Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
130 Cards in this Set
- Front
- Back
|
Contract
|
Promise or set of promises for the breach of which the law gives a remedy o the performance of which the law in some way recognizes as a duty; Mutual assent and consideration required
|
|
|
Hawkins v. McGee (1929) pg.10
|
Promise; Guarantee from Dr does not mean contractual guarantee but b/c of pressure Dr put on Hawkins, it is equivalent to promise; Damages=to value of promised hand minus result
|
|
|
Consideration
|
1) Requires performance (or promise of future performance)
2) The performance be bargained for |
|
|
Hamer v. Sidway (1891) pg.16
|
Consideration; Promised nephew $ if didn't drink/smoke etc; Benefit Detriment theory (not modern) Detriment in this case was giving up drink/smoke
|
|
|
Langer v. Superior Steel Corp (1932) pg.21
|
Consideration; Pension check promise if didn't work in similar field; Acceptance probably occurred when cashed first check;
|
|
|
In Re Green (1930) pg.23
|
Consideration; Affair with married woman; Agreement once done to pay her money; Past relationship cannot be consideration; $1 for thousands is nominal
|
|
|
Kirksey v. Kirksey (1845) pg.27
|
Conditional Promises; Gratuitous Promise; Man offers land/house to sister in law after his brother passes away; She sells house and travels; Works for awhile but eventually kicked off;No consideration
|
|
|
Allegheny College v. National Chautauqua County (1927) pg.28
|
Conditional Promises; Moment college accepted money there was assumption of duty to make the endowment fund for her; Bilateral contract not a gift b/c promise for a promise
|
|
|
Strong v. Sheffield (1895) pg.34
|
Illusory Promise; Sold debt from business to niece husband, niece guaranteed in return for forbearance; Forbearance for little or some time is not sufficient, needed some time limit; No consideration
|
|
|
Wood v. Lucy, Lady Duff-Gordon (1917) pg.35
|
Illusory Promise; Express agreement-wouldnt have entered into agreement unless both believed Wood was going to sell her products with her name on them; She shouldn't have sold anything with her name; Implied duty to sell so promise for promise
|
|
|
Rehm-Zeiher Co v. F.G. Walker Co. (1913) pg.37
|
Illusory Promise; Whisky barrels contract, Clause that allowed Walker for some "unforeseen reason" to not take the whiskey (relieved of the obligation) Not necessary to be good or reasonable; Since K was nonenforceable for Walker, it lack mutuality which made is none forceable to Rehm-Zeiher
Lacking mutuality of obligation so neither party held |
|
|
Mattei v. Hopper (1958) pg.40
|
Illusory Promise; Sell of real estate conditioned on obtaining leases satisfactory to purchaser;Satisfaction is based on performance then it is consideration; Fancy Standard- not satisfied when made in good faith has been held as defense to an action on the K
|
|
|
Mutual Assent
|
To ensure voluntariness, law requires that both parties must provide assent for a contract to be formed; Objective perspective protects parties reliance on counter parts words and actions and encourages clarity and communication; Difficult to determine at what point parties progress in negotiations moves past expressions of interest and even tentative agreements to expressions of commitment necessary for binding contract
|
|
|
Embry v. McKittrick Dry Goods Co (1907) pg.44
|
Mutual Assent; Boss said "Go ahead, you're alright" responding to employees request for renewed employment; Statement constituted contract; Court does not look at Inner intent but reasonable person's beliefs of the actions intent; There was meeting of the minds; Employee acted accordingly
|
|
|
Lucy v. Zehmer (1954) pg. 47
|
Mutual Assent; Zehmer while drunk/ in jest sold his farm to Lucy through verbal and a written note; Court focuses on multiple actions of seller with note as well as Lucy's reliance on it; If words and actions have one meaning, undisclosed intention in immaterial unless known to other party
|
|
|
Empro Manufacturing Co. v. Ball Co Manufacturing Inc (1989) pg. 52
|
Mutual Assent; Letter of Intent subject to approval of board members of Empro; Found out Ball Co was negotiating w/ other co; Letter of intent was not contract, each side free to leave; Option to purchase
|
|
|
International Casings Group Inc v. Premium Standard Farms Inc (2005) pg. 54
|
Mutual Assent; Negotiations through several emails; settled on essential terms of K with both parties represented; Writing only important if condition precedent to the formation of binding K
|
|
|
Joseph Martin Deli v. Schumacher (1981) pg. 61
|
Mutual Assent; Rented space for set price for five years; with option to renew; Wanted to renew but wanted too much; Must appear that the promisee assented to obligation in question; No definiteness as to material matters is very essence of K
|
|
|
Offer
|
When communication is sequential, mutual assent takes form of offer paired with acceptance; An offer is the manifestation of willingness to enter into a bargain so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it; Determined not only by the words but also by the context
|
|
|
Interstate Industries, Inc v. Barclay Industries, Inc (1976) pg.66
|
Offer; Price quote for 75k + sq. ft but no quantity specified; Price is essential to contract no mutual assent, mere quotation of price must be distinguished from offer
|
|
