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160 Cards in this Set
- Front
- Back
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Modified Objective Theory of Assent
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We must look to the outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention. The law imputes to a person an intention corresponding to the reasonable meaning of his words and acts.
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Lucy v Zehmer
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(Two drunks agree to a farm sale written on the back of a bar bill.) A contract is enforceable despite one party’s subjective belief that the parties are joking.
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Specific Performance
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To demand the fulfillment of a contract as the remedy in court. Only favored as a remedy if subject matter is unique.
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Remedies are (describe characteristics).
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1) substitutional 2) not punitive in nature 3) not immoral to breach contract 4) damages should be reasonably certain
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Types of Remedies
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Types of Remedies: Expectancy, Reliance, Restitution
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Expectancy
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his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed
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Reliance
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his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made
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Restitution
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his interest in having restored too him any benefit that he has conferred on the other party
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US Naval Institute v. Charter Communications
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(Berkley had a license to distribute Hunt for Red October no sooner than October in its paperback form. Berkeley shipped the books early, and vendors began distributing them in mid-September.) A court will not grant punitive damages for a breach of contract.
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Hawkins v. McGee
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(McGee thought that he could fix Hawkins' hand and make it as good as new, 100% perfect. The end result was a hand with limited mobility, oozing puss and unsightly hair.) Expectancy Measure: there is a difference between the 100% perfect hand and the hand that was provided. This difference plus the doctor fee was awarded, but the pain and suffering was not unless it was pain and suffering beyond what was promised.
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Sullivan v. O'Connor
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(Plastic surgeon disfigures patient in the course of performing a nose job.) Clear proof of a doctor’s promise to specific performance may give rise to an enforceable contract. Introduction to remedies: Expectancy, beauty promised, Reliance, as if the surgery never happened, Restitution, refund the money only.
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Elements of an Offer
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Restatement 24 1) Manifestation (manifestation of willingness to enter into a bargain). 2) Intent to be bound 3) Justifies a belief that assent is invited (the power to bind offerer) 4) Assent will conclude the bargain 5) 5th Element (exception for advertisements) the offer must be directed at some person or group.
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manifestation of willingness to enter into a bargain
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Fairmount Glass Works v. Crunden-Martin Woodenware Co Communication/Words by Conduct, ex: asking about the item for sale before offering it for a price, “I like your bicycle”
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Intent to be bound
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Owen v. Tunison (look to outward manifestation- Lucy v Zehmer). things that describe the offer more specifically: terms, price, manner acceptance, quantity
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Assent will conclude the bargain
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If the power of acceptance is provided by interpreting the outward manifestation of intent, then nothing else matters.
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5th Element of Offer (exception for advertisements)
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Lefkowitz v. Great Minneapolis Surplus Store Advertisements fall into a different category of interpretation--an advertisement is not universally held to be an offer. If an advertisement offers a specific item to a specific person then the advertisement is indeed an offer.
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UCC Generally
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Applies to goods (tangible personal property) and only to parties who are both US citizens.
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UCC 2-204
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States that a contract can be made in any manner sufficient to show agreement, which is determined by examining the objective facts which suggest the intent of the parties involved based on their outward expression. Holds that a contract is binding even if the set time for exchange of goods is left open. Does not fail for indefiniteness. One of the specifications is that the parties specify what they want because this makes sure that the remedy is clear (basis for remedy).
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Owen v. Tunison
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(Owen wrote an inquiry letter about Tunison's property, offering $6000. Tunison replied: “It would not be possible for me to sell unless I was to receive $16,000, cash.” Owen took that statement to be an offer and responded with an agreement to that offer.) An invitation to negotiate is not binding as an offer to enter into a contract.
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Harvey v Facey
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(In a telegraph Harvey asked two questions. One was whether or not Facey would sell his property. “Will you sell?” The other was as to the lowest price. “Lowest Price?” Facey responded to the second question. “L$900” Harvey took this to be an offer. “I accept”) There was not intent to be bound because stating a sale price is not as binding as an offer to sell at a specific price.
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Fairmount Glass Works v. Crunden-Martin Woodenware
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(Mason Jars were quoted at a certain price. This “quote” was accepted, and then the offeror attempted to revoke the “quote.”) It was too late, as a contract had been made. A price quote may rise to an enforceable contract, depending on its language.
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Lefkowitz v. Great Minneapolis Surplus Store
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(There was an ad that stated that a fir coat was available for sale to the first person who arrived to purchase the item. The person arrived to purchase the item, and the advertiser stated that he did not qualify since the ad was intended for a woman to purchase.) If an advertisement offers a specific item in a manner that is detailed, clear and leaves no room for negotiation, then the advertisement is indeed an offer which is biding upon acceptance.
