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84 Cards in this Set

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What are the elements of a contract?
1. Offer
2. Acceptance
3. Consideration
Which contracts are enforceable without C?
1. Promissory estoppel
2. Promise to pay barred legal obligation (such as statute of limitations)
3. Promise to perform voidable preexisting duty
4. Promise to pay for benefits previously conferred.
What are the 3 main enforcement principles of K law?
1. K law is meant to provide relief to the promisee to make up for the breach, not to punish.
2. Relief should put the promisee in the position she would have been in had the K been performed.
3. Damages, mostly, should be substitutional, not specific.
U.S. Naval Institute v. Charter Communications
Facts: Hunt For Red October
Category: Reliance Damages
Rule: Damages = actual loss when possible.
Sullivan v. O'Connor
F: Nose Job
C: Reliance Damages
R: Reliance is a good middle ground. Pain and suffering can be included in reliance.
Definition of C?
Benefit received by the promisor or detriment incurred by the promisee. Fact that the promise was bargained for is usually sufficient.
Hamer v. Sidway
F: Nephew agrees not to drink, smoke, etc.
C: Absetention from legal conduct as C
R: Waiver of a legal right, if that is what is bargained for, is sufficient C. Must be the price of the bargain.
Fiege v. Boehm
F: Good date case
C: Forbearance to sue as sufficient C
R: Forbearance to sue is sufficient C if:
1. P reasonally believed the claim was valid, and
2. P acted in good faith.
Feinberg v. Pfeiffer Co.
F: Lady retires after receiving gratutitous pension.
C: Promissory estoppel
R: Although promise was for past C, she detrimentally relied on it, so enforceable.
Mills v. Wyman
F: Man promises to pay person who had cared for his sick son.
C: Past C does not = C
R: Benefit flowed to a 3rd party, so there is no moral obligation question.
Webb v. McGowin
F: Block and Blockhead
C: Past C when there is a moral obligation
R: When the other party received a material benefit and promisee received a material detriment, moral obligation is sufficient C. Benefit must flow to the promisee directly.
CAB v. Ingram
F: non-compete and employment Ks
C: In employment situations, what constitutes suff. C?
R: Allowing an at-will employee to continue to work and giving promotions/bonuses is suff C for the signing of non-compete clauses after employment began.
What is the test for whether a promise is sufficient C?
Whether the performance itself would be sufficient C. This goes to the mutuality of obligation.
What is an illusory promise?
Where the promisor has not bound himself to anything.
Strong v. Sheffield
F: Wife as surety for husband's debt. Promisor promises to forbear for as long as he sees fit.
C: Illusory Promises
R: Note payable on demand means that the promisor has not really bound himself to forbearing from anything, so it is illusory.
Mattei v. Hopper
F: Leases satisfactory to P
C: Promises conditional on P's satisfaction
R: Not illusory because it doesn't permit promisor to arbitrarily avoid the K. Promisor must be dissatisfied with the performance. Good faith requirement.
Why are requirements Ks not illusory?
They limit the freedom of the promisor -- if he has requirements, he must buy them from the promisee.
Eastern Air Lines, Inc. v. Gulf Oil Corp.
F: Gulf wants to raise oil prices b/c indicatior is no longer valid.
C: Requirements Ks
R: UCC 2-306(1) - must be based on good faith and reasonably foreseeable requirements.
Wood v. Lucy, Lady Duff-Gordon
F: Clothing agent
C: Reasonable best efforts implied
R: Look at the K. If a court can find that a promise to use reasonable best efforts is implied, they will.
Elements of promissory estoppel
1. There was a promise.
2. Promisor should reasonnbly expect the promise to induce action or forbearance.
3. Promisee relied on the promise.
4. Injustice can only be avoided by enforcement of the promise.
Ricketts v. Scothorn
F: Grandfather gives granddaughter promissory note. She quits her job in reliance.
C: Promissory estoppel
R: Gift promise is enforceable b/c promisee took detrimental action in reliance on it.
Can a prospective employee sue for lost wages on an unfulfilled promise of at-will employment? Why? Can any other expenses be recovered?
No. The employer could have terminated the employee at any time after the employment began, so the employee could have no reasonable expectation of any determinable period of employment or pay. But even if lost wages cannot be recovered in such a case, damages for expenses incurred in moving for a job can be recovered. In that case, the employer could have expected the prospective employee to move in reliance on the promise of employment.
Definition of a quasi-contract?
A "quasi-contract" is not a true contract, since there is no mutual assent bargained for and received by the parties. It is a K made up by the court to prevent unjust enrichment.
Elements of a quasi-contract recovery.
1) A has rendered services or expended property which confers a benefit on B.
2) A rendered such performance with the expectation of being paid.