|
Nordyne Inc v. International Controls Measurements Corp (2011) pg.69
|
Offer;Modified control panels samples specifically for this company with a price quote and was answered; Price quote can be offer is detailed enough which it was
|
|
|
Craft v. Elder & Johnston Co (1941) pg. 71
|
Offer; Sale on sewing machines, ran out so defendant couldn't buy one; Court ruled advertisement is not offer but offer to negotiate, offer to receive offers; not specific enough
|
|
|
Lefkowitz v. Great Minneapolis Surplus Store, Inc (1957) pg 72
|
Offer; Advertisements specifically for fur coats with quantity, price, etc; Constituted offer because of how specific it was, become K as soon as person accepts by showing up asking to purchase "Clear, definite, explicit"
|
|
|
Consolidated Freight ways Corp of Delaware v. Williams (1976) pg.75
|
Offer; Reward for reporting stealing at the company; Manager reported, company claims reward offer wasn't for managers; No limit of that sort was identified; If construction is doubtful, that which goes most strongly against the party executing the instrument is preferred
|
|
|
Leonard v. Pepsico, Inc (1999) pg. 77
|
Offer; Commercial that offered a Harrier Jet for an absurd amount of Pepsi points and person took it serious and tried to purchase with a check and points; Harrier Jet was not option on form; Use of jet was joke, no object reasonable person would believe it is real
|
|
|
Harris v. Time (1987) pg.86
|
Offer; Envelope with offer go free calculator watch, inside it conditioned with purchase of magazines; Sought huge punitive damage award and watches for everyone promised; Ruled it was Kr b/c left nothing for further negotiation (unilateral contract) BUT law disregards trifles so no case
|
|
|
Acceptance
|
Once offer made, acceptance is necessary to bind the parties; Defined as manifestation of assent to the terms thereof made by the offer in manner invited or required by the offer
Must 1) manifest a willingness to be bound in a contractual relationship 2) Reflect the terms of the offer and be provided in the way in which the offer instructs -"Mirror Image of offer" |
|
|
Carlill v. Carbolic Smoke Ball Co. (1892) pg.93
|
Acceptance; Company promised in advertisement if customer used product 3 x daily for 2 weeks wouldn't get sick; Plaintiff followed instructions but got the flu; Add mentioned deposit in aid that was proof of sincerity; company gets increase in sales which is consideration so there is a K
|
|
|
Glover v. Jewish War Veterans (1949) pg. 97
|
Acceptance; War Veterans put reward in the paper for info regarding a murder; Police questioned mother of the gf of the suspect and she gave them info; claims she is owed reward even though she did not seek them out; (learned about reward after she told officers info); Ruled you cannot accept if you do not know about the offer
|
|
|
Corinthian Pharmaceutical Systems v. Lederle Labs (1989) pg. 99
|
Acceptance; Labs sells and Corinthian buys them frequently, knew price was going to go up so tried to order 1000 when normally ordered 100; Placed order through automated system, but was accepted until Labs sent shipment; Non conforming response was mere accommodation
|
|
|
Termination of Offers
|
4 types: Revocation, Rejection, Time lapse and Death/ Incapacity
-Offer cannot be terminated once accepted and cannot be accepted once terminated |
|
|
Ever-Tite Roofing Corp v. Green (1955) pg.105
|
Termination of Offer; Hired to roof the house; Bilateral contract, accept contract by commencing work which started when they loaded the trucks and began journey to the house
|
|
|
Dickinson v. Dodds (1876) pg. 109
|
Termination of Offer; Memo agree to sell land (was actually an offer) which allowed acceptance till certain time; Before time was out found out land was being sold to another person, tried to submit acceptance afterward; No consideration to keep offer open (binding) Both parties free; Knew seller changed mind
|
|
|
Morrison v. Thoelke (1963) pg. 111
|
Termination of Offer; Mailbox rule case; Offer is effective when received; Acceptance is effective when mailed unless option K which is accepted when received (Default rule)
|
|
|
Statute of Frauds
|
Commonly subject to SoF:
1)Executor/Administrator of estate to answer for the debts of the decedent 2)K that calls for one person to answer for the duties of another 3) K for while marriage provides consideration 4)K for the sale of interests in land 5)K not to be performed w/in one year -A contract that falls within the statute of frauds technically need not be a written K in order to be enforced, so as long as written memorandum evidences the existence and essential terms of the K and is signed by the party against whom the K is being enforced |
|
|
Waddle v. Elrod
|
Statute of Frauds; Electronic signature is enough to count as a signature by the parties; Land deal that attempted to revoke; Under Statute of Frauds valid K
|
|
|
Infancy
|
Bright line rule, K entered into by an individual under the age of majority are voidable at the election of the minor or infant before or within a reasonable time after reach the age of majority; K for necessaries are not voidable
|
|
|
Halbman v. Lemke (1980) pg. 146
|
Infancy; Minor wants to disaffirm contract for car; After 5 weeks engine broke; Property cannot be returned in same condition purchased, diminished value; Not required to make additional restitution, just return car as long as absent from tortious damage or misrepresentation
