief Briefing PDF

**Contracts** (1-2 sentence of key facts and 1-2 sentence of rule) **Nature and History of Contract** [Shaheen v. Knight:] Facts: - P. contracted with D. to sterilize him, but the procedure was unsuccessful, so P. now claims damages for additional expenses incurred due to having an uni...

**Contracts** (1-2 sentence of key facts and 1-2 sentence of rule) **Nature and History of Contract** [Shaheen v. Knight:] Facts: - P. contracted with D. to sterilize him, but the procedure was unsuccessful, so P. now claims damages for additional expenses incurred due to having an unintended child. D. claims that there is no "warranty of cure" and cannot get damages for the absence of a contracted result. Rule: - There is no implied warranty of cure. Patients enter into contracts with their doctors but cannot claim damages for the lack of an intended result, although **they can contract for a particular result. \`**In this case, the court found that P. wasn't harmed by the result of having another child. **And no damages will be awarded if P does not suffer a harm from the breach.** **Remedies for Breach:** [Hawkins v. McGee:] Facts: - P. contracted with D. to perform corrective surgery as D. promised "100% good hand." Surgery resulted in a deformed hand with diminished function, so P. seeks damages for breach of contract. Rule: - Law of Contract formation: an enforceable contract is formed when a reasonable person would believe that the defendant was making a firm offer to meet terms stated. - Measure of recovery in damages is based on **expectation interest,** **difference in value between** 100% good hand **(**promised result) and the value of deformed hand (result received) but excludes ~~additional~~ the pain and suffering ~~as that~~ which was part of expected contract. [Nurse v. Barns:] Facts: - P. contracted with D. for the use of iron mills for six months, worth 20 pounds per year, but D. breached, and jury awarded damages of 500pds. Rule: - If P suffered natural and foreseeable losses due to the breach, P. may recover those reliance damages even if they exceed the expectation damages of the agreement. [Hadley v. Baxendale:] Facts: - P. contracted with D. for quick delivery of a replacement mill shaft crank and seeks damages claiming that the delay in receiving the part caused a loss of profits. D. claims that these damages were not "foreseeable" and that they were not aware of the special circumstances of the delivery. Rule: - Breaching party in a contract is only liable for damages that were reasonably foreseeable at the time of contract formation. If special circumstances (here, speed) are communicated, the breach would allow recovery for expectation damages (loss he has sustained and profit which he has been prevented from acquiring...) [Chicago Coliseum Club v. Dempsey] Facts: - P. contracted with D. to fight in a boxing match, later D breached by claiming they had no contract and had agreed to another fight. P seeks damages for loss in profits, pre-signing expenses, cost of litigation for preventing D from fighting, and post-signing expenses. Rule: - In an action for breach of contract, a party can only recover on damages that naturally flow from and are the result of breach and must be proven with reasonable certainty. Here, P. cannot recover damages for lost profits, pre-signing expenses, or cost of litigation, but can recover post-signing expenses under reliance interest. [Mistletoe Express v. Locke] Facts: - P contracted with D. for a year, but D. breached forcing P. to close her business, incurring \$3,000 in losses while still owing \$9,000+ in startup expenses. P. seeks reliance interest damages due to the breach but D. claims that as P was not making a profit (even though losses were decreasing each month) damages awarded were unjust enrichment and request expectation interest. Rule: - An injured may recover reliance expenditures as damages as here, she was deprived of the opportunity to recoup them due to the breach. However, the injured party should not be in a better position than if the contract had been~~,~~ but the duty was on the D to prove losses and damages with reasonable certainty. [Rockingham County v. Luten Bridge Co] Facts: - P. contracted with D. to build a bridge but due to political factors, P. breached the contract and informed D. that they would not be paying for further work done on the bridge. D. continued working on the bridge until completed and now seeks full expectation interest. Rule: - When a non-breaching party in a contract receives notice that the other party is going to breach, they must mitigate damages and are only entitled to receive damages for work done up until the notice date. Here, D. is entitled to damages at time of giving notice, but they cannot increase damages by continuing work and then recover such damages from other party. [Parker v. 20th Century Fox] Facts: - P. contracted with D. to star in the film for \$750,000 and for certain privileges, but D. breached the contract by not producing the movie. D. claims that damages should not be awarded because P. did not mitigate damages and provided alternate employment in another film, but multiple contractual provisions were different. Rule: - Employees' rejection of or failure to seek other available employment of different or inferior kind does not amount to a failure to mitigate. Holding/Reasoning: - D's offer of a replacement contract is both different and inferior as the conditions and terms of employment were different (and worse) (subjective theory of value). [Neri v. Retail Marine] Facts: - P. contracted with D. to purchase a boat for immediate delivery and had a deposit, but became hospitalized so wanted to breach contract and get deposit back (restitution interest) D. was able to sell boat to another seller months later, but claims that they lost opportunity to sell two boats/get two profits, seek damages for expectation interest (including incidental damages). Rule: - Lost Volume Rule: volume seller (D.) is entitled to recover the profit (a reasonable overhead + incidentals) he or she would have made on a lost sale, regardless of resale. [Wassenaar v. Towne Hotel] Facts: - P. was hired by D. to be manager of hotel and signed 3-year contract with stipulated damages clause that if P. was fired before term expiration, P. would be paid remainder of his salary for remaining contract period. P was fired and seeks stipulated damages, but D. claims that clause is void as penalty as harm was foreseeable by employee and gives P. windfall recovery. Rule: - Once a stipulated damages clause is determined as enforceable, employee has no duty to mitigate damages. 