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Elements of Acceptance
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1) Offerer is master of the offer. 2) Acceptance must be communicated. 3) Communication can be dispensed with. 4) Interpretation
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Offerer is master of the offer. (Acceptance)
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The offeror controls everything and dictates the terms including method of acceptance and timing. Restatement 50: Acceptance in the manner invited or required by the offer.
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Acceptance by promise
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Restatement 56: In acceptance by promise (unless stated otherwise), the offeree must exercise reasonable diligence to notify the offeror of acceptance or the offeror must receive the acceptance seasonably. Restatement 50: Acceptance by promise requires fulfillment of every act essential to making the promise.
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Acceptance big picture
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Offeror is master of the offer, Acceptance by promise; Acceptance by performance; Acceptance must be communicated unless communication is dispensed with; Unilateral Ks; In the manner required by offer; Shipment as Acceptance; Silence as Acceptance
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International Filter Company v. Conroe Gin, Ice and Light Co.
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(Waterman presented a letter proposing the sale of a water filter. The letter had the specifics of the item and a price. It laid out the terms that upon “prompt acceptance” by Conroe stating that the letter would become contract after being approved by Conroe an executive officer of International Filter.) The holding for International Filter demonstrates that the offeror is the master of the offer as they can change or modify the manner of acceptance to their liking.
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Acceptance must be communicated.
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White v. Coriles and Tift, Acceptance by promise
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White v. Coriles and Tift
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(Letter from Coriles stating that the work as agreed upon in the signed estimate which resulted from negotiations could begin “Upon an agreement to finish in two weeks from date, you can begin at once.” White never responds but begins performance. Coriles countermands the offer.) White did not respond in a manner agreed upon. In the absence of express provisions in the offer, acceptance must be by reasonable means given the circumstances surrounding offer.
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Communication can be dispensed with
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Ever-Tite Roofing Corporation v. Green B Acceptance by performance
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Ever-Tite Roofing Corporation v. Green B
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(The Greens want to have Ever-tite re-roof their residence. They signed a document that specified details of the work and established monthly payments. Language that “This agreement shall become binding only upon written acceptance... or upon commencing performance of the work.” When Ever-tite performed, the Greens had brought in another contractor.) In the absence of specific language in an offer, the offeror must allow a reasonable amount of time for acceptance.
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Acceptance by performance
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Restatement 50: Acceptance by performance requires performance of part of the agreement as a form of acceptance. No notification is necessary unless it is specifically requested. Exception: If offeror has no means of learning of performance in a reasonable amount of time unless (a) exercise reasonable diligence (b) learns of performance in a reasonable amount of time (c) it is indicated that notification is not required.
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Interpretation
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Unilateral contracts, any manner unless the offer limits forms of acceptance, shipment as a manner of acceptance under the UCC, silence as acceptance.
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Unilateral contracts
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Contracts where offereor is bound, and the offeree demonstrates acceptance by performance. In unilateral contracts, the offeree does not have to communicate acceptance. They can accept, and collect upon acceptance following performance. To determine if an offer is unilateral: 1) Look to the character of the transaction, it may suggest that notification is not required, ex. Reward. 2) Notification of acceptance is not necessary before the offeree performs the condition. 3) If the offeree performs, then the condition of notification is dispensed with.
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Allied steel
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(Ford and Allied steel had a contract to have Allied Steel install some machinery. The original contract no indemnity clause - then entered into a second contract as an amendment to the first for additional equipment which had indemnity. Allied began performance. Ford argues that the indemnity clause applied.) Rule: An offer which suggests a means of acceptance may become binding by performance by the offeree.
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Acceptance can be in any manner unless the offer limits which forms of acceptance are allowed.
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Allied steel Restatement 50: Acceptance of an offer is a manifestation of assent in the manner required by the offer. Acceptance by performance requires that at least part of the requested performance is tendered.
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Corinthian Pharmaceutical Systems Inc. v Lerdele Laboratories
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(Lederle increased its prices. Corinthian bought 100 vials from Lederle. Lederle filled the order, but they only delivered 50 vials and a letter stating the price increase and offering to allow Corinthian to revoke the remaining order. Corinthian wanted specific performance.) Rule: If a seller ships to a buyer non-conforming goods and gives notice that the shipment is an accommodation, then the seller is not in breach of contract and is not obligated to specific performance.
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Shipment as a manner of acceptance under the UCC.
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An offer to make a contract will be construed as inviting acceptance in any manner unless it states otherwise. In shipping goods, a shipment shall be construed as acceptance of the offer. The shipment will still be acceptance if the goods are non-conforming unless the non-conforming goods are seasonably accompanied by notification that the non-conforming goods are an accommodation, and do not constitute acceptance.