|
|
|
Webster Street Partnership v. Sheridan (1985) pg. 154
|
Infancy; Minors rented apartment from Webster; Couldn't not continue to pay rent so moved from premise; Tried to argue necessity but court ruled b/c minors had other place to stay it was not needed so disaffirm allowed; Minors can recover all money paid
|
|
|
Incapacity
|
Protection to individuals who lack mental capacity by virtue of mental illness or intoxication-allows K to be voidable in some instances; Restatement limits right to avoid where a contracting partner lacks reason to know of the party's condition
|
|
|
Hauer v. United St Bank of Wautoma (1995) pg. 163
|
Incapacity; Suffered brian injury w/ guardianship but took out loan to give to a guy who was already in debt in exchange for profits; Lack of mental competency (guardianship, lack of understanding, incompetent by Dr) Bank should have known/had reason to know of her incompetency
|
|
|
Farnum v. Silvano (1989) pg. 169
|
Incapacity; 90 yr old woman who was hearing things/believed in imaginary things sold house for 1/2 of value; Understood that she was selling house at time but she failed to understand unreasonableness of sale; Return deed back to owner, (original state)
|
|
|
First State Bank of Sinai v. Hyland (1987) pg. 172
|
Incapacity; Mervin signed as cosigner for son; Argues he is a drunk who didn't what he was signing; Only can be void if Mervin was incompetent at time of signing K; but evidence he understood the business and disaffirmance must be prompt when discover the contract but there was a long delay , didn't rescind so K is not voidable
|
|
|
Duress
|
Protect parties from the consequences of agreements that satisfy technical requirements of K but were not entered into voluntarily ; Parties can avoid enforcement of K coerced by "improper threat" on part of the of error that the offeree has "no reasonable alternative"but to accept
|
|
|
Levine v. Blumenthal (1936) pg. 181
|
Duress; Retail lease with a price for one year and an increase for the second; When it came time for the increase Defendants claimed they couldn't afford it and would have to go bankrupt and not pay at all (threat); Agreeing to paid what is already owed is not valid consideration
|
|
|
Alaska Packers Ass'n v. Domenico (1902) pg. 183
|
Duress; Company hired workers for fishing boat in remote area, In the middle of trip workers demanded higher pay; Boss agreed to increase but then didn't want to pay; Threat of not working in such a remote area with lack of additional workers and importance of finishing the work = Duress, same required work for more money
|
|
|
Austin Instrument Inc v. Loral Corp (1971) pg. 186
|
Duress; Loral has K with Navy to make radar, subcontractor (Austin) makes gear and already has an order to fill; While filling first, the bid on 2nd K, upset they didn't get the bid for all of the gears so decided to not fulfill 1st order; Would have ruined the K w/ Navy if no gears were delivered b/c no other company could get them the parts in time (economic)
|
|
|
Centech Group Inc v. Getronicswang
|
Duress; Centech delinquent on K w/Navy, had subcontractor who they agreed to transfer job to for profits; Subcontractor threatened to not follow through unless received full K w/ Navy; Centech claims duress but Court argues there were other reasonable alternatives so merit for duress
|
|
|
Misrepresentation
|
Assent is not coerced but instead the complaining party lacked info at the time of contracting that, if known would have caused the party to withhold consent; Restatement allowed party to avoid enforcement if his assent was induced by (a) assertion not in accordance w/ facts, that was (b) material or fraudulent and (3) justified in relying
|
|
|
Swinton v. Whitinsville Bank (1942) pg.193
|
Misrepresentation; House infested with terminates, seller does not tell buyer; Concealment is not reason to terminate K; Would need false statement or representation, or half truth for misrepresentation; No duty to disclose non apparent defects to buyer
|
|
|
Weintraub v. Krobatsch (1974) pg. 195
|
Misrepresentation; House purchased that was infested with cockroaches at night and seller did not disclose; Seller hid infestation by not disclosing or not allowing buyers to see house at night; If a fact is concealed and is of such a nature that is significant enough to justify recession, it is a misrepresentation
|
|
|
Stambovsky v. Ackley (1991) pg. 199
|
Misrepresentation; Buyer didn't know the house was haunted, even though Seller published house in national publications and local press as haunted; Her duty to the buyer cannot be less than what she has given to the public
|
|
|
Unconscionability
|
-Procedural (procedural defects in bargaining process)
-Substantive (unfairness in resulting agreement) -Often Plaintiffs just challenge validity of specific terms rather than the entire agreement |
|
|
Williams v. Wallker-Thomas Furniture Co (1964) pg. 211
|
Unconscionability; Lady purchases furniture from store with a very deceptive financial plan (cross collateralization/add on); Ends up defaulting and tries to argue no meeting of the minds; Court states (unilateral mistake) no fraud/misrepresentation; Also argues against public policy which the Court says it should be but is not currently; Affirms for furniture company
