Contract Breakdown

7/30/2019 Contract Breakdown

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Chapter 1: Meaning of Terms

Contract Defined 1 A contract is a promise or a set o

Promise; Promisor; Promisee; Beneficiary 2

Agreement defined; Bargain defined 3

How a Promise may be made 4

Second Restatement Contracts and UCC


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promises for the breach of which the law gives a remedy, or the performance of which t


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e law in some way recognizes as a duty


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TOPIC CASE, PAGE NO K / NO K IMPT FACTS

Contract & Promise Bailey v. West, 13 No K Ownership

dispute

Contract & Promise

Bolin Farms v.

American Cotton,18

K Forward salesK

ConsiderationKirksey v. Kirksey,

31No K

ConsiderationHamer v. Sidway,

33K

ConsiderationLanger v. Superior

Steel, 36K

Refrained from

seeking empwith

competitive

company

ConsiderationThomas v. Thomas,

46K

Wife given

land, had to

keep up, pay

ConsiderationBrowning v.

Johnson, 54K

K for cancelled

sale

UnconscionabilityJones v. Star Credit,

61No K

Ds owed more

than fair retail

value of

purchased

object

Consideration In re Greene, 66 No K

Written

instrument

under seal topay mistress, $1

and good &

valuable

consid


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Pre-existing DutyAlaska Packers v.

Domenico, 81No K

Pre-existing Duty Angel v. Murray, 85 K

Normal

increase was 20-

25 units per

year, then

increased 400

units

MutualityRehm-Zeiher v. F.G.

Walker, 93No K

R-Z could

refuse to accept

whisky for any

unforeseenreason

Good Faith Wood v. Lucy, 99 K

Moral Obligation Mils v. Wyman, 113 No K

Moral ObligationWebb v. McGowin,

120K

Employee srsly

injured saving

boss

Moral ObligationHarrington v.

Taylor, 123No K P saved Ds life

Promissory Estoppel

Ricketts v. Scothorn,

129 K

No promise by

P to do orrefrain from

Promissory EstoppelBlinn v. Beatrice,

142K

Oral

modification of

emp agrmt

alleged, indef


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Statute of FraudsProfessional Bull

Riders, 168K

Oral K which

by express

terms is to last

more than 1 yr

but contains

prov allowing

term before 1 yr

Measuring RemediesSullivan v.

OConnor, 200K

P was

entertainer, no

proof of lost

earnings

RemediesCurtice Brothers v.

Catts, 207K- spec perf

Plant needs

were unique

RemediesHadley v.

Baxendale, 213K

Ps didnt tell D

that mill would

be shut down

without shaft

Mutual Assent / Objective TestEmbry v. Hargadine,

227K

P demanding

renewal of K,

threatened to

quit unless re-

empd

Mutual Assent Lucy v. Zehmer, 229 K

D considered

offer in jest,discussion,

modification,

signed K

Implied-in-fact AgreementWrench v. Taco

Bell, 241K*

Reversed later,

judgment for P

Offer

Lonergan v.

Scolnick, 250 No K

Prop sold 4/12

acceptancesent 4/15

OfferLefkowitz v. Great

Minn, 253K

house rule

offer for

women


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OfferLeonard v. Pepsico,

257No K

Harrier jet not

included in

catalog

OfferBretz v. Portland

GE, 275

No K

OfferEquitable Life v.

FNB, 279No K

Acceptance by PromiseLaSalle NB v. Vega,

284No K

K had to be

signed by

offeror, Vega,

trust (wasnt)

AcceptanceHendricks v. Behee,

286No K

D withdrew

offer before

notified of

acceptance

AcceptanceEver-Tite v. Green,

288K breach

K binding on

written

acceptance by

contractor or

upon perf.

Acceptance Corinthian v.Lederle, 291 No K

Partial order

sent with notice

of priceincrease, option

to cancel order

AcceptanceGlover v. Jewish

War Veterans, 302No K

Informant

didnt know

reward had

been offered,

questioned by

police

Acceptance by Conduct or Silence Russell v. Texas Co,316

K

Offer said

continued usemeans

acceptance

Booking didnt


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Acceptance (when effective)Adams v. Lindsell,

325K

Offer letter

misdirected by

D, accepted by

P after D had

sold

Acceptance / Counter-offerMinneapolis Co. v.