3-step test to determine enforceability (1) Did parties intend to provide for damages or a penalty (2) Is injury caused by breach one that is difficult or incapable of accurate estimate? (if difficult to determine =\> stipulated damages are reasonable) (3) Are stipulated damages reasonable forecast of harm caused by breach (prospective-retrospective approach) Here, employee's earnings after the breach do not reduce damages awarded as liquidated damages is enforceable. [Lake River v. Carborundum] Facts: - P. contracted with D. to supply abrasive for steel and would send 22,500 tons but D. was not able to provide the full amount, and due to a liquidated damages clause was required to pay P. \$241,000. D claims Rule: - Prospective Approach: Liquidation of damages must be reasonable estimate at time of contract formation of the likely damages from the breach. P. was not able to receive liquidated damages as they were much higher than possible loss but was entitled to damages = (contract value -- costs spared by not completing the contract) [Loveless v. Diehl] Facts: - P. contracted with D. to lease their farm for 3 years with option to purchase a farm for \$21,000 during the lease period. During this period, D's enacted promissory note for farm equipment for \$1,400+ from P. and contracted with individual to buy the land for \$22,000, but Ps claimed that they no longer wanted to sell. Now, P. is suing for breach of contract and D. claimed specific performance of awarding land. Rule: - Default remedy for breach of land sale is specific performance. Here, to deny specific performance and award damages below buyer's expenditures would result in unjust enrichment, as D's spent money on improving the land. [Cumbest v. Harris] Facts: - P. contracted for sale to D. for purchase of hifi radio equipment with option allowing P to repurchase equipment with a deadline, but D. received equipment and didn't give it back. P. seeks specific performance as the equipment of such unique value and a 1 of 1 unique item. Rule: - Specific performance will not be granted for goods unless the specific articles are of there is no adequate remedy at law, the item has peculiar sentimental or unique value and is not readily obtainable. Here, due to the irreplaceability of the equipment and unique value, it qualifies for specific performance. [Sedmak v. Charlies Chevrolet Inc.] Facts: - P. contracted with D. to purchase Corvette and put down deposit of \$500 with verbal agreement from D. However, D. breached by preventing P. from purchasing car and told them they paid to have the first bid, now P. requests specific performance. Rule: - Specific performance may be awarded where goods are unique or in other proper circumstances. Competing offers for the car and the considerable amount of work it would take to procure car show the rarity of the item making it eligible for specific performance. [Dallas Cowboys v. Harris] Facts: - P. contracted with D. to play football, but D. breached by agreeing to play for another team and so P. is seeking injunction and specific performance. P. claims that D. testified to his "uniqueness" that makes him subject to injunctive relief. Rule: - Injunctive relief will be granted to restrain violation in a personal service contract if employee is person of exceptional and unique knowledge, skill, and ability. Here, D is unique as there is no market substitute and so is subject to injunctive relief. But P. is not awarded specific performance because you can't force someone to work but can prevent him from working for someone else. [Britton v. Turner] Facts: - P. agreed to work for D. for a year for \$120 but breached after 9.5 months and claims quantum meruit for payment of work completed. D. claims that P. is not entitled to recover anything as he didn't perform the full service under the contract. Rule: - If employee voluntarily breaches contract for labor, employee is entitled under quantum meruit to reasonable value of services provided -- other party's damages from breach. Here, P. was awarded damages of \$95 but D. did not provide evidence of damages, so amount was not reduced. [Vines v. Orchard Hills] Facts: - P. contracted to buy condo from D. and paid downpayment of \$7,000+ as liquidated damages. P. then breached contract and claims restitution interest as breach enriched the defendant by allowing condo to appreciate in value and sell at higher price. D. claims that liquidated damages clause is appropriate as damages. Rule: - Buyer who breaches valid contract may obtain restitution from seller if amount paid exceeds seller's damages or losses, only if breaching party can prove that innocent party has attained a net gain will it be sustained. Basic measure of damages id difference between contract and market price at time of breach + damages, here the market price was unknown at trial time, but breaching parties can seek restitution of unjust enrichment. [Cotnam v. Wisdom\*\*] Facts: - P. contracted with D. to provide medical services to after he fell off streetcar and hit his head. D. passed away but now Ps seek to recover compensation of services, but D. claims that they shouldn't recover as it was not successful. Rule: - Market Value Approach: Ps are allowed to be compensated under a contract **implied in law,** based on reasonable value to other party on what he received (ex. based on standard price of service) and cannot take into account the D's ability to pay. - "Implied in law" \-- fictional component that allows you to claim recovery in restitution, not a real contract you get the value of the benefit. [Martin v. Little, Brown & Co.] Facts: - P. sent plagiarism notice to D. providing plagiarized work and highlighted copy of breach which D. then agreed and pursued a copyright infringement claim. P. claims compensation for his services under implied contract but D. claims that they never entered a contract and are not obligated to compensate him. Rule: - ~~No quasi-contract~~ No contract was found as there was no assent expressed or implied. No quasi-contract because here, P. was a **volunteer**, and D. did not have to pay for unjust enrichment. A close-up of a document Description automatically generated [Quasi Contract -- Contract Implied in **Law**:] "\[T\]he recovery must be sustained by a contract by implication of law... A contract implied by law... has no actual existence. It is simply a mythical creation of the law." *Cotnam v. Wisdom.* - Quantum Meruit is the unjust enrichment theory of recovery; it supports the idea of a quasi-contract. (quasi-K ≠ real K b/c no mutual assent). [Contract implied in **Fact:**] "A contract, implied in fact, is an actual contract which arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from their acts in the light of the surrounding circumstances." *Martin v. Little, Brown.