Contracts--6

Front 1

What are examples of areas of human interaction that the courts will not interfere with?

Back 1

(a) Domestic relationships inside a family (b) Religious agreements (c) Surrogate parenting (motherhood agreements)

Front 2

How does KOCH v. KOCH demonstrate the LIMITS OF CONTRACT:ORAL AGREEMENT IN CONTEMPLATION OF MARRIAGE

Back 2

(a) Guy has to choose his wife or his mother. They had an agreement not to allow the guy’s mother to move in. (b) Held: an oral agreement made in contemplation of marriage cannot be enforced. (c) This is under the statute of frauds. However, prenuptial agreements can govern this.

Front 3

How does AVITZUR. V. AVITZUR demonstrates LIMITS OF CONTRACT: ENFORCEMENT OF RELIGIOUS AGREEMENTS

Back 3

(a) They had an agreement to do things by jewish law. One party refused. (b) Held: Courts may enforce a secular provision of a religious prenuptial agreement. (c) Public policy prefvents courts from intruding upon matters of religious doctrine and practice. But they may apply the secular aspects of religious laws.

Front 4

How does IN THE MATTER OF BABY M demonstrate LIMITS OF CONTRACT: SURROGATE PARENTING?

Back 4

(a) P hired someone to give birth to their child. The birth mother then did not surrender the child. (b) Held: (c) Contracts for surrogate motherhood are not enforceable. (d) Public policy prohibits a woman from selling her child before it is born. Sperm donor loses to surrogate other, who invested nine months of pregnancy in the child. (e) If the claims of P and D to the child are equal, the n the child’s best interests must determine custody.

Front 5

What are the three basic kinds of interests of a promise?

Back 5

(a) Expectation (b) Reliance (c) Restitution

Front 6

What are the basic principles that guide courts in enforcing promises?

Back 6

(a) Contract law is not intended to provide relief to the promise to make up for the breach, NOT punish the promisor for breaching (b) Relief should put the promise in the position she would have been in if the contract had been performed, thereby fulfilling the promisee’s expectations (c) In most cases, relief should be substantive (a money award) and not specific (ordering the promisor to perform).

Front 7

How did Hawkins v. McGee demonstrate EXPECTATION DAMAGES?

Back 7

(1) D, the doctor, promised P, Hawkins a 100% perfect hand after surgery but P got instead a hairy hand. (2) Held: A recovery for an unsuccessful operation (breach of warranty) CANNOT include an award of damages for pain and suffering. (3) The PROPER measure of damages would be the difference between THE VALUE TO P OF A GOOD HADN (as promised by D) and the VALUE OF HIS HADN IN ITS PRESENT CONDITION. Pain and suffering were incident of the operation that P agreed to undergo.

Front 8

What kind of damages do courts normally give for contract actions based on promised medical services?

Back 8

(1) RELIANCE DAMAGES. (2) NOT--Restitution (out of pocket expenses) would not be enouph (3) NOT--Expectation would be excessive.

Front 9

How does United States Naval Institute v. Charter Communications, Inc demonstrate DAMAGES: FOCUS ON INJURED PARTY’S DAMAGES?

Back 9

(1) Hunt for the red October book. Paperback sales came out a week before they should have and cut into the hard copy sales. Contract was breached, what kind of damages do we need here? (2) HELD: a breaching party does not have to pay the profits it received through its breach to the promise. (3) Proof of the hardcover sales would have been hypothetical anyways.

Front 10

How does Earth Info, Inc. v. Hydrosphere Resource Consultants, Inc demonstrate DAMAGES: DISGORGEMENT OF PROFITS AS RESTITUTITON?

Back 10

(1) Royalties for product usage were not surrendered upon contract (2) HELD: A party that breaches a contract MUST disgorge to the non breaching party any benefits received as a result of the breach. (3) Retention of profits by D would be unjust enrichment, so the disgorgement of D’s profits is justified. This is an extreme measure.

Front 11

[expectation measure] What is the general theory of damages in contract actions?

Back 11

(1) The injured party should be palce din the same position as if the contract had been properly performed.

