Contracts Ii 2011 Concepts & Cases

Front 1

McKittrick Dry Goods
Facts/Holding

Back 1

Renewal of contract taken from "go ahead, you're all right. Don't let that worry you". Held to be a renewal

Front 2

objective notion of contract

Back 2

Assent is an objective notion. Reasonable person. nothing to do with intent. force of law to acts of the parties, usually words, which ordinarily accompany and represent a known intent. LH says 20 bishops. More reliable than subjective. Subj has proof problems "we must look to the outward expression of a persona as manifesting his intention rather than to his secret and unexpressed intention"

Front 3

Lucy v Zehmer
Facts/Holding

Back 3

Did contract as a goof, but had outward signs of being good. K enforced. Go by what a reasonable person in position would believe.

Front 4

Cargill Commission co. V. Mowery

Back 4

Guy used industry code word wrong. Company thought he was selling 35k not 3.5k. Company had relied, guy held to K

Front 5

Factual mistake

Back 5

Can get out of a K as long as the mistaker informs the mistakee before reliance.

Front 6

Raffles v. Wichelhaus
Facts, Concept

Back 6

There were 2 "peerless" ships. Buyer wanted on Oct. ship, came on Dec. ship. Misunderstanding

Front 7

Misunderstanding

Back 7

If both parties meant different things, and neither had reason to know what the other meant, there is a misunderstanding and no contract
If one party is ignorant and the other is not, then the not ignorant is stuck with the ignorant one's interpretation

Front 8

Corbin on Contracts: The offer

Back 8

Offer is an expression of assent by one party to definite terms provided the other party expresses his assent to the identically same terms.

Front 9

Lefkowitz v. Great Minneapolis Surplus Sore
Facts

Back 9

Fur coat "worth to 100" and stole "worth 139.50" offered for $1 in ad. Guy told only for women after fur coat but came again.

Front 10

Lefkowitz v. Great Minneapolis Surplus Sore
Holding

Back 10

Coat was too speculative to be an offer. 'worth to"
Court said stole specified everything necessary, was an offer. Price, means of acceptance (first come, first served)

Front 11

Courteen Seed Co. v. Abraham
Facts
Holding

Back 11

Def. sends sample "i am asking 24c". Plaintiff says "too high, wire firm offer. def says "i am asking 23 c, have offer of 22.75. plaintiff takes as firm offer. Court says No. but Ib thinks wrong b/c reasonable person would find an offer.

Front 12

Nebraska Seed Co v. Harsh
(cited in Courteen seed co.
facts
holding

Back 12

"i want ___ for my seed" did not constitute an offer. Language was general and as such might be used in an advertisement or circular addressed generally to those engaged in the business.

Front 13

Fairmount Glass Works v. Grunden-martin woodenware Co.
facts

Back 13

guy asked for quotes on jars.
mailed quotes "for immediate acceptance"
Telegram for acceptance w/ specifications.
seller sends back that he can't

Front 14

Fairmount Glass Works v. Grunden-martin woodenware Co.
Holding

Back 14

UCC says: not everything has to be specified at the time of the acceptance. Offer, acceptance there. So seller breached.

Front 15

Ardente v. Horan
Facts, holding

Back 15

House seller gives papers, buyer signs, returns with check and letter with stipulations. Seller doesn't sell. Court says stipulations were a counter offer, not "inquiry into mere factual matter." Acceptance has to be "Mirror image." Counteroffer kills offer.

Front 16

Eliason v. Henshaw
Facts,

Back 16

Buyers made offer for flour, wanted acceptance by wagon to place. Sellers send ordinary Mail to different place.

Front 17

Eliason v. Henshaw
holding

Back 17

Court said place mattered, method didn't matter. Ib thinks method matters b/c "unambiguously indicated" (UCC)

Front 18

Restatement on doubt of acceptance

Back 18

you can say "i accept" or you can start performing the contract. Only for doubt, if offerer is clear in how they want acceptance, it has to be done that way.