Columbus Co, 330No K

Offer to sell,

counter-offer

Acceptance Hill v. Gateway, 349 K

Terms inside

computer box,

arbitration

clause

AcceptanceKlocek v. Gateway,

352No K

P offered to

purchase, D

accepted by

shipping

Option ContractsHumble Oil v.

Westside, 376K

Option

supported by

consid, 2

acceptances

sent- diff terms

OptionsJames Baird v.

Gimbel, 388No K

D withdrew

offer after P had

made

dependent bid

OptionsDrennan v. Star

Paving, 392K

Subcontractors

mistaken bid to

contractor

Inadequate AgreementRaffles v.

Wichelhaus, 402No K

K was to buy

cotton from

ship Peerless,

2 ships w same

name

AcceptanceAmmons v. Wilson,

321K

constitute K or

absolute offer,

waited 12 days

to refuse


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Indefinite AgreementVarney v. Ditmars,

409No K

Boss offered

fair share of

profits,

employee

discharged

Indefinite Agreement Lefkowitz v. GreatMinn, 253

K

Newspaper ad

didnt specify

addl Rules

Incomplete / Deferred AgreementMGM v. Scheider,

420K

Only term in

question was

start date for

filming TV

series

Incomplete / Deferred AgreementJoseph Martin v.

Schumacher, 421No K

Future rent to

be agreed

upon

Incomplete / Deferred AgreementOglebay v. Armco,

425K

Close, long bus

relationship

Inadequate Agreement168

thand Dodge v.

Rave Reviews, 438No K

Letter of intent

established

good faith, not

lease agreement

Inadequate AgreementTexaco v. Pennzoil,

451K

P sued T fortort of

inducement of

breach of K

K Capacity: Mental IncompetenceHeights Realty v.

Phillips, 475No K

Woman had

mental decline,

weak evidence


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Unilateral MistakeBoise JCD v.

Mattefs, 490No K

14% error, city

had budgeted

for more than

next-highest bid

bid bond

Mutual Mistake Beachcomber Coinsv. Boskett, 498

No K

Both parties

believed coin

was genuine

MistakeSherwood v.

Walker, 500No K

Agreed to buy

barren cow

Fraud and Duty to DiscloseLaidlaw v. Organ,

522K

P asked D for

info, D

remained silent

Fraud and Duty to Disclose Vokes v. ArthurMurray, 526

No K

P sold 2302 hrs

of dance

lessons, $31k

Duress and Undue InfluenceRubenstein v.

Rubenstein, 550No K

P seized with

fear of his life

due to threats

UnconscionabilityWilliams v. Walker-

Thomas, 564No K*

Remanded with

def of

unconscionabili

ty

IllegalitySinnar v. LeRoy,

604No K

Statute

regulated beer

license

Illegality and Public Policy Watts v. Watts, 636 K*Cause of action

supported

Parol Evidence Rule Mitchill v. Lath, 656 Not incl.

Oral promise toremove ice

house K for

sale

Parol EvidenceMasterson v. Sine,

660Incl.

Deed silent on

Q of

assignability,

form structure

makes diff


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InterpretationPac. Gas v. GW

Thomas, 679Incl.

3rd

party

indemnity

clause

InterpretationConFold Pac v.

Polaris, 682Incl.

Confidentiality

agrmt not

extended to

proposal

InterpretationFrigaliment v. BNS,

690Not incl.

Chicken

ambig word

Good Faith DutyMarket Street v.

Frey, 736No BF

Lease called for

rable consid,

GF negot for

funding,decreased

bu back if not

Warranties

Henningsen v.

Bloomfield Motors,

787

No K

Stdized mass K

used by all auto

sellers, K of

adhesion

ConditionsDove v. Rose Acre

Farms, 793No perf

Pgrm designed

to dis absents,

pro motivation,

failure of cond

forfeits bonus

Conditions Clark v. West, 808 Perf

Sobriety was

waivable

condition, D

promised to pay

full price

Conditions Palmer v. Fox, 831 No Perf

Time stipd for

each perf,

concurent

ImpracticabilityUS v. Wegematic,

863K

K allocated

risk, liquidated

dmgs/day,

option to go to

other source


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ImpracticabilityTaylor v. Caldwell,

868No K

Music hall

burned down

before reserved

dates, perf

made

im ossible

ImpracticabilityCentex v. Dalton,

884K cancld

Bank Board

prohibited

payment of

finders fees

Frustration of Purpose Krell v. Henry, 898 K cancld

Advertised flat

for purpose of

watching

coronation

BreachTaylor v. Johnston,

921No breach

Both mares in

foal most of

breeding season

Compensatory DamagesSpang Fort Pitt v.