|
|
|
Williams v. Walker-Thomas Furniture Co (Part 2) (1965) pg. 212
|
Misrepresentation; Same details but UCC is has been created; introduces idea of unconscionability; Little bargaining power signs unreasonable K, hardly likely that consent given to all terms; Terms so extreme; Sent back to evaluate for unconscionability
|
|
|
Healy v. NY Central & Hudson River (1912) pg. 253
|
Standard Form; Turned in handbag to bag check which gave her a ticket that had a disclaimer on back of it limiting liability to $10; No notice was given, plaintiff had no reason to expect it; No meeting of minds
|
|
|
Hill v. Gateway 2000 Inc (1997) pg. 255
|
Standard Form; Ordered a computer over phone; Computer sent to the house with terms requiring return w/ 30 days if don't agree with arbitration clause; Receiving party has duty to read the terms; Terms are binding if given chance to read and revoke by returning
|
|
|
Leonard Pevar v. Evans Products (1981) pg. 290
|
Battle of the Forms; Price quote for wood, Evans quoted lowest price; Pevar had phone condo w/ Evans ; Issue if there was a 2nd call that entered into an oral contract of sale; Clear confirmations do not need to mirror each other; Goes over the three methods a buy and seller can enter into a K
|
|
|
Materially Alter Oral to Written Agreement
|
If the trier of fact determines that the acknowledgement includes additional terms which materially alter the oral agreement, the terms will not be incorporated and standard gap filler Article 2 will provide the terms
|
|
|
Merchant Exception
|
Must be between two merchants; Additional terms become part of contract unless: 1) Offer expressly limits acceptance to the terms of the offer; 2) They materially alter it; 3) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received
|
|
|
Klocek v. Gateway (2000) pg. 294
|
Battle of the Forms; Overruled Hill v. Gateway, judge got that decision wrong; Receiving party of the terms (very short return rate-5 days) must give express assent to the additional terms for them to be enforceable; You don't need more than one form for 2-207 to apply;In typical consumer transactions (purchaser is offeror, vendor is offeree )
|
|
|
Parol Evidence
|
If evidence is being introduced to challenge validity of writing on separate subject evidence allowed (PE does not apply); If being introduced to prove meaning of term (PE does not apply); If being offered in attempt to prove term that does not appear (PE does apply and evidence not allowed)
|
|
|
Parol Evidence Theories
|
1)Four corners-nothing off the page)
2)Subjective-would similarly situated parties have put these terms into the K 3) Objective-would a reasonable person expect to find this in the K 4)UCC approach-would similarly situated parties have put these terms into the K |
|
|
Gianni v. R. Russel &
|
Parol Evidence Rule; Plaintiff signed lease that explicitly prohibited him from selling tobacco products but plaintiff claims in exchange he would be the exclusive seller of soft drinks in the building (in an oral contract); Agreement prior to signing of the K; Argues it is a separate agreement but Court sees it is as an extension of written; PE applies, evidence is not allowed b/c whole agreement must be written down
|
|
|
Masterson v. Sine (1968) pg. 303
|
Parol Evidence; P sold land to D with option to purchase,D argued that it was just for family b/c doesn't want P's trustee to purchase (P went bankrupt); UCC governs, only prohibits if agreement would have "certainly" been included (naturally made as separate means evidence is allowed)
|
|
|
Nelson v. Elway (1995) pg. 306
|
Parol Evidence;Nelson sold car dealerships to Elway; wrote up but never signed Service Agreement that would pay Nelson $50 for every car sold; Nelson owed money to GMAC and demanded Elway pay; Signed agreement did not contain service and had merger clause that precluded additional agreements; Service Agreement not looked at
|
|
|
Pacific Gas & Electronic v. G.W. Thomas Drayage & Rigging (1968) pg. 321
|
Interpretation; Defendant worked on plaintiffs steam turbine, caused damage to property; Argues provision is for damage to third party's even though not stated; Test of admissibility of extrinsic evidence is whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible; ; Allowed b/c susceptible to multiple meanings
|
|
|
In Re Soper (1935) pg. 323
|
Interpretation; Man fakes suicide, moves and marries another woman who dies and finally marries a 3rd wife before committing suicide himself; While married to the 3rd wife, he signed a stock insurance plan that would give $5k to the "wife"; First wife argues it is her, 3rd wife ends up winning, Court states that b/c 3rd wife was the only wife ppl in the plan knew so she was intended
|
|
|
Frigaliment Importing Co v. B.N.S. International Sales Corp (1960) pg. 326
|
Interpretation; "What is Chicken?" Dispute over the meaning of the word chicken in a K, Looked at various outside sources to determine what the term meant (dictionary, common practice, parties' actions) Plaintiff accepted first batch as acceptable, wouldn't have ordered the 2nd if didn't approve; Plaintiff failed to prove different definition of chicken (had the burden)
|
|
|
Ordinary Condition
|