3) A was not acting as an intermeddler or "volunteer."
4) To allow B to retain the benefits without paying A would result in the unjust enrichment of B at A's expense.
Cotnam v. Wisdom
F: Doctor renders services to attempt to save someone's life after they are injured in a wreck.
C:Quasi-Ks
R: Court can find a quasi-k in this situation, b/c the injured person is unable to consent to an actual k. The doctor expected to be paid, and should be paid a reasonable amount for his services.
Callano v. Oakwood Park Homes
F: Shrubbery
C: Quasi-Ks
R: P cannot use the fiction of quasi-contract to substitute one promisor or debtor for another.
Pyeatte v. Pyeatte
F: Asshole lawyer husband
C: Restitution claims
R: Restitution may be appropriate where the wife's unilateral effort inured solely to the benefit of the husband by the time of dissolution.
Test for mutual assent?
Whether a reasonable person would be led to believe there was a K.
Lucy v. Zehmer
F: Land K possibly made as a joke.
C: Mental assent of the parties
R: Mental assent is not required if his actions and words cause the other party to believe there is a K.
Definition of an offer.
An offer is a proposal by one party to the other manifesting a willingness to enter into a bargain and made in such a way (by words or conduct) that the other person is justified in believing that her assent (i.e., acceptance) to that bargain is invited and, if given, will create a binding contract between the parties.
Requirements of an offer.
1. Manifestation of intent to be bound.
2. Certainty and definiteness of terms.
3. Communication to the offeree.
Owen v. Tuniston
F: I could not sell for less than $16,000.00
C: Price quotation
R: A statement qualifying the minimum price one would accept is just an invition to begin negotiations, not an offer.
Fairmount Glass Works v. Grunden-Martin Woodenware
F: P asked for the lowest price at which D would sell mason jars. D replied with a quote and terms for immediate acceptance and shipment. P sent order.
C: Price quote for immediate acceptance
R: Price quote for immediate acceptance constitutes an offer. Correspondence indicated that D intended for the ability to accept or reject to be given to the P.
Why are advertisements generally considered invitations to deal rather than actual offers?
1. Usually addressed to the general public.
2. Usually indefinite to quantity and terms.
Lefkowitz v. Great Minneapolis Surplus Store
F: Fur coat ad
C: Advertisements
R: Ads are considered binding if they are specific enough to be so.
Elsinore Union Elementary School District v. Kastorff
F: Contractor submits mistaken bid. Confirms said bid. P votes to A bid. D discovers that he was wrong, and tells P. They want him to sign the K anyway.
C: Mistaken bids
R: If P knows or has reason to know of the mistake before A, then K is not enforceable. Plus, look for unconscionability with a material mistake.
Requirements for a valid A.
1. A can only be from the person to whom the offer was made.
2. Must be unequivocal.
3. For a unilateral K - doing the act that was asked.
4. For a bilateral K - return promise or performance if bargained for.
White v. Corlies & Tift
F: Carpenter begins performance when a return promise was bargained for.
C: Beginning performance as A
R: If a promise is requested, a promise must be given. The lumber that he got could have been used for any job, so it was not sufficient.
Ever-Tite Roofing Co. v. Green
F: Roofing K - run credit check and the ppl replace them.
C: Reasonable time for A
R: Must allow a reasonable time for offeree to A by beginning performance. A begins when they run the credit check.
Corinthian Pharmaceutical Systems v. Lederle Labs
F: Trying to dupe the system before prices go up.
C: Accomodation
R: UCC 2-206. Shipment of noncomforming goods does not constitute an A if the seller notifies buyer that they are an accomodation. Treated as a counteroffer.
Is silence generally A?
No, but it can be considered so based on the prior dealings of the parties.
Requirements of an effective revocation.
1. Words and/or conduct must be enough that a reasonable person would consider them a revocation.
2. Must be communicated to the offeree.
3. Effective when received.
What is a firm offer?
UCC 2-205. Must be:
1. Signed, written offer by a merchant.
2. Must state that the offer will be held open for a definite time or reasonable time (no longer than 3 months.)
3. Must state that it is irrevocable.
Dickinson v. Dodds
F: Dodds was going to sell property to Dickinson adn said the offer was open, but there was no C given. Dickinson found out through a 3rd party that the property had been sold.
C: Revocation
R: Revocation of O is valid, even when there is a time period stated, if no C is given. Communication of sale by a 3rd party was sufficient notice.
Ragosta v. Wilder
F: "Fork Shop"
C: Revocation prior to performance by A
R: If there is no C to keep the offer open, offeree can revoke anytime prior to A. A detriment can only be C if bargained for.
Minneapolis & St. Louis Railway Co. v. Columbus Rolling-Mill Co.