Aetna, 996Breach

Delayed steel

delivery by

months, too

cold to pour

concrete

Compensatory Damages

Hydraform v.

American Steel,

1005

Breach

Late deliveries

of steel could

ruin Hs

business for ayear

InjunctionsLaclede Gas v.

Amoco Oil, 1032Spec Perf

P could cancel

agrmt but no

provision for D

to cancel

Injunctions ABC v. Wolf, 1050 No SpecPerf

D breached

good faith

negotiation but

not first-refusal

provision

Em. Distress & Punitive DmgsBoise Dodge v.

Clark, 1023Pun. Dmgs

Jury found

actual damages

$350, punitive

$12,500 for car

sales fraud


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Liquidated Dmgs

Southwest

Engineering v. U.S.,

1066

Liq, Dmgs.

D suffered no

actual damage

on project,

$8,300 in

liquidated

dama es

Delegation of DutiesSally Beauty v.

Nexxus, 1164

No K, no

delgn

Sally wascompetitor of

Nexus, cant be

assigned K

Third-party BeneficiariesKMART v. Balfour,

1169

K, 3d party

ben

P was tenant of

shopping center


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REASONING RULE?

Person not

required to

become obliger

unless he desires

If performance rendered by person without

request by another, unlikely person will be

under legal duty to pay compensation

Keep bargains

whether good orbad for us

Promise was

mere gratuity, no

consid

Waiver of any

legal right is

sufficient

consideration

Consideration is either some right, interest,

profit, benefit accruing to one party or

forbearance, detriment, loss, responsibility

given, suffered or undertaken by the other

Consider if

happening of

condition will

benefit promisor

Consideration exists if one refrains fromanything he has legal right to do whether

any loss, detriment, benefit

Suffic. Consid,

motive need not

be statedGiving up K of

sale was suffic

consid, mutual

assent proves

mutual

expectation of

benefitConcern for gross

inequality of

bargaining power,

fraud not

necessary

UCC 2-302: court may refuse to enforce K

if unconscionable

Nominal

consideration,good &

valuable not

shown


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No consideration,

consent based

solely on agmt to

perform exact

svcs already

under K to render

Promise to pay a man for ding tht which he

is already under K to do is without

consideration

Contextualism,

fair and equitable

SR89D: promise modifying duty under K

not fully performed is binding if

modification is fair and equitable in view of

circumstances not anticipated by parties

K was

unenforceable by

Walker, so lacked

in mutuality ofobligation

Promise to use

reasonable efforts

to bring

profits/revenue

has value, P has

dutonly when the party making promise gains

something, or he to whom it is made loses

something, that law gives promise validityPromise to pay

for remainder of

life, morally

bound, material

benefit rcd

when promisee cares for, improves,

preserves prop of promisor w/o request,

suffic consid for subsequent agrmt to pay bc

material benefit received

Voluntary

humanitarian act

not suffic consid

Acted on faith of

promise

When payee changes position to disadvtg, in

reliance on promise, right of action doesarise

Detrimental

reliance replaces

consid

NE law: prom est action may be based on

promise insuff def to form K but promisees

reliance is rable and forseeable


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Agrmt exply prov

that alt perf could

be completed in

less than 1 yr

Agrmt void if not in writing if not to be

performed within 1 yr of making

Expectancy or

reliance dmgs

P entitled to out-of-pocket, worsening of

condition, pain and suffering

If damages easy

to measure,

courts withhold

spec perf

(equitable)