Events beyond control of either party thus not obligations of either; EX: Insurance K that obligates insurer to pay to rebuild home if destroyed by fire-Insurer's duty is only triggered if house burns down; When not satisfied conditional duty never becomes due, but neither party has legal cause of action against other
|
|
|
Promissory Condition
|
Duty of one party as well as being a condition of the other party 's duty. Ex: Landlord will furnish apartment when tenant posts security deposit; Failure constitutes breach of K which means contractual duty is not triggered and non breaching party has cause of action for breach
|
|
|
Irving v. Town of Clinton (1998) pg. 375
|
Conditions; Snow Plow Contract subject to approval of the town vote; Town reduced the payment; Town's duty to pay was discharged by failure of the voters to approve K as written (nonoccurrence of a condition discharges parties from duty)
|
|
|
Main Electric v. Printz Service Corp (1999) pg. 376
|
Conditions; Contractor was hired to work on project, before complete, owner lost deed to property so failed to pay contractor who could not pay the subcontractors; Interpreting payment clause-subcontractor should not bear risk so interpret clause as promise unless language mandates otherwise; No express acknowledgment by subcontractor rather than contractor to assume risk of owners nonpayment; SInce doubt it is read as promise
|
|
|
Kingston v. Preston (1773) pg. 379
|
Condition; K to turn over business to plaintiff after service and sufficient security paid monthly; Plaintiff argues did service, security requirements isn't condition; Dependence or independence of promise determined by sense and meaning of parties (precendency must depend on order of time in which intent of transaction requires performance) Security is condition of turning over
|
|
|
Goodisson v. Nunn (1792) pg. 381
|
Condition; Plaintiff was to sell property to Defendant b a date but never did, Defendant never paid; Sued for nonpayment; Court ruled conveyance and payment by their nature needed to occur at the same time. So defendant did nothing wrong by not paying
|
|
|
Maxton Builders Inc v. Lo Galbo (1986) pg. 385
|
Substantial Performance and Material Breach; Defendants wanted to purchase new house, put down payment in escrow provided if real estate taxes exceed 3500 buy can cancel K upon 3 days written notice; Taxes exceed 3500 but letter not received in time; When K requires written notice w/in certain time notice is not effective unless received w/in that time
|
|
|
Sahadi v. Continetal Illinois National Bank & Trust Co of Chicago (1983) pg. 386
|
Substantial Performance and Material Breach; Called a $7 million loan less than one day after due; No evidence that due date was point of contention in negotiations since date was changed several times; Later in day when it was due, Bank called the loan knowing it would be paid that week; even offered to pay at that moment but Bank refused; Court states summary judgment not appropriate; Needs to be sent to jury
|
|
|
Jacob & Youngs v. Kent (1921) pg. 391
|
Substantial Performance and Material Breach; K with contractor required specific brand of pipes but failed to notice that not all pipes were correct brand; Didn't discover until after the house was finished; Entitled to what is promised in K but when there is a breach (non material) when it is not fraudulent nor willful-substaintial performance; Normally damages would be cost of being complete (replacement) but when it is unfair and the difference is minimal to none , damages=difference in value
|
|
|
O.W. Grun Roofing Construction Co v. Cope (1975) pg. 395
|
Substantial Performance and Material Breach; Hired to put new roof in a certain color; home owner believed it wasn't uniform so put in new tiles which ended up not matching; Court ruled material breach b/c purpose of K was a uniform roof not just functioning roof; Plaintiff given the difference between new roof and K prince
|
|
|
Clark v. West (1908) pg. 404
|
Excusing Conditions; K to have the plaintiff (writer) abstain from drinking while writing several books; If he abstains paid $6 a page, if not paid $2 a page; Sobriety is not consideration for the K but just one of the conditions; The term can be waived oral or written; SJ not appropriate; Plaintiff need to show evidence of express wavier
|
|
|
Gill v. Johnston Lumber Co (1892) pg. 408
|
Excusing Conditions; K to move wood, paid by about so severable K, entitled to compensation that matches the amount received; Since payment is not single and entire, pay is apportioned to each item
|
|
|
Lowy v. United Pacific Insurance Co (1967) pg. 409
|
Excusing Conditions; K for road work, 2 parts, 98% done with first part dispute over final payment; Hired other workers to finish; Since the consideration was apportioned (2 jobs), the contract was severable; Substantially performed first job
|
|
|
Stark v. Parker (1824) pg. 412
|
Excusing Conditions; Plaintiff entered into K to work for D for one year; Plaintiff intentionally broke the K; conditional precedent to payment; Law denies a party an advantage from its own wrong (Voluntary desertion=No remedy)
|
|
|
Britton v. Turner (1834) pg. 414
|
Excusing Conditions; Plaintiff entered into work K, for one year, voluntarily left early/didn't finish; Issue is whether he can recover $ for time worked (quantum meruit) Employer pay for value of the service he actually receives and the laborer pays for damages where he does not complete the entire K
|
|
|
Several Contract