* - A real contract where mutual assent is implied by the circumstances. [Embry v. Hargadine, McKittrick Dry Goods Co] *Facts:* P. was employed by D. for a year long written contract for 2,000 per year. Prior to expiration, P contends that he was reengaged by company president for another year through a verbal agreement, but was let go in March. President said "go ahead you're all right, get your men out and don't let that worry you" which P took as verbal contract of employment. *Rule:* Objective theory of assent: regardless of parties' subjective or actual intent, if a reasonable person could infer from their conduct intent to enter into a binding and enforceable contract, a binding and enforceable contract is presumed to exist. [Lucy v. Zehmer: ] *Facts:* P's brought suit for specific performance, as they contracted to sell the land with D and he verbally agreed and signed for it. D's contend that the contract was a joke as he was drunk and that it is not valid agreement as they did not intend to sell. *Rule:* Restatement § 17: formation of the contract requires a bargain in which there is a manifestation of mutual assent. "If the words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to other party. Here, the D. showed objective assent by the defendants constituting a valid contract (they both signed the document and all their actions showed that they assented.) [Nebraska Seed Co v. Harsh:] *Facts:* P. alleges that D. refused to deliver seed after demand and sending letter to P that offered seed (language was general and may be used in an advertisement). P replied saying it would accept the offer for price quoted, and asked how soon he could load the seed, then sent another letter and payment for seed, to which D refused to deliver. P's claim that the letter was an offer which they accepted, creating a contract so his failure to deliver was a breach. D claims that there was no mutual assent because the initial letter was not an offer. *Rule:* Restatement § 26: Manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent. Factors include: terms of any previous inquiry, completeness of terms, number of persons to whom communications is addressed. Here, the court found there was no binding contract because the correspondence did not make a complete contract (the number and price of the bushels was not determined) [Lefkowitz v. Great MN Surplus Store:] *Facts:* D had advertised sale of furs in newspaper which offered them \$1 each, to first come first served. P appeared at the store that day and requested to purchase the item but D refused to sell saying that it was intended for women only. D's TOC: Advertisement offering items for sale is a unilateral offer which can be withdrawn, the advertisement was not an offer. *Rule:* Advertisement is not typically an offer as it creates power of acceptance in everyone who reads the ad, was not filtered or made for a specific audience. Here, the ad implied a quantity of people who can accept so it was a unilateral offer that was clear, definite, and explicit, leaving nothing open for negotiation, so P. was entitled to performance. [Leonard v. Pepsico:] *Facts:* P. brings suit for specific performance of Harrier Jet, which he claimed he earned through the Pepsi stuff promotional ad. D. claims that the ad was not an offer. *Rule:* Existence of an offer depends on the objective reasonableness of alleged offerees belief that the ad was intended as an offer. Here, this was an act done in jest and an objective/reasonable person would not find this offer to be serious. [Empro Manufacturing vs. Ball-Co Manufacturing] *Facts:* P drafted letter of intent to buy D, which contained general terms and conditions and stated that agreement was subject to approvals by board, etc but there was a divisive term. D. started negotiations with other company and P issued restraining order from continuing. *Rule:* Parties reached mutual assent without signing on dotted line. Open terms were cirtical component that showed the court the agreement was not determined. Intent must be determined from the language used in the writing and the language here, showed that P had the ability to walk at any point, so neither party intended to be bound and it is not a binding contract. [Arnold Palmer v. Fuqua] *Facts:* P and D entered into a deal to licenses/sell products but ultimately D. pulled out. P sued for breach and stated that the Parties had entered into an agreement/demonstrated intent to be bound. *Rule:* Parties reached mutual assent without signing on dotted line. Court needed more evidence through trial to determine parties intent and resolved by fact finder. Mutual assent could not be determined from the contract alone. [Dickinson v. Dodds] *Facts:* P contracted to buy D's house and as part of the agreement the D. left the offer open until Friday at 9 am on June 12th. P accepted offer before it was revoked by bringing offer in writing by Friday at 9 am. D revoked offer and sold house to someone else before P's acceptance. *Rule:* D made a promise *nudum pactum* (bare promise that is not legally binding). Here, the court found that there was no offer as P was aware of D changing his mind -- there was no existence of the "same mind" at any point in contracting and an offeror is free to revoke their offer. [Ardente v. Horan] *Facts:* P attempted to purchase D's house by making a bid of \$250,000. They sent back a letter and a check for \$20,000 which included a request for more information on the option to purchase furniture. D's refused to sell the furniture and refused to contract with Ps, so P seeks specific performance. *Rule:* Mirror Image Rule: Acceptance must mirror original offers terms and anything else is a counter offer, acceptance may not impose additional conditions or add limitations to the original offer. Here, P's letter was a qualified acceptance (formed a counter offer) and terminated the original offer, so they were not in a contract. [Carlil v. Carbolic Smoke Ball] *Facts:* D published an advertisement that offered a reward to be paid to anyone who gets sick while using their product and to show their intent, they deposited 1000 into a bank account for this purpose. P performed on this agreement, bought a ball and used as directed, but got the flu and now claims recovery but D claims this was not a serious offer/never accepted it. *Rule:* Restatement § 54: no acceptance is required in situations where performance is requested. Here, no notice was requested in the advertisement and they asked to perform the act (unliateral contract) so P's action was sufficient to constitute an acceptance and D. owes her. [Petterson v. Pattberg] *Facts:* P. claims damages of breach as D. sold mortgage to third party but D. claims that they had not contracted so he was able to revoke offer without notice. (P had arrived to D's house and stated "I am here to pay off the mortgage" but D had already contracted with someone else) *Rule*: Restatement § 32: If offer is ambiguous in terms of acceptance, either by performance or promise, offeree is able to choose. Here, D chose full performance and the offer to sell may be withdrawn before acceptance without formal notice. D's offer was withdrawn before it became a binding promise and no contract was made. [Hobbs v. Massasoit Whip Co.] *Facts:* P consistently previously contracts with D to send eelskins, sends as expected but did not receive notice from D of accepting the offer. D eventually destroys the skins. *Rule:* UCC 2-206: Order or other offer to buy goods shall be construed for inviting acceptance either by prompt promise to ship or by prompt/current shipment of conforming goods. P was entitled to take D's failure to act as acceptance. Restatement § 69 also states that silence and inaction operate as acceptance when offeree takes benefit of offered services with reasonable opp to reject them or where because of