F: C offered a price for quantities of 2k-5k. M sent an order for 1200.
C: Order specifying quantity
R: Ordering quantity not specified by the offer = rejection (outside the UCC.)
Normally, when is a rejection effective?
When received by the offeror.
What is the mirror image rule?
Common law - A terms must mirror those of the offer. Any differences make the A a rejection and counter-offer.
Step-Saver Data Systems v. Wyse Technology
F: Box-top License
C:Terms printed on packaging that differ from warranty terms, UCC 2-207
R: Under U.C.C. section 2-207, an additional term included in the box-top license is not incorporated into the parties' contract if the term's addition to the contract would materially alter the parties' agreement. In order to be a conditional A under UCC 2-207(1), it must show a clear willingness not to continue with the sale unless the terms are accepted.
C. Itoh & Co. v. Jordan Int'l Co.
F: D's A stated that it was expressly conditional on the additional terms it provided. P accepted and paid for the product.
C: UCC 2-207, K based on performance
R: No K under 2-207(1). Parties performed, so K under 2-207(3). K = the terms on which the writings agree plus gap fillers.
ProCD, Inc. v. Zeidenberg
F: EULA
C: A when terms are not disclosed before purchase.
R: EULA's are ok, as long as the buyer has the option to return the merchandise if they do not agree and there is notice of the EULA on the outside of the box.
Drennan v. Star Paving
F: Sub submits bid to contractor, who relies on it.
C: Construction Ks
R: If the reliance was reasonable and foreseeable, and if the reliance produced detriment, then the subcontractor will be bound to his bid.
Holman Erection Co. v. Orville E. Madsen & Sons, Inc.
F: General lists sub in bid and is awarded the project. Sub finds out later, but the job is given to a minority sub instead.
C: Construction Ks
R: Sub is bound, but general is not. Reasoning is that sub submits bids to several different general, but general relies on the bid of the sub. Also, this allows general to have time to check out the sub.
Hoffman v. Red Owl Stores
F: D wants to buy franchise from P. P keeps telling him to do different things, which D does, to his detriment on reliance of P's promises.
C: Promissory estoppel
R: Even when there is no actual offer, D can recover under promissory estoppel if P has not acted in good faith and there is: a promise, substantial reliance, detriment, injustice unless damages are granted, and foreseeability of reliance by P.
What are the essential terms of a K?
1. Parties to the K
2. Subject Matter of the K
3. Time for Performance
4. Price.
What Ks must be in writing according to the Statute of Frauds?
1. K for the sale of goods for more than $5,000.00
2. K that cannot be performed in less than a year.
3. Suretyship Ks
4. Land Sale Ks
5. Ks in consideration of marriage.
6. Executor promises to personally pay estate debts.
Power Entertainment v. NFL Properties
F: D agrees to assume debt of third party in exchange for a licensing agreement from P.
C: Statute of Frauds
R: "Main purpose doctrine" removes an oral agreement to pay the debt of another from the statute of frauds whenever the main purpose of the promisor is to serve his own purpose.
Langman v. Alumni Association of the U of VA
F: P give deed to arcade that has mortgage attached to D. D accepts, then gets pissy when arcade loses $.
C: Suretyship; Statute of Frauds
R: Assumption of mortgage is not a suretyship. D received a direct benefit.
Can a K with a minor be enforced?
Yes, but it is void or voidable by the minor at their option. The exception is Ks for necessities.
Kiefer v. Fred Howe Motors
F: P, 20, misrepresented his age as 21 and bought a car.
C: Ks with minors
R: K is void or voidable at the option of the minor. D could have checked ID and didn't.
Ortelere v. Teachers' Retirement Board
F: Woman is crazy. Retires because of it.
C: Mental Incapacity
R: If party has diagnosed mental condition and the other party knows or has reason to know of it, K is voidable.
Cundick v. Broadbent
F: Guy makes land sale K; negotiations go on for > 6 months. Wife says husband is mentally incapable.
C: Mental incapacity
R: Must ask whether other party could have known of the defect and whether the disabled person possessed sufficient reason to understand the K.
McKinnon v. Benedict
F: Smart guy v. dumb guy with resort
C: Disparity in bargaining power
R: Court can examine adequacy of C when there is overreaching by one party. Courts do not favor land restrictions.
Tuckwiller v. Tuckwiller
F: Woman agrees to take care of old lady for the rest of her life in exchange for getting her farm when she dies. Woman dies shortly thereafter, before changing her will.
C: Services as C
R: While past services cannot provide C, courts can examine them when looking at the fairness of the K and the adequacy of C. The woman had bound herself to take care of the old lady for years, if needed, so the K was fair.