Front 19

List of offer-killers

Back 19

1. Counter-offer
2. death/incapacitation of offerer/offeree
3. Lapse of time
4. Revocation

Front 20

Akers v. J.B. Sedberry, Inc
Facts /Holding

Back 20

Guys offer to resign in a meeting. boss accepts several days later. Court says lapse of time killed offer.

Front 21

Lapse of time: standard and Moral

Back 21

Reasonable amount of time standard. Corbin says need immediate if in conversation.
Moral: you should have a fixed date in any offer to avoid.

Front 22

Hypothetical: guy offers to resign to boss. boss has heart attack and dies, guy listening in jumps in and accepts. Acceptance?

Back 22

No, death of offeree means offer-killer. But, you could say that maybe they were making offer to company as whole, not to individual.

Front 23

Marsh v. Lott
Facts / holding

Back 23

Guy paid 25 cents to keep option open, woman tried to revoke. Guy wins. "valuable consideration, whether adequate or not, is binding for option" Option contract was second contract with separate consideration.

Front 24

Restatement option contract requirements

Back 24

1. Option contract must be in writing.
2. Must recite purported consideration for the option.
3. no mere pretense, has to be valid consideration.
4. exchange must be on fair terms.

Front 25

UCC requirements for option contracts

Back 25

1. Less than 3 months. Either stated or "reasonable time"
2. In writing
3. UCC doesn't have fair terms
4. Consideration not necessary, just a promise.

Front 26

Wormser and unilateral contracts (early and post-conversion beliefs)

Back 26

Early belief: Bridge scenario: Walker can stop 1/2 way, why can't offerer stop 1/2 way?
Later belief: Restatement, creation of option contract..

Front 27

Brackenbury v. Hodgkin
Facts / Holding

Back 27

Mom invites daughter to help her, will give farm when dies. huge time lapse. Mom gets angry, kicks out daughter. "trust created" (replaced in rules later with option)

Front 28

Petterson v. Pattberg
Facts

Back 28

Unilateral contract allowing guy to pay off mortgage if he pays bond at specific date. Tries to go to house with money, "I've sold off the mortgage!" pushes money though door.

Front 29

Petterson v. Pattberg
Holding

Back 29

Contract was successfully revoked by saying "I've sold off the mortgage" If offeree has knowledge of something inconsistent with continuance of offer, offer is withdrawn.

Front 30

Drennan v. Star Paving Co.
facts

Back 30

Contractor got low bid from contractor, asked to repeat, stopped by after contractor made bid on job.

Front 31

Drennan v. Star Paving Co.
Holding

Back 31

Reasonable Reliance made on the offer. Un-revocable. But Ib has doubts about whether reliance was reasonable. Mostly applies to bidding situations because otherwise nothing preventing you from accepting, reliance unreasonable.

Front 32

UCC 2-207, when applicable/ not applicable?

Back 32

Battle of the forms! Does NOT apply for something specifically bargained for. For big companies (merchants) using standard forms. Inconsistent writing on forms.

Front 33

Two broad factual scenarios for 2-207

Back 33

1. Oral K followed by one written or form.
2. Two competing standard forms/writings

Front 34

What additional/different terms are allowed in a oral then written battle of the forms scenario?

Back 34

Terms that don't "materially alter the contract." Would the added term provoke "unreasonable surprise" in the recipient? (industry standard)

Front 35

Common law interpretation of battle of the forms scenario. (2 different forms sent)

Back 35

Most recent form would control if the parties began performance. B/c most recent is the counteroffer and performance is acceptance. (In UCC rules, acceptance is "any manner that is reasonable")

Front 36

How are additional terms / different terms handled in a "battle of the forms"(2 forms) scenario? (UCC)

Back 36

Additional terms: Same "material alteration of the contract" standard.
Different terms:
1. Majority Rule "knock out" any term provided, then any term supplied by law.
2. Minority Rule: Summer's "drop-out rule" second term, conflicts with 1st, offeree's different terms "drop out". Offerer's rule.

Front 37

Datum inc v Pennwalt Corp
Facts / Holding

Back 37

Offer: proposal 1 yr warranty. Acceptance: Purchase Order 4 yr warranty. Court goes for "knock out rule" default under UCC is 4 yrs. Left door open for summer's rule.