previous dealings it is reasonable that the offeror accepts. [Nguyen v. Barnes and Noble] *Facts:* P contracted to purchase tablets from D, but D later cancelled his order. P brought class action suit against D which D claims he is bound to arbitrate his claim due to agreeing to their terms of use. *Rule:* User assents to terms when they affirmatively express assent (ex. clickwrap), when user has actual notice of terms or is subjectively aware, and the website provides constructive notice that makes prudent user aware of terms. Here, the terms were found at the bottom of the site and there was no required expressed assent to the terms so P did not assent to terms. [Raffles v. Wichelhaus] *Facts:* Parties agree for sale of cargo of cotton to arrive from Peerless from Bombay. D. meant the Peerless which departed in October, and P. meant the Peerless which departed in December. Defendant refuses to accept delivery of plaintiff's cotton in Dec. Peerless. *Rule:* Restatement § 201: When parties have attached the same meaning to a promise or agreement term thereof, it is interpreted in accordance with that meaning. When parties have attached different meanings, it is interpreted in accordance with meaning attached by one of them if at the time of agreement 1) the party did not know of different meaning attached by the other and the other knew of attached meaning OR 2) the party had no reason to know of any different meaning attached by the other, and other had reason to know the menaing attached by first. We hold parties to other parties terms if it was reasonable to know of other party's terms. Here, there was a failure of mutual assent and there was no contract as the parties subjectively disagreed and no way to break the tie. [Oswald v. Allen] *Facts*: P and D disagree on definition of "swiss coins" in contract for sale. P seeks specific performance but D states that minds of parties never met ≠ contract, and if an oral contract existed it is barred by Statute of Frauds. *Rule:* Subjective agreement of terms is always controlling, but here there is no way to break the tie as it is a failure of mutual assent. [Weinberg v. Edelstein] *Facts:* P leased space for a retail store which operated in same building as D, entitling him to sell ladies, dresses, coats, but D was entitled to sell blouses skirts and beachwear. P's lease contained restrictive covenant for retail store that sold ladies dresses, coats, and suits but D started selling two piece sets which P then sued to enforce. *Rule:* Restatement § 202: writing is interpreted as a whole and all writings that are part of same transaction are interpreted together. Intention of parties to a promise are interpreted as consistent with each other... with any relevant course of performance or usage of trade. Here, Interpretive dispute on terms that hinges on what is possible range of meaning of the term "dress." Dress is a narrow term that is not the same as a two piece set, and P could not enforce restrictive convenant. [Frigaliment Importing Co v. BNS International Sales Corp] *Facts:* D. contracted for the importing of chickens but received stewing chicken. P says chicken means a young chicken, suitable for boiling and frying and brought action as goods should have corresponded with the description. *Rule:* UCC § 1-303: Course of Performance is probative and involves repeated occasions for performance. Other party accepts with knowledge of the nature and has opportunity to object. If one party is new, requires higher level of proof that the D. should have known. Here, Defendant accepted performance without an exception. The contract specified the definition of the chicken as US Dept of Ag as including different types, evidence didn't establish that government def was what parties intended/stated. [Sun Printing v. Remington Paper] *Facts:* P agreed to buy 1,000 tons of paper for a year and to make payment on the 20th of each month, but the price increased in October. P is suing for breach as the price was to be established, D says there was too much left open in terms. *Rule:* Duration matters as parties are allocating risk and court is not sure how to allocate risk = impossible tasks for court to fill the gap. [N.Y. Cent. Iron Works v. US Radiator] *Facts:* P and D had a standing contract, but P surpassed the number that was typically ordered. D claims that quantity should be interpreted as what was done/sold previously, was implied that P's demands would be similar to those in the past. *Rule:* UCC § 2-306: term which measures quantity by the output of seller or by requirements of buyer means actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate. Here, parties intentionally left the contract open and indefinite as to the quantity of goods that the plaintiff might order. Allocation of risk theory -- Plaintiff should be entitled to the benefit, you can't get out of an agreement because its unfavorable. Plaintiff could not use the contract for speculation purposes. [Eastern Air Lines v. Gulf Oil Corp] *Facts:* P brought suit against D for breach of longstanding requirements contract for fuel. P claims entitlement to specific performance because the circumstances were known. D rejects the contract under the commercial impracticality doctrine (would be too much \$\$ to perform). *Rule:* Valid requirements contract: 1) fix for indefiniteness in quantity and 2) there is mutuality, both parties made a promise (buyer to buy from seller, and seller to supply fuel). In situations of loss, refusal based on loss itself is not a valid reason, good faith reductions are permissible even if reduction is unreasonably disproportionate to previous demands. [Diamond v. Krack] *Facts:* P claims they are entitled to specific performance because circumstances were known, D claims that 2-207 is inapplicable as the disclaimer was not part of the contract. Buyer sent purchase order on form with it's terms Metal Matic made a CL counter offer with additional or different terms Parties perform (seller ships goods, buyer pays) (Krack agreed to MM's counter offer). *Rule:* Restatement § 2-207 (3) : a definite and seasonable expression of acceptance operates as acceptance even though it states terms additional to or different from those offered or agreed upon unless acceptance is expressly made conditional on assent to the additional or different terms... Conduct by both parties which recognizes existence of a contract is sufficient to establish a contract.. although the writings don't establish a contract. In such cases the terms of the contract consist of those terms on which terms the parties agree. Aka When communications do not establish assent (no matching offer and acceptance) -- use 2-207(3). Here, M.M. made acceptance expressly conditional on Krack's acceptance of terms so it is viewed as counter offer but Krack's acceptance ≠ assent (need specific and unequivocal indication of assent). They are bound because parties went on to perform. MM's disclaimer was not part of contract, Krack is liable for foreseeable damages aka MM is liable. [Step-Saver Data Systems v. Wyse Tech] *Facts:* P seeking relief for