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Silence as Acceptance
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(Restatement 69): Problem with silence as acceptance is that it makes it impossible to interpret conduct and words when there is silence.
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Restatement 69
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Silence is acceptance: 1) If the offeree takes the benefit of the services and has reasonable time to reject the services. 2) If the offeree does not respond, then you can ask the offeree if they intended to accept, and if they said that they intended to accept, then you can take that at face value. 3) If the offeror has stated or given the offeree reason to believe that silence is a proper manner of acceptance based on prior dealings. 4) If the offer says that silence is an acceptable manner of acceptance.
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Termination of the Power of Acceptance: How?
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Lapse, Revocation, Some offers are irrevocable- Firm Offers, Death, Rejection/Mirror Image Rule, The Mail Box Rule, UCC 2-207
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Restatement 36
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rejection/counter-offer, lapse, revocation, death/incapacity
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UCC 2-204
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A contract is only made when both parties demonstrate agreement in a manner that recognizes the existence of such contract. Under this framework, a termination will be in a manner that demonstrates the termination as long as it is communicated prior to acceptance.
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Lapse
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An offer will lapse once reasonable time has passed. Based on the context of the offer, the following facts are considered as determining if an offer has lapsed. (1) face to face meeting? (2) complex transaction? (3) offer no longer relevant? Eg. Reward (4) radio? Note: Beneficial to set a time for expiration and in some cases delayed acceptance is acceptance.
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Revocation
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An offer is revocable unless the offeror states otherwise. Like offer and acceptance and lapse, revocation is still subject to interpretation based on facts, words, conduct of parties. Dickinson v Dodds.
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Dickinson v Dodds
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Offer to sell property, offerre was aware that offeror had discussed selling elsewhere, and he tried to complete the K. No avail, bc knowledge of revocation is revocation.
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Restatement 43
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Indirect communication of revocation: If the offeror makes a clear action that is inconsistent with the original offer and the offeree requires reliable information of this, the offer is revoked.
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Firm Offers
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Option K/ Rest. 87 or UCC 2-205
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Option Contracts
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Restatement 87, An enforceable contract with consideration cannot be revoked. Elements: (1) Writing, signed by offeror (2) Consideration (3) Proposes an exchange on fair terms in a reasonable time
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UCC: 2-205
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If one makes an offer and states that they will hold it open for a period of time, then it is irrevocable. By it's terms the offer gives assurance that it will be held open and is not revocable during the time stated (or reasonable time, 3 mo) No consideration required.
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Revoking irrevocable offers
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Rigosta v. Wilder, no consideration, then not irrevocable K.
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Rigosta v. Wilder
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(Rigosta wanted to buy a fork shop, and aggressively sent a letter with consideration to buy it. Wilder did not want to commit, so returned the money.) It was not an option contract bc there was no consideration, thus Wilder had the power of revocation. (Note: Promisary estoppel would apply here).
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Death
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(1) If an offer has been made and is accepted, and the offeror dies, the contract is still enforceable. (2) Offerre's power of acceptance is terminated if offeror dies or becomes incapacitated even if the death is unknown by the offeree. (3) Offeree's death or incapacity terminates the offer unless it is an option contract.
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Rejection
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Terminates power of acceptance, and estopps the offer. Based on words and conduct also subject to interpretation.
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Mirror Image Rule
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Acceptance must be in the manner stated in the offer and in the exact terms of the offer. Anything else is a counter offer and rejection. (Fairmont Glass Works)
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Exceptions to the Mirror Image Rule
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(1) Counter offer that does not materially alter the offer is actually acceptance. (2) Precatory language, ie. It would be nice (3) Conduct eg. Performance
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Last Shot Doctrine
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Performance despite disagreement to specific terms constitutes a contract. Allied steel- supposition is that performance is assent to last communication made “the last shot.”
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The Mail Box Rule
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Adams v. Lindsell: (1) After acceptance has been dispatched into the mail it forms a contract; Acceptance is effective upon mailing. (2) After acceptance has been mailed, it is too late to withdraw acceptance or to revoke the offer. (3) This rule applies even if the offer is never received.
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Exceptions to the Mail Box Rule
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(1) If offeror specifies a means of acceptance. (2) When an offer specifies that acceptance will be effective upon receipt.
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UCC Philosophy
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Minimize impediments to contracts and formalities.