Front 38

Alaska Packer's Association v. Domenico
Facts
Holding

Back 38

Sign contract before expedition. Demand more once in AL due to defective nets. But, no consideration for modification. so no modificaton

Front 39

"preexisting duty rule"

Back 39

common law rule, must give consideration for modifications.
Posner says "peppercorn" sufficient consideration.

Front 40

Schwartzreich v. Bauman-Basch, Inc
Facts
Holding

Back 40

Under contract for $90/wk, offered $115/wk elsewhere. Original employer gave $100/wk for same duration as original. Court said NOT preexisting duty situation, but
"Mutually agreed rescission"

Front 41

Angel v. Murray
Facts
Rules

Back 41

Garbageman strikes initial contract b/c number of homes increases.
Restatement: 1) after initial K, unanticipated circumstances arise
2) THe modification is fair and equitable
UCC says
1. Valid if in good faith

Front 42

Consolidated Edison Co. of New York, Inc. v. Arroll
facts
Holding/ rule

Back 42

Guy thought bill was too high, sent in what he thought he should pay and marked "payment in full"
Accord & Satisfaction, a settlement that makes original contract to make clear. By cashing the check, the company consented to the settlement. Guy just needs to "honestly believe" the amount is in dispute.

Front 43

Parol Evidence Rule

Back 43

Prior or contemporaneous oral or written agreements cannot be introduced to contradict, add to, or explain a final written contract. Must be a final, written contract to have a Parol evidence question.

Front 44

Exception to the Parol Evidence Rule and factors.

Back 44

1. Collateral contracts!
Question:
Would you expect to find it int he final, written agreement?
1. Is there separate consideration?
2. Is it about a separate subject matter? (goods/services/land)

Front 45

Mitchill v. Lath
Facts
Holding

Back 45

Selling land, had previous oral agreement to take out ice-house.
Different subject matter but no new consideration. Overall says wouldn't expect to be in the deed (which was the contract in this situation)

Front 46

Masterson v. Sine
Facts
holding

Back 46

Guy sold land to family, had an option to buy back land, went bankrupt. Trustee wanted to exercise option, family said wasn't transferable by prior oral agreement.
holding: Taynor said too hard to write "nontransferable on deed" but Ib disagrees. fails Mitchill factors.

Front 47

Ambiguity exception

Back 47

Parol evidence allowed in to explain ambiguity (more than one reasonable explanation) traynor says: Forget Parol rule if the evidence is relevant and credible

Front 48

Gold Kist v. Carr
Facts
Holding

Back 48

Peanut hauler's contract said company was under "no obligation to engage you." But was told only for bad behavior. Court didn't allow ambiguity exception b/c K not ambiguous.

Front 49

Pacific Gas and Electric Co. v. G.W. Thomas
Facts
Holding

Back 49

K to service steam turbine, def caused damage. Problem word in contract Indemnify, does it apply for 3rd parties property or any property? Traynor says words have no meaning.traynor says can bring in extrinsic evidence if language is "fairly susceptible to" more than 1 intrep.

Front 50

Eskimo Pie Corp. v. Whitelawn Dairies
Facts
Holding

Back 50

Used "non-exclusive" to avoid anti-trust, but meant exclusive. Allowed them to introduce evidence that "non-exclusive" is ambiguous b/c preliminary hearing for judge before Parol ruling.

Front 51

Turner Holdings, Inc. v. Howard Miller Clock co.

Back 51

Investment bank and clock company in disagreement about which firms were "under consideration" for acquisition. If no discussion, go to plain meaning, if there was a discussion, go to extrinsic evidence. not a prol evidence Q, b/c no discussion.