Specific performance

where 2 parties have made K & 1 broken,

damages= arising natly, or rably supposed

to been in contemplation of both parties at

time of K, prob result of breach

D must have

answered as he

did to assure P of

employment

Meeting of minds not determined by secret

intentions but by expressed intention; if

rable man would understand

Appearance,

modification,provisions show

serious bus

transaction

R71: If words or acts of 1 party have 1rable meaning, undisclosed intention is

immaterial except when known

Implied K where

one accepts

benefit for which

comp usually

expected

Implied-in-fact K when intention not

manifested by direct words but by

implication/deduction from conduct, lang

Meeting of minds

evidenced byoffer/acceptance

If know/reason to know person making

promise does not intend expsn of fixedpurpose until further assent, no offer

Cant impose new

restrictions not in

published offer

Where offer is clear, def, explicit, nothing

for negot = offer which acceptance will

complete K


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Ad not unilateral

offer, obj rable

person standard,

no writing SOF

Not P or Ds subjective intent but what obj

rable person would understand

P did not rably

rely on

representationsfrom DAuctioneer must

act in good faith

in interest of

principal

Auctioneer may withdraw prop from sale

any time before acceptance of bid; bid=

mere offer for K

Vega could

decline and write

new K but didnt

Offeror has complete control over offer,

may condition acceptance to terms

Realtor is agent

of principal,

notification made

to either counts

Unless offer supported by consid, offerormay w/d at any time before acceptance &

comm.

Active perf of

work began

before notice of

dissent given,

reasonable delay

Power to create K by acceptance of offer

ends at time specified or reasonable

Non-conforming

shipment is

counter-offer,may be rejected

or acce ted

Shipment of non-conforming goods not

acceptance if notify buyer onlyaccommodation

Didnt volunteer

info, doesnt

count if giving for

unconnected

motive

No K unless claimant knew of offer when

giving desired info and acted w/ intention of

accepting

Cant argue lack

of intent to acceptwhen retained

benefits

R72: if exercise of dominion is tortuous,

offeror may treat it as accepance though

offeree manifests intention not to accept

R72: when because of previous dealings

offeree has given offeror reason to

understand silence/inaction is assent,

acceptance


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R69(1)(c): where because of previous

dealings or otherwise, it is reasonable that

the offeree should notify the offeror if he

does not intend to accept.; (1) where an

offeree fails to reply to an offer, his silence

and inaction operate as an acceptance in the

followin cases onl :

D bound at

moment of

acceptance by P

Proposal to

accept on diff

terms is rejection

Offer to sell imposes no obligation until

accepted according to its terms, negotiation

remains openWriting provides

benefits for both

sides of comm.

Transactions, K

formed when

consumer

inspects

box/ roduct

K formed when consumer pays for software

(only terms then known count) OR vendor

invites acceptance by conduct

Terms are not

counter-offer, no

unwillingness to

proceed w/o P

agreement

UCC 2-207

Right to keep

option K open for

set time, can

negotiate re: K of

sale

If irrevocable offer w/ binding option,

counter offer does not terminate power of

acceptance

Offer withdrawn

before accepted

Reasonabledetrimental

reliance

R45: if offer for unilateral K made & part ofconsid reqd given in response, offeror is

bound by K, duty of immed perf conditional

on full consid given in time stated or rable

D meant one, P

meant other- no

consensus, no

binding K


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fair & rable

meaning dep

upon intention of

parties and subj

matter

Promise/agreement of parties must be

certain&explicit, full intention may be

ascertained to rable degree of certainty,

neither vague nor indef

All offers are

unilateral, may bewithdrawn before

acceptance

where the offer is clear, definite, and

explicit, and leaves nothing open fornegotiation, it constitutes an offer,

acceptance of which will complete the KWhere parties have completed negotiations

of what they regard essential elements &

perf begun on good faith understanding that

agrmt on unsettled matters will follow, court

will find/enforce K even though elements

left for future neg / agrmt if some obj

method for determination is avail found in

agrmt, comm practice, other usage/custom,

will fill in a sK would be

acceptable if

method for

determining rent

found in lease or

amt dep on obj

extrinsic event,

condition,

standard

Must be sufficiently certain and specific

what was promised for law to enforce

promise

Court may fill in

gaps, diff to

ascertain damages

Agreements to agree enforceable whenparties manifested intention to be bound by

terms, intentions specifically definite to be

enforcedLOI was cursory,

indef,

conditional, fails

to establish

objective intent of

arties to be

Draft any writingmaking clear

when manif.