breach of warranty, damages as customers are suing P. D supplied component part for system and included a box top warranty. P contends that contract was formed over the phone and was finite in its terms, box top warranty was material alteration that didn't become part of final agreements. D wants boxt top to be final confirmation, claims contract was formed when they opened the box, having seen the license (Offer=sending the product, Accepted = when opened, boxtop license is conditional acceptance) *Rule:* Restatement § 2-207(2): Informal Assent followed by written confirmations. Additional terms are to be construed as proposals for addition to the contract, between merchants such terms become part of contract unless 1) offer limits acceptance to terms of the offer, 2) they materially alter it or 3) notification of objection to them has been given or is given within a reasonable time after notice of them is received. Here, the parties agreed on price, quantity, type which are sufficient terms that express their intent. The box top license is written confirmation that contained additional term. P. never agreed to proposal for modification and TSL materially altered the agreement (2), and P vocally rejected the terms. [ProCD v. Zeidenberg] *Facts:* P would engage in price discrimination, selling products at different prices for different groups. P states that you cannot sell this information/license to anyone else. D says the later arriving terms are not part of the agreement. *Rule:* 2-207 could apply here (but Judge said it didn't) If it applied.. there was written confirmation of the terms and there was acceptance with written confirmation. D. would be bound. [Hill v. Gateway] *Facts:* P orders computer on phone claims that he did not agree to terms, D put arbitration agreement in the box, claims that if you keep the computer, you consent to the terms in the box. *Rule:* There is no express assent here and P was not on notice that there were terms attached. [Klocek v. Gateway] *Facts:* *Rule:* 2-207 does apply, shipping goods is act of acceptance, additional terms do not stick as there was no agreement on modification and both parties are not merchants) [Masterson v. Sine] *Facts:* Family was attempting to leave a house in the family by selling ito *Rule:* Parol evidence rule was applicable, there [PG&E v. GW Thomas Drayage & Rigging Co] *Facts:* Defendant contracted to repair plaintiff\'s steam turbine, promising to indemnify plaintiff for all property damage. *Rule:* Rejecting Traynor's approach. Looking only at the plain meaning of contractual language ignored the possibility that the parties had contrary intentions. The court therefore held that parol evidence was admissible to ascertain the true intent of the contractual parties even where the writing seemed clear and unambiguous. [Trident v. Connecticut General Life Insurance Co] *Facts:* Plaintiff argued that under California law, even seemingly unambiguous contracts were subject to modification by parol or extrinsic evidence but D contended that loan documents clearly and unambiguously precluded prepayment during first 12 years. *Rule:* The inclusion of relevant, extrinsic, evidence to explain the meaning of a written instrument may be justified only if it were required and helpful to determine the meaning the parties gave to the words from the instrument alone. The contract here was not ambiguous, the new clause would contradict all of the existing or original information in the first contract. [Schwedes v. Romain] *Facts:* Court says there is no writing signed by Schwedes and cannot be enforced. *Rule:* Mutuality of obligation: because one party can invoke statute of frauds, there is no mutual obligation [Boone v. Coe] *Facts:* P's contracted that if lessees would leave their farm in Kentucky, they would furnish them with a house and cultivate land in Texas for a year period commencing once they arrive. They arrived but the materials, furnishings etc weren't ready. Lessor received no benefit but the Lessees incurred detrimental reliance. The doctrine of these cases proceeds upon the theory that the defendant has actually received some benefits from the acts of part performance, and the law, therefore, implies a promise to pay. *Rule:* Statue of Frauds; contract can't be performed within one year. Year period wouldn't start until they arrived, fell within SOF because it couldn't have been performed within one year. No evidence that cost incurred by the P was a benefit to the D so no claim to resituttion for quantum meruit. [Klewin v. Flagship] *Facts*: Parties had entered into an oral contract that failed to specify explicitly the time for performance and P filed suit claiming that D had agreed to to perform as construction manager on all phases of the project. *Rule:* Contract is within one year condition if by its own terms cannot be performed within one year of its making. If within one year, memorandum is required to be enforced. If contract says nothing about the time period, it cannot be enforced within a year of its making or enforced. Performance for unilateral contracts are based on formation, [Hamer v. Sidway:] *Facts*: Agreement between Uncle and Nephew for him to abstain from drinking/smoking in exchange for uncle giving him \$\$. Uncle didn't get anything in return and Willie J. benefitted from agreement rather than took on legal detriment. *Rule:* Legal detriment, agreeing to do something you're not required to do, agrreing to refrain from something you could have done. Willie J. took on legal detriment because he gave up something (smoking + drinking) that he previously had a right to do. [Kirksey v. Kirksey] *Facts*: A brother-in-law, wrote to the widow of his brother, living sixty miles distant, that if she would come and see him, he would let her have a place to raise her family. Shortly after, she removed to the residence of her brother-in-law, who for two years furnished her with a comfortable residence, and then required her to give it up. *Rule:* Promise was not supported by consideration, not necessary that he materially benefitted. Here, shows that he did not materially benefit, the fact that someone does benefit shows a bargain. [Dahl v. Hem ] *Facts*: D paid patients to test medication, offered a years supply to those who complete testing, refused to provide the supply once trial concluded. Was a unilateral contract in exchange for a promise for a performance. *Rule:* Promise did not lack consideration, was binding. Legal detriment = participation, Bargain = one year supply. [Moore v. Elmer\*\*] *Facts*: Moore is psychic and predicted that Elmer would die before 1900, Elmer entered into the agreement and promised to pay the balance of the mortgage if her prediction came true. *Rule:* **Past Acts** are not consideration because of past inducement, past consideration is not consideration at all. Here, Past Sittings were not consideration, promise must induce a return act and the sittings already happened. [Mills v. Wyman:] *Facts*: Mills took care of Wyman's son when he was extremely ill and took care of him for 15 days before his death. Wyman