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Battle of the Forms
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boiler plate forms lead to contracts with conflicting terms
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UCC 2-207 (1)
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2-207(1) Elements: (1) Definite and seasonable expression of acceptance (2) even though it states additional or different terms from those offered and agreed upon (3) unless acceptance is expressly made conditional on assent to the additional or different terms
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UCC 2-207 (2)
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Additional terms are construed to be proposals for additions to the contract. Between merchants such terms become part of the contract (a) unless offer expressly limits acceptance (b) they materially alter it or (c) notification of objection to them has been given or is given seasonably after notice of them has been received.
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UCC 2-207 (3)
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Conduct by both parties that recognizes the existence of a contract will establish a contract for a sale (even if writings conflict) the terms being those that are agreed upon in writing (may use gap fillers). Do away with the last shot doctrine.
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Application of 2-207
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(1) Dorton v. Collins: Conditional Acceptance/Materiality (2) Step Saver v Wyse: Last Shot (3) Litronic Different Terms
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Dorton v. Collins
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(Dorton bought carpet from Collins regularly but found out that Collins was misrepresenting the carpet quality by passing off inferior carpet fiber, and wanted to sue. Collins said that they could not because of an arbitration agreement that was slipped in with the goods.) Speaks to materiality: if including a term will induce hardship on the party which was unaware of the term, then it is material. Dorton won.
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Step Saver v Wyse
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(Stepsaver bought faulty software. Wyse imposed a box top license which “disclaims all express and implied warranties” and “opening this package indicates acceptance” if not return package.) Held for Stepsaver bc UCC seeks to avoid injustice. Here material alterations would have led to injustice.
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Requirements of Definiteness of a Contract: Functions
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(1) craft a remedy. (2) unclear contract cannot be broken (3) protect promisee's expectation interest
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How does court determine if a K is definite enough to be considered as a K under law?
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Looks to preliminary negotiations, prior communications, preferences to external sources, trade usages, performance, provides means for definiteness at performance to determine if they can surmise the terms of a contract. If not, then it fails for indefineteness. (Note not in UCC see 2-204)
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Toy's Inc. v . F.M. Burlington Company
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(Lessor and Lesee cannot agree to the new price in the renewal of the lease term. Court held that an options K is sufficiently definite even when the price is not set.) UCC 2-305, Open Price Term: A contract can be concluded even if the price is not settled.
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Pro Cd v. Zeidenberg
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(Computer database sold in CD rom, and the issue was about whether or not a box top license would be binding.) The court held that it is as long as the package provides notice that not returning the software equals acceptance to terms a box top license is binding. 2-207 protects the offeror in this case.
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Oglebay Norton v. Armco
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How does a court deal with indefiniteness? (25 years ongoing K, parties can no longer agree to price with the trade publication that set price out of circulation.) A court can set the price when 2 parties cannot agree to the price when there is intent to be bound. The remedy was specific performance bc long term damages were too speculative.
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Elements of Consideration
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Bargained for exchange which is a benefit to the promisor and a detriment to the promise.
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Detriment
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Promisee gives something up.
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Exchange
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Promise is made by promisor as part of the bargain; promise is in exchange for detriment to promisee.
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Family Contracts
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Most family contracts which are not formally drafted are unenforceable. Bafor v. Balfor: A man's castle is a place in which the King's writ does not run, and the king does not seek to be admitted. Bottom line there must be consideration for enforcement of a contract among family members.
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Restatement 17
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K: offer, acceptance and consideration
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Restatement 71
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Benefit Detriment/Exchange Defines consideration. Part (1) Performance or return promise must be bargained for. (2) A promise is bargained for if it is sought by the promisor in an exchange. (3) The performance may consist of (a) An act (b) forbearance, or (c) creation, modification or destruction of a legal action. Exception: Third parties can be recipients of promise.
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Hamer v. Sidway
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Benefit/Detriment analysis has evolved into the concept of exchange. (This case illustrates the limitations of the benefit/ detriment analysis. Uncle promised nephew $ to refrain from smoking, drinking, gambling. Nephew complied.) Uncle’s estate had to pay up bc nephew gave up a legal right, despite the fact that nephew did benefit from the K.
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Gratuitous Promises
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Glen v. Savage Sometimes a promise with consideration has consideration that is so minimal that it is not considered to be consideration at all. Eg; Martinez’s uncle and the silver dollar.
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Glen v. Savage
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(Building materials in the river. Glen saved materials and returned them to Savage. Savage did not want to pay.) Holding: Will not support gratuitous promises. The law will never permit a friendly act to be imputed into a punitive demand.
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Fiege v. Boehm
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(A woman believed a man was the father of her child. She promised not to press bastardy charges against him if he would promise to pay her all her birth related expenses; he paid some money but then stopped after finding that the child was not his.) Holding: In favor of woman. If a promise is made upon a claim of fact to induce a return promise, the initial promise can be valid consideration even if the claim of fact upon which it was based turns out to be untrue. Exception: falsely predicated promise.