|
If the part to be performed by one party consists of several and distinct items, and the price to be paid by the other is apportioned to each item to be performed, or is left to be implied by law, such a contract will generally be held to be severable
|
|
|
Entire Contract
|
If consideration to be paid is single and entire, the contract must be held to be entire although the subject of the contract may be consist of several distinct and wholly independent items
|
|
|
Mutual Mistake
|
Three criteria to avoid enforcement of: 1) Both parties must be mistaken at the time if contracting as to a basic assumption of the K 2)Mistake must have a material effect on the bargain 3) Party who is adversely affected by the mistake must not bear the risk of that mistake
|
|
|
Condition precedent
|
Event that must occur before a cut is triggered
|
|
|
Condition subsequent
|
Event that excuses a duty that would otherwise be due
|
|
|
Mistake vs Misrepresentation
|
Mistake is a belief that is not in accord with the facts whereas misrepresentation is an assertion not in accord with the facts
|
|
|
West Coast Airlines v. Miners Aircraft & Engine (1965) pg. 420
|
Excuse of Non-Performance of Duties-Mistake; West Coast purchased engines (with paperwork required), Accumulated junk and hired company to haul away junk cans; Airline didn't know that an engine was in one of the cans; Tried to get it back; Court determines it was mistake, no meeting of minds b/c K was never for engines; Also paperwork that is required was never exchanged
|
|
|
City of Everett v. Estate of Oddmund Sumstad (1981) pg.421
|
Excuse of Non-Performance of Duties-Mistake; Estate sold a safe in auction that contained $32k; Estate tried to claim mistake of having money in the safe; Court determines purpose of safe is to keep valuable things & the intent to sell the safe included the contents; No mistake
|
|
|
Beachcomber Coins Inc v. Boskett (1979) pg. 429
|
Excuse of Non-Performance of Duties-Mistake; Defendant sold Plaintiff a coin that turned out to be fake but neither party knew during the sale; T Ct used coin dealing procedures to rule that the buyer had the duty to inspect but the Ct overrules saying it is not established as custom of trade; Both parties were certain coin was genuine at time of sale; "Mutual Mistake"
|
|
|
Taylor v. Caldwell (1863) pg. 440
|
Excuse of Non-Performance of Duties-Impracticability; Rented Music Hall for performances but Music Hall was burned down before performances could occur; Existence of music hall was essential for fulfillment of K;Performance unexpectedly burdensome or impossible; Both parties excused from K
|
|
|
Krell v. Henry (1903) pg. 453
|
Excuse of Non-Performance of Duties-Frustration of Purpose; Rented room to watch King's coronation but was canceled; Court found the coronation processions to be the foundation of the K and that non happening of them prevented performance of K
|
|
|
Northern Indiana Public Service v. Carbon County Coal (1986) pg. 456
|
Excuse of Non-Performance of Duties-Frustration of Purpose; Contract to purchase coal at min price but gov agency required company to purchase lowest price coal they can which ended up being another company; Tried to claim force majeure clause meaning the gov agency prevented them from keeping K; Ct rules that they assumed risk when entered into K, not forced to break K, just made bad decision with K; so K is valid
|
|
|
Punitive Damages
|
Intended to punish the defendant rather than to compensate the plaintiff-not recoverable in actions for the breach of K
|
|
|
White v. Benkowski (1967) pg. 469
|
Remedies-Punitive Damages; Neighbors promised to supply water to plaintiff so didn't have to drill own well for $3/month; Began to shut off the water at times, claimed violation of agreement; Damages awarded equal to inconvenience and no punitive damages awarded b/c not allowed in breach of K
|
|
|
Delzer v. United Bank of Bismarck (1997) pg. 471
|
Remedies-Punitive Damages; Plaintiffs entered into K w/ bank to take out 300K for two separate things; Collateral all assets and son's; Bank gave 150K loan but not second; Led Plaintiffs to losing their ranch and other assets pledged to Bank; Court found Bank never intended to give 2nd part of loan which = fraud (fraudulent intent)
|
|
|
Laclede Gas v. Amoco Oil (1975) pg. 486
|
Specific vs. Substitutional Performance; Gas Co contracted with Amoco to supply gas to certain housing areas; Could cancel after 1 yr w/in 30 days; Amoco reduced gas to 80% b/c of shortage but Laclede needed 100%; Laclede tried to argue no mutuality b/c no consideration but Cts determine there is b/c of restrictions to cancel; Requirements K, Specific performance needed b/c only way to fix breach
|
|
|
Walgreen Co v. Sara Creek Property (1992) pg. 491
|
Specific vs. Substitutional Performance; Walgreen had K w/ mall to be only pharmacy; Mall later planned to bring in additional pharmacy to fill space and Walgreen protested; Ct deciding between damages or injunction to stop new pharmacy; If damages smaller than gain to mall pay damages; Ct determines injunction b/c it may set off negotiations between parties; Very close though
|
|
|
Benefits of Injunctions over Damages (Walgreen v. Sara Creek Mall0
|
1)Shifts burden of determining cost of defendant's conduct from court to the parties (parties can negotiate price that will make them both better off