assent, prior there

is no K

Doctor, fam

testimony

Test of M.C. is whether person is capable of

understanding in Rable manner

nature/effect of act


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Bid error entitled to relief of rescission if

material mistake, enforcement of K-

unconscionable, no culpable negligence, no

prejudice except loss of bargain, prompt

notice of error given

P did not assumerisk

Recission for mutual mistake of fact when

both parties act under mistake and factmaterial, neg failure to know does not

preclude

Mistake went to

whole substance

of agreement

Party who has given consent to K of sale

may refuse to execute if assent founded/K

made on mistake of material fact

Was not bound to

communicate info

If undertakes to

disclose facts,

answer inquiries,

must tell whole

truth

Genrly, actble mirep must be fact, not

opinion; Stmt of party having sup knldg maybe reg as stmt of fact, although considered

opinion if parties on = terms

Age, sex, capacity

considered here

legit threat

Unlawful threats which overcome will of

person, induce to do act would not

otherwise do, not bound = duress

UCC 2-302 is

persuasive

authority

Unconscionability= absence of legal choice

on 1 party + K terms unrably favorable to

other partyIllegality need not

be pleaded, D

cant waive

defense

Court will not knowingly aid in furtherance

of illegal t/a but will leave parties where it

finds them

Balance interest

in enforcing K

against policy

against

enforcement

Bargain btwn 2 not illegal merely bc of

illicit rship, so long as K is indep of illicit

rship and not part of consid or condition

How closelybound collat

agrmt is to K is

decisive factor

Agrmt must be collateral, not contradict

express/implied prov of written K, parties

not ord expected to embody in writing

Integ: whether

parties intended

writing to serve

as exclusive

embodiment

Ev of oral collateral agrmts should only be

excluded when fact finder likely to be

misled


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Intention, words,

meaning relevant

Test: whether offered ev relevant to prove

meaning to which lang of instrument rably

susceptible

K minimally

ambig but extrins

ev strongly

supported D

If K ambig, extrinsic ev admissible to

resolve

D expected to

make profit, P

allowed 2nd

shipment, D

believed

com liance

NY law: usage so long continuous, well

estab, notorious, universal, rable that

presumption is violent parties refd it

Give parties what

would have stipd

for exply if had

completeknowledge of

future, costs=0P had no

bargaining pwr,

disclaimer of

liability against

pub policy

Ppl should not be unnecessarily restricted in

freedom to K but provisions which tend

injury to public- void against PP

Substantial perf,

BUT bonus was

voluntary, nofraud or BF

D could have

refused but

waived, condition

precedent

D had right to

expect

improvements

made by time fullprice paid

Courts will construe covenants as dependent

unless contrary intention clear

Risk of revolution

falls on seller,

express agrmt,

cost was for

entire line not one

com uter


22/24

Implied condition

Where performance depends on continued

existence of person/thing, impossibility of

perf arising from perish of person/thing

excuses breach of perf

Forseeabilityfactor dcrsd,

party may still be

dischgd if event

forseen

SR 261, 264: Occurrence of event non-o

was basic assumption discharges duty; gov

regulation is such event

Ask if substance

of K needs certain

state of things

Test: whether event causing impossibility

was/might have been anticipated or guarded

against

Repudiation may

be retracted

Anticipatory breach = one party to bilateral

K repudiates K, express or implied (puts out

of its power to perform)Eventuality of

damages likely to

follow should

have been

anticipated by

Fort Pitt

When parties enter K where time of perf to

be fixed later, knowledge of consequences

of failure to perf imputed at time parties

agree on date of perf

Lost profits up to

400 sales

foreseeable

Speculative damages not recoverable;

consequential dmgs (lost profits) only if

count not rably be prevented by cover

Public interest in

providing

propane to

customers, no

adequate remedy

at law

SR 370: Spec enfrcmt not decreed unless

terms of K so expd that court can determine

with rable certainty each partys duty and

cond when perf is due

If services are

unique, can

enjoin employeefrom providing to

another for

duration of K

Once employment K has terminated, eq

relief only avail to prevent injury fromunfair comp or to enforce express anti-

competitive covenant

Prospective

deterrent effect

on others like D

No strict mathematical ratio to be applied


23/24

Amount must be reasonable forecast of just

compensation for harm caused by breach,

harm must be incapable or very difficult of

accurate estimation

UCC 2-306: lawful agreement for exclusive

dealing of goods imposes obligation to use

best efforts

P beneficiary,

also bound to

submit claims to

arbitration

SR 302


24/24

Topic

Bases for Liability Contract

Consideration = bargained for

Seal/Formality

Promissory Estoppel

Prior Benefit (Srest 86; cf. Webb)

Documents

Contract Breakdown