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Feinberg v. Pfeiffer
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(Pension payments promised before retiring were stopped by the board of directors after 7 years.) It was given as a gratuitous promise. Her past employment could not serve as consideration. Note: “She should have cooked them a cherry pie.” In exchange for $1 more on retirement, then consideration.
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Alaska Packers
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(Cannery hired sailors for seasonal work, and after going to Alaska, they refused to work without increased wages. No replacements were available, promised raise, but did not deliver.) Holding: In favor of cannery bc a K cannot insist additional pay for performance of a duty which the party is required to perform bc no consideration.
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Restatement 89
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Can’ modify an existing K which has already been finalized unless it is fair and equitable to do so.
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UCC 2-209
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A modification of an existing contract does not require consideration. It is overlaid with a requirement of good faith.
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Booth v. Fiztpatrick
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(Someone finds a bull, and ultimately the owner claims it and makes a promise to pay for the care and maintenance of the bull.) Quasi K exception- altruistic act.
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Quasi Contract/ Contract Implied Law
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K implied in law (contract to K which is implied in fact): A contract will be imposed where the parties don't agree if the following elements are present: (1) a benefit (2) performed with knowledge by the recipient (3) retained (4) it would be unjust to retain the benefit without payment Exception: Altruistic Act
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Webb v McGowin
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(Webb injured saved McGowan from death or serous injury at his own expense. M agreed to pay Webb money monthly for the duration of Webb’s life. Issue over whether or not this was a contractual obligation.) Court held in favor of W bc M had a moral obligation and W received a material benefit. There was no consideration by traditional K standards.
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Mills v Wyman
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A stranger cared for Wyman’s son, and the court held that Wyman was not contractually obligated to compensate said stranger for the altruistic act (may have turned out differently if his son was a minor).
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Bargain/ Illusory “promises.”
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Figurative equivalent of Al Pacino saying I give you nothing. A promise where one party receives nothing. Kirksey v Kirksey, Strong v. Sheffield
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Kirksey v Kirksey
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(Widow attempts to impose contractual liability for a promise that her brother in law made which induced her to leave her home to live on his estate. She claimed consideration based on traveling to his estate.) The court found that this was not consideration because it was necessary for her to benefit from his gratuitous promise to provide her a place to live. Based on Williston’s tramp.
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Williston's tramp
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Traveling to a location to receive a gift is not consideration, but simply the means to obtain the gift. (A man told a tramp that if she went to a clothing store, she would buy her a coat.) That was a gratuitous promise since the man received no end of the bargain- no exchange occurred since he did not seek her going to the store in return for the promise.
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Central Adjustment Bureau v Ingram
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(Ingram started his own company after leaving in violation of a non-competition agreement signed while employed by CAB.) Note: Court’s decision was not true to doctrine because the court found consideration conferred by continued employment which is actually an illusory promise because employer can fire at any time.
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Rewards and Consideration
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A reward can be conferred but only if the person is aware of the requirement at the time of performance.
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Restatement 75
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A promise which is bargained for is only consideration if the promised performance would be consideration.
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Strong v. Sheffield
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(Wife “Sheffield” endorsed her husband's debt, and the debt holder agreed to forbearance on the debt until he decided that he wanted the money back.) The court found no consideration here (illusory promise) bc Strong could collect at any time.
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Mattei v. Hopper
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(Seller attempts to back out of real estate deal bc buyer’s satisfaction clause rendered the promise to buy illusory since it was based on his subjective satisfaction.) The court read good faith into the K, making the promise not illusory.
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Eastern Air Lines Inc., v Gulf Oil Corporation
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(In the midst of an oil embargo Eastern seeks injunction to prevent Gulf from breaching requirements K.) The court held that a requirement K is binding under the UCC if the parties perform according to the terms of the K in good faith regardless of unforeseeable changes that create a hardship for one party if the contract is enforced. UCC 2-306 Reads good faith into UCC.
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Requirements K
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K where seller agrees to make good faith effort to meet buyer’s requirement, which the buyer is bound to unless the good faith standard is not met.
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Wood v. Lucy, Duff-Gordon
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(Famous fashion designer attempts to invalidate an exclusive deal K on the basis that the seller agreed to nothing-illusory promise.) The court read good faith into the K here, stating that the promise was not illusory bc it was based on the presumption that Wood would perform in good faith. “The law has outgrown its primitive stage of formalism when the precise word is assumed to have no implied good faith.”
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Consideration big picture points.