Front 52

UCC Interpretation Hierarchy

Back 52

1. Express contract terms
2. Course of performance in this contract
3 (tie) Course of dealing in prior contracts
3. (tie) usage of trade

Front 53

Nanakuli Paving and Roc Co. v. Shell Oil Co,
Facts
Holding

Back 53

Was there price protection? Express term was "Shell's posted price at time of delivery" Previous price protection (2x) was course of performance, and usage of trade also went to price protection. Express terms not express enough to control. REMEMBER< THIS IS UCC (GOODS)

Front 54

Haines v. City of New York
Facts
Holding

Back 54

NYC built sewage treatment for upriver communities, city wants to stop, contract is indefinite. Employment at will is gap filler for employment. and this was a "reasonable amount of time" NYC gets out

Front 55

Haslund v. simon Property Gorup, inc.
Facts
Holding

Back 55

when giving out stock, unsure what kind of equity or ift here was vesting. Neither party entered evidence, so got nothing. but Usage of trade would have won vesting.

Front 56

Southwest engineering Co. v. Martin Tractor co.
Facts
Holding

Back 56

Time of payment left out of contract. UCC gap fills and puts time on delivery (no usage of trade or course of performance)

Front 57

When can't you gap fill?

Back 57

Anything too important. Posner thinks if price isn't agreed upon, no contract to gap fill. But maybe UCC could gap fill price for people who've done business before.

Front 58

Fortune v. National Cash register Co.
Facts
Holding

Back 58

Guy fired to avoid paying money he gets for registered delivered in his area. "at will contract" but court read in an implied covenant of good will, Was there a legitimate business interest?

Front 59

City of Midland v. O'Bryant
Facts
Holding

Back 59

Whistleblower fired. Judge said good faith should be read into vulnerable subjects, like insurance or being asked to commit illegal acts. Here, there were administrative remedies. not court's job. (minority view)

Front 60

Tymshare v. Covell
facts
Holding

Back 60

Guy got commissions for sales above quota, but company had "sole discretion" to adjust quota. Here, "sole discretion" = reasonable discretion, ambiguity found, gap filled.

Front 61

What is bad faith?

Back 61

1. Evasion of the spirit of the bargain
2. lack of dilligence and slacking off.
3. Willful redering of imperfect performance
4, Abuse of power to specify terms
5. Interference with or failure to cooperate in the other party's performance.

Front 62

Merritt Hill Vineyards Inc. v. Windy Heights Vineyard
Facts
Holding

Back 62

Buying stock in vineyard. Seller is supposed to bring title, insurance policy and confirmation about mortgages. Seller did none. Were these conditions or promises? Were conditions, no breach. Guy can waive conditions.

Front 63

Jacob & Youngs v. Kent
facts
Holding

Back 63

Pipes weren't of "Reading manufacture" If an express condition, have to comply PREFECTLY. Court said breach wasn't willful, wasn't a condition, so was a promise and damages = 0.

Front 64

Substantial performance

Back 64

Substantial performance is the point where trigger payment, meet the essential purpose of the K. Normally implied, can be express.

Front 65

Plante v. Jacobs
Facts
Factors for Sub. Performance

Back 65

20 things wrong in building a house. But court says meet essential purpose.
Factors:
1. were the deal specifically bargained for?
2. Is the K personal or for business?
3. Bad faith?
4. How harsh is it?

Front 66

O.W. grun Roofing and Construction co. v. Cope
Facts
Concept

Back 66

Roof "MUST BE OF UNIFORM COLOR", wasn't. Was it an express condition (no pay; need perfect performance), or a promise (substantial performance)? All extrinsic evidence said it was important to her.

Front 67

Excuse
4 kinds
Underlying rationale

Back 67

1. mutual mistake
2. Impossibility
3. Impracticability
4. Frustration of purpose.
Who should bear the risk?

Front 68

Sherwood v. walker
Facts
Holding

Back 68

Guy sells what thinks is barren cow. Not barren at pickeup, won't give up. Majority says mutual mistake, both thought there was a barren cow, no barren cow existed for this K. no K. barren cow was "substantially different," mistake goes tothe "nature of the thing" and "substance of the contract"

Front 69

Wodd v boynton
Facts
Holding

Back 69

Woman sell stone ($1) that turns out to be a diamond, guy didn't know at time. WI differes from Shorewood and says : value and nature don't go to the nature of the contract

Front 70

2 approaches for Mutual Mistake
(USE BOTH ON EXAM)

Back 70

1. Sherwood (barren cow changes substance)
2. Wisconsin (really a diamond doesn't change substance. Value/Character doesn't change the substance)

Front 71

Leanwee County Board of health v. Messerly

Back 71

Both parties assumed income-generating property, broken sewage system. mutual mistake that changes the subject and affects the character "FOR ALL TIME".