Alaska Packers' Association v. Domenico
F: Fishermen stop work in the middle of Alaska and demand more $. D agrees to pay it b/c he cannot get substitute workers quickly enough.
C: Economic Duress; Preexisting Duty
R: There must be C for a modification to the K. Cannot demand more from the other party for something you are already bound to do.
Watkins & Son v. Carrig
F: K to excavate a cellar, but hit hard rock. D agrees to pay more, but then won't do so when the work is done.
C: Consideration
R: D released P from the first K and made a new one.
Austin Instrument v. Loral Corp.
F: P threatens to stop shipment of goods under existing K if 2nd K is not awarded to them and the prices are increased for the 1st K. D cannot find substitute supplier.
C: Economic duress
R: A contract is voidable on the ground of duress when one party is forced to agree to the modification by means of a wrongful threat precluding the exercise of its free will.
Odorizzi v. Bloomfield School District
F: Gay teacher
C: Undue influence; duress
R: No duress b/c they had a legal right to fire him. One element of undue influence is lessened capacity to make a free K.
Elements of undue influence.
1. Discussion at an unusual or inappropriate time.
2. Commsumation at an unusual place.
3. Demand that the deal be done right then.
4. Emphasis on seriousness of delay.
5. Multiple parties against single party.
6. Absence of 3rd party advisor.
7.Assurance that there is no time to consult advisor.
What is the rule on disclosure?
If you say something, must say everything.
Exception - knowledge obtained from experts.
Kannavos v. Annino
F: Seller misrepresents the zoning use of property.
C: Misrepresentation
R: Misrep = fraud.
Definition of adhesion K.
Adhesion K = "Take it or leave it" K. Usually involves disparity of bargaining power.
Definition of unconscionability.
Terms so one-sided as to be unfair or even oppressive.
What remedies can a court enforce when a K is unconscionable?
When a court determines as a matter of law that a contract or clause is unconscionable, it has broad discretion and can enforce in total, enforce in part, or rewrite the offending contract or clause.
Williams v. Walker-Thomas Furniture Co.
F: Upon default, store can repossess all items bought on credit.
C: Caveat emptor
R: UCC 2-302.
6 factors considered when determining whether a breach is material or not.
1) The extent to which the breaching party has already performed (the greater the performance, the more likely it is a minor breach).
2) Whether the breach was willful, negligent, or the result of innocent behavior (if willful, it is more likely to be a material breach).
3) The degree of certainty that the party who has breached will perform the remainder of the contract (the more certain, the more likely it is a minor breach).
4) The extent to which the nonbreaching party will obtain or has obtained the substantial benefit she bargained for (if the nonbreaching party has obtained substantial benefit, it is likely to be a minor breach).
5) The extent to which the nonbreaching party can be adequately compensated for the defective or incomplete performance through her right to damages.
6) The degree of hardship imposed on the breaching party by holding the breach to be material and terminating all of his rights under the contract (the more hardship, the less likely it is to be a major breach).
Klein v. PepsiCo.
F: P wanted to buy a jet.
C: Specific performance
R: Specific performance is not given when money damages would be adequate.
Walgreen Co. v. Sara Creek Property
F: Sara Creek wanted to lease space to a competitor of Walgreens despite their agreement not to do so.
C: Injunctions as specific performance
R: Issuing an injunction instead of awarding damages had the benefit of shifting the burden of determining the true cost of the defendant's conduct from the court to the parties.
2 damages formulations
1. Damages = (loss in value) - (costs avoided) + (other losses)

2. Damages = (cost of reliance) + (profits) + (other losses)
Are a lost volume seller's damages limited to the market price/contract price differential provided under U.C.C. 2-706(1)?
No.
4 measures of general damages under the UCC.
1. 2-706, contract price less resale price;
2. 2-708(1), contract price less market price;
3. 2-708(2), profit;
4. 2-709, price.
May a plaintiff recover in restitution even if he would have recovered nothing in a suit on the contract?
Yes. An accepted principle of contract law is that the promisee, upon breach, has the option to forgo any suit on the contract and claim only the reasonable value of his performance.
Tongish v. Thomas
F: Market price of sunflower seeds
C: UCC 2-713 - Liquidated Damages
R: Cases that limit the buyer's recovery to actual loss typically involve sellers who do not breach in bad faith. If it is bad faith, damages are usually difference b/n K price and market price.
Jacob & Youngs v. Kent
F: Builder negligently uses the wrong brand of pipe.
C: Cost of remedy
R: Where the omission is trivial and not willful, it will be excused and damages for the minor breach of condition will be allowed rather than holding that there is a breach of condition forfeiting the entire contract. Damages should be measured by the loss in value (rather than cost of replacing the pipe).