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Defined in Restatement 71; Cannot be based on past performance; not gratuitous; not consideration if based on a pre-existing binding K unless equitable; exception of Quasi K (material benefit); illusory promises are not consideration; travel to receive a gift is not consideration unless bargained for.
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Ricketts v. Schothorn
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(Woman who quit work in reliance on grandfather’s promise to support her sues the estate. Estate says no consideration, thus no K). The court held that promissory estoppel entitled her to the money bc there was an action on her part.
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Restatement 45
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In the case of a unilateral contract, in which acceptance is demonstrated by performance, the offer becomes irrevocable if consideration or reliance (see restatement 90).
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Restatement 90
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Promisary Etoppel
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Elements of Promisary Estoppel
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(1) Promisor’s conduct and intent (a) promise and (b) reasonable expectation that promise will induce reliance (2) Action by Promisee (a) Promise does induce Action/Forbearance and (b) reliance is justified. (3) Conditions by which remedy is allowed (a) Injustice can only be avoided by enforcement (b) The remedy may be limited as justice requires. Read in that action has to be of a definite and substantial character, reliance must not be trivial.
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Cohen v. Cowles Media
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(Cohen provided information to the press on the presumption that his name would be left out; his name was not left out costing him his job.) The court found in his favor bc he gave the information in reliance that the paper would keep his name confidential.
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Enforceable Promises
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(1) Supported by consideration (2) Reliance (reasonable reliance) (3) Implied Promise (4) Illusory Promises bound by good faith (5) Material Benefit (Webb v McGowan) (6) At Will Employment- Illusory Promise that is still enforceable based on performance (Credit Adjustment Bureau)
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Unenforceable Promises
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(1) Illusory Promises (not at will, no performance) (2) Gratuitous Promises without reliance (3) Moral Promises (Webb v McGowan)
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D & G Stout v. Bacardi Imports
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(Liquor distributor declined a sale in reliance on the fact that Bicardi would not terminate the relationship, Bicardi terminated (was an illusory promise so could). DG lost money by selling at a lower price bc of reliance on Bicardi’s illusory promise.) The court held that DG had a reliance argument but could not claim expectancy damages. That translates to money lost but not to money that would have been gained if B stuck around,
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General-contractor/ Sub-contractor dynamic.
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A SC’s bid is revocable bc the GC has not accepted. It is industry norm for GC to place a bid in reliance on C quote, and then hire SC if they win the bid. As a result, this dynamic creates grounds for promisary estoppel bc the industry custom forces the GC to rely on the SC bid without officially accepting it.
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Drennan v. Star Paving
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(GC wants to enforce SC’s bid on a job. There was no acceptance before SC revoked the offer, but bc the GC placed and won a bid in reliance on the SC’s bid--in line with trade custom.) The court found that promisary estoppel applied. Note, the remedy was limited to the difference between SC quote and the price paid to the SC who replaced the original SC.
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Hoffman v. Red Owl Stores
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(Bakery owner wants to open super market franchise but is rejected by franchise after making preparations in reliance on statements made by the super market rep.) The court awarded remedies under the theory of promisary estoppel. There was no promise made here, this case represents the outer boundaries of the doctrine of promisary estoppel. Note remedies limited to reliance only bc not a breach of K.
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Channel Home Center V Grossman
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(A mall developer abruptly cancels lease negotiations with a prospective tenant.) There was an agreement to negotiate in good faith toward a K, so the remedy was to force the developer to take more time to negotiate in good faith. Outer edges of triviality of promisary estoppel.
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Unjust enrichment Elements
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(1) Unjust (a) intent to charge (b) no imposition (officious intermeddler) request, emergency, acceptance (2) enrichment (a) benefit received (b) issue of measurement.
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Unjust enrichment
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In Quasi K only, recovery is based on preventing unjust enrichment even in the absence of a promise.
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Cotnam v. Wisdom
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(Physician responded to an emergency and performed an emergency surgery on Harrison who died.) Physician sought recovery for services rendered, and the court held no contract, no promise but unjust enrichment. If services are provided by a physician in good faith, then the benefiting party is liable to repay those services even absent consent.
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Callano v. Oakwood Park Homes
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(Operators of nursery seek payment for shrubbery installed to the benefit of the housing developer, although the K was between now-deceased home-owner.) The court held that his was not a cause of unjust enrichment bc nursery was officious intermeddler since builder not ask for nursery to do the work; should go after estate of original K holder.
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Pyeatte v. Pyeatte
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(Spouses agree to put each other through grad school, but the husband seeks a divorce after the wife puts him through law school.) Typically there would be no restitution for performing duties of a marriage, but restitution available here bc wife made extraordinary efforts.