Front 72

Taylor v. Caldwell

Back 72

Fire before concert. Neither party is at fault.

Front 73

Force majeure

Back 73

Excuses from performance when act God, fire, terrorism, etc.

Front 74

Impossibility elements

Back 74

1. K impossible to perform
2. No one is at fault

Front 75

Bell v. Carver

Back 75

Company has to put AC / heat into restaurant. No fault fire.
Performance excused. Got paid under unjust enrichment, not K.

Front 76

Davis v. Skinner

Back 76

Insurance made everyone whole, and insurer bears the risk of loss. Seller is a trustee for the buyer for insurance money.

Front 77

Uniform Vendor and Purchaser Act

Back 77

Risk of loss falls on seller unless title OR possession transfer. Seller keeps both during closing period. (CA, NY have, but 1/4 states)

Front 78

2-509 UCC (bearing risk)

Back 78

Buyer doesn't assume until receipt of goods or tenure of delivery.

Front 79

Canadian Industrial Alcohol Co. v Dunbar Molasses Co.

Back 79

(Before UCC)
Molasses middle-man couldn't get enough from factor to fill K. Tried to get out w/ impossibility.
It was impossible, but it was his fault. No impossibility.

Front 80

Sutter squib on alternate interpretations.

Back 80

Go to what is fair if there are alternate explanation.

Front 81

Requirements for Mutual Mistake

Back 81

a) mistake
b) mutual
c) Goes to substance of whole K

Front 82

Requirements for impossibility

Back 82

a) impossible
b) no fault

Front 83

Impracticability

Back 83

a) impracticable
b) No fault

Front 84

Marcovich Land Corp. v. J.J. Newberry Co.

Back 84

Express allocation of risk that building has to be rebuilt if fire. If owner can't it is his fault he didn't insure.

Front 85

Mineral Park Land Co. V. Howard

Back 85

gravel sinks below water, can't be removed by ordinary means. Ib Thinks mutual mistake, gravel was b4 contract was formed. WI standard would make them take gravel. MI probably not enough either. 10x is rule of thumb for impracticability

Front 86

cost to qualify as impractical

Back 86

10x is good rule of thumb

Front 87

Trans-Atlantic Financing v. US

Back 87

Canal shut down due to war. Going around cost was only 2x expensive. So not impractical.

Front 88

Krell v. Henry

Back 88

big bucks to watch coronation, ceremony cancelled. Frustration of purpose.
1) toal/close frustration of purpose?
2) purpose known to both parties.
3) unforeseeable event.

Front 89

Frustration of purpose requirements

Back 89

1) Total or close to total frustration of purpose.
2) Purpose must be known to both parties.
3) has to be an unforeseeable event.

Front 90

How to you determine what is foreseeable?

Back 90

Sort of an objective standard. what would a reasonable person consider foreseeable?

Front 91

Lloyd v. Murphy

Back 91

Guy leases car store, gov't puts ban on sale of civilian cars.
1) superseding event
2)Still possible
3) is purpose frustrated? - NO making less money isn't a frustration of purpose unless it is WAAAAy less. 50k to 10k
4) purpose was known to both
5) was foreseeable that cars would be rationed.

Front 92

Language for condition

Back 92

"warranted to"

Front 93

White v. Corlies

Back 93

offerer wanted "upon acceptance, writer will call again" <-- specific means of acceptance. Not "a case of doubt" as defined in restatement.

Front 94

Restatement & Ucc "doubt of manner of acceptance"

Back 94

Restatement: "I accept" or start doing it.
UCC: "commercial reasonableness for acceptance"

Front 95

Condition or a promise?

Back 95

1) express terms
2) willful breach
3) juxtaposition of language
4) forefiture
5) Roof of bargain