promised to pay Mills for expenses incurred, but then retracted. *Rule:* Wyman's promise lacked consideration, as there was no legal duty to care for his adult son, agreement failed the bargain test. **Moral Obligation** is sufficient consideration for express promise where at some time good or valuable consideration has existed **vs. Legal Duties**: here, because Wyman is an adult, there is no legal obligation to care for him [Webb v. McGowin] *Facts*: Webb is suing the estate of McGowin after his death, Webb chose to fall with a block at a lumber mill to prevent McGowin from harm, Webb sustained significant injuries and McGowin agreed to pay him until his death. *Rule:* McGowin received material benefits in being saved from grievous harm and Webb suffered severe injuries, thus McGowin's promise was a valid contract. Comparison to *Wyman*: benefit was not incurred to the promisor. Here, benefit flowed directly to the promisor. [Stilk v. Myrick] *Facts*: Employees are sailors and two sailors deserted, they agreed with captain that if they could not hire replacements, he would pay them more but once they got back, capt did not uphold his promise. *Rule:* Pre-existing duty rule, Employees were not taking on any legal detriment because they were performing within their original contract, the agreement with the captain was void for lack of consideration. Desertion was a foreseeable emergency of see voyages and extra labor had already been pledged to captain. [Alaska Packers v. Domenico] *Facts*: After arriving in Alaska, the sailors stopped working and demanded \$100 for the season in order to resume their work. Being unable to hire replacement sailors, an APA representative in Alaska signed a new contract agreeing to the higher pay. However, the APA representative told the sailors that he did not have the authority to alter their original contracts with APA. When the sailors returned to San Francisco, APA paid the sailors only their original contract price of \$50 or \$60. The sailors sued APA in admiralty to recover the full amount payable under the new agreement, alleging they had demanded the new contract price because APA had provided them faulty fishing nets. *Rule:* Libelants agreed in writing for stated compensation, and the terms of their employment Consent to the demand was without consideration for the reason that it was based solely upon agreement to render exact services and none that they were under contract to render. They willfully and arbitrarily broke that obligation. [Dyer v. National By-Products] *Facts*: Dyer was promised lifetime employment as he lost his foot in workplace accident. National denied the agreement. *Rule:* Release of invalid legal claims is not valid consideration. Forbearance from bringing an unfounded claim is only valid consideration if the claim is doubtful or the party genuinely believes the claim is valid. Party's good faith belief is judged based on info available at the time of settlement. [Schnell v. Nell] *Facts*: Promises to pay \$\$ and in exchange gave 1 cent gave "love and affection." *Rule:* Nominal consideration is consideration that is in name only and doesn't appear to satisfy the bargain. Here it would seem likely that Schnell would give \$200 in exchange. Highly unlikely so instead they're trying to disguise gift as a bargain. [Hoffman v. Red Owl Stores Inc] *Facts*: P says they took actions in reliance on Red Owl's promise to build a store, D says that negotiations were never complete so there was no agreement. *Rule:* They did not form a contract as they had not reached determinations on the key terms, doesn't make Red Owl contractually liable. Rewarded reliance damages in promissory estoppel, court awards what justice so requires. [Ricketts v. Scothorn] *Facts*: Scothorn quit her job because her grandfather offered to pay her as he didn't want his grandchildren to work. D contended this was a gratuitous promise with no consideration as there wasn't a bargain. *Rule:* Promise to pay granddaughter was not an exchange as she did not give anything up, but the promisee suffered some detriment in relying on the promise and such reliance was foreseeable result of the promise. [Feinberg v. Pfieffer] *Facts*: D contends that gratuitious promise is not a contract. P worked for company for two years and promise was not made to depend on fulfillment of a term. *Rule:* Promissory estoppel is used when there is some issue with contract cause of action, contract is default cause of action. She changed her position for the worse when she retired even if disregarding her medical condition, it induced reliance because it would be difficult for her to get a new job. [Pitts v. McGraw] *Facts*: P contends that was promise to pay 1% of sales in exchange his customer list. D contends that it was gratuitious promise, not enforceable in contract *Rule:* P was independent contractor for the company and business relationship was terminable at will by either party, letter did not require P to take any action and induce P to detrimentally change his position in reliance. [James Baird Co v. Gimbel Bros] *Facts*: P relied on contractual theory that D promised to supply linoleum and we accepted that offer to use it on our bid, D withdrew the offer prior to acceptance. *Rule:* Promissory estoppel will not be used to enforce an unaccepted offer for an exchange or promises or performances. No evidence suggests that the offer was intended to create a unilateral obligation on Gimbel [Drennan v. Star Pavings Co: ] *Facts*: P used D's bid to supply paving in making their bid, but D then revoked the offer. *Rule:* Promissory estoppel applies as the implied promise is not to revoke the offer. When the offeree begins performance, a unilateral contract is created. Bilateral: acceptance is in form of supply pavement in exchange for \$\$, reasonable reliance on their bid in submitting general bid and there was an implied promise not to revoke. General contractors reliance on subcontractor-implied promises that induce reliance can be upheld under promissory estoppel because sub-contractor can foresee the reliance. The bid was low but not SO low that it was obvious mistake, gave party awareness that it would be different. [Locke v. Warner Bros] *Facts*: P contends that Warner Bros should have given consideration for her projects and were obligated to demonstrate good faith efforts to consider her pictures. She supplied evidence that they feigned consideration. *Rule:* Honest satisfaction: term in contact that someone will or won't be satisfied. Employing a subjective standard vs. employing objective standard in instances of transacting goods or providing information on industry standards. [Seidenberg v. Summit Bank] *Facts*: Parties expressly agreed to formulate joint marketing programs, but it is impossible to specify aspect of parties performance. S.B. had discretion in how to perform in marketing programs. *Rule:* Where there are discretions in performance, Parol Evidence rule doesn't apply to the parties intent so it's impossible to answer this question without introducing extrinsic evidence. Violation of the spirit