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Statute of Frauds: Types of K ruled by S/F
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(1) Sale of Land (2) K can’t be performed within one year (3) sale of goods of $500+ (4) Suretyship (pay another’s debt) (5) Marriage
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Elements of Statute of Frauds
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(1) K fall within statute? (2) Is the writing sufficient to satisfy the statute? (3) Is the case an exception to S/F?
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Writing the Satisfies requirement of Statue of Frauds
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(1) Memo of K (2) Memo with enough information to show K made (3) Writing signed by party against whom K will be enforced (4) Writing can be linked through several docs.
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What did Statute of Frauds forget to cover?
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Stocks and bonds, large securities sales, multibillion dollar mergers, shorter term employment for large amounts of money, large contracts for ball players or actors.
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Power Entertainment v NFL Properties
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(License to make cards for NFL players in exchange for paying the debt owned by the default debt of a third party. At some point the NFL no longer desires to have a K with Power.) Can Power enforce the K even though it is not in writing? Yes, since the basis of the K was not suretyship but an exchange of goods the suretyship provision of S/F does not apply.
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Exception to Suretyship provision of S/F
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When the agreement is not to take on debt but to exchange goods, where one of the thing received in exchange is someone’s debt.
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1 Year Provision of S/F
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(1) If it is possible to perform in one year (but not likely) it still falls within the statute. (2) If K for lifetime, then can be performed in less than 1 year if die eg; at will, non-competition agmt. (3) If K for employment for more than 1 year, then S/F
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S/F and Oral modification of a written K
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Problem here bc technically created a new K.
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CISG and S/F
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A contract of sale need not be evidenced in writing, and is not limited to any requirement of forms, and may be recognized with any means of evidencing the formation of a contract.
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UCC 2-201(1)
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Contracts for goods that are worth more than $500 (some jursx $5K) require some writing. A writing has to afford some basis to believe that there is evidence that there was some transaction. Evidence of K: Amt, Signature. The signature can be met in a number of ways: stamp, letterhead, x, senders name on a fax, any symbol.
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UCC 2-201(2)
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Between merchants a confirmation can satisfy a statue of frauds, and it will work unless there is notice of objection within 10 days.
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UCC 2-201(3)
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(1) Exception to S/F writing requirement (a) if goods are specially manufactured and no repudiation of the goods- when specially manufactured, goods are not easy to resell. (b)If you admit in a pleading, you testify or somehow admit that a contract exists, then you are stuck with the contract. (c)If you actually perform, then no fraud is being perpetuated, so you don’t not need the S/F here.
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Johnson Farms
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(Partnership wants to buy a parcel of land, but buyer wants to exchange (avoid capital gains) land for land. Partial performance, but then the deal does not go through.) Partial performance was sufficient to overcome the S/F requirement in Real Estate transactions.
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Monarco v. Lo Greco
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(Oral agreement to help run farm for 20 years in exchange for inheritance of it. Did not perform on giving him the farm.) S/F applies here, but the exception is unjust enrichment or reliance/promisary estoppel.
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Phillepe v. Shappel Industries
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(P is licensed real estate broker who procures property, and then demands commission.) Knows that Monarco and Tenzer set precedent that performance superseded thus thought he could get away without going through the formalities. S/F. Court held that exception is when real estate agent should know about the writing requirement.
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E-Sign Act
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All electronic transactions including computers and faxes meet writing requirement of S/F. Does not have to be in a reproducible form to constitute a signature. Preempts all other relevant acts expect UETA.
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UETA
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Differs from E-sign act in that if a statute requires a writing if it is a form that can be accurately reproduced. Otherwise the same for our purposes. Came before E-sign. Applies in CA.
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Parole Evidence Rule
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Extrinsic evidence is inadmissible to vary the terms of an integrated agreement. The question arises when there is a K in writing, how far do we go beyond the 4 corners of the document?
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Restatement 214
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Parole Evidence Rule, lists exceptions, can consider extrinsic evidence to prove: (1) writing is not integrated agreement (2) integrated agreement is not fully integrated (independent agreements accompany) (3) the meaning of the writing (bc ambiguous) (4) mistake, fraud (5) ground for denying remedies.
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Integration (PE Rule)
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Integration of a parties’ agreement is the intent that the agreement is the final expression on the agreement.
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Partial Integration (PE Rule)
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Document is intended to be final, but it is not intended to include all details of the K.
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PE Rule and Subsequent Agreements
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PE never bars subsequent agreements.
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Gianni v Russell
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(Store owner wants to hold landlord to an oral agreement which conflicts with their written agreement.) The court finds that the writing is an integrated agreement, and that extrinsic evidence does not apply here bc the extrinsic evidence is the kind that should have been included in the written K (exclusivity of soft drinks would also be written to accompany the mention of tobacco). PE applies here.