Front 12

[expectation measure] What are the two elements of COMPENSATORY DAMAGES?

Back 12

(1) The STANDARD MEASURE: a elgal formula is applied that measures the loss according to the type of contract involved, which party breached, etc. (2) The INDIVIDUALZED MEASURE (a) In addition to the standard measure, the plantiff may be entitled to recover thouse damages that were a consequence of the breach in the particular case at hand.

Front 13

[expectation measure] What is the NORMAL damages assessment in BREACH BY THE PERSON WHO AGREES TO PERFORM SERVICES?

Back 13

(1) Normally, the patient, property owner, etc., can get THE COST OF COMPLETION OF PERFORMANCE plus REASONALBE COMPENSATION FOR THE DELAY OR OTHER DEFECT IN PERFORMANCE.

Front 14

How does Louise Caroline Nursing Home, Inc. v. Dix Construction Co demonstrate EXPECTATION MEASURE: DAMAGES FOR FAILURE TO COMPELTE CONSTRUCTION

Back 14

(1) P had a contract to have a home built by D. P fulfilled the contract but D breached. (2) HELD: The cost of completion IS the correct measure of damages when a builder defaults before compelting construction as required by the contract. (3) The proper measure of damages for failure to complete a construction contract is the amount of the reasonable cost of completing the contract and repairing the defendant’s performance LESS such part of the contract price as has not been paid.

Front 15

How does Peevyhouse v. Garland Coal and Mining Co demonstrate EXPECTATION MEASURE: Cost of performance greatly exceeds increase in value

Back 15

(1) HELD: the correct measure of damages is NOT the cost of doing wteh work rather than the difference in market value of the farm before and after the work is done. (2) In a construction contract, where the defect can be repaired without undue expense, the cost to complete the uncompleted work is the proper measure of damages (since it will give the plaintiff the benefit of the bargain) (3) But where the defect cannot be repaired without an expenditure disproportionate to the object to be attained (putting the plaintiff where he would have been had the contract been performed), the “diminished value rule” is followed (since it avoids economic waste).

Front 16

[expectation measure] What is the measure of damages to the surface estate for gas drilling in respect to environmental laws?

Back 16

(1) The measure of damages to the surface estate remains the diminution in the value of the land caused by the drilling operations, despite what peevyhouse had.

Front 17

[expectation measure] What do the courts follow if there is a substantial good faith effort to perform the contract but there are defects of such a nature that the contract has not been performed according to its terms, and the defects can be remedied?

Back 17

(1) The owner is entitled to recover the cost of making the work conform to the contract. But if the cost of remedying the defects is grossly disproportionate to the benefits, the owner is entitled only to the difference between the value of the property as it would have been if the contract had been performed according to its terms and the value in its condition as constructed.

Front 18

[expectation measure] What is the measure of damages for the non breaching party when: Breach by the person who contracts to have services rendered—BREACH before performance.

Back 18

(1) The contractor may recover her prospective profits.

Front 19

[expectation measure] What is the measure of damages for the non breaching party when: Breach by the person who contracts to have services rendered—Breach during performance

Back 19

(1) The contract has partly performed, she may recover prospective profits PLUS her expenses in rendering part performance.

Front 20

[expectation measure] What is the measure of damages for the non breaching party when: Breach by the person who contracts to have services rendered—BREACH after performance.

Back 20

(1) IF the contractor has fully performed, she may recover the full contract price.

Front 21

[expectation measure] What is the measure of damages when Plaintiff ceases performance after defendant’s breach [Aiello Construction, Inc. v. Nationwide Tractor r Trailer Training and Placement corp.

Back 21

(1) Held: A contractor who justifiably ceases performance due to the owners breach is entitled to recover lost profits. (2) Damages: P’s actual expenditure to the date of breach, LESS the value of materials on hand, PLUS the profit P proved with reasonable certainty would have been realized from full performance.

Front 22

[expectation measure] How does OVERHEAD affect the calculation of costs?

Back 22

(1) Overhead not included in calculation of costs. (2) Overhead expenses are fixed and nonperformance of the contract produces no overhead cost savings; therefore, no deduction from the award of profits should be made for these expenses.