2)Prices and costs are more accurately determined by the market than the government |
|
|
Costs of Injunctions (Walgreen v. Sara Creek Mall)
|
1) Injunctions require continued supervision by the court (costly)
2) Some injunctions impose costs on 3rd parties 3)Bilateral monopoly-When 2 parties can deal only w/ each other; Injunctions create this, lack of alternatives creates a bargaining range, may be expensive to negotiate w/in that range-only cost |
|
|
J.O. Hooker & Sons v. Roberts Cabinet (1996) pg. 502
|
Expectation Damages; Subcontract with cabinet company to furnish cabinets, tops, etc and tear out old ones; Later cabinet company sent letter saying considered K null and void; Ct calculates damages by looking at costs associated with if job was complete; Took out storage costs from lower Ct b/c didn't have to rent additional storage for this job
|
|
|
Expectation Damages
|
1)Direct-Loss in value of subject matter of K due to breach (loss in value of performance)
2)Consequential- Losses resulting from reasonably foreseeable or unavoidable 3)Indirect-Costs of securing a substitute performance |
|
|
Groves v. John Wunder Co (1939) pg. 511
|
Expectation Damages; Contract with Wunder to have them excavate and screen gravel on property and level out land; Stopped work before grade required by K is achieved; Breach was willful; Law is damages=cost of performance not the value of it the item at the end;Although huge difference in $ of value of product and cost of performance court rules the cost of performance is owed
|
|
|
Peevyhouse v. Garland Coal and Mining (1962) pg. 515
|
Expectation Damages; Hired Defendant to mine on his land, made holes from surface of ground; In K specifically included clause about restorative and remedial work (cost $29K); Defendants did all work except restorative; Court rules that cost of performance should not be used as damage rule if there is economic waste and mere incidental provision; Used value rule instead; Awarded $300 which is the value of the damage to the land
|
|
|
Rockingham County v. Luten Bridge (1929) pg.523
|
Mitigation Principle; Board approved K with builders to construct bridge; Few months later, revoked K and alerted contraction company but they kept working until finished; Court states After plaintiff received notice of the breach, it was its duty to do nothing to increase damages; Owed only damages up to point alerted of canceled K and lost profit from not carrying out K
|
|
|
General Rule for Recovery for a Wrongfully Discharged Employee (Parker v. 20th Century Fox)
|
1) Amount of salary agreed upon for a period of service LESS the amount which the employer affirmatively proves the employee earned or might have earned with reasonable effort from other employment
2) Employer must show other employment was comparable or substantially similar |
|
|
Parker v. 20th Century Fox (1970) pg. 531
|
Mitigation Principle; Actress had K to star in a musical movie but company decided to not continue with production; Offered role in a western movie, different location, lost rights director rights; She turned it down; Fox tried arguing failure to mitigate damages; Must show it was comparable job but Ct finds it was not; (Diff place, type of movie, loss of creative control) So she is owed amount of salary agreed upon(New movie is different and inferior)
|
|
|
In Re Worldcom (2007) pg. 535
|
Mitigation Principle; Michael Jordan entered in K with MCI, 10 years to advertise products; With 2 years remaining, MCI filed for bankruptcy, argues Jordan had obligation to mitigate damages and failed to do so; Jordan tries to argue lost volume seller; Burden of proof on him to prove; Must prove he would have had the benefit of both original and subsequent K is MCI didn't reject K; Jordan did not show he could and would have entered into subsequent K-Actually shows he wanted to scale back-So he is not relieved of his duty to mitigate damages
|
|
|
Lost Volume Seller
(In Re Worldcom) |
-Applies to services and goods
-One who has the capacity to perform the K that was breached in addition to other potential contracts due to unlimited resources or production capacity -Does not minimize its damages by entering into another K b/c it would have had the benefit of both K even if the first were not breached "Could and would" have entered into subsequent K and could have had the benefit go both (R 347) -Burden of proof lies on the person trying to prove |
|
|
Compensation Principle
|
Foreseeability Requirement;When no substitute available, breaching party is liable for the difference between the K price and the full value of performance expected by the non breaching party
|
|
|
Hadley v. Baxendale (1854) pg. 542
|
Foreseeability Requirement; Mill was stopped by breakage of crank shaft, plaintiff sent it to defendant to make a new one; Delivery back was delayed in part by negligence thus plaintiff could not operate mill for several days; Damages should arise naturally or reasonably supposed as probable result of breach; Didn't tell defendant about consequences of late shaft; Not naturally stemming from/reasonably supposed; Loss of profits not allowed for damages
|
|
|
Allen v. Jones (1980) pg. 553
|
Foreseeability Requirement; Plaintiff had brother cremated and company lost the remains which caused him nervous shock, mental anguish, etc, No physical consequences; Mental anguish is foreseeable in a K with mortician negligence; Torts action; Public policy allows as well "Highly foreseeable result"; Damages allowed for mental anguish