of the contract in denying reasonable expectations of performance. [Inman v. Clyde] *Facts*: Company breached by firing the plaintiff. The company had duty to pay him salary, but this is not a condition precedent, the company had a duty to pay him damages for breach conditioned on the event that he was fired. *Rule:* When we have express condition written into agreement = strict compliance is necessary to adhere to condition. Contract specified it was condition precedent, by failing to provide written notice P forfeits his right to performance, failure to adhere to condition is forfeiture. [Howard v. Federal Crop Ins. Co] *Facts*: Insurance company's duty to pay was a condition dependent on damage to the crops. P contends that because it was condition precedent, it was not expressly stated, one was condition and one was promise. *Rule:* Interpretive preference for not having forfeiture = interpretive preference for having a condition. Here it was only a promise, does not relieve insurance company to pay for breach. [Clark v. West\*\*] *Facts:* \$4 on condition of C not drinking, but D's stipulation was total abstinence. Ask what the parties were bargaining for, here they were not bargaining for him to stop drinking. *Rule:* Promise to pay an additional \$4 per page on condition, Clark does not drink = paying \$ even though Clark is drinking is waiver of condition. BUT promise to pay an additional \$4 per page in exchange for Clark not drinking is a modification. [JNA Realty Corp v. Cross Bay Chelsea Inc] *Facts:* Duty was to extend or renew the lease, condition was to inform JNA with a 6 month notice to renew the lease, but P had duty to read contract, but P contends that they signed contract and failed to meet condition because failure to comply was inadvertent. *Rule:* Option contracts don't grant excuse for conditions as parties haven't typically relied on the other party. But here, there was reliance, court may excuse condition to excuse disproportionate forfeiture. [Harrell v. Sea Colony:] *Facts:* P wrote a letter stating that he wanted to cancel contract contingent on deposit, P is seeking expectation damages and return of deposit. D believes P anticipatorily repudiated the contract. *Rule:* Anticipatory Repudation; P didn't repudiate as request to cancel isn't enough. Either party agreed to mutual recission and P is entitled to deposit. Or Sea Colony was in breach and P would be entitled to deposit and expectation damages. [Scott v. Crown:] *Facts:* Performance on 2^nd^/3^rd^ contract is under question, seller had reasonable grounds for insecurity (inherently context specific), seller can demand assurances in writing and may suspend performance *Rule:* Failure to receive assurances = repudiation = entitles party to terminate. Sellers statement was not demand for assurance, it was a cease of performance, Oral demands must be clear to parties. [Jacobs and Young v. Kent]*:* *Facts*: If it was breach, what is measure of damages, was using the incorrect pipe a material breach that relieved his duties under the contract? Duty to pay is conditional on builders performance. Builder substantially performed so can't be a material breach OR material breach so did not substantially perform. Conditions here are implied rather than express. Contract could have provided expressed condition by requiring payment and reaches same endpoint as builder's failure relieved party from performance. Owners ability to pay is dependent on substantial performance, forfeiture would be disproportionate to Builder's harm. *Rule*: Doctrine of Substantial performance: when parties aren't obligated to perform unless other, constructively conditioned on each other, they still have to perform, party's duties are independent of each other. Deficiency in the builders performance is trivial! [B+B Equipment v. Bowen:] *Facts:* dispute over who gets to keep the stock, as it has significantly increase in price. If D breached, company was no longer obligated to perform, not required to let him pay off the rest of the loan. If his breach was immaterial, company can sue him for damages, but they are not relieved from own duties. *Rule*: nonbreaching party required to keep going to the extent which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing. [Lane v. Foster:] *Facts*: P sent letter asking if Lane would perform stage two of the contract, requesting assurances, Lane then decides that they won't even discuss until P paid remaining amount in Stage 1. *Rule*: Party with reasonable doubts can demand assurances, but doubts on contract was for Stage II and money due was for Stage 1. If requesting adequate assurances, you can withhold future assurances not previous performance. Fosters breach was immaterial and did not relieve Lane of performance as it was not material. If a party justifiably request assurances, they can suspend performances then Lane anticipatorily repudiates by suspending their own performance. Two wrongs don't make a right: if first wrong is material breach, then it does entitle you to terminate performance. [Ramirez v. Autosport:] *Facts*: looking to recover restitution damages (because they had traded in the van) and expectation damages (for breach= if the contract had been performed) *Rule*: Where seller fails to make delivery or repudiates the buyer rightfully rejects or justifiably revokes acceptance, the buyer may cancel in addition to recovering so much of the price as has been paid. [Halpert v. Rosenthaal:] *Facts:* Defendant wanted recission of the contract to void their obligation and restitution, Plaintiff seeking damages for breach of contract. Contracted to purchase a house that was termite free. *Rule*: Must be a misrepresentation of fact. Seller's statement is inducing cause that would induce action, has to substantially contribute to manifestation of assent but doesn't have to be main reason. If not material then it is not likely to induce assent and make doesn't know it would induce action. Here, court rejected statement that D did not materially misrepresent. Merger clause bars representations other than those represented in the contract, buyers aren't arguing that house being termite free was part of the contract, instead arguing that assent was brought on by statement of fact (thus misrepresentation.) [Stambovsky v. Ackley]*:* *Facts:* Buyer wanted to breach contract because they didn't know it was a haunted house! *Rule*: Seller was under no obligation to share information beyond asked. Seller did not take affirmative acts to prevent but concealment is treated as expression that fact doesn't exist. Seller here was responsible for creating the reputation but the buyers failed to discover or back up the information supplied, could be researched. If roles are reversed, buyer does not have to disclose information (such as house's value being larger than believed by the seller). If Buyer has superior knowledge this is for their own understanding. [Arthur Murray v. Vokes]*:* *Facts:* D seeks recission of the contracts and restitution in claiming Misrepresentation. D spent thousands of dollars for additional dance classes due