Front 23

[expectation measure] What is the standard measure of damages for breach of contract for the sale of goods?

Back 23

(1) The difference between the contract price and the market price for the goods at the time and place where the goods were to be delivered.

Front 24

[expectation measure] What is the measure of damages for the non breaching party in DAMAGES for Breach of a Contract to Sell goods when there is a –Breach by the seller—Damages exceeding the standard measure

Back 24

(1) The non breaching party may recover his actual loss, even if this exceeds the standard measure. (2) Thus if the seller refuses to deliver the goods contracted for, the buyer may “cover,” or purchase substitute goods from other sources, and recover the differences between the contract price and the cover price.

Front 25

[expectation measure] What is the measure of damages for the non breaching party in DAMAGES for Breach of a Contract to Sell goods when there is a –Breach by the seller—Action for possession

Back 25

(1) The buyer may bring an action for replevin and obtain possession of the goods themselves IF (2) The seller refuses to deliver goods that have been identified to the contract” or specifically set aside as those to which the contract refers, and the buyer is unable, after reasonable efforts, to cover. (3) Not like SPECIFIC PERFORMANCE in that the GOODS NEED NOT BE UNIQUE. The buyer only needs to show that he cannot cover.

Front 26

[expectation measure] What is the measure of damages a BREACH OF WARRANTY?

Back 26

(1) Liability for the cost of repairs to bring the equipment up to the warranted condition, even if this cost exceeds the purchase price. (2) [A seller who breaches express warranties concerning the equipment sold]

Front 27

[expectation measure] To recover for the difference between contract and market price, must plantiffs prove market price for specific goods? [burgess v. curley Olney’s inc.

Back 27

(1) They wanted damges but disputed the value of the goods at the time. (2) HELD: to recover damages for the difference between contract and market price, Plaintiffs must prove market price for the specific goods.

Front 28

[expectation measure] How does COVER affect the remedy?

Back 28

Cover under UCC §2-712 is not a mandatory remedy; the buyer may choose between cover and damages for nondelivery. However, once a buyer chooses to cover, it may not also recover damages for nondelivery under UCC §2-713

Front 29

[expectation measure] Buyer’s damages for lost orders [Delchi carrier Spa v. Rotorex corp] May a buyer who accepts orders based on the quantity fo goods purchased recover lost profits on those sales when the goods turn out to be defective and the buyer cannot purchase replacement goods? Answer and case description

Back 29

(1) Yes. A buyer who accepts orders based on the quantity of goods purchased can recover for lost profits on those sales when the goods turn out to be defective and the buyer cannot purchase replacement goods. (2) This is the air conditioner compressors that were shipped but were defective. (3) This case was governed under the CISG. If the breach was fundamental, the buyer may either require delivery of substitute goods or declare the contract void and seek damages.

Front 30

[expectation measure] Buyer’s cover damages in excess of its actual damages [KGM Harvesting Co v. Fresh network] If a seller’s breach forces a buyer to cover at a higher price, but the buyer has not lost money because its own customer paid on a cost-plus basis, may the buyer still recover the contract-cover price differential as damages from the seller?

Back 30

(1) Yes. Contract damages are intended to give the parties the benefit of the bargain. There may be exceptions for bad faith. (2) This is the lettuce case.

Front 31

[expectation measure] When the buyer breaches, does the seller have the right to sell the goods in a commercially reasonable manner? May she recover the difference between the contract price and the resale price?

Back 31

(1) Yes (2) She is not accountable to buyer for any profit made on the resale.

Front 32

[expectation measure] When the buyer breaches by refusing to purchase goods “identified to the contract,” and seller is unable to resell them, what damages may the seller recover?

Back 32

(1) Seller may recover the full contract price instead of just the contract price-market price differential.

Front 33

[expectation measure][Lost volume seller—Neri v. Retail marine corp. The missold boat case] May a retail dealer recover lost profit even when he resell the goods after the original buyer’s repudiation of the contract?