|
|
|
Deitsch v. The Music Co. (1983) pg. 573
|
Reasonable Certainty Requirement; Plaintiff hired band to play at wedding reception, never showed; Ct had to determine damages b/c deposit wasn't enough but full price of reception was too much; Damages=distress, inconvenience and diminution in value of reception, award $815
|
|
|
Sullivan v O'Connor (1973) pg. 575
|
Reasonable Certainty Requirement; Defendant performed nose job on Plaintiff ended up disfiguring her instead of perfecting nose; Couldn't demonstrate loss of employment; Not confined to recovery of out of pocket expenses, entitled to recover for worsening of condition and pain, suffering of 3rd surgery and out of pocket expenses
|
|
|
TAL Financial Corp v. CSC Consulting Corp (2006) pg. 580
|
Stipulated Damages; TAL leased out office equipment through rental agreement; Contained default provision that required liquidated damages 18% of costs plus remaining owed; CSC was acquired by new company and didn't know about lease;TAL claimed damages but Ct ruled unreasonable estimate of actual damages that could have been anticipated at time of K;Reject 2nd look approach;Proved damages were "grossly disproportionate"; Actual damages determined to be ) so unenforceable
|
|
|
NPS v. Minihane (2008) pg. 583
|
Stipulated Damages; 10 year K for seats at football game; If default have to pay for seats for remaining years on K; Grossly disproportionate to real damages liquidated damages must be proven by defendant; If damages difficult to determine, must pay no more than total amount he would have had to pay if he performed his obligations under agreement; Mitigation irrelevant in liquidated damages; Enforceable clause, up aid license fees plus interest =damages owed
|
|
|
Promissory Estoppel
|
A gratuitous promise can be enforced if it induced detrimental reliance in the absence of consideration
|
|
|
Ricketts v. Scothorn (1898) pg.590
|
Promissory Estoppel; Grandfather of Plaintiff promised yearly payment, no consideration to abandon job but she quit anyways; Note was gratuity; Abandon job was voluntary; Having intentionally influenced plaintiff to alter position for the worse on faith of note being paid when due, would be grossly inequitable to permit executor to resist payment on grounds that promise had no consideration
|
|
|
Feinberg v. Pfeifferr Co (1959) pg.593
|
Promissory Estoppel;Bookkeeper worked for company that passed a resolution in board meeting of giving her a retirement fund; Continued to work for sometime after then retired; Relied on payments, new owner took over, stopped payments-considered it as a gift; Retired early on reliance of retirement money promised; K Enforeable
|
|
|
Grouse v. Group Health Plan (1981) pg. 606
|
Promissory Estoppel; Plaintiff was offered a job and told to give notice at his old job; When two weeks notice passed and was able to take new job, the company told him he did not have a job; Between time of offer and rejection by company, found out they needed references and no one would give reference and couldn't contact Plaintiff about it so hired someone else; Promissory estoppel applies here; Remedy granted for breach may be limited to damages measured by promisees reliance;Right to assume he would be given good faith opportunity to perform his duties to the satisfaction of respondent once he was on the job; Damages what he lost in quitting the job he held and in declining at least one other offer of employment elsewhere
|
|
|
Second Look approach to stipulated damages
|
Where actual damages resulting from the breach are measured to determine whether enforcement of the liquidated damages would be unfair; As opposed to using expectations at time of contracting
|
|
|
Equitable Estoppel
|
Can prevent parties from claiming in court a fact they previously denied
|
|
|
Conditional Promises
|
Promises exchanged for consideration
|
|
|
Illusory Promises
|
A promise of a future performance can be consideration for another party's promise or present performance, even if the obligation to provide that future performance is expressly conditioned on the occurrence of any event that is not certain to occur ; Not consideration if the occurrence of a condition of performance is entirely within discretion of the promisor however the element of commitment can be so entirely absent that a promise though cloaked in the language of obligation (ILLUSORY PROMISE)
|
|
|
Gratuitous promise
|
A gift with no consideration
|
|
|
Purported acceptance
|
Conditional on terms additional to or different from those proposed in the offer is not affective as acceptance and instead constitutes a counteroffer; However purported acceptance that requests a change in terms but does not depend on acquiescence to the request can still operate as an acceptance
|
|
|
Option Contract
|
Offer irrevocable for a period of time. Offer is unbound and may decide not to accept the offer and form a contract, but the offeror lacks her usual power to revoke offer; Option must be supported by consideration (such as deposit) UCC makes exception that allows offers that are documented in a signed writing and cannot extend beyond 3 months; Restatement exception allowing writing plus nominal consideration
|