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Extrinsic Evidence that the court considers:
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(1) Fraud, mistake (2) Existence of condition orally agreed but not included in writing (3) Collateral agreements with separate consideration (4) Interpretation of the words of the K (5) Trade usages (6) Performance (7) Past dealings
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Masterson v. Sine
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(Married couple takes possession of their in-law’s ranch but refuses to honor in-laws’ option to buy I back.) This is a narrower view of integration (CA). The court considered the oral contract to keep the property as an independent agreement, which could thus be considered bc actually non-integrated agreement. Precedent: PE Rule limited to integrated agreements.
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MCC Marble Ceramic Center v D’Agastino
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(American and Italian companies enter into a K in Italian. The Italian company wants to bind the American company to the K, even though the American company did not consent to that portion, but signed without having the entire K interpreted.) CISG overruled PE, allowing the consideration of the extrinsic evidence. (Today, would turn out like Masterson v Sine).
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Merger Clause
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Clause of K limiting the K to the 4 corners of K. Conclusively establishes total integration. Some courts do not consider the merger clause to be binding.
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Bollinger v. Central Penn Quary
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(K clause for the generation of waste, elimination of topsoil and then replace after, left out of the written document. Construction company began performing according to alleged oral K, but then stopped.) The court considered extrinsic evidence on the basis of mistake, omission. Bc intended to include top soil clause and performance indicated as such, PE not apply to integrated agreement here.
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Fragaliment v BNS
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(Chicken case, what is a chicken? Huhn or chicken? One party thinks young, broiling. Other party thinks stewing.) Extrinsic evidence can be considered when the written K is ambiguous or unclear.
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Steps in accessing extrinsic evidence of K
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Consider extrinsic evidence when one of the exceptions is present (see Rest. 214). The following factors should be weighed by the court: (1) Look at the document itself (2) Look at prior dealings (3) Trade usage (4) Trade publications/government Rules (5) Market Value Objective evidence re price. (6) Conduct by both parties (7) Expert testimony.
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Raffles v. Wichelhaus
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(2 cotton ships- Peerless, but one K. Confusion when the first Peerless delivers cotton on Oct, but buyer intended to buy in December from the second Peerless.) R sued for breach of K. Can consider extrinsic evidence when the written K is ambiguous.
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Oswald v Allen
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(Coin collection sold, buyer thinks both, seller thinks one of the two.) This is a clear case of ambiguity in K, thus extrinsic evidence is applicable.
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WWW Associates v Giancontieri
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(Sale of real estate with clause allowing for mutual term based on Les Pendens--notification to buyer about a possible attachment of property. Seller exercised right.) Buyer wants to include extrinsic evidence, but court says no bc extrinsic evidence that creates greater ambiguity will not be considered.
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Northrop v. Litronic
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(Battle of the forms, problem with faulty printed wire boards; different terms, which should be binding?) Illustrates the 3 approaches to the conflict between different and additional-2-207(1) and additional- 2-207(2).
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Approaches to different and additional terms in 2-207.
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(1) 2-207 did blow it, and suggests that drafters meant different and additional in both (1) and (2). (2) Discrepant terms drop out and the offeror’s terms get used, effectively treating any discrepant terms as material. (3) Knock Out Doctrine, majority approach.
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Knockout Doctrine
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All non-identical terms drop out and are replaced with UCC gap fillers, and the conduct which demonstrates the existence of a contract allows for this. This means that any terms that are different and additional will be taken out period, regardless of whether or not they are material.
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New 2-207
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Not adopted. Should be adopted. States that if parties’ conduct demonstrates the existence of a K, them look to (1) common terms and keep (2) terms agreed upon and keep them and (3) default UCC terms and keep them [in that order]. This simplifies the process by eliminating the consideration of materiality or conditional acceptance.
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At Will Employment and Consideration
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Unsettled, problem is that at will employment is an illusory promise, and any terms after the K formed are not bargained for. Still most courts have held that continued employment after initial agreement constitutes consideration in at-will employment.
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Permanent (or set time period of) Employment and Consideration
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Consideration is clear in this case bc no illusory promise.
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Officious intermeddler
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One who provides services without the knowledge or consent of the benefiting party.
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Antecedent Valuable Consideration
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Note Martinez does not like. No consideration bc happened in past, thus not an exchange. Promisor did not seek anything, but in the case of an express promise to repay at a later date, consideration can be found in the following limited instances: (1) debts barred by statute of limitations (2) debts incurred by minors “infancy” (3) debts previously discharged by bankruptcy.
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