Back 33

(1) Yes. (2) Unlike a private party, a retailer has an unlimited supply of goods. (3) Thus if a buyer repudiates and the seller resells to another party, the seller has lost a sale and should recover the profits he would have made on the original sale.

Front 34

[expectation measure] What happens in Mitigation; contracts for Employment when—Employer’s breach?

Back 34

(1) When the employer breaches, the employee generally is entitled to recover the full contract price (wages not yet paid at the time of the breach), subject to her duty to mitigate damages.

Front 35

[expectation measure] What happens in Mitigation; contracts for Employment when—Employee’s breach?

Back 35

(1) When an employee breaches, the employer may recover whatever it costs to replace the employee. However, the employee’s death or illness discharges her obligation under the doctrine of “impossibility of performance.”

Front 36

[expectation measure] What happens in Mitigation; contracts for Employment—DUTY TO MITIGATE??

Back 36

(1) If employer wrongfully terminates employment, the employee has an affirmative duty to use reasonable efforts to locate similar work. Also, there is the duty to increase her damages by continuing performance after employers breach.

Front 37

[expectation measure] Builder’s continuation after notice of breach by owner—Rockingham county v. Luten bridge co.—May a party continue performance after notice of breach and recover the full contract amount?

Back 37

(1) No. There was a duty for them not to increase their damages (2) This was the bridge that was built in nowhere case.

Front 38

xxviii) [expectation measure—Employee need not accept different or inferior employment in mitigation—parker v. twentieth century-fox film corp.] May court rule as a matter of law that differences between two jobs in the same field are so great that the employee has no duty to accept the alternative employment?

Back 38

(1) Yes. (2) The general rule is that the salary as to be the same to cover damages for a wrongfully discharged employee. En employee cannot recover for injury to his reputation, but he may recover for a loss of an identifiable professional opportunity.

Front 39

[expectation measure—Forseeability] What is the breaching party liable for forseeable damages?

Back 39

(1) The breaching party is liable for all losses resulting from his breach that the parties as reasonable persons should have foreseen as likely to result from the breach at the time the contract was made. (2) The special circumstances must be known to both parties. If they were known, the breaching party will be deemed to have assumed the liability for such additional damages in the even to the breach.

Front 40

[expectation measure—forseeability—Hadley v. baxendale]. Crankshaft mill case. ---- May the nonbreaching party recover damages for losses it sustains but which would not ordinarily be expected?

Back 40

(1) No. (2) Lost profits would not ordinarily flow from D’s breach, and since the special circumstances were never communited to D, loss of prifts should not have been considered in estimating damages.

Front 41

[expectation measure—Forseeability] In a case where P lost profits and the big account that they were bidding for, can they recover for the big account?

Back 41

(1) No.

Front 42

[expectation measure—Forseeability] in a case where a sugar delivery to a port was late, can the P recover for the lost interest in the sugar prices or for the drop in market price of their nine day period?

Back 42

(1) The drop in market price over the nine day period.

Front 43

[expectation measure—Certainty] What if the amount of the plaintiff’s damages cannot be made certain?

Back 43

(1) The plaintiff can then recover no more than nominal damages for the defendant’s breach.

Front 44

May a nonbreaching party be entited to lost profits where such damages were never contemplated at the time of contracting? [expectation measure—Certainty] Contemplation of the paries—kenford co. v. erie county]

Back 44

(1) No. d

Front 45

Loss of future profits is permitted as damages for breach of contract provided that:

Back 45

provided that: (a) Such damages have been caused by the breach; (b) The lost profits are capable of proof with reasonable certainty; (c) The lost profits were fairly within the contemplation fo the partiew when the contract was made.

Front 46

What is the “new business rule?” What is the modern trend?

Back 46

(1) Prohibits recovery of lost profits arising from the breach of a contract that prevents the opening of a new business. (2) The profitability of anew businesses is too speculative. (3) Modern trend: favors examining the facts of each case independently.

Front 47

[expectation measure—Certainty] What about when there is a proven record?

Back 47

(1) Like in a horse race, if there is a record before and after the breach, then it can be assumed that the loss during the breach would be consistent with its surrounding standards.