to false misrepresentations related to her dancing ability and skills. *Rule*: "In my opinion" is an implied statement of fact: making statement about one's own state of mind, equivalent to I know of facts that give rise to my opinion -- implying knowledge. Generally you need to take opinions with grain of salt, here speakers had special skills in making opinion determinations on which P could rely on. Parties acting "at arms length" are more likely to be skeptical of another vs. if parties are closer, they're not likely to be skeptical. [Austin Instrument v. Loral Corp]*:* *Facts:* D is trying to avoid substantial price increase in the modification, not trying to avoid contract, just trying to avoid modification. P threatened to not deliver parts (breach), unless they complied with price increase. *Rule*: **"cover rule:**" in Austin Instrument v. Loral, Loral was unable to cover from another source, aka alternative courses for breach left Loral with no reasonable alternative [Ordorizzi v. Bloomfield School District:] *Facts*: P is looking to avoid his agreement to resign, court cites subjective and objective standard for undue influence. *Rule*: Undue Influence is combination of two elements: Vulnerability relating to some type of undue influence on a frail person (subjective), Over persuasion in behavior is objective element of the defense (ex. showing up at an odd time, multiple persuaders, time is of the essence, inability to consult third party/lawyer = none of these are duress but all are undue influence. [Williams v. Walker-Thomas:] *Facts:* P had entered into contract to buy stereo set, but contracted incurred debt with every purchase until the entire amount had been paid back. Clause that allowed D to take back all items previously purchased *Rule*: Doctrine of Unconscionability can apply*;* absence of meaningful choice and contract which terms unreasonably favor another party. [Sherwood v. Walker] *Facts*: Does the cows fertility allow the seller to rescind the contract? Parties shared the idea that the cow (rose) was barren and thus the value of the cow. *Rule*: Mistake of fact: Mistakes about quality of the goods aren't grounds to rescind, mistakes about substance are grounds. Basic assumption: not a failure of mutual assent, mistake about assumption on which contract is made [Wood v. Boynton ] *Facts*: D says to P that this might be a topaz and wants to sell to P, both parties are unsure about what the type of stone is.) *Rule:* Mutual Mistake: Both parties operating with degree of uncertainty, difference is in how court analyzes the mistake, she assumed the risk of not knowing what the stone was: both parties are bearing the risk of their assumption not being true. (low risk for buyer, high risk for seller Lenawee County Board V. Messerly: *Facts*: Buyer's TOC: we weren't aware of septic tank spill and should be entitled to rescind based on mutual mistake. *Rule*: Assumption that it would be profitable rental property is a basic assumption that the land was viable, sewage has material effect on the exchange and the value of the property*.* "As is" clause: parties agreed on allocation or risk to the buyers, deduce that parties meant for risk to go to one party. Misrepresentation of Substance mistakes affects allocation of risk but not as common for procedural mistakes. [Tyra v. Cheney] *Facts*: On basis of mistake, P wants to rescind the contract and they are entitled to restitution. D contends that you signed a written bid for \$3,000. *Rule:* Unilateral mistake, only plaintiff made a mistake. Initial bid of \$3,000 gave D reason to know of P's mistake. [C&A & American Casualty v. Phoenix:] *Facts*: Insurance companies are filing claim against D, estate of River Phoenix for breaching contract due to non performance (death), D says breach is excused by impossibility defense. Here, court said that P should have included a clause regarding his death in this manner as they did for other ways (ie. Being in a plane, etc), people are not at fault for their own death, but in some instances when performance is personal, his death excused his obligation to perform making performance impossible. *Rule*: death or incapacity of person necessary for performance. If the existence of a particular person is necessary for the performance of a duty, his death or such incapacity as makes performance impracticable is an event the non occurrence of which was a basic assumption on which the contract was made. [Transatlatntic Fishing Co v. US] *Facts:* Parties contracted to carry shipment from TX to Iran, after departure, Egypt shut off access to the Suez Canal due to colonial invasion. *Rule*: Impracticable; Did an event occur or fail to occur? If it was just to get from TX to Iran ≠ assumption; but if contract specified by means of suez canal then its an assumption Court said that while it was failure of basic assumption, performance did not become impractical. Performance required modest cost increase, which is not impracticable. (doesn't matter if it's commercially practicable, its whether performance is still possible, aka 15% increase in cost isn't enough)***.*** Defendant should have used defense to breach or rescinded the agreement and covered in restitution. Their TOC is legally ineffective because they are doing too much! Does language or circumstances indicate risk going forward? Suez cris was brewing and was foreseeable. But just because it might be foreseeable ≠ a defense. War and embargo are explicit unforeseeable risks under the UCC. [Krell v. Henry:] *Facts:* Owners obligation was to provide the room and Buyer's obligation is to pay for the rooms, both parties can still perform. P contends that court shouldn't consider frustration of purpose, and it should only apply to the subject matter of the contract where there is no mention of the King's coronation procession *Rule*: There was a failure in basic assumption, PER is not applicable to defense. Distinguishing between basic assumption and the parties purpose: purpose must be principal purpose of that party in making contract, purpose doesn't have to be shared unlike basic assumption. Defendant's purpose is frustrated but Plaintiff's wasn't -- both shared assumption that coronation would take place. [Lloyd v. Murphy]*:* *Facts:* parties contract for lease of land to service and sell cars, but then World War 2 hit and D contended that they were unable to pay rent, due to the restrictions imposed on selling cars. P sought declaratory rights and remainder of unpaid rent. *Rule*: What was principal purpose of the defendant? "Selling and servicing cars:" This wasn't substantially frustrated as regulation did not curtail servicing of cars. Even if purpose was to run profitable business, wavier doesn't prevent D from making money. Substantial frustration aka performance must be virtually worthless, Basic assumption that cars could be sold indefnitiely, both parties shared basic assumption of the continued viability of auto sales. Foreseeability: if you assume that you will be able to sell cars with war looming (as both were aware of), you assume the